By William Abbott and Jessica Melms

North Murrieta Community LLC v. City of Murrieta, 2020 Cal.App.LEXIS 496 (Cal.App.4th Dist. June 8, 2020).

Developers acquire protection from changing land use laws through vesting tentative maps or development agreements. In many situations, a development project may include vesting maps and a development agreement, and occasionally, these vesting tools may conflict with each other. The most recent vesting law case resolves the conflict between these two forms of protection in favor of the development agreement.

In July 1999, North Murrieta Community LLC, the Petitioner and master developer of a large development project called the Golden City Project (“the Project”), obtained approval for a vesting tentative map for a portion of the Project. The map locked in place fees the City could charge the developer until the vesting tentative map expired two years later. In March 2001, four months before the vesting tentative map expired, North Murrieta and the City entered into a Development Agreement covering the entire Project. Among other things, the Development Agreement extended the life of the tentative vesting map and extended most but not all of the benefits through the life of the vesting tentative map; maps which generally expire within 24 months of approval.

The agreement locked in place regulations and fees that the City could enforce against the developer for the term of the development agreement, but also allowed the City to impose new generally applicable fees on North Murrieta to mitigate the effects of development. In passing the Development Agreement, the City Council found that the agreement was “in the best interest of the City because it provides the construction of infrastructure needed to serve development in the area; allows the City to collect fees for operational costs for police and fire services…and allows the City to impose future mitigation fees on the Project if said fees are applied throughout the City.” Soon thereafter, the City passed the Western Riverside County Transportation Uniform Mitigation Fee Program Ordinance (“TUMF Ordinance”), which was designed to impose fees that would address effects not fully mitigated by fees or exactions in place when development projects were approved.

In 2017, a subsequent purchaser and developer of a portion of the Project made $541,497 in TUMF payments between July and October. A majority of these funds were transferred to the respondent, Western Riverside Council of Governments (WRCOG), with the city keeping only $244 in administrative fees. The master developer and North Murrieta protested the fees and North Murrieta brought a petition for writ of mandate on behalf of both parties. Petitioner requested that the trial court order a return of the payments, issue a declaration halting the TUMF fees until the vesting tentative map’s new extension expired in 2019, and issue a declaratory judgement that the fees could not be imposed on any lots within the Project until the Development Agreement expired in 2021.

The trial court denied the petition on the ground that the Development Agreement controlled and allowed the City to require TUMF payments on lots within the Project. Specifically, the Development Agreement provided that the City may impose new fees for development impact, provided that the fees apply citywide, are not enacted discriminatorily to apply to the subject development, and mitigate impacts that were not fully mitigated by the fees in existence at the time the Development Agreement was approved by the City. Petitioner did not deny the plain reading of the Development Agreement and it was undisputed that the TUMF was effective Citywide and did not discriminately apply to the developer. Since the City determined that it needed to impose additional mitigation fees, and those fees were in compliance with what the Development Agreement allowed, the trial court entered a judgement in favor of the City and WRCOG.

North Murrieta appealed, waiving the recovery of the City’s $244 in fees and sought recovery on the fees collected by WRCOG. Petitioner argued that the trial court erred by concluding the Development Agreement governed the rights of the parties and that instead, the vesting tentative map statutes provide a way of securing a developer’s rights beyond the reach of any development agreement.

When a local agency approves a vesting tentative map or enters into a development agreement, the builder is entitled to proceed on the project under the local rules, regulations, and ordinances in effect at the time of approval. Thus, obtaining a tentative vesting map or entering into an agreement allows a builder to rely on regulations that exist during the planning state when completing a long-term development project regardless of intervening changes in local regulation. Here, however, the City approved a vesting tentative map in 1999, and entered into the Development Agreement in 2001 affecting the same property.

When North Murrieta argued that the City was required to give force to the limits and fees conveyed through the vesting tentative map, all the way through March 2019, the Court held that they misstated the situation. Instead, the Court looked to whether a subsequent development agreement can alter the builder’s vested rights under the vesting tentative map. A tentative vesting map expires 24 months after its initial proposal unless extended by local ordinance up to an additional 12 months. This means that the map and North Murrieta’s rights were set to expire in July 2001, 24 months after the vesting tentative map’s approval in July 1999. Without the Development Agreement which extended the vesting tentative map for 15 years, North Murrieta was four months away from losing all of the rights conferred through the vesting tentative map.

In other words, Petitioner was able to retain at least some of the rights that were originally conferred in 1999 through the vesting tentative map for an additional 15-20 years, but only through the extension granted in the Development Agreement. The Agreement clearly stated that the City did not extend all the rights originally conveyed by the vesting tentative map. Instead both parties made concessions, including allowing the City to impose new mitigation fees under certain conditions.

In rejecting North Murrieta’s argument, the appellate court noted that North Murrieta offered no authority for thinking that vesting tentative maps have special rights which cannot be negotiated away. Nor did Appellant offer any reason for thinking development agreements should be treated differently than other contractual agreements. Accordingly, the Court of Appeal affirmed, ruling in favor of the city and WRCOG that the Development Agreement controlled, and the vesting tentative map had limited rights beneath it.

William Abbott is Of Counsel at Abbott & Kindermann, Inc. Jessica Melms is a law clerk at Abbott and 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.