Boatworks, LLC v. City of Alameda

• Decision Date: 15 May 2019
• Docket Number: A151919,A151063
• Parties: BOATWORKS, LLC, Plaintiff and Appellant, v. CITY OF ALAMEDA et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

35 Cal.App.5th 290

247 Cal.Rptr.3d 159

BOATWORKS, LLC, Plaintiff and Appellant,

v.CITY OF ALAMEDA et al., Defendants and Appellants.

A151063

A151919

Court of Appeal, First District, Division 4, California.

Filed May 15, 2019

Counsel for Appellants: Jarvis, Fay, Doporto & Gibson, Rick Jarvis, Oakland; and Janet C. Kern, City Attorney; Alan M. Cohen, Assistant City Attorney

Counsel for Respondents: Thomas D. Roth, San Francisco

TUCHER, J.

The Mitigation Fee Act ( Gov. Code, § 66000 et seq. )¹ authorizes local agencies to impose fees on a development project in order to defray the cost of public facilities needed to serve the growth caused by the project, as long as the fees are reasonably related to the burden caused by the development. ( §§ 66000, subd. (b), 66001 ; see Ehrlich v. City of Culver City (1996) 12 Cal.4th 854, 864-865, 50 Cal.Rptr.2d 242, 911 P.2d 429 ( Ehrlich ); Shapell Industries, Inc. v. Governing Board (1991) 1 Cal.App.4th 218, 234-235, 1 Cal.Rptr.2d 818 ( Shapell ).)

In 2014, the City of Alameda adopted an ordinance establishing fees it would impose as a condition for approving future development. Boatworks brought this facial challenge to the ordinance, alleging that the proposed fees for park facilities lack a reasonable relationship to the burden of future development and hence violate the Mitigation Fee Act.² The trial court concluded the fees are excessive and constitute invalid exactions in three respects: by imposing on new residents the purported cost of acquiring land for parks, although the City does not need to buy new parkland; by including in its inventory of current parks two parks that were not yet open; and by categorizing certain areas as parks rather than (less expensive) open space. The court rejected the remainder of Boatworks’s specific challenges. It ordered the City to excise and vacate the portions of the ordinance authorizing development impact fees for parks and recreation.

Both the City and Boatworks have appealed from the judgment. The City has also appealed a post-judgment order awarding attorney fees. We have consolidated the two appeals for purposes of decision. We conclude the trial court erred only in two respects: in ruling the City could not treat certain areas as parks, and in the form of the remedy it imposed.

I. BACKGROUND

The City of Alameda includes land at Alameda Point formerly owned by the United States Navy. After the Alameda Naval Air Station closed in 1997, the Navy transferred the majority of the property to the City at no cost for civilian use. The City plans to develop Alameda Point with residential units, commercial space, parks, and open space. Other areas of the City also have the potential for new development.

In 2014, the City updated its development fee ordinance, which had not changed since 2001. In preparation, it commissioned from Willdan Financial Service the "Development Impact Fee Update and Nexus Study" (the nexus study, or the study). The purpose of the study was to analyze the development impact fees needed to support development in the City through 2040, and the study became the basis for the fees the City later authorized.

To calculate new developments’ fair share of park facilities, the nexus study used the "existing inventory approach," which it explained "allocates costs based on the ratio of existing facilities to demand from existing development," with the goal that facilities will expand at the same rate as the population expands, preserving the current standard for park facilities. This was a multi-step process.

The study first made an inventory of the City’s park and recreational facilities, which encompassed approximately 157 acres of parkland and 24 acres of open space. It estimated the cost per acre for developing parkland and open space, setting the cost of acquiring land for park facilities at $ 1,437,000 per acre and the cost of parkland improvements and facilities at $ 529,800 per acre, for a total cost of almost $ 2 million per acre for active-recreation parkland. Because open space is less intensively developed than active-recreation parkland, the study assigned to open space acres only the cost of acquiring the land, and treated each acre of open space as the equivalent of approximately three-quarters of an acre of parkland.³

Based on these calculations, an inventory of existing parkland and open space, and the City’s population in 2013, the study concluded the existing standard was 2.4 acres of parkland per 1,000 residents.

The nexus study then calculated the cost of additional facilities that would be needed to maintain this standard. With the addition of 8,260 residents by 2040,⁴ an additional 19.82 acres of improved parkland would be needed to maintain the existing ratio of parkland to residents. At $ 2 million per acre, the study calculated a total cost of $ 39 million for park facilities to accommodate new development, a number that represents $ 28.5 million to acquire land for parks, plus $ 10.5 million to improve it. Based on its assumption of the number of residents who would live in each new unit, the study proposed a total park and recreation facilities fee per dwelling unit of $ 12,809 for single family homes and $ 9,149 for multifamily homes.

The nexus study stated that the City planned to use the park facilities fee revenue to "purchase parkland or construct improvements to add to the system of park and recreation facilities that serves new development." It included a preliminary list of planned park facilities, including the Alameda Point sports complex, Jean Sweeney Open Space Park construction, and Estuary Park athletic fields and park construction. The total project costs of those planned facilities was estimated to be $ 26.5 million, which would be fully funded by the park facilities fee. Additional facilities would also need to be identified to maintain the City’s existing parkland standard.

The City adopted Ordinance No. 3098, the Development Impact Fee Ordinance, on July 16, 2014 (the ordinance). The only component of the ordinance at issue here is parks and recreation. Citing the nexus study, the ordinance included a finding that there was a reasonable relationship between the need for new and improved park and recreation facilities and the type of development on which the fee would be imposed, since new residents would use parks and recreational facilities throughout the City, and that current service levels would fall if additional facilities were not provided. The ordinance set impact fees, of which $ 11,528 for single family homes or $ 9,149 for multifamily units was attributable to parks and recreation fees. The amount for single family homes is somewhat below the amount proposed in the nexus study, while the amount for multi-family units is exactly what the study proposed.

Boatworks brought a petition for writ of mandate and complaint for declaratory and injunctive relief, alleging the nexus study inflated the amount of parkland fees necessary to maintain the current level of service. The trial court agreed, finding the City violated the Mitigation Fee Act in three respects: it authorized fees to pay for the value of land the City already owned; its inventory of current parks—which established the current standard for parkland—included parks that were not yet open; and the inventory miscategorized three open space areas as parks. The court issued a writ of mandate directing the City to excise and vacate the portions of the ordinance that authorized development impact fees for parks and recreation.

II. DISCUSSION

A. Legal Landscape

The Mitigation Fee Act "was passed by the Legislature ‘in response to concerns among developers that local agencies were imposing development fees for purposes unrelated to development projects.’ " ( Ehrlich , supra , 12 Cal.4th at p. 864, 50 Cal.Rptr.2d 242, 911 P.2d 429.) It "embodies a statutory standard against which monetary exactions by local governments subject to its provisions are measured." ( Id . at p. 865, 50 Cal.Rptr.2d 242, 911 P.2d 429.) Section 66001 requires the agency to "[i]dentify the purpose of the fee," "[i]dentify the use to which the fee is to be put," "[d]etermine how there is a reasonable relationship between the fee’s use and the type of development project on which the fee is imposed," and "[d]etermine how there is a reasonable relationship between the need for the public facility and the type of development project on which the fee is imposed." ( § 66001, subd. (a), italics added.)

"While it is ‘only fair’ that the public at large should not be obliged to pay for the increased burden on public facilities caused by new development, the converse is equally reasonable: the developer must not be required to shoulder the entire burden of financing public facilities for all future users. ‘[T]o impose the burden on one property owner to an extent beyond his [or her] own use shifts the government’s burden unfairly to a private party ....’ [Citation.] It follows that facilities fees are justified only to the extent that they are limited to the cost of increased services made necessary by virtue of the development. [Citations.] The [public agency] imposing the fee must therefore show that a valid method was used for arriving at the fee in question, ‘one which established a reasonable relationship between the fee charged and the burden posed by the development.’ " ( Shapell , supra , 1 Cal.App.4th at pp. 234–235, 1 Cal.Rptr.2d 818.) However, the figures upon which the public agency relies will necessarily involve predictions regarding population trends and future building costs, and they need not be exact. ( Id . at p. 235, 1 Cal.Rptr.2d 818.) "As a practical matter it will not always be possible to fashion a precise accounting allocating the costs, and consequent benefits, of particular building projects to particular portions of the population. All that is required of the [agency] is that it demonstrate that development contributes to the need for...