Californians for Homeownership, a nonprofit sponsored by the California Association of Realtors (CAR), aims to address California’s housing crisis through impact litigation, announced earlier this month that it has filed its first lawsuit challenging excessive residential development fees.
The lawsuit, filed Oct. 3 jointly with the California Housing Defense Fund, challenges new fees adopted by the city of Los Altos.
“For years, we have heard from experts that excessive fees are a leading driver of California’s housing crisis,” said CAR president Melanie Barker. “With this new lawsuit, Californians for Homeownership is expanding its work into an area where court intervention is critically necessary.”
Because it is a pending legal matter, city of Los Altos officials denied requests for comment.
The fees being challenged in the new lawsuit include parks fees, transportation impact fees, a fee for “general government services” and a public art fee. By the city’s own estimates, the total fees for a typical mid-sized apartment or condominium project will exceed $4 million.
The lawsuit identifies defects and inconsistencies in the nexus study the city adopted to justify the new fees, as well as more fundamental issues with the city’s approach to fees.
“Under the city’s new fee regime, owners and residents of new developments will be double-charged for the same services – once in the form of fees when the project is built, and again in the form of taxes over the years that follow,” said Matthew Gelfand, the in-house litigator for the nonprofit. “The city’s fee calculation methodology assumes that new developments in the city will provide zero additional tax revenue, which is absurd.”
Each fee adopted by the city suffers from more specific flaws as well. For example, the city’s parks fee requires new developments to fund 100% of the cost of acquiring new parks based on the premise that these new parks will be exclusively used by new residents, while also requiring the same developers to fund improvements to existing parks based on the premise that new residents will instead use existing facilities. And the public art fee requires developers to set aside 1% of the development’s construction cost to be given to the city to construct public art, a violation of the California Constitution’s limits on local property taxes.
“The extent of the legal flaws in these new fees is startling,” said Dylan Casey, executive director of California Housing Defense Fund. “We can’t afford to tax desperately needed housing the same way we tax cigarettes, especially when construction costs already make it very difficult to develop new housing. We are glad to have Californians for Homeownership as a partner in this important legal challenge to fees that will harm housing affordability in a city that is already one of California’s most expensive to live in.”
Challenging fees is a new critical area of focus for Californians for Homeownership. The organization is following impact fees being adopted by other cities and counties, as well as development-related fees charged by utilities and special districts.
“Our organization has a proven track record of using the courts to rapidly and successfully challenge zoning policies that limit housing development. Now we plan to build the same record of success in challenges to baseless fees that harm housing affordability,” Gelfand said.
The Los Altos City Council discussed “anticipated litigation” in regard to the CAR lawsuit at the council’s Sept. 17 meeting. That discussion was held in closed session.
