COLUMN RIGHT/ MICHAEL M. BERGER : Bradley Plan Would Pick Wrong Pockets : If the city wants housing, pay for it. Don’t extort money from the nearest businessman.
City governments feel trapped between constituents, who want more services, and restrictions (such as Proposition 13) that limit the funds available to pay for those services. They have begun to cast their nets broadly, seeking novel ways to pay for new programs without raising taxes.
Enter the convenient fish in the proverbial barrel: a person who wants to develop property and needs a permit to do so. With increasing frequency, government agencies are refusing to issue permits unless the developer funds some pet municipal project by paying a “linkage” fee.
Supposedly, these fees are to mitigate a public problem, like traffic congestion, that will be caused by the planned buildings. In practice, the only connection is that the property developer is in the wrong place (the city planning office) at the wrong time (when the city is looking for funds).
This trend has come to public attention lately in front-page news stories from Los Angeles and Sacramento.
Here, Mayor Bradley unveiled a plan to raise $30 million a year to build low-income housing by imposing a “linkage” fee on the builders of offices, retail buildings and warehouses. Sacramento is slightly ahead of Los Angeles, having instituted a housing linkage fee in 1989.
The rationalization for the Sacramento ordinance was that new commercial buildings attract new residents--people who will work in the buildings, many of them at low-paying jobs. They will need a place to live, but modestly priced housing is scarce. Bradley’s program, by contrast, seems intended to solve an existing housing shortage at the expense of commercial developers.
The problem with both of these approaches, and particularly with Bradley’s, is that they violate the standards set by the U.S. Supreme Court in its 1987 decision in Nollan vs. the California Coastal Commission. The court concluded that conditions, such as fees imposed on developers, are valid under the Fifth Amendment (which bans the government from taking property without paying compensation) only if they are rationally related to the particular burden on public services that they are designed to relieve.
The justices openly expressed concern that state and local planning officials would, if not constrained, invent questionable financing linkages. The court called the misuse of the power to put conditions on permits a form of “extortion.”
Bradley’s proposal is contrary to the Supreme Court’s requirement. It is designed to make future developers pay for an old, existing problem. It offers no rational link to a specific burden imposed by a specific development.
The Sacramento ordinance, at least on its face, sought to comply with the Nollan rule by asserting a link between new commercial developments and their new, house-hungry workers. But the ordinance is a long way from connecting a cost to society created by a developer and the fees demanded by the city to cover that cost.
A group of developers challenged the city in court. In Nollan, the Supreme Court required a close connection--one that would withstand judicial scrutiny--between the conditions for issuance of permits and the burden that those conditions are intended to mitigate. What’s the “burden” that Sacramento says the commercial builders are putting on the city? Why, they are creating jobs that will employ more people! What a villainous thing to do. Especially in a recessionary era.
Although on Aug. 7, a federal appeals court majority found the Sacramento ordinance valid, the dissenting judge wrote that it was “a transparent attempt to force commercial developers to underwrite social policy.” Warning that this case might inspire abuses, he added: “We can be expected next to uphold exactions imposed on developers to subsidize small-business retailers, child-care programs, food services and health-care delivery systems.”
In neither case is the issue the need for housing. The issue is the means by which the cities choose to provide housing. That bedrock issue of ends versus means is where most Bill of Rights cases wind up. And in the Constitution, the right not to have one’s property taken without compensation shares equal footing with the rights to life and liberty--even for developers.
If Los Angeles or Sacramento is short of affordable housing, then that need must be confronted honestly and weighed in the balance along with all other demands for public services. If the voters won’t pay for it, then perhaps they don’t really want it. Extorting the funds from a vulnerable party to get it anyway is just plain wrong.