Morrison Homes went for broke in its lawsuit against the City of Manteca over government facilities fees and lost big.
The Third Appellate Court last week sided with the city and overturned a San Joaquin Superior Court decision that initially blocked the city’s ability to raise the fee from $350 to $4,702 per home to help growth pay for everything from a new city hall to a library and performing arts center.
It means Morrison Homes will now have to pay full freight for homes they build in Manteca despite their contention the signing of a development agreement protected them from annual increases justified under state-mandated nexus studies. Morrison Homes has also been ordered to pick up all of the city’s legal costs connected with the appeal.
The court essentially ruled that if the city was increasing an existing fee based on a nexus study it did not represent a new fee. Morrison Homes argued that it was a new fee and therefore they couldn’t charge more because the builder had a signed development agreement with the city. Since the fee was just referenced and not a specific amount tied to it, the court said whatever fee the city could justify and adopt was the fee.
Had Morrison opted for a negotiated settlement Manteca offered after the initial decision in a bid to reduce the possibility the city could end up with no more than $350 if it was unsuccessful on the appeal, they would be paying $3,800 per low density residential unit and $3,169 per medium residential unit through Jan. 1, 2012. After that point, the fees would have been adjusted upward to reflect the increases in the Engineering News record Construction Cost Index for the previous two years.
That is the deal Florsheim Homes took in May.
The two builders ironically are developing separate segments of the same project off Woodward Avenue west of Airport Way. It means Florsheim will be paying $900 less per home for government facilities fees through the deal reached with Manteca than Morrison Homes will.
Florsheim – along with Pulte Homes, Morrison Homes, and the Building Industry of the Delta – believed the city was charging growth too much for the facilities they said they needed. So after the city refused to consider lowering them, they sued.
The lawsuits started when home builders contended Manteca hadn’t proven its case that as the community grows the city needs a larger police headquarters.
Nor did builders believe the need for a new library, more city office space, an expanded corporation yard, a new animal control shelter or a performing arts center had been justified as required by state law with an accurate nexus.
City officials countered that they have conducted studies and public meetings over the course of several years that the facilities costing $109.1 million are needed and growth’s share of that tab - ultimately $4,702 a home - was justified.
Whether the facilities were needed was one of the premises of the original lawsuit filed in San Joaquin County Superior Court by the Building Industry Association of the Delta against the City of Manteca.
Developers, through BIA, also contended:
•the fee was excessive.
•growth was paying more than its fair share.
•the fee was unfair as it is nearly a 1,200 percent increase.
City leaders countered:
•the fee was justified as required by state law requiring exhaustive studies known as nexuses before such a fee can be put in place.
•the BIA got the city to delay the implementation of the fee for several months examined the nexus and discovered - with the city concurring - they had charged growth $73 too much per home for a new library and the fee was reduced accordingly. No other cost splits between growth and existing residents were challenged successfully at that time by developers’ representatives.
•the city has been talking with developers which is why the original fee of $4,702 ended up being phasing it in over three years starting with $4,000 in 2007, $4,300 in 2008 and $4,702 in 2009.
•the fee had been at $350 for 20 years since it was adopted in June 1986 with no adjustments for inflation or identifying what new growth during that time would demand in terms of city facilities.
The Third Appellate Court last week sided with the city and overturned a San Joaquin Superior Court decision that initially blocked the city’s ability to raise the fee from $350 to $4,702 per home to help growth pay for everything from a new city hall to a library and performing arts center.
It means Morrison Homes will now have to pay full freight for homes they build in Manteca despite their contention the signing of a development agreement protected them from annual increases justified under state-mandated nexus studies. Morrison Homes has also been ordered to pick up all of the city’s legal costs connected with the appeal.
The court essentially ruled that if the city was increasing an existing fee based on a nexus study it did not represent a new fee. Morrison Homes argued that it was a new fee and therefore they couldn’t charge more because the builder had a signed development agreement with the city. Since the fee was just referenced and not a specific amount tied to it, the court said whatever fee the city could justify and adopt was the fee.
Had Morrison opted for a negotiated settlement Manteca offered after the initial decision in a bid to reduce the possibility the city could end up with no more than $350 if it was unsuccessful on the appeal, they would be paying $3,800 per low density residential unit and $3,169 per medium residential unit through Jan. 1, 2012. After that point, the fees would have been adjusted upward to reflect the increases in the Engineering News record Construction Cost Index for the previous two years.
That is the deal Florsheim Homes took in May.
The two builders ironically are developing separate segments of the same project off Woodward Avenue west of Airport Way. It means Florsheim will be paying $900 less per home for government facilities fees through the deal reached with Manteca than Morrison Homes will.
Florsheim – along with Pulte Homes, Morrison Homes, and the Building Industry of the Delta – believed the city was charging growth too much for the facilities they said they needed. So after the city refused to consider lowering them, they sued.
The lawsuits started when home builders contended Manteca hadn’t proven its case that as the community grows the city needs a larger police headquarters.
Nor did builders believe the need for a new library, more city office space, an expanded corporation yard, a new animal control shelter or a performing arts center had been justified as required by state law with an accurate nexus.
City officials countered that they have conducted studies and public meetings over the course of several years that the facilities costing $109.1 million are needed and growth’s share of that tab - ultimately $4,702 a home - was justified.
Whether the facilities were needed was one of the premises of the original lawsuit filed in San Joaquin County Superior Court by the Building Industry Association of the Delta against the City of Manteca.
Developers, through BIA, also contended:
•the fee was excessive.
•growth was paying more than its fair share.
•the fee was unfair as it is nearly a 1,200 percent increase.
City leaders countered:
•the fee was justified as required by state law requiring exhaustive studies known as nexuses before such a fee can be put in place.
•the BIA got the city to delay the implementation of the fee for several months examined the nexus and discovered - with the city concurring - they had charged growth $73 too much per home for a new library and the fee was reduced accordingly. No other cost splits between growth and existing residents were challenged successfully at that time by developers’ representatives.
•the city has been talking with developers which is why the original fee of $4,702 ended up being phasing it in over three years starting with $4,000 in 2007, $4,300 in 2008 and $4,702 in 2009.
•the fee had been at $350 for 20 years since it was adopted in June 1986 with no adjustments for inflation or identifying what new growth during that time would demand in terms of city facilities.
