California County Fines Man $120,000 for Refusing to Evict a Family From His Property

Plus, a look at Rep. Alexandria Ocasio-Cortez and Sen. Tina Smith's plan to resurrect public housing in America.

Happy Tuesday and welcome to another edition of Rent Free.

Our lead story this week looks at a darkly ironic case out of California, where government overregulation has created a housing cost crisis; government officials are penalizing a winery owner for trying to solve that cost crisis for his employee.

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Santa Clara Winery Owner Fined $120,000 For Letting Employee Live on His Property

Hundreds of people live in trailers and campers on the streets of Santa Clara County, California—a very visible sign of the ultra-expensive county's homelessness crisis.

Despite the scale of vehicular homelessness in the county, county officials have spent years focusing their enforcement actions on a single trailer parked on private property.

For years now, winery owner Michael Ballard has allowed his longtime vineyard manager, Marcelino Martinez, and his family to live rent-free in a trailer parked on the winery's property.

County officials say this violates a county ordinance prohibiting recreational vehicles (RVs) parked on residential parcels from being used as dwelling units. Therefore, Martinez's trailer has got to go.

Ballard has been trying to fix the violation by building a permanent home for Martinez and his family on the property. But getting all the needed permits from the county for that home has taken years.

In the interim, Ballard has refused to evict Martinez's family from the property.

"I'm not going to remove this trailer because that will cause them to be homeless and I'd be putting this family on the street and I'm not going to do that," Ballard tells Reason.

In response, the county has issued Ballard daily fines for every day he refuses to remove the trailer. These fines total some $120,000.

Ballard is now suing the county in federal court, arguing the fines violate the U.S. Constitution's prohibition on excessive fines.

Background

Ballard and his wife have owned and operated the Savannah-Chanelle Vineyards since the late 1990s. For almost all that time, he's employed Martinez as his vineyard manager.

In 2013, Martinez asked Ballard if he'd be able to move a trailer he owned onto the winery property and live there with his family. Ballard, aware of Martinez's limited options for finding housing in the ultra-expensive county, agreed.

Average home prices in Santa Clara County are $1.5 million today, according to Zillow. The median apartment rents for $3,200.

According to the county's 2023 Point-in-Time count, 9,903 people are homeless in Santa Clara County—which includes the city of San Jose and other pricy Silicon Valley communities. Nearly 10 percent of the county's homeless population lives in campers or RVs.

For several years, Martinez and his family lived on Ballard's property, where Ballard and his wife also live, without incident.

But in 2017, a county code enforcement official, while conducting an inspection of the Ballard's property, noticed the trailer. A couple of weeks later, Ballard received a letter saying he had to either remove the trailer or evict Martinez and his family from it.

Coming Into Compliance

Neither option was acceptable to Ballard.

Kicking Martinez off the property "would force him to leave the area entirely. That would result in him losing his job here, his kids having to leave school," he says. "I knew that would be traumatic for the Martinez family."

At first, Ballard tried to get permits that would legalize Martinez's RV but the county wouldn't budge—citing its ban on using RVs as dwelling units on residential land.

Next, Ballard sought to build an accessory dwelling unit on the property for Martinez that would serve as a legal alternative for his trailer.

The county did not make that easy either. Ballard applied for the needed permits for the ADU and a septic system in May 2019. While that application was being processed, COVID hit, leading to the shutdown of Ballard's winery and the county permitting office.

It wasn't until October 2022 that Ballard eventually received his entitlements for the ADU. He's still waiting on some final county approvals of a fire suppression system before Martinez and his family can move into it.

And while Ballard was waiting on his permits for the ADU, the county kept issuing him fines for every day that Martinez and his family lived in the trailer on the winery property.

Excessive Fines

As he was building the ADU, Ballard also used the county's administrative process to challenge the fines he was being hit with. That resulted in his daily fines being reduced from $1,000 a day to $100, but no other relief was forthcoming.

He's now suing the county in federal court.

"The lawsuit is to ensure the many constitutional issues with what has happened to the Ballards are put front and center where they belong," says Paul Avelar, an attorney for the Institute for Justice, the public interest law firm representing Ballard.

Avelar doesn't contest that Ballard violated county ordinances by letting Martinez and his family live permanently in a trailer on his property. But he argues that the fines Ballard received are totally disproportional to any damage that's been done.

Ballard's complaint argues that the fines he's received violate the Eighth Amendment to the U.S. Constitution's prohibition on excessive fines. The lawsuit also argues that the county administrative process by which the fines were imposed on Ballard violates his rights to due process and a trial by jury.

"The trailer wasn't harming anyone and the Ballards were only acting out of good intentions," says Avelar. "This $120,000 fine is the result of really just one violation. It's only by treating every day as a new violation that you get to this ridiculous number."

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The Return of Public Housing?

This past week, Rep. Alexandria Ocasio-Cortez (D–N.Y.) and Sen. Tina Smith (D–Minn.) introduced the Homes Act which would resurrect the federal government's role as a housing developer.

Their bill would create a national housing development authority tasked with building and operating affordable housing across the country, where most units would be reserved for low-income residents.

At a panel discussion on the bill hosted by the Center for American Progress (CAP), Ocasio-Cortez and Smith pitched the bill as creating a "social housing" alternative to "privatized" real estate development that would integrate society along class lines.

While Ocasio-Cortez did criticize zoning restrictions during her remarks, she seemed ambivalent about the idea that high housing costs were fundamentally a problem of excessive regulation limiting supply. "There are narratives that are pro-building that are straight from a lobbyist's playbook," she said.

Likewise, Smith said that zoning reform in her backyard of Minneapolis had underperformed because it still depended on private developers to build homes.

Public housing has a bad reputation in the U.S. for a reason. High operating costs and capped rents have left most remaining public housing developments with massive maintenance backlogs. The public housing authorities that operate this housing are well-known for mismanagement and corruption.

The Homes Act seems almost designed to replicate this result.

The government-owned homes authorized by the bill have would be built and maintained with union labor, come with strong tenant protections, and be built to the highest environmental standards. This all would raise construction and operating costs.

Meanwhile, the bill would cap rents at 25 percent of tenants' income—which is lower than the 30 percent cap at public housing and most other affordable housing programs.

In short, the bill calls for public housing that costs more and takes in less in rent than existing public housing. Ensuring new Homes Act units don't fall into disrepair would require sustained public subsidies.

Ocasio-Cortez said at the CAP event that opening up Homes Act units to people of all incomes would build political support for government-owned housing. But it's not clear why middle- and higher-income earners would opt to live in public housing if they have other options available to them.

The chances that Congress would eagerly embrace a resurrection of public housing are low. The Homes Act seems more like a messaging bill than anything else. Nevertheless, the message it's spreading is not a good one.

Quick Hits

• The California state government is warning the city of Norwalk that if it doesn't repeal its ban on new homeless shelters and transitional housing, it risks a state lawsuit and the loss of state funds.
• Speaking of which, California Gov. Gavin Newsom signed a package of new housing bills this past week, including changes to the state's "builder's remedy," enhanced penalties for local governments block new housing, and modest changes to how impact fees on new development are levied. (See next week's newsletter for a more comprehensive breakdown of the state's new housing laws.)
• A new report on the United Kingdom's failure to build.
• Pittsburgh debates expanding inclusionary zoning requirements—which mandate developers include money-losing, below-market-rate units in new housing projects—to more areas of the city.
• American Enterprise Institute's Edward Pinto writes in The Wall Street Journal about Kamala Harris' plan for more housing shortages.