The state Supreme Court has rejected most claims of a development company fighting building permit fees in the City of Rancho Cucamonga. However, the court did decide that the builder, Barratt American, could contest the validity of a city fee ordinance adopted in 2002 — a reversal of a lower court ruling.

Barratt American, a Carlsbad-based developer and homebuilder, has contested permit and plan check fees in numerous jurisdictions. Barratt argued that Rancho Cucamonga's fees for building permits and plan checks exceeded the cost of providing service, and the builder sought both a refund and a reduction of future fees (see CP&DR Legal Digest, November 2005, July 2003). The trial court and Court of Appeal ruled against Barratt.

The state Supreme Court first decided that the fees in question, although authorized by the Mitigation Fee Act, are not "development fees." Therefore, a fee act requirement for refund of excessive fees does not apply, the court ruled.

"Barratt challenges only the city's charges for ministerial, regulatory building plan review and construction inspection activities that implement state and local building safety standards," Justice Ming Chin wrote for the unanimous court. The fees "fund a program that supervises how, not whether Barratt may build." Under the Mitigation Fee Act, surplus building inspection and plan check fees must be used to reduce future fees, the court ruled.

The court rejected Barratt's arguments that excess fees were illegal special taxes and that the city must provide an annual audit of the fees.

However, the court did rule that a validation lawsuit Barratt filed in May 2002 was not barred by the statute of limitations. The lower courts ruled that the city's readoption of fees in January 2002 was not a new legislative enactment because the fees in question were unchanged from fee schedules adopted in 2000 and 1999 — and there is a 120-day statute of limitations for contesting fee ordinances.

"Although the amount of the permit and plan review fees remained the same, resolution No. 02-023 changed the duration of the fee by extending its applicability," Chin wrote. "As Barratt points out, if a fee was not challenged at its initial enactment, then the validity of all subsequent reenactments would be immune to judicial challenge or review."

The court sent the case back to San Bernardino County Superior Court for consideration of Barratt's validation suit over the 2002 fee ordinance.

The Case:
Barratt American, Incorporated v. City of Rancho Cucamonga, No. S117590, 2005 DJDAR 14715. Published December 22, 2005.
The Lawyers:
For Barratt: Walter McNeill, (530) 222-8992.
For the city: Tilden Kim, Richards, Watson & Gershon, (213) 626-8484.