Boatworks, LLC v. City of Alameda (2019) 35 Cal. App. 5th 290.

In 2014, the City of Alameda adopted updated Development Impact Fees pursuant to the Mitigation Fee Act (“MFA”), including fees for park acquisition and improvement.  A property owner/developer (“Boatworks”) timely filed a facial challenge to the park fee and the trial court ruled against the City on three grounds, rejecting the balance of the petitioner’s claims.  First, the fee included the estimated cost of lands which were given to the City by the United States Navy.  Second, in its inventory of existing parks (used to create the existing LOS standard), the City included facilities that were not open to the public for park purposes.  Third, the City included in its inventory of existing parks properties which were separately considered to be open space, a distinct land use from parks in the City’s General Plan.  The trial court ordered the City to excise and vacate the portions of the ordinance pertaining to the park fee.  The trial court also awarded attorney’s fees to the petitioner.  Both sides appealed, and the Court of Appeal mostly affirmed the trial court.

Regarding the cost of facilities included within the fee study, the City used a standard-based methodology, utilizing existing parks per capita and setting the fee to acquire additional park lands in proportion to new population growth.  Both the trial court and Court of Appeal concluded that the City committed error when it included within the cost of lands to be acquired lands it already owned or would acquire at no cost from the Navy.  The appellate court concluded that the City could not demonstrate the additional burden associated with new development.

The Court of Appeal also affirmed that the City committed error in its inventory of existing parks.  Two parks included in the inventory of existing facilities were not open to the public.  This had the effect of inflating the existing LOS for parks as measured against the then existing population. 

However, the appellate court reversed the trial court, where the latter had ruled against the City’s practice of including certain community open space lands (e.g. boat launch) as park lands.  While the City’s own planning documents distinguished open space from park lands, the Court found sufficient evidence to support the City’s inclusion of open space lands (with a discounted value compared to more conventional park lands).  The appellate court concluded that while a more detailed explanation in the fee study justifying the different treatment of open space lands would be desirable, there was sufficient evidence such that the City’s approval for MFA purposes was not an abuse of discretion.

In its cross-appeal, Boatworks argued that the City was precluded from using the fees to fix existing facilities.  However, the Legislature had amended the MFA to provide that fees could be used to rehabilitate existing facilities or to meet a general plan standard.  Based upon this code section, the Court of Appeal recognized that new residents could use existing facilities, and there was no statutory conflict in using fees from new development to rehabilitate existing facilities with recognized deficiencies.

Boatworks’s remaining argument complained of the City’s approach in 2014 in allocating costs for a major new sports facility differed from the allocation used by the City in 2001.  Boatworks argued that the City was required to explain why it used a different approach.  The Court of Appeal disagreed, concluding that nothing in the MFA required the City to remain wedded to the same plan for facilities as long as the City could establish a sufficient nexus between new growth and the fees when approving the updated fee.

As to the appropriate judicial remedy for an improper fee, the appellate court concluded that the trial court incorrectly ordered the City to rescind the portion of the ordinance relating to the park fee.  Procedurally, the trial court should have invalidated the fee, and not compelled the City to undertake the legislative act of rescinding its prior legislative approval as this would violate the separation of powers.

The final issue related to the trial court award of attorney’s fees to Boatworks ($558,052.50) pursuant to the private attorney general statute, Code of Civil Procedure section 1021.5.  Appellate courts allow significant deference to the trial court in considering all of the relevant factors in a fee award.  As the City partially prevailed, the City argued that the Court should remand the attorneys fee award to the trial court for a new calculation. However, the Court of Appeal found that the relief granted to the City was limited and declined to do so.  While Boatworks, as a developer, had a potential economic interest sufficient to justify the litigation, there was sufficient evidence before the trial court that the elimination of the fee would potentially benefit thousands of future homebuyers would be otherwise presumably have to absorb the cost.  Given the uncertainty that Boatworks would ever successfully develop its property (meaning it may never benefit from the voided fee), it was not an abuse of discretion for the trial court to not further reduce the award.

William Abbott is an attorney at Abbott & Kindermann, Inc.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or 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.