ATTACHMENT A - Granicus

SheppardMullln

December 15, 2011

VIA ELECTRONIC NIAlL [[email protected]]

Michael Jenkins Jenkins & Hogln, LLP Manhattan Towers 1230 Rosecrans Avenue, Suite 110 Manhattan Beach, CA 90266

Re: 612 Croft Avenue, City of West Hollywood

Dear Mr. Jenkins:

Shepperd Mullin Rlchlsr & HampiOn LLP Four Embarcod810 Contor, 17th Floor San F111nclsca, CA94111-4109 415.434.9100 main 415.434.3947 main ra• www.sheppardroollln.com

415.774.29911 direct [email protected]

FIB Number. 29YK·165715

Thank you for your time and consideration in dlscussll"{{ this project with me today. I have relayed your concern about the liming for the client to apply for the building permit. Mr. Lehrer-Greiwer appreciates your concern, and he is prepared to proceed with the building permit application in short order. First, however, he Is seeking clarification and agreement as to the !Imina for payment of the various development fees {other than permit processing and inspecllon fees) that the City has requested in connecllon with the approval of this development.

Deferral of Fee Payments Is Reouired bv Government Code Section 66007

As we discussed, the Legislature has expressly provided in Government Code Section 66007 {a) a general rule that the time for payment of most types of fees Imposed as conditions of development Is to be deferred until the comole!lon of the development project, I.e., eHher {a) final inspection, or (b) issuance of certificates of occupancy ("whichever occurs first''). (A copy of Secllon 66007 Is enclosed for your convenience.) Moreover, In response to the current financial difficulties confronting the home building Industry, the Legislature amended this statute In 2008 to authorize local agencies, such as the City, tofurther"deferthe colleclion of one or more fees up to the close of escrow." (Section 66007(g), as amended by Stats. 2008, ch. 246.) While this last amendment does not appear to be mandatory, it is nevertheless strong evidence of the legislative recognition of the pubUc policy interests in encouraging the deferral of collection of development fees.

Accordingly, we respectfully request that the City CjOnfirm that it will abide by controlling California law and ~the collection of certain fees {inclusi~nary housing In lieu fees, school facilities fees, park and traffic fees) at least until the time of completion of the project as defined In Secllon 66007(e). The appUcent can then finalize his arrangements for financing and depositing those City fees which are properly due and payable at the time of applying for building pemtits.

For example, Section 66007{d) specifies that this general rule (deferring payment of local fees until the time of completion) is not applicable to fees for "code enforcement or inspection services." and our client fully intends to pay those plan check, permit processing, and Inspection fees to the City up front at the time of building permit issuance.

ATTACHMENT A

..

SIIEPI'AliD MULLIN IUCliTER & IIAIIl"'''O LLP

Michael Jenkins December 15,2011 Page2

While Section 66007(b) does provide for possible exceptions to the general rule of fee payments not baing due until completion, we are not aware that the Dated fees requested by the City of West Hollywood would be qualified or eligible as "exceptions" to this rule. For example, we are not aware thet these fees would be for "reimbursement" to the City for prior expencrrtures, or that the City has already appropriated funds and adopted construction schedules for any of the funds dedicated to these particular fees as to which we request deferral.

"SecuritY" for Deferred Fee Payments?

We also discussed, briefly, the City's possible concern about "security" for fees that have been lf)'lposed as conditions of the project but which may not, as a matter of State law, be coUected until the completion of the project. There is no authoritY for the City to demand that the developer cost a bond or leHer of credit in order to expect that the City comply with State law as expressed in Section 66007.

Presumably the Legislature recognized that the City would already be holding the best possible "security'' for payment of any deferred teas - the completed buildings themselves, which could not be transferred or occupied until and unless the City Is paid the appropriate fees and Issues the necessary certlflcete of occupancy or final inspection. To the extent that the City may deem it necessary or appropriate to seek further "security" it appears that the only legal means of doing so Is specified in Section 66007(c), which allows the City to require the property owner to "execute a contract to pay the fee ... within the time specified in subdivision (a)."

Conclusion and Request for Conf!flllation;

We therefore respectfully request your review and urgent consideration of these points. We respectfully request that the City provide clarification and confinnation that It will comply with these statutory limits on the collection of fees, so that our client may timely comply with the City's time frame for applying for buDding pennlls, and may properly pay or deposit the appropriate amounts of fees, and only such fees Which are lawfully due or collectible at this point In the process.

I apologize for the shortness of time for your review and response, especiallY in light of the hoHday season, and appreciate your thoughtful response to our concerns. Please contact me at any time if you would like further infonnation, or would like to discuss this iri further detail. Thank you again for your consideration.

Wll2-WEST:FPDI4043DOB9B.2 Enclosure

SlllWPAJW i\IULLI;\1 - --~--- -- ---\ll1"~1{1f 'II "~IIC!T'f'UIN'P~J" Lll'

ATTORNEYS AT LAW

December22, 2011

Mr. John Keho Planning Manager CITY OF WEST HOLLYWOOD 8300 Santa Monica Boulevard West Hollywood, CA 90069

Four·Embarcadero Center I 17th Floor I Silo Francisco, CA 94111·4109

415-434·9100 offiCI! I 415-'134-39471ax I www.sheppardmullln.com

415.774.2996 dllect [email protected]

FRo N~.mber. 29YK·165715


Notice of Payment Under Protest, and Statement of ObjectionsFees Paid as Conditions of Application for Building Pennlts [Cal. Gov't Code Sections 66020, 66021, 66007]

Dear Mr. Keho:

On behalf of the applicant and developer of the 11-unit residential condominium project, located at 612-616 North Croft Avenue In West Hollywood (the "project"), we respectfully provide this notice of protest as to the City of West HollyWood'!! ("City") requirement that the applicant pay the ''fees" described below in the amounts demanded by the City as conditions of issuance of building permits" for this project Our client has paid or will soon be paying the fees described below under protest, in order to obtain Issuance of necessary building permits for this project.

As summarized in this letter, we respectfully submit that the City may not lawfully demand such fees as conditions of approval, the amounts of the fees demanded are arbitrary, unjustified and unreasonable, and even if the fees were valid, the City violates state lew by demanding payment at this time rather than deferring payment until the completion of construction and Issuance of certificates of occupancy. Accordingly, any and all payment of the disputed "fees" described below, or any other performance of City demands reflected in those fees, should be deemed to be submitted or executed under crotest.

In particular, this protest applies to the City's demands for payment of purported ''fees" required in Ueu of dedicating or transferring newly built homes to the City's housing program under the City's "lncluslonary zoning" mandates. It also applies, however, to other fees demanded by the City as conditions of building A&rmlt issuance (e.g., traffic Impact fees, park in lieu fees, school facilities fees) to the extent that the payment demands are (a) premature, (b) based on erroneous assumptions of ''net" new chargeable areas, and (c) arbitrary, unjustified and invalid. ·

This Notice of Protest applies to any payment or performance of the disputed fees which have been or may be tendered In connection with our clienrs project or appllcation(s) for permits, inspections, occupancy certificates or other development approvals for this project. This is a continuing Statement of Protest for all such disputed fee payments and exactions levied on

' I

SHEPI\IRD IIULLIN Rl!'ll'IHR & H.UIPTON LLP

Mr. John Keho December 22, 2011 Paga2

the above-described project. Payment or performance of the City's demands shall be deemed to be under protest, and in full reservation of all rights to seek refunds, credit, interest, damages or other reHef. The applicant respectfully asserts and reserves ali rights to seek judicial review and invalidation of the enactments and actions under which these disputed fees or exactions have been applied to this project, and such other forms of relief as provided by the Mitigation Fee Act [Government Code Sections 66000 et seq.], or by other California law, and a claim for relief from the disputed fees and housing exactions as provided above and by Government Code Sections 81 o;.sea, or as otherwise provided by the constitution and laws of the State of California and of the United States.

A. Oblectlons to the Cltv's "lncluslonary Zonlnau Requirements and "In lieu Fees''

Our client strives to work constructively with the City and with other governmental agencies to mitigate its "fair share" of the equitably allocated costs of additional public facilities and services which may be actually caused by Its project, and to address public needs which may be actually and ressonably attributable to impacts of our client's development. However, the City has not attempted to demonstrate that Its so-called inclusionary zoning housing requirements ("IZ progrem") or that the fees imposed in lieu of lhasa IZ housing demands reflect our client's ''fair share" of the community's perceived needs for additional affordable housing. The City has failed to provide any evidence demonstrating that our client's development, or new residential development In general, in any way caused or increased any additional public need to provide additional "lnclusionary zoning" housing for other residents of the City, or to otherwise "justify" the exaction of the IZ in lieu fee demands against this residential project.

The Croft Avenue project will Involve the redevelopment of the site by replacing two older houses With eleven new condominium homes, to provide new residences consistent with the City's land use plans for the area. Studies of urban housing economics and other empirical evidence indicates that an increase of the supply of housing In a community, In areas planned and deemed suitable for residential development, contributes to improved affordability of housing In the community In general. The circumstances surrounding this project support the view that this development may help to provide a net reduction In the community's perceived need for affordeble housing. We .are not aware of any substantial evidence demonstrating any adverse impacts on the City's needs for affordable housing caused or Increased by this project or by similar residential development In general, nor demonstrating any reasonable relationship between the burden of these IZ exactions and any quantified adverse impact on public needs.

The City's application of Rs IZ housing requirements egainst this project, whether In the form of demands to set aside and ded(cate actual new homes to the City's housing program at prices dictated by the City or by payment of ''fees• levied in lieu of such property dedication requirements are therefore unjustified, excessive, and unlawful. The grounds for objection and protest Include, without limitation. the following:

SHEl'PAI!D !!ULLIN RICIITEil & HAMPTON LLP

Mr. John Keho December 22, 2011 PageS

1. No Demonstration That IZ Exactions Are Reasonably Related to Impacts of This New Residential Development:

So far as we are presently aware, the City has never demonstrated that our client's development of new market-rate housing in this project in any way causes or increases the City's needs to provide subsidized, "lnclusionary zoning" C'IZ"), housing. Similarly, we are not aware that the City ever considered or publicly provided any evidence demonstrating any reasonable relationship between the amounts of the IZ housing exactions imposed against this project and the impacts of the project (If any) on legitimate public needs for subsidiZed housing. Accordingly, the City's fees fail to comply with constitutional and statutory requirements, as explained by the Court of Appeal in BIACC v. City of Patterson (2009) [affordable housing In lieu fees held Invalid for failure to demonstrate the required reasonable relationship between the amount of the fees and any deleterious impacts on public needs caused by the new residential development].)

The City's imposition of these exaclions on this residential development fails to meet constltutional"nexus" requirements. (See, e.g., NoJian v. California Coastal Comm. (1987) 463 U.S. 625; Dolan v. City of Tigard (1994) 512 U.S. 374). The California Supreme Court has affirmed that these constitutional limitations on fees and exactions are included In the California Mitigation Fee Act (Gov't Code §§ 66000-66024), and are applicable to development Impact fees. (Ehrlich v. City of Culver City (1996) 12 Cal.4111 654.) The Court hes also explained that even legislatively-enacted development fees and exactions must meet these nexus-type requirements and must be shown to be reasonably related and limited to amounts necessary to address deleterious public impacts {If any) of new development (San Remo Hotel v. City & County of San Francisco (2002) 27 Caf.41h 643, 671-72 [fees imposed "in lieu" of housing conversion requirements].)

The IZ in lieu teas imposed against this project are not supported by evidence demonstrating any justification or the required "nexus"- {1) they must be shown to be reasonably related to adverse public Impacts actually attributable to proposed development: and (2) they must be shown to be "roughly proportional" to the costs of providing facilities or services necessary to address needs reasonably attributable to the project. The imposition of these unjustified fees against this project is in excess of the City's legal authority.

2. No Demonstration That The Amounts of IZ Housing Exactions Demanded from This Project Account For The Net Impacts on Community Housing Affordablllty:

So far as we are presently aware, the City has never demonstrated, or attempted to demonstrate, that its Imposition of fees or IZ, housing exactions egainst this project took Into account the beneficial impacts of additional new housing in the community. The expansion of the community's overall housing stock resulting from our clienrs residential development in an area designated and deemed suitable for such development frequently results in an overall improvement in the affordabillty of housing in general in the City. Unless the City's imposition of its IZ housing exactions on the project takes such positive impacts into account, the imposition of these IZ fees or exaclions would be unjustified, excessive, and invalid. (See, e.g., Wannington Old Town Associates v. Tustin Unified School District (2002) 101 Cai.App.41h 840 [school facilities fees on residential redevelopment project were invalidated because dislrict failed to take into

SH!li'PARD I!ULLIN IUCH'l'!l!l & !!AMP'l'ON LLI'

Mr. John Keho December 22, 2011 Page4

account the net impacts of redevelopment, including replacement of former student-generating housing at site].)

3. No Demonstration That IZ Exactions Are Reasonably Related to Impacts of New Residential Development Generally:

. So far as we are presently aware, the City has never factually demonstrated, or attempted to demonstrate, that the development of new market-rate homes on lands designated for residential development causes any particular adverse or deleterious public impacts on the City's perceived needs for subsidized or IZ housing, or justifies the exaction of IZ homes, or any other form of private subsidy or dedication from residential development generally, as required by the City's IZ housing policies.

The City's IZ housing policies, as enacted and as applied by the City against this project, improperly purport to require a contribution of constructed homes, or other consideration, at ratios or In amounts which greatly exceed any amounts that might be shown to be reasonably related tD any adverse public Impacts (if any) of such new market rate residential development generally on the City's legitimate needs for such iZ housing. The City's IZ housing exactions therefore fall to meet the constitutional requirements for such policies or enactments, which must be shown to be "reasonably related to the deleterious public impacts of new development," as explained by the California Supreme Court. (See, San Ramo Hotel v. City & County of San Francisco (2002) 27 Cal.4111 643, 671·72 [city's housing conversion Impact fee ordinance].)

The City has not demonstrated how new market~rate housing development In general has caused an increased need for additional subsidized housing, at least not in the amounts required from this project under the City's application of its IZ housing mandates.

4. The IZ Exactions Are NOT Limited to Amounts Reasonably Necessary Or Apportioned As To Needs Attributable To New Development:

The IZ exactions are not limited to the reasonable impacts of new development on quantified public needs or costs of providing new facilities made necessary by new development, and the exactions have been Improperly imposed against this project in excessive amounts, without apportionment between IZ housing "needs" fairly attributable to new development and other existing community-wide housing needs.

California law requires that government agencies, such as the City, must demonstrate .Q2IIl (1) the reasonable amount dt the costs of providing new facilities deemed necessary to accommodate the impacts of new development, and (2) the reasonableness of the basis for determining the apportionment of those costs to new development. (See, e.g., Ehrlich v. City of Culver City, supra; see also, e.g., Williams Communications v. City of Riverside (2003) 114 Cai.App.4111 642, 656 [invalidated city's arbitrary charge for permission to install conduit in public streets]; Rohn v. City of Visalia (1989) 214 Cal.App.3d 1463, 1476 [Invalidating city demand for traffic Improvements and street dedication unsupported by evidence showing "nexus" between impacts of project and "need" for improvements); Shapelllndustries Inc. v. Governing

SlillPI'MUl A!IJLIJIIIUCHTER & HAMJ'I'ON LLP

Mr. John Keho December 22. 2011 PageS

Board (1991) 1 Cai.App.4111 218, 234-235 [invalidated school facilities fees which were not apportioned between needs attributable to new development and other existing needs].)

5. The IZ Housing Exactions Improperly Include Costs for Correcting Existing Deficiencies In the Community's Provision of "Affordable Housing":

The City's IZ housing exactions improperly seek to address the City's unrnet needs for more "affordable housing" - a need which already exists independently of City approvals of new or additional market rate housing projects. The IZ exactions Imposed against this project unlawfully seek to shift the community-wide costs of correcting existing deficiencies in the community's stock of affordable housing, or deficiencies in the City's perception of such affordable housing opportunities, which are more accurately attributable to other factors, rather than to new residential development. Exactions on new development csnnot include disproportionate contributions which are attributable to the costs of addressing existing deficiencies. (See, e.g., Government Code § 66001 (g); Bixel Associates v City of Los Angeles (1989) 216 Cai.App.3d 1208, 1218-9.)

6. The IZ Exactions Fail to Accurately Reflect Other Housing Measures or Credit for Potential Funding Sources for Housing Improvements:

The current IZ exactions imposed against this project apparently fail take Into account additional means which may be used to improve the community's stock of affordable housing, such as rehabilitation and renovallon of existing housing, state or federal housing assistance, redevelopment agency contributions, community-wide funding sources, and other similar housing opportunities. In addition the IZ housing program fails to provide a credit against fees or exactions if such fUnds are received or anticipated, falls to credit non-fee sources of affordable housing opporlunitles, and fails to credit new development for additional general tax revenues generated by new residents which may be applied to affordable housing programs.

7. The IZ Exactions Raise Issues of Compliance With State Housing Law:

Increased fees or excessive requirements which are mandated as conditions of developing new housing in general are viewed as constraints on the supply of housing generally by the California Department of Housing and Community Development, and thus operate as a deterrent to the increase or Improvement of affordable housing, which is contrary to State Housing Law (e.g., Government Code §§ 655!!3(a)(5); 65589.5.) The State Housing Element Law also requires that if a community requires i\ew residential development to set aside a fixed percentage of homes for affordable housing, it must allow density bonuses and must allow such requirements to be met by for-rent units. The City fails to provide any density bonus or other zoning, planning or development concessions or incentives as part of its mandatory affordable housing and in lieu fee payment requirements

SHE!'I'ARD MULLIN RICHTER & HA!!I'!ON LLP

Mr. John Keho December 22, 2011 PageS

8. The IZ Fees In lieu of IZ Housing Exactions Are Actually Unlawful Special Taxes or Fees For Generally-Available Governmental Services:

The California Attorney General has published an Opinion characterizing IZ exactions such as these as "special taxes" requiring voter approval. To the extant that these IZ exactions excesd the reasonable costs of providing facilities shown to be actually attributable to development or to this type of development, they constitute "special taxes" within the meaning of Article XIII (A) of the California Constitution; which require approval of two thirds of the electorate. (Government Code§§ 50076-50077.) Under the California Constitution, exactions which excesd the reasonable costs of providing facilities or services made necessary by users or developers may be Invalid "special taxes. • (E.g., Bay Area Cellular Tel. Co. v. City of Union City (2006) 162 Cai.App.4111 686.) These IZ exactions also appear to be Inconsistent with the California Constitution, articles XIII(C) and (D), prohibiting the levying of ''fees" for "generally-available governmental services" such as these affordable housing amenities.

9. The IZ Fees In Lieu of IZ Housing Exactions May Be Pre-Empted by State Laws:

To the extent the IZ fees are imposed as "fees in lieu" of dedicating or transferring homes and property, they would appear to be inconsistent with, and pre-empted by, the California Mitigation Fee Act (see Government Code Section 66000 et seq.) To the extent that these fees are Imposed in lieu of requiring the dedication of "affordable housing" units, they would appear to be inconsistent with, and pre-empted by, the State Housing Law and Density Bonus Law. To the extent that these exactions may Impair or infringe on the rights of the owner/developer to set the sales prices o~ housing units it has constructed, or on other rights of the owner/developer to manage and control housing units for residential rental purposes, they would appear to be inconsistent with, and pre-empted by, the Costa-Hawkins Act (Clvn Code§§ 1954.50 et seq.)

10. Denial of Equal Protection of the Laws and Substantive Due Process:

To the extent that these IZ fees and exactions may be used to try to remedy preexisting deficiencies or needs not attributable to this project, it would appear that the City may be requiring one class of property owner to contribute more to affordable housing programs (which benefit the community as a whole) than other residents. In the absence of any rational basis for shifting such a public burden to new market-rata residential development rather than equitably sharing the costs of providing these amenities among the entire benefited community, the imposition of these fees appears to be arbitrary, in violation of constitutional rights to due process and to the equal protection of the laws.

\ We respectfully reserve the right to specify further grounds for protest of the

disputed IZ In lieu fees and exactions upon rsvlew of the City's documentation and in light of developments in the law In this area.

SHEPI'ARD MULLIN RICll'l'llR & IWII'l'ON LLP


B. Oblectlons Common to All CitY Fee Demands on this ProJect:

(1) Erroneous Assumptions of NET Square Footage Subject to Payment of Fees

The City's demands for fee payments is erroneously based on unfounded and excessive assumptions regarding the NET new residential units and/or NET new square footage of residential area that may be subject to the City's fee calculations.

This project involves the proposed demolition of the two older houses currently existing on the site, and replacement with eleven (11) new homes. The nm impact of the project Is therefore an increase of only nine (9) new residential units on this property.

The City's calculation of "fees" (IZ in lieu fees as well as other impact fees based on number of housing units or square footage of new residential space) did not take Into account the demolition of the existing units on the property, and the redevelopment of the site with new market-rete housing In the project. Accordingly, the replacement of those older houses by our clienfs new residential development will create only a limited net change in impacts on City facilities or demands for IZ housing. To the extent the City's fee calculations fail to take into account the net impacts of the redevelopment of the site, the imposition of these fees in these amounts is unjustified, excessive, and Invalid. (See, e.g., Warmington Old Town Associates v. Tustin Unified School District (2002) 101 Ca1App.41h 840 [school facilities fees on residential redevelopment project were . invalidated because disbict failed to take Into account the nm Impacts of redevelopment, including replacement of former housing with fewer new homes).)

Moreover, the IZ In lieu fee was based not only on the hab~able interior spaces of 19,011 sq. ft. (gross new space), upon which the school fee Is based, but also on all of the exterior private patios and decks. So the City Is erroneously basing its fee on 21,896 (gross) sq. ft.. .

(2) Erroneous and Premature Demand for Payment

Regardless of the invalidity or lack of justification for the amounts of the various fees demanded by the City, discussed above, we reiterate our position (as detafted in our letter of December 15, 2011, to the City Attomey) that the payment of the various development fees (other than permit processing and Inspection fees) required by the City In connection this development should be deferred until completion of the improvements, pursuant to Government Code Section 66007. That Section specifies the general rule that the time for payment of most types of fees imposed as conditions of development Is to be deferred until the completion of the development project, I.e., either (a) final inspection, or (b) issuance of certificates of occupancy (''Whichever occurs first"). \

Deferral of Fee Pavments Is Required bv Government Code Septjon 66007. Acccrdingly, we respectfully request that the City defer the collection of all these m~igation and impact fees (inclusionary housing in lieu fees, school facilities fees, park and traffic fees) at least until the time of completion of the project as defined In Section 66007(e).

SHEPPAI!D MULLIN RICHTER & IIM11'11JN LLI'

Mr. John Keho December 22, 2011 Page a

Request for Documentation

This letter also constitutes our request for copies of any and all documentation Oncluding all resolutions, evidence, and analyses), relied upon by the City to purportedly justify the enactment or imposition of the disputed IZ housing in lieu fees or similar exactions.

Conclusion

We respectfully request that you promptly review this Statement of Protest and provide us with your response. We also request that you notify us in the event that there is any available process for appeal or administrative review through your agency without resort to judicial remedies. To the extent that disputed fees are paid, this letter reiterates our request for the immediate return of an disputed fees and IZ contributions (and credits or compensation therefor), together with Interest as provided by statute.

Please contact me at any time if you would like further information, or would like to discuss this In further detail. Thank you again for your consideration.

an ER & HAMPTON LLP

W02-WEST:FPD\404300898.5 Enclosure (Letter dated 12115111 toM. Jenkins, City Attorney)

cc: Michael Jenkins, Jenkins & Hagin, City Attomey (w/encl.) Adrian Gallo, Project Planner (w/encl.) Jonathan Lahrer-Gralwer, Developer and Applicant (w/encl.)

RUTAN A!'TORl\'EYS AT LA\Y.:

Honorable Mayor Jeffrey Prang And Members of the City Council CITY OF WEST HOLLYWOOD 8300 Santa Monica Boulevard West Hollywood, CA 90069

March 8, 2013

Re: Appeal to City Council --March 18, 2013 Agenda

David P. Lanferman Direct Dial: (650) 320-1507

E~mail: [email protected]

Appeal for relief from Affordable Housing In Lieu Fees paid under protest 616 Croft Avenue, West Hollywood

To the Honorable Mayor and Members of the City Council:

My clients and I appreciate this opportunity to present our appeal for refund, waiver, adjustment, or such other relief as the City Council may determine to be appropriate from the imposition of "affordable housing in lieu fees" (aka "inclusionary zoning fees") which were previously paid under protest by our clients in the amount of $540,393.28 as a condition of obtaining building permits.

Background:

The appellants are the owners and developer of the residential condominium project, located at 612-616 North Croft Avenue in West Hol!ywvod (the "project"). The City approved this project in July 2005 (Res. No. 05-3268 and -3269), which included approvals for the demolition of two older residential buildings on the site, and the redevelopment of the site by replacing those older houses with eleven new condominium homes, to provide new residences consistent with the City's land use plans for the area. The City affirmatively determined and declared that "this project would help the City achieve its share of the regional housing need" by creating II new homes, and a net gain of 9 new residential units. Studies of urban housing economics and other empirical evidence indicates that an increase of the supply of housing in a community, in areas planned and deemed suitable for residential development, contributes to improved affordability of housing in the community in general. The circumstances surrounding this project support the view that this development will help meet the community's perceived need to improve the affordability of housing.

In the course of getting the project in position to receive building permits, our clients were required to advance the payment of more than half a million dollars toward these fees in late 2011. As reflected in the correspondence between our office and the City, City staff rejected our requests that payment be deferred, consistent with prevailing state law, until such time as the

Rutan & Tucker, LLP I 3000 El Camino Real, Suite 200. Palo Alto. CA 94306

650-320-1500 I Fax 650-320-9905

Orange County I Palo A!to I wv·:"vV rutan com

2644/03060!-0002 5142358.1 aOJ/081!3

RUTAN RUTAN 6. TUCKE:R, LLP

Honorable Mayor Jeffrey Prang March 8, 2013 Page 2

project might actually be constructed and ready for final inspection. California law provides generally that the payment of development fees should be deferred until the time of final inspection or certificate of occupancy in most cases, unless specified exemptions call for earlier payment (Government Code § 66007). None of the statutory exemptions were applicable to these fee demands.

Following the City's rejection of our request that the fees in question not be demanded unless and until the project were actually undertaken and completed, our clients were put to great difficulty and stress in order to secure the necessary financing to advance those fee payments as demanded, at a time when such financing was extremely scarce and very expensive. The demanded fees were paid in full, the time of building permit issuance.

The demanded fees were, however, paid under protest and with a written request for the Council to provide a hearing or appeal from the fee imposition, as provided by the City's Municipal Code. (A copy of that statement of protest is attached hereto, at Tab 1.)

There was initially no response to our protest and request for an appeal. Civil litigation was subsequently filed by our clients, seeking declaratory and injunctive relief regarding the lack of constitutionally-required evidentiary justification for the "affordable housing in lieu fees" demanded from our clients, in addition to several other grounds. The lawsuit seeks a refund and restitution of the unjustified and premature fee collections, as well as invalidation of the City's affordable housing requirements on new development generally (LA Superior Court # BC 498004).

Legal counsel for the City subsequently recognized that the Council had not been afforded an opportunity to address our request for an appeal or to consider our clients' request for relief from the disputed fee payments, and attorneys for both sides then agreed (with Court approval) to put the litigation on hold while this appeal to the Council is under consideration.

We therefore appreciate and welcome this opportunity to ask the Council to review our appeal and to provide the appropriate refund, waiver, or adjustment of the unjustified fees.

Grounds for Relief From the "Affordable Housing In Lieu Fees"

1. There Was No Evidence In the Record Demonstrating That the Fees Demanded (and Paid Under Protest) Were Reasonably Related to Needs Caused by the Development, as Required by Law:

The fees demanded by the City, referred to as affordable housing in lieu fees or as "inclusionary zoning" in lieu fees, were not factually justified by any substantial evidence in the record demonstrating that the amount of the fees was reasonably related to any identified impacts of new residential development generally or of our clients' project in particular. Such an

2644/030601-0002 5142358.1 a03/08113

RUTAN RUTAN & TUCKER. LLP


evidentiary showing is required by the federal and state constitutions. As summarized by the California Supreme Court, in San Remo Hotel v. City & County of San Francisco (2002) 27 Cal.4'h 643, 671: "As a matter of both statutory and constitutional law, such fees [residential hotel conversion in lieu fees] must bear a reasonable relationship, in both intended use and amount, to the deleterious public impact of the development."

The City's own Municipal Code recognizes the necessity for such a demonstrated "reasonable relationship between the impact of a particular residential or commercial development on the demand for affordable housing" and the amount of the fees demanded from the developer, and the absence of such a demonstrated reasonable relationship is grounds for "an adjustment, reduction, postponement, or waiver of that fee .... " (WHMC § 19.64.040(C).)

The failure to provide such an evidentiary justification for the fees, in any amount whatsoever, therefore requires that the fees be set aside and refunded, in full.

The only published California Court of Appeal decision on similar facts requires this outcome. (Building Industry Association v. City of Patterson (2009) 171 Cal.App.4'h 886 [Court of Appeal held that the City's ordinance establishing "affordable housing in lieu fees" was invalid because it was not supported by evidence showing the fees to be reasonably related to needs created by new development, and the disputed fees paid under protest were subject to full refund to developer].)

More recently, on July 11,2012, the City of San Jose's "inclusionary housing ordinance" (similar to the West Hollywood ordinance) was declared invalid following a trial in Santa Clara County Superior Court, based on the same type of failure to provide substantial evidence demonstrating a reasonable relationship between the exactions of housing units on pricerestricted terms, or alternative payment of fees in lieu of such inclusionary housing exactions, and any increased public needs for additional affordable housing caused by new residential development. (California Building Industry Association v. City of San Jose; a copy of the "Judgment After Trial Declaring the Invalidity of City of San Jose Ordinance No 28689, and Enjoining Enforcement or Implementation of Ordinance No 28680" is attached hereto, at Tab 2. The judgment is now on appeal by the City.) As explained by the trial judge in his Order enjoining the implementation of the ordinance in that case:

This Court had previously asked the City of San Jose to demonstrate where in the record was there evidence demonstrating the constitutionally required reasonable relationships between deleterious public impacts of new residential development and the new requirements to build and to dedicate the affordable housing or pay the fees in lieu of such property conveyances, The City of San Jose has appeared to be unable to do so.

2644/030601-0002 5142358.1 a03/08113

RUTAN RuTAN lio TUCKER, LLP

Honorable Mayor Jeffrey Prang March 8, 2013 Page4

Since the City of San Jose adopted this ordinance in derogation of controlling state law without providing any evidence purporting to meet the legal standards required, the ordinance was not properly enacted and is invalid on its face. The City of San Jose "has no authority to exercise its discretion in a way that violates constitutional provisions or undermines their effect." (See Silicon Valley Taxpayers' Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal, 4th 431, 448.)

The disputed fees in this case suffer the same lack of evidentiary support and legal justification, and are invalid- and subject to waiver and refund- on the same basis.

I. There Was No Demonstration That The Fees Demanded from This Project Account For The Net Impacts on Community Housing Affordability:

The City did not demonstrate, or attempt to demonstrate, that the imposition of fees or IZ housing exactions against this project took into account the beneficial impacts of additional new housing in the community. The expansion of the community's overall housing stock resulting from our client's residential development in an area designated and deemed suitable for such development frequently results in an overall improvement in the affordability of housing in general in the City. Unless the City's imposition of its IZ housing exactions on the project takes such positive impacts into account, the imposition of these IZ fees or exactions would be unjustified, excessive, and invalid. (See, e.g., Warmington Old Town Associates v. Tustin Unified School District (2002) 101 Cal.App.4'h 840 [school facilities fees on residential redevelopment project were invalidated because district failed to take into account the net impacts of redevelopment, including replacement of former student-generating housing at site].)

2. In The Absence of Evidence Showing that the Affordable Housing Exactions and In Lieu Fees Are Reasonably Related and Limited to Needs Created by New Development, They Are Actually Unlawful Special Taxes:

The California Attorney General has published an Opinion characterizing affordable housing exactions and in lieu fees such as these as unlawful "special taxes" requiring 2/3 voter approval. (See, 62 Ops. Cal. Atty. Gen. 673 (1979).) The Supreme Court of Washington reached a similar conclusion, invalidating the City of Seattle's "affordable housing" fees as unlawful special taxes. (San Telmo Associates v. City of Seattle (1987) 735 P.2d 673.)

To the extent that these IZ exactions exceed the reasonable costs of providing facilities shown to be actually attributable to development or to this type of development, they constitute "special taxes" within the meaning of Article XIII(A) of the California Constitution, which require approval of two thirds of the electorate. (Government Code§§ 50076-50077.) Under the California Constitution, exactions which exceed the reasonable costs of providing facilities or

2644/030601-0002 5142358.1 a03/08/l3

RUTAN RUTAN & TUCKER, LI.P


services made necessary by users or developers may be invalid "special taxes." (E.g., Bay Area Cellular Tel. Co. v. City of Union City (2008) 162 Cal.App.4'h 686.)

These IZ exactions also appear to be inconsistent with the California Constitution, articles XIII( C) and (D), prohibiting the levying of "fees" for "generally-available governmental services" such as these affordable housing amenities.


To the extent that these affordable housing requirements and in lieu fees are intended to remedy pre-existing housing deficiencies or needs not caused by this project or by new residential development generally, they may require one class of property owner to contribute more to affordable housing programs (which benefit the community as a whole) than other residents. In the absence of any demonstrated rational basis for shifting such a common public burden to a few new home builders or new home buyers rather than equitably sharing the costs of providing these amenities among the entire benefited community, the imposition of these fees appears to be arbitrary, in violation of constitutional rights to due process and to the equal protection of the laws.

4. Unlawful and Premature Demand for Payment of Fees

Regardless of the invalidity or lack of justification for the amounts of the various fees demanded by the City, discussed above, we reiterate our position that the payment of the disputed development fees (other than permit processing and inspection fees) required by the City in connection this development should have been deferred until completion of the improvements, pursuant to Government Code Section 66007. That Section specifies the general rule that the time for payment of most types of fees imposed as conditions of development is to be deferred until the completion of the development project, i.e., either (a) final inspection, or (b) issuance of certificates of occupancy ("whichever occurs first").

Conclusion

We respectfully request that the City Council provide appropriate relief as demonstrated by the circumstances of this case and as required by law.

All of the disputed affordable housing in lieu fees should be refunded, with interest as provided by law, since they were collected without justification. This is the primary relief sought by this appeal and compelled by the applicable state and local law.

2644/030601-0002 5142358.1 aOJ/08113

RUTAN RUTAN I> TUCKER, LLP


Alternatively, in the event that substantial evidentiary justification is somehow found in the record for imposing fees in some amount on this project, the fees should be adjusted based on that evidence, and should be recalculated based on a net increase of only 9 dwelling units, and using the corrected calculation of assessable square footage.

Finally, in the event it is somehow shown that some amount of fees may have been justified by evidence in the record, the clients should be credited or refunded the appropriate interest on the disputed fees from the time they were paid until the time the project is ready for final inspection and the fees could properly be demanded.

Thank you again for your consideration.

DL:2378 cc: Michael Jenkins, City Attorney

Clients

2644/030601-0002 5142358.1 a03/08/13

Very truly yours,

TAB 1

SHEPPARD MULLIN SHEPPARD MULliN RICHTER & HAMPTON LLP

ATTORNEYS AT LAW

December 22, 2011

Mr. John Keho Planning Manager CITY OF WEST HOLLYWOOD 8300 Santa Monica Boulevard West Hollywood, CA 90069

Four Embarcadero Center I 17th Floor I San FranCisco, CA 94111-41 09

41 5"434-91 00 office I 415"434-3947 fox I www.sheppardmullin.com

415.774.2996 direct [email protected]

File Number: 29YK-165715


Notice of Payment Under Protest, and Statement of ObjectionsFees Paid as Conditions of Application for Building Permits [Cal. Gov't Code Sections 66020, 66021, 66007]

Dear Mr. Keho:

On behalf of the applicant and developer of the 11-unit residential condominium project, located at 612-616 North Croft Avenue in West Hollywood (the "project"), we respectfully provide this notice of protest as to the City of West Hollywood's ("City") requirement that the applicant pay the "fees" described below in the amounts demanded by the City as conditions of issuance of building permits" for this project. Our client has paid or will soon be paying the fees described below under protest, in order to obtain issuance of necessary building permits for this project.

As summarized in this letter, we respectfully submit that the City may not lawfully demand such fees as conditions of approval, the amounts of the fees demanded are arbitrary, unjustified and unreasonable, and even if the fees were valid, the City violates state law by demanding payment at this time rather than deferring payment until the completion of construction and issuance of certificates of occupancy. Accordingly, any and all payment of the disputed "fees" described below, or any other performance of City demands reflected in those fees, should be deemed to be submitted or executed under protest.

In particular, this protest applies to the City's demands for payment of purported "fees" required in lieu of dedicating or transferring newly built homes to the City's housing program under the City's "inclusionary zoning" mandates. It also applies, however, to other fees demanded by the City as conditions of building permit issuance (e.g., traffic impact fees, park in lieu fees, school facilities fees) to the extent that the payment demands are (a) premature, (b) based on erroneous assumptions of "net" new chargeable areas, and (c) arbitrary, unjustified and invalid.

This Notice of Protest applies to any payment or performance of the disputed fees which have been or may be tendered in connection with our client's project or application(s) for permits, inspections, occupancy certificates or other development approvals for this project. This is a continuing Statement of Protest for all such disputed fee payments and exactions levied on

SHEPPARD ML"LLIN RICHTER & I!AMPTO"i LLP


the above-described project. Payment or performance of the City's demands shall be deemed to be under protest, and in full reservation of all rights to seek refunds, credit, interest, damages or other relief. The applicant respectfully asserts and reserves all rights to seek judicial review and invalidation of the enactments and actions under which these disputed fees or exactions have been applied to this project, and such other forms of relief as provided by the Mitigation Fee Act [Government Code Sections 66000 et seq.], or by other California law, and a claim for relief from the disputed fees and housing exactions as provided above and by Government Code Sections 810-996, or as otherwise provided by the constitution and laws of the State of California and of the United States.

A. Objections to the City's "lnclusionary Zoning" Requirements and "In lieu Fees"

Our client strives to work constructively with the City and with other governmental agencies to mitigate its "fair share" of the equitably allocated costs of additional public facilities and services which may be actually caused by its project, and to address public needs which may be actually and reasonably attributable to impacts of our client's development. However, the City has not attempted to demonstrate that its so-called inclusionary zoning housing requirements ("IZ program") or that the fees imposed in lieu of these IZ housing demands reflect our client's "fair share" of the community's perceived needs for additional affordable housing. The City has failed to provide any evidence demonstrating that our client's development, or new residential development in general, in any way caused or increased any additional public need to provide additional "inclusionary zoning" housing for other residents of the City, or to otherwise "justify" the exaction of the IZ in lieu fee demands against this residential project.

The Croft Avenue project will involve the redevelopment of the site by replacing two older houses with eleven new condominium homes, to provide new residences consistent with the City's land use plans for the area. Studies of urban housing economics and other empirical evidence indicates that an increase of the supply of housing in a community, in areas planned and deemed suitable for residential development, contributes to improved affordability of housing in the community in general. The circumstances surrounding this project support the view that this development may help to provide a net reduction in the community's perceived need for affordable housing. We are not aware of any substantial evidence demonstrating any adverse impacts on the City's needs for affordable housing caused or increased by this project or by similar residential development in general, nor demonstrating any reasonable relationship between the burden of these IZ exactions and any quantified adverse impact on public needs.

The City's application of its IZ housing requirements against this project, whether in the form of demands to set aside and dedicate actual new homes to the City's housing program at prices dictated by the City or by payment of "fees" levied in lieu of such property dedication requirements are therefore unjustified, excessive, and unlawful. The grounds for objection and protest include, without limitation, the following:

SHEPPARD MuLLIN RICHTER & !lAMPTON LLP

Mr. John Keho December 22, 2011 Page 3

1. No Demonstration That IZ Exactions Are Reasonably Related to Impacts of This New Residential Development:

So far as we are presently aware, the City has never demonstrated that our client's development of new market-rate housing in this project in any way causes or increases the City's needs to provide subsidized, "inclusionary zoning" ("IZ"), housing. Similarly, we are not aware that the City ever considered or publicly provided any evidence demonstrating any reasonable relationship between the amounts of the IZ housing exactions imposed against this project and the impacts of the project (if any) on legitimate public needs for subsidized housing. Accordingly, the City's fees fail to comply with constitutional and statutory requirements, as explained by the Court of Appeal in BIACC v. City of Patterson (2009) [affordable housing in lieu fees held invalid for failure to demonstrate the required reasonable relationship between the amount of the fees and any deleterious impacts on public needs caused by the new residential development].)

The City's imposition of these exactions on this residential development fails to meet constitutional "nexus" requirements. (See, e.g., Nol/an v. California Coastal Comm. (1987) 483 U.S. 825; Dolan v. City of Tigard (1994) 512 U.S. 374). The California Supreme Court has affirmed that these constitutional limitations on fees and exactions are included in the California Mitigation Fee Act (Gov't Code §§ 66000-66024), and are applicable to development impact fees. (Ehrlich v. City of Culver City (1996) 12 Cal.41h 854.) The Court has also explained that even legislatively-enacted development fees and exactions must meet these nexus-type requirements and must be shown to be reasonably related and limited to amounts necessary to address deleterious public impacts (if any) of new development (San Remo Hotel v. City & County of San Francisco (2002) 27 Cal.4'" 643, 671-72 [fees imposed "in lieu" of housing conversion requirements].)

The IZ in lieu fees imposed against this project are not supported by evidence demonstrating any justification or the required "nexus"- (1) they must be shown to be reasonably related to adverse public impacts actually attributable to proposed development; and (2) they must be shown to be "roughly proportional" to the costs of providing facilities or services necessary to address needs reasonably attributable to the project. The imposition of these unjustified fees against this project is in excess of the City's legal authority.

2. No Demonstration That The Amounts of IZ Housing Exactions Demanded from This Project Account For The Net Impacts on Community Housing Affordability:

So far as we are presently aware, the City has never demonstrated, or attempted to demonstrate, that its imposition of fees or IZ housing exactions against this project took into account the beneficial impacts of additional new housing in the community. The expansion of the community's overall housing stock resulting from our client's residential development in an area designated and deemed suitable for such development frequently results in an overall improvement in the affordability of housing in general in the City. Unless the City's imposition of its IZ housing exactions on the project takes such positive impacts into account, the imposition of these IZ fees or exactions would be unjustified, excessive, and invalid. (See, e.g., Warmington Old Town Associates v. Tustin Unified School District (2002) 101 Cai.App.41

" 840 [school facilities fees on residential redevelopment project were invalidated because district failed to take into

SHEPPARD MULLIN RICHTER & HAMPTON LLP


account the net impacts of redevelopment, including replacement of former student-generating housing at site].)

3. No Demonstration That IZ Exactions Are Reasonably Related to Impacts of New Residential Development Generally:

So far as we are presently aware, the City has never factually demonstrated, or attempted to demonstrate, that the development of new market-rate homes on lands designated for residential development causes any particular adverse or deleterious public impacts on the City's perceived needs for subsidized or IZ housing, or justifies the exaction of IZ homes, or any other form of private subsidy or dedication from residential development generally, as required by the City's IZ housing policies.

The City's IZ housing policies, as enacted and as applied by the City against this project, improperly purport to require a contribution of constructed homes, or other consideration, at ratios or in amounts which greatly exceed any amounts that might be shown to be reasonably related to any adverse public impacts (if any) of such new market rate residential development generally on the City's legitimate needs for such IZ housing. The City's IZ housing exactions therefore fail to meet the constitutional requirements for such policies or enactments, which must be shown to be "reasonably related to the deleterious public impacts of new development," as explained by the California Supreme Court. (See, San Remo Hotel v. City & County of San Francisco (2002) 27 Cal.41

h 643, 671-72 [city's housing conversion impact fee ordinance].)

The City has not demonstrated how new market-rate housing development in general has caused an increased need for additional subsidized housing, at least not in the amounts required from this project under the City's application of its IZ housing mandates.

4. The IZ Exactions Are NOT Limited to Amounts Reasonably Necessary Or Apportioned As To Needs Attributable To New Development:

The IZ exactions are not limited to the reasonable impacts of new development on quantified public needs or costs of providing new facilities made necessary by new development, and the exactions have been improperly imposed against this project in excessive amounts, without apportionment between IZ housing "needs" fairly attributable to new development and other existing community-wide housing needs.

California law requires that government agencies, such as the City, must demonstrate both (1) the reasonable amount of the costs of providing new facilities deemed necessary to accommodate the impacts of new development, and (2) the reasonableness of the basis for determining the apportionment of those costs to new development. (See, e.g., Ehrlich v. City of Culver City, supra; see also, e.g., Williams Communications v. City of Riverside (2003) 114 Cai.App.41

h 642, 656 [invalidated city's arbitrary charge for permission to install conduit in public streets]; Rohn v. City of Visalia (1989) 214 Cai.App.3d 1463, 1476 [invalidating city demand for traffic improvements and street dedication unsupported by evidence showing "nexus" between impacts of project and "need" for improvements]; Shape/1 Industries Inc. v. Governing

SHEPPARD Mm.LI~ RICHTER & Hk\!PTON LLP


Board (1991) 1 Cai.App.4'h 218, 234-235 [invalidated school facilities fees which were not apportioned between needs attributable to new development and other existing needs].)

5. The IZ Housing Exactions Improperly Include Costs for Correcting Existing Deficiencies in the Community's Provision of "Affordable Housing":

The City's IZ housing exactions improperly seek to address the City's unmet needs for more "affordable housing" - a need which already exists independently of City approvals of new or additional market rate housing projects. The IZ exactions imposed against this project unlawfully seek to shift the community-wide costs of correcting existing deficiencies in the community's stock of affordable housing, or deficiencies in the City's perception of such affordable housing opportunities, which are more accurately attributable to other factors, rather than to new residential development. Exactions on new development cannot include disproportionate contributions which are attributable to the costs of addressing existing deficiencies. (See, e.g., Government Code§ 66001(g); Bixel Associates v City of Los Angeles (1989) 216 Cai.App.3d 1208, 1218-9.)

6. The IZ Exactions Fail to Accurately Reflect Other Housing Measures or Credit for Potential Funding Sources for Housing Improvements:

The current IZ exactions imposed against this project apparently fail take into account additional means which may be used to improve the community's stock of affordable housing, such as rehabilitation and renovation of existing housing, state or federal housing assistance, redevelopment agency contributions, community-wide funding sources, and other similar housing opportunities. In addition the IZ housing program fails to provide a credit against fees or exactions if such funds are received or anticipated, fails to credit non-fee sources of affordable housing opportunities, and fails to credit new development for additional general tax revenues generated by new residents which may be applied to affordable housing programs.

7. The IZ Exactions Raise Issues of Compliance With State Housing Law:

Increased fees or excessive requirements which are mandated as conditions of developing new housing in general are viewed as constraints on the supply of housing generally by the California Department of Housing and Community Development, and thus operate as a deterrent to the increase or improvement of affordable housing, which is contrary to State Housing Law (e.g., Government Code §§ 65583(a)(5); 65589.5.) The State Housing Element Law also requires that if a community requires new residential development to set aside a fixed percentage of homes for affordable housing, it must allow density bonuses and must allow such requirements to be met by for-rent units. The City fails to provide any density bonus or other zoning, planning or development concessions or incentives as part of its mandatory affordable housing and in lieu fee payment requirements

SHEPPARD MLUIN RICHTER & HAMPTON LLP


8. The IZ Fees in lieu of IZ Housing Exactions Are Actually Unlawful Special Taxes or Fees For Generally-Available Governmental Services:

The California Attorney General has published an Opinion characterizing IZ exactions such as these as "special taxes" requiring voter approval. To the extent that these IZ exactions exceed the reasonable costs of providing facilities shown to be actually attributable to development or to this type of development, they constitute "special taxes" within the meaning of Article XIII(A) of the California Constitution, which require approval of two thirds of the electorate. (Government Code §§ 50076-50077.) Under the California Constitution, exactions which exceed the reasonable costs of providing facilities or services made necessary by users or developers may be invalid "special taxes." (E.g., Bay Area Cellular Tel. Co. v. City of Union City (2008) 162 Cai.App.41

" 686.) These IZ exactions also appear to be inconsistent with the California Constitution, articles XIII(C) and (D), prohibiting the levying of "fees" for "generally-available governmental services" such as these affordable housing amenities.

9. The IZ Fees In Lieu of IZ Housing Exactions May Be Pre-Empted by State Laws:

To the extent the IZ fees are imposed as "fees in lieu" of dedicating or transferring homes and property, they would appear to be inconsistent with, and pre-empted by, the California Mitigation Fee Act (see Government Code Section 66000 et seq.) To the extent that these fees are imposed in lieu of requiring the dedication of "affordable housing" units, they would appear to be inconsistent with, and pre-empted by, the State Housing Law and Density Bonus Law. To the extent that these exactions may impair or infringe on the rights of the owner/developer to set the sales prices on housing units it has constructed, or on other rights of the owner/developer to manage and control housing units for residential rental purposes, they would appear to be inconsistent with, and pre-empted by, the Costa-Hawkins Act (Civil Code§§ 1954.50 et seq.)


To the extent that these IZ fees and exactions may be used to try to remedy preexisting deficiencies or needs not attributable to this project, it would appear that the City may be requiring one class of property owner to contribute more to affordable housing programs (which benefit the community as a whole) than other residents. In the absence of any rational basis for shifting such a public burden to new market-rate residential development rather than equitably sharing the costs of providing these amenities among the entire benefited community, the imposition of these fees appears to be arbitrary, in violation of constitutional rights to due process and to the equal protection of the laws.

We respectfully reserve the right to specify further grounds for protest of the disputed IZ in lieu fees and exactions upon review of the City's documentation and in light of developments in the law in this area.

SHEPPARD MULLIN RICHTER & IR\II'TON LLP


B. Objections Common to All City Fee Demands on this Project:

(1) Erroneous Assumptions of NET Square Footage Subject to Payment of Fees

The City's demands for fee payments is erroneously based on unfounded and excessive assumptions regarding the NET new residential units and/or NET new square footage of residential area that may be subject to the City's fee calculations. ·

This project involves the proposed demolition of the two older houses currently existing on the site, and replacement with eleven (11) new homes. The net impact of the project is therefore an increase of only nine (9) new residential units on this property.

The City's calculation of "fees" (IZ in lieu fees as well as other impact fees based on number of housing units or square footage of new residential space) did not take into account the demolition of the existing units on the property, and the redevelopment of the site with new market-rate housing in the project. Accordingly, the replacement of those older houses by our client's new residential development will create only a limited net change in impacts on City facilities or demands for IZ housing. To the extent the City's fee calculations fail to take into account the net impacts of the redevelopment of the site, the imposition of these fees in these amounts is unjustified, excessive, and invalid. (See, e.g., Warmington Old Town Associates v. Tustin Unified School District (2002) 101 Cai.App.4'" 840 [school facilities fees on residential redevelopment project were invalidated because district failed to take into account the net impacts of redevelopment, including replacement of former housing with fewer new homes].)

Moreover, the IZ in lieu fee was based not only on the habitable interior spaces of 19,011 sq. ft. (gross new space), upon which the school fee is based, but also on all of the exterior private patios and decks. So the City is erroneously basing its fee on 21,896 (gross) sq. ft ..

(2) Erroneous and Premature Demand for Payment

Regardless of the invalidity or lack of justification for the amounts of the various fees demanded by the City, discussed above, we reiterate our position (as detailed in our letter of December 15, 2011, to the City Attorney) that the payment of the various development fees (other than permit processing and inspection fees) required by the City in connection this development should be deferred until completion of the improvements, pursuant to Government Code Section 66007. That Section specifies the general rule that the time for payment of most types of fees imposed as conditions of development is to be deferred until the completion of the development project, i.e., either (a) final inspection, or (b) issuance of certificates of occupancy ("whichever occurs first").

Deferral of Fee Payments Is Required by Government Code Section 66007. Accordingly, we respectfully request that the City defer the collection of all these mitigation and impact fees (inclusionary housing in lieu fees, school facilities fees, park and traffic fees) at least until the time of completion of the project as defined in Section 66007(e).

SHEPPARD MULLIN RICHTER & HAMPTON LLP


Request for Documentation

This Jetter also constitutes our request for copies of any and all documentation (including all resolutions, evidence, and analyses), relied upon by the City to purportedly justify the enactment or imposition of the disputed IZ housing in lieu fees or similar exactions.

Conclusion

We respectfully request that you promptly review this Statement of Protest and provide us with your response. We also request that you notify us in the event that there is any available process for appeal or administrative review through your agency without resort to judicial remedies. To the extent that disputed fees are paid, this Jetter reiterates our request for the immediate return of all disputed fees and IZ contributions (and credits or compensation therefor), together with interest as provided by statute.

Please contact me at any time if you would like further information, or would like to discuss this in further detail. Thank you again for your consideration.

W02-WEST:FPD\404300696.5

Enclosure (Letter dated 12/15/11 toM. Jenkins, City Attorney)

cc: Michael Jenkins, Jenkins & Hogin, City Attorney (w/encl.) Adrian Gallo, Project Planner (w/encl.) Jonathan Lehrer-Graiwer, Developer and Applicant (w/encl.)

TAB2

1 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership Including Professional Corporations 2

DAVID P. LANFERMAN, Cal. Bar No. 71593 3 JAMES G,HIGGINS, Cal. BarNo. 238188

Four Embarcadero Center, 17th Floor 4 San Francisco, California 94111-4109

Telephone: 415-434-9100 5 Facs1mile: 415-434-3947

6 Attorneys for Plaintiff CALIFORNIA BU1LDING INDUSTRY

7 ASSOCIATION

8

9

10

11 SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF SANTA CLARA 12

13 CALIFORNIA BUILDING INDUSTRY ASSOCIATION,

14

15 v.

Plaintiff,

16 CITY OF SAN JOSE, a California 17 municipal corporation, CITY COUNCIL

AND MAYOR of the CITY OF SAN

18 JOSE, and DOES 1-200, inclusive,

19 Defendants.

Case No. 1-10-CV-167289

JUDGMENT AFTER TRIAL

DECLARING THE INVALIDITY OF CITY OF SAN JOSE ORDINANCE NO. 28689, AND ENJOINING ENFORCEMENT OR IMPLEMENTATION OF ORDINANCE NO. 28689

22 WHEREAS, the plaintiff CALIFORNIA BUILDING INDUSTRY ASSOCIATION

23 filed the "Complaint for Declaratory Relief; for Injunctive Relief; for Invalidation of

24 Ordinance No. 28689, Establishing "Inclusionary Housing" Exactions, and Petition for

25 Writ of Mandamus" on March 24, 2010; 26

27

28

W02·WEST:FPD\405544480.3

....... .._..._.. ................. , .... "~"""'

Atty: Lanferman (0189) CBIA v. City of San Jose File Num.ber: OlZG·y,39f2 Sent to D&C on: I S I J.,..---,.,,.. t ... ~-r,. ........ ..,... th .. -..;J: I

(pldg)

JUDGMENT AFTER 1RJAL

•••••••••••• I

I AND WHEREAS, the defendants CITY OF SAN JOSE and the CITY

2 COUNCIL AND MAYOR of the City of San Jose (collectively "the CITY") filed their

3 Answer denying the allegations of the Complaint;

4

5 AND WHEREAS, the Court subsequently granted the Motion for leave to

6 intervene filed on behalf of Affordable Housing Network of Santa Clara County, Housing

7 California, California Coalition for Rural Housing, Non-Profit Housing Association of

8 Northern California, Southern California Association ofNon-Profit Housing, San Diego

9 Housing Federation and Janel Martinez (hereinafter "Intervenors"), and said Intervenors

I 0 filed their Complaint in Intervention in support of the defendant City on or about May I 0,

II 20 II;

12

13 AND WHEREAS, this action came on regularly for bench trial in

14 Department 19 of the above-entitled Court, the Honorable Socrates Peter Manoukian,

15 Judge Presiding, on July 11, 2011;

16

17 AND WHEREAS, plaintiff appeared at trial by its counsel, David P.

18 Lanferman of Sheppard Mullin Richter & Hampton LLP, and defendant City appeared by

19 its counsel, Margo Laskowska of the Office ofthe City Attorney, and Andrew Faber of

20 Berliner Cohen; and Intervenors appeared by their counsel, Melissa A. Morris, Kyra

21 Kazantzis, and James F. Zahradka II ofthe Law Foundation of Silicon Valley; Michael

22 Rawson of The Public Interest Law Project; and Colleen Bal, and Caroline E. Wilson of

23 Wilson, Sonsini, Goodrich & Rosati PC.

24

25 AND WHEREAS, the action was continued for hearing and argument on

26 July 15, 20 II, and pursuant to the Court's Order of October 16, 20 II, further briefing was

27 submitted and further hearing and argument were conducted on November 17,2011, and

28 the matter was subsequently submitted for decision;

W02-WEST:FPDI4055U480.3 JUDGMENT AFTER TRIAL

1 AND WHEREAS, the Court having reviewed and considered the evidence,

2 the legal briefs and authorities cited by all counsel, as well as the oral arguments raised

3 during the trial and hearings on this matter, and good cause appearing, on May 25, 2012,

4 the Court duly issued the attached Order Granting Plaintiffs Request for Temporary,

5 Preliminary, and Permanent lrifunctive Relief determining that City Ordinance Number

6 28689 is invalid and enjoining the City from enforcing or implementing said Ordinance,

7 and directing the preparation and entry of Judgment.

8

9 NOW, THEREFORE, pursuant to the foregoing and good cause appearing,

10 the Court decrees that JUDGMENT AFTER TRIAL be entered as set forth herein and

11 below.

12

13 IT IS HEREBY ORDERED, DECREED, AND ADJUDGED AS

14 FOLLOWS:

15

16 1. The Court determines and declares that Ordinance Number 28689 is

17 invalid;

18

19 2. The City of San Jose may not lawfully impose the new Inclusionary

20 Housing Ordinance exactions in Ordinance Number 28689 as conditions of providing

21 planning or other development permits or other approvals for new residential development;

22 and

23

24 3. Plaintiffs request for temporary, preliminary, and permanent

25 injunctive relief is GRANTED. Defendants are enjoined from enforcing or implementing

26 Ordinance Number 28689 unless and until the City of San Jose provides a legally

27 sufficient evidentiary showing to demonstrate justification and reasonable relationships

28

WOl-WEST:FPD\405544480.3 JUDGMENT AFTER TRIAL

·-·-···~-.-- ......... ,.- -...... , .. ,·"~··.-···---·c·i

1 between such Inclusionary Housing Ordinance exactions and impacts caused by new

2 residential development.

3

4 4. Plaintiff is the prevailing party and shall therefore recover its reasonab.le

5 and allowable costs of suit by filing its Memorandum of Costs as provided by Code of

6 Civil Procedure Sections 1032, 1033, and 1033.5.

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

APPROVED AS TO FORM.

DATED: JuneZ.~, 2012

DATED: June U., 2012

DATED: June 2 7-, 2012

W02-WEST:FPD\405544480.3

SHEPPARD, MULLIN, RICHTER & HAMPTON LLP

By

/

Davtd P. anferman

Attorneys for PLAINTIFF California Building Industry Association

OFFICE OF THE CITY ATTORNEY

1f']/, /I I I /j j By / ,.;('1-'f-! tf;:;<....,..;C~ka_ ( ""} TPIM # -

Attorneys forDEFENDANT CITY OF SAN JOSE

BERLINER COHEN

By .J I

/d Andrew Faber I Thofrlas P. Murphy . ;

(./ .

Attorneys for Defendant CITY OF SAN JOSE


1

2

3

4

5

6

7

s 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DATED: June.U; 2012

DATED: June_, 2012

DATED: June_, 2012

THE PUBLIC INTEREST LAW PROJECT

By tlu4-JA<}K,~9·~ I Michael Rawson "-

Attorneys for INTERVENORS

LAW FOUNDATION OF SILICON VALLEY

- By Melissa A. Morris


WILSON SONSINI GOODRICH & ROSATI

By Caroline E. Wilson I Colleen Bal


JUDGMENT IS HEREBY ENTERED AS SET FORTH ABOVE.

DATED: June_, 2012

WOZ-WEST.·FPD\405544480.3

Honorable Socrates Peier Manoukian JUDGE OF THE SUPERIOR COURT


·----~---r

2

3

4

5

DATED: June_, 2012

6 DATED: June tv, 2012

7

8

9

10

II DATED: June_, 2012

12

13

14

15

16


By

By

Michael Rawson

Attorneys for INTERVENORS -~

\

FDA no~ OF SILicoN VALLEY

i ( / j ' //

Melissa A. Morris



By Caroline E. Wilson I Colleen Bal


17 JUDGMENT IS HEREBY ENTERED AS SET FORTH ABOVE.

18

19 DATED: June_,2012

20

21

22

23

24

25

26

27

28

SOCRATES P. MANOUKIAN Honorable Socrates Peter Manoukian JUDGE OF THE SUPERIOR COURT

JUDGMENT AFTER 'i'lfiA·I~

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

DATED: June _,2012

DATED: June_, 2012

DATED: June 2-2..., 2012


By Michael Rawson


LAW FOUNDATION OF SILICON VALLEY

By Melissa A. Morris



By Caroline E. Wilson I Colleen Bal Attorneys for INTERVENORS

JUDGMENT IS HEREBY ENTERED AS SET FORTH ABOVE.

DATED: June_, 2012

W02-WEST:FPD\405544480.3

Honorable Socrates Peter Manoukian JUDGE OF THE SUPERIOR COURT

-..5_-JUDGMENT AFTER TRJAL

.......... -·--- ,. -----,·--~~------······r

SUPERIOR COURT, STATE OF CALIFORNIA COUNTY OF SANTA CLARA

DEPARTMENT19 161 North First Street, San Jose, CA 95113

408.882.2310 · 408.882.2299(fax) [email protected] http://www.scscourt.org

California Building Industry Assoc. v. City of San Jose DATE: TIME:

CASE NO.: 110CV167289 LINE NUMBER:

ORDER GRANTING PLAINTIFF'S REQUEST FOR TEMPORARY, PRELIMINARY, AND PERMANENT INJUNCTIVE RELIEF

---cOo---

Nobody seriously disputes the proposition that the South Bay Area is an expensive place in which to live. There is no serious argument that inclusionary housing laws are a legitimate concern of local government agencies. No one seriously argues that inclusionary housing laws increase the availability of housing to people with lower incomes.

Plaintiff California Building Industry Association ("CBIA") filed this action on 24 March 2010. It seeks declaratory relief, injunctive relief, in validation of City of San Jose Ordinance Number 28689 which establishes "lnclusionary Housing Exactions" which require private entities to provide "affordable housing'' for the public.

Plaintiff contends that City of San Jose enacted the new ordinance arbitrarily and unlawfully, without evidentiary support or any attempt to demonstrate the reasonable relationship between the burdens imposed by the new ordinance and any adverse public impacts shown to be caused by new residential development, in disregard of clear constitutional standards and requirementsc

On 26 January 2010, the City of San Jose adopted Ordinance Number 28689. This ordinance, in excess of 56 pages, applies to all residential development within the City of San Jose which requires a City of San Jose planning permit and which would create 20 or more new, additional, or modified dwelling units, with certain specified exceptions.

The ordinance defines "inclusionary units" as units which are affordable to low, very low, lower, or moderate income households." The ordinance requires that residential developments shall include "inclusionary units" upon the same side as the new residential development itself, unless otherwise exempted or accepted.

ORDER GRANTING PLAINTIFF'S REQUEST FOR TEMPORARY, PRELIMINARY, AND PERMANENT

INJUNCTIVE RELIEF.

Pagel o£6

In "for sale" residential projects, 15% of the total new dwelling units in the residential development are required to be made available for purchase by income-restricted households at below-market rates.

For "for rent" residential projects, 9% of the total new dwelling units in the residential development are required to be available for rent at below-market rents by incomerestricted households defined as "moderate income" and another 6% required to be available at below-market rents by households meeting the definition of "very low income" households.1 ·

The ordinance allows for alternative methods of compliance. Plaintiff, however, asserts that the ordinance requires similar exactions of new homes, either on-site or off-site, where dedication of land or payment of fees "in lieu" of providing it in inclusionary units at the artificial below-market prices or rents are under the ordinance.

Paragraph 15 of the complaint alleges that the requirement of new inclusionary housing may be satisfied by a payment of a fee to the City of San Jose, in lieu of constructing the affordable units otherwise required, in the amount of $122,000. The deed also requires decreased erections against homes that are subject to the ordinance to permit the city to capture a portion of the appreciated value of the home in an amount to be determined by the city in its sole discretion.

In Paragraph 18, Plaintiff alleges that at no time did Defendant City of San Jose publicly produce or provide substantial evidence, or any evidence in the record purporting to demonstrate a reasonable relationship between adverse public impacts or needs for additional subsidized housing units caused by or reasonably attributed to the development of new residential developments of 20.units or more. Plaintiff believes that the burdens and financial impacts required under the ordinance greatly exceed any reasonable share of the city's cost of addressing public needs for additional subsidized housing or affordable housing caused by such new development.

Plaintiff makes a facial challenge to the ordinance and argues that the ordinance is an "impact fee" or "exaction." Defendants and Intervenors frame the Plaintiffs argument as, prior to adopting an inclusionary housing ordinance, a city must first prove that the

·construction of new market-rate housing creates a need for affordable housing and quantifies the extent of the need for affordable housing purportedly caused by the new construction.

1 The subsection of the ordinance which restricts rents for new "for rent" developments shall become operative only at such time as current appellate law in Palmer/Sixth Street Properties, L.P. v. City of Los Angeles (2009) 175 Cal. App. 4'" 1396 is overturned. disapproved, or de-published by a court of competent jurisdiction, or modified by the State Legislature to authorize control of rents in lnclusionary Units. As of the date of this Order, this case has received no negative treatment although it was distinguished in the Sixth D'1stricfs decision in more on that In a moment. Trinity Park, L. P. v. City of Sunnyvale (2011) 193 Cal. App. 4th 1014.

ORDER GRANTING PLAINTIFF'S REQUEST FOR TEMPORARY, PREUMINARY, AND PERMANENT

INJUNCTNE RELIEF.

Page2 of 6

Standard Of Review

When an ordinance contains provisions that allow for administrative relief, we must presume the implementing authorities will exercise their authority in conformity with the Constitution. Home Builders Ass'n v. City of Napa (2001) 90 Cal. App. 4th 188, 199.

In a facial challenge, the Court considers only the text of the measure itself, not its application to the particular circumstances of an individual or by a suggestion that in some future hypothetical situation constitutional problems may possibly arise as to the particular application of the statute. The required showing must demonstrate that the act's provisions inevitably pose a present total and fatal conflict with applicable constitutional prohibitions. County of Sonoma v. Superior Court (2009) 173 Cal. App. 4th 322, 337.

The minimum showing that the Supreme Court of California has required for a facial challenge to the constitutionality of a statute is that in a facial challenge to a city ordinance, a plaintiff must demonstrate from the face of the ordinance that the challenged portion of the ordinance bears no reasonable relationship to permissible outcomes in the generality or great majority ofcases. San Remo Hotel v. City and County of San Francisco (2002) 27 Cal. 4th 643, 673.

"We do not hold that a court in inquiring whether an ordinance reasonably relates to the regional welfare, cannot defer to the judgment of the municipality's legislative body. But judicial deference is not judicial abdication. The ordinance must have a real and substantial relation to the public welfare. There must be a reasonable basis in fact, riot in fancy, to support the legislative determination. Although in many cases it will be "fairly debatable" that the ordinance reasonably relates to the regional welfare, it cannot be assumed that a land use ordinance can never. be invalidated as an enactment in excess of the police power." Associated Home Builders etc., Inc. v. City of Livermore (1976) 18 Cal. 3d 582, 609 (internal citations and footnotes omitted.)

Government Code,§ 66001 (a) and (b) state:

(a) In any action establishing, increasing, or imposing a fee as a condition of approval of a development project by a local agency, the local agency shall do all ofthe following:

(1) Identify the purpose of the fee.

(2) Identify the use to which the fee is to be put. If the use is financing public facilities, the facilities shall be identified. That identification may, but need not, be made by reference to a capital improvement plan as specified in Section 65403 or 66002, may be made in applicable general or specific plan requirements, or

ORDER GRANTING PLAINTIFF'S REQUEST FOR TEMPORARY, PREUMINARY, AND PERMANENT

INJUNCTIVE RELIEF.

Page3of6

may be made in other public documents that identify the public facilities for which the fee is charged.

(3) Determine how there is a reasonable relationship between the fee's use and the type of development project on which the fee is imposed.

(4) Determine how there is a reasonable relationship between the need for the public facility and the type of development project on which the fee is imposed.

(b) In any action imposing a fee as a condition of approval of a development project by a local agency, the local agency shalf determine how there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the fee is imposed.

Plaintiff certainly does not dispute the legitimacy of cities encouraging and making adequate provision for affordable housing. (Closing brief, page 5, fines 17-18.)

In Home Builders Association of Northern California v. City of Napa (2001) 90 Cal. App. 4th 188, the Court of Appeal held that the assistance of moderate-income households · with their housing needs is recognized in California as a legitimate governmental· purpose. (p. 195.) "A claimant who advances a facial challenge faces an uphill battle. A claim that a regulation is facially invalid is only tenable if the terms of the regulation will not permit those who administer it to avoid an unconstitutional application to the complaining parties. This is because a facial challenge is predicated on the theory that the mere enactment of the ordinance worked a taking of plaintiff's property." fd. at 194.

Plaintiff makes an effort to distinguish between incentives for developers who may voluntarily agreed to include affordable housing units in their projects (Government Code, §§ 65580, et seq.) versus arbitrary mandates such as that claimed by Plaintiff in the ordinances under scrutiny in this case.

Plaintiff argues that as a matter of both statutory and constitutional law, legislatively imposed development mitigation fees must bear a reasonable relationship, in both intended use and amount, to the deleterious public impact of the development. Government Code § 66001. Plaintiff further argues that if the condition fails to further · ·the end advanced as the justification forthe fee, the fee is not a valid regulation of land use but a plan of extortion. In support of this contention, Plaintiff places reliance upon San Remo Hotel v. City and County of San Francisco (2002) 27 Cal. 4th 643. That case made the following observations:

The takings clause of the California Constitution (art. I, § 19) provides: "Private property may be taken or damaged for public use only when just compensation, ascertained by a jury unless waived, has first been paid to, or into i::ourt for, the owner."


INJUNCfiVE RELIEF.

Page 4 of 6

By virtue of including "damage" to property as well as its "taking," the California clause "protects a somewhat broader range of property values" than does the corresponding federal provision. Hensler v. City of Glendale (1994) 8 Cal. 4th 1, 9, fn. 4; Varjabedian v. City of Madera (1977) 20 Cal. 3d 285, 298.

The federal takings clause (U.S. Const., 5th Amend.) provides: "nor shall private property be taken for public use without just compensation." "In determining whether a government regulation of property works a taking of property under the Fifth Amendment to the United States Constitution, the United States Supreme Court has generally eschewed any set formula for determining whether a taking has occurred, preferring to engage in "essentially ad hoc, factual inquiries" (Lucas v. South Carolina Coastal Council (1992) 505 U.S. 1003, 1015), which focus in large part on the economic impact of the regulation. See Penn Central Transp. Co. v. New York City (1978) 438 u.s. 104, 124.

The Court has held that property is taken when a government regulation compels a property owner to suffer physical invasion of his property or denies all economically beneficial or productive use of land. Lucas, supra, 505 U.S. at pp.1015-1016. The court has also stated that the Fifth Amendment is violated when a land-use regulation "does not substantially advance legitimate state interests." Lucas, supra, 505 U.S. at p. 1016.

Here, the City argues that the "inclusionary ordinance does not require that developers 'dedicate' affordable housing or 'convey' property. (Defendants' brief of November 17, 2011.) The City claims that a requirement that a developer sell property at a beloWmarket price is analogous to a law limiting the rent that can be charged by a landlord.

Therein .lies what this Court sees as the defect in the position taken by the City. This is not a rent-control case. It is a case where one a developer is required to sell 15% of its homes in affected developments, and which are substantially similar to the rest ofthe homes in the development, at below market rates. This Court believes that it is· incumbent for the city to demonstrate its legal ability to require that a developer sell a home at a level which may be potentially below its costs in building that home.

Plaintiff agrees that increasing the availability of affordable housing is a legitimate and important public policy objective. Government Code,§§ 65913, 65915,65582.1, et seq. While California law encourages the voluntary production of affordable housing, voluntary programs pursuant to enactments such as Government Code, § 65915, et seq. are different than the mandatory exactions of homes and in lieu fees imposed by this ordinance.

Plaintiff has persuaded this Court to conclude that the face of the ordinance that the challenged portion of the ordinance bears no reasonable relationship to permissible outcomes in the generality or great majority of cases.


INJUNCTIVE RELIEF.

PageS of 6

Any evidently constitutional propriety of the enacted legislation disappears if the condition substituted for the prohibition utterly fails to further the end advanced as the justification for the prohibition. Without this "essential nexus," between the permit condition and the development ban, "the building restriction is not a valid regulation of land use but 'an out-and-out plan of extortion." San Remo Hotel v. City and County of San Francisco (2002) 27 Cal. 4th 643, 665.

This Court had previously asked the City of San Jose to demonstrate where in the record was there evidence demonstrating the constitutionally required reasonable relationships between deleterious public impacts of new residential development and the new requirements to build and to dedicate the affordable housing or pay the fees in lieu of such property conveyances. The City of San Jose has appeared to be unable to do so.

Since the City of San Jose adopted this ordinance in derogation of controlling state law without providing any evidence purporting to meet the legal standards required, the. ordinance was not properly enacted and is invalid on its face. The City of San Jose "has no authority to exercise its discretion in a way that violates constitutional provisions or undermines their effect." See Silicon Valley Taxpayers' Assn., Inc. v. Santa Clara County Open Space Authority (2008) 44 Cal. 4th 431, 448.

Therefore, good cause appearing, IT IS ORDERED THAT:

1. This Court determines and declares that Ordinance Number 28689 is invalid;

2. The City of San Jose may not lawfully impose the new IHO exactions in Ordinance Number 28689 as conditions of providing planning or other development permits or other approvals for new residential development; and

3. Plaintiff's request for temporary, preliminary, and permanent injunctive relief is GRANTED. Defendants are restrained from enforcing or implementing Ordinance Number 28689 unless and until the City of San Jose provides a legally sufficient evidentiary showing to demonstrate justification and reasonable relationships between such IHO exactions and impacts clause by new residential development.

Plaintiff is granted leave to file a Memorandum of Costs and to prepare an appropriate Judgment.

DATED: 24 May 2012

Judge of the Superior Court · County of Santa Clara:


INJUNCTIVE RELIEF.

Page 6 of6

-~---·---~~-_·;-:---·--·····--:-r-

··--<~,_,,, .. , ;,,, ; ; ... ,

~ I ~ ~~: , IN THE SUPERIOR COURT OF CALIFORNIA

!.'.,., kit.'!.';!

IN AND FOR THE COUNTY OF SANTA CLARA l'i 4l 2 :-; LU1Z Plaintiff: CALIFORNIA BUILDING INDUSTRY DAVf;,fH ' • '"' ' " ''KI . -·!• .. :_,-... ~ .. >:~.

O;t ... : .. ,>(:~":.>. .... : .• i!o"t:.~H-~

Defendant: CITY OF SAN JOSE :ru Sup:l'!:>rC3.1..·:.t:: ""~tfi~·:·o::_·,_-Je;::nr-"Ciar!'l :: ur f

.;.:~ PROOF OF SERVICE ON ORDER GRANTING Case Number: 110 CV '1~7289 PLAINTIFF'S REQUEST FOR TEMPORARY, PRELIMINARY, AND PERMANENT INJUNCTIVE RELIEF

.

CLERK'S CERTIFICATE OF SERVICE: I certify that I am not a party to this case and that a true copy of this document was served as follows:

[) By personal service on the parties and on the date shown below"

[X) By first class mail, postage prepaid, addressed as shown below and mailed on the date shown below.

DATED: 5/25/12

DAVID LANFERMAN FOUR EMBARCADERO CENTER 17111 FLOOR SAN FRANCISCO, CA 94111-4109

ANDREW FARBER 10 AlMADEN BLVD, 11111 FLR SAN JOSE, CA 95113

KYRA KAZANTZIS JAMES ZAHRADKA MELISSA MORRIS 152 N. THIRD ST., 3RD FLR SAN JOSE, CA 95112

MARGO LASKOWSKA OFFICE OF THE CITY ATTORNEY 200 EAST SANTA CLARA ST, 16TH FLR SAN JOSE, CA 95113-1900

David Yamasaki, Chief Executive Officer/Clerk (;;!

BY -----~-.i!'"\,----' Deputy Jessie f~es

.~~ ,-- ..

Proof of service Clerk's Certificate of Service

Documents

ATTACHMENT A - Granicus