Court Opinion

ID: 1085650
Source: CourtListenerOpinion
Date Created: 2013-10-17 17:14:46.591439+00
Date Added: 2024-06-11T13:20:33.620482
License: Public Domain

Filed 10/17/13

      IN THE SUPREME COURT OF CALIFORNIA

STERLING PARK, L.P., et al.,          )
                                      )
           Plaintiffs and Appellants, )
                                      )                           S204771
           v.                         )
                                      )                      Ct.App. 6 H036663
CITY OF PALO ALTO,                    )
                                      )                     Santa Clara County
           Defendant and Respondent. )               Super. Ct. No. 1-09-CV154134
____________________________________)

        A developer wanted to build 96 condominiums on a parcel of land. As a
condition of obtaining a permit to do so, the city required the developer to set
aside 10 condominium units as below market rate housing and make a substantial
cash payment to a city fund. The developer proceeded with the construction but
challenged in court these requirements pursuant to a statute that permits a
developer to proceed with a project while also “protest[ing] the imposition of any
fees, dedications, reservations, or other exactions imposed on a development
project.” (Gov. Code, § 66020, subd. (a).)1
        We must decide whether section 66020 applies. If it does not, it appears
another statute would apply, and that statute would make this action untimely.
(See § 66499.37.) Specifically, we must decide whether the requirements at issue

1     All further statutory references are to the Government Code unless
otherwise indicated.
constitute the imposition of “any fees . . . or other exactions” under section 66020,
subdivision (a). The trial court and Court of Appeal held that this statute only
governs fees imposed “for the purpose of defraying all or a portion of the cost of
public facilities related to the development project.” ( 66000, subd. (b) [defining
“fee”].) Because the protested requirements were imposed for other purposes, the
courts further held, section 66020 does not apply, and this action is untimely.
       We conclude otherwise. Even if the requirements at issue here were not
“fees” under section 66020, they were “other exactions.” Accordingly, the
statutory scheme permitting a challenge to the requirements while the project
proceeds applies here.
                      FACTUAL AND PROCEDURAL HISTORY
       We take these facts largely from the Court of Appeal’s opinion.
       Plaintiffs Sterling Park, L.P. and Classic Communities, Inc. (collectively,
Sterling Park) owned two lots totaling 6.5 acres on West Bayshore Road in the
City of Palo Alto (the City). Sterling Park planned to demolish existing
commercial improvements and construct 96 residential condominiums on the site.
The proposed development was subject to the City’s below market rate housing
program, which is set forth in the Palo Alto Municipal Code. Section 18.14.030,
subdivision (a), of that code provides, “Developers of projects with five or more
units must comply with the requirements set forth in Program H-36 of the City of
Palo Alto Comprehensive plan.”
       As pertinent here, Program H-36 requires that housing projects involving
the development of five or more acres must provide at least 20 percent of all units
as below market rate units. The developer must agree to one or more of certain
requirements or equivalent alternatives that the City accepts. One of the
requirements applicable to Sterling Park’s project is that three-fourths of the below
market rate units be affordable to households in the 80 to 100 percent of median

                                          2
income range. One-fourth of the units may be affordable to the higher range of
between 100 to 120 percent of the county’s median income. The developer may
provide off site units or vacant land if providing on site units is not feasible. If no
other alternative is feasible, the City may accept a cash payment to the City’s
housing development fund in lieu of providing below market rate units or land.
The in-lieu payment for projects of five acres or more is 10 percent of the greater
of the actual sales price or fair market price of each unit. The City requires the
below market rate units to be sold to qualifying buyers it selects. To implement
the requirement, the City takes an option to purchase the units for the specified
below-market-rate price, which it generally then assigns to the buyer it selects.
       Sterling Park submitted its initial application for project approval in 2005.
The City’s planning staff found the project would not cause any significant
adverse environmental impact, and the City’s architectural review board
recommended approval of the design and site plan in March 2006.
       In a letter dated June 16, 2006, the City stated the terms of an agreement
between Sterling Park and the City’s planning staff under which Sterling Park
agreed to provide 10 below market rate units on the project site and pay in-lieu
fees of 5.3488 percent of the actual selling price or fair market value of the market
rate units, whichever was higher. Classic Communities, Inc.’s vice president
executed the letter on June 19, 2006. On that date, the city council approved the
project.
       The City approved Sterling Park’s application for a tentative subdivision
map on November 13, 2006, and for a final subdivision map on September 10,
2007. A document entitled “Regulatory Agreement Between Sterling Park, LP
and City of Palo Alto Regarding Below Market Rate Units” was executed on
September 11, 2007, and recorded on November 16, 2007. This document
referred to and attached the June 16, 2006 letter.

                                           3
          Over a year later, when the new units were being finished, the City began
requesting conveyance of the below-market-rate designated homes. On July 13,
2009, Sterling Park submitted a “notice of protest” to the City, claiming the prior
agreements were signed under duress and arguing that the below market rate
requirements are invalid. When the City failed to respond to the protest, Sterling
Park filed this action on October 5, 2009. It sought an injunction and a judicial
declaration that the below market rate requirements are invalid and “the City may
not lawfully impose such [below market rate] affordable housing fees or exactions
as a condition of providing building permits or other approvals for the Project.”
Its third cause of action cited sections 66020 and 66021 and sought “restitution or
equitable relief for the compelled conveyance of houses under restrictive terms.”
          The City moved for summary judgment on statute of limitations grounds,
arguing that the action is untimely under section 66499.37. The trial court agreed
and granted the motion. Ultimately, the court entered judgment in the City’s
favor. Sterling Park appealed.
          The Court of Appeal affirmed the judgment. Relying heavily on an earlier
decision from the same appellate district (Trinity Park, L.P. v. City of Sunnyvale
(2011) 193 Cal.App.4th 1014 (Trinity Park), the court held that section 66020
does not apply to this case, and that the action is untimely under section 66499.37.
          We granted Sterling Park’s petition for review to determine which time
limits — those of section 66020 or those of section 66499.37 — govern this
action.
                                    II. DISCUSSION
          We must decide which of two possible statutes of limitations applies here.
          Section 66499.37, part of the Subdivision Map Act (see § 66410), provides
as relevant: “Any action or proceeding to attack, review, set aside, void, or annul
the decision of an advisory agency, appeal board, or legislative body concerning a

                                           4
subdivision, or any of the proceedings, acts, or determinations taken, done, or
made prior to the decision, or to determine the reasonableness, legality, or validity
of any condition attached thereto, including, but not limited to, the approval of a
tentative map or final map, shall not be maintained by any person unless the action
or proceeding is commenced and service of summons effected within 90 days after
the date of the decision.”
       It seems clear, and no one disputes, that section 66499.37 is broad enough
that it would apply unless another statute applies instead. It is also undisputed that
this action would be untimely under section 66499.37; the action was commenced
more than 90 days after the decision that it challenges. But Sterling Park argues
that another statute, section 66020, governs this case.
       Section 66020, part of the Mitigation Fee Act (§ 66000.5, subd. (a)),
provides as relevant:
       “(a) Any party may protest the imposition of any fees, dedications,
reservations, or other exactions imposed on a development project . . . by a local
agency by meeting both of the following requirements:
       “(1) Tendering any required payment in full or providing satisfactory
evidence of arrangements to pay the fee when due or ensure performance of the
conditions necessary to meet the requirements of the imposition.
       “(2) Serving written notice on the governing body of the entity, which
notice shall contain all of the following information:
       “(A) A statement that the required payment is tendered or will be tendered
when due, or that any conditions which have been imposed are provided for or
satisfied, under protest.
       “(B) A statement informing the governing body of the factual elements of
the dispute and the legal theory forming the basis for the protest.

                                          5
       “(b) Compliance by any party with subdivision (a) shall not be the basis for
a local agency to withhold approval of any map, plan, permit, zone change,
license, or other form of permission, or concurrence . . . incident to, or necessary
for, the development project. . . .
        “(c) . . .
       “(d)(1) A protest filed pursuant to subdivision (a) shall be filed at the time
of approval or conditional approval of the development or within 90 days after the
date of the imposition of the fees, dedications, reservations, or other exactions to
be imposed on a development project. Each local agency shall provide to the
project applicant a notice in writing at the time of the approval of the project or at
the time of the imposition of the fees, dedications, reservations, or other exactions,
a statement of the amount of the fees or a description of the dedications,
reservations, or other exactions, and notification that the 90-day approval period in
which the applicant may protest has begun.
       “(2) Any party who files a protest pursuant to subdivision (a) may file an
action to attack, review, set aside, void, or annul the imposition of the fees,
dedications, reservations, or other exactions imposed on a development project by
a local agency within 180 days after the delivery of the notice. Thereafter,
notwithstanding any other law to the contrary, all persons are barred from any
action or proceeding or any defense of invalidity or unreasonableness of the
imposition. . . .
       “(e) If the court finds in favor of the plaintiff in any action or proceeding
brought pursuant to subdivision (d), the court shall direct the local agency to
refund the unlawful portion of the payment, with interest at the rate of 8 percent
per annum, or return the unlawful portion of the exaction imposed.”
       A related statute, section 66021, subdivision (a), provides as relevant:
“Any party on whom a fee, tax, assessment, dedication, reservation, or other

                                           6
exaction has been imposed, the payment or performance of which is required to
obtain governmental approval of a development . . . or development project, may
protest the establishment or imposition of the fee, tax, assessment, dedication,
reservation, or other exaction as provided in Section 66020.”
       Sterling Park argues that section 66020 applies here. It further argues that
this action is timely under that statute because the City never provided the notice
that section 66020, subdivision (d)(1), requires.2 Invoking the “ ‘rule of statutory
construction that a special statute dealing expressly with a particular subject
controls and takes priority over a general statute,’ ” one court has held that when
section 66020 does apply, its time limits govern the case, not those of the more
general section 66499.37. (Branciforte Heights, LLC v. City of Santa Cruz (2006)
138 Cal.App.4th 914, 924.) We agree. This construction comports with “the
Legislature’s understanding . . . that the Mitigation Fee Act generally governed
developer’s protests against fees imposed upon developments.” (Id. at p. 928.)
       Accordingly, we must decide whether section 66020 applies. If it does,
then section 66499.37 does not apply; contrariwise, if section 66020 does not
apply, then section 66499.37 does.
       The Legislature originally enacted the substance of section 66020 in 1984
as Government Code, former section 65913.5. (Stats. 1984, ch. 653, § 1, p. 2411;
Sen. Bill No. 2136 (1983-1984 Reg. Sess.) (Senate Bill 2136); see Shapell
Industries, Inc. v. Governing Board (1991) 1 Cal.App.4th 218, 241.) After
reviewing the legislative history, the Shapell Industries court explained the
legislative purpose behind the enactment. “Prior to the enactment of this statute, a
developer could not challenge the validity of fees imposed on a residential

2      We express no opinion on this further argument, which is not before us.

                                          7
development without refusing to pay them. (Pfeiffer v. City of La Mesa (1977) 69
Cal.App.3d 74, 78.) Since payment is a condition of obtaining the building
permit, a challenge meant that the developer would be forced to abandon the
project. The bill was drafted to correct this situation. It provided a procedure
whereby a developer could pay the fees under protest, obtain the building permit,
and proceed with the project while pursuing an action to challenge the fees. If the
action were successful, the fees would be refunded with interest.” (Shapell
Industries, Inc. v. Governing Board, supra, at p. 241.)
       Sterling Park argues that this purpose applies here; it should be allowed to
pay the required amount or “ensure performance” of the below market rate
requirements (see § 66020, subd.(a)(1)) under protest and proceed with the project
while pursuing an action to challenge the requirements. The City argues, on the
other hand, that the statute does not apply, and Sterling Park had to delay the
construction project as the price of challenging the requirements.
       The question concerning section 66020’s applicability comes down to this:
Are the requirements at issue “any fees, dedications, reservations, or other
exactions” under section 66020, subdivision (a)? The Court of Appeal held that
they are not.
       Trinity Park, supra, 193 Cal.App.4th 1014, the case on which the Court of
Appeal primarily relied in reaching its conclusion, supports the City’s argument.
Trinity Park, and the Court of Appeal here, interpreted the phrase “any fees,
dedications, reservations, or other exactions” as being limited to fees as defined in
section 66000, subdivision (b): “a monetary exaction . . . that is charged by a local
agency to the applicant in connection with approval of a development project for
the purpose of defraying all or a portion of the cost of public facilities related to
the development project . . . .” (Italics added.) The Court of Appeal also held that

                                           8
the requirements at issue here were not imposed for the purpose of defraying the
cost of facilities related to the proposed development.
       In reaching its conclusion, the Trinity Park court noted that the Mitigation
Fee Act, which includes section 66020, does not define the term “exaction.”
(Trinity Park, supra, 193 Cal.App.4th at p. 1034.) In seeking its own definition,
and reading section 66020 in the context of the overall statutory scheme, the court
cited several provisions of the Mitigation Fee Act that use the word “exaction” or
“exactions” in the context of defraying the cost of services or facilities related to a
project. (Trinity Park, at p. 1035 [citing §§ 66000, subd. (b), 66005, subd (a), and
66010, subd. (b)].)3 It viewed these statutes’ use of this word in that context as
meaning that section 66020 is limited to that context: “Given the Mitigation Fee
Act’s express references to a fee or exaction imposed to defray the cost of public
facilities related to the development, and the express requirement that a fee or
exaction not exceed a reasonable cost, we find that the plain language of the

3       Section 66000, subdivision (b), provides as relevant: “ ‘Fee’ means a
monetary exaction other than a tax or special assessment, whether established for a
broad class of projects by legislation of general applicability or imposed on a
specific project on an ad hoc basis, that is charged by a local agency to the
applicant in connection with approval of a development project for the purpose of
defraying all or a portion of the cost of public facilities related to the development
project . . . .” (Italics added.)
        Section 66005, subdivision (a), provides as relevant: “When a local agency
imposes any fee or exaction as a condition of approval of a proposed
development . . . , or development project, those fees or exactions shall not exceed
the estimated reasonable cost of providing the service or facility for which the fee
or exaction is imposed.” (Italics added.)
        Section 66010, subdivision (b), provides: “ ‘Fee’ means a monetary
exaction or a dedication, other than a tax or special assessment, which is required
by a local agency of the applicant in connection with approval of a development
project for the purpose of defraying all or a portion of the cost of public facilities
related to the development project, but does not include fees for processing
applications for governmental regulatory actions or approvals.” (Italics added.)

                                           9
pertinent provisions of the Mitigation Fee Act shows that the Legislature intended
the 180-day limitations period provided by section 66020, subdivision (d)(2) to
apply to an exaction imposed for the purpose of ‘defraying all or a portion of the
cost of public facilities related to the development project.’ ” (Trinity Park, supra,
at pp. 1035-1036, quoting § 66000, subd. (b).)
       The Trinity Park court also cited a statement in one of our cases that the
term “fees,” as used in section 66020, “applies only to ‘development fees’ that
alleviate the effects of development on the community and does not include fees
for specific regulations or services.” (Barratt American, Inc. v. City of Rancho
Cucamonga (2005) 37 Cal.4th 685, 696 (Barratt).) It determined that what we
said about fees “also applies to an ‘other exaction’ under the canon of statutory
construction knows as ejusdem generis . . . .” (Trinity Park, supra, 193
Cal.App.4th at p. 1036.)
       The canon of ejusdem generis “simply means that if a statute contains a list
of specified items followed by more general words, the general words are limited
to those items that are similar to those specifically listed.” (Clark v. Superior
Court (2010) 50 Cal.4th 605, 614.) “It implies the addition of similar after the
word other.” (Scalia & Garner, Reading Law: The Interpretation of Legal Texts
(2012) p. 199.)
       The Trinity Park court explained its view of how the canon applied there:
“Applying the rule of ejusdem generis to the enumeration of ‘fees, dedications,
reservations, or other exactions’ in section 66020, it is apparent that ‘exactions’ is
a more general word that follows a list of specified items (fees, dedications, and
reservations). The meaning of the phrase ‘other exactions’ must therefore be
limited to exactions of like kind and character as the fees, dedications and
reservations listed in section 66020 that are imposed for the purpose of ‘defraying
all or a portion of the cost of public facilities related to the development project’

                                          10
(§ 66000, subd. (b)) or, as stated by the California Supreme Court, to ‘alleviate the
effects of development on the community . . . .’ (Barratt, supra, 37 Cal.4th at p.
696.)” (Trinity Park, supra, 193 Cal.App.4th at p. 1036.)
       The Trinity Park court also viewed the legislative history behind section
66020 as showing “the Legislature intended that the Mitigation Fee Act would
allow a developer to challenge a fee, dedication, reservation or other exaction
imposed on a development project and obtain a refund where the exaction
exceeded the cost or burden of the project.” (Trinity Park, supra, 193 Cal.App.4th
at p. 1039.) “Accordingly,” the court stated, “an exaction constitutes an ‘other
exaction’ within the meaning of the Mitigation Fee Act only where the exaction
was (1) imposed by a local agency as a condition of approval of a development
project; and (2) for the purpose of ‘defraying all or a portion of the cost of public
facilities related to the of public facilities related to the development project.’
(§ 66000, subd. (b); see Barratt, supra, 37 Cal.4th at p. 696.)” (Ibid.)
       The Trinity Park court erred in interpreting the term “other exactions” so
narrowly. It is certainly true that the Legislature intended to allow a developer to
challenge a fee or exaction that exceeded the cost or burden of the project. But
nothing in the statutory language, the statutory context, or the statute’s purpose
suggests it is limited to that situation. Trinity Park’s interpretation is contrary to
other courts’ far more reasonable interpretation and would lead to absurd results
the Legislature cannot have intended.
       Trinity Park used the canon of ejusdem generis to conclude that section
66020’s words “any fees, dedications, reservations, or other exactions” mean
nothing more than fees as defined in section 66000, subdivision (b). But this view
deprives the words “any” and “or other exactions” of all meaning. As we said in
interpreting another statute within the Mitigation Fee Act, “[t]he use of the word
‘any’ and the inclusion of several disjunctives to link essentially synonymous

                                           11
words all serve to broaden the applicability of the provision.” (Utility Cost
Management v. Indian Wells Valley Water Dist. (2001) 26 Cal.4th 1185, 1191
[referring to § 66022], italics added.) The words “any . . . other exactions” must
have some meaning to broaden the statute’s reach beyond merely a specific
definition of fees.
       Another court also applied the canon of ejusdem generis to these same
words and reached a quite different result. In Fogarty v. City of Chico (2007) 148
Cal.App.4th 537 (Fogarty), a city council had precluded a subdivision developer
from building on a certain portion of its property. The developer sued, purporting
to use section 66020’s protest procedures. As here, the question arose whether
section 66020 applied. Relying on the words “or other exactions,” the developer
had argued that the statute governed the use restriction the city council had
imposed. The Court of Appeal disagreed, in part due to its own application of the
canon of ejusdem generis. After explaining what the canon is, the court noted that
“the specific terms in section 66020 all involve divesting a developer of either
money or a possessory interest in the subject property. The present land use
conditions at issue do not result in either consequence; they are simply a
restriction on the manner in which plaintiffs may use their property.” (Fogarty,
supra, at p. 544, italics added.)
       Fogarty also relied on the analysis of an earlier decision interpreting this
same statutory language. (Williams Communications v. City of Riverside (2003)
114 Cal.App.4th 642 (Williams).) As Fogarty explained, Williams had “found that
a per-foot assessment imposed in connection with a permit to lay cable in conduit
under city streets was not a fee but was nonetheless an ‘exaction’ within the
meaning of section 66020.” (Fogarty, supra, 148 Cal.App.4th at p. 543.)
       In Williams, the trial court had ruled the assessment did not come within
section 66020 “because the ‘City did not purport to impose the subject license fee

                                         12
on plaintiff to mitigate or defray the cost of any alleged impacts on public
improvements or facilities.’ ” (Williams, supra, 114 Cal.App.4th at p. 647.) The
Court of Appeal reversed. Citing section 66000, subdivision (b), the court agreed
that the assessment “was not a fee within the meaning of this definition because it
was not assessed for the purpose of defraying the cost of [the] project.” (Williams,
supra, at p. 658.) But it determined the assessment was an “other exaction” under
section 66020, subdivision (a). As did the Trinity Park court, the Williams court
noted that the statutes do not define “exaction.” So it turned to other sources for a
definition. “[T]he term is generally defined to include a ‘compensation arbitrarily
or wrongfully demanded.’ (Black’s Law Dict. (7th ed. 1999) p. 581, col. 2;
Webster’s 3d New Internat. Dict. (1993) p. 790, col. 2: ‘[T]he levying or
demanding of some benefit (as a fee or gratuity) that is not lawfully or properly
due.’)” (Williams, supra, at p. 658.) The court found that a certain statute had
prohibited certain charges. Due partly to this definition, it also held that the
“Legislature used the collective term ‘other exactions’ in section 66020 to include
all such [prohibited] charges.” (Ibid.)
       The Williams court rejected the argument that “the Mitigation Fee Act only
applies to fees, and not anything else. This argument derives from the definition
of fee in section 66000. While we agree . . . that the payment was not a fee, as
defined in section 66000, subdivision (b), it was an ‘other exaction’ as defined in
sections 66020 and 66021. Because the sum charged was an ‘other exaction,’ the
Mitigation Fee Act is applicable.” (Williams, supra, 114 Cal.App.4th at p. 659.)
       The Fogarty court concluded that the definition cited in Williams “indicates
that the usual and ordinary meaning of the word ‘exaction,’ the first step in the
interpretation of a statute [citation], does not include land use restrictions, which
are not any form of payment.” (Fogarty, supra, 148 Cal.App.4th at pp. 543-544,
italics added.) Accordingly, Fogarty held that section 66499.37, and not section

                                          13
66020, governed the challenge to the use restriction of that case. (Fogarty, supra,
at p. 540.)
       In combination, Williams and Fogarty indicate that the term “other
exactions” under section 66020 at least includes actions that divest the developer
of money or a possessory interest in property, but it does not include land use
restrictions. This interpretation conforms to the statute’s plain language far better
than does Trinity Park’s excessively narrow interpretation. Divesting the
developer of money or a possessory interest is similar to imposing a fee,
dedication, or reservation. This interpretation also conforms to the legislative
purpose behind the statute.
       We have explained that the Mitigation Fee Act “sets forth procedures for
protesting the imposition of fees and other monetary exactions imposed on a
development by a local agency. As its legislative history evinces, the Act was
passed by the Legislature ‘in response to concerns among developers that local
agencies were imposing development fees for purposes unrelated to development
projects.’ ” (Ehrlich v. City of Culver City (1996) 12 Cal.4th 854, 864, italics
added, quoting Centex Real Estate Corp. v. City of Vallejo (1993) 19 Cal.App.4th
1358, 1361.) We described the language in section 66021 that is essentially
identical to the relevant language in section 66020 as “a broadly formulated and
unqualified authorization” that “is consistent with the view that the Legislature
intended to require all protests to a development fee that challenge the sufficiency
of its relationship to the effects attributable to a development project — regardless
of the legal underpinnings of the protest — to be channeled through the
administrative procedures mandated by the Act.” (Ehrlich v. City of Culver City,
supra, at p. 866.)
       Under Trinity Park’s interpretation, a developer may pay under protest a
fee charged to defray the cost of facilities related to the development and then

                                         14
challenge the fee as excessive while proceeding with the development; but it may
not so challenge any other fee or exaction. However, the Legislature was not
concerned merely about excessive fees but also about “ ‘fees for purposes
unrelated to’ ” the project. (Ehrlich v. City of Culver City, supra, 12 Cal.4th at p.
864.) The Legislature did not want developers to have to choose between either
paying the fee with no recourse or delaying the project while challenging the fee,
as previous law had required. (Shapell Industries, Inc. v. Governing Board, supra,
1 Cal.App.4th at p. 241.) But Trinity Park’s interpretation would mean section
66020 does not apply to fees imposed for purposes entirely unrelated to the
project. Under that interpretation, if a fee or other exaction is not merely
excessive but truly arbitrary, the developer would either have to pay it with no
recourse, or delay the entire development to challenge the fee or exaction. In other
words, the more unreasonable the fee or exaction, the less recourse the developer
would have. This perverse interpretation is not only contrary to legislative intent,
it is contrary to the broad language — “any fees, dedications, reservations, or
other exactions” — the Legislature used in defining section 66020’s reach.
       The Williams court agreed with the developer that “ ‘[u]nder the [trial]
court’s reading of the statute, . . . no illegal monetary charge would fall within the
purview of the statute, yet the very purpose of the statute is to challenge the
lawfulness of monetary charges imposed on persons who seek permits and
licenses.’ ” (Williams, supra, 114 Cal.App.4th at p. 658.) This argument is
slightly exaggerated, because under the trial court’s interpretation in Williams,
which was similar to Trinity Park’s, section 66020’s pay-under-protest provision
would apply to fees that relate to the project but are arguably excessive. But its
main point is correct. Under Trinity Park’s reading, the statute would only govern
fees that are related to the project but arguably excessive; it would not govern fees
or other exactions that are blatantly arbitrary and unlawful. This interpretation

                                          15
would be contrary to our explanation that section 66020 was intended to apply to
“all protests to a development fee that challenge the sufficiency of its relationship
to the effects attributable to a development project — regardless of the legal
underpinnings of the protest.” (Ehrlich v. City of Culver City, supra, 12 Cal.4th at
p. 866.)
       The Trinity Park court relied heavily for its narrow interpretation on our
opinion in Barratt, supra, 37 Cal.4th 685. (See Trinity Park, supra, 193
Cal.App.4th at pp. 1032, 1036-1037, 1039.) In Barratt, we held that the time limit
provisions of sections 66016 and 66022, and not those of section 66020, govern a
challenge to building permit fees imposed under section 66014. We reached this
conclusion because section 66014, subdivision (c), provides: “Any judicial action
or proceeding to attack, review, set aside, void, or annul the ordinance, resolution,
or motion authorizing the charge of a fee subject to this section shall be brought
pursuant to section 66022.” (See also § 66016, subd. (e) [containing a similar
reference to § 66022].) Because sections 66014 and 66016 expressly refer to
section 66022, we concluded that “the applicable remedy and limitations period
for excessive building fees claims under section 66104 are found in sections 66016
and 66022, not in sections 66020 and 66021.” (Barratt, supra, at p. 692.) In the
course of our discussion, we made the statement the Trinity Park court repeatedly
cited: “Thus, section 66020, by its own terms, applies only to ‘development fees’
that alleviate the effects of development on the community and does not include
fees for specific regulations or services.” (Barratt, supra, at p. 696.) But this
statement was made in the context of a statutory scheme that expressly provided
that a challenge to fees imposed under section 66014 was subject to the provisions
of 66022 rather than 66020. What we said in Barratt about fees governed by
section 66014 (and hence § 66022) has no bearing on whether the requirements at

                                          16
issue here, which are not governed by either section 66014 or 66022, are “other
exactions” under section 66020, subdivision (a).
       The procedure established in section 66020, which permits a developer to
pay or otherwise ensure performance of the exactions, and then challenge the
exactions while proceeding with the project, makes sense regarding monetary
exactions. By the nature of things, some conditions a local entity might impose on
a developer, like a limit on the number of units (see Fogarty, supra, 148
Cal.App.4th 537), cannot be challenged while the project is being built.
Obviously, one cannot build a project now and litigate later how many units the
project can contain — or how large each unit can be, or the validity of other use
restrictions a local entity might impose. But the validity of monetary exactions, or
requirements that the developer later set aside a certain number of units to be sold
below market value, can be litigated while the project is being built. In the former
situation — where the nature of the project must be decided before construction —
it makes sense to have tight time limits to minimize the delay. In the latter
situation — where the project can be built while litigating the validity of fees or
other exactions — it makes sense to allow payment under protest followed by a
challenge and somewhat less stringent time limits.
       For these reasons, we believe Fogarty and Williams correctly interpreted
section 66020. The statute governs conditions on development a local agency
imposes that divest the developer of money or a possessory interest in property,
but not restrictions on the manner in which a developer may use its property.
Section 66499.37 governs the latter restrictions. (Fogarty, supra, 148 Cal.App.4th
at pp. 540, 544.)
       The City argues that the requirements it imposed under its below market
rate program are not exactions but merely land use regulations of the kind
Fogarty, supra, 148 Cal.App.4th 537, found section 66020 does not govern. We

                                         17
disagree. The below market rate program is different from a land use regulation of
the type at issue in Fogarty (a limit on the number of units that can be built);
instead, it is similar to a fee, dedication, or reservation under section 66020. The
program offers developers two options, either of which, by itself, would constitute
an exaction. The imposition of the in-lieu fees is certainly similar to a fee.
Moreover, the requirement that the developer sell units below market rate,
including the City’s reservation of an option to purchase the below market rate
units, is similar to a fee, dedication, or reservation. It may be, as the City argues,
that under traditional property law, an option to purchase creates no estate in the
land. But a purchase option is a sufficiently strong interest in the property to
require compensation if the government takes it in eminent domain. (County of
San Diego v. Miller (1975) 13 Cal.3d 684, 691-693.) Compelling the developer to
give the City a purchase option is an exaction under section 66020. Because of
this conclusion, we need not decide whether forcing the developer to sell some
units below market value, by itself, would constitute an exaction under section
66020.
         The City also notes that subdivision (e) of section 66020 requires a local
agency that loses the action “to refund the unlawful portion of the payment” with
interest “or return the unlawful portion of the exaction imposed.” Based on this
language, it argues that an approval condition, such as requiring some of the units
to be sold below market price, “that does not result in transfer to the public agency
of money or property that can be returned in whole or in part to a successful
plaintiff cannot be an ‘exaction’ subject to payment under protest, and delayed
litigation, under . . . section 66020.” We disagree. Subdivision (e) of section
66020 concerns remedies for a prevailing plaintiff and does not limit the scope of
section 66020, subdivision (a). Subdivision (a)(1) of that section permits the
protesting party either to pay the amount in full or “provid[e] satisfactory evidence

                                           18
of arrangements to pay the fee when due or ensure performance of the
conditions . . . .” Obviously, if the protesting party does the latter, there will be no
payment to repay or exaction to return. This does not make section 66020 self-
canceling whenever the developer provides the required satisfactory evidence and
does not make an actual payment. It just means that a remedy will not include
repayment of a payment that was never made.
       The City also argues that Sterling Park’s broad interpretation of section
66020 would “encourage ‘chaos,’ allowing developers to ask courts to micro-
manage a municipality’s permitting decisions by considering land-use approval
conditions one by one rather than in relation to one another and to the entire
development’s potential community benefits and burdens,” and “would conflict
with CEQA, which requires a comprehensive analysis of a development
proposal’s foreseeable environmental impacts rather than piecemeal analyses of
each feature or stage.” (Citing Cal. Environmental Quality Act; Pub. Resources
Code, § 21000 et seq.) Again, we disagree. There is nothing chaotic about section
66020’s protest provisions and nothing that violates CEQA. The City borrows the
word “chaos” from Pfeiffer v. City of La Mesa, supra, 69 Cal.App.3d at page 78.
By enacting what is now section 66020, the Legislature intended to modify, not
adopt, the law as stated in that case. (See Shapell Industries, Inc. v. Governing
Board, supra, 1 Cal.App.4th at p. 241.)
       The City argues that the Legislature did not intend for section 66020 to
repeal section 66499.37 or “to provide a ‘performance under protest’ option for
any and every condition to which a firm 90-day statute of limitations [under
section 66499.37] otherwise would apply.” The City is correct. Section 66020
applies only to “any fees, dedications, reservations, or other exactions,” not to all
conditions a local agency may impose on the use of property. But this argument
does not support its position. The question here is not whether section 66020 has

                                          19
repealed section 66499.37, but when each statute applies. The answer we give
does not repeal section 66499.37 or make section 66020 apply to all conditions
placed on the use of property; instead, it reconciles the two statutes.
       “Finally,” the City argues, “broad application of section 66020 would be
unfair to the public, because section 66020 is asymmetric: It allows a developer,
but not the public, to invoke its special procedure.” This would argue against any
application of section 66020. But the Legislature enacted it, and we cannot
interpret it out of existence. Moreover, as noted, it is reasonable for the
Legislature to impose strict time limits for litigation that can delay an entire
development project but provide more relaxed limits (but ones that are still fairly
tight) when the project can continue during the litigation.
       The City also invokes legislative history to support its narrow
interpretation. It quotes a statement by the legislator who introduced the bill
enacting what is now section 66020 that, as the City puts it, “described it as
addressing the increasing incidence, after enactment of Proposition 13, of local
governments’ using ‘fee revenue to support planning and building activities.’ ”
(Quoting a “Statement by Senator Leroy F. Greene on [Senate Bill] 2136 as
amended June 21, 1984.”) Even were a statement by an individual legislator
relevant to our interpretation of a statute, this statement does not aid the City. The
same statement also says: “If a housing developer finds a fee is exorbitant or
illegal, he is faced with the dilemma of paying it so he can get the approval to
proceed or going to court realizing his project will likely be halted until resolution.
[¶] This measure sets up an orderly procedure so the housing developer can pay
the fee under protest, take legal action within 180 days, and if he wins in court, be
refunded the unlawful portion of the fee.” (Ibid., italics added.) Nothing in this
statement suggests an intent to permit this “orderly procedure” to challenge a fee

                                          20
that is excessive but to deny the same procedure when the fee is arbitrary and thus
entirely illegal.
       The City also cites a legislative analysis that, as the City describes it, “gave
examples of the kinds of requirements that [the bill] would permit a developer to
perform under protest: ‘fees and dedications . . . to provide services such as
schools, parks, capital facilities, etc.’ ” (Quoting Dept. Housing & Community
Development, analysis of Sen. Bill No. 2136 (1983-1984 Reg. Sess.) as introduced
Feb. 17, 1984, p. 1.) Again, nothing in this analysis suggests an intent to limit
section 66020’s reach in the way the Trinity Park court did. The use of the
abbreviation “etc.” at the end of the quoted language suggests the opposite — that
the Legislature intended a broad application.
       The City does make one correct argument. It argues that if we find section
66020 applies here, we should remand the matter to the Court of Appeal to decide
any remaining issues. We agree. We express no opinion regarding the merits of
the underlying action, or even regarding whether the action is timely under section
66020. We merely hold that section 66020 governs this case.

                                          21
                                  III. CONCLUSION
       We reverse the judgment of the Court of Appeal and remand the matter to
that court for further proceedings consistent with this opinion. We also disapprove
Trinity Park, L.P. v. City of Sunnyvale, supra, 193 Cal.App.4th 1014, to the extent
it is inconsistent with this opinion.
                                                       CHIN, J.
WE CONCUR:

CANTIL-SAKAUYE, C.J.
KENNARD, J.
BAXTER, J.
WERDEGAR, J.
CORRIGAN, J.
LIU, J.

                                        22
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.

Name of Opinion Sterling Park, L.P. v. City of Palo Alto
________________________________________________________________________________

Unpublished Opinion XXX NP opn. filed 7/17/12, 6th Dist.
Original Appeal
Original Proceeding
Review Granted
Rehearing Granted

________________________________________________________________________________

Opinion No. S204771
Date Filed: October 17, 2013
________________________________________________________________________________

Court: Superior
County: Santa Clara
Judge: Kevin McKenney

________________________________________________________________________________

Counsel:

Sheppard, Mullin, Richter & Hampton, Robert J. Stumpf, Jr., James G. Higgins; Rutan & Tucker, David P.
Lanferman; Rosen Bien Galvan & Grunfeld, Sanford Jay Rosen and Ernest J. Galvan for Plaintiffs and
Appellants.

Molly S. Stump, City Attorney, Donald A. Larkin, Assistant City Attorney; Law Offices of Scott D.
Pinsky, Scott D. Pinsky; Goldfarb & Lipman, Juliet E. Cox and Barbara E. Kautz for Defendant and
Respondent.

Dennis J. Herrera, City Attorney (San Francisco), Christine Van Aken, Chief of Appellate Litigation, and
Kristen A. Jensen, Deputy City Attorney, for League of California Cities, California State Association of
Counties and City and County of San Francisco as Amici Curiae on behalf of Defendant and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):

David P. Lanferman
Rutan & Tucker
5 Palo Alto Square
3000 El Camino Real, Suite 200
Palo Alto, CA 94306-9814
(650) 320-1500

Juliet E. Cox
Goldfarb & Lipman
1300 Clay Street, Eleventh Floor
City Center Plaza
Oakland, CA 94612
(510) 836-6336