Appellate Court Finds That Solar Energy Project Was Not Exempt From City’s Zoning Ordinance

November 2019
Number 75

A recent California appellate court ruling has clarified the requirements for a local agency’s compliance with city or county zoning ordinances. In City of Hesperia v. Lake Arrowhead Community Services District, the Fourth Appellate District held that a community services district did not qualify for zoning compliance exemptions as provided in sections 53091(e) and 53096(a) of the Government Code, after the district had adopted a resolution finding the exemptions applicable in preparation for constructing a solar energy facility.

Background

In City of Hesperia, the Lake Arrowhead Community Services District (District), sought to overturn a trial court’s decision that construction of a solar energy facility did not qualify for exemption from the City of Hesperia’s (City) zoning ordinances. The solar energy facility (Project) was to be constructed on property owned by the District within City limits. The property, which was already in use as a water reclamation facility, was zoned “Rural Residential.” The City’s municipal code provided that “solar farms” were only allowed on nonresidential and nonagricultural property with a conditional use permit and could not be located within 660 feet of agricultural or residential property. Over the City’s objections, the District passed a resolution finding that the City’s zoning ordinances did not apply to the Project, as it was both absolutely exempt and qualifiedly exempt under Government Code provisions specific to energy projects. The City filed suit and prevailed at the trial court level, and the District appealed.

Analysis

Government Code section 53091(a) provides generally that a local agency must comply with “all applicable building ordinances and zoning ordinances of the county or city in which the territory of the local agency is situated.” This case considers two exemptions from this general rule.

Government Code section 53091(e) provides an absolute exemption from local zoning ordinances for the “the location or construction of facilities… for the production or generation of electrical energy” unless the facilities are used for storage or transmission of electrical energy. While the Project was designed to produce energy, that energy was intended to be transmitted to the local utility’s electrical grid. The court concluded that because section 53091(e) does not exempt “transmission” of electrical energy from local zoning ordinances, the Project was not exempt from those ordinances under section 53091(e).

Government Code section 53096(a) provides a qualified exemption to local zoning regulations for a local agency that holds a public hearing and adopts a resolution determining that “there is no feasible alternative to its proposal.” In order to use this exemption, the local agency must properly determine through substantial evidence that no feasible alternatives exist for the location of the proposed facility. The court concluded that the District’s determination that there was no feasible alternative location for the Project was not supported by substantial evidence, and that the District had failed to provide evidence that it had considered “economic, environmental, social, or technological factors associated with an alternative location.” Thus, the Project was not exempt under section 53096(a).

Since the Project did not did not meet the requirements for exemption from the City’s zoning ordinances under either section 53091(e) or section 53096(a), the court ruled that it was not exempt from the City’s zoning ordinances.

Takeaways

The court in City of Hesperia took a narrow view of a local agency’s ability to exempt itself from local zoning ordinances in order to proceed with energy projects. In particular, this ruling makes clear that a local agency’s finding that “there is no feasible alternative to its proposal” must be supported by substantial evidence that the agency had carefully considered alternative locations for its project.

If you have any questions about the City of Hesperia v. Lake Arrowhead Community Services District decision or building and zoning issues in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcast, follow us on Facebook, Twitter, and LinkedIn or download our mobile app.

Written by:

Claudia P. Weaver

Partner

©2019 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Significant New Developer Fee Cases

October 2019
Number 44

As part of an uptick of cases in recent years regarding school impact fees, two recent cases argued by Lozano Smith on behalf of school districts have been decided by the California Sixth District Court of Appeal, with mixed results. The court ruled in relation to an “adults only” agricultural worker housing project that, when imposing prospective developer fees on development projects, school districts need not establish a reasonable relationship between the fee and the specific project in question. Instead, districts are merely required to establish a nexus between the fee and the general type of project that is at issue (e.g. residential, commercial, industrial). This favorable outcome came after the same appellate court, straying from prior precedent that supported deference to local agencies, issued a published decision invalidating a school district’s developer fee justification study. The court held that the study in question was invalid because it did not provide sufficient analysis to demonstrate that the school district would have to house new students generated from development in new facilities. Both cases are part of a trend toward greater judicial scrutiny of school districts’ imposition of developer fees.

School districts in California are authorized by law to impose fees on development projects, referred to as “developer fees” or “school impact fees.” There are three separate levels of fees that can be charged, each of which are subject to different legal requirements. The first case below addresses whether a school district must analyze the potential residential population of a particular development, as projected by the developer, before imposing fees on that particular development. The second case addresses the legal requirements for preparing a Level I fee justification study.

The Tanimura Case

Tanimura & Antle Fresh Foods v. Salinas Union High School District, 34 Cal.App.5th 775, addressed a dispute regarding Level 2 developer fees. The Salinas Union High School District (Salinas) had imposed a developer fee on a 100-unit agricultural employee housing complex commissioned by Tanimura & Antle Fresh Foods, Inc. (Tanimura) within Salinas. The complex, per the terms of its development permit issued by the Monterey County Board of Supervisors, was designed to house only agricultural workers, without dependents.

In recent years, many school districts have contended with developers who argue that fees should not be imposed on their projects because the developers expect that few or no potential school age students will live in the finished project. These arguments have been made, for instance, regarding housing intended for agricultural workers, college students, or young professionals. This case affirms that a school district need not consider the developer’s intended residents for a particular project, and can instead analyze the impact of residential housing projects across the district when imposing developer fees on residential projects.

In relation to its agricultural worker housing project, Tanimura sued for a refund of its fees, alleging that the developer fees imposed by Salinas were not reasonably related to a need for school facilities, as required by statute. Tanimura cited the project’s prohibition on dependents, arguing that, as no children would reside in the complex, its construction would not generate an increased burden on the district’s facilities. The Government Code requires a public agency, before imposing prospective developer fees, to establish the purpose of the fee, the agency’s use for the funds, a reasonable relationship between the fee’s use and the type of development project on which it will be imposed, and a reasonable relationship between the need for public facilities and the type of development project on which the fee is imposed. The trial court held in favor of Tanimura, reasoning that “case law-and common sense-preclude the application of an overbroad label in a fee study that does not account for a project’s actual impact.” The court opined that Salinas was required to account for the fact that no children would be permitted to live at the complex, and in failing to do so had not met the nexus requirement of the Government Code.

In a victory for school districts, and following argument by Lozano Smith (acting as co-counsel in this matter), the Court of Appeal reversed. The court held that, when establishing a nexus between developer fees and a development project, a public agency need not consider the specific project in question; its calculus is limited to the general type of project at issue (e.g., residential, commercial, or industrial). As applied here, Salinas was not required to consider the complex’s prohibition on dependents in its fee analysis. The district’s treatment of the complex as a generic, residential development was lawful.

The court asserted that its interpretation was the only “commonsense” reading of the statute that avoided practical absurdities. To adopt Tanimura’s position, the court held, “would have the practical effect of requiring a school district to expand its needs analysis to address the projected impact on school facilities of undefined, variant subtypes of residential construction not contemplated in the statute.” The court found such an effect to be contrary with the purpose of the statutes. Further, the law contains exceptions from developer fees for certain types of developments, including government-financed agricultural migrant worker housing. However, the Legislature has created no such exception for privately-financed farmworker housing. This indicates that the Legislature did not intend for projects such as the complex to be exempted from developer fees.

The Summerhill Case

In Summerhill Winchester, LLC, v. Campbell Union School District 30 Cal.App.5th 545, the Appellate Court invalidated the Level 1 developer fees adopted by Campbell Union School District (Campbell). In doing so, the court applied the rule laid out in a prior case, Shapell Industries, Inc. v. Governing Board of the Milpitas Unified School District (1991) 1 Cal.App.4th 218, that a Level 1 fee study must include an analysis of the following three factors: (1) the projection of the total amount of housing to be constructed within the school district; (2) estimation of the number of new students that are expected to result from the new development; and (3) estimation of what it will cost to provide the necessary school facilities for that approximate number of new students.

Regarding the first Shapell element, Campbell’s fee study stated that there were “in excess of 133” residential units that could be constructed over the next five years. The court took issue with the fact that these projections were not based on data from all of the planning departments within Campbell’s boundaries. The court also held that the study’s projection was too vague to support the imposition of fees. According to the court, a projection based on consultation with only some of the local jurisdictions within Campbell’s boundaries and using a phrase such as “in excess of” is “little better than saying that ‘some’ development is anticipated.” This was found to be inadequate because the study did not provide sufficient guidance for Campbell’s Board to determine whether or not new school facilities would be needed due to anticipated development. The court found it irrelevant that the district was already over capacity at all of its schools, and essentially rejected Campbell’s argument that new facilities would be needed to house students generated from development, regardless of the number of such students.

The court also found that the fee study was invalid because it did not provide sufficient evidence for the district’s Board to determine what type of school facilities would be needed to accommodate students generated by development, if any. The court based its decision on a narrow reading of the applicable statutes.

Developers may argue that the court’s decision means that a fee study must now establish what “type” of facilities a school district will construct to house students generated by development. However, prior case law, includingGarrick Development Co. v. Hayward Unified School District (1992) 3 Cal.App.4th 320, held that specific improvement plans or building proposals were not necessary. The court acknowledged that, underGarrick, “the Board did not have to identify specific facilities that would be built or make concrete construction plans.” At the same time, however, the court concluded that “the key missing element in the fee study was what new facilities would be necessary for the new students generated by new development.” These two statements are difficult to reconcile, and create a challenge when school districts decide how specifically their fee studies must describe student housing needs. However, it remains clear that specific school construction projects need not be identified.

The court’s opinion is likely to cause confusion and possibly to disrupt established law. As a result, school districts may wish to review the adequacy of their fee justification studies.

Lozano Smith represented the school district in the litigation and appeal, and requested, on behalf of the district, that the California Supreme Court depublish the case. The request for depublication was supported by CASBO, CASH, and CSBA, and not opposed, but the request was nevertheless denied by the Supreme Court.

Takeaways

Tanimura clarifies that public agencies, when imposing prospective developer fees, need not consider the specific development project, but only the type of development project at issue. The case should also help school districts resist the claims of developers who assert that they should be relieved of fees because few or no students will allegedly be generated by a specific project.

While some may argue for a broader application, the Summerhill decision can be viewed as the court’s application of the three-factorShapell test to a particular fee study. In this regard, the case simply calls for a fact-specific analysis based on already-established precedent. The following are some best practices following the Summerhill case:

  • Avoid use of imprecise language like “at least” when describing projected development.
  • If at all possible, consult with all planning departments within the school district’s jurisdiction.
  • If at all possible, identify the general types of school facility projects that may be constructed to accommodate students (e.g., new school construction, portable additions, a mix of both, etc.). We note that such identification in the fee study is not necessarily binding on the school district when it later implements its facilities plans.

If you have any questions about the Tanimura orSummerhill cases or about developer fees in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. Copies of Lozano Smith’s Developer Fee Handbook are available for purchase from Lozano Smith’s Client Services Department; you can submit your request to clientservices@lozanosmith.com. You can also subscribe to our podcast, follow us on Facebook, Twitter, and LinkedIn or download our mobile app.

Written by:

Harold M. Freiman

Partner

Devon B. Lincoln

Partner

Kelly M. Rem

Partner

Benjamin Brown

Associate

©2019 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

AB 48 Increases Bonding Capacity, Provides Facilities Funding At Multiple Levels, Prioritizes Small School Districts, And Reduces Available Developer Fees For School Districts … But Only Applies If Voters Approve A School Facilities Bond In March

October 2019
Number 62

The California Legislature recently passed, and on October 7 Governor Newsom signed, Assembly Bill (AB) 48, known as the “Public Preschool, K-12, and College Health and Safety Bond Act of 2020.”

AB 48 places a $15 billion statewide K-12 school and college facilities general obligation bond on the March 3, 2020 ballot.

Contingent on voter approval of the statewide bond measure at the Presidential Primary election on March 3, 2020, AB 48 would introduce a slew of significant changes, relative to the funding of school facilities including:

  1. Increasing the bonding capacity of school and community college districts as follows:
    1. For elementary and high school districts – from 1.25% to 2.0% of assessed value of the taxable property within the district.
    2. For unified school districts and community college districts – from 2.5% to 4.0% of assessed value of the taxable property within the district.
  2. Establishing a 2020 School Facilities Fund for the apportionment and disbursement of money, including AB 48 bond proceeds, pursuant to the Leroy F. Greene School Facilities Act of 1998, commonly known as the School Facility Program;
  3. Imposing requirements to submit a five-year school facilities master plan or updated five-year school facilities master plan as a condition for participating in the School Facility Program;
  4. Prioritizing the order in which modernization and new construction applications for participation in the School Facility Program will be processed as follows: to projects that are determined to pose a health of life safety hazard; to projects by school districts requesting financial hardship status; for modernization applications only, to applications requesting a grant for the testing and/or remediation of lead levels in water at school sites; to projects that were submitted but not reviewed in the two immediately preceding quarters; to projects designed to eliminate existing severe overcrowding; and to applications based upon a computation of points as set forth in the Education Code;
  5. Introducing new programs to lessen the burden on rural and lower-income school districts when applying for state funds, including a small school district assistance program to provide advanced funding for design, reserve funds so districts will have the time needed to develop their projects, technical assistance and an increased bonding capacity to allow more small school districts to receive financing assistance, and increasing the threshold total bonding capacity for the financial hardship eligibility so more districts can qualify for projects without having to raise the full local contribution
  6. Authorizing
    1. funding for health and safety projects;
    2. grants for lead testing and remediation;
    3. grants for new construction and modernization projects for seismic mitigation, control, management or abatement of lead, the demolishment and construction of buildings on existing school sites in specified situations and to establish school site-based infrastructure to provide broadband internet access;
  7. Authorizing the use of new construction and modernization grants for the purchase of portable electronic devices with a useful life of more than three years;
  8. Specifying procedures by which small schools can obtain project and construction management, new construction grants, and modernization grants;
  9. Providing districts affected by a disaster with immediate assistance;
  10. Requiring annual notification by school districts to the State Allocation Board of sites that have been acquired for school purposes but remain unused;
  11. Prioritizing health and safety projects at the higher education level, and requiring the University of California (“UC”) and California State University (“CSU”) to adopt five-year affordable student housing plans as conditions for funding; and
  12. Imposing accountability and transparency obligations, such as public hearing and audit requirements, posting project and audit information requirements, on school districts, county offices of education, charter schools, community colleges, the CSU and the UC.

Impact on Developer Fees

In addition to the numerous substantial changes addressed above, AB 48 places new limitations on school districts’ ability to obtain the full school impact fees to which they had previously been entitled, retreating on a compromise between developers and school districts that was reached over two decades ago.

In 1997, following years without a new statewide school bond measure, the Legislature reached a compromise that led to Senate Bill (SB) 50, which placed a successful statewide bond on the ballot in 1998 and new restrictions on developer fees. SB 50 limited the ability of a school district to challenge new development on the basis of inadequate school fees, and introduced the three levels of developer fees that remain in effect to this day. School districts may assess residential developer fees authorized by Education Code sections 17620, et seq. (“Level 1” fees), or a higher “Level 2” or “Level 3” rate authorized by Government Code sections 65995.5 et seq., if the district meets certain criteria. The highest level of fees, Level 3, was intended to go into effect when state facility funding was no longer available. To date, school districts have had only fleeting moments to collect Level 3 fees, which have been variously suspended by the Legislature and challenged in court by the California Building Industry Association.

Under AB 48, if the statewide bond measure in 2020 is successful, school impact fees will be eliminated altogether for multifamily housing developments that are located within one-half mile of a major transit stop, which is defined in the legislation as “a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods.” For all other multifamily housing, AB 48 reduces the amount of Level 1 and Level 2 fees that can be charged by 20%. These changes are presumably to support more affordable housing, though that goal rests, at least in part, on a potentially faulty assumption that developers will pass the savings on to home buyers. These reductions in fees would remain in effect until January 1, 2026.

Additionally, increasing the local bonding capacity for school districts could potentially reduce school impact fees by making it more difficult for a district to qualify for Level 2 fees. This is because qualification for Level 2 fees is dependent, in part, on a school district’s bonding capacity. In relevant part, to qualify for Level 2 fees, a district must (1) be eligible for state facility funding, and (2) meet two of four criteria – one of which is directly tied to the district’s local bonding capacity (the issuance of debt or incurring obligations for capital outlay in an amount equal to 30 percent of the district’s local bonding capacity). (Gov. Code § 65995.5, subd.(b)(3)(C).) By raising school districts’ bonding capacity, AB 48 would make it more difficult to meet this particular criteria, potentially causing school districts to fall out of Level 2 status in the future.

Finally, if they go into effect, certain of AB 48’s provisions could once again suspend the ability of a school district to impose Level 3 fees even if state facilities funding runs out. This suspension of Level 3 fees would be in place until January 1, 2028.

If the voters approve AB 48 in March, the bill’s treatment of developer fees will retreat from the compromise arrangement of SB 50 in each of the foregoing ways. Developers will keep the benefits of that compromise (limits on ability to challenge development based on insufficient school facilities) while school districts give up the full benefits of Level 2 and Level 3 fees.

Takeaway

Importantly, the many changes proposed by AB 48 will not take effect until and unless the voters approve the Public Preschool, K-12, and College Health and Safety Bond Act of 2020 (the Act) on March 3, 2020. If the Act is not approved by voters on March 3, none of the above will apply.

With respect to the effect of some of the changes that will go into effect only if voters approve the Act: AB 48 will provide facilities funding at multiple levels; the state match for funding will be more aligned with LCFF factors, and will also include a “hold harmless” provision to avoid harm caused by the shifting formula; priorities for funds will be based on need rather than a first-in-line-model; specific focus will be paid to small school districts, potentially adversely impacting suburban and larger districts; and some school districts may be adversely impacted by the limitation on the collection of multi-family residential developer fees.

Lozano Smith will soon be releasing an episode of the Lozano Smith Podcast focusing on AB 48 and its potential impacts on school facilities funding in California. Go to Lozanosmith.com/podcast to access all of Lozano Smith’s podcasts.

If you have any questions about AB 48, public finance or developer fees in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcast, follow us on Facebook, Twitter and LinkedIn or download our mobile app. Information regarding Lozano Smith’s Developer Fee Handbook for School Facilities can be found Here.

Written by:

Harold M. Freiman

Partner

Daniel Maruccia

Partner

Deepika S. Thompson

Senior Counsel

James N. McCann

Associate

©2019 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Legislature Postpones Sunset Of Civic Center Act Fee Provisions

October 2019
Number 55

Assembly Bill (AB) 1303, which was recently signed by the Governor, will postpone the sunset of central fee provisions within the Civic Center Act (Act).

The Act generally requires school districts to permit the use of their facilities and grounds for particular purposes. The Act further authorizes, and in some cases requires, school districts to charge users for their use of school facilities. The Legislature originally provided that these provisions would be repealed as of January 1, 2020; however, AB 1303 extends this date to January 1, 2025.

Background

The Act mandates that school districts “authorize the use of school facilities or grounds under [their] control by . . . nonprofit organization[s], or by . . . club[s] or . . . association[s] organized to promote youth and school activities.” “School facilities” are defined as nonclassroom space and “school grounds,” and include, but are not limited to: playing fields, athletic fields, track and field venues, tennis courts, and outdoor basketball courts.

The Act also provides that school districts may, and in certain circumstances must, charge for such use. In particular, school districts may generally charge “an amount not to exceed direct costs” for use of their grounds or facilities. “Direct costs” are defined as the user’s proportional share of supplies, utilities, janitorial services, work performed by school district employees, maintenance, repair, restoration, and refurbishment in connection with the operation and maintenance of the school facilities or grounds. This proportion of costs is based on the extent and nature of the entity’s use.

There are a few notable exceptions to this general rule. If a school district permits the use of school facilities for religious services, the district must charge the user an amount at least equal to the school district’s direct costs. Further, school districts must charge fair rental value for users who utilize school facilities for entertainment purposes or to hold meetings where admission is charged or contributions are solicited and the net receipts are not expended for the welfare of the pupils of the school district or for charity. The Act defines “fair rental value” as the direct costs to the school district plus the amortized costs of the school facilities or grounds used for the duration of the activity.

The Act originally provided that the above provisions would be repealed as of January 1, 2020. However, AB 1303 postpones such repeal until January 1, 2025. The Senate Rules Committee (Committee) observed that this fee provision was originally enacted in 2012 to help school districts remain fiscally viable during the national economic downturn. Now, though the economic climate has improved, the Committee determined that such fees are still necessary to enable districts to ensure that their schools are properly maintained and to prevent injuries that can result from dilapidated facilities.

Takeaways

School districts should be aware that the Legislature has postponed the sunset of the above-described Civic Center Act fee provisions until January 1, 2025. Consequently, school districts may continue to charge users in proportion to the direct costs associated with their use, except with respect to users who utilize school facilities for religious, entertainment, or profit-generating purposes.

For more information about AB 1303, the Civic Center Act, or facilities use matters in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcast, follow us on Facebook, Twitter, and LinkedIn or download our mobile app.

Written by:

Claudia P. Weaver

Partner

Benjamin Brown

Associate

©2019 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

AB 5: New Law Further Limits Employers’ Ability To Classify Workers As Independent Contractors

October 2019
Number 53

Governor Newsom signed Assembly Bill 5 (AB 5) on September 18, 2019, which takes effect on January 1, 2020. AB 5 codifies the California Supreme Court’s decision inDynamex Operations West, Inc. v. Superior Court of Los Angeles (Dynamex) (see 2018 Client News Brief No. 20), which made it more difficult to classify a worker as an independent contractor. This new legislation also creates additional protections for workers.

In Dynamex, the Court held that, for purposes of Industrial Welfare Commission (IWC) wage orders, a worker is presumed to be an employee unless the hiring entity is able to demonstrate that:

(A) The person is free from their control and direction in connection with the performance of the work, both under the contract for the performance of the work and in fact;

(B) The person performs work that is outside the usual course of the hiring entity’s business; and

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

AB 5 expands the applicability of this three-part test, commonly referred to as the “ABC test,” to specific sections of the California Labor Code and Unemployment Insurance Code. The bill exempts specific occupations such as licensed architects, lawyers, and private investigators from the ABC test. Instead, those professionals will be governed by the Borello test, which does not contain a rebuttable presumption that a worker is an employee. The Borello test has nine factors and focuses on the amount of “control” the hiring entity has over a worker. Hiring entities are not required to meet all nine factors to show that a worker is an independent contractor. Therefore, it is easier to classify a worker as an independent contractor under Borello. AB 5 provides that, in addition to the specific exemptions, Borello can also be applied when a court determines that the ABC test cannot be applied in a particular circumstance.

AB 5 authorizes the California Attorney General and certain local government officials to seek injunctions against hiring entities on behalf of misclassified workers. Additionally, some of the changes to the Labor Code apply retroactively to existing claims to the extent permitted by law.

Takeaways

AB 5 extends the applicability of Dynamex and the ABC test from IWC wage orders to provisions of the Labor and Unemployment Insurance Codes. The legislation has the potential to increase employer liability because it is partially retroactive to existing claims and creates a new right to seek injunctive relief.

Precisely what impact AB 5 will have on public entities is yet to be determined. First, while most IWC wage orders do not apply in full to public entities, sections of the Labor Code and the Unemployment Insurance Code do apply. Second, AB 5 does not contain an exemption for public entities. Third, adopting the ABC test could lead to greater use of the test by other agencies that have historically relied on the Borello test such as the California Public Employees’ Retirement System (CalPERS). If this occurs, the change may have a significant impact on CalPERS membership rules, including post-retirement work implications for CalPERS retirees attempting to return to work as independent contractors. Therefore, public entity employers with independent contractors should review their classification decisions to ensure workers are correctly classified under the appropriate test.

For more information about AB 5 or worker classification in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcast, follow us on Facebook, Twitter, and LinkedIn or download our mobile app.

Written by:

Michelle L. Cannon

Partner

Travis J. Lindsey

Associate

©2019 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

U.S. Supreme Court Overrules Precedent And Opens the Federal Court Door to Takings Lawsuits Before Exhaustion of State Law Just Compensation Remedies

August 2019
Number 37

The Supreme Court of the United States held in Knick v. Township of Scott that plaintiffs claiming a local government action has interfered with their use of property may bring their constitutional “takings lawsuit” under 42 U.S.C. section 1983 directly in federal court, and before exhausting other related state law remedies. The Supreme Court’s opinion overruled a 34-year old precedent requiring plaintiffs to first seek just compensation under state law in state court. This is a major change in takings law, which alters long-held takings strategies used by local agencies.

The United States Constitution prohibits the “taking” of private property for public use without the payment of just compensation. In Knick, the Township of Scott informed a private landowner that her property, which contained a small graveyard, must be opened to the public during daylight hours, pursuant to a local cemetery ordinance. The landowner brought an action in federal court alleging that the ordinance’s mandatory public access requirement effected a “taking” of her property without the payment of just compensation. Existing, long standing Supreme Court precedent, specifically, the opinion in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, required plaintiffs to first seek just compensation under state law in state court before bringing a federal takings claims. Because landowner had proceeded directly to federal court without first seeking a state court remedy, the U.S. District Court dismissed her action.

The 1985 Williamson County opinion had held that the constitutional prohibition on the taking of private property has not been violated until the government denies payment of just compensation. Williamson County drew from cases dating back to 1890 for the proposition that just compensation does not need to be paid to the private property owner at the time of the taking, provided a “reasonable, certain, and adequate” mechanism exists for obtaining just compensation, such as an inverse condemnation action in state court. On this authority, a plaintiff cannot bring a claim for violation of the takings clause until just compensation has been denied by the state. However, as a perhaps unintended consequence, federal law requires federal courts to give preclusive effect to state court decisions. This means that a plaintiff who loses its inverse condemnation case in state court would often be barred from then bringing a claim in federal court due to the issue preclusion rule.

In Knick, the Supreme Court overruled the Williamson County precedent, holding “[i]f a local government takes private property without paying for it, that government has violated the Fifth Amendment, just as the Takings Clause says, without regard to subsequent state court proceedings. And the property owner may sue the government at the time in federal court for the ‘deprivation’ of a right secured by the Constitution.” The assertion of an uncompensated taking is now enough to obtain immediate standing to sue in federal court on an immediate basis.

The Supreme Court’s Knick opinion decision means that plaintiffs may sue local governments in federal court for alleged “takings” withoutfirst bringing a state court inverse condemnation action.

For further information regarding the Knick opinion, or governmental land use and taking issues in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcast, follow us on Facebook, Twitter and LinkedIn or download our mobile app.

Written by:

William P. Curley III

Partner

Nicholas J. Clair

Associate

©2019 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.

Local Governments Maintain Aesthetic Control Over Their Rights Of Way

June 2019
Number 29

A public agency’s right to enforce reasonable aesthetic criteria on telecommunications installations is a valid exercise of power. So says the California Supreme Court in its recent ruling inT-Mobile West LLC v. City and County of San Francisco (T-Mobile) (April 4, 2019, S238001) __ Cal. __. In a long-awaited decision by local governments and wireless carriers alike, the court held that local government ordinances requiring aesthetic guidelines for equipment erected by wireless telephone companies were neither preempted by, nor in violation of, state law. Thus, cities and counties need not fear a loss of community quality and aesthetic beauty as a result of unattractive telecommunications installations.

Background

For decades, local governments have battled over the amount of aesthetic control they hold over wireless telecommunications carriers constructing telecommunication facilities located in public rights of way. This struggle by cities and counties to maintain their local character has presented valid concerns regarding the extent of local government regulatory authority. The T-Mobile case settles this squabble by providing local governments with clear authority to establish aesthetic guidelines for wireless carriers locating equipment in public rights of way.

Analysis

In T-Mobile, plaintiffs, national telecommunications carriers including T-Mobile and Crown Castle contended that defendant, the City and County of San Francisco’s (City) ordinance which established aesthetic guidelines was preempted by California state law. They asserted that California Public Utilities Code (CPUC) section 7901 preempted the local rule and, even if not preempted, the ordinance violated CPUC section 7901.1 by singling out wireless telecommunications carriers for regulation.

Plaintiffs’ preemption argument stemmed from the parties’ disagreement over their interpretation of section 7901 which permits wireless carriers to construct and maintain cell towers and wireless facilities along public roads “in such manner and at such points as not toincommode the public use of the road…” Plaintiffs asserted a narrow interpretation of section 7901 stating that the statute granted them the right to construct and erect equipment along public roads, and local governments could not prevent such construction, so long as Plaintiffs did not “obstruct the path of travel.” The court disagreed with Plaintiffs, holding that the City’s ordinance is not preempted by section 7901, concluding that obstructing the path of travel was just one of multiple ways that public road use could be disturbed or made inconvenient, and that the City retained inherent local police power to regulate the manner and location of telephone line installations of all types. Ruling in favor of the City, the court stated that the statute “leaves room for additional local action” and that there are “significant local interests relating to road use that may vary by jurisdictions.”

Plaintiffs additionally asserted that the City’s ordinance violated CPUC section 7901.1, which provides that local governments may “exercise reasonable control as to the time, place, and manner” in which roads are “accessed,” and that the control must “be applied to all entities in an equivalent manner. Considering the legislative history of section 7901.1, the court held that the statute only applies to temporary access during construction and installation of telephone lines and equipment, and the City’s ordinance did not violate the statute because the City did not discriminate amongst entities when regulating temporary access to public rights of way.

Takeaways

The T-Mobile case is a win for cities and counties seeking to maintain their unique character during a time of increased necessity for cell towers and other wireless facilities. The Court here provided clear guidance on local government authority to regulate aesthetics of telecommunication equipment. This may set the stage for future Federal Communications Commission rule-making to attempt to limit this well-deserved affirmation of local control and community quality of life.

If you have any questions about this case or regulation of public rights of way in general, please contact the authors of this Client News Brief or an attorney at one of our eight offices located statewide. You can also subscribe to our podcast, follow us on Facebook, Twitter and LinkedIn or download our mobile app.

Written by:

William P. Curley III

Partner

Lauren Kawano

Associate

©2019 Lozano Smith

As the information contained herein is necessarily general, its application to a particular set of facts and circumstances may vary. For this reason, this News Brief does not constitute legal advice. We recommend that you consult with your counsel prior to acting on the information contained herein.