By William W. Abbott
In 1986, the Legislature enacted the Mitigation Fee Act (“MFA”) (Government Code section 66000 et seq.) Supported by the building industry, this legislation was thought to operate as a limitation on the enactment of impact fees by local government, a practice which was gaining in momentum following the voter enacted Proposition 13 and the resulting chaos in local government funding. By providing express statutory recognition for impact fees, the Mitigation Fee Act, in this author’s opinion, inadvertently led to the significant expansion in the world of impact fees rather then operating as a brake. To the extent that a city or county was sitting on the fence as to whether or not it could adopt impact fees, that question was now clearly answered by the MFA. The result has been the widespread adoption of fees, with the creative juices of consultants testing the limits of what can be funded through fees (e.g. bullet proof vests for public safety staff.)
The latest case in impact fees, Homebuilders Association of Tulare/Kings Counties, Inc. v. City of Lemoore (2010) ____ Cal.App.4th ____, addresses a number of key issues part of the impact fee debate. The building association challenged a series of fees enacted by the City of Lemoore: community recreation, park land, police, municipal facilities, fire protection, and refuse vehicle/collection equipment. The lawsuit also challenged the City’s fee accounting practices. The trial court ruled favorably for the City on all claims except with respect to the conflict with the Quimby Act. The appellate court generally upheld the City’s fees, with the exception of the east side fire impact fee.
The appellate court first addressed the burden of proof. The court noted that while by statute the agency bears the initial burden of justifying its fees, the burden of proof ultimately falls on the fee challenger.
The first issue of substance was that of the community/recreation fee. The City used an approach of valuing the existing facilities, divided by the population, to create a cost per resident. Effectively, new growth had to maintain the existing value of recreational facilities (a fee calculating methodology referred to as “standard-based” as compared to “facility-based”.) The City’s plan generally described the types of facilities which could be constructed, but did not commit to specific facilities. The appellate court concurred in the City’s approach, noting that the Mitigation Fee Act gives local agencies discretion when identifying the facilities to be developed. The building association also argued that fees for recreation facilities were pre-empted by the Quimby Act. However, the Court viewed the purposes of the Quimby Act as preserving recreational opportunities for new subdivisions, whereas the City’s impact fees were designed to fund unique facilities of broader benefit, and therefore, were not pre-empted by the Quimby Act.
The petitioner also challenged the park land impact fee. The fee applied in part, to non-subdivision development. As such, the appellate court again rejected the Quimby Act pre-emption argument. The court, as it did with respect to the community/recreation fee claim, rejected the argument that a standard-based fee calculation was improper. The petitioner also argued that the City’s five acre per 1000 standard (allowed by the Act), was inconsistent with the three acres per 1000 set forth in the City’s general plan. In an analysis which is not entirely clear, the appellate court agreed with the City, that based upon the language of general plan, that five acres per 1000 was not inconsistent with three acres per 1000, and therefore could meet the requirement of consistency with the general plan.
The petitioner’s challenge to the public safety fee and municipal facilities fee was a challenge to the use of a standards-based calculation (no dilution in existing service levels.) Again, the appellate court held that the city’s fee report provided ample supportive documentation.
Where the appellate court agreed with the building association was with respect to the challenge to the City’s east side fire fee. The east side of the City was largely developed, and all required facilities were in place. The revenue from the fee was to be used to pay the City back for facilities already constructed by the City to serve the east side. On this issue, the appellate court held the fees to be invalid as they were enacted for general revenue purposes. At the same time, the court upheld the west side fire fee. The fee assumed that the City would eventually annex substantial acreage (an assumption which operated to lower the per-unit fee.) While the issue was not apparently expressly addressed in the fee study, the court concluded that a sufficient basis existed to support the fee, even without annexation.
The final category of fees challenged were fees for solid waste vehicles and equipment. Although the depreciation rate for these facilities is much more rapid then other types of facilities, this equipment still qualified as capital facilities.
The petitioner’s final challenge was to the City’s accounting practices. This argument was viewed as a recast of the debate over standards-based or facility-based fees. As the City was entitled to use broad facility descriptions when enacting the fees, a similar approach was sufficient when accounting for the fees.
Justice Ardaiz of the appellate court concurred in the result but expressed concerned over the nexus of broad community facilities (military museum) to new growth.
William W. Abbott is a partner 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.