In many cities throughout California, developers must either include a certain percentage of affordable housing in large, new developments, or pay an in lieu fee, which is used to fund affordable housing construction elsewhere. Under this scheme, if you want a new condo tower to go up in San Francisco, San Jose, or West Hollywood, you either offer a few units at a below market rate or pay for those units to be built somewhere else. Many, many developers chose in lieu fees.
And there's nothing wrong with that, an appeals court in California ruled recently. The Court of Appeal for the Second Appellate District, Division One, rejected a West Hollywood developer's argument that such fees were an unconstitutional taking. The court's ruling comes a year after the California Supreme Court upheld a similar inclusionary housing scheme in San Jose.