Western/California, Ltd. v. Dry Creek Joint Elementary School Dist., C020197

• Decision Date: 31 October 1996
• Docket Number: No. C020197,C020197
• Citation: 58 Cal.Rptr.2d 220,50 Cal.App.4th 1461
• Parties: , 114 Ed. Law Rep. 223, 96 Cal. Daily Op. Serv. 8413, 96 Daily Journal D.A.R. 13,883 WESTERN/CALIFORNIA, LTD., et al., Plaintiffs and Appellants, v. DRY CREEK JOINT ELEMENTARY SCHOOL DISTRICT, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

Page 220

58 Cal.Rptr.2d 220

50 Cal.App.4th 1461, 114 Ed. Law Rep. 223,

96 Cal. Daily Op. Serv. 8413,

96 Daily Journal D.A.R. 13,883

WESTERN/CALIFORNIA, LTD., et al., Plaintiffs and Appellants, v. DRY CREEK JOINT ELEMENTARY SCHOOL DISTRICT, Defendant and Appellant.

No. C020197.

Court of Appeal, Third District, California.

Oct. 31, 1996.

Gregory D. Thatch, Sacramento and Larry C. Larsen, Los Angeles, for Plaintiffs and Appellants.

Gary G. Kreep and Kevin T. Snider, Escondido, for Amici Curiae on behalf of Plaintiffs and Appellants.

Laurence B. Labovitz, Los Angeles, Eisen & Johnston, Jay-Allen Eisen and Marian M. Johnston, Sacramento, for Defendant and Appellant.

Kronick, Moskovitz, Tiedemann & Girard, P. Addison Covert, Sacramento, Pinnell & Kingsley, Paul Nicholas Boylan, Sacramento, Joseph R. Symkowick and Edmundo R. Aguilar, Sacramento, for Amici Curiae on behalf of Defendant and Appellant.

SIMS, Associate Justice.

Pursuant to statutory authorization in place between January 1, 1993, and November 2, 1993 (former Gov. Code, § 65995.3, ¹ Stats. 1992 ch. 1354, § 5; Sen. Bill No. 1287 (1991-1992 Reg. Sess.) ["Senate Bill 1287"]), appellant Dry Creek Joint Elementary School District adopted a district-wide development fee of $1 per square foot on residential development for purposes of construction or reconstruction of school facilities. The fees were imposed on and paid under protest by developers in one part of the District--the Antelope area--which was already subject to "Mello-Roos" community facilities taxes (§ 53311 et seq.) for school facilities purposes. This mandamus action (Code Civ. Proc., § 1085) seeking refunds was then filed by the developers--Western/California, Ltd., a California Limited Partnership; U.S. Home Corporation, A Delaware Corporation, doing business as US Home; George Wimpey, Inc., a Delaware Corporation, doing business as Morrison Homes; Winncrest Homes, a California Corporation; and J&L Properties, California General Partnership (hereafter, "the developers"). ²

The developers argued among other things that the fee could not be imposed on the Antelope area because the fee, when added to the existing Mello-Roos taxes, exceeded a statutory restriction on development fees and requirements (§ 65996, subd. (b), hereafter section "65996(b)" ³). The District's opposing The trial court entered judgment in favor of the developers and directed issuance of a peremptory writ of mandate commanding the District to refund the fees paid by the developers. On appeal, the District contends (1) the action is barred by the statute of limitations, and (2) the trial court erred in concluding the exemption of Mello-Roos taxes from the restriction on development requirements applied only to Mello-Roos taxes adopted in the future. The developers, in addition to defending against the appeal, filed a protective cross-appeal, contending the judgment may be affirmed on the alternative grounds that (1) the fee was imposed without establishing the required nexus between the fee and school needs created by the residential development and therefore was an invalid special tax, and (2) the fee was procedurally defective for failure to give appropriate notice to the County of Sacramento. We shall conclude the developers' action was not barred by the statute of limitations, but the developers were not entitled to a refund, because Mello-Roos taxes are not a factor in the statutory cap on development fees and requirements. We shall further conclude the cross-appeal has no merit. We shall therefore reverse the judgment. ⁶

position was that Mello-Roos taxes do not count in calculating the maximum development fees and requirements (former § 65996(b), § 65995 ⁴). ⁵

FACTUAL AND PROCEDURAL BACKGROUND

The territory of the district spans Sacramento County and Placer County. The Antelope area, which is at issue in this appeal, is the Sacramento County portion of the District. ⁷

In 1986, the Legislature enacted Assembly Bill No. 2926 ("Assembly Bill 2926") (Stats.1986, ch. 887), giving school districts express authority to impose fees on development projects to help pay for construction of school facilities. (§ 53080; Stats.1986, ch. 887, § 8, pp. 3080-3081.) However, in this case the developers (or their predecessors in interest) negotiated with the District and the County to avoid Assembly Bill 2926 fees and in August The agreement was premised on a 50/50 split between state and local funding. The parties intended that the Mello-Roos taxes would finance 50 percent of school construction costs in the Antelope area, with state funds providing the other 50 percent. The District was responsible for pursuing all available sources of funding. It was agreed that Assembly Bill 2926 fees (limited by statute to approximately $1.50 per square foot, adjusted periodically for inflation) would not have provided sufficient funds to meet the need created by the residential development.

1988 entered into a "school financing settlement agreement," whereby (1) the developers agreed to support formation of a Mello-Roos tax district (§ 53311 et seq.) in the Antelope area for purposes of construction of new school facilities made necessary by their residential development, (2) the District agreed not to seek a building moratorium in the impacted area and not to impose Assembly Bill 2926 fees in that area, and (3) the County, as the local agency responsible for the [50 Cal.App.4th 1470] general plan, zoning, and issuance of building permits, agreed not to restrict approval of building permits based on school conditions. The agreement recognized "the only practical method for permitting development to continue within the [Antelope area], while also ensuring that adequate school facilities will be constructed to accommodate the students generated by such development, is to create a Mello-Roos district within the [Antelope area]."

On November 3, 1988, the District established Mello-Roos Community Facilities District No. 1 (CFD No. 1) in the Antelope area, to provide local funding for school facilities in that portion of the District. At an election held on December 20, 1988, the developers (or their predecessors in interest), as property owners in CFD No. 1, approved its formation and authorized the issuance of up to $30 million in Mello-Roos bonds and the levy and collection of a special tax to pay the principal and interest thereon. The District subsequently did an initial issuance of bonds in the amount of $6 million, resulting in Mello-Roos taxes once the property was developed. ⁸

The school financing settlement agreement was later amended in October 1988 to provide that the Mello-Roos taxes would be credited against Assembly Bill 2926 fees the District could have imposed. This was done so the high school district in the area would not assess the District's share of the Assembly Bill 2926 fees.

The original agreement expired on February 28, 1989.

By the time of trial, the District had received $11 million in state matching funds. It had also imposed Assembly Bill 2926 fees in the other two areas of the district.

The local funds available to the District from development fees and Mello-Roos special taxes fell below what the District needed to keep up with increased student enrollment resulting from residential development. In 1990, the District projected it needed at least $3.5 million per year for the next 10 years to meet anticipated growth from existing approved projects and building permit activity. A 1992 analysis indicated the unfunded shortfall ($36,321,133) translated to $2.74 per square foot of residential development.

In 1992, the District faced the risk that state funding would be unavailable. Assembly Constitutional Amendment 6, 1991-1992 Regular Session, placed Proposition 170 before the voters in the November 1993 statewide election. (Ballot Pamp., Proposed Amends. to Cal. Const., Statewide Elec. (Nov. 2, 1993) Prop. 170, pp. 16-19, 40-41; see Stats.1992, ch. 1354, §§ 2, 7, 10.) If passed, Proposition 170 would allow school construction taxes to be approved by a simple Also in 1992, the Legislature enacted Senate Bill 1287, which provided that if the voters adopted Proposition 170, the state matching funds program would be eliminated in January 1996. (Stats.1992, ch. 1354.) One provision of Senate Bill 1287 added to section 65995.3, authorizing school districts to impose an additional fee of $1 per square foot on residential development. Senate Bill 1287 specified section 65995.3 (and other provisions of the bill) would be repealed if the voters rejected Proposition 170 in the November 1993 statewide election. (Stats.1992, ch. 1354, § 5.)

majority (rather than two-thirds) vote. (Ibid.)

On January 7, 1993, pursuant to Senate Bill 1287, the District adopted Resolution 1993-4, imposing a district-wide fee of $1 per square foot on all residential development. The resolution became effective 60 days later, on March 8, 1993.

The developers were required to pay Senate Bill 1287 fees for their projects, beginning in May 1993, and did so under protest, complaining that the Mello-Roos taxes plus the Senate Bill 1287 fee exceeded the statutory cap on development fees and requirements. ⁹ The District's position was that Mello-Roos taxes were statutorily excluded from calculation of the maximum development requirements which could be imposed.

In the November 1993 election, the voters rejected Proposition 170, and consequently the District's authority to impose the additional $1 per square foot fee expired. (Stats.1992, ch. 1354, § 5.) The District then repealed the fee.

On November 5, 1993, the developers filed their petition for writ of mandate (Code Civ. Proc., § 1085) and complaint for breach of contract in the trial court. As alleged in an amended petition and a supplemental petition, and as admitted in the District's answer, each developer was "required to pay" the Senate Bill 1287 fee beginning in May 1993,...