We're not going to dwell all that much on the California Court of Appeal's recent opinion in Discovery Builders, Inc. v. City of Oakland, No. A164315 (June 22, 2023), mostly because it seems entirely predictable.
The developer thought it had an agreement with the city to pay certain fees (dare we say "exactions") the city required in order to approve and provide what the court calls "project oversight." The contract "provided that the fees set forth in the agreement satisfied 'all of the Developer's obligations for fees due to the City for the Project.'" Slip op. at 1. You know where this is headed, don't you?
That's right, eleven years later while the project was still underway, the city adopted new ordinances imposing new impact fees. When the developer sought additional building permits ... no permit without paying the additional exactions. The trial court thought the contract took care of that issue, and ordered that the city could not impose any new fees beyond what it had agreed to impose.
The court of appeal made short work of that, and held (as you probably predicted) that the city's agreement was pretty worthless because the new fees were a valid exercise of police power, and "the government may not contract away its right to exercise the police power in the future." Slip op. at 12. Against public policy, etc etc. You know the vibe.
"We trusted you," and "we had a deal," don't go very far when it comes down it it, and anyone who thinks they can actually hold the government to what it agrees to has a reckoning coming if the government chooses not to honor its agreement. As Chief Justice Roberts noted in a different context: what chumps!
We're not suggesting that the developer here was in fact a chump. We feel for you -- you should be able to trust the government. But alas, no, the courts are just fine with treating those who rely on the government's promises like suckers for believing it.
Anyway, this one can't be too much of a surprise.
Discovery Builders, Inc. v. City of Oakland, No. A164315 (Cal. Ct. App. June 22, 2023)
