Agenda - 03-21-1990 - Laserfiche WebLink

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170 LAND USE AND ENVIRONMENT [26] persp:ctive, provided that the cost of inclusionary obligation is sufficiently offset by benefits to keep housing developments profitable. But what do practicing lawyers tell their developer clients who inquire about the legality of any specific inclusionary scheme? Can it be said that it is legal if a profit can be made building under it and that it is illegal if it is impossible to make a reasonable profit? Must lawyers go to court with witnesses who pretend to have a complete understanding of the housing market and try to prove the impossibility of profit on some theoretical basis? If it is theoretically possible to make some profit if the price of the land is reduced below the client's costs, what defense is there against the allegation that the clients overpaid for the land? Or must lawyers be safe and practical and tell their clients that no given inclusionary scheme is likely to be invalidated until some rea- sonable number of developers who have received their land as gifts have attempted diligently and efficiently to build under it and have gone bankrupt? Neither the enabling legislation in California nor the New Jersey Supreme Court meaningfully addresses the issue of to what extent an inclusionary obligation cost must be balanced by benefit values. It is not sufficient, in the real world, to set as a standard for the validity of a complex economic technique merely that it works or results in a profit. Typical exclusionary . municipalities in New Jersey, at least, will not resist the tempta- tion of conducting allegedly bona fide experiments designed to test the limits of profitability in the hope that while economists argue no housing will be built. Conclusion: The Need for Standards to Ensure Sufficient Compensating Benefits Inclusionary set-aside Ordinances work well without the kind of pressures on the free-market system that are likely to squeeze landowners, builders, or free-market home buyers in munici- palities like Utopia, which provides compensating benefits that have a value that exceeds the cost of the inclusionary obligation. In the real world, however, local government, acting with legal advice, will be tempted to withhold benefits as long as it is satisfied that a home'builder can make some profits if he buys the land at the correct 'tiiiireciated value. This practice is exceed- ingly likely to generate litigation and a perception that the entire ;i4. . n�te,6 .'r14''�. .h:., ... r. Y..00,1 ;r�,.. — , r414,„ w '✓ r '473' ■