The Beacon Center of Tennessee is taking Metro Nashville government to court, claiming that a new affordable housing law is illegal and unconstitutional.
The Nashville-based think tank, which promotes free markets, filed a lawsuit last week in Davidson County Chancery Court. The suit was filed on behalf of the Home Builders Association of Middle Tennessee.
The suit challenges an inclusionary zoning ordinance passed by the Metro Council in September 2016. With limited exceptions, the law requires homebuilders to set aside part of their developments for affordable or workforce housing or pay a fee.
Megan Barry, Nashville’s Democratic mayor, has made affordable housing one of her signature issues.
“As anyone who has been paying attention knows, a government program that begins with the term affordable is typically anything but,” the Beacon Center said in a blog post. “Look no further than the Affordable Care Act, or Obamacare. That redistribution of wealth scheme has left working-class Americans with astronomically higher prices and fewer health insurance options, all in exchange for a worthless guarantee that it will be more ‘affordable.’ ‘Affordable’ housing is essentially the Obamacare of housing.”
Developers will pass on the costs of creating affordable housing to buyers and renters, according to the Beacon Center. Young professionals struggling to start their careers will be frustrated by rents going up so that someone with less money can move in next door. Meanwhile, the poor have a disincentive to improve their lives because they will have to pay for more housing as their income increases.
Moreover, the Beacon Center contends that the city ordinance, which goes into effect in June, violates state law and the “takings clause” of the 5th Amendment of the U.S. Constitution.
Regarding state law, the Beacon Center says in its blog post:
The state has never given cities the power to address affordable housing in this manner, and if there was any lingering confusion on this issue, the Tennessee General Assembly cleared it up in 2016 when affordable housing mandates began to surface in Tennessee. In response to the spread of these ordinances, the legislature passed a law prohibiting local governments from enacting affordable housing mandates as they relate to rental properties. Nashville passed its law anyway, even though it is illegal under state law.
Regarding the U.S. Constitution, the Beacon Center says:
The Takings Clause prohibits the government from taking one’s property without just compensation. Here, Nashville is not “taking” the developers property outright, it is demanding that they lose money in exchange for the city’s permission to develop, and if they do not want to do that, they can just kick into a slush fund to avoid the mandate. The courts have recognized these sorts of shenanigans before and have stated that a demand for a person to surrender a right in exchange for a permit is still an unconstitutional taking.
The Takings Clause exists because the Founders did not envision a country where governments could strong-arm private parties into paying for things the government did not care to pay for itself. The Supreme Court has made clear that the Fifth Amendment not only protects one from a physical taking, but also from governments that misuse the power of land-use regulation.
Supporters of the new law characterize it as an incentive-based approach, but the Beacon Center says it requires developers to comply as long as financial incentives are available, meaning they can’t opt out.
Braden Boucek is the director of litigation for the Beacon Center. Justin Owen, its president and CEO, is also licensed to practice law in Tennessee. The Beacon Center will work on the case with the Southeastern Legal Foundation in Atlanta.
Boucek previously worked as an assistant U.S. attorney and as a trial and appellate prosecutor for the State of Tennessee.
