Housing Developer Loses Rancho Cucamonga Fee Case
A Southern California housing developer that has aggressively fought a wide variety of government fees in recent years has lost a building permit and plan review fee case at the Fourth District Court of Appeal.
In a terse opinion, the unanimous three-judge appellate panel ruled that Barratt American's claims were either time-barred or attempted to rely on the wrong statutes.
At issue were building permit and plan review fees that the City of Rancho Cucamonga levied for a 123-unit subdivision developed by Barratt American. In May 2002, Barratt American filed a petition for writ of mandate and a complaint against the city challenging the fees and fee schedule, and seeking a refund of $143,000 for fees paid since June 2000. The fees were based on Rancho Cucamonga's fee schedule, which calls for a building permit fee of $555 for work valued at up to $100,000 and an additional fee of $2.50 for every $1,000 in building value. The plan review fees are a percentage of building permit fees.
Barratt American argued that Article 13B, §§ 1.5 and 8, subdivisions (b) and (c), of the state constitution compelled the city to complete an annual audit of fees and determine whether they exceed the reasonable cost of providing services. Barratt American also pointed to Government Code § 66016, which bars local agencies from levying fees that exceed the cost of providing service. The developer further argued that the fees were arbitrarily based on the value of construction and not on the city's cost of providing service.
San Bernardino County Superior Court Judge Joseph Johnston ruled for the city. Barratt American appealed and the Fourth District upheld the lower court.
According to the appellate court, Article 13B addresses governmental expenditures — not taxation, revenues or planning fees. Barratt American should have filed a validation action under § 66016 within 180 days of the fee schedule's adoption, the court ruled. Barratt American did file its lawsuit with 180 days of the city's re-adoption of the fee ordinance in January 2002; however, the court ruled that the fees could not be challenged now because the city only re-adopted existing fees. The city did not increase fees or levy new ones.
Barratt American asked the court, under Proposition 62, to penalize the city for collecting and retaining illegal "special taxes." But the appellate court ruled that building permit and plan check fees are not "special taxes," that the developer's remedy lied in § 66016 and that it was too late to seek relief under that statute.
Barratt American also asked for a refund under Government Code §§ 66020 and 66021, arguing that the fees were either entirely refundable as "special taxes" or were partially refundable as excessive fees. The court, though, pointed out that the cited statutes apply to development impact fees.
"Barratt's effort to extend the scope of §§ 66020 and 66021 contradicts the whole statutory scheme in which development fees are treated differently than building permit and plan review fees. A fee does not become a development fee because a developer pays it," Justice Barton Gaut wrote for the court.
More importantly, the court held that the developer had waived its right to recover the money. "Barratt did not act under compulsion; it had other alternatives," Gaut wrote. "It could have built its development elsewhere. It could have challenged the fee ordinance before proceeding. It could have tried to negotiate with the city. But, having accepted the benefits of the permit, it has no right to a refund."
The Case:
Barratt American Inc. v. City of Rancho Cucamonga, No. E032578, 2003 DJDAR 6311. Filed May 28, 2003. Ordered published June 10, 2003.
The Lawyers:
For Barratt American: Walter McNeill, (530) 222-8992.
For the city: James Markman, Richards, Watson & Gershon, (714) 990-0901.