Even though the case was initially argued in Los Angeles, legal experts predict developers in other cities such as San Francisco will follow the court's decision.
"They can go to the planning commission and say, 'Look, forget it. You can't apply that to us because of the Palmer decision," said Tim Iglesias with the University of San Francisco.
Since 1992, San Francisco has created affordable housing laws to address the city's housing shortage and high costs. Fifteen to 20 percent of new units built by a developer must be rented to people who qualify for affordable housing. But that could go away because of the Palmer/Sixth Street Properties vs. city of Los Angeles decision.
It is a victory for developers like James Nunemacher of Vanguard Properties. "I think developers in this town, in San Francisco, have not only gone to other cities but have not proceeded with any rental housing developments. Ninety-nine percent of the time they are going to be building for sale only."
This decision affects only rental units.
San Francisco board supervisor David Chiu has introduced legislation to force developers to pay a fee in lieu of building affordable housing.
"In a city like San Francisco which without affordable housing policies could very quickly become a city of the extremely wealthy," said Chiu.
The legislation must be approved by the full board and signed by Mayor Gavin Newsom.
In December, the board also approved a resolution urging the Legislature in Sacramento to draft a bill that would override the court's decision and protect affordable housing in cities across California.