Statute of Limitations: Developers Can Challenge Below-Market Housing Requirements While Building

Friday, December 06, 2013 12:00 am
 
Land Use Law Report, Volume 41, Number 11
 

A California "pay-under-protest" statute--which allows developers to challenge fees and "other exactions" while still developing their properties--applies to city rules that require developers to create affordable housing in new developments.

Facts: Sterling Park, L.P. and Classic Communities, Inc. (together, Sterling Park) wanted to build 96 condominiums on a 6.5-acre parcel of land in Palo Alto, California (the City). Under the City’s Municipal Code, a development project involving five or more acres must provide at least 20 percent of its units at below-market rates. There are several alternative ways to meet this requirement, including keying the rates for 20 percent of the units to median incomes, providing off-site units or vacant land, and making cash payments to the City’s housing development fund. A cash payment in lieu of providing below-market-rate units ("in-lieu fees") requires a payment of 10 percent of the greater of each unit’s actual sales price or fair market price.

In 2005, Sterling Park applied for project approval from the City. To approve the project, the City required Sterling Park to provide 10 below-market-rate units and pay in-lieu fees of 5.3488 percent of the greater of the market-rate units’ sales prices or fair market prices. Sterling P[..]

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