After two years of litigation, Stanford University had dropped its challenge to a Santa Clara County law that requires residential developers to devote 16% of their new units to below-market-rate housing.

Stanford's decision concludes a protracted legal tussle between the county and Stanford over how much affordable housing the university needs to provide if and when it moves ahead with its campus expansion. The university filed its lawsuit in December 2018, just as it was moving ahead with an ambitious application for a new general use permit, which would have allowed Stanford to construct up to 3.5 million square feet of new development, including 2.275 million square feet of academic space.

While Stanford withdrew its application for a new permit in November 2019, its litigation against the inclusionary-housing ordinance proceeded. In December 2019, a federal district court judge upheld the county's ordinance and dismissed the suit. The ruling from U.S. District Court Judge Beth Labson Freeman also allowed Stanford to file an amended petition to support its claim that it has been unfairly singled out by the county, in violation of the equal protection clause of the U.S. and California constitutions.

While the county's inclusionary-housing ordinance had initially applied to Stanford land, the county Board of Supervisors approved on Oct. 6 a law that extends the policy to all land in unincorporated Santa Clara County. The county ultimately plans to also create an inclusionary-housing requirement for nonresidential development.

Jean McCown, Stanford's associate vice president for government and community relations, said that the county's October decision to expand the law to land outside of Stanford prompted the university to withdraw its legal challenge.

"The objection to the County ordinance in the lawsuit was that, as adopted previously, it applied to Stanford alone, and not to others in unincorporated county lands," McCown told his news organization in an email. "This fall, the County Board of Supervisors revised the ordinance so that it applies the same 16 percent affordability requirements to all landowners throughout the unincorporated county. Because the ordinance no longer singles out Stanford, the parties agreed the lawsuit was moot."

County leaders lauded Stanford's decision to withdraw its lawsuit. County Counsel James Williams said in the statement Friday that the county is "pleased with Stanford University's decision to withdraw its challenge to the County's housing regulations."

The county, he said, has an obligation to use the tools it has to alleviate the housing and affordability crisis. He characterized the ordinance as a tool designed to ensure that the university "does its part to alleviate the housing burden within its community."

"Stanford's decision recognizes the County's authority to legislate to ensure that the impacts of Stanford's development don't negatively impact the community," Williams said in a statement. "This is a win for the Stanford community and for all of us in the County fighting for housing solutions."

The county's recently approved ordinance applies to all developments with at least three residential units. It exempts certain types of projects, including student housing and accessory-dwelling units and it allows developers to build affordable-housing units off-site. It also gives developers the option of paying the county an in-lieu fee of $259,000 per required inclusionary unit rather than offering the unit as affordable housing.