Appellate Court Eliminates City of Alameda Fees on New Homes

Alameda, CA – On May 15, 2019, the California Court of Appeal (First District) in San Francisco issued a published opinion upholding a lower court’s decision that the City of Alameda’s “park impact fee” is invalid and unenforceable. This will help reduce the cost of building and buying a new home in Alameda.

In 2014, the City adopted a new ordinance imposing “impact fees” on new housing being built in Alameda. Boatworks, which has been seeking to build hundreds of new homes in the City adjacent to the Inner Harbor Tidal Canal, filed a lawsuit in 2014 contending that the new fees violated a state law called the Mitigation Fee Act. Boatworks brought a “facial” challenge, meaning that the City’s ordinance was invalid on its face and that it was illegal for the City to collect the park impact fees from any homebuilder in the City (including Boatworks).

The Mitigation Fee Act limits the City’s police power and regulates fees imposed on new development. The law forbids a city from imposing fees on new development like housing beyond what is needed to address the impacts created by the new homes. So, the City of Alameda had to show that new homes created additional demand for parks that justified imposing about an additional $40 million in fees on new homes.

The appellate court agreed with Boatworks and the trial court and ruled that the City didn’t show such a need. The City, for instance, insisted that it needed tens of millions of dollars in new fees to buy new land for new parks, when in reality the City already had received hundreds of acres of land for parks for free from the Navy as part of the Alameda Point base closure. The court ruled that the City therefore didn’t have a need to buy additional park land, and it could not collect fees for that purpose.

The appellate court remanded the case to the trial court and directed the court to “issue a judgment declaring the parks and recreation fee as imposed invalid and unenforceable.”

The appellate court also upheld the trial court’s order directing the City to pay $558,000 in attorneys fees to Boatworks, holding that the decision “conferred a significant benefit on the general public.” The decision lowers fees not only for housing builders but also home buyers since much of the fee is usually passed on to the buyer.

Any homebuilder who paid housing impact fees since this case was ruled on originally in January 2017 may be entitled to a refund.