STATE ROUTE 4 BYPASS AUTHORITY v. THE SUPERIOR COURT

Filed 8/8/07

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

Story continued from Part I.

2. Individualized Determination

It is important to recognize that the Dolan test had to be applied in this case to the purely hypothetical circumstance of a possible future development application for the properties in question. In a real development application process, there would be an opportunity for the issuing agency to make an assessment of the actual impacts of the development and to weigh them against the dedication requirement before imposing it. Here, the only opportunity for the agency to engage in that type of analysis was through the evidence it put on in the Porterville trial itself. Under these circumstances, the trial court properly deemed the evidence presented at the trial to, in fact, constitute the individualized determination required by Dolan.

Real parties maintain that: (1) the court found that no individualized determination would have been performed by the City of Antioch prior to imposing the dedication condition, and (2) such finding was supported by uncontroverted evidence. We disagree on both counts.

Although the court found it to be undisputed that the City of Antioch neither requested nor considered an individualized traffic analysis before imposing the dedication requirement, it also founddespite some ambiguity in the evidencethat the city maintained flexibility to make other concessions in the development approval process should it determine that the dedication requirement would impose an excessive burden in relation to a projects actual impacts.

In our view, the evidence shows only that the responsible officials were confident that the economic burden of complying with the dedication requirement was modest in relation to the cost of accommodating the likely traffic impact of any significant development to which it might apply. Such confidence was not in fact unjustified in light of available traffic impacts data, including the impact costs calculated in connection with the ECCRFFA nexus study. It is true that the right-of-way dedication requirement was not designed to be raised or lowered according to the specific traffic impacts of each proposed development project. Nonetheless, there was no evidence that the Bypass Authority or the City of Antioch, if faced with a proposed development that would generate only an insubstantial amount of additional traffic, would have insisted on imposing the dedication policy without negotiation, modification, or offset. Witness Brandt, who had the last word on conditions of approval within the City of Antioch planning department, testified that he understood the city was required to operate under the Dolan decision, that he acted under the city attorneys close supervision, and that negotiating with developers over conditions was a commonplace part of his job.

Considering the fact that the trial court had to decide the individualized determination issue in the absence of any actual development application, its finding that this aspect of the Dolan standard was satisfied is supported by substantial evidence.

3. Rough Proportionality

In concluding that the dedication requirement did not meet the rough proportionality standard under Dolan, it was critical to the trial court that the ECCRFFA fees assessed to developers were set at a level below that required to cover the full traffic impact costs of the developments subject to them. We quote at some length from the statement of decision below in order to lay out the courts reasoning on this point.

Preliminarily, the court noted that although ECCRFFA had performed a nexus study to determine the level of transportation impact fees that would be attributable to new development, [t]he fees ultimately assessed to the developers were (apparently for political considerations, to encourage development) less than the impact fees as determined by the study . . . . The court then went on to link that apparently undisputed fact to the proportionality issue as follows:

[Witness Walterss] opinion was that the impacts to the transportation system outweighed the costs to [Nunn and Morimoto], taking into account both the developer fees under ECCRFFA and the loss of value of the take under Porterville. Without going into detail as to the facts testified to by Mr. Walters, this court finds the testimony credible. [] The crux of the Constitutional analysis, however, is not whether the financial burden of the dedication exceeds or is less than the developers fair share of traffic impacts. The inquiry must be whether, once the transportation impacts have been calculated, and a decision made to reduce those fees for all developers, whether some property owners, specifically those through which the Bypass will be constructed, must then be forced to shoulder a greater financial burden, not by virtue of increased traffic impacts, but solely by virtue of their location. This Court finds that under these facts, the dedication requirement cannot satisfy the standard set forth in Dolan.[1]

As discussed post, we do not find the trial courts approach to be required by or consistent with Dolan.

4. Equal Protection Clause Violation

The trial court also found that the dedication requirement, as it might have been hypothetically applied to the development of the Nunn and Morimoto properties, would have violated the Equal Protection Clause. The court cited the following facts on this issue: The Nunn property is expected to contribute roughly two and one-half to three times as many vehicle trips per day to the Bypass as the Morimoto property, yet the dedication requirement calls for less than one-third as much land from Nunn as from Morimoto. In addition, both Nunn and Morimoto are burdened with a dedication not borne by other developers whose developments will add vehicle trips to the Bypass, but whose land does not lie in its path.

Based on these considerations, the court held as follows: There is no rational basis for these differences in treatment, particularly given that this inequitable dedication burden could be eliminated by compensating Nunn and the Morimotos at the highest-and-best use value for the entire take and relying on the regional traffic fee established by the [ECCRFFA] to spread costs evenly among all expected to use the Bypass.

C. Does Dolan Require a Determination of Comparative Equity?

In Dolan, the Supreme Court did not consider whether any property owners other than the petitioner were being required to dedicate land for a greenway or pedestrian/bicycle pathway. It focused solely on whether the dedication conditions in issue were reasonably related (or roughly proportional) to the impacts of the petitioners development plans on levels of storm water runoff and automobile traffic in the surrounding area. All that was constitutionally required of the city was that it perform some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development. (Dolan, supra, 512 U.S. at p. 391, fn. omitted.) In the case of the traffic issue, the court faulted the city for not making some effort to quantify its conclusory finding that the bicycle pathway system could offset some of the traffic demand caused by the petitioners store expansion. (Id. at pp. 395396.) None of these slightly different ways of phrasing the standard adopted in Dolan can reasonably be construed to mean that the City of Tigard was required to conduct a comparative analysis of the relative economic burdens it imposed on different property owners whose developments contributed to increased storm water runoff or traffic congestion in the downtown area.

In our view, the question of whether the financial burden of the dedication exceeds or is less than the developers fair share of traffic impacts is precisely [t]he crux of the Constitutional analysis required by Dolan. The trial court erred in holding that it was not, and therefore erred in holding that the Walters testimony, which it found credible, was nonetheless insufficient to establish that the Bypass Authoritys dedication requirement was lawful under the Takings Clause as applied to the Nunn and Morimoto properties.

We also do not see why the imposition of ECCRFFA fees at levels that are less than required to cover the full traffic impact costs of new development should change the analysis under Dolan. At most, this fact shows that the Bypass Authority arguably could have chosen a more equitable means for distributing the financial burden of building the Bypass by greater reliance on developer fees. But the Takings Clause, as construed in Dolan and other cases, only protects a property owner from being assessed for more than the full spillover costs of developing his or her property; it does not compel public agencies to pick the most equitable possible method of distributing such costs. In fact, fairness in this context would seem to raise a host of complex public policy issues that are best resolved through the political process rather than by judicial fiat.[2] There is certainly no evidence in this record establishing that raising the ECCRFFA fee structure across the board would itself be fair to all of the affected parties, much less that it represents a feasible alternative that would not bring development to a standstill in the member jurisdictions.[3]

The trial courts formulation of the Dolan test would also lead to a multitude of practical problems. There would first of all be problems of proof. Trying to establish that a developer challenging a dedication condition is not being asked to shoulder a greater financial burden than any other similarly situated developer would not be easy, and would likely become a fruitful source of litigation. More importantly, a standard like that proposed by the trial court would altogether discourage the use of dedication conditions as a tool for mitigating the spillover effects of development, and could provide an added disincentive for planning agencies to approve new development. One of the express purposes of the Bypass Authoritys dedication policy was to protect the right-of-way for the Bypass project pending construction. Presumably, many other transportation agencies around the state use similar dedication policies in order to facilitate the construction of significant projects. Absent compelling evidence of a constitutional infirmity, the use of that device should not be imperiled by the courts.

D. Does the Dedication Policy Violate the Equal Protection Clause?

Under the Equal Protection Clause, a state may not deny to any person within its jurisdiction the equal protection of the laws. (U.S. Const., 14th Amend.,  1.) The clause is essentially a direction that all persons similarly situated should be treated alike. (Cleburne v. Cleburne Living Center, Inc. (1985) 473 U.S. 432, 439.) Generally speaking, laws that distinguish among different categories of persons, unless based on suspect classifications such as race or gender, are presumed to be valid and will be sustained as long as they are rationally related to a legitimate state interest. (Id. at p. 440.) The Bypass Authoritys dedication requirement in this case plainly involves no suspect classification, and is subject to the rational basis standard of review, as the trial court recognized. Such laws are normally upheld, since  the Constitution presumes that even improvident decisions will eventually be rectified by the democratic processes.  (Lawrence v. Texas (2003) 539 U.S. 558, 579580 (conc. opn. of OConnor, J.), quoting Cleburne, at p. 440 .)

In Dolan, the Supreme Court made a special point of distinguishing between the rational basis review and the new rough proportionality test that it was defining, observing that the former required only the minimal level of scrutiny [required] under the Equal Protection Clause. (Dolan, supra, 512 U.S. at p. 391.) The clear implication of this discussion is that the court viewed rough proportionality as a more demanding standard than rational basis. In this case, it is undisputed that mitigating the traffic problems created by new development is a legitimate state interest. It was also either undisputed or proven by the evidence at trial that the dedication requirement facilitates the construction of new transportation capacity, that the requirement would have been imposed as a condition of allowing development of the properties subject to it, and that the financial burden of complying with the requirement is a fraction of the cost to the public of servicing the added vehicular traffic to be generated by that development. Together, these facts are more than sufficient to establish that the dedication program is rationally related to a legitimate governmental interest.

The trial court found no rational basis for imposing a greater burden on Morimoto than on Nunn, or for imposing a greater burden on properties lying on the Bypass route than on other properties not in the path of the Bypass path that would create equal or greater vehicular traffic if developed for commercial or residential use. In our view, the record in this case is wholly insufficient to draw any conclusions about the relative burdens placed on property owners to mitigate area-wide transportation problems. Although other property owners might not be subject to the Bypass dedication condition, they would be subject to other exactions and conditions. For example, Brandt testified that the City of Antioch generally requires developers to dedicate and pay for the construction of roads within their subdivisions, and to dedicate and/or pay for a portion of roads constructed along the edge of their property line. Whether the full financial burden of complying with applicable development approval conditions is greater for real parties than for the owners of properties lying outside the Bypass route simply cannot be determined from the evidence in the record.

The case upon which real parties principally rely, Village of Willowbrook v. Olech (2000) 528 U.S. 562 (Willowbrook), is distinguishable. Willowbrook involved the sufficiency of a complaint alleging that the village intentionally demanded a 33-foot easement as a condition of connecting [the respondents] property to the municipal water supply where [it] required only a 15-foot easement from other similarly situated property owners. [Citation.] [The 33-foot easement demand] was irrational and wholly arbitrary[,] and . . . the [v]illage ultimately connected [the respondents] property after receiving a clearly adequate 15-foot easement. (Id. at p. 565.) The Supreme Court held that these allegations were sufficient to state a claim for relief under the Equal Protection Clause. (Ibid.)

The critical factor in Willowbrook was that the allegations, if true, would have established that the longer easement was not rationally related to any legitimate governmental interest. Here, all property owners along the path of the Bypass were subject to the same requirement to dedicate a strip of property 110 feet wide along the centerline of the route. The requirement was rationally related to protecting the right-of-way chosen through democratic processes for a central component of the Bypass Authoritys transportation plan for East Contra Costa County. Moreover, as Wrights testimony established, properties lying along the Bypass route gain economic benefits from their proximity to it that also may rationally justify imposition of a dedication requirement to recoup some of those benefits for the public. In fact, as the Bypass Authority points out, Wrights testimony established that the Nunn and Morimoto properties will effectively receive a subsidy from construction of the Bypass and other projects because of the sizeable gap between the full public cost of accommodating their added vehicular traffic and the private cost of the dedication requirement and development fees to which they will be subject. That the dedication requirement will arguably lower the subsidy real parties will enjoy compared to that received by other property owners, or that Nunn is garnering a greater subsidy than Morimoto, do not raise equal protection issues.

Although the trial court, and real parties, take the position that it would be fairer and more rational to do away with the dedication requirement and raise ECCRFFA fee levels for all developers, the Equal Protection Clause is not a rule of thumb for determining the relative fairness and wisdom of different public policy choices. It is a safeguard against wholly irrational policies that do not advance a legitimate state interest or that single out an unpopular group for discriminatory treatment. The court erred in holding that applying the dedication requirement to the Nunn and Morimoto properties would have been impermissible under an equal protection analysis.

E. The City of HollisterCase

Under the heading Conclusion, the final paragraph of the trial courts statement of decision reads as follows: The Bypass is a long-planned improvement to the State highway system designed to address existing deficiencies. Once constructed, the Bypass will become a State highway [replacing] State Route 4, which will become a city street. Requiring dedications from [real parties] to accommodate the long-planned replacement of an existing segment of [the] State highway impermissibly shifts the burden of providing a public benefit to a few landowners who are only remotely responsible for the need for it. City of Hollister, supra[,] 26 Cal.App.4th at [pages] 299300. For these reasons, the Court finds in favor of Defendants and against Plaintiff on this bifurcated issue.

The heading, placement, and wording of the above-quoted paragraph all suggest that the trial court intended it as a final summation of the earlier-stated legal grounds for its decision. Real parties nonetheless assume that the trial court was stating a separate and independent legal basis for its decision in the paragraph. Although there is some ambiguity about it, we will assume for purposes of our analysis that real parties are correct on this point.

As an initial matter, we note that City of Hollister was decided before the Supreme Court issued its opinion in Dolan. It is at least arguable whether City of Hollister has any continuing precedential value on the issues before us in light of the latter case. The standard it applied was whether the dedication requirement in issue, which was for construction of a roadway, was reasonably related to defendants proposed use of the property. (City of Hollister, supra, 26 Cal.App.4th at p. 298.) As real parties concede, Dolan requires a more stringent standard of review for dedication conditions than that applied by the Court of Appeal in City of Hollister.

In any event, City of Hollister is distinguishable on its facts. The defendant property owners in that case put in evidence that the construction of the roadway was not merited by the proposed development of their property. (City of Hollister, supra, 26 Cal.App.4th at pp. 298299.) Undisputed evidence established that the actual traffic impact of the defendants proposed development would be  very insignificant,  and that the city wanted the dedication to construct a road called for by a planning map the city had adopted 20 years earlier for purposes unrelated to the development of the defendants property. (Id. at p. 299.) As the Court of Appeal explained: The fact that this map was adopted long before there was any proposed development of defendants parcel or any positive steps taken to acquire the property by eminent domain further indicates that plaintiffs proposed use of a portion of defendants parcel for street . . . purposes was unrelated to defendants potential development of their parcel. (Id. at p. 300.) Thus, the dedication condition in City of Hollister was found to be unlawful because the evidence showed that the citys actual reason for imposing it was unrelated to mitigating the impact of the defendants proposed use of the property. In practical effect, City of Hollister applied the Nollan essential nexus test, albeit in a slightly different guise.

Whatever label is given to its analysis, the facts in City of Hollister are the diametric opposite of those before us. It was critical to the Court of Appeal in City of Hollister that the development of the subject property would contribute only a  very insignificant  amount of traffic to the roadway. Here, by contrast, there is credible and uncontested evidence that the Nunn and Morimoto properties will each contribute a substantial amount of daily vehicular traffic to the Bypass once they are developed. Not only is that additional traffic significant on an absolute scale, the evidence shows that it is also significant in comparison to the economic burden of the dedication requirement on both properties.

It is true that the Bypass was planned in advance of any specific development approval sought for the subject properties, and that the project will serve many properties other than the Nunn and Morimoto parcels, both in Antioch and in East Contra Costa County generally, including already developed properties. But City of Hollister does not stand for the propositionwhich was in any event decisively rejected in Dolanthat a dedication requirement must be  specifi[cally] and uniquely attributable  to the development against which it is applied. (Dolan, supra, 512 U.S. at pp. 389390.) Here, as the ECCRFFA nexus study and the testimony of traffic planner Walters made clear, the project was designed to meet the needs of new as well as existing development in the member jurisdictions, and the hypothetical development of the Nunn and Morimoto properties will contribute not insignificantly to those needs. Under City of Hollister, no more was required to justify the dedication requirement.

III. CONCLUSION AND DISPOSITION

For these reasons, we hold that the trial court erred in finding that the dedication requirement was unlawful and in resolving the Porterville issue in favor of real parties.

Let a peremptory writ of mandate issue, commanding the Contra Costa County Superior Court in case Nos. C05-00485 and C05-00857 to vacate the statement of decision filed on February 14, 2007, and to instead enter a statement of decision ruling in favor of the Bypass Authority in accordance with the views expressed in this opinion. The stay previously imposed shall remain in effect until the remittitur issues.

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Margulies, J.

We concur:

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Marchiano, P.J.

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Swager, J.

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Analysis and review provided by La Mesa Property line Lawyers.

Trial Court: Contra Costa County Superior Court

Trial Judge: Hon. Joyce M. Cram

Counsel:

Greenan, Peffer, Sallander & Lally, Kevin D. Lally, John P. Makin, Angel L. Lewis; Silvano B. Marchesi, County Counsel, Sharon L. Anderson, Assistant County Counsel, Beatrice Liu, Deputy County Counsel, for Petitioner.

No appearance for Respondent.

Bingham McCutchen, Matthew S. Gray for Real Parties in Interest.

[1] Elsewhere in the statement of decision, the trial court stated that it found Walterss testimony true, but irrelevant to the Porterville issue.

[2] For example: Are development fees the fairest method of financing the cost of public infrastructure, or should the costs be spread across other groups by greater utilization of broad-based taxes or bond financing? Are fuel taxes and toll roads a fairer method of financing transportation infrastructure than development fees? Do higher development fees unfairly impact the construction of affordable housing, hurting lower income and younger families especially? Do they hold back the growth of the local tax base and ultimately lead to reductions in services for existing residents or the need for even higher fees in the future? Do they put localities at a disadvantage in competing for desirable development?

[3] We note that the evidentiary record concerning the setting of these fees was truncated through no fault of the Bypass Authority. Real parties counsel objected on relevance grounds when the Bypass Authority sought to question witness Dennis about the gap between the fees and estimated impact costs, and the trial court sustained that objection, stating that whether theres a shortfall or isnt a shortfall was irrelevant to the fairness of asking only those with property in the right-of-way to dedicate land. To then decide the Porterville issue against the petitioner in apparent reliance on that very factor seems questionable as a matter of procedural fairness.