The court of appeal held that the City of Alameda’s development fee for parks and recreation was invalid and unenforceable because there was no reasonable relationship between the fee charged and the burden from new development. Boatworks, LLC v. City of Alameda, 35 Cal. App. 5th 290 (2019). The City improperly inflated mitigation fees

The Sixth District Court of Appeal invalidated a school district’s Level 1 development fee because the underlying fee study did not properly calculate anticipated growth and included the cost of hypothetical new schools that the district had no plans to build.  Summerhill Winchester v Campbell Union School District, No. H043253 (6th Dist., Dec. 4,

The Fourth District Court of Appeal has upheld an order requiring refund of over $10 million in accumulated development impact fees because the City’s findings “were mere conclusions, not the specific findings required under the [Mitigation Fee] Act.” Walker v. City of San Clemente, No. G050552 (Fourth Dist., Aug. 28, 2015).

Statutory Requirements. Under the Mitigation Fee Act, Gov’t. Code §§ 66000 et seq., each development fee must be deposited in a separate capital facilities account and may be expended only for the purposes for which it was collected. For all unexpended fees, the agency must make findings every five years that (1) demonstrate a reasonable relationship between the unexpended balance and the purpose for which the fee was charged; (2) identify the sources and funding for any as-yet uncompleted public improvements; and (3) designate the approximate date the agency expects the funding for uncompleted improvements to be deposited in the account. § 66001(d)(1) The Act provides that “[i]f the findings are not made as required by [the Act], the local agency shall refund the moneys in the account” to the current owners of the properties for which the fees were paid. § 66001(d)(2).

The Beach Parking Impact Fee. In 1989, the City of San Clemente adopted a “Beach Parking Impact Fee” whose stated purpose was to “mitigate the impact of the increased demand on beach parking caused by new residential development.” For some 20 years, the City collected the fee, but expended very little of it (less than 3%) on beach parking improvements. In 2009, the City Council “receive[d] and file[d]” a “Five-Year Required Report” prepared by staff to justify its continued retention of the fees under the Mitigation Fee Act. Plaintiffs challenged the City’s retention of the fees, contending that the Five-Year Report failed to satisfy the requirements of the Act.
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Under the Mitigation Fee Act, when a city imposes a fee, dedication, reservation or other exaction on a development project, the developer has the right to pay under protest, obtain the necessary project approvals and proceed with construction, while at the same time disputing the legality of the requirement.  In Sterling Park v. City of