(The Center Square) – A prominent public-interest law firm is warning that Los Angeles’ apparent requirement that older apartments be replaced with income-restricted low-income housing is an “unconstitutional taking” that, if applied to homes destroyed in the Pacific Palisades fire, would add “insult to injury.”
Last week, The Center Square reported on a newly passed Los Angeles ordinance that could require a large portion of apartment units lost to the Palisades Fire to be replaced with low-income housing.
The ordinance could require all multifamily units built before October 1978, which are subject to city rent controls, to be replaced with income-restricted units affordable to low-income households (relative to city, not Palisades income levels).
It also could require the replacement of post-October 1978 units that have been occupied with a low-income renter in the past five years with a low-income unit, and, for units for which the owner does not have complete five-year tenant household income history, replacement with low-income and very-low income units in proportion to the citywide average.
The key legal question regarding the ordinance in question, which aims to ensure “No Net Loss of Dwelling Units,” is whether the income-restricted replacement housing requirement for “replacement of existing or demolished protected units” applies to housing lost by natural disasters.
UC Davis professor and property law expert Chris Elmendorf says other portions of Los Angeles code do treat natural disasters differently than intentional demolition, and referenced the city’s nonconforming uses provisions. Under this code, buildings that would not conform with today’s codes or allowed uses could today be rebuilt as they were before if they were damaged or destroyed by a declared emergency.
However, it’s unclear if these nonconforming use provisions for natural disasters would apply to income restrictions as well.
Elmendorf also indicated the city’s ordinance is written as such that it could interpret the replacement of “demolished” units to not apply so as to make rebuilding economically feasible.
Elmendorf said that in the case that the ordinance does actually require replacement of some fire-destroyed apartments with low-income housing that costs more to build than it generates in revenue, that it may be found to be an unconstitutional taking.
Pacific Legal Foundation, a libertarian public-interest firm that recently secured a unanimous U.S. Supreme Court ruling that government fees must be related to and proportional to the fee’s interest, suggested the ordinance may apply to fire-destroyed units, and said that the ordinance is an unconstitutional taking.
“Rent control is an unconstitutional taking of property without the payment of just compensation. This scheme is admittedly a form of rent control, so it’s clear the City of Los Angeles wants to be sued by its own residents,” said Mark Miller, senior attorney at Pacific Legal Foundation, to The Center Square. “Moreover, the city’s decision to take the property rights of property owners who already suffered the tragedy of losing their homes to a fire that the city was woefully unprepared to contain adds insult to injury.”
“The city should let people build what they want and lease what they build to who they choose,” continued Miller. “In the other 49 states of the United States of America, that is called ‘freedom.’”
Pacific Legal Foundation recently settled a similar case on so-called “inclusionary zoning.” “Inclusionary zoning” is the practice by which cities require new construction to pay large fees or include or financially support the construction of price-controlled “affordable” housing.
In that case, one moderate-income California family trying to build two new homes on its property was slapped with a $20,000 “inclusionary zoning” fee the city said is necessary to improve housing affordability, provided that the family neither wanted to give the city land for price-controlled housing, or sign a 55-year price guarantee on the housing they are building.
Pacific Legal Foundation argued the fee was not related to the matter at hand, as it was unclear how building the new homes would result in higher local home prices, and was not proportional to any assumed increase in housing prices from building new homes.
The city settled the lawsuit several months later, refunding the fee and paying the family for its hardship, without going to court, which prevented the “affordable” housing rule from being fully adjudicated. It’s likely a similar argument could be used against Los Angeles’ law, albeit under higher national scrutiny.
