A county can require an applicant for a development permit to indemnify the county in any attempt brought by a third party to void the permit, according to an opinion from the Attorney General's office.
The specific question raised by state Sen. Wesley Chesbro (D-Arcata) is whether a county can require an applicant for a coastal development permit to sign an agreement to defend, indemnify and hold harmless the county in an action filed by a third party. The opinion authored by Deputy Attorney General Gregory Gonot, however, appears to apply to all discretionary development permits, not only coastal applications.
Regulation of land development is an exercise of the police power of a county or city, Gonot explained. The police power allows local government to impose development fees, which relate to the impact of a development and the cost to the community. Local governments also can impose regulatory fees, such as the reasonable cost of processing permit applications or the cost of administering an ordinance.
The costs included in regulatory fees can include all incidental costs for issuing a permit. Gonot cited United Business Com. v. City of San Diego, (1979) 91 Cal.App.3d 156), which built on an earlier state Supreme Court ruling. The court in United Business ruled that regulatory costs are not "simply those which arise directly in the enforcement of the regulatory provisions themselves. The license fee may properly be fixed with a view to reimbursing the city, town or county for all expense imposed upon it by the business sought to be regulated."
Wrote Gonot, "Here, the indemnity agreement is exacted by the county to cover litigation expenses associated with the issuance of a coastal development permit."
In Topanga Assn. for a Scenic Community v. County of Los Angeles, (1989) 214 Cal.App.3d 1348, the court ruled that a similar indemnity requirement was an issue of public policy and that challenges should be addressed to the legislative body, not the courts.
"Accordingly," wrote Gonot, "we view it as a matter of public policy for a county to determine whether the litigation costs associated with the granting of a coastal development permit should be borne by the permit holder or by the general taxpayers of the county. A court will not interfere with a county's decision in this regard."
Opinion No. 01-701 was filed February 4, 2002. It can be found at 2002 DJDAR 1721
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