Vested Rights Doctrine California
In Kaufman & Broad Central Valley, Inc. v. City of Modesto (1994) 25 Cal.App.4th 1577, the court, after reviewing the vesting rights doctrine and the subsequent enactment of the vesting tentative map statutes, concluded the due process notice requirements implicit in the statutes "limit increases in developer's fees to those for which adequate standards for determining the scope and extent of the fee increases are in place at the time the vesting tentative map is deemed complete." ( Id. at pp. 1579-1580.)
In Kaufman, the City of Modesto appointed a committee to examine funding for future public improvements. the committee issued a report recommending the establishment of development impact fees to finance improvements made necessary by new development.
The report proposed a fee of $ 1,413 per unit for low-density residential development. (Kaufman, supra, 25 Cal.App.4th at p. 1580.) the city adopted a resolution setting fees at $ 1,417 per unit. (Ibid.)
Subsequently, the city increased the fee to $ 1,434 to reflect increased costs of construction. ( Id. at pp. 1580-1581.)
In anticipation of a substantial increase in fees, the city adopted a policy of attaching a fee escalator condition to approval of all future vesting tentative maps.
The condition states: "'"The Capital Facilities Fee payable at the time of the issuance of a building permit for any construction in this subdivision map (parcel map) shall be based on the rates in effect at time of issuance of the building permit. "'" (Kaufman, supra, 25 Cal. App.4th at p. 1581.)
While the $ 1,434 fee was in effect, developer Kaufman's predecessor submitted an application for a vesting tentative subdivision map for two residential developments. the application for the first subdivision was deemed complete on June 22, 1988. (Kaufman, supra, 25 Cal.App.4th at p. 1581.)
Consultants later hired by the city recommended substantial increases in the fees based upon a much broader approach to future development than had been taken earlier by the committee.
The study added two entirely new components: wastewater treatment and fee administration. the fee increased subsequently from $ 1,446 to $ 2,654 per unit, and the city reserved the right to revise fees further to incorporate additional studies. (Kaufman, supra, 25 Cal.App.4th at p. 1582.)
Following this increase, Kaufman's predecessor applied for a vesting tentative subdivision map for the second development, which application was deemed complete on June 8, 1989. ( Id. at p. 1583.)
Several months later, further studies again increased the cost of improvements. These new studies added entirely new transportation-related components to the fee structure: public transportation and air quality mitigation. the city responded by increasing the fee from $ 2,654 to $ 4,890 per unit. (Kaufman, supra, 25 Cal.App.4th at p. 1583.)
Kaufman acquired the two projects and applied for building permits. the city charged Kaufman $ 4,890 per unit. (Kaufman, supra, 25 Cal.App.4th at p. 1583.)
Kaufman paid the fees under protest and brought an action seeking reimbursement of fees paid in excess of the rate in effect when the vesting tentative subdivision map was deemed complete. ( Id. at pp. 1583-1584.)
The Kaufman court found the vesting tentative map statutes also incorporate a notice requirement consistent with due process. Section 66498.9, subdivision (b) states, in part:
"The private sector should be able to rely upon an approved vesting tentative map prior to expending resources and incurring liabilities without the risk of having the project frustrated by subsequent action by the approving local agency, provided the time periods established by this article have not elapsed."
As the court noted: "It follows that a developer is entitled to actual or constructive notice of the ordinances, policies, and standards with which it will be expected to comply. 'Quite obviously one cannot rely on what one does not know or cannot reasonably discover.'" (Kaufman, supra, 25 Cal.App.4th at p. 1588.)
The Kaufman court concluded: "We interpret section 66498.1 to apply this general notice requirement to a local agency seeking to pass along a fee increase imposed after a developer's rights have vested. That is, the ordinances, policies, and standards in effect when the developer's vesting tentative map is deemed complete, must include not only a general fee escalation provision but must also provide reasonable notice of the nature of the fee and the manner of its calculation. a developer about to commit substantial time and resources to a project should be able to predict with at least some degree of assurance what the fee will be when the time comes to pay it." (25 Cal.App.4th at p. 1589.)
After reviewing the ordinances in question, the Kaufman court found that although the city's fee policy contemplated future fee increases, "it did not foretell the comprehensive reevaluation of the fee structure which the City was later to conduct. In fact, the policy suggested the increases would be limited to relatively modest and predictable cost of building adjustments." (Kaufman, supra, 25 Cal.App.4th at p. 1589.)
The court concluded the critical point in the process for a developer to have actual or constructive notice of future fee increases "is the date on which the map application is complete." ( Id. at p. 1590.)