a photo of Marin County
Affluent Marin County, California, provides the setting for what may be a landmark Supreme Court case. Eric Risberg/AP

A Marin County lawsuit has conservatives and housing advocates preparing to face off over the constitutionality of a powerful affordable housing tool.

Marin County is committed to building affordable housing. Indeed, the most exclusive county in California doesn’t have much choice.

Back in May, authorities in Marin entered into a new voluntary compliance agreement with the U.S. Department of Housing and Urban Development to build new low-income housing outside areas where black or brown residents make up the majority. This is now the county’s second big push since 2010 to satisfy the government’s demand that it work on desegregating its affordable housing.

Fair housing is a challenge for Marin, an enclave of million-dollar bungalows across the Golden Gate Bridge from San Francisco. According to a nonprofit project called Race Counts, it has the highest racial disparities of any county in California. That’s in part because Marin County doesn’t want to build any housing. Homeowners here are at the forefront of NIMBY efforts to stop plans for new construction, whether they’re local, regional, or statewide.

The county’s iron grip on its land is the backdrop for a case that may soon appear before the U.S. Supreme Court. Back in 2000, two Marin County property owners, Dartmond and Esther Cherk, looked to split their undeveloped land into two single-family-zoned lots. As developers, they were liable to preserve some part of the property for affordable housing or pay into a low-income housing production fund. The fee was nearly $40,000; the Cherks sued.

The Marin County case may test the constitutionality of inclusionary zoning, a tool that local jurisdictions rely on to expand the supply of affordable housing, especially in tight housing markets. The court has expressed an interest in the case, which the justices may wind up using as a wedge to reshape property rights. It’s possible the inclusionary zoning ordinances—and local regulations more broadly construed—will not stand under the court’s scrutiny.

Plaintiffs in Dartmond Cherk, et al. v. Marin County, California filed a cert petition asking the Supreme Court to hear the case over the summer. In August, the court asked Marin County for its response, which attorneys aim to file by October 16. The court’s term begins on October 7. Although there’s no guarantee that the Supreme Court will add this case to its decision docket, the justices have signaled their willingness to wade into the divisive zoning debates that punctuate the affordable housing crisis.

Housing advocates and industry associations are filing briefs on both sides of the case, which could have ramifications for hundreds of jurisdictions across more than two dozen states where local ordinances require new residential developments to include affordable housing units.

Opponents of inclusionary zoning—in this case the plaintiffs and their backers from the Pacific Legal Foundation, a nonprofit that defends property right and economic liberty—argue that these ordinances violate the takings clause, a provision of the Fifth Amendment that says that “private property [shall not] be taken for public use, without just compensation.”

“Inclusionary zoning is perhaps the most prevalent strategy for providing affordable housing at the local level,” says Emily Hamilton, a research fellow at the Mercatus Center, a free-market–oriented think tank at George Mason University. “There are open questions about the legality of that and the effectiveness of that.”

The Supreme Court may be spoiling for that fight. With Justices Neil Gorsuch and Brett Kavanaugh on the bench, the court could use the takings clause to strike down climate change legislation, an analysis from a progressive group called Take Back the Court warns.

If the Supreme Court agrees to hear Dartmond Cherk v. Marin County, then the justices may settle a standing argument on property rights. Inclusionary zoning could be a collateral victim in a broader effort to undermine environmental regulations and local government. In a twist, Marin County’s extraordinary commitment to NIMBYism may wind up helping the Roberts Court land a haymaker against progressive policies.

***

The case is in some ways typical. Marin County has long been a battleground in community clashes over single-family zoning and land-use debates. Like other affluent communities, it opposes state laws that would require them to ease restrictive zoning codes in order to allow more housing density, for example. The county nevertheless has laws on the books that require developers to set aside units for below-market-rate housing or else pay into an affordability fund.

Most inclusionary zoning policies work this way. On-site or off-site affordable units, in-lieu fees, land donations, preservation or rehabilitation of existing housing—these are the main mechanisms by which zoning adds to affordable housing and economically diverse communities. Optional inclusionary zoning policies offer incentives to developers, too, such as density bonuses, zoning variances, or expedited permitting.

Critics say this approach makes housing developers responsible for sorting out a crisis created by government. “It’s obvious there’s an affordable housing crisis in Marin,” says Larry Salzman, litigation director for the Pacific Legal Foundation. “The main source of that housing crisis is the county itself, which has refused for decades to approve the number of building permits that are required by a surging population.”

The residential property in question is an undeveloped three-acre lot that has belong to Cherk, and his father before him, for more than 50 years. While the family has considered developing it at various points over that time, those efforts never came to fruition. In 2000, after several starts and stops, the Cherks decided to split the lot in half and sell one of the lots. Since he is a single property owner and not a multifamily housing developer, Cherk is an atypical (and arguably more sympathetic) figure for an inclusionary zoning case.

Back when the Cherks started the permitting process, there wasn’t a relevant affordable housing ordinance in Marin County. But by 2007, when they won approval for their plan, an ordinance required the owners to pay into an affordable housing production fund. Marin County charged them a $39,960 inclusionary zoning fee. In 2015, the Cherks went through with the plan. They also challenged the law.

When the government wants to take property (including an exaction in the form of fees) as a condition of granting a change in the use of the land, it’s incumbent on the government to demonstrate that the fee is related to whatever negative impact the change in land use would have on the broader community. The plaintiffs’ argument rests on a taking precedent known as Nollan/Dolan.

In recent years, the Supreme Court has applied a test—known as Nollan/Dolan, named after the 1987 and 1994 cases that established the precedents—to look at land-use permits and fees through the lens of the Fifth Amendment takings clause. Nollan/Dolan is a two-prong test: a fair regulatory fee (known as an exaction) must have some clear and relevant connection to a development, and the fee must be proportional to the project at hand.

“If you’re going to develop vacant land and you’re going to have to cut down a bunch of trees to do it, there’s a clear nexus that you could be required to plant new trees somewhere else, because you’re taking those trees away from the community,” Hamilton says. “If you were developing a piece of vacant land and were going to cut down 10 trees to do so, you could be required to plant the same amount of trees. But you can’t be required to plant a whole forest.”  

One purpose of the takings clause is to prohibit the government from imposing costs on single individuals that should fall on the entire community. The plaintiffs say that’s clearly what’s happening to the Cherks. The developer is being held liable for trying to put a vacant property to a more productive purpose in terms of the housing it can accommodate by dividing the lot in two.

“Instead of doing what is fully within its power to do—permit much, much more housing to be built, and resolve the housing shortage—[Marin County is] holding people like the Cherks as scapegoats for the problem they’ve created,” Salzman says.

The Pacific Legal Foundation has backed similar cases in an effort to get the Supreme Court to bite. In 2016, the court declined to review California Building Industry Association v. City of San Jose (although Justice Clarence Thomas signaled that he was all in). Then in 2017, in the case of 616 Croft Ave. v. City of West Hollywood, the court asked West Hollywood to respond to the plaintiffs’ cert petition, as it has with the Marin case; ultimately, the court punted on this one, too. California courts are decided on the matter.

So far, the Supreme Court docket for Cherk v. Marin County has garnered amicus briefs from a bevy of originalist, libertarian, free-market groups, as well as home builders in California and beyond. But any Supreme Court intervention into local zoning promises to be a much bigger affair. Civil rights groups are watching the case closely, too, since it has a bearing on efforts to desegregate housing in Marin County and beyond. (An attorney for the county declined to comment before the Monday deadline for the county’s response.)

“Historically, we’ve seen inclusionary zoning as being one of the most important tools that local governments need to live up to and fulfill their civil rights obligations,” says Thomas Silverstein, counsel for the Lawyers’ Committee for Civil Rights Under Law. “Removing the ability or severely limiting the ability of local governments to engage in inclusionary zoning really is a racial justice issue, because it prevents effectively in many instances the fulfillments of these civil rights requirements.”

Silverstein argues that the petitioners are fundamentally mistaken about what happens from a property-rights perspective when the government imposes zoning restrictions on a property owner or developer. An inclusionary zoning ordinance isn’t any more a takings than a height restriction or an environmental review, he says. Courts in California have argued that for generally applicable land-use regulations, a different, older takings test applies: the Penn Central doctrine, named after Penn Central Transportation Co. v. City of New York.

In that 1978 case, the Supreme Court rejected a claim from the owners of Grand Central Terminal that the historic preservation of the station represented a takings. (The owners wanted to build an office building over the rail hub.) The Penn Central test is generally understood to have three prongs: The court has to examine a law’s economic impact on the owner, whether it interferes with a reasonable expectation of an investment, and whether the character of the law is justified. Under a Penn Central test, applying an affordable-housing fee to a development that will still result in a windfall sale of extremely valuable land would seem to pass.

“So long as you’re not interfering with the reasonable investment-backed expectations of a property owner, then the regulation can be permissible,” Silverstein says. “Many of these types of policies, like inclusionary zoning, do allow for developers and other property owner to get [a] reasonable return on their investment.”

The question about which test applies gets complicated quickly, especially after Koontz v. St. Johns River Water Management District. In this 2013 decision, a divided Supreme Court ruled that the Nollan/Dolan takings test applies to permit approvals and rejections (with all nine justices agreeing) and also to ad hoc permitting fees (by a 5-4 split decision). The majority didn’t indicate in Koontz whether the standard applies to legislative exactions—like an affordable housing fund fee. The omission was controversial.

“At the least, the majority’s refusal ‘to say more’ about the scope of its new rule now casts a cloud on every decision by every local government to require a person seeking a permit to pay or spend money,” Justice Elena Kagan wrote in her Koontz dissent.

Writing in his minority opinion in California Building Industry Association v. City of San Jose, Thomas concurred that the law is too muddled—and argued that the Supreme Court needs to intervene. “Until we decide this issue, property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively.”

If the Supreme Court does decide to hear Dartmond Cherk v. Marin County, it could wind up revisiting Koontz, Nollan/Dolan, even Penn Central. The consequences for local government could be sweeping in scope, as progressive court watchers are warning. But even a limited decision about inclusionary zoning would be significant for high-price housing markets.

***

Nationwide, inclusionary zoning policies are responsible for generating some 174,000 affordable housing units and $1.7 billion in fees. The Lincoln Institute of Land Policy counts 886 jurisdictions nationwide with inclusionary zoning policies. Many jurisdictions have more than one (the report finds 1,379 ordinances in all). These laws—most of which were passed after 2000—have introduced new affordable rental units that tend to stay affordable. According to the report, 90 percent of all inclusionary zoning policies set terms that require housing units to be low cost for at least 30 years.

Yet inclusionary zoning is a narrow response at best to the housing crisis. Three states account for the vast majority of all inclusionary zoning laws: Massachusetts (27 percent of the nearly 900 laws), New Jersey (45 percent), and California (17 percent). States such as Texas and Florida have passed laws banning inclusionary zoning.

Hamilton’s research at George Mason has shown that mandatory inclusionary zoning in the Baltimore-Washington, D.C. region is associated with a 1 percent increase in housing prices for every year the regulations are in place. Optional inclusionary zoning policies in this area have been even less successful, because incentives such as density bonuses don’t appear to offset the costs of subsidizing the affordable units, except in places with extremely tight exclusionary caps on development, namely Alexandria and Falls Church, Virginia. ”Evidence indicates that inclusionary zoning makes housing less affordable for those not lucky enough to get a subsidized unit,” she concludes.

Other questions linger over inclusionary zoning—whether subsidies ever reach deeply enough, whether they kill permits, whether they encourage awful outcomes like separate entrances for lower-income residents (“poor doors”). Still, advocates insist that inclusionary zoning is one of the only ways to create opportunities for low-income families in affluent neighborhoods.

“Marin County is a place where there are very, very significant barriers in terms of zoning and land-use regulations,” Silverstein says. “It’s a place that has extremely high housing costs that is, frankly, in many ways a bastion of segregation within the Bay Area. Limiting inclusionary zoning would really, really hamper efforts to fix those problems within Marin.”

Fundamentally, inclusionary zoning works hand in hand with exclusionary zoning. And ending exclusive zoning is an idea that (many) progressives and libertarians alike can agree on. But that’s not the question that the Supreme Court will be taking up.

“If your right to build is taken by a local government, they might have to pay for that choice,” Salzman says. “Local governments seem to want to prohibit housing. Those of us in favor of housing and free markets want to see a lot more building going on.”

This story has been updated.

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