Hamilton and High, LLC v. City of Palo Alto, 89 Cal.App.5th 528

Palo Alto established an "in-lieu" parking fee (ch. 16.57) to allow eligible downtown nonresidential developments to pay instead of providing required parking; fees are deposited in a separate University Avenue Parking In‑Lieu Fund.
Plaintiffs paid $972,000 (later adjusted to $906,900) in in‑lieu parking fees in December 2013 as a condition of approval for a mixed‑use project at 135 Hamilton Ave.
Govt. Code §66001(d) requires local agencies to make specified findings every five years for unexpended fee funds and mandates refunds if the findings are not made; §66006 requires related annual public accounting within 180 days after fiscal year end.
The City previously made five‑year findings for the parking fund (2009, 2014) but omitted the fund from January 2019 findings for the fiscal year ending June 30, 2018.
Plaintiffs demanded a refund (Jan. 2020); City denied (Feb. 24, 2020) and then adopted belated five‑year findings (May 11, 2020). Plaintiffs sued for writ/declatory/injunctive relief; trial court denied relief.
The Court of Appeal held the in‑lieu fee is covered by the Mitigation Fee Act, the refund claim was timely, untimely five‑year findings trigger the statutory refund remedy, and §65010(b) harmless‑error does not bar relief.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Applicability of Mitigation Fee Act to in‑lieu parking fees	In‑lieu fee is a "monetary exaction" imposed as condition of project approval and thus a §66000 fee	In‑lieu fee is elective/alternative to a use restriction and not a §66000 "fee" subject to the Act	Fee is a development fee under the Act; elective nature does not exclude it from §66000/§66001
Statute of limitations / accrual for refund claim	Claim accrues when refund request is denied (Feb. 24, 2020); suit filed May 2020 is timely	Argues shorter limitations (one year under El Dorado) or other bars	Cause of action accrued on denial of refund; plaintiffs filed timely regardless of 1/3/4‑year alternative periods
Remedy for untimely five‑year findings (remand vs refund)	Untimely/absent §66001(d) findings mandate refund under §66001(d)(2); remand is improper	City urges courts should remand to allow curative/late findings rather than impose forfeiture	Statute explicitly prescribes refund; untimely findings that fail to conform to law trigger refund remedy (no remand to cure)
Applicability of Gov. Code §65010(b) harmless‑error standard	§65010(b) does not apply to an action to enforce an express statutory refund remedy under §66001(d)	§65010(b) requires plaintiff to prove prejudice before court overturns agency action/inaction	§65010(b) (harmless‑error) does not override the specific refund mandate in §66001(d); prejudice showing not required for §66001(d) refund

Walker v. City of San Clemente, 239 Cal.App.4th 1350 (Cal. Ct. App.) (five‑year findings remedy under §66001(d) is refund; agency findings reviewed under ordinary mandamus)
Ehrlich v. City of Culver City, 12 Cal.4th 854 (Cal. 1996) (in‑lieu monetary exactions are subject to Mitigation Fee Act principles and reasonable‑relationship review)
San Remo Hotel L.P. v. City & County of San Francisco, 27 Cal.4th 643 (Cal. 2002) (applies Act/reasonable‑relationship standard to in‑lieu mitigation fees)
Sterling Park, L.P. v. City of Palo Alto, 57 Cal.4th 1193 (Cal. 2013) (in‑lieu payments and other exactions can be treated as exactions under Act; distinguishes use restrictions)
California Building Industry Assn. v. City of San Jose, 61 Cal.4th 435 (Cal. 2015) (distinguishes mitigation fees from land‑use use restrictions; fee must mitigate development's impacts)
County of El Dorado v. Superior Court, 42 Cal.App.5th 620 (Cal. Ct. App.) (addressed statute‑of‑limitations question for §66001(d) refund claims)
Koontz v. St. Johns River Water Management Dist., 570 U.S. 595 (U.S. 2013) (recognizes monetary exactions, including in‑lieu fees, are functionally equivalent to land‑use exactions)