This just in: in Trinity Park, L.P. v. City of Sunnyvale, No. H035573 (Mar. 24, 2011), the California Court of Appeal (6th District) held that the City’s approval of the property owner’s residential development, conditioned upon the developer reserving 12 1/2% of the units for sale at below the market rate, was not a “development fee, dedication, reservation or ‘other exaction’ within the meaning of [Cal.Gov’t Code §] 66020 where, as here, the affordable housing requirement was clearly not intended to ‘defra[y] all or a portion of the cost of public facilities related to the development project.'” Slip op. at 2.
The narrow issue in the case was the statute of limitations (statute of repose, if you want to be more technical). California law requires challenges to conditions on development permits to be made within 90 days, while challenges to development fees, dedications, reservations and “other exactions” must be brought within 180 days. The property owner didn’t, and the trial court dismissed the case (again, technically, sustained the demurrer), concluding the 90-day limitations period applied.
The Court of Appeal affirmed. The city asserted section 66020 was inapplicable because under that section, the property owner must seek a refund or return of the unlawful portion of the exaction, a remedy the city asserted it could not provide since the houses are now occupied by the below-market purchasers. The court didn’t really address this issue, but rather relied on amici who argued the city’s condition didn’t meet the statutory definition of “other exaction.” According to the court, the city’s affordable housing exact… — uh, condition — is not an “exaction” (despite the dictionary definition) since it was not used by the City to pay for the cost of public facilities related to the development project:
We do not rely on the dictionary definition of “exaction” because we believe, as we have discussed, that the statutory language of the relevant provisions of the Mitigation Fee Act and the legislative history of sections 66020 and 66021 show that the Legislature intended that the exactions that may be protested under the Mitigation Fee Act are those exactions imposed for the purpose of “defraying all or a portion of the cost of public facilities related to the development project.”
Slip op. at 29. The court distinguished Building Industry Ass’n of Central Cal. v. City of Patterson, No. F054785 (Cal. Ct. App. Mar 2, 2009) (a case we summarized here), a case in which the court held that the city’s increase in an in-lieu fee from $734 per house to nearly $21,000 per house was not “reasonably justified” under the statute. There was no dispute in that case, however, that the in-lieu fee was an “exaction.”
The lengthy opinion leaves us a little wanting. It goes into detail about what the city’s below market condition wasn’t meant to do (pay for the cost of public facilities related to the housing project), but doesn’t really explain what it was meant to do. Perhaps the court thought it obvious that it was meant to allow people who could not afford market rate housing to purchase a home in one of the most expensive markets in the country, but that does not address the question of whether the condition was otherwise allowable under the Nollan/Dolan standard. Perhaps the constitutional issue was present in the case, but if it was, it didn’t make an appearance in the opinion.