CANDID ENTERPRISES INC v. GROSSMONT UNION HIGH SCHOOL DISTRICT

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Court of Appeal, Fourth District, Division 1, California.

CANDID ENTERPRISES, INC., Respondent, v. GROSSMONT UNION HIGH SCHOOL DISTRICT, et al., Appellant.

Civ. 28012.

Decided: December 21, 1983

Fiore & Nordberg and Donald E. Smallwood, Newport Beach, for defendant and appellant. Dorazio, Barnhorst, Goldsmith & Bonar, Joel Incorvaia, San Diego, and Louise M. Quintard, Oakland, for plaintiff and respondent.

Grossmont Union High School District and its governing board appeal the judgment (order following a petition for writ of mandate) which ordered the refund of certain school impact fees assessed against Candid Enterprises, Inc., in connection with its proposed condominium development project in Santee.

Candid is a business engaged in developing condominiums and single family residences and was engaged in such a program within the Santana High School attendance boundaries.   This development, known as Lakeview Carlton Hills No. 6 Project (Project), was originated by Carlton Santee Corporation (Carlton) but purchased by Candid on November 3, 1978.   Candid's rights are as successor in interest to Carlton.

In February 1974, the County of San Diego adopted “Policy I–43” which provided:

“That the proponent of the development [must] present evidence satisfactory to the Planning Commission, at the time of its consideration of the matter, and to the Board of Supervisors at the time of its consideration of the matter that the required public school services will in fact be provided concurrent with the need.”

The county would accept as evidence of compliance a letter from the local school district stating sufficient school facilities would be available.

In 1977, it was evident any new developments within the District would result in overcrowding in the high school.   To meet the problem on November 21, 1977, the District revised its policy “FF” to read as follows:

“It is the responsibility of the Grossmont Union High School District to provide educational facilities for the programs offered to the students of the District.   It is the intent of the Board to provide for additional facilities through taxation of the District as a whole as well as through assessment of specific groups or areas.   Such assessment is to be levied against all new residential developments.

“District cooperation with developers and other public agencies is to be established and maintained within existing laws and Board policies.”

Pursuant to this policy, the District began assessing all residential developments $1,000 per single family detached dwelling and $500 for all other types of dwelling.  “Secured agreements” were executed with the District for payment of such fees to the District at the time the building permits were to be issued.   A deed of trust was recorded as a lien on the land to guarantee payment.   The monies collected under Policy I–43 secured agreements were used for both temporary and permanent school facilities.

On March 14, 1978, Carlton entered into such an agreement for this project and agreed to pay a total of $68,000.

Effective January 1, 1978, the California Legislature had enacted the School Facilities Act (Act) (Gov.Code, §§ 65970–65981).   This Act authorized cities and counties to adopt ordinances requiring developers to pay fees for elementary and high school classrooms where overcrowded conditions existed in the area.   Such fees were to be assessed for the limited purpose of providing interim, temporary school facilities (Gov.Code, §§ 65974, 65980).1

Pursuant to the Act, on March 28, 1978, the San Diego Board of Supervisors enacted Ordinance No. 5120 authorizing assessment of such fees beginning May 27, 1978.   Following this enactment, the District began assessing fees and using the proceeds for temporary facilities as provided by law.   However, it continued to collect and use fees which had been contracted for under the secured agreements signed earlier for construction of permanent as well as temporary school facilities.

Enrollment in the District began to decline in 1979 and, on December 19, 1979, the board rescinded its resolution regarding overcrowding and ceased collecting school fee assessments from developers as of February 1, 1980.2  Its action was stated to be without effect on existing agreements with developers and it reserved the right to require fees from future developments which might upset the balance of available facilities.   At this time, the District had some 24 secured agreements outstanding with potential payments to the District amounting to $4,716,000.   In November 1980, when Candid obtained building permits to begin the first 47-unit phase of its project, the District required it to pay the fees contracted for and, on February 18, 1981, Candid paid $23,500 under protest to the District.   The payment was in accordance with the terms of their agreement.   Candid's demand for refund was rejected by the District and the board.   A writ of administrative mandamus (Code of Civil Procedure, § 1094.5) and a statutory writ proceeding (Code of Civil Procedure, § 1085) were filed with the superior court and, after hearing, the court held (1) the board abused its discretion in rejecting Candid's request for refund because the board did not receive proper evidence and thus denied Candid a fair trial;  (2) that pursuant to the School Facilities Act, the proceeds had to be used for temporary facilities to alleviate overcrowding and, since no overcrowding existed at the time of collection and since other developers would not be assessed fees, the collection from Candid denied it equal protection of the law;  (3) fees paid under protest should be returned;  and (4) no further fees should be collected under Policy I–43.

The District appeals, contending first it was not required to give Candid an adjudicatory hearing so that review under Code of Civil Procedure section 1094.5 was improper.

 The Education Code provides the board is a proper body to address issues directly relating to school district business (Ed.Code, § 35145.5) and, as such, is required to provide a forum for matters of school policy.   Under due process requirements, the board is required to afford the public a full and fair hearing.

 This court has held that when a government entity imposes an invalid condition in a building permit, the proper method to test the validity of the condition is in a proceeding in mandamus under Code of Civil Procedure section 1094.5 (Pfeiffer v. City of La Mesa, 69 Cal.App.3d 74, 76, 78, 137 Cal.Rptr. 804;  see also Selby Realty Co. v. City of San Buenaventura, 10 Cal.3d 110, 128, 109 Cal.Rptr. 799, 514 P.2d 111).   Here, the condition which the District sought to impose was a fee for additional school facilities ostensibly required because of overcrowding.   The writ of mandamus, pursuant to Code of Civil Procedure section 1094.5, was an appropriate means of testing the validity of these fees being imposed on developers as a condition of granting the building permits.

 The right to test the validity of a condition being imposed by the District is lost when the developer obtains the benefit offered by complying with the condition under protest and then seeks recovery of his damages.   As we stated in McClain Western # 1 v. County of San Diego, 146 Cal.App.3d 772, at pages 776 to 777, 194 Cal.Rptr. 594:

“Ordinarily, the developer will not be permitted to obtain the benefit of going ahead with construction and subsequently litigating the validity of one of the conditions of the permit.   There are critical distinctions from tax cases where the taxpayer may or must pay and sue for refund.   The taxpayer does not pay the tax to obtain the permission of the government to go ahead with a project, make a sale, or realize a gain.   A tax is imposed on an event, condition, or occurrence that exists or has taken place, and at the point in time the tax is imposed, the taxpayer has no further ability to make an election that the tax not be due.   In the case of a condition of a permit, whether by payment or a fee, construction of offsite improvements, dedication, or otherwise, the applicant has the ability to elect to decline the benefits of the permit, and the fee, construction or dedication are not required.   The County requires and is entitled to certainty in its fiscal affairs and budget procedures, and once the developer has accepted the benefits of the permit by constructing the project he will not be permitted to sue for refund or cancellation or reimbursement of the cost of compliance with the permit conditions.

“There is a further desirable effect of our continuing to adhere to the rule announced by this court in Pfeiffer [Pfeiffer v. City of La Mesa, 69 Cal.App.3d 74 [137 Cal.Rptr. 804].   The decisions about fees to be imposed as conditions of permits are properly made by the County and the District, and the determination as to whether those decisions are lawful are most appropriately made under the standards and procedures applicable to a petition for mandamus rather than a suit at law potentially involving a jury trial.”

 In McClain, we found an exception where the county imposed the fee on a later phase of a development program when, from a practical economic point of view, the developer had committed himself to a program and could not wait to resolve, even by writ procedure, the legalities of the new fee imposed (id., at p. 777, 194 Cal.Rptr. 594).   That is not the case here, since the fees were for the first phase of the project and the developer had from March 14, 1978, when it entered the agreement after the School Facilities Act became effective, to February 18, 1981, when it paid the fees under protest, to question the legality of the fee condition, but rather, chose to execute a contract to pay the fees and did so without undertaking any legal proceedings.   It sat idly by when on December 19, 1979, the board rescinded its action charging assessments after February 1, 1980.   It waited until November 1980 before it obtained the building permits and was not called upon to pay the fees until February 18, 1981.   Candid can cite no economic disadvantage to it in pursuing the writ proceeding to obtain the ruling on the propriety of the fees prior to payment.   Since Candid has obtained the benefit of the permit, it is not now in a position to obtain any recovery of the fees or damages (McClain Western # 1 v. County of San Diego, supra, 146 Cal.App.3d 772, 194 Cal.Rptr. 594).   Nor does the record show any other basis on which Candid may be entitled to a refund.3

This leaves us with the issue of the propriety of future assessments.

The issue thus presented is whether a fee can be levied by a local entity upon residential developers to cover costs of constructing permanent school facilities.   The validity of the secured agreements depends upon the District's legal ability to assess such fees.

Local authorities have the power to regulate a municipal affair.

“For its own government, a county or city may adopt a charter by majority vote of its electors voting on the question.   The charter is effective when filed with the Secretary of State.   A charter may be amended, revised, or repealed in the same manner.   A charter, amendment, revision, or repeal thereof shall be published in the official state statutes.   County charters adopted pursuant to this section shall supersede any existing charter and all laws inconsistent therewith.   The provisions of a charter are the law of the State and have the force and effect of legislative enactments.”  (Cal.Const., art. XI, § 3, subd. (a).)

“A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws.”  (Cal. Const., art. XI, § 7.)

 The Constitution does not forbid counties and cities from legislating upon matters of statewide concern, nor with respect to purely municipal affairs, but state laws control over local ordinances with regard to local matters if the subject matter is also of statewide concern (Pac. Tel. & Tel. Co. v. City & County of S.F., 51 Cal.2d 766, 769, 336 P.2d 514;  Codding Enterprises v. City of Merced, 42 Cal.App.3d 375, 377–378, 116 Cal.Rptr. 730).

“A city which adopted such ‘home rule’ amendments thereby gained exemption, with respect to its municipal affairs, from the ‘conflict with general laws' restrictions of section 11 of article XI [now section 7 of article XI].

“As to matters which are of statewide concern, however, home rule charter cities remain subject to and controlled by applicable general state laws regardless of the provisions of their charters, if it is the intent and purpose of such general laws to occupy the field to the exclusion of municipal regulation (the preemption doctrine).  [Citations.]

“As is made clear in the leading case of Pipoly v. Benson, supra, [20 Cal.2d 366 [125 P.2d 482] local governments (whether chartered or not) do not lack the power, nor are they forbidden by the Constitution, to legislate upon matters which are not of a local nature, nor is the Legislature forbidden to legislate with respect to the local municipal affairs of a home rule municipality.   Instead, in the event of conflict between the regulations of state and of local governments, or if the state legislation discloses an intent to preempt the field to the exclusion of local regulation, the question becomes one of predominance or superiority as between general state laws on the one hand and the local regulations on the other.  [Citations.]

“If resolution of that question requires a determination as to whether the matter regulated is a state or a municipal affair, then, as declared in Professional Fire Fighters, Inc. v. City of Los Angeles (1963) 60 Cal.2d 276, 294 [32 Cal.Rptr. 830, 384 P.2d 158] ․, ‘Because the various sections of article XI fail to define municipal affairs, it becomes necessary for the courts to decide, under the facts of each case, whether the subject matter under discussion is of municipal or statewide concern.’   In other words, ‘No exact definition of the term “municipal affairs” can be formulated, and the courts have made no attempt to do so, but instead have indicated that judicial interpretation is necessary to give it meaning in each controverted case.   The comprehensive nature of the power is, however, conceded in all the decisions․'  (Butterworth v. Boyd (1938) 12 Cal.2d 140, 147 [82 P.2d 434] ․;   see also City of Pasadena v. Charleville (1932) 215 Cal. 384, 392 [10 P.2d 745] ․)   Further, the ‘constitutional concept of municipal affairs ․ changes with the changing conditions upon which it is to operate.   What may at one time have been a matter of local concern may at a later time become a matter of state concern controlled by the general laws of the state.  [Citations.]’  (Pacific Tel. & Tel. Co. v. City & County of San Francisco, supra, 51 Cal.2d 766, 771, 775–776, 336 P.2d 514;  Butterworth v. Boyd, supra.)

“In exercising the judicial function of deciding whether a matter is a municipal affair or of statewide concern, the courts will of course give great weight to the purpose of the Legislature in enacting general laws which disclose an intent to preempt the field to the exclusion of local regulation [citation], and it may well occur that in some cases the factors which influenced the Legislature to adopt the general laws may likewise lead the courts to the conclusion that the matter is of statewide rather than merely local concern.   However, the fact, standing alone, that the Legislature has attempted to deal with a particular subject on a statewide basis is not determinative of the issue as between state and municipal affairs, nor does it impair the constitutional authority of a home rule city or county to enact and enforce its own regulations to the exclusion of general laws if the subject is held by the court to be a municipal affair rather than of statewide concern;  stated otherwise, the Legislature is empowered neither to determine what constitutes a municipal affair nor to change such an affair into a matter of statewide concern.  [Fn. omitted.]”  (Bishop v. City of San Jose, 1 Cal.3d 56, 61–63, 81 Cal.Rptr. 465, 460 P.2d 137.)

 In applying these principles to the state legislation here,4 it should be noted new school construction has traditionally been a matter of state law and statewide concern (see Hall v. City of Taft, 47 Cal.2d 177, 179–183, 302 P.2d 574;  cf. Madsen v. Oakland Unified Sch. Dist., 45 Cal.App.3d 574, 581–582, 119 Cal.Rptr. 531).   The matter of the impact of new residential developments throughout the state was described in terms of state concern, the Legislature declaring that funds are not available in many areas of the state to construct new facilities with the result there is overcrowding which cannot be alleviated in a reasonable time under existing law (Gov.Code, § 65970, subds. (a)–(d)).   It was for these reasons new and improved methods of financing interim school facilities was necessitated (Gov.Code, § 65970, subd. (e)).   We conclude the Legislature has defined a statewide interest.

The question follows whether the Legislature has preempted the field through its legislation.

“It is settled that a local municipal ordinance is invalid if it attempts to impose additional requirements in a field that is preempted by general law.  [Citations.]   Local legislation in conflict with general law is void.   Conflicts exist if the ordinance duplicates [citations], contradicts [citation], or enters an area fully occupied by general law, either expressly or by legislative implication [citations].   If the subject matter or field of the legislation has been fully occupied by the state, there is no room for supplementary or complementary local legislation, even if the subject were otherwise one properly characterized as a ‘municipal affair.’  [Citations.]”  (Lancaster v. Municipal Court, 6 Cal.3d 805, 807–808, 100 Cal.Rptr. 609, 494 P.2d 681.)

The Attorney General in his opinion No. 79–625, 62 Opinions of the Attorney General 601, at 607 to 608, suggests several reasons why the language of the Act was intended to preclude the imposition of developer fees for permanent facilities.

“First, the school impact fee and dedication statutes place substantial limitations upon a city council or county board of supervisors to exact fees from residential developers.   As previously set forth, subdivision (d) of [Gov.Code] section 65974 limits the land dedication or fees payment to ‘a reasonable relationship ․ to the needs of the community for interim elementary or high school facilities and shall be reasonably related and limited to the need for schools caused by the development,’ not to ‘exceed the amount necessary to pay five annual lease payments for the interim facilities.’   Such restrictions imposed by the Legislature would be meaningless if a city council or board of supervisors could exact additional developer fees for permanent school facilities.

“Second, as previously stated, the statutory scheme imposing school impact fees and dedications upon developers was arguably broad enough to cover permanent facilities when initially enacted.   However, with the amendment of the statutory scheme to define ‘interim’ facilities as ‘temporary’ facilities (§ 65980), the Legislature indicated an intent to restrict the amount and purpose of the fees to be collected from developers.   If the Legislature had intended that developers could be assessed fees for permanent school facilities pursuant to local ordinance, the addition of section 65980 would appear to be inconsistent with such an intention.

“Third, the history of subdivider fees and dedications under the Subdivision Map Act indicates a legislative intent to allow, but restrict local control in this area.   In Kelber v. City of Upland, supra, 155 Cal.App.2d 631 [318 P.2d 561] and Santa Clara County Contractors etc. Assn. v. City of Santa Clara, supra, 232 Cal.App.2d 564 [43 Cal.Rptr. 86] local ordinances imposing fees for schools and parks were struck down by the Court of Appeal as contrary to the provisions of the Subdivision Map Act.   Subsequently, the Legislature added what are now sections 66477 and 66478 to the Subdivision Map Act, expressly authorizing certain fees and dedications for schools and parks.   The apparent intent of the Legislature was to allow a city or county to exact from subdividers what otherwise could not be accomplished by local ordinance.   The grant of authority, however, was also in effect a restriction upon local regulations, where specific limitations were incorporated into the grant of authority.  (See also §§ 66483–66486.)”

The Attorney General concludes the Legislature intended to preempt the field and any fees or dedications required by the local authority not authorized by the Act would be invalid.

 The express authority to impose school impact fees and dedication upon developers under Government Code sections 65970 to 65981 is broad in its scope, applies to all schools but narrowly restricts the amount and use of such fees.   To permit local entities to impose further broader fees or further burdens on developers for new school construction would be to write into this very comprehensive plan for school finance of new school construction a complicating feature, having statewide ramifications never suggested.   Indeed, it could have extremely adverse effect on urban development generally.   There is preemption in the legislative scheme we consider here, precluding the county, district and board from collecting the fees from developers for permanent school facilities.

 We concur with the trial court Candid is denied equal protection of the law in that the development it intends to construct will have especially burdensome fees imposed upon it while those which start fresh will be able to avoid these fees altogether.   Under the circumstances, both kinds of residential subdivisions must be similarly classed and have no adverse impact in school facilities.

Judgment is reversed insofar as it orders a return of the fees already paid, but in all other respects is affirmed.

FOOTNOTES

1.   Government Code section 65974 authorizes dedication or fee assessment, or both, for classroom and related facilities “[f]or the purpose of establishing an interim method of providing classroom facilities where overcrowded conditions exist” (emphasis added;  Stats.1977, ch. 955).   Subdivision (c) of Government Code section 65974 reads:  “The land or fees, or both, transferred to a school district shall be used only for the purpose of providing interim elementary or high school classroom and related facilities ” (emphasis added).Government Code section 65980 reads:“For the purposes of Section 65974, ‘classroom facilities,’ ‘classroom and related facilities,’ and ‘elementary or high school facilities' mean ‘interim facilities' as defined in this section and shall include no other facilities.“Interim facilities for the purposes of Section 65974 shall be limited to the following:“(a) Temporary classrooms not constructed with permanent foundation and defined as a structure containing one or more rooms, each of which is designed, intended, and equipped for use as a place for formal instruction of pupils by a teacher in a school.“(b) Temporary classroom toilet facilities not constructed with permanent foundations.“(c) Reasonable site preparation and installation of temporary classrooms.”  (As added by Stats.1979, ch. 282, eff. July 24, 1979, and amended by Stats.1980, ch. 1354, eff. Sept. 30, 1980.)

2.   Government Code section 65978 provides, in part:“If overcrowding conditions no longer exist, the city or county shall cease levying any fee or requiring the dedication of any land pursuant to this chapter.”

3.   Government Code section 65979 provides for refunds under certain conditions, as follows:“One year after receipt of an apportionment pursuant to the Leroy F. Greene State School Building Lease-Purchase Law of 1976 (Chapter 22) (commencing with Section 17700 of Part 10 of the Education Code) for the construction of a school, the city or county shall not be permitted thereafter, pursuant to this chapter or pursuant to any other school facilities financing arrangement such district may have with builders of residential development, to levy any fee or to require the dedication of any land within the attendance area of the district.   However, any time after receipt of the apportionment there may be a determination of overcrowding pursuant to Section 65971, if there is the further finding that (1) during the period of construction additional overcrowding would occur from continued residential development, and (2) that any fee levied and any required dedication of land levied after the receipt of the construction apportionment can be used to avoid the additional overcrowding prior to the school being available for use by the school district.“Any amounts of fees collected or land dedicated after the receipt of the construction apportionment and not used to avoid overcrowding shall be returned to the person who paid the fee or made the land dedication. ”  (Emphasis added;  added by Stats.1979, ch. 282, eff. July 24, 1980, as am'd. Stats.1980, ch. 1354, eff. Sept. 30, 1980.)

4.   Insofar as preemption is concerned, the principles set forth in Bishop v. City of San Jose, supra, 1 Cal.3d 56, 62–63, 81 Cal.Rptr. 465, 460 P.2d 137, apply to chartered counties as well as chartered cities (see In re Hubbard, 62 Cal.2d 119, 128, 41 Cal.Rptr. 393, 396 P.2d 809 (disapproved on another point in Bishop, supra, 1 Cal.3d 56, 63, fn. 6, 81 Cal.Rptr. 465, 460 P.2d 137;  see also California Water & Telephone Co. v. County of Los Angeles, 253 Cal.App.2d 16, 26–28, 61 Cal.Rptr. 618).

COLOGNE, Acting Presiding Justice.

WORK and McCONNELL *, JJ., concur.

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