Trinity Park, L.P. v. City of Sunnyvale

• Decision Date: 24 March 2011
• Docket Number: No. H035573.,H035573.
• Citation: 193 Cal.App.4th 1014,11 Cal. Daily Op. Serv. 3653,124 Cal.Rptr.3d 26,2011 Daily Journal D.A.R. 4344
• Court: California Court of Appeals Court of Appeals
• Parties: TRINITY PARK, L.P., et al., Plaintiffs and Appellants, v. CITY OF SUNNYVALE, Defendant and Respondent.

193 Cal.App.4th 1014

124 Cal.Rptr.3d 26

11 Cal. Daily Op. Serv. 3653

2011 Daily Journal D.A.R. 4344

TRINITY PARK, L.P., et al., Plaintiffs and Appellants,

v.CITY OF SUNNYVALE, Defendant and Respondent.

No. H035573.

Court of Appeal, Sixth District, California.

March 24, 2011.

David P. Lanferman, Sheppard Mullin Richter & Hampton LPP, James G. Higgins, Brenna E. Moorhead, for Plaintiffs and Appellants, Trinity Park, L.P. et al.

Juliet E. Cox, Barbara E. Kautz, Goldfarb & Lipman LLP, David E. Kahn, City Attorney, Robert L. Boco, Assistant City Attorney, for Defendant and Respondent, City of Sunnyvale.

Thomas B. Brown, Amy E. Hoyt, Burke, Williams & Sorensen, LLP, for Amici Curiae for Defendant and Respondent City of Sunnyvale The League of California Cities and California State Association of Counties.

Kyra Kazantzis, James F. Zahradka II, Melissa A. Morris, for Amici Curiae for Defendant and Respondent City Of Sunnyvale Law Foundation of Silicon Valley Public Interest Law Firm.

Michael Rawson, for Amici Curae for Defendant and Respondent City of Sunnyvale The Public Interest Law Project California Affordable Housing Project.

BAMATTRE–MANOUKIAN, Acting P.J.

I. INTRODUCTION

Appellants Trinity Park, L.P. and Classic Communities, Inc. (hereafter, collectively Trinity) are the developers of a residential housing project known as Trinity Park, which consists of 42 houses in a subdivision located in respondent City of Sunnyvale (City). The City's 2007 approval of the Trinity Park development was conditioned upon compliance with the City's below market housing ordinance, which required Trinity to sell five houses in the subdivision at below market prices. In 2009, after substantial construction of the project, Trinity filed a complaint in which it sought to invalidate the City's below market housing requirement as applied to the Trinity Park development.

The City demurred to the complaint on the ground that it was time-barred under the 90–day limitation periods provided by the applicable statutes of limitation, Government Code sections 65009, subdivision (c)(1)(E) [challenges to conditions on development permits] and 66499.37 [challenges to conditions on subdivision development].¹ In opposition, Trinity argued that those statutes did not apply and its complaint was timely filed under the 180–day limitations period provided by section 66020 [challenges to development fees, dedications, reservations and “other exactions” imposed as condition of development project approval], which had not begun to run due to the City's failure to give the requisite notice. The trial court sustained the City's demurrer without leave to amend and entered a judgment of dismissal from which Trinity appeals.

For reasons that we will explain, we determine that a requirement that a subdivision developer sell a certain percentage of a subdivision's houses at below market prices as a condition of development approval does not constitute a development fee, dedication, reservation or “other exaction” within the meaning of section 66020 where, as here, the affordable housing requirement was clearly not intended to “defra[y] all or a portion of the cost of public facilities related to the development project.” (§ 66000, subd. (b); Barratt American, Inc. v. City of Rancho Cucamonga (2005) 37 Cal.4th 685, 696, 37 Cal.Rptr.3d 149, 124 P.3d 719( Barratt ).)

We therefore conclude, as a matter of law, that section 66020 does not apply and Trinity's complaint was untimely filed underboth section 66499.37 and section 65009, subdivision (c)(1)(E). Accordingly, the trial court did not err in sustaining the City's demurrer without leave to amend and we will affirm the judgment of dismissal.

II. FACTUAL BACKGROUND

Since this appeal concerns a judgment of dismissal upon an order sustaining a demurrer without leave to amend, our summary of the facts is drawn from the properly pleaded factual allegations of the complaint and those matters properly subject to judicial notice. ( Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569( Schifando ).)

Trinity is the owner and developer of a residential housing project known as Trinity Park in the City of Sunnyvale. In 2007, the City approved Trinity's application for rezoning, a special development permit allowing 42 single family homes, and a tentative map subdividing four lots into 42 lots and one common lot. One of the City's conditions for granting approval of Trinity's application for the development of Trinity Park was compliance with the City's below market housing ordinance.

Adopted in 1980, the below market housing ordinance as amended provides that where the proposed development includes more than nine units, “For ownership units, twelve and one-half percent of the total number of dwelling units ... within the development shall be maintained as below market rate.” (Sunnyvale Mun.Code, § 19.66.020, subd. (a)(1).) ² A developer may pay an “in-lieu fee” instead of providing below market rate units only if the proposed development consists of between nine and 19 parcels or units. (Mun.Code, § 19.66.090, subd. (a).) The below market housing ordinance also provides that where a proposed residential development project is subject to the below market rate housing requirement, any tentative map, use permit or special development permit approving the project must include conditions “sufficient to ensure compliance” with the ordinance. (Mun.Code, § 19.66.020, subd. (b).) A residential development providing at least 10 percent below market rate units is entitled to priority processing of required city permits and approvals. (Mun.Code, § 19.66.120.)

In 2008, the City and Trinity entered into a “Below Market Rate Developer Agreement” that the City recorded. Among other provisions, the agreement states that Trinity is required to sell five houses at below market purchase prices of $246,821 for three-bedroom units and $269,115 for four-bedroom units. In addition, each “BMR [below market rate] unit” is to be first offered for sale to the City or its designee. The agreement further states that the estimated completion date for the units was June 30, 2009.

In a letter to the City dated August 5, 2009, captioned “Notice of Protest and Statement of Objections—Below Market Rate (‘BMR’) Housing Requirements,” Trinity stated that it was providing notice, pursuant to sections 66020 and 66021, that any contracts to sell houses in Trinity Park for less than market value “should be deemed to be executed or submitted, and continue to be executed or submitted, under protest and subject to full reservation of rights to seek relief therefrom.” Trinity also argued that the City's “BMR exactions” were unlawful for several reasons: (1) due to the lack of reasonable relation to the development's impacts, the “BMR exactions” constituted special taxes requiring a two-thirds vote of the electorate; (2) improper shifting of the cost of affordable housing; (3) failing to allow a credit for revenue generated by new residents; (4) inconsistency with the City's general plan, and (5) preemption by state laws.

There is no indication in either the complaint or the matters subject to judicial notice that Trinity has sold any houses in the Trinity Park development at below market purchase prices.

III. PROCEDURAL BACKGROUND

A. The Complaint

On December 17, 2009, Trinity filed its complaint against the City arising from the Trinity Park development. Without specifically mentioning the City's below market housing ordinance, Trinity claimed that the City's below market rate “housing policies” and “BMR exactions” were unlawful. According to Trinity, the City's requirement that Trinity sell five houses at below market prices as a condition of approval of its application to develop Trinity Park violated several California laws, constituted an unconstitutional taking, was a “disguised ‘special tax,’ ” and was arbitrary and excessive.

Trinity also alleged that it had executed the “Below Market Rate Developer Agreement” “under duress and compulsion as apparently non-negotiable conditions of submitting and processing the necessary development applications.” Additionally, Trinity alleged that it “continued to perform very substantial work” on Trinity Park, including installing “infrastructure and other public improvements,” while continuing to “question the validity or justification for the disputed BMR housing exactions.” Trinity also complained that the City had “not provided any relief from said invalid and unjustified fees and exactions....” Finally, Trinity asserted that it had “duly and timely submitted written Statements of Protest and objections to such BMR exactions as provided by [sections] 66020 and 66021, and the common law of California.”

The complaint included two causes of action for declaratory relief in which Trinity sought invalidation of the City's below market housing requirement as applied to the Trinity Park development. In three other causes of action Trinity sought a refund, injunctive relief, and a writ of mandate directing the City “to vacate the invalid BMR housing exactions conditions to this Project, and the underlying BMR housing policies, and to conform [the City's] imposition of any other ‘affordable housing’ exaction or fee to State law as set forth herein[.]”

B. The City's Demurrer

The City demurred to Trinity's complaint on three grounds, including the affirmative defenses of the statute of limitations and equitable estoppel, as well as failure to state a cause of action under the applicable laws.

Regarding the statute of limitations, the City contended that the complaint was time-barred under section 66499.37, which is part of the Subdivision Map Act (section 66410 et seq.). Section 66499.37 provides a 90–day limitations period to challenge the decision of a legislative body “concerning a subdivision.” The City argued that Trinity had only 90 days after tentative map approval in 2007...