Steven Greenhut writes for Human Events about the unintended impact of California’s housing rules.

California’s housing prices plummeted after the bubble burst in 2008, but now are approaching levels not seen since the market’s height – especially along the Southern California coast and around San Francisco Bay. This has reignited the perennial question: What should policy makers do to promote “affordable” housing?

Earlier this month, the state Supreme Court heard arguments in a Northern California case that could have statewide impact, given that it ponders the constitutionality of one way officials promote the construction of lower-cost housing. Whatever the court decides, it’s unlikely to have any noticeable effect on prices.

The issue is “inclusionary zoning.” In exchange for allowing builders to construct houses, officials require them to set aside a percentage of the new houses that would be sold at below-market rates.

In San Diego, homebuilders must sell at least 10 percent of their houses at reduced rates to people who meet an earnings formula. According to the code, “The intent is to ensure that when developing the limited supply of developable land, housing opportunities for persons of all income levels are provided.”

In San Jose, the subject of the court case, the city requires builders of more than 20 housing units to set aside 15 percent of them at these lower prices — or build 20 percent as low-income housing elsewhere in the city, or pay the city a fee of $122,000 for each “inclusionary” unit. The city requires the buyers of these reduced-price houses to sell them to other lower-income buyers in the future, or turn over price gains to the city.

The legal issue isn’t solely about housing, but about whether cities have unlimited power to extract concessions from homebuilders for things that are not “impacts” from the project. In other words, it’s legitimate for government to require new developments to pay to mitigate the effect of the new residents on local infrastructure (roads, sewers, fire service), but is it OK for cities to require affordable housing just because officials want to see more of it built?