CBIA v. San Jose (Exactions & Impact Fees)


California Supreme Court

NAHB Involvement


The California Building Industry Association (CBIA) has challenged the city of San Jose's "Policy on Implementation of the Inclusionary Housing Requirement." The policy, which has been amended multiple times, establishes requirements for set-asides of affordable housing and rental properties. In the most recent version, the CBIA asserts that the amended policy arbitrarily has changed several key definitions and imposed percentages of affordable housing per project that have no rational relationship between the requirements and any need for affordable housing resulting from new development.

The CBIA won its challenge at the trial court; however, the California Court of Appeals upheld the policy, stating that inclusionary zoning ordinances were subject to a police power deferential standard, rather than a heightened scrutiny standard set for exaction-like ordinances.

NAHB submitted an in-house authored brief at the end of March 2014.

The California Supreme Court heard oral argument in early April 2015.

Unfortunately, in June 2015, the California Supreme Court issued a devastating opinion which holds that mandatory inclusionary zoning laws are subject to deferential police power analysis. This clearly opens the door for all California municipalities to enact stringent inclusionary zoning ordinances with minimal judicial oversight.

A cert petition lead by the Pacific Legal Foundation is strongly expected.