San Jose's mandate that home builders either include affordable units in their projects or pay a fee will stand, after the U.S. Supreme Court on Monday declined to hear a challenge to the law.

In 2010, San Jose required that all new residential developments of 20 units or more set aside 15 percent of those units for sale below market rate. Developers could instead pay a fee in lieu of creating affordable units.

The California Building Industry Association sued, arguing that the ordinance amounted to an unconstitutional taking of property. Last year, the California Supreme Court upheld the law and the building association appealed to the U.S. Supreme Court, according to this report.

Many in the industry see the court's decision as a blow to residential builders. The Pacific Legal Foundation, which represented the building association, released a statement saying that law penalizes developers and raises overall home prices:

“As a practical matter, San Jose’s costly demands on home builders mean that fewer homes get built, and the price of market-rate homes goes up, squeezing more and more buyers out of the market. As a constitutional matter, there is no excuse for forcing property owners — in this case, the builders of new homes — to foot the bill for problems they didn’t cause, such as the affordable housing shortage.”

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