Russ Bldg. Partnership v. City and County of San Francisco

• Citation: 244 Cal.Rptr. 682,44 Cal.3d 839,750 P.2d 324
• Court: United States State Supreme Court (California)
• Decision Date: 17 March 1988
• Parties: , 750 P.2d 324 RUSS BUILDING PARTNERSHIP, Plaintiff and Appellant, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant and Respondent. PACIFIC GATEWAY ASSOCIATES JOINT VENTURE, Plaintiff and Appellant, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant and Respondent. CROCKER NATIONAL BANK et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant and Respondent. S000156.

Page 682

244 Cal.Rptr. 682

44 Cal.3d 839, 750 P.2d 324

RUSS BUILDING PARTNERSHIP, Plaintiff and Appellant, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant and Respondent.

PACIFIC GATEWAY ASSOCIATES JOINT VENTURE, Plaintiff and Appellant, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant and Respondent.

CROCKER NATIONAL BANK et al., Plaintiffs and Appellants, v. CITY AND COUNTY OF SAN FRANCISCO, Defendant and Respondent.

S000156.

Supreme Court of California.

March 17, 1988.

James P. Bennett, Pillsbury, Madison & Sutro, San Francisco, for appellants Pacific Gateway and Crocker Nat. Bank.

Jerome B. Falk, Jr., Howard, Rice, Nemerovski et al., San Francisco, for respondent.

BROUSSARD, Associate Justice.

In this case we are called upon to decide whether San Francisco's Transit Impact Development Fee (TIDF) ordinance may be applied to projects which, at the time of the enactment, were in the course of construction pursuant to building permits conditioned on the developers' participation "in a downtown assessment district, or similar fair and appropriate mechanism, to provide funds for maintaining and augmenting transportation service...." We conclude that the condition encompasses the TIDF, and therefore hold that the TIDF may be imposed on the projects without impairing the developers' vested rights.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1979, plaintiffs Crocker National Bank and Crocker Properties, Inc. (Crocker) and Pacific Gateway Associates Joint Venture (Pacific) sought approval from defendant City and County of San Francisco (City) for the construction of two new office developments in the City's downtown area. As required under the California Environmental Quality Act (CEQA) (Pub. Resources Code, § 21000 et seq.), an environmental impact report (EIR) was prepared for each proposed project, detailing its probable impact on the downtown environment.

The draft EIR's revealed that the new office buildings would have an adverse impact on the San Francisco Municipal Railway system in the form of increased demand for public transportation downtown. That disclosure led to adverse public comment on the proposed projects, in response to which the developers proposed to mitigate the impact of their projects on the demand for transportation by participating in a transit funding mechanism if one were established by the City. ¹

The permit for Crocker's project was approved by the San Francisco Planning Commission's (Commission) Resolution No. 8332 on July 26, 1979; Pacific's permit was approved by Resolution No. 8378 on September 20, 1979. Each resolution contained the following language: "In recognition of the need for expanded transportation services to meet peak demand generated by cumulative office development in the downtown area, [the developer] shall participate in a downtown assessment district, or similar fair and appropriate mechanism, to provide funds for maintaining and augmenting transportation service, should such a mechanism be established by the City." The Commission imposed a similar "transit mitigation condition" on every other downtown office permit it approved in the latter half of 1979. ²

On May 5, 1981, the San Francisco Board of Supervisors enacted the TIDF ordinance. (Ord. No. 224-81, codified at S.F.Admin.Code, § 38.1 et seq. [hereinafter ordinance].) The ordinance, which became effective the following month, requires developers of downtown buildings containing new office space to pay a TIDF as a condition of issuance of a certificate of completion and occupancy. (S.F.Admin.Code, § 38.4.) The TIDF, not to exceed $5 per square foot of new office space, provides revenue for the municipal railway to offset the anticipated costs of the increased peak-period ridership generated by the new office space over the useful life of each office building. (S.F.Admin.Code, § 38.5.) The ordinance appears to be the first transit funding mechanism of its kind in California. ³

Plaintiff Russ Building Partnership (Russ) filed a class action suit against the City to have the ordinance declared invalid on its face and as applied. ⁴ Crocker and Pacific filed a separate suit against the City challenging the "retroactive" application of the ordinance to buildings under construction before the ordinance was enacted. ⁵

After separate trials on the validity of the fee and its "retroactive" application, the trial court entered judgments in favor of the City, finding that the TIDF is a valid development fee and that application of the ordinance to Crocker and Pacific did not impair their vested rights. All plaintiffs filed appeals, which were consolidated. The Court of Appeal upheld the validity of the TIDF, rejecting various constitutional and other attacks on the ordinance, but, by a divided vote, reversed the judgment as to Crocker and Pacific. Both Russ and the City petitioned for review. We granted the City's petition and denied Russ's, thus leaving intact the lower court ruling that the TIDF is a valid development fee. Pursuant to rule 29.2 of the California Rules of Court, we limited review to the interpretation of the resolutions authorizing Crocker's and Pacific's building permits and to whether the resolutions gave them adequate notice of the subsequently imposed TIDF. ⁶

II. DISCUSSION

"It has long been the rule in this state and in other jurisdictions that if a property owner has performed substantial work and incurred substantial liabilities in good faith reliance upon a permit issued by the government, he acquires a vested right to complete construction in accordance with the terms of the permit. [Citations.] Once a landowner has secured a vested right the government may not, by virtue of a change in the zoning laws, prohibit construction authorized by the permit upon which he relied." (Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785, 791, 132 Cal.Rptr. 386, 553 P.2d 546, cert. den. and app. dism. (1977) 429 U.S. 1083, 97 S.Ct. 1089, 51 L.Ed.2d 529.) " 'The rule is grounded upon the constitutional principle that property may not be taken without due process of law.' " (Urban Renewal Agency v. California Coastal Zone Conservation Com. (1975) 15 Cal.3d 577, 583-584, 125 Cal.Rptr. 485, 542 P.2d 645, quoting Aries Dev. Co. v. California Coastal Zone Conservation Com. (1975) 48 Cal.App.3d 534, 543, 122 Cal.Rptr. 315; see also Highland Development Co. v. City of Los Angeles (1985) 170 Cal.App.3d 169, 186, 215 Cal.Rptr. 881.) The vested rights doctrine protects the developer's right not only to construct, but also to use the premises as authorized by the permit. (County of San Diego v. McClurken (1951) 37 Cal.2d 683, 691, 234 P.2d 972.)

Plaintiffs ⁷ had been issued building permits, had begun construction, and had made a substantial financial commitment to their projects almost two years before the City enacted the TIDF ordinance. Thus, they had a vested right to complete the buildings and occupy them under the conditions contained in the permits. It is clear that if the resolutions authorizing plaintiffs' building permits did not contain the transit mitigation condition, application of the later-enacted TIDF ordinance to plaintiffs would impair their vested rights and violate due process. (See post, p. 690-691 of 244 Cal.Rptr., at pp. 342-343 of 750 P.2d.) However, if the TIDF falls among the funding mechanisms contemplated by the resolutions, then application of the ordinance to plaintiffs is proper. Our task is to decide if the transit mitigation condition included the eventuality of the TIDF ordinance. We find that it did.

A. The Transit Mitigation Condition Contemplated the Later Imposition of the TIDF

The City maintains that the language of the transit mitigation condition was intended to include a funding mechanism such as the TIDF, which applies only to new office development and which is directed at recovering the anticipated cost of meeting the expanded transportation needs generated by that new development. Plaintiffs argue that it was intended only to describe a funding mechanism which would include prior and present development in its sweep, not one directed solely at new development, and that for this and other reasons the TIDF is not a "downtown assessment district, or similar fair and appropriate mechanism" within the meaning of the condition. We find that while a mechanism which applies to both existing and new development certainly would be within the scope of the condition, nothing in the language compels a conclusion that the condition was intended to be so limited, or to exclude a mechanism such as the TIDF which applies only to new properties. Moreover, we find that the TIDF falls well within the range of funding mechanisms contemplated by the words "similar," "fair" and "appropriate."

We apply familiar principles of statutory construction. ⁸ "We begin with the fundamental rule that a court 'should ascertain the intent of the Legislature so as to effectuate the purpose of the law.' [Citation.]" (Moyer v. Workmen's Comp. Appeals Bd. (1973) 10 Cal.3d 222, 230, 110 Cal.Rptr. 144, 514 P.2d 1244.) "An equally basic rule of statutory construction is, however, that courts are bound to give effect to statutes according to the usual, ordinary import of the language employed in framing them." (Rich v. State Board of Optometry (1965) 235 Cal.App.2d 591, 604, 45 Cal.Rptr. 512; Moyer, supra, 10 Cal.3d at p. 230, 110 Cal.Rptr. 144, 514 P.2d 1244.) "Although a court may properly rely on extrinsic aids, it should first turn to the words of the statute to determine the intent of the Legislature." (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 698, 170 Cal.Rptr. 817, 621 P.2d 856.) We also examine the history and background of the statute to discern the statutory objective. (People v. Navarro (1972) 7 Cal.3d 248, 273, 102 Cal.Rptr. 137, 497 P.2d 481.)

1. The Language of the Condition is Inclusive of the TIDF

We note...