On May 15, 2019, the First District Court of Appeal in Boatworks, LLC v. City of Alameda & Alameda City Council, (2019) 2019 Cal.App.LEXIS 446, held a parks and recreation development impact fee was invalid where it lacked a “reasonable relationship” to the burden imposed by a development project, as required by the Mitigation Fee Act, Government Code section 66000 et seq.
Background
In 2014, the City of Alameda (“City”) adopted an ordinance that established an impact fee schedule for future development, which included a park facilities fee (“parks fee”). To support its decision, the City conducted a “nexus study” which found parkland acquisition and improvement would cost close to $2 million per acre. Based on that finding, an inventory of parkland and open space, and the City’s population in 2013, the study found that the existing standard for parkland was 2.4 acres per 1,000 residents. To maintain this standard, an additional 19.82 acres of parkland would be required by the end of the City’s 2040 planning forecast. As such, the study concluded $39 million was needed to accommodate parkland for new development – $28.5 million to acquire land and $10.5 million to improve the land. Considering this, the City ordinance set a parks fee of $11,528 per single-family home and $9,149 per multi-family home.
A local developer, Boatworks, LLC (“Boatworks”), challenged the fee. The trial court held in favor of Boatworks and the City timely appealed.
Court of Appeal Holds in Favor of Company
The Court of Appeal affirmed the trial court’s holding. The appellate court held that the parks fee lacked a reasonable relationship to the cost of the park and recreation facilities needed for the development because the City was already in possession of most of the land required to maintain the parkland standard. The City could not pass through a cost that it would not incur; a development would not burden the City to acquire land, only improve the land that it already owned. The appellate court found that the fee was largely based on land acquisition costs, and since the City did not need to purchase new land, there lacked a reasonable relationship between the fee and actual needs of the City.
The appellate court next held that the City improperly included parks not open to the public in its baseline. By including unopened parks in the nexus study calculation, the standard was artificially high and, therefore, so was the parks fee computed to maintain it. At the same time, the study proposed using the parks fee to open the same parks to the public. With limited discussion, the appellate court found the City’s calculation improper.
The appellate court then held in favor of the City’s classification of certain areas as parkland, even where they had not been classified as parkland in planning documents before, including the City General Plan Parks and Recreation element. Reversing the trial court holding, the appellate court held that, while more information was preferable, the City’s decision on parkland classification was not “arbitrary, capricious, or entirely lacking in evidentiary support” and the City was not required to explain why it treated certain open space as parkland. The purpose of the nexus study was to determine the cost of developing park and recreation facilities, which was different from the purpose of the General Plan, so there was no clear issue. The City’s reasoning for reclassifying open space as parkland was discernable from the record. If the City received park fees to build improvements such as benches, picnic areas, and restrooms, then the land would be considered developed open space and therefore be classified as parkland.
Finally, the appellate court rejected Boatworks’ cross-appeal that parks fees may not be used to remedy existing deficiencies in park facilities. The appellate court reasoned that cities necessarily apply development fees to the burdens incurred to existing facilities and other existing problems before building new facilities. Furthermore, development fees do not impose on the City any responsibility to maintain the same type and proportion of facilities, as explained by the court in Homebuilders Assn. of Tulare v. City of Lenmore (2010) 185 Cal.App.4th 554. In this respect, the appellate court held there was a reasonable relationship between the fee and the impact of the development.
Advisory
This ruling demonstrates the courts’ deference to local agencies when determining whether there is a reasonable relationship between an impact fee and a proposed development. Here, the appellate court yielded to the City by allowing the City to classify “Community Open Space” as parkland rather than open space because there were some minor improvements to the property; such classification inflated impact fees. However, the appellate court prohibited the City from including free, already-acquired land into their calculations to determine a fee to purchase land. Overall, there is some give-and-take in these determinations but reasonable relationships between fees and burdens on the payor are malleable in nature.
Questions
If you have any questions concerning this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.
Mona Ebrahimi
mebrahimi@kmtg.com | 916.321.4597
Olivia Filbrandt
ofilbrandt@kmtg.com | 916.321.4290