Hamilton & High LLC v. City of Palo Alto, H049425

CourtCalifornia Court of Appeals
PartiesHAMILTON AND HIGH LLC et al., Plaintiffs and Appellants, v. CITY OF PALO ALTO, et al., Defendants and Respondents.
Docket NumberH049425
Decision Date20 March 2023


HAMILTON AND HIGH LLC et al., Plaintiffs and Appellants,

CITY OF PALO ALTO, et al., Defendants and Respondents.


California Court of Appeals, Sixth District

March 20, 2023

Order Filed Date: 4/17/23

Santa Clara County Superior Court No. 20CV366967 Hon. Cynthia C. Lie Trial Judge

Counsel for Plaintiffs and Appellants Hamilton and High LLC, The Keenan Family Trust and Charles J. Keenan:

David P. Lanferman Rutan & Tucker, LLP

Counsel for Defendants and Respondents City of Palo Alto and City Council of the City of Palo Alto:

Rick W. Jarvis Jarvis Fay LLP Molly Stump Terence Howzell Office of the City Attorney, City of Palo Alto



It is ordered that the opinion filed on March 20, 2023, be modified as follows:

On page 44, in the first full paragraph, add a footnote at the end of the second sentence that reads: "As the City's adoption of the May 2020 five-year findings occurred more than one year after the end of the 180-day period, we have not been asked to and do not decide whether section 66001(d)(2)'s requirement that five-year findings be made "in connection with" the annual public information findings required by section 66006, subdivision (b), might be satisfied on different facts." Renumber all subsequent footnotes.

On page 44, in the first full paragraph, add two sentences at the end of the last sentence. The two sentences read: "The amount of the refund owed to plaintiffs, and the


manner in which the refund should be made (§§ 66001(d)(2), 66001, subd. (e)) are not before us. We leave determination of those issues to the trial court in the first instance."

On page 51, in the first full paragraph of the disposition, delete footnote 14.

There is no change in the judgment. The petition for rehearing is denied.


Danner, J.


In this appeal, we consider the application of the Mitigation Fee Act (Gov. Code, § 66000 et seq.[1] (Act)) to the City of Palo Alto (City or Palo Alto)'s refusal to refund “in-lieu parking fees” to plaintiffs, developers who paid the fees years earlier as a condition of approval of a building project. Plaintiffs contend the City failed to make certain five-year findings statutorily required by section 66001, subdivision (d), of the Act and is therefore required to refund their unexpended fees.

The City counters that the in-lieu parking fee, charged when the developer elects not to provide parking directly, is not a “fee” subject to the Mitigation Fee Act. Consequently, the City contends that the five-year finding and refund provisions set forth in section 66001, subdivision (d), do not apply, and the City has no obligation under the Act to return the fees.


In addition to this principal claim, the City makes a number of alternative arguments. It maintains that, even if the Act does apply, plaintiffs' claim for relief is barred by the statute of limitations and lacks a statutory basis. The City also contends that it complied with the Act's requirements by belatedly adopting five-year findings. Finally, the City asserts that plaintiffs have not satisfied section 65010, subdivision (b), a "harmless error" provision applicable to parts of the Government Code.

We conclude that the City's imposition of in-lieu parking fees in connection with plaintiffs' development project is subject to the Mitigation Fee Act, and plaintiffs' action is not time-barred. We decide that the City's failure to timely make five-year findings under section 66001, subdivision (d) with respect to the parking fund at issue triggers the refund provision of the Act for the unexpended parking fees paid by plaintiffs. Finally, we determine section 65010, subdivision (b), does not require that plaintiffs make an independent showing of prejudice for a violation of section 66001, subdivision (d).

We reverse the judgment of the trial court and remand with directions to enter a new judgment granting the mandate petition directing the refund of plaintiffs' unexpended fees in accordance with applicable statutory provisions, granting the cause of action for declaratory and injunctive relief, and dismissing the cause of action for equitable relief.


A. The City of Palo Alto In-Lieu Parking Fees and Parking Fund

In 1985, the Palo Alto City Council (city council) adopted an ordinance which established the "Commercial Downtown (CD)" zoning district and created detailed parking regulations set forth in the Palo Alto Municipal Code (municipal code or code). These regulations included "in-lieu parking provisions" (capitalization omitted). These


provisions allowed for "payment of an in-lieu monetary contribution to the city to defray the cost" of new, off-site parking spaces in an assessment district for "sites which would otherwise be precluded from development due to parking constraints." (Palo Alto Mun. Code, former § 18.48.100(d).)

In 1995, the city council adopted Ordinance No. 4256, which recognized the need to further address parking demand and mitigate insufficient parking facilities in downtown Palo Alto (downtown). Ordinance No. 4256 added chapter 16.57 to the municipal code to establish an in-lieu parking fee for new, nonresidential development in the "University Avenue parking assessment district" (capitalization omitted) as an alternative to satisfying downtown parking requirements. (Ordinance No. 4256, adopted Jan. 17, 1995, § 1B; see Palo Alto Mun. Code, ch. 16.57.) Ordinance No. 4256 provided that the purpose of the in-lieu parking fee was "to establish a mechanism for funding the provision of parking to serve new, nonresidential developments which are not able to meet the parking requirement" set forth in the code. (Ordinance No. 4256, § 1(E).) It specified that the in-lieu fees are to "be used to finance the construction of new parking facilities to meet the increased parking demand caused by new nonresidential developments." (Id., § 1(F).)

The municipal code defines" '[f]ee'" for purposes of chapter 16.57 as "a payment in lieu of the provision of required parking spaces." (Palo Alto Mun. Code, ch. 16.57.020(d).) Chapter 16.57 creates a special fund, the "University Avenue parking assessment district in-lieu parking fund . . . into which all fees, and any interest thereon, shall be deposited" (parking fund). (Id., § 16.57.050.) The parking fund must "be maintained as a separated capital facilities account in a manner to avoid any commingling of the fees with other revenues, funds or accounts of the city." (Ibid.)

The City requires new, nonresidential development to provide off-street parking facilities "for new uses and enlargements of existing uses, proportional to the need created by each use, in order to alleviate traffic congestion." (Palo Alto Mun. Code,


§ 18.52.010.) The code establishes minimum off-street parking requirements for the University Avenue parking assessment district. (Id., § 18.52.040) New commercial development in the University Avenue parking assessment district may meet these requirements by providing on-site or off-site parking spaces, or "by payment of an in-lieu monetary contribution to the [C]ity to defray the cost of providing such parking." (Id., § 18.52.070; see also id.,§ 16.57.010 et seq.) The option to pay the in-lieu parking fee is not available in all development scenarios but only where specified criteria exist due to site or other physical constraints. (Id., § 18.52.070(d).) In those cases, building permit applicants may "pay a fee for each required onsite parking space that they do not provide for their development projects, due to site constraints, in the Commercial Downtown (CD) district." (City of Palo Alto Office of the City Auditor, Audit of Parking Funds, Dec. 15, 2015.)

The City calculates in-lieu parking fees based on the projected cost of one new parking space, which includes land acquisition, construction, and administrative costs. The municipal code provides for the initial calculation and later recalculation (to reflect actual design costs based on an awarded construction contract) of the in-lieu parking fee. (Palo Alto Mun. Code, § 16.57.030(a), (b).)

The City's fiscal year "begin[s] on the first day of July each year and end[s] on the last day of June of the subsequent year." (Palo Alto Mun. Code, § 2.28.010.) The municipal code provides for annual review by the city council of the "uses proposed for expenditure of the moneys in the [parking] fund." (Id., § 16.57.070.) City staff has periodically submitted "five-year findings" on the parking fund, consistent with the Mitigation Fee Act's reporting requirements for development impact fees. (See generally § 66000 et seq.) However, the relevant chapter of the City's municipal code does not include a provision related to the five-year reporting requirement of section 66001, subdivision (d) (hereafter, section 66001(d)). (See Palo Alto Mun. Code, ch. 16.57.) As


plaintiffs' principal claims against the City are based on its alleged violation of section 66001(d), we examine the provision in detail below.

Following adoption of Ordinance No. 4256, in the fiscal year that ended on June 30, 1996, the City collected $231,400 in in-lieu parking fees. Between 1995 and 2003, the City collected over $1.6 million in such fees, which largely went toward the construction of two downtown parking garages. From 2003 through May 2012, the City did not collect in-lieu parking fees due to the availability of parking exemptions during that time. Between 2012 and 2015, in-lieu parking fees collected in connection with five development projects were paid into the parking fund. The collected fees totaled $4,455,750 and included plaintiffs' payment in 2013 of $972,000 (later reduced to $906,900). The parking fund had a positive balance of unexpended fees for the fiscal year that ended on June 30, 2014, through...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT