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Plan area, and development practices that had removed one-third of the affordable housing in the Plan area. The Specific Plan required that 15 percent of new units be affordable or that an in-lieu fee— calculated as the cost equivalent of building the units — be paid. Where low-income units had been demolished on the site, the Specific Plan alternatively required that they be replaced. In Palmer's case, this resulted in an inclusionary requirement of about 18 percent. The Plan offered density bonuses and other development incentives (not accepted by Palmer) in exchange for the affordable units. In Palmer, the City asserted that its inclusionary requirements were land use controls rather than rent controls governing the entire rental housing market—a defense rejected by the Court of Appeal. While not disagreeing that the requirements (imposed through a specific plan) were land use controls, the Court found that so long as the requirements-estrict rents, they must comply with State rent control statutes.l7 Since both the inclusionary requirement and the in-lieu fee were found in Palmer to be preempted by State law as applied to a rental project, clearly the "land use control" model can no longer be used to require affordable rental units. This will have a major impact on inclusionary housing practice, because of the inclusionary units surveyed in 2007, 71 percent were rentals.'8 While the land-use theory may retain some validity for units offered for sale, the Patterson case (discussed in the next section) has made it questionable whether in-lieu fees can avoid analysis as impact fees. B. Inclusionary Ordinances as Exactions The development community and many published analyses of inclusionary zoning have " In particular, the Court held that the inclusionary provisions must comply with Civil Code Sections 1954.51 — 1954.535 (Costa Hawkins Act). The case is discussed in detail below. NPH 2007,supra note 3,at 15. 6 990051A1 A7203723 8/72009