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Contact: Brian T. Hodges
Senior Attorney
Pacific Legal Foundation
bth@pacificlegal.org
(425) 576-0484
www.pacificlegal.org


Larry G. Salzman
Senior Attorney
Pacific Legal Foundation
LSalzman@pacificlegal.org
(714) 591-0490
www.pacificlegal.org

Victims of city’s ‘inclusionary housing’ law appeal to U.S. Supreme Court


WEST HOLLYWOOD, CA.;  March 21, 2017:  In a just-filed petition to the U.S. Supreme Court, Pacific Legal Foundation asks the justices to hear the case of a couple who were slammed with an unjust, half-million-dollar “affordable housing” fee as the price for pursuing a modest condominium project in West Hollywood.  The case not only seeks reimbursement for the victims — small developers Shelah and Jonathan Lehrer-Graiwer — it also targets the confiscatory law under which the city acted: the city’s Inclusionary Housing Ordinance.


Brian Hodges
Senior Attorney


Larry Salzman
Senior Attorney

That law forces homebuilders to build and set aside a certain number of units — or pay a fee set by rigid formula — as a condition for receiving a permit.  The purpose is supposedly to address the region’s affordable housing shortage, but the size of the fee is not linked to any measurement of affordable housing needs that the proposed development might create.  To the contrary, the Lehrer-Graiwers’ 11-unit condominium project creates no new affordable housing needs; the city itself admitted that it actually helps meet regional housing goals.  Yet they were still charged a staggering $540,000 “affordable housing” fee for permission to build.

PLF is the leading legal watchdog organization that litigates nationwide for limited government, property rights, and individual rights.  With its petition for certiorari asking the Supreme Court to review West Hollywood’s extortionate actions, PLF represents the Lehrer-Graiwers free of charge, as with all its clients. 

West Hollywood punishes small-scale homebuilders for providing new housing

“The Lehrer-Graiwers were victims of a shakedown, and we’re asking the U.S. Supreme Court for relief and redress against the perpetrator — the City of West Hollywood,” said PLF senior attorney Brian T. Hodges.  “The Lehrer-Graiwers aren’t to blame for affordable housing shortages.  On the contrary, their condominium project would add to the stock of housing.  For city bureaucrats to punish them with an astronomical fee — really, a payoff — for providing more housing isn’t just unconscionable, it’s unconstitutional.”

City’s shakedown subverts Supreme Court precedent

The Lehrer-Graiwers’ story dates back to the early 2000s, when they bought two adjacent houses at 612-616 Croft Ave., with dreams of redeveloping them into an attractive and modern condominium complex.

After a delay due to the financial crisis, they were prepared to move forward in 2011.  It was then that the city made its shocking demand: as a permit condition, they would have to pay more than a half-million dollars in “affordable housing” fees.

This astronomical sum was unrelated to any impact from the development.  In fact, the city praised the project’s “superior architectural design,” and noted that it “would help the City achieve its share of the regional housing need,” by providing “11 families with a high quality living environment.”

The Lehrer-Graiwers paid the fee under protest, and proceeded to challenge it in court.  Their case rests on major Supreme Court precedents, such as Nollan v. California Coastal Commission and Koontz v. St. Johns River Water Management District, which require that land use permit conditions must be linked to some public need created by the project.  After the California Second District Court of Appeal failed to recognize how these precedents prohibit the city’s unjust financial demand, and the California Supreme Court declined to take review, the Lehrer-Graiwers are now appealing to the highest court in the land.

‘Penalizing homebuilders undermines the property rights of everyone’

“The $540,000 fee presented a significant financial burden,” said Jonathan Lehrer-Graiwer.  “First, the city insisted it be paid when the building permit was pulled, rather than at the time of completion and sale of units, when we would have had the cash flow to pay it.  This forced my family to put together that sizeable sum at the same time we were trying to get a construction loan that also required us to add significant equity to the project.  We almost were unable to put this amount together, and had we failed we would have lost our entitlements.

“The second financial burden involves the magnitude of the fee, equaling the full construction cost of one of the larger units,” he continued.  “It amounts to 30 percent of the project’s profit — the equivalent of a 30 percent net income tax.  This can’t be justified by any measurement of fairness or constitutionality.

“We are asking the court to accept this important case, return the Lehrer-Graiwers’ wrongly taken money, and render the Inclusionary Housing Ordinance null and void,” said Hodges.  “Bureaucrats cannot be allowed to use ordinary land use permits as a coercive revenue-raising strategy.  Penalizing homebuilders is a recipe for worsening the housing crisis and undermining the property rights that the Constitution guarantees for everyone.”

The case is 616 Croft Ave., LLC v. City of West Hollywood.   More information, including the petition for writ of certiorari and an explanatory blog post, is available at:  www.pacificlegal.org.

About Pacific Legal Foundation
Pacific Legal Foundation, America’s most powerful ally for justice, litigates in courts nationwide for limited government, property rights, individual liberty, and a balanced approach to environmental regulations.  PLF represents all clients free of charge.