On February 22, California State Assembly Member Toni Atkins, D-San Diego, introduced a bill, AB 1229, to restore the ability of California cities and counties to require affordable housing as part of market-rate housing developments. The bill would override a notable 2009 court decision, Palmer/Sixth Street Properties, L.P. v. City of Los Angeles, 175 Cal.App.4th 1396 (“Palmer”), that rendered many inclusionary housing requirements unenforceable under California law.Continue Reading Questions & comments
Inclusionary Zoning: Superior Court Strikes Down City of San Jose's "Inclusionary Housing" Ordinance
This case has been reversed on appeal. The appellate decision will be the subject of a new post shortly.Questions & comments
(First published in the California Real Property Journal, a quarterly publication of the Real Property Law Section of the State Bar of California)
By Dave Lanferman
The quest to increase the supply of affordable housing has been an important public policy goal in California for decades. That goal, however, has proven to be elusive. Even during times of recession and depressed housing markets, housing in many parts of California has remained prohibitively expensive to moderate and lower income households. State and local governments have experimented with a wide variety of approaches intended to address this problem. One of the most prevalent of these is “inclusionary zoning.”
Trinity Park, L.P., et al. v. City of Sunnyvale, 2011 WL 1054221, __ Cal.App.4th ___, (6th Dist. 2011)
By Dave Lanferman
A California appellate court has ruled that the "pay-or-perform under protest" procedures of Government Code sections 66020 and 66021 do not apply to all types of development exactions. In its opinion, the Sixth Appellate District narrowed the scope of the statutory pay under protest provisions, and held that they should be interpreted so as to be available for review of exactions imposed by a local agency as a condition of development approval only if the exaction is "for the purpose of defraying all or a portion of the cost of public facilities related to the development project."
Home Builders Ass'n of Tulare/Kings Counties v. City of Lemoore, No. 07C0185 (5th Dist. June 9, 2010)
By David Lanferman
On June 9, 2010, a panel of the Court of Appeal for the Fifth Appellate District rejected challenges by a builders association to six out of seven "development fees" recently adopted by the City of Lemoore. The Mitigation Fee Act (Gov. Code §§ 66000 – 66025) requires that a local agency seeking to establish or impose development fees to finance public facilities must "identify" the new public facilities purportedly justifying the fees. Two justices held that the City had satisfied these statutory requirements by adopting a consultant's report that listed examples of the "types" of new facilities that the City may in the future decide to construct to accommodate growth from new developments, but the third justice wrote separately to question whether such lack of specificity complied with the statute.
Beutz v. County of Riverside, No. RIC457351 (4th Dist. May 26, 2010)
By David Lanferman & Michael Cato
In Beutz v. County of Riverside, No. RIC457351 (4th Dist. May 26, 2010), the California Court of Appeal held that a special assessment imposed by the County of Riverside was invalid because the engineer's report commissioned by the County failed to separate and quantify the general and special benefits to be realized from the public parks that were the subject of the special assessment district. By failing to both separate and quantify the general and special benefits, the agency failed to satisfy its two-part constitutional burden.
By James Pugh & Dave Lanferman
On October 22, 2009, the California Supreme Court decided not to review the Court of Appeal's decision in the landmark Palmer/Sixth Street Properties v. City of Los Angeles case. [See SMRH Blog 08/18/2009, for detailed discussion of Palmer decision.] This decision, although favorable for Palmer, could launch "inclusionary zoning" and similar affordable housing laws across the state into uncertain legal waters as municipalities attempt to enforce now-questionable inclusionary zoning requirements.
Weisblat, et al., v. City of San Diego, ___ Cal. App. 4th ____ (Aug. 18, 2009, No. D052787)
By Jeffrey W. Forrest and David P. Lanferman
In 1997, in an attempt to clarify the sometimes blurry distinction between a government “fee” and a government “tax,” the California Supreme Court explained that “taxes are imposed for revenue purposes, rather than in return for a specific benefit conferred or a privilege granted.” (Sinclair Paint Co. v. State Bd. of Equalization (1997) 15 Cal.4th 866, 874.) Recently, on August 18, 2009, California’s Court of Appeal for the Fourth Appellate District further clarified the distinction in Weisblat, et al., v. City of San Diego (Super. Ct. No. GIC871893). The issue was whether the City of San Diego’s “Tax Collection Fee” charged to landowners to cover the expense of collecting and administering the City’s rental unit business tax was, in fact, a general tax. The court held that it was a general tax because the purpose of the Tax Collection Fee was not to provide a government service to landlords (such as building inspection), but rather to facilitate the City’s general tax collection efforts (processing rental tax applications, answering taxpayer questions, and generating and mailing out billing statements to collect the rental tax). As a general tax, the court voided the Tax Collection Fee because the City Council levied it in 2004 without approval of a majority of qualified voters in the City as required by the California Constitution. The City’s underlying rental unit business tax, which was established in 1942 and generates $11 million annually, was not challenged and remains in effect.
New Law Automatically Extends Existing Tentative Maps For Two Years, But Also Creates New Pitfalls, And Reduces Some Protections For Recorded Maps
By David P. Lanferman & Jeffrey W. Forrest
On July 15, 2009, the Governor signed new "urgency" legislation to automatically extend the life of existing tentative subdivision maps, vesting tentative maps ("VTMs") and parcel maps for two additional years -- provided that they were still valid and in effect on July 15, and would otherwise expire before January 1, 2012. The new law, AB 333 (Fuentes) (Stats. 2009, ch. 18), included urgency provisions so that it took effect immediately upon signature by the Governor. The urgency of this measure, intended to preserve the many approved projects which were otherwise in danger of map expiration and loss of valuable rights, was apparently recognized so that it was able to receive the Governor's signature notwithstanding the hold on most other new legislation pending resolution of the State budget situation.
BIACC v. City of Patterson (2009) 171 Cal.App.4th 886
By David P. Lanferman
On June 17, 2009, the California Supreme Court denied the City of Patterson's petition for review of the Court of Appeals decision invalidating the City of Patterson's "affordable housing in lieu fees" and holding that the City violated a development agreement by demanding the new fees from the approved project. The Fifth Appellate District had initially issued its unanimous decision in January, holding that the City had failed to demonstrate that the amount of its new $22,000 per market-rate home fee was reasonably related to any deleterious impacts on the community's need for affordable housing. The appellate court later denied the City's petition for rehearing, slightly modified the text of its decision, and ordered the decision to be published in March. The Supreme Court's recent ruling means the decision now stands as "final" (at least as to the California judicial system).
Building Industry Association of Central California v. City of Patterson (2009) __ Cal App. 4th ____
By David P. Lanferman
The Court of Appeal for the Fifth Appellate District certified its decision in Building Industry Association of Central California v. City of Patterson for publication on March 2, 2009. The court had previously issued an opinion on Jan. 30, 2009, holding that the City of Patterson’s “affordable housing in lieu fee” was invalid, because the amount of the fee was not shown to be reasonably related to costs of the City’s affordable housing program attributable to new development, as required by the terms of a statutory development agreement between the City and the developer. (See previous Affordable Housing in Lieu Fees blog article). The City had increased the fee to $20,946 from its previous rate of $734 per new residential building permit. The development agreement with the homebuilder permitted the City to impose increased fees if they were “reasonably justified,” and the City argued that this language permitted the increased fees. The Court of Appeal held that (1) the contractual limitation incorporated the legal standards generally applicable to development impact fees and exactions; (2) the fees in this case were therefore not free from a “meaningful means ends review”; and (3) the City had failed to show that its new fees met those standards.
Continue Reading Questions & comments
Affordable Housing In Lieu Fees Must Be Shown To Be Reasonably Related, And Limited, To "Deleterious Impacts Of New Development" Like Other Development Fees
“Affordable housing in lieu fees” imposed by the City of Patterson on new residential development projects were invalidated by the California Court of Appeal for the Fifth Appellate District, in an unpublished decision issued on January 30, 2008. (Building Industry Association of Central California v. City of Patterson). The court unanimously held that the amount of the City’s housing in lieu fee (nearly $21,000 per home) was not calculated in conformity with “the legal standards generally applicable to development fees,” and that the fees were therefore not “reasonably justified” as required by the terms of a development agreement. The court invalidated the fee, awarded costs to the plaintiffs, and remanded the case to the lower court with directions to determine an appropriate remedy for the City’s imposition of unjustified and invalid fees.Continue Reading Questions & comments
Supreme Court Raises The Bar: Holds Prop. 218 Requires Court To Exercise Independent Judgment Regarding Validity Of Assessments And Places Burden Of Proof On Assessing Agency
Silicon Valley Taxpayers Ass’n v. Santa Clara County Open Space Authority (July 14, 2006, Case No. S136468) ___ Cal.4th ___.
The California Supreme Court declared that Proposition 218 “changed the law governing assessments” in this unanimous decision issued on July 14, 2008, and applied the “new law” to invalidate assessments levied by a special district to fund the acquisition of unspecified “open space.” The opinion lays out the new rules for the establishment, and judicial review, of assessments under the new substantive and procedural standards mandated by Proposition 218. Since these new requirements were added to the State constitution (Articles XIII C and D), the Court explained that the determination of the validity of an assessment “is now a constitutional question” subject to a more rigorous “independent judgment” standard of judicial review. The Court held that Prop. 218 shifted the burden of proof to the assessing agency. Then, applying its “independent judgment,” the Court found the agency had not met its burden of proof and these open space assessments were fatally deficient in at least two respects: (a) the assessments did not meet the new requirements that they be limited to “special benefits” enjoyed by the assessed properties; and (b) the assessments did not meet the new requirements that the amounts assessed to parcels be “proportional” to the special benefits conferred on the assessed properties.Continue Reading Questions & comments
New State Fees For Water Rights Permits and Licenses Unconstitutional Due To Failure To Demonstrate Reasonable "Proportionality" To Fee Payors
California Farm Bureau Federation et al. v. California State Water Resources Control Board, (January 17, 2007, C050289) __ Cal.App.4th__ http://www.courtinfo.ca.gov/opinions
The Court of Appeals for the Third Appellate District has declared that regulatory fee schedules adopted by the State Water Rights Control Board (“Board”) in 2003, imposing new annual fees on holders of water rights permits and licenses are unconstitutional and invalid. The decision was based largely on the court’s finding that the Board failed to demonstrate the requisite “proportionality” between the costs of the Board’s regulatory program and the fees imposed on the targeted fee payors, and addressed several important issues frequently raised in the implementation and litigation of regulatory fees.Continue Reading Questions & comments
California Supreme Court Permits Use Of Local Initiatives To Reduce Or Repeal Water Delivery Charges, But Such Initiatives May Not Require That Future Rate Increases Be Submitted For Voter Approval
Bighorn-Desert View Water Agency v. Verjil, (July 24, 2006, S127535) __ Cal.4th __
On July 24, the California Supreme Court unanimously held that the initiative power reserved to the voters by Article XIII C of the California Constitution permits use of an initiative to reduce or repeal water delivery charges, and suggested that this initiative power extends to all local government levies that are ordinarily understood to be fees or charges. However, the Court also held that XIII C does not permit such initiatives to require voter approval of future increases in those charges, and invalidated the particular initiative proposal on this basis. The Court's decision acknowledged concerns that recognition of the right of local voters to repeal or reduce governmental fees by initiative may result in fiscally irresponsible actions by voters, but invoked the presumption that governing boards and their voters will act reasonably and in good faith to reach financially and legally sound compromises on fee-setting actions.Continue Reading Questions & comments
Building Permit Fees: Considerations Raised by the Recent Cal. Supreme Court Decision in Barratt-American v. City of Rancho Cucamonga
The recent decision of the California Supreme Court in Barratt-American v. City of Rancho Cucamonga(37 Cal.Rptr.3d 149) [covered in an earlier update on this site] raises serious questions as to the way many jurisdictions calculate, collect, and apply fees from developers for building permits and building inspections. Back in 1993, the California Attorney General published an opinion which concluded that fees for building permits and inspections are required to be based on the actual or reasonable costs of providing such services, rather than on the value of the proposed construction or improvements [76 Ops.Cal.Atty.Gen. 4]. Nevertheless, many (perhaps most) cities and counties continue to charge building permit fees which are based on the valuation of the construction, rather than being based on staff time and costs of providing service. To the extent that such valuation-based fees may exceed the reasonable costs of providing those services, recent court decisions may now hold cities and counties accountable for the excess revenues collected.Continue Reading Questions & comments
In Barratt American, Inc. v. City of Rancho Cucamonga, the California Supreme Court clarified questions of procedure and potential remedies available in actions challenging building permit and inspection fees under the Mitigation Fee Act, California Government Code § 66000 et seq. (the "Act"). Appellant Barratt American had sued the City on the basis that its inspection and permit fees (1) exceeded the City's costs of providing building inspection services; and (2) the City was improperly accumulating excessive fee revenues from its building permit operations. The Court agreed with lower court holdings that, when building inspection and permit fees are at issue, the only statutory relief was an action for invalidation of the resolution pursuant to Gov. Code § 66022. However, the Court disagreed with lower courts that Barratt's action was barred by the 120-day statute of limitations applicable under § 66022, finding instead that the City's reenactment and minor modification of the building permit fee schedule started a new limitations period. Lastly, the Court held that, when building inspection and permit fees are at issue, the appropriate remedy under the Act was not a refund but rather to reduce the fees going forward.Continue Reading Questions & comments