Bixel Associates v. City of Los Angeles, B037251

• Decision Date: 21 December 1989
• Docket Number: No. B037251,B037251
• Citation: 216 Cal.App.3d 1208,265 Cal.Rptr. 347
• Court: California Court of Appeals Court of Appeals
• Parties: BIXEL ASSOCIATES, Plaintiff, Cross-Defendant and Appellant, v. CITY OF LOS ANGELES et al., Defendants, Cross-Complainants and Respondents.

Page 347

265 Cal.Rptr. 347

216 Cal.App.3d 1208

BIXEL ASSOCIATES, Plaintiff, Cross-Defendant and Appellant, v. CITY OF LOS ANGELES et al., Defendants, Cross-Complainants and Respondents.

No. B037251.

Court of Appeal, Second District, Division 1, California.

Dec. 21, 1989.

Review Denied April 2, 1990.

Greenberg, Glusker, Fields, Claman & Machtinger, Norman H. Levine, Los Angeles, and Kathleen A. O'Brien, Sunland, for plaintiff, cross-defendant and appellant.

James K. Hahn, City Atty., Claudia McGee Henry, Sr. Asst. City Atty., Sharon Siedorf Cardenas, and Thomas A. Kathe, Deputy City Attys., for defendants, cross-complainants and respondents.

L. THAXTON HANSON, Associate Justice.

Plaintiff Bixel Associates, a partnership (hereinafter Bixel), filed a complaint seeking refund of a fire hydrant fee of $135,520 from the named defendants, the City of Los Angeles and its Department of Building and Safety (hereinafter City). City answered plaintiff's complaint and filed a cross-complaint for declaratory relief.

After discovery, both parties made motions for summary judgment. Upon conclusion of the hearing on the motions, the trial court took the matter under submission and ultimately awarded summary judgment to City. Plaintiff Bixel has filed a timely appeal. The parties agreed to proceed in this court by filing a Joint Appendix in Lieu of Clerk's Transcript, pursuant to California Rules of Court, rule 5.1.

INTRODUCTION

Plaintiff Bixel is the developer of the Transpacific Center, a 32-story office building at 1055 West 7th Street, in Los Angeles. The building has 586,884 square feet and a maximum occupancy of 5,869 persons, as well as parking for 1,178 cars. More than $1 million is being spent by the developer for an internal system of fire protection. The building permit was obtained from City for construction at a cost to the developer of $136,184.40, based on the $61.6 million total value assigned to the construction work. The developer also paid plan check fees of $97,798.20 and $17,958.54, for a total of $251,941.14. In addition, pursuant to Los Angeles Municipal Ordinance No. 160086 and as a condition of the issuance of the building permit, plaintiff Bixel's predecessor in interest The fire hydrant fee was paid under protest on March 20, 1986, and a claim for refund was made to the City on June 20, 1986. City neither granted nor denied the claim, and accordingly the claim was deemed rejected by City. (Los Angeles City Charter, § 363.) This action was then filed in the superior court.

was required to pay a fire hydrant fee of $135,520, representing .022 percent of the value of the work subject to the building permit fee.

To clarify the factual presentation, we explain that at issue is the constitutionality of the fire hydrant fee exacted from center's developer, a fee which was established by the enactment of two city ordinances, Ordinance No. 160086 and No. 160087 (the Fire Hydrant Fee Ordinances). The constitutionality of the fee has been challenged as violative of article XIIIA, section 4 of the California Constitution, certain sections of the Government Code enacted to implement articles XIIIA and XIIIB (constitutional amendments enacted by the voters and commonly known as Proposition 13), and the due process guarantees of both the federal and state constitutions.

Article XIIIA, section 4 of the California Constitution bars entities such as City from imposing "special taxes" unless they are approved by a vote of two-thirds of the electorate. However, there is an exception to the rule: local entities such as City, in the exercise of police power, may constitutionally impose "development" fees, which are not regarded as "special taxes" but are designed to compensate the public for any increased burden on public services which can reasonably be attributed to the new development in question. The fee imposed must "not exceed the reasonable cost of providing the service or regulatory activity for which the fee is charged and which is not levied for general revenue purposes." (Gov.Code, § 50076, Stats.1979, ch. 903, § 1; emphasis added; see also Russ Building Partnership v. City and County of San Francisco (1987) 199 Cal.App.3d 1496, 246 Cal.Rptr. 21, reprinted as directed by the California Supreme Court.)

FACTUAL SUMMARY

From the record made in the trial court and presented to us here, we glean the following: Prior to the enactment of the Fire Hydrant Fee Ordinances, the entire cost of the installation of fire hydrants and upgrading of water mains attributable to a new development project such as Bixel's building in the City was paid by the developer, rather than from the City's General Fund. When a developer sought a building permit for a new project, City required the developer to submit its plans to the City's Fire Department for review pursuant to the City's Fire Protection and Prevention Plan to determine the necessary fire hydrant and water main improvements to service the proposed project.

The plan referred to above specifies the minimum spacing between fire hydrants and the minimum water supply which must be available to the hydrants based on the estimated intensity and density of the particular area under review. Where additional hydrants and other changes were determined necessary, City's Fire Department would advise City's Department of Water and Power (DWP). The DWP would estimate the cost of installing additional fire hydrants, water mains, etc., and would require the developer to provide the sums needed to service his project.

This method of financing has been utilized in the past not only in Los Angeles but in many other cities. It has not been considered equitable because it placed a heavy burden on the first developer in a new area; often while a heavy burden was placed on the first developer, others who subsequently received the benefit of the increased services in a particular area did not bear an equal share of the cost.

Between 1974 and 1978, City's council conducted numerous studies and hearings to create a more equitable method of funding fire hydrants and mains to service new development. The council's efforts were not only favored by the large developers but by smaller entities--churches, schools and small developers--who were hardpressed to bear the individual cost of the hydrants and water mains sometimes necessitated In 1984 and 1985, at the council's request, the City's administrative office (CAO) made reports to council that ultimately formed the basis for the Fire Hydrant Ordinances method of financing. Taking the year 1983 as a year of normal building activity in the City (i.e., the so-called "snapshot" year), the determination was made, according to the declaration of Maria Nixon, a senior administrative analyst for City, that $4,288,620 had been spent in the City for fire hydrants and water main improvements. Taking this annual cost and dividing it by the total value of work authorized by the building permits from 1982 to 1984, an average resulting annual percentage was determined.

by their relatively inexpensive projects. In 1978, the voters enacted the initiative commonly known as Proposition 13, which, by constitutional amendment, placed very substantial limitations on the taxing powers of local governmental entities.

It is this percentage--ultimately placed at .022 percent (after excluding developments valued at under $50,000)--applied to the value of a proposed development--which determined the fire hydrant fee collected by the City from Bixel. In this manner it was intended that the cost of providing new services would be spread among all new developers; the fire hydrant fees collected from developers are placed in a fund separate and apart from general City revenues. City offered evidence by the affidavit of City Fire Inspector Charles Justis, in support of its motion for summary judgment, that all monies from the fund were being spent in a manner consistent with the City's Fire Protection and Prevention Plan.

The City council decided, during the course of this effort to change the existing financing method, to exempt any development where the total value of the work was under $50,000 because of the limited impact such projects historically have had on the fire hydrant and water main system, and the relatively heavy individual burden imposing the fee would place on small projects; statistically, it appears that while 85 percent of the building permits issued annually by City are for projects valued at less than $50,000 they comprise only 15 percent of the total value of the work for which building permits are annually issued. After public hearings, the Fire Hydrant Ordinances were adopted by the City council on June 28, 1985. Voter approval was not sought for the new financing scheme.

The ordinances added section 91.0204(h) to the LAMC. This section provides for the collection of the fire hydrant fee by the Department of Building and Safety on projects for which a building permit is issued and which exceed $50,000 in value. The section provides that the fee to be imposed is .022 percent of the value of the project as reflected in the building permit.

It contains the following language: "The Department of Building and Safety shall cause all money collected ... to be deposited into the 'Fire Hydrant Installation and Main Replacement Fund' described in Section 5.114 of the Los Angeles Administrative Code for purposes of disbursement as permitted therein...." (Emphasis added.)

Section 5.114 of the LAAC, in turn, provides that the money collected by the Fund is for use in "the initial installation of fire hydrants, fire hydrant upgrades, and upgrades, improvements or replacements of existing water mains consistent with the Safety Plan and Fire Protection Plan elements of the General Plan. The relocation of fire hydrants due to street improvements is not to be paid from the Fund." (Emphasis added.)

Our record contains the Fire Protection and...