Amcal Chico LLC v. Chico Unified Sch. Dist.

• Decision Date: 05 November 2020
• Docket Number: C087700
• Citation: 270 Cal.Rptr.3d 868,57 Cal.App.5th 122
• Court: California Court of Appeals Court of Appeals
• Parties: AMCAL CHICO LLC, Plaintiff and Appellant, v. CHICO UNIFIED SCHOOL DISTRICT, Defendant and Respondent.

57 Cal.App.5th 122

270 Cal.Rptr.3d 868

AMCAL CHICO LLC, Plaintiff and Appellant,

v.CHICO UNIFIED SCHOOL DISTRICT, Defendant and Respondent.

C087700

Court of Appeal, Third District, California.

Filed November 5, 2020

Cox, Castle & Nicholson and Kenneth B. Bley, Los Angeles, for Plaintiff and Appellant.

Orbach Huff Suarez + Henderson, Philip J. Henderson, Kimble R. Cook, Los Angeles, and Carolyn M. Aguilar, San Diego, for Defendant and Respondent.

Atkinson, Andelson, Loya, Ruud & Romo, Martin A. Hom, La Jolia, and Jennifer D. Cantrell for Coalition for Adequate School Housing as Amicus Curiae on behalf of Defendant and Respondent.

RAYE, P. J.

Education Code section 17620 authorizes public school districts to levy a fee against new residential developments in order to fund the construction or reconstruction of school facilities to accommodate the increase in students likely to accompany the new developments. In order to impose the fee, a school district must comply with Government Code section 66001, which requires that the district determine that (1) there is a reasonable relationship between the fee's use and the type of development on which the fee is imposed and (2) there is a reasonable relationship between the need for the school facilities for which the fees will be used and the residential development upon which the fee is imposed.¹

Plaintiff AMCAL Chico, LLC (AMCAL) constructed a dormitory complex that will house unmarried university students within the boundaries of defendant Chico Unified School District (the District). The District imposed school impact fees on the complex and AMCAL filed suit seeking a refund of the fees. The trial court granted the District's motion for summary judgment. AMCAL appeals, arguing the fees must be refunded because the District failed to comply with section 66001, the fee is an invalid special tax, and the fee is an improper taking. We shall affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

Mitigation Fee Act

Education Code section 17620 authorizes school districts to levy a fee against new residential construction within the boundaries of the school district for the purpose of funding the construction of school facilities. Every two years the State Allocation Board sets the maximum square foot rate for school impact developer fees the school district can assess. ( Gov. Code, § 65995, subd. (b)(3).) In February 2016 the State Allocation Board set the fee for new construction at $3.48 per square foot of assessable space.

The Mitigation Fee Act (§ 66000 et seq.) imposes limitations on a district's assessment of fees by requiring a reasonable relationship between the fees assessed and the impact of the type of development on the district's facilities. "In the context of school impact fees, the reasonable relationship standard can be satisfied by showing (1) the projected total amount of new housing expected to be built within the district; (2) the estimated number of students to be generated by the new housing; and (3) the estimated cost to provide the necessary school facilities for that approximate number of students. [Citations.] This showing may properly be derived from districtwide estimations concerning anticipated new residential development and impact on school facilities." ( Cresta Bella, LP v. Poway Unified School Dist. (2013) 218 Cal.App.4th 438, 446-447, 160 Cal.Rptr.3d 437 ( Cresta Bella ); Shapell Industries, Inc. v. Governing Board (1991) 1 Cal.App.4th 218, 235, 1 Cal.Rptr.2d 818 ( Shapell ).)

For a general fee applied to all new residential development, a site-specific showing is not required. Instead, this showing may be derived from districtwide estimations concerning new residential development and impact on school facilities. The school district is not required to evaluate the impact of a particular development project before imposing fees. Instead, the required nexus is established based on the justifiable imposition of fees on a class of development rather than particular projects. ( Cresta Bella, supra , 218 Cal.App.4th at p. 447, 160 Cal.Rptr.3d 437 ; Garrick Development Co. v. Hayward Unified School Dist. (1992) 3 Cal.App.4th 320, 334-335, 4 Cal.Rptr.2d 897 ( Garrick ).)

The District Fee Study

The District commissioned Koppel & Gruber Public Finance (Koppel & Gruber) to assist the District with creating a fee justification study to analyze future development and the corresponding impact on the District. Koppel & Gruber obtained new residential construction development information from the city planning department and projected the amount of new housing to be built over the next 10 years. The firm concluded future development would generate 2,894 new residential units.

Koppel & Gruber next calculated the potential number of students generated by the new construction. The firm considered property data from the assessor's office, including classification of all residential properties, and then calculated the student generation rate for both single-family and multi-family buildings. Koppel & Gruber compared the property data to the District's student addresses to determine the student numbers for both single-family and multi-family residences. The firm calculated the number of students that would be generated at each school grade based on that rate, multiplied by the anticipated number of new residential units to be constructed and calculated that 709 new students would be generated by new residential construction.

Koppel & Gruber calculated the cost to provide school facilities for the number of projected new students, concluding the District's existing facilities were inadequate to house new students from new residential construction. The firm estimated the costs of facilities per student and the impact of the anticipated students from new development and estimated the impact to be $4.22 per square foot of residential construction.

Following a presentation to the District and a public hearing, the District passed a resolution formally adopting the fee study. Although the fee study found an impact of $4.22 per square foot, the District imposed the statutory school fee of $3.48 on new residential construction.

AMCAL'S Project

AMCAL developed a "building intended to house college students" (the Project) within the boundaries of the District. The Project contains over 600 beds to be leased to students at the local state university. Renters must be 18 years old and enrolled in a degree program.

In December 2016 AMCAL provided a rationale for the District to exempt the Project from the school impact mitigation fees. AMCAL argued the facility would be rented by the bed, with locks on each bedroom and bathroom for security and privacy, furnished units, shuttle service to the campus, 12-month leases, and residential assistants to work with students. In addition, the physical layout of the building was tailored for students, not the general rental market.

However, the Project is not associated with any college, but is a private 173-unit, 216,476-square-foot residential apartment complex. The Project is zoned as "medium high density residential." AMCAL cannot refuse to rent to families with children.

In January 2017 AMCAL renewed its claim that the Project was exempt from school impact mitigation fees, but recognized they would have seven fulltime employees, which would result in a fee of $6,098 under the District's formula.

Fee Imposed by the District

Based on the fee justification study, the District assessed the Project at the residential fee rate, citing its zoning as a multi-family residential structure and not entitled to an exemption under Education Code section 17620, subdivision (a)(1) or Government Code sections 65995 through 65998. Under protest, AMCAL paid $537,576.50 in fees calculated at the residential rate of $3.48 per square foot in March 2017. AMCAL submitted a protest letter requesting the District provide documents supporting the imposition of the fees.

Subsequent Litigation

In May 2017 AMCAL filed a complaint alleging three causes of action: the District failed to comply with the Mitigation Fee Act; the fee constituted an invalid special tax because the fee exceeded the cost of the school facilities needed to mitigate the impact of the Project; and the imposition of the fee constituted an invalid taking because there was no nexus between the fee imposed and the impact of the Project. The District filed an answer.

The District and AMCAL both filed motions for summary judgment. The court denied both motions finding triable issues of material fact. The parties agreed to an in camera court trial and filed supplemental briefing in light of a recent decision in 1901 First Street Owner, LLC v. Tustin Unified School District (2018) 21 Cal.App.5th 1186, 231 Cal.Rptr.3d 84.

In May 2018, following a court trial, the court found "a facility housing college students, such as this one, is not a separate class of residential development. Rather a residential apartment building, such as this one, is a residential apartment building regardless of its present, or intended, occupants. Plaintiff's subjective classification does not make the residential apartment building less so for mitigation fee assessment purposes. [¶] Defendant's school fee justification study and its conclusion that a reasonable relationship exists between the projected new development within the Defendant's boundaries, together with Defendant's duty and responsibility to prepare for construction and/or reconstruction of school facilities to house potential additional elementary school, junior high school, and high school students, as a result of that new residential construction, was reasonable. Defendant has, therefore, met it burden under Government Code § 66001. As such, the Court concludes the mitigation fee assessed by the Defendant was proper."

The trial court subsequently issued a final judgment in favor of the District as stated in the ruling. The court also found pursuant to Shapell, supr...