Extending A Temporary Growth Control Plan Reopens The Statute of Limitations To Legal Challenges

By Glen Hansen

In Arcadia Development Co. v. City of Morgan Hill (2008) 169 Cal.App.4th 253, the California Court of Appeal, Sixth Appellate District, held that the extension of a temporary growth control ordinance restarts the running of the 90-day statute of limitations found in Government Code section 65009 to challenge the ordinance.

In Arcadia, voters in the City of Morgan Hill (“City”) passed Measure P in 1990, which amended the city’s general plan. Measure P was designed to concentrate residential growth toward the center of the city and prevent the outward sprawl that put excessive pressure on city services. Measure P introduced the Density Restriction. The properties subject to the Density Restriction were the properties outside of the city’s limit being considered for annexation by the Santa Clara County Local Agency Formation Commission (“LAFCo”) around the time Measure P was enacted. The Density Restriction limited development on these properties to the density allowed by the Santa Clara County general plan to which they would have been subject absent annexation, effectively preventing them from competing for housing allotments at the much greater density city’s zoning regulations would have allowed. Measure P was set to expire in 2010.

Plaintiff Arcadia Development Company owned an 80-acre parcel covered by the Density Restriction. Arcadia was awarded a housing allotment for an 11-acre subdivision of its parcel. The city approved Arcadia’s plans on condition that all further development of the remaining 69 acres was subject to the Density Restriction, which limited development to a maximum of one unit per 20 acres, or a total of four homes. Without the Density Restriction, Arcadia could have competed for housing allotments at a density of five units per acre, or approximately 345 homes. By the time Measure P took effect in December 1990, Arcadia’s property was, for all practical purposes, the only property to which the Density Restriction applied. 

In 2004, the voters passed Measure C, which extended the Density Restriction for 10 more years to 2020. Arcadia filed this action on the grounds that the Density Restriction unfairly singled out Arcadia’s property and was arbitrary and unreasonable. Arcadia also alleged that the Density Restriction was a prejudicial abuse of discretion and that Arcadia was entitled to inverse condemnation and damages for denial of equal protection and violation of civil rights. 

The trial court bifurcated the writ petition and equal protection liability provisions of Arcadia’s action from the remainder of its claims. After the trial of the first phase, the trial court issued a judgment that all of Arcadia’s claims are barred by the 90-day statute of limitations in Government Code section 65009. The trial court held that the statute of limitations began to run in 1990, when the original provisions were enacted. The 2004 reenactment did not restart the statute of limitations, the trial court held. The court of appeal disagreed and reversed. 

The appellate court held that under the circumstances of this case, the 2004 reenactment of the Density Restriction for 10 more years gave rise to a new cause of action that restarted the statute of limitations. The court stated that the city intended in 1990 that the Density Restriction would only be temporary.  The city's voters passed Measure P knowing that any extension of the Density Restriction beyond 2010 would be based upon then-existing circumstances.  Thus, the factual basis for the 2004 extension in Measure C was different than the factual basis for the original 1990 decision to enact Measure P. Also, extending the Density Restriction for 10 additional years increased the burden and impact of the restriction on Arcadia’s property. That impact, and the 2004 circumstances, must be considered in assessing the validity of the restriction under Arcadia’s equal protection and takings claims in the case. Accordingly, new causes of action arose upon the enactment of Measure C in 2004, which restarted the running of the 90-day statute of limitations. 

Glen Hansen is a senior associate at Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

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