DOWNTOWN LOS ANGELES - One of Downtown’s biggest developers has won a court case challenging the city’s affordable housing law. It could deliver a damaging and precedent-setting blow to Mayor Antonio Villaraigosa’s efforts to increase the city’s low-income rental housing stock.

Geoff Palmer, known for his Italian villa-inspired apartment buildings in City West, sued the city in February 2007 to avoid having to include below-market rate rents in his upcoming 350-unit Piero II project. The city requires developers in City West either to price 15% of the residences in each project for low-income workers, or pay for the city to build the units elsewhere.

A Superior Court judge ruled in Palmer’s favor in December 2007. The city appealed the ruling. In a decision filed Wednesday, July 22, the state Court of Appeal also ruled in favor of Palmer.

While the December ruling applied only to Palmer’s specific case, the appellate court ruling is precedent setting, according to Palmer’s lawyer, Jeffrey Lee Costell of Costell & Cornelius Law, and other attorneys. That means that Palmer’s victory could open the door to further affordable housing challenges, they say.

Palmer, in an email after the decision, called his victory a “landmark case” that “should end the Mayor’s wrong headed affordable initiative and help reverse mandatory inclusionary housing ordinances wrongly adopted state wide.”

Villaraigosa’s office was not able Thursday morning to provide a comment.

Last September, Villaraigosa announced an ambitious $5 billion plan to create more affordable housing throughout Los Angeles. Though only a fraction of the necessary funds are in place, one key element of the proposal is already in the works: the Mixed Income Ordinance. The measure, similar to a previous, failed proposal known as the Inclusionary Zoning Ordinance, would be similar to the City West requirement, but would apply to housing projects citywide.

Attorney Barbara Kautz of the Oakland-based Goldfarb & Lipman, who is consulting with the city on the proposed Mixed Income Ordinance, said during a May hearing at City Hall that Palmer’s case, if successful, could prevent the city from applying the measure to rental housing.

“It could affect a lot how the Mixed Income Ordinance gets structured,” she said at the time.

Kautz was not available for comment Thursday morning. Her colleague, Thomas Webber, said he could not discuss the case until he had time to further study the Court of Appeals ruling.

City planning officials have said that they expect to present a few possible versions of the Mixed Income Ordinance to the City Council’s Housing and Planning committees in September. An actual ordinance might not come until more than a year after that, said Planning Director Gail Goldberg.

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