LINCOLN PROPERTY COMPANY INC v. CUCAMONGA SCHOOL DISTRICT (1991)

OPINION

Plaintiffs Lincoln Property Company, N.C., Inc. and Lincoln Rancho (collectively, Lincoln) sued Cucamonga School District (District) and the City of Rancho Cucamonga (City) ¹ to obtain a refund of a $990,008 school fee.   The District required payment of the fee before it would issue a certification which the City required as a prerequisite to granting building permits for Lincoln's 376–unit apartment complex (the Alta Park project).   Following trial, the court entered judgment in favor of the District, upholding the validity of the school fee.   On appeal, Lincoln contends that the District had no authority to impose the fee, and the fee violates Government Code section 65961.²

FACTS

The City approved the subdivision map September 4, 1984.   The final subdivision map for the Alta Park project was recorded on November 14, 1984.   The City granted final developmental review approval on August 28, 1985.   On October 23, 1985, the District, acting under City Municipal Code section 17.08.050 ³ (hereafter section 17.08.050), adopted a resolution which imposed a school facility fee on developers of residential construction.⁴  The fee was set at $2,633 per dwelling unit.

On December 30, 1985, Lincoln applied for building permits for the first phase of the Alta Park project.   Before issuing the building permits, the City required Lincoln to furnish a certification letter from the District under section 17.08.050.   Before it would issue the certification letter, the District required Lincoln to pay the fee.   Lincoln tendered the fee to the District under protest.

Lincoln then filed this lawsuit, seeking recovery of the fee and a declaration that the District's resolution was void because the District lacked authority to adopt and impose the fee.   Lincoln also contended that the fee violated section 65961, which prohibits cities from imposing conditions on the issuance of building permits if those conditions could have been imposed as conditions of approval of an applicable subdivision map.

Following trial, the court entered judgment against Lincoln.   In its Memorandum of Intended Decision, the court concluded, “[I]t seems clear that the City ․ had the authority to require the plaintiffs to pay an appropriate fee per single family dwelling before the city would issue building permits for plaintiffs' project.   Under Sections 65970 et seq., the city not only had the right but also the duty to determine from the defendant school district whether conditions of overcrowding existed and whether the school district had any feasible method of mitigating the existing conditions.   That was done in the instant case.

“The purpose of the certification letter issued by the defendant school district was not to impose a development fee directly on plaintiffs but rather to indicate to the city as to whether it was appropriate and even necessary for the city to impose the fee on the plaintiffs.   Therefore, we really do not need to resolve the question raised by plaintiffs as to whether the defendant school district could legally impose the development fee on plaintiffs.   That question is moot under the facts in the instant case because the defendant school district did not impose any fee directly on plaintiffs.   The assertion made by plaintiffs that Section 17.08.050 did not expressly grant to the defendant district any power other than to issue or withhold written certification that adequate schools did or did not exist to serve students generated by plaintiffs' new development is irrelevant.”  (Original emphasis.)

DISCUSSION

ITrial Court's Ruling

A. Determination that the City Imposed the Fee.   Lincoln challenges the trial court's determination that the District did not impose any fee directly on Lincoln.   The court concluded, “The purpose of the certification letter issued by the defendant school district was not to impose a development fee directly on plaintiffs but rather to indicate to the city ․ to impose the fee on the plaintiffs.”

The trial court also made the factual finding that “In January, 1986, the District required Lincoln to pay the $2,633.00 per dwelling unit fee adopted in Resolution 8530.1, before it would issue its certification.”  (Emphasis added.)   The resolution states that “the District adopts the following schedule of school facilities fees․”  (Emphasis added.)   Moreover, the certification letter which the District provided stated, “This is to certify that Lincoln Properties has paid the required fee of $990,008.00 to the Cucamonga School District․”  Finally, the District concedes in its brief on appeal that it imposed and collected the fee.

We conclude that the trial court erred in determining that the City, not the District, imposed the fee.   The evidence was undisputed that the District directly imposed and collected the fee.   We cannot construe the District's resolution as merely indicating to the City what fee the City should collect on the District's behalf.

B. School Facilities Act.   The trial court implied that the School Facilities Act (§ 65970 et seq.) permitted imposition of the fee.   The District does not dispute that the fee was not in fact imposed under the School Facilities Act.

 Our disagreement with the trial court's reasoning does not mean that the judgment must automatically be reversed.   Even if the trial court erred in the bases for its ruling, we uphold that ruling if it is correct under any applicable theory of law.  (D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19, 112 Cal.Rptr. 786, 520 P.2d 10.)   We thus independently analyze the legal issues.

II

District's Authority to Impose Fee

Lincoln asserts that the District lacked authority to impose a school facility fee on developers.   Lincoln argues that (1) the power to impose regulatory fees arises under the police power which, under the California Constitution, is granted to cities and counties, not school districts ⁵ ;  (2) the City did not delegate authority to the District to impose the fee;  and (3) no statute in existence when the fee was imposed authorized the District to impose the fee.   The District responds that it had constitutional and statutory authority to impose the fee.

A. Police Power.   In California Bldg. Industry Assn. v. Governing Bd. (1988) 206 Cal.App.3d 212, 253 Cal.Rptr. 497 (hereafter CBIA ), the court stated, “Development fees are an exercise of the local police power granted to cities and counties by article XI, section 7 of the California Constitution.  [Citations.]  While general law cities and counties receive their taxing power from the Legislature under article XIII, section 24, they can impose development fees pursuant to their police power without the necessity of authority from the Legislature.  [Citation.]  However, the school districts have no such police power to support the imposition of development fees.”  (Id., at p. 234, 253 Cal.Rptr. 497, emphasis added.)   In CBIA, school districts had imposed certain exactions on residential developers which exceeded the dollar limitations on such fees found in section 65995.⁶  The court determined that the challenged exactions were in the nature of development fees, and the Legislature had imposed strict limitations on the imposition of such fees.  (Id., at pp. 218–219, 253 Cal.Rptr. 497.)   The court held that school districts' “authority for said fees comes solely from section 53080 and is subject to the section 65995 financial limitations.”   (Id., at p. 234, 253 Cal.Rptr. 497.)

 B. General Powers of School District.   The District asserts that its authority to impose the fee arises under article IX, section 14 of the California Constitution (article IX, section 14), which states, “The Legislature may authorize the governing boards of all school districts to initiate and carry on any programs, activities, or to otherwise act in any manner which is not in conflict with the laws and purpose for which school districts are established.” ⁷

Imposition of a school facility fee does not “conflict with the purposes for which school districts are established.”  (Educ.Code, § 35160.)   We believe that the broad grant of authority under article IX, section 14 of the California Constitution includes a grant of such police power as is consistent with the basic role of school districts.   In enacting Education Code section 35160, the Legislature expressed its intention to implement article IX, section 14 to the fullest extent.   We conclude that the school district had authority to impose a school facility fee.⁸

The CBIA court did not consider the effect of article IX, section 14 or Education Code section 35160 in stating that school districts have no police power to impose development fees.   We thus disagree with the dicta in CBIA, supra, 206 Cal.App.3d at p. 234, 253 Cal.Rptr. 497 that specific legislative authorization was required for such fees.

Lincoln further argues that article IX, section 14 was not intended to confer authority on the District to adopt development fees.   Lincoln cites the voters' pamphlet which accompanied the 1972 initiative measure which enacted the section:

“The Detailed Analysis by the Legislative Counsel of Proposition 5 in the Voters' Pamphlet for the general election of November 7, 1972 (p. 14) explains what was sought to be accomplished by the amendment:

“ ‘Under the existing provisions of the Constitution, statutory authority is required to permit school boards to initiate and carry out programs or activities.

“ ‘This measure would amend the Constitution to authorize the Legislature, ․ to enact legislation to permit school boards to initiate and carry on any programs, activities, or otherwise act in any manner, not in conflict with the laws and purposes for which school districts are established.

“ ‘Thus, the Legislature would not have to grant specific authority for a school board to carry out a particular activity, but could authorize school boards to carry out any activity if it is related to school purposes and is not prohibited by law.’ ”  (60 Ops.Cal.Atty.Gen. 177, 178–179 (1977).)   The Legislature has since implemented article IX, section 14 to the broadest possible extent.  “There is no doubt that with the enactment of [Education Code section 35160] the strict rule enunciated by the courts that school districts are public agencies with extremely limited powers is no longer applicable.  [Citations.]”  (Id., at p. 180.)   We thus disagree with Lincoln's contention that the scope of article IX, section 14 was limited.

Candid Enterprises.   Our conclusion that the District had authority to impose the fee is buttressed by Candid Enterprises, Inc. v. Grossmont Union High School Dist. (1985) 39 Cal.3d 878, 218 Cal.Rptr. 303, 705 P.2d 876 and Builders Assn. of Santa Clara–Santa Cruz Counties v. Superior Court (1974) 13 Cal.3d 225, 118 Cal.Rptr. 158, 529 P.2d 582.   In Candid, the county board of supervisors adopted an ordinance that set a precondition to approval of a development proposal involving a special use permit or rezoning:  a developer must present evidence “that public school services will in fact be provided concurrent with the need.”  (Candid, supra, 39 Cal.3d at p. 883, 218 Cal.Rptr. 303, 705 P.2d 876.)   The county accepted “school availability” letters from school districts as the required evidence.   In 1977, a developer entered into an agreement with a school district to pay a specified fee in exchange for a school availability letter.   Meanwhile, the Legislature adopted the School Facilities Act which took effect on January 1, 1978.  (Ibid.)  The developer paid the agreed fees under protest, arguing that the School Facilities Act preempted the District's authority to collect any fee other than that allowed by the Act.   However, the Candid court held that the School Facilities Act did not preempt local action to collect additional fees for permanent school facilities.  (Id., at p. 885, 218 Cal.Rptr. 303, 705 P.2d 876.)   The Candid court cited Builders Assn., supra, 13 Cal.3d at p. 232, fn. 6, 118 Cal.Rptr. 158, 529 P.2d 582 for the proposition that “the imposition of school-impact fees is generally valid.”  (Candid, supra, 39 Cal.3d at p. 885, 218 Cal.Rptr. 303, 705 P.2d 876.)

In Builders Assn., plaintiffs challenged an initiative ordinance which prohibited rezoning of certain land for residential development “unless the school districts ‘in which the subject land is situated’ certify that the party seeking rezoning has agreed to provide a satisfactory alternative to permanent school construction.”  (Builders Assn., supra, 13 Cal.3d at p. 228, 118 Cal.Rptr. 158, 529 P.2d 582.)   In upholding the ordinance against a challenge that it unlawfully delegated authority over zoning to the school district, the court explained, “Plaintiffs suggest that the school district might require a property owner to dedicate land, construct improvements, or pay fees as a condition to certification.   The imposition of such conditions, however, would not necessarily render the ordinance invalid, particularly if the conditions related to the need for increased facilities created by the zoning change.   [Citations.]”  (Id., at p. 232, fn. 6, 118 Cal.Rptr. 158, 529 P.2d 582, emphasis added.)   Although Candid and Builders Assn. present factual circumstances somewhat different from those we consider, nonetheless, we glean from those cases the general principle that courts permit flexibility in local governments' responses to school overcrowding caused by new development.   Such responses may include school districts' imposition of fees as a condition to issuance of a building permit.   We conclude that the District had authority to impose the fee.

 Section 65961.   Lincoln next contends that the fee violates section 65961, which states, “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, ․ shall not require as a condition to the issuance of any building permit ․ for such single- or multiple-family residential units, conformance with or the performance of any conditions that the city ․ could have lawfully imposed as a condition to the previously approved tentative or parcel map․”

In Fontana Unified School District v. City of Rialto (1985) 173 Cal.App.3d 725, 219 Cal.Rptr. 254, a developer challenged fees imposed under the School Facilities Act even though final maps had been approved and recorded four years before the ordinance imposing the fees was adopted.   The court rejected the developer's contention that “․ school facilities fees should be viewed as conditions for subdivision approval on the same footing as fees enumerated in the Map Act and as such the city may not impose new conditions upon a subdivision after approval of the tentative and final maps.”  (Id., at p. 731, 219 Cal.Rptr. 254.)   The court explained, “The school facilities fee is not in the Subdivision Map Act but is authorized by a separate act.   The Subdivision Map Act is primarily concerned with land use planning.   Parks and recreational facilities are an integral part of land use planning, whereas, the purpose of the School Facilities Act is to provide funding for interim school facilities where overcrowding results from the housing development.   Land use planning must be determined in advance of the development because of its permanence, whereas, impaction cannot be determined until it occurs.”   (Ibid.)  The Fontana court relied on Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785, 132 Cal.Rptr. 386, 553 P.2d 546 to support its holding.   In Avco, the court stated, “The contention that Avco was entitled to a building permit because the county would have been compelled to issue it upon mere application has no merit.   The Orange County Building Code (§ 302(a)) provides that a building permit may not issue unless the plans conform not only to the structural requirements of the code but to ‘other pertinent laws and ordinances.’   This provision codifies the general rule that a builder must comply with the laws which are in effect at the time a building permit is issued, including the laws which were enacted after application for the permit.  [Citations.]  A landowner which has not even applied for a permit cannot be in a better position merely because it had previously received permission to subdivide its property and made certain improvements on the land.”  (Avco, supra, 17 Cal.3d at p. 795, 132 Cal.Rptr. 386, 553 P.2d 546, fn. omitted;  cited with approval in City of West Hollywood v. Beverly Towers, Inc. (1991) 52 Cal.3d 1184, 1192–1193, 278 Cal.Rptr. 375, 805 P.2d 329.)

We conclude that under Fontana and Avco, the fee does not violate section 65961.

DISPOSITION

The judgment is affirmed.   Each party to bear its own costs on appeal.

FOOTNOTES

1.   The City is not a party to this appeal.

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

3.   City Municipal Code section 17.08.050 states, “The absolute policies are intended to address the most critical issues associated with residential development.   These include assuring neighborhood compatibility, compliance with adopted plans, adequacy of public facilities and services, and protection of the environment and public health.   Each project must satisfy all absolute policies before approval can be granted.   These policies are used in evaluation of a residential project as described in Section 17.06.030.“․“C. Public Facilities and Services.“1. The project includes school facilities or adequate school facilities exist which are or will be capable of accommodating students generated by this project.   Written certification from all affected school districts is required within ninety (90) days prior to the final map approval in the case of the subdivision map or issuance of permits in the case of all other residential projects.”  (Emphasis added.)

4.   The District's resolution states, “To establish a method whereby the District may mitigate and alleviate the conditions of overcrowding within the District, the District adopts the following schedule of school facilities fees upon each single family residential dwelling unit:“Fee schedule:  $2,633.00 per dwelling unit“Fees charged pursuant to this Resolution shall be paid to the District by the developer of a residential project prior to obtaining a building permit for each residential unit.   Fees paid to District shall be paid at its offices․”

5.   Article XI, section 7 of the California Constitution provides, “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.”  (Emphasis added.)

6.   In 1986 the Legislature enacted section 53080, which provides, “(a) (1) The governing board of any school district is authorized to levy a fee, charge, dedication, or other requirement against any development project, ․ for the purpose of funding the construction or reconstruction of school facilities, ․” Section 65995 limits the amount of any such fee or charge to $1.50 per square foot in residential developments.   These statutes took effect after the District imposed the fees at issue in the instant case, and are therefore inapplicable.

7.   Implementing legislation provides, “On or after January 1, 1976, the governing board of any school district may initiate and carry on any program, activity, or may otherwise act in any manner which is not in conflict with or inconsistent with, or preempted by, any law and which is not in conflict with the purposes for which school districts are established.”  (Educ.Code, § 35160.)

8.   This conclusion renders moot Lincoln's contention that the City did not lawfully delegate its own police powers to the District.

DABNEY, Acting Presiding Justice.

HOLLENHORST and McKINSTER, JJ., concur.