Cities and counties may force developers who apply for building permits to offer some of their homes at below market rates, the California Supreme Court ruled on Monday.
The unanimous ruling came in response to a lawsuit brought five years ago by the California Building Industry Association against San Jose. The association said the city’s affordable housing ordinance was unconstitutional.
Some version of that law has been adopted in 200 California cities and counties already. It requires that in communities of 20 or more housing units, the developers must offer 15% of them at below-market rates.
Housing inventory is tight in California, putting upward pressure on home prices. San Diego and other cities have tried to create more affordable housing by making it a condition of a building permit.
But builders, developers and real estate agents argued that the law allowed the city to “take” private property.
A spokesman for the building industry said the group might appeal the ruling to the U.S. Supreme Court.