Opinion
A153579
12-14-2018
DARTMOND CHERK et al., Plaintiffs and Appellants, v. COUNTY OF MARIN, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Marin County Super. Ct. No. CIV 1602934)
Dartmond Cherk and the Cherk Family Trust (the Cherks) appeal from the denial of their petition for writ of administrative mandate under Code of Civil Procedure section 1094.5. The Cherks challenge the validity of a $39,960 "in-lieu" fee imposed by the County of Marin (County) under its inclusionary housing program as a condition for subdividing their property. The Cherks contend that the fee is invalid under both the Mitigation Fee Act (the Act) (Gov. Code, § 66000 et seq.) and the "unconstitutional conditions doctrine," established by the United States Supreme Court in Nollan v. California Coastal Comm'n (1987) 483 U.S. 825 (Nollan) and Dolan v. City of Tigard (1994) 512 U.S. 374 (Dolan). We disagree. The fee falls outside the scope of the Act's scrutiny of certain "exactions" because it serves broader purposes than simply mitigating the impact of the Cherks' subdivision. And the unconstitutional conditions doctrine is inapplicable because the Cherks could have avoided the fee by satisfying the inclusionary housing program in an alternative way. Accordingly, we affirm.
All further statutory references are to the Code of Civil Procedure unless otherwise noted.
Inclusionary housing programs " 'require or encourage developers to set aside a certain percentage of housing units in new or rehabilitated projects for low- and moderate-income residents.' " (California Building Industry Assn. v. City of San Jose (2015) 61 Cal.4th 435, 441 (San Jose).)
I.
FACTUAL AND PROCEDURAL
BACKGROUND
For almost two decades, the Cherks have been engaged in an on-again, off-again effort to subdivide a 2.79-acre parcel of land into single-family residential lots. The effort began in 2000, when they applied to the Planning Division of the Marin County Community Development Agency (Planning Division) to split the parcel into two single-family residential lots. The Planning Division deemed the application complete and began its review of the project, but in 2002 the Cherks asked for the review to be put on hold because they saw proposed changes to the Marin County Code as potentially enabling them to subdivide their property into three, rather than two, lots.
A. Ordinance No. 3393 Is Enacted.
In October 2003, the County adopted Ordinance No. 3393, amending the "affordable housing regulations" contained in Title 22 (Development Code) of the Marin County Code. In enacting the ordinance, the County Board of Supervisors found that the amendments would implement the policies contained in the County's housing policies encouraging the development of new affordable housing. (Marin County Ord. No. 3393, § V.) In relevant part, the 2003 ordinance "expand[ed] the applicability of the inclusionary housing requirements for all new residential projects resulting in two or more housing units or lots where the [prior] ordinance applie[d] only to new projects resulting in 10 or more residential units or lots" and "[i]ncrease[d] the percentage of required affordable housing units for most new residential projects from 15% to 20%." (Ibid.)
As amended, Marin County Code, section 22.22.090 (section 22.22.090) provides that "20 percent of the total number of dwelling units or lots within a subdivision shall be developed as, or dedicated to, affordable housing. Where the inclusionary housing calculation results in a decimal fraction greater than 0.50, the fraction shall be rounded up to one additional dwelling unit or lot. Where the inclusionary housing calculation results in any decimal fraction less than or equal to 0.50, the project applicant shall pay an in-lieu fee proportional to the decimal fraction." (§ 22.22.090 A.)
B. After Delays and Revisions, a Tentative Subdivision Map Is Approved.
In February 2004, after concluding that the 2003 amendments would not make it any easier to subdivide the property into three lots, the Cherks initially moved forward with their original plan for a two-lot division. But, after meeting with staff in the Planning Division and others, the Cherks decided to apply for a three-lot division after all, with the third lot dedicated to affordable housing. In a December 2004 letter to principal planner Thomas Lai, Dartmond Cherk urged the County to approve the three-lot division, stating, "The Planning department has been charged with finding more affordable housing for Marin County. When asked if we could come up with a plan, we fully cooperated. In our effort to help, we not only came forth with a plan for infill affordable housing, but we built a scale model, met with housing agencies, met with your Housing Strategist, met with the Supervisor, her aide, as well as with the neighborhood representatives. We went to this extraordinary expense not only because we believe in affordable housing, but we also wanted to help the County achieve its goal. With regards to this issue, we need our three lots if only to enable any less ambitious attempt to provide some affordable housing."
A year and a half later, however, the Cherks again changed course and revised the project back to a two-lot division. In a July 2006 internal email, Stacey Laumann of the Marin County Community Development Agency gave instructions to a planner "for [his] communications with the Cherks." Laumann wrote, "In this case, 2 developable parcels are being created. Therefore either 1 of the two lots should be deed restricted for development of low or very low income units, or an in-lieu fee of $39,960 would be required by the County." She further explained that the in-lieu fee was calculated as 40% of the fee for a single affordable housing unit valued at $99,900.
Following a noticed public meeting in December 2007, the Deputy Zoning Administrator approved the Cherks' tentative map. The final project approval was conditioned upon the Cherks' payment of an in-lieu fee of $39,960 in accordance with the formula contained in section 22.22.090 A.
In December 2008, the Planning Division informed the Cherks that the in-lieu fee had increased to $92,808 in light of the County's re-evaluation of the market value of one affordable housing unit. The County reconsidered, however, and ultimately charged the Cherks the original amount of the in-lieu fee based on the prevailing market value when the application was initially deemed complete.
C. The Project Is Finally Approved and the In-lieu Fee Is Paid Under Protest.
The Cherks again suspended their subdivision efforts after determining that the value of their property was impaired by then-existing economic conditions. For several years, they obtained extensions of time to file a parcel map.
In late 2014, the Cherks submitted their parcel map to the Planning Division for final review. The Planning Division informed the Cherks that the parcel map was approved but could not be recorded until the in-lieu fee was paid. The County offered the Cherks the option of paying the in-lieu fee in installments, with half of the fees due at the time of sale for the first lot, and the remaining balance of the fees due within three years of the map's recordation. In a July 2015 email, the Cherks accepted the County's offer to pay the in-lieu fee through an installment plan. But several weeks later, the Cherks paid the fee in full, although they did so under protest. In an accompanying letter that contained a reference line entitled "extortion payment," Dartmond Cherk stated the County was "violating the law that requires in-lieu affordable housing fee when creating two (2) or more new lots. We are creating only one new lot." He also complained that the project was "substantially completed well in advance of the new housing law. It is wrong for you to apply it retroactively."
In February 2016, attorneys for the Cherks wrote to the County asking it to refund the in-lieu fee. The letter claimed the fee was an unconstitutional exaction in violation of the Fifth Amendment takings clause and also violated the Cherks' equal protection rights. The County did not respond to this letter.
D. The Cherks File a Petition for Writ of Administrative Mandate.
In August 2016, the Cherks filed a verified petition for traditional and administrative mandate and complaint for declaratory relief, claiming the County had abused its discretion by imposing the in-lieu fee because it violated the Act and the unconstitutional conditions doctrine. They later moved for judgment on their petition.
In December 2017, the trial court issued a tentative decision denying the petition. The court found that the in-lieu fee was not a development-impact fee intended to defray the public burden caused by the Cherks' project and was therefore not subject to the Act's "reasonable relationship" test. It also found that the in-lieu fee did not constitute a monetary exaction subject to the unconstitutional conditions doctrine under the California Supreme Court's decision in San Jose, supra, 61 Cal.4th 435, and the Court of Appeal's opinion in 616 Croft Ave., LLC v. City of West Hollywood (2016) 3 Cal.App.5th 621 (West Hollywood). The Cherks voluntarily dismissed their remaining claims, and the court issued a final judgment in January 2018. This appeal followed.
The trial court also concluded the petition was not untimely and the Cherks were not required to exhaust administrative remedies because the County never provided them with written notice required by Government Code section 66020, subdivision (d), when a local agency imposes fees, dedications, reservations, or other exactions under the Act.
II.
DISCUSSION
A. The Standard of Review.
"In reviewing an agency's decision under Code of Civil Procedure section 1094.5, the trial court determines whether (1) the agency proceeded without, or in excess of, jurisdiction; (2) there was a fair hearing; and (3) the agency abused its discretion." (McAllister v. California Coastal Com. (2008) 169 Cal.App.4th 912, 921.) "On appeal from the denial of a petition, our role is identical to that of the trial court." (Id. at p. 922.)
"Abuse of discretion is established if the respondent has not proceeded in the manner required by law, the order or decision is not supported by the findings, or the findings are not supported by the evidence." (§ 1094.5, subd. (b).) The petitioner has "the burden of proving that the agency's decision was invalid and should be set aside, because it is presumed that the agency regularly performed its official duty. When the standard of review is the substantial evidence test, . . . it is presumed that the findings and actions of the administrative agency were supported by substantial evidence. [Citations.] Thus, since the same standard of review applies now on appeal as did in the trial court, the burden is on [the] appellant to show there is no substantial evidence whatsoever to support the findings of the [agency]." (Desmond v. County of Contra Costa (1993) 21 Cal.App.4th 330, 335-336.)
B. Judicial Review Is Not Barred by the Cherks' Failure to Exhaust Their Administrative Remedies.
The County argues that the judgment should be affirmed because the Cherks failed to exhaust their administrative remedies. According to the County, tentative map decisions are appealable to the Marin County Planning Commission and Board of Supervisors under Marin County Code, section 22.40.020, and the Cherks should have brought an administrative appeal back in December 2007 when the Deputy Zoning Administrator conditioned approval of the tentative map on payment of the in-lieu fee.
We begin by considering, and rejecting, the Cherks' contntion that the County forfeited this argument because it did not cross-appeal the portion of the trial court's ruling that the Cherks were not required to exhaust administrative remedies due to the County's failure to provide written notice as required by the Act. It is true that, as a general rule, a respondent who fails to file a cross-appeal cannot claim error in connection with the opposing party's appeal. (Preserve Poway v. City of Poway (2016) 245 Cal.App.4th 560, 585.) But section 906 provides a "limited exception," which "allows a respondent to 'request the reviewing court to . . . review [the judgment] for the purpose of determining whether or not the appellant was prejudiced by the error or errors upon which he relies for reversal or modification of the judgment from which the appeal is taken.' " (Preserve Poway, at p. 585.) This exception applies here, as the County raises the administrative-exhaustion issue to show that the judgment against the Cherks can be affirmed on the basis of an alternate legal theory.
We therefore consider the merits of the County's exhaustion argument, but we are not persuaded by them. "The exhaustion of administrative remedies doctrine 'bars the pursuit of a judicial remedy by a person to whom administrative action was available for the purpose of enforcing the right he seeks to assert in court, but who has failed to commence such action and is attempting to obtain judicial redress where no administrative proceeding has occurred at all; it also operates as a defense to litigation commenced by persons who have been aggrieved by action taken in an administrative proceeding which has in fact occurred but who have failed to "exhaust" the remedy available to them in the course of the proceeding.' " (Citizens for Open Government v. City of Lodi (2006) 144 Cal.App.4th 865, 874.) While the administrative-exhaustion doctrine "remains a 'fundamental rule of procedure' [citation] . . . courts have repeatedly recognized the rule is not inflexible dogma. [Citations.] Exceptions to the rule include situations . . . when resort[ing] to the administrative process would be futile because it is clear what the agency's decision would be [citations]. Before a court can determine whether an exception is applicable the court must analyze and determine whether the benefits served by the administrative hearing outweigh denying a litigant meaningful judicial review." (Doster v. County of San Diego (1988) 203 Cal.App.3d 257, 260-261 (Doster).)
Any benefits of insisting on administrative exhaustion here are outweighed by the harm of denying the Cherks meaningful judicial review. This case turns on "a straightforward legal issue that needs little in the way of factual development" and "presents a dispositive question within judicial, not administrative, competence." (Action Apartment Assn. v. Santa Monica Rent Control Bd. (2001) 94 Cal.App.4th 587, 615.) The legal issue is simply whether the in-lieu fee violates the Act or the unconstitutional conditions doctrine. The County's position is clear and based on appellate authority. Given these circumstances, we conclude the Cherks' failure to exhaust administrative remedies was not a jurisdictional bar to seeking judicial relief.
C. The In-lieu Fee Does Not Violate the Act or the Unconstitutional Conditions Doctrine.
1. The governing law.
Turning to the Cherks' main arguments that the in-lieu fee is invalid under the Act and the unconstitutional conditions doctrine, we begin with an overview of the applicable law.
The Act
Under Government Code section 66001, 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 must, among other things, "[i]dentify the purpose of the fee" and "[d]etermine how there is a reasonable relationship between the fee's use and the type of development project on which the fee is imposed." (Gov. Code, § 66001, subd. (a)(1), (3).) "Fee" under the Act 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." (Id., § 66000, subd. (b).) Any party protesting the imposition of such a fee may do so by tendering the payment under protest and serving the governing body of the entity with written notice of the payment and the factual and legal bases for the protest. (See id., § 66020, subd. (a).)
The unconstitutional conditions doctrine and its application to land-use permits
The unconstitutional conditions doctrine prevents the government in a variety of contexts from denying a benefit to a person because that person exercises a constitutional right. (Koontz v. St. Johns River Water Management Dist. (2013) 570 U.S. 595, 604 (Koontz).) The doctrine "vindicates the Constitution's enumerated rights by preventing the government from coercing people into giving them up." (Ibid.) A series of United States Supreme Court cases have discussed " 'a special application' of this doctrine that protects the Fifth Amendment right to just compensation for property the government takes when owners apply for land-use permits." (Ibid.) Particular rules apply in this area because of two competing realities surrounding land-use permits: On one hand, the government can take unreasonable advantage of landowners who seek a permit. "By conditioning a building permit on the owner's deeding over a public right-of-way, for example, the government can pressure an owner into voluntarily giving up property for which the Fifth Amendment would otherwise require just compensation." (Id. at p. 605, italics omitted.) But on the other hand, the government often has legitimate interests in controlling or mitigating the effects of a particular development. (Ibid.) To address these competing realities, Nollan and Dolan establish that the "government may not condition the approval of a land-use permit on the owner's relinquishment of a portion of his property unless there is a 'nexus' and 'rough proportionality' between the government's demand and the effects of the proposed land use." (Id. at p. 604.)
In Koontz, the Court extended the Nollan/Dolan test to apply to government demands for money as a condition for a land-use permit. (Koontz, supra, 570 U.S. at p. 612.) "[S]o-called 'in lieu of fees are utterly commonplace . . . and they are functionally equivalent to other types of land use exactions." (Ibid.) Accordingly, the Court concluded that they too must satisfy the nexus and rough proportionality requirements of Nollan and Dolan. (Ibid.) But, pertinent to our purposes here, the Court agreed that "so long as a permitting authority offers the landowner at least one alternative [to the money condition] that would satisfy Nollan and Dolan, the landowner has not been subjected to an unconstitutional condition." (Id. at p. 611.)
State authority applying the Act and the unconstitutional conditions doctrine
In San Jose, our state Supreme Court considered an inclusionary housing ordinance requiring 15% of all residential developments of 20 or more units to be made available at an affordable cost. (San Jose, supra, 61 Cal.4th at p. 449-450.) The city provided residential developers with "a menu of options from which to select alternatives" to complying with the requirement, including an option of paying an in-lieu fee based on the median sales price of a housing unit affordable to a moderate-income family. (Ibid.) A developer sued to invalidate the ordinance, contending that, under the unconstitutional conditions doctrine and San Remo Hotel v. City & County of San Francisco (2002) 27 Cal.4th 643 (San Remo Hotel), the city was required to demonstrate a reasonable relationship between any adverse public impacts caused by the new residential units and the exactions and conditions imposed on developers. (San Jose, at pp. 443, 452-453.)
The Court held that the unconstitutional conditions doctrine was inapplicable because the ordinance did not impose an exaction on the developer's property within the meaning of the takings clauses of the federal and California Constitutions. (San Jose, supra, 61 Cal.4th at pp. 443-444.) The Court found that the city's ordinance "does not require a developer to give up a property interest for which the government would have been required to pay just compensation under the takings clause outside of the permit process." (Id. at p. 461.) Rather, the 15% set-aside requirement "simply places a restriction on the way the developer may use its property by limiting the price for which the developer may offer some of its units for sale. . . . [¶] Rather than being an exaction, the ordinance falls within . . . municipalities' general broad discretion to regulate the use of real property to serve the legitimate interests of the general public and the community at large." (Ibid.) Such land use restrictions, enacted under the government's "general police power, to regulate the development and use of real property within its jurisdiction to promote the public welfare" are constitutionally permissible so long as they "bear[] a reasonable relationship to the public welfare." (Id. at p. 455.) The Court elaborated that "[n]othing in Koontz suggests that the unconstitutional conditions doctrine under Nollan and Dolan would apply where the government simply restricts the use of property without demanding the conveyance of some identifiable protected property interest (a dedication of property or the payment of money) as a condition of approval." (Id. at p. 460.)
The Court therefore held that "it follows that the affordable housing requirement of the San Jose ordinance as a whole—including the voluntary off-site options and in lieu fee that the ordinance makes available to a developer—does not impose an unconstitutional condition in violation of the takings clause." (San Jose, supra, 61 Cal.4th at pp. 468-469.) "No developer is required to pay the in lieu fee and may always opt to satisfy the ordinance by providing on-site affordable housing units." (Id. at p. 476.)
The Court rejected the developer's reliance on San Remo Hotel, which involved a challenge to a land use restriction requiring property owners seeking to convert long-term rental units to short-term units to provide a comparable number of long-term rental units at another location or pay an in-lieu fee. (San Remo Hotel, supra, 27 Cal.4th at p. 651.) In San Remo Hotel, the Court had held that the challenged fee was valid because it was reasonably related to mitigating the impact caused by the proposed conversion of long-term rental housing to short-term rentals. (Id. at pp. 672-679.) Seizing on the "reasonably related" language, the developer in San Jose argued that the inclusionary housing requirements must also "satisfy something similar to the Nollan/Dolan test." (San Jose, supra, 61 Cal.4th at p. 470.) But San Jose held that the cited portion of San Remo Hotel " applies only to 'development mitigation fees' [citation]—that is, to fees whose purpose are to mitigate the effects or impacts of the development on which the fees are imposed—and does not purport to apply to price controls or other land use restrictions that serve a broader constitutionally permissible purpose or purposes unrelated to the impact of the proposed development." (Id. at p. 472.) In contrast to the development-mitigation fee at issue in San Remo Hotel, "San Jose's inclusionary housing ordinance is intended to advance purposes beyond mitigating the impacts or effects that are attributable to a particular development or project and instead 'to produce a widespread public benefit' [citation] that inures generally to the municipality as a whole." (San Jose, at p. 474.)
Finally, in 2016, the Second District Court of Appeal decided West Hollywood. There, a developer applied to the City of West Hollywood for permits to demolish two single-family homes and build an 11-unit condominium complex in their place. (West Hollywood, supra, 3 Cal.App.5th at p. 624.) The city determined that the project fell under the inclusionary housing ordinance, which required developers to sell or rent a portion of newly constructed units at below-market rates or pay an in-lieu fee "designed to fund construction of the equivalent number of units the developer would have otherwise been required to set aside." (Id. at p. 625.) Although the city approved the application in 2005, by the time the developer sought building permits in 2011, the in-lieu fee had nearly doubled. (Ibid.) The developer paid the fee under protest and sued the city, arguing that the in-lieu fee violated the Act and was an unconstitutional condition under the Nollan/Dolan test. (Id. at pp. 625-626.)
Applying San Jose, the Court of Appeal held that Nollan/Dolan was not implicated because the developer "paid the in-lieu fee voluntarily as an alternative to setting aside a number of units." (West Hollywood, supra, 3 Cal.App.5th at pp. 628-629.) The court further held that the in-lieu fee was not subject to the Act because the fee's purpose was not to mitigate any adverse impact of the new development, and the fee was part of a land use regulation that broadly applied the nondiscretionary fees to a class of owners. (Id. at p. 629.)
2. The Act does not apply to the in-lieu fee.
With this background in mind, we turn to the Cherks' primary arguments. They first argue that the in-lieu fee is "plainly" a development fee or exaction subject to the Act's reasonable-relation standard. In support of their argument, they cite Home Builders Assn. of Tulare/Kings Counties, Inc. v. City of Lemoore (2010) 185 Cal.App.4th 554 (Lemoore) and various provisions of the Act. We are not convinced. Lemoore is not on point because the municipality in that case did not claim that it could impose the fee at issue, a community/recreation facility impact fee, without satisfying the Act. Rather, the issue in Lemoore was whether the municipality satisfied the reasonable-relation test by relying on the findings in a development-impact fee report. (See id. at pp. 561-566.) Equally unavailing to the Cherks, is their reliance on the Act's language. As we have explained, a "fee" within the meaning of Act is one that is imposed "for the purpose of defraying all or a portion of the cost of public facilities related to the development project." (Gov. Code, § 66000, subd. (b).) West Hollywood squarely held that an in-lieu housing fee is not an exaction subject to the Act when the fee's purpose is not to mitigate the adverse impact of the particular development but is instead to enhance the public welfare by promoting the use of available land for the development of affordable housing. (West Hollywood, supra, 3 Cal.App.5th at p. 629.)
The Cherks brush aside this holding in West Hollywood as dicta because the Court of Appeal "[a]ssum[ed]" the in-lieu fee was a general land use regulation. (West Hollywood, supra, 3 Cal.App.5th at p. 629.) They are mistaken in doing so. The holding was fully consistent with the reasoning of San Jose, in which the Supreme Court distinguished the development-mitigation fee in San Remo Hotel from a broad inclusionary housing ordinance (including its in-lieu fees) that serves purposes beyond mitigating the impact of a particular development project. (See San Jose, supra, 61 Cal.4th at p. 462.) The validity of the latter "does not depend upon a showing that the restrictions are reasonably related to the impact of a particular development to which the ordinance applies. Rather, the restrictions must be reasonably related to the broad general welfare purposes for which the ordinance was enacted." (Id. at p. 474.) The ordinance here is broadly aimed at increasing the amount of affordable housing in Marin County. The Cherks do not suggest otherwise, nor do they contend that the ordinance is not reasonably related to the general welfare. In short, the in-lieu fee was not a development fee or exaction subject to the Act's reasonable relation standard.
In arguing to the contrary, the Cherks place undue reliance on Sterling Park, L.P. v. City of Palo Alto (2013) 57 Cal.4th 1193 (Sterling Park). In that case, the Supreme Court held that the statute of limitations of Government Code section 66020 applied to a challenge to the requirements of Palo Alto's below market rate housing program. Those requirements compelled developers of large-scale housing projects either to set aside a certain number of units for sale at below market value and give the city an option to purchase them, or to provide offsite units or vacant land. (Sterling Park, supra, at p. 1196.) If neither of those alternatives were feasible, the city could accept an in-lieu fee. (Ibid.) The court held that "[c]ompelling the developer to give the City a purchase option is an exaction under [Government Code] section 66020" because "a purchase option is a sufficiently strong interest in the property to require compensation if the government takes it in eminent domain." (Id. at p. 1207.)
This holding has little relevance here. To begin with, Marin County's inclusionary housing program does not include a provision for a purchase option. More importantly, as San Jose made clear, "Sterling Park did not address or intend to express any view whatsoever with regard to the legal test that applies in evaluating the substantive validity of the affordable housing requirements imposed by an inclusionary housing ordinance. The opinion in Sterling Park focused exclusively on the procedural issue presented in that case and made no mention of the passage in San Remo Hotel, supra, 27 Cal.4th 643, or any other substantive legal test." (San Jose, supra, 61 Cal.4th at p. 482.) Thus, Sterling Park expressly did "not decide whether forcing the developer to sell some units below market value, by itself, would constitute an exaction under section 66020." (Ibid.)
3. The Nollan/Dolan test does not apply to the in-lieu fee.
As we have mentioned, the unconstitutional conditions doctrine is not implicated where the permitting authority offers the applicant at least one constitutionally permissible alternative to paying the in-lieu fee. (See Koontz, supra, 570 U.S. at p. 611; San Jose, supra, 61 Cal.4th at pp. 460-461.) Marin County's inclusionary housing ordinance, like the ordinance in San Jose, restricts the use of property by limiting the price for which developers may offer some of its units for sale. (San Jose, at pp. 455-457.) San Jose concluded that this type of an ordinance is an example of a permissible regulation of the use of land under a county's general police power. (Ibid.) Because such a restriction is not subject to the Nollan/Dolan test, it follows that the County's affordable-housing ordinance as a whole, including the in-lieu fee, does not impose an unconstitutional condition. (Id. at pp. 468-469.)
The Cherks argue that San Jose and West Hollywood are distinguishable because, unlike the developers in those cases, they had no alternative way to comply with the inclusionary housing requirements and "were faced with an exclusive demand for money." Their argument appears to be based on the language of section 22.22.090, which states the applicant "shall" pay an in-lieu fee where the inclusionary housing calculation results in a decimal fraction less than or equal to 0.50. (§ 22.22.090 A.) Because the Cherks' proposed lot division would result in only two lots, the inclusionary housing formula required them to be responsible for providing 40% of an affordable housing unit (0.20 x 2 lots = 0.40). The Cherks assume that because the inclusionary housing calculation resulted in a decimal fraction less than 0.50, they were required to pay the in-lieu fee. The County responds that, to the contrary, the Cherks always had the option of "rounding up" from a decimal fraction of less than 0.50 and dedicating the entire second lot to affordable housing.
Putting aside, for a moment, section 22.22.090 A's calculation guideline, other sections of the Development Code make clear that developers have several potential alternatives to the requirement of dedicating onsite units for affordable housing purposes. Under Marin County Code, section 22.22.060, entitled "Waivers," the County may approve one or more of various alternative means of compliance if applicants can demonstrate a better means of serving the County in achieving its affordable housing goals. These alternatives, listed in order of priority, are: the construction of affordable units offsite (Marin County Code, § 22.22.060 A.1); the dedication of other lots of suitable real property to the County or its designee to develop the required inclusionary units (id., A.2); and the "lowest priority" option of paying an in-lieu fee (id., A.3).
Turning back to section 22.22.090, the provision specifies the percentage of affordable housing units that must be set aside and clarifies how to round when the formula yields a fractional unit. While the Cherks' argument that the word "shall" implies that they had no choice but to pay the in-lieu fee is colorable, we must consider the word in context. (See California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 257 ["shall" is not necessarily mandatory and depends on context in which it is used].) Clearly, the overarching purpose of the County's inclusionary housing program is to increase the amount of affordable housing, and the primary goal is the dedication of affordable onsite units. We decline to interpret the rounding provision in the manner proposed by the Cherks so as to violate the purposes and goals of the inclusionary housing program by prohibiting a developer from voluntarily rounding up a fractional unit.
The Cherks contend that however the County might interpret the inclusionary housing provisions in hindsight, in this as-applied challenge, "the actual fact is that the County demanded . . . a lump sum of $39,960." But we find no support in the record that the County made such a demand or interpreted its ordinance in a way that gave the Cherks no choice but to pay the fee. In fact, the record suggests that other choices were available. After the 2003 ordinance was enacted, the Cherks discussed with Planning Division staff their proposal to split the property into three lots, with the third lot dedicated to affordable housing. They eventually abandoned the three-lot plan and returned to the original two-lot plan, but there is no evidence that their decision to pay the in-lieu fee at that time was due to an express demand from the County. The statement in the July 2006 Laumann email that "either 1 of the two lots should be deed restricted for development of low or very low income units, or an in-lieu fee of $39,960 would be required" (italics added) reflects the County's position that the in-lieu fee was an alternative to dedicating one entire lot to affordable housing purposes, and the Cherks cite no contrary evidence to suggest they were not given this choice. Moreover, the Cherks' claim that the County demanded a "lump sum" is belied by the undisputed evidence that the County offered them the option to pay the fee in installments. The record otherwise shows that the Cherks were, at all relevant times, aware of the County's affordable-housing requirements and were engaged in ongoing discussions with the Planning Division on different ways of implementing the County's goals. On this record, in the absence of evidence that the County demanded payment of the in-lieu fee without alternatives, we conclude the Cherks have failed to distinguish this case from San Jose and West Hollywood.
Additionally, "legislatively prescribed monetary fees"—as distinguished from ad hoc monetary demands by an administrative agency—"that are imposed as a condition of development are not subject to the Nollan/Dolan test." (San Jose, supra, 61 Cal.4th at p. 459, fn. 11, citing San Remo Hotel, supra, 27 Cal.4th at pp. 663-671; see Ehrlich v. City of Culver City (1996) 12 Cal.4th 854, 876 [heightened scrutiny appropriate when exactions are imposed on individual and discretionary basis].) Here, as in San Jose, the in-lieu fee is a legislatively mandated fee that applies to a broad class of permit applicants. The Cherks argue there is no legitimate basis to provide lesser scrutiny to legislatively mandated in-lieu fees than to those imposed ad hoc by an administrative agency, especially since the County has the discretion to waive the fees from case to case. But this argument ignores San Remo Hotel's point that legislatively mandated fees are "subject to the ordinary restraints of the democratic political process" while ad hoc monetary demands "deserve special judicial scrutiny mainly because, affecting fewer citizens and evading systemic assessment, they are more likely to escape such political controls." (San Remo Hotel, at p. 671.) In any event, regardless of the County's decision not to waive the in-lieu fee in the Cherks' case, the fee is not subject to the unconstitutional conditions doctrine because there were alternative means of complying with the inclusionary housing ordinance that did not violate Nollan/Dolan. (See Koontz, supra, 570 U.S. at p. 611.)
4. The Cherks' regulatory takings claim fails.
In their reply brief, the Cherks argue that for small landowners like themselves, dedicating one of their two newly-created lots to affordable housing imposes a very substantial hardship and may be subject to a regulatory takings challenge under Penn Central Transp. Co v. New York City (1978) 438 U.S. 104. We conclude the Cherks doubly waived this argument by not presenting it to the trial court below or in their opening brief. (Children's Hospital & Medical Center v. Bontá (2002) 97 Cal.App.4th 740, 776.) And even if the argument was properly presented, the Cherks have cited no facts or evidence supporting a regulatory taking in this case under the relevant factors set forth in Penn Central—the economic impact of regulation on the claimant; the extent to which the regulation interferes with distinct, investment-backed expectations; and the character of the government action (e.g., physical invasion or regulation adjusting societal burdens and benefits to promote the public good). (Penn Central, at p. 124.)
For all of these reasons, we conclude the Cherks have not demonstrated that the County failed to proceed in a manner required by law. (§ 1094.5, subd. (b).) As a result, they are not entitled to mandamus relief.
III.
DISPOSITION
The judgment is affirmed. Respondent is awarded its costs on appeal.
/s/_________
Humes, P.J. We concur: /s/_________
Margulies, J. /s/_________
Kelly, J.
Judge of the Superior Court of the City and County of San Francisco, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution. --------