In a victory for the homebuilding industry, the city of San Diego's inclusionary housing ordinance -- which mandates that 10 percent of homes built in the city be made affordable to low- and moderate-income homebuyers -- has been struck down in Superior Court.
Superior Court Judge John S. Meyer said among other things that the ordinance is contrary to California law because it effectively mandates that market-rate new homebuyers subsidize the low- and moderate-income buyers in any given project.
According to the Building Industry Association (BIA), last year's ordinance left owners of 20,483 residences having to pay more than $7 million in extra costs.
Since the court determined that the city's ordinance is illegal, the city can no longer use it. It was not immediately clear Wednesday whether or not the city planned to appeal, however.
Elizabeth "Betsy" Morris, executive director of the San Diego Housing Commission, said she was very disappointed with the ruling. She said, however, the commission will review the administrative record to see if anything was missing in the case.
"We need to look at the transcripts," Morris said, adding that there are attorneys who specialize in this type of law who could be brought on board to help with this case.
Meanwhile, the BIA is celebrating.
"This ruling makes the city do the right thing. Our customers -- today's new homebuyers -- will no longer be illegally taxed to pay for someone else's home," said Paul Tryon, BIA's chief executive officer.
According to the BIA, the frustration with the city of San Diego over this ordinance dates back to 2003 when city staff allegedly ignored City Council direction and changed wording that protected builders and market-rate buyers.
"Left with no alternative, BIA sued on behalf of the 20,483 residents who bought a home under the faulty ordinance and paid an inclusionary zoning fee in their purchase price," according to a BIA statement.
Even after filing the lawsuit, the BIA said its industry leaders worked to resolve the conflict.
"We tried to work with the city on a compromise that preserved the city's ability to implement inclusionary zoning lawfully, but also respected the direction from the City Council vote in 2003," Tryon said.
The BIA claims the city agreed to settlement terms in 2004 but never docketed the amended version of the ordinance for a public hearing. Since the city never finalized the settlement, and the City Attorney's Office failed to write a new ordinance needed for City Council action, the court was left to decide the matter.
"We regret we were forced to take legal action. However, it was necessary to defend the rights of San Diego homebuyers," Tryon added. "This city has a history of failed integrity, and it is time to lawfully and fairly address the city's self-declared housing emergency."
The BIA contends that in a market where only 9 percent of the populace can afford a median-price home, inclusionary housing actually has the opposite of the intended effect.
"The ruling stops the city's abuse, restores constitutional rights and clears the way to craft a new, fair approach to deal with housing for San Diego's
economically disadvantaged families," the BIA writes.
Morris countered that inclusionary housing is "a very important part of our affordable-housing strategy."
Richard Schulman of Hecht, Solberg Robinson, Goldberg & Bagley represented the BIA. City Attorney Michael Aguirre, along with deputies in his office, represented the city in the case.