Washington courts have had a number of opportunities to address housing issues, particularly those designed to address low-income housing needs. A number of lessons can be learned from these cases.
(1) Nexus and proportionality
If a jurisdiction chooses to use its police power or other statutorily delegated authority to require the private sector to participate in the funding of affordable housing, it may face nexus and proportionality challenges.
The framework for legal analysis nationally was set forth by the Supreme Court of the United States when it addressed the due process limits of nexus and proportionality in seeking developer exactions as part of a development permit program in Nollan v. California Coastal Commission, 483 U.S. 825, 107 S. Ct. 3141, 97 L. Ed. 2d. 677 (1987), and Dolan v. City of Tigard, 512 U.S. 374, 114 S. Ct. 2309, 129 L. Ed. 2d 304 (1994).
Under the due process requirements of the United States Constitution, either or both of those elements lacking the resulting mitigating conditions were held to be unlawful and unenforceable. For more detailed discussion of these cases, see Volume 5, Chapter 19 (Regulatory Taking and Inverse Condemnation), of this deskbook.
Although neither case dealt with affordable housing mandates, the rationales of both decisions were thought to set the stage for challenges to local community mandates to provide affordable housing as part of some larger development plan. The results in those cases were anticipated in Washington cases such as Unlimited v. Kitsap County, 50 Wn.App. 723, 750 P.2d 651, review denied, 111 Wn.2d 1008 (1988).
Nationally however, challenges on this theory have not necessarily been successful. The California Supreme Court unanimously rejected a challenge filed by the California Building Industry Association (CBIA) to San Jose's inclusionary housing ordinance, rejecting the argument that such a regulation must be analyzed as an exaction. Cal. Bldg. Indus. Ass'n v. City of San Jose, 61 Cal.4th 435, 351 P.3d 974 (2015), cert. denied, 136 S. Ct. 928 (2016).
San Jose passed an ordinance in line with ordinances passed in an estimated 170 California jurisdictions that required developers of new residential projects of 20 or more units to set aside 15 percent of for-sale units to be sold at a below-market cost to low and moderate income households. Id. at 446. Developers could avoid this obligation by paying an in-lieu fee, dedicating land of an equivalent value, or constructing affordable units off site. Id. at 450.
CBIA challenged the ordinance as an unconstitutional exaction. It argued that the city could not enact such legislation without first preparing a nexus study to support the inclusionary requirement, as would be required for a dedication of land or payment of a mitigation fee. The trial court took CBIA's approach and found the ordinance unconstitutional. The California Court of Appeals reversed, finding that the ordinance was nothing more than a zoning use restriction like one would find on height, density, or setback. The Court of Appeals found that the city did not need to provide proof of a nexus. The California Supreme Court also found that the ordinance was a use restriction, merely limiting the price a developer could charge for certain units. It was not an exaction because it did not require developers to give up property interests or pay any money to the public. The court remanded for a determination as to whether the land use regulation was properly enforceable.
(2) RCW 82.02.020
The Washington State Legislature created a barrier to imposing taxes, fees, or charges on development, as discussed above:
Except as provided in RCW 64.34.440 and 82.02.050 through 82.02.090, no county, city, town, or other municipal corporation shall impose any tax, fee, or charge, either direct or indirect, on the construction or reconstruction of residential buildings, commercial buildings, industrial buildings, or on any...
