KAUFMAN BROAD OF NORTHERN CALIFORNIA INC CENTRAL VALLEY DIVISION v. CITY OF MODESTO

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Court of Appeal, Fifth District, California.

KAUFMAN & BROAD OF NORTHERN CALIFORNIA, INC., CENTRAL VALLEY DIVISION, Plaintiff and Respondent, v. CITY OF MODESTO, Defendant and Appellant.

No. F015916.

Decided: January 28, 1992

Stan T. Yamamoto, City Atty., and Laury L. Dowd, Deputy City Atty., Modesto, for defendant and appellant. Varni, Fraser, Hartwell, Lanferman & Rodgers and David P. Lanferman, Hayward, for plaintiff and respondent.

OPINION

THE CASE

The Superior Court of Stanislaus County granted a petition for writ of mandate filed by respondent, Kaufman & Broad of Northern California (Kaufman & Broad).   The court issued a writ directing the City of Modesto (City) to return, with interest, excess development fees collected from Kaufman & Broad and to refrain from collecting excess fees in the future.   The court entered judgment, from which the City appeals.

THE FACTS

We glean the facts from the pleadings.

Kaufman & Broad proposed to develop a residential subdivision known as “California Chardonnay” on 37.1 acres of land within the City of Modesto.   Its proposal called for a completed subdivision of 228 low density single-family homes.   In the summer of 1988, at Kaufman & Broad's request, the City rezoned the property for this use.

On July 18, 1988, Kaufman & Broad filed application with the City for a “Vested Tentative Subdivision Map” for the project, and on September 6 the City deemed the application complete.   On October 24 the City scheduled a hearing before its planning commission to consider the application.   In anticipation of that hearing, the planning department prepared a report recommending approval of the tentative map subject to 19 conditions.   Condition 19 provided:  “The Capital Facilities Fees payable at the time of the issuance of a building permit for any construction in this subdivision map shall be based on the rates in effect at time of issuance of the building permit.”

Capital facilities fees are the focus of the present dispute.   They were authorized by urgency interim ordinance No. 2520–C.S., adopted by the Modesto City Council (city council) on June 23, 1987.   The amounts of the fees were initially established by the city council's resolution 1 No. 87–498 adopted the same day.

Capital facilities fees, as revised periodically by the city council, are charged to new construction projects to finance the additional costs of capital improvements and municipal services attributable to the projects.   The fee at the time the City approved Kaufman & Broad's tentative map was $1,434 per unit for low density residential units.

The City collects capital facilities fees from developers when it issues building permits to them.   The City adopted the practice of charging the fee in effect when it issues the permit rather than the fee in effect when the map vested.   However, this practice of escalating the fee after vesting was occasionally challenged by individual developers.   In an attempt to settle the issue, the city council adopted resolution No. 88–609 on August 16, 1988, establishing a policy of inserting in future vesting tentative maps a condition similar to condition 19.

On October 24, prior to the planning commission hearing, a member of the city attorney's staff received a telephone call from a representative of Kaufman & Broad.   The caller claimed the proposed condition 19 was inapplicable to Kaufman & Broad's tentative map because the map had vested prior to adoption of resolution No. 88–609.   The staff member agreed with the caller based upon what the City alleges was a mistake in reading the file.   At the hearing that evening, the staff member recommended to the planning commission that it delete condition 19.   The planning commission accepted the recommendation and approved Kaufman & Broad's vested tentative subdivision map without the condition.

Based upon the planning commission's approval of its tentative map, Kaufman & Broad proceeded with the design and engineering of “California Chardonnay.”   On January 5, 1989, the City approved the final map for the project.   In March 1990 Kaufman & Broad applied to the City for building permits for the first 19 units.   In the 15–month period between approval of Kaufman & Broad's tentative map and its application for the initial building permits, the City increased its capital facilities fee for low density residential units to $4,890 per unit.   The City refused to issue building permits to Kaufman & Broad unless it paid the higher fees.   Kaufman & Broad paid the fees under protest for the units as it obtained building permits for them.

DISCUSSION

 A property owner who performs substantial work and incurs substantial liabilities in good faith reliance upon issuance of a construction permit by the government thereby acquires a “vested right” to complete the construction in accordance with the terms of the permit.  (Russ Bldg. Partnership v. City and County of San Francisco (1988) 44 Cal.3d 839, 845–846, 244 Cal.Rptr. 682, 750 P.2d 324.)

This rule has been codified with respect to development of residential housing subdivisions.   Under section 66498.1 of the Government Code,2 whenever a tentative subdivision map or parcel map is required, a developer may elect instead to submit a “vesting tentative map.”  Section 66498.1 provides in part:

“(b) When a local agency approves or conditionally approves a vesting tentative map, that approval shall confer a vested right to proceed with development in substantial compliance with the ordinances, policies, and standards described in Section 66474.2.”

At the time Kaufman & Broad's vesting tentative map was approved, section 66474.2 provided in part:

“In determining whether to approve or disapprove an application for a tentative map, the local agency shall apply only those ordinances, policies, and standards in effect at the date the local agency has determined that the application is complete pursuant to Section 65943 of the Government Code.”  3

I. Applicability of Resolution No. 88–609.

The court granted Kaufman & Broad's petition for writ of mandate on the ground that resolution No. 88–609, adopted on August 16, had not yet taken effect on September 6 when the City deemed Kaufman & Broad's vesting tentative map complete.   That conclusion was based upon section 65962 4 which provided in part:

“(b) Any action adopting a fee or charge, or increasing a fee or charge adopted, upon a single family or multifamily development project, as defined in Section 65928, which applies to the filing, accepting, reviewing, approving, or issuing of an application, permit, or entitlement to use shall be enacted in accordance with the procedure specified in Sections 54986 and 54992 5 and shall be effective no sooner than 60 days following the final action on the adoption of the fee or charge or increase in the fee or charge.”  (Emphasis added.)

Kaufman & Broad argues that resolution No. 88–609 had the effect of increasing capital facilities fees and was therefore subject to section 65962.   Resolution No. 88–609 provides:

“WHEREAS, the Public Projects Committee has recommended that a policy be adopted regarding the Capital Facilities Fees, applicable to any new vesting tentative maps that are accepted for filing, to prevent a rush on filing vesting tentative maps which attempt to avoid the adjusted Capital Facilities Fees.

“NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Modesto does hereby adopt the policy entitled ‘Conditions of Approval on Vesting Tentative Maps as They Relate to Capital Facilities Fees', which reads as follows:

“ ‘The Capital Facilities Fees payable at the time of the issuance of a building permit for any construction in this subdivision map (parcel map) shall be based on the rates in effect at time of issuance of the building permit.’ ”

 Resolution No. 88–609 enacted a policy of including an escalator clause for capital facilities fees as a condition for approving future vesting tentative maps.   The condition, if accepted, subjects a developer to fee increases adopted after its map has vested.   However, the resolution itself does not impose or increase fees.6

 Section 65962 is part of a statutory scheme providing the public with an opportunity to review and comment on specific fee proposals.   Proposed fees may not exceed estimated costs.   Since resolution No. 88–609 did not propose a specific fee or project future costs, the section 65962 review process, if applied to the resolution, would not provide the intended opportunity for public review.   Furthermore, even if section 65962 applied, the City would nevertheless be required to follow the process a second time to implement the actual fee increase.   To apply section 65962 to resolution No. 88–609 would be unnecessarily duplicative while providing no additional opportunity for the intended public review.

 Therefore, section 65962 does not apply to resolution No. 88–609.   And contrary to the trial court's conclusion, the resolution took effect upon its adoption on August 16, prior to September 6, the date the City deemed Kaufman & Broad's tentative subdivision map to be complete.  (Midway Orchards v. County of Butte (1990) 220 Cal.App.3d 765, 780, 269 Cal.Rptr. 796.)

 Our conclusion, however, does not end our inquiry.   A decision correct on any applicable theory of law must be sustained if it is consistent with the facts of the case.  (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 18–19, 112 Cal.Rptr. 786, 520 P.2d 10.)   Accordingly, we must determine whether any other applicable legal theory supports the court's order.

II. The City's Existing Policy of Escalating Capital Facilities Fees.

By its terms, resolution No. 88–609 does not impose an independent obligation on a developer to pay escalated fees in the absence of an express condition.   The City's approval of Kaufman & Broad's vesting tentative subdivision map did not include such a condition.7

The City also argues its existing policy with respect to capital facilities fees authorized it to charge the fees in effect when it issued a building permit to Kaufman & Broad.   It asserts the policy was established by Urgency Interim Ordinance No. 2520 C.S., adopted on June 23, 1987, adding article 9, sections 8–1.901 through 8–1.905 to chapter 1, title VIII of the Modesto Municipal Code.

Section 8–1.904 of article 9, chapter 1, title VIII of the Modesto Municipal Code (section 8–1.904) provides:

“A Capital Facilities Fee, as established from time to time by the City Council by resolution, shall be due and payable at the earliest time permitted by State law as determined by the Chief Building Official.   The decision of the Chief Building Official as to the type of use for fee assessment purposes shall be final.”

The City thereafter adopted the practice of collecting capital facilities fees at the time it issues a building permit.

The City argues section 8–1.904 imposes a general requirement on all developers to pay the capital facilities fees in effect when a building permit is issued, and this requirement exists independently of resolution No. 88–609.

 Section 8–1.904 provides only that fees shall be “due and payable” on a particular date and does not specify the amount of the fees.   However, a provision should be given a reasonable and common-sense interpretation consistent with the apparent purpose of the lawmakers.   (DeYoung v. City of San Diego (1983) 147 Cal.App.3d 11, 18, 194 Cal.Rptr. 722.)   It is reasonable to conclude that section 8–1.904 was intended to establish a policy of charging capital facilities fees at the rate in effect when the fees are collected.   Furthermore, that interpretation is consistent with the City's practice.   Construction of a statute by those charged with its administration is entitled to great weight.  (DeYoung v. City of San Diego, supra, at p. 18, 194 Cal.Rptr. 722.)   Therefore, by intent and practice, section 8–1.904 established a policy of charging the capital facilities fees in effect when a building permit is issued.

III. The City's Policy of Escalating Capital Facilities Fees and Section 66498.1.

Section 66498.1 is part of a statutory scheme the purpose of which is set out in section 66498.9, which reads in part:

“(a) To establish a procedure for the approval of tentative maps that will provide certain statutorily vested rights to a subdivider.

“(b) To ensure that local requirements governing the development of a proposed subdivision are established in accordance with Section 66498.1 when a local agency approves or conditionally approves a vesting tentative map.   The private sector should be able to rely upon an approved vesting tentative map prior to expending resources and incurring liabilities without the risk of having the project frustrated by subsequent action by the approving local agency, provided the time periods established by this article have not elapsed.

“(c) To ensure that local agencies have maximum discretion, consistent with Section 66498.1, in the imposition of conditions on any approvals occurring subsequent to the approval or conditional approval of the vesting tentative map, so long as that discretion is not exercised in a manner which precludes a subdivider from proceeding with the proposed subdivision.”

Section 66498.1 permits a local agency, under certain circumstances, to impose additional conditions on a developer after its tentative map has vested.   It provides in part:

“(c) Notwithstanding subdivision (b), the local agency may condition or deny a permit, approval, extension, or entitlement if it determines any of the following:

“(1) A failure to do so would place the residents of the subdivision or the immediate community, or both, in a condition dangerous to their health or safety, or both.

“(2) The condition or denial is required, in order to comply with state or federal law.

“․

“(e) Consistent with subdivision (b), an approved or conditionally approved vesting tentative map shall not limit a local agency from imposing reasonable conditions on subsequent required approvals or permits necessary for the development and authorized by the ordinances, policies, and standards described in subdivision (b).”

 The fundamental rule of statutory interpretation is to “ ‘․ 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 1224.)   When the intent is not clear from the statute itself, a court may look to various extrinsic aids.   “[T]he provision must be given a reasonable and common sense interpretation consistent with the apparent purpose and intention of the lawmakers, practical rather than technical in nature, which upon application will result in wise policy rather than mischief or absurdity.  [Citations].”  (DeYoung v. City of San Diego, supra, 147 Cal.App.3d at p. 18, 194 Cal.Rptr. 722.)   However, when the language of the statute is unambiguous, statutory construction is unnecessary.   A court should not add to or alter the words “ ‘․ to accomplish a purpose that does not appear on the face of the statute or from its legislative history.’ ”  (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 698, 170 Cal.Rptr. 817, 621 P.2d 856.)

 The City asserts section 66498.1 is ambiguous because it fails to specify the extent to which a developer's vested rights may be altered by subsequent changes in existing ordinances and policies.   Therefore, it argues, the statute should be interpreted as a matter of public policy to avoid the financial hardship to the City which would occur if capital facilities fees were frozen at the time a tentative map vests.

Section 66498.1 declares a developer's rights vest unconditionally when its tentative map is deemed complete, subject to certain specified exceptions.   The City proposes an interpretation that would permit it to increase fees to a developer after the developer's tentative map has vested so long as the ordinance authorizing the increase was in effect when the map was deemed complete.   However, under such an interpretation a City could enact additional ordinances reserving the right to impose other fees or to change building or zoning requirements after a map has vested, thereby circumventing the purpose of section 66498.1.

Furthermore, the City's contention is inconsistent with section 65961 which provides in part:

“Notwithstanding any other provision of law, upon approval or conditional approval of a tentative map for a subdivision of single- or multiple-family residential units, ․ during the five year period following recordation of the final map or parcel map for the subdivision, a city, county, or city and county shall not require as a condition to the issuance of any building permit or equivalent permit for such single- or multiple-family residential units, conformance with or the performance of any conditions that the city or county could have lawfully imposed as a condition to the previously approved tentative or parcel map.   Nor shall a city, county, or city and county withhold or refuse to issue a building permit or equivalent permit for failure to conform with or perform any conditions that the city, county, or city and county could have lawfully imposed as a condition to the previously approved tentative or parcel map.”

Exceptions may be made to avoid imperiling the health and safety of the immediate community, to comply with state or federal law, or to comply with applicable zoning ordinances.   The City does not rely on any of these exceptions.

The City could have approved Kaufman & Broad's vesting tentative map subject to a condition that Kaufman & Broad pay the capital facilities fees in effect when its building permits issued.   Its failure to do so barred it under section 65961 from subsequently imposing that condition.

Finally, the City argues its imposition of the higher fee is consistent with the decision in Russ Bldg. Partnership v. City and County of San Francisco, supra, 44 Cal.3d 839, 244 Cal.Rptr. 682, 750 P.2d 324.   In Russ, the developers of an office building were held to be subject to an ordinance imposing transit impact fees enacted two years after issuance of the developers' building permits.   However, the permits had been issued subject to a “transit mitigation condition” by which the developers agreed to participate in a future plan to fund the additional costs of public transportation attributable to the development, if such a plan were established by the city.   In holding that application of the ordinance did not violate the developers' vested rights, the Supreme Court said:

“It is clear that if the resolutions authorizing plaintiffs' building permits did not contain the transit mitigation condition, application of the later-enacted [Transit Impact Development Fee] ordinance to plaintiffs would impair their vested rights and violate due process.”  (44 Cal.3d at p. 846, 244 Cal.Rptr. 682, 750 P.2d 324.)

The fee increase in this case is comparable to the one which, according to Russ, would impair a developer's vested rights.

“The purpose of the vesting tentative map and the development agreement is to allow a developer who needs additional discretionary approvals to complete a long-term development project as approved, regardless of any intervening changes in local regulations.”  (City of West Hollywood v. Beverly Towers, Inc. (1991) 52 Cal.3d 1184, 1194, 278 Cal.Rptr. 375, 805 P.2d 329.)   Absent an express condition, when its tentative map was deemed complete on September 6, 1988, Kaufman & Broad acquired a right to complete its proposed development subject to the capital facilities fees in effect on that date.

IV. Equitable Estoppel.

Because we have concluded the City's application of escalating capital facilities fees was inconsistent with section 66498.1, we need not consider Kaufman & Broad's contention that the doctrine of equitable estoppel prohibited the City from applying that fee policy.

DISPOSITION

Judgment affirmed.   Costs on appeal to respondent, Kaufman & Broad.

FOOTNOTES

1.   All references to resolutions are to resolutions of the Modesto City Council.

2.   All statutory references are to the Government Code unless otherwise indicated.

3.   Section 65943 requires a public agency to determine whether an application for a development project is complete, and to notify the applicant, within 30 days after receiving the application.

4.   Section 65962 was recodified in 1990 as section 66017.

5.   Sections 54986 and 54992 (§ 54992 was recodified in 1990 as § 66016) apply to county boards of supervisors and to local agencies, respectively.   Both sections require the appropriate public entity to give notice, to provide information on request, and to conduct a public meeting prior to imposing or increasing a fee or service charge.   Section 54992 provides that the amount of a fee or service charge shall not exceed the estimated cost of the service for which it is levied.

6.   The rules of statutory construction apply equally to the construction of municipal ordinances.  (County of Madera v. Superior Court (1974) 39 Cal.App.3d 665, 668, 114 Cal.Rptr. 283.)   Statutory construction is a question of law for the court, which is not limited to the conclusions of the trial court.   In determining legislative intent, a court should look first to the words of the enactment, and may also consider extrinsic evidence, including recitals and findings in the enactment.  (Id. at pp. 668–669, 114 Cal.Rptr. 283.)

7.   It appears resolution No. 88–609 was not intended to apply to tentative maps filed before the resolution was adopted.   Resolution No. 88–609 is “applicable to any new vesting tentative maps that are accepted for filing ․”  (Emphasis added.)   The planning commission deleted condition 19 on the basis that Kaufman & Broad's application “was received prior to the time the City Council adopted the resolution [No. 88–609] adopting the ordinance.”  (Emphasis added.)   If the critical date for the purposes of resolution No. 88–609 was the date of filing the map application, the resolution did not apply to Kaufman & Broad's tentative map.

STONE (Wm. A.), Associate Justice.

MARTIN, Acting P.J., and VARTABEDIAN, J., concur.

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