Branciforte Heights v. Santa Cruz: City May Deny Open Space Credit Against Parkland Dedication Requirements

May 25, 2006

In what will come as a surprise to many California developers, the Court of Appeal for the Sixth District ruled last month that the Quimby Act’s provision that private open space “shall be eligible” for a credit against parkland dedication is only discretionary, not mandatory, with the local agency charged with implementing the Act. Branciforte Heights, LLC. v. City of Santa Cruz, 138 Cal.App.4th 914 (2006).

The Quimby Act, Government Code §66477, authorizes cities and counties to require parkland dedication, or park in lieu fees, as a condition for subdivision approval. It further requires that the value of a project’s parkland improvements “shall be a credit” against such dedication or fee requirements, whereas the value of its private, recreational open space “shall be eligible” for a similar credit as determined by the local agency.

Branciforte, the developer of a nine unit subdivision, received approval from the City of Santa Cruz for a nine unit planned unit development (PUD), conditioned upon it setting aside private open space for park and recreational facilities. Branciforte argued that such open space land entitled it to a credit under the Quimby Act against any parkland fees which might otherwise be imposed, but the City refused to provide such credit. Instead the City argued Branciforte’s setting aside land as open space was not made in connection with the approval of its subdivision map, but rather as a condition of receiving its PUD permit, which provided deviations from standard zoning. In other words, the City argued it had already recognized Branciforte’s open space as part of the permit application and was not obligated to do so again via a credit against Quimby fees. Branciforte paid the park in lieu fees under protest and brought suit for a credit for the value of its open space. The trial court ruled in its favor, but the Court of Appeal reversed, holding that the City was under no duty to provide a credit under Section 66477.

The Court of Appeal did not address the merits of the City’s argument that the open space land was not related to the subdivision approval, but instead based its decision on its interpretation of the Act’s statutory language. The Court found it meaningful that the Legislature used different language to describe the two types of credits available under the statute. On the one hand, Section 66477(a)(9), which concerns credits for improvements made to dedicated land, states that the value of such improvements “shall be a credit against the payment of [parkland] fees.” By contrast Section 66477(e), which concerns a credit for private open space, uses less commanding language, stating only that projects “shall be eligible to receive a credit, as determined by the legislative body.” The Court held that the whereas a city was required to provide the first type of credit, it was under no duty to provide the second type in the absence of a local ordinance providing for such a credit. Because Santa Cruz had not adopted any such ordinance, it was not required to provide Branciforte a credit for its private open space.

The Court’s opinion is troubling because it necessarily suggests the Legislature enacted the open space credit of Section 66477(e) simply to enable local agencies to provide open space credits if they so choose. However, an agency is not required to impose parkland dedication requirements in the first place, and even when it does it is given leeway to set reasonable standards for determining the extent of those requirements. Consequently, the Court’s interpretation would make Section 66477(e) superfluous: local governments do not need the Legislature’s permission to issue credits against fees which are themselves entirely discretionary.

The opinion also leaves open the underlying question of whether a city may avoid having to recognize a project’s “eligibility” for a open space credit by simply never adopting an ordinance addressing the subject. The Branciforte court explicitly declined to address that important issue on the ground that the developer did not argue that the City acted improperly by never adopting such an ordinance.

Until the Supreme Court or other Courts of Appeal take up this important question, a developer of a project with a private, recreational open space would be well advised to negotiate for its Quimby Act credit as early as possible in the entitlement process.