3 Cal. App. 5th 621
Cal. Ct. App.2016Background
- Croft (developers of 612–616 N. Croft Ave.) applied in 2004 to demolish two houses and build an 11‑unit residential project in West Hollywood; the City conditioned permit approvals on compliance with its inclusionary housing ordinance (WHMC § 19.22) or payment of an in‑lieu fee.
- City approved permits in 2005 with expiration and renewal conditions; Croft executed acceptance affidavits and later sought extensions as the project was delayed by economic downturn; the City updated its fee schedule during the lapse.
- In 2011 Croft requested building permits, paid $581,651.15 in assorted fees (including an in‑lieu affordable housing fee that had nearly doubled since 2005) "under protest" and demanded administrative information; the City did not provide clarity on administrative appeal rights.
- Croft filed suit (multiple causes of action) challenging the fees as facially unconstitutional under the Nollan/Dolan takings line, violating the Mitigation Fee Act, and seeking refunds; the City Council held an administrative hearing and upheld most fees; the trial court denied mandamus and Croft appealed.
- The Court of Appeal reviewed facial issues de novo and as‑applied claims for substantial evidence in the administrative record, and affirmed the judgment for the City.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Facial takings/due process challenge under Nollan/Dolan to the inclusionary ordinance and in‑lieu fee | Croft: fee is an unconstitutional exaction requiring Nollan/Dolan nexus and rough proportionality | City: inclusionary requirement and in‑lieu fee are land‑use regulation, not an exaction; therefore Nollan/Dolan do not apply | Held: facial Nollan/Dolan challenge is time‑barred and, on the merits, San Jose controls — ordinance is a land‑use regulation, not an exaction; no takings violation |
| As‑applied burden and reasonableness of individual fee | Croft: City must prove the fee charged Croft was reasonably related to the project’s impact; City failed that burden | City: Mitigation Fee Act and state constitutional provisions do not shift burden here; petitioner bears burden to show invalidity; the fee addresses general affordable‑housing needs, not project‑specific impacts | Held: Croft bears burden; reasonableness inquiry targets the fee schedule’s relation to overall housing needs (not dollar‑for‑dollar project impact); Croft offered no proper as‑applied proof |
| Parks and recreation fee calculation (total vs. net units) | Croft: fee should be calculated on net increase (9 units) because two units were demolished | City: statutory basis (Gov. Code § 66477) requires density based on the approved map (total resulting units) | Held: City’s calculation using total resulting units upheld as statutory and reasonable |
| Timing of fee collection (too early) | Croft: collection occurred prematurely; Gov. Code § 66007 limits demand until final inspection or certificate of occupancy | City: in‑lieu fee not governed by the Mitigation Fee Act timing restriction; parks fee can be collected earlier to reimburse prior expenditures | Held: timing upheld — in‑lieu fee not subject to § 66007; parks fee collection supported by City Council finding that fees reimbursed prior park renovations |
Key Cases Cited
- Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) (establishes nexus requirement for exactions)
- Dolan v. City of Tigard, 512 U.S. 374 (1994) (establishes rough proportionality for land‑use exactions)
- California Building Indus. Assn. v. City of San Jose, 61 Cal.4th 435 (2015) (inclusionary housing ordinance is a land‑use regulation, not an exaction)
- Sterling Park, L.P. v. City of Palo Alto, 57 Cal.4th 1193 (2013) (discusses when conditions may be exactions; distinguished by San Jose)
- San Remo Hotel v. City & County of San Francisco, 27 Cal.4th 643 (2002) (application of Nollan/Dolan to individual exactions vs. generally applicable fees)
- Terminal Plaza Corp. v. City & County of San Francisco, 177 Cal.App.3d 892 (1986) (fees tied to conversion of housing not special taxes)
- Ehrlich v. City of Culver City, 12 Cal.4th 854 (1996) (application of Nollan/Dolan to individualized conditions)
- Travis v. County of Santa Cruz, 33 Cal.4th 757 (2004) (90‑day limitations period for attacking legislative land‑use decisions)
- MHC Operating Ltd. P’ship v. City of San Jose, 106 Cal.App.4th 204 (2003) (standard for reviewing administrative records in fee disputes)