November 24, 2025 - East Palo Alto, California -A California family can now build an accessory dwelling unit (ADU) on their property 
without shelling out a nearly $55,000 fee after the City settled a federal lawsuit challenging its extortionate “inclusionary zoning” ordinance. Wesley Yu sued the City of East Palo Alto after the City refused to grant a building permit unless he either dedicated his planned accessory dwelling unit to become affordable housing for the City or agreed to pay $54,891 in “in-lieu” fees.
“This settlement is a victory for the Yu family and their right to build a better life without unnecessary government interference,” said Austin Waisanen, an attorney at Pacific Legal Foundation, which represented Mr. Yu free of charge. “The City’s commitment to no longer imposing extortionate fees for some ADU projects is a step in the right direction. We will continue to fight for everyone’s property rights by challenging extortionate laws like these.”
The Yus wanted to build multi-generational housing to create space for their growing family and host visiting relatives. California law allowed them to split their property into two lots, and they planned to expand their small home and build an ADU on the newly created lot. However, the City’s inclusionary zoning law mandates that residential building projects with fewer than five units—like the Yus’ two-unit project—set aside one unit as affordable housing for the City or pay a hefty fee, known as an exaction.
Just last year, the U.S. Supreme Court reaffirmed that the government cannot require you to give up your property rights as a condition of accessing a government-issued permit.
Following Mr. Yu’s lawsuit, the City withdrew the fines it had initially charged and further amended its ordinance to exclude ADUs like theirs. In the future, the City will not impose in-lieu fees on residents who build projects as the Yu family did.
The case is Wesley Yu v. City of East Palo Alto, California.
About Pacific Legal Foundation
Pacific Legal Foundation is a national nonprofit law firm that defends Americans threatened by government overreach and abuse. Since our founding in 1973, we challenge the government when it violates individual liberty and constitutional rights. With active cases in 34 states plus Washington, D.C., PLF represents clients in state and federal courts, with 18 wins of 20 cases litigated at the U.S. Supreme Court.
Source: Pacific Legal Foundation
