WINNERS: Construction continues at the Dutra Estates subdivision built by Florsheim and Morrison Homes in southwest Manteca. Florsheim and Morrison were among a group of builders to win a lawsuit against the city this week, arguing that they should be exempt from building fees that shot up from $350 to $4,000 after they signed a contract with the city. 

Three developers win, two fold in building fee suit against city

MANTECA — The city’s budget was dealt a multi-million dollar blow Tuesday, April 1, when a judge ruled in favor of a group of homebuilders that sued the city over an increase in development fees.

Just a day before, two other developers had agreed to dismiss identical lawsuits if the city pushed back the deadline for $1.5 million in fees that would have been due next week.

All in all, Manteca will miss out on $8 million it hoped to collect from developers over the next decade as a result of the litigation.

The developers’ lawsuits, all filed by San Francisco-based attorney Dave Lanferman, challenged the city’s decision to raise the “government building facilities fee” charged for each new home built in Manteca.

The City Council in 2006 voted unanimously to raise this fee for the first time since 1986, from $350 per home to $4,000 in January 2007, to $4,350 in 2008 and finally, $4,700 in 2009.

The new fee was meant to cover the cost of a new police station, library, performing arts center, and other city buildings that will be needed as the population grows.

But on Tuesday, San Joaquin County Superior Court Judge Carter Holly sided with the developers, who had argued that their contracts with the city to build the subdivisions — signed prior to the increase — protected them from new fees.

Under Holly’s ruling, Stockton-based Florsheim Homes, Georgia-based Morrison Homes and Pulte Homes, based in Michigan, will only pay the $350 fee on homes in their subdivisions, along with a slew of other fees the city charges on new homes.

City Manager Karen McLaughlin said that, with the higher fees, the city had expected to collect as much as $8.7 million from the developers. At $350 a home, it will collect only $646,450.

The city will also have to return some of the fees, with interest, that developers paid under protest last year.

Los Angeles-based attorney Peter Pierce, who represented Manteca, said the city “respectfully disagreed” with Holly’s decision and was “weighing its options,” including a possible appeal, which must be filed within 60 days.

It’s still unclear how the decision will affect the city’s plans for new buildings.

Earlier this year, plans for a new police station at 555 Industrial Park Drive were put on hold while the slawsuit was resolved.

Now councilmen will have to make some hard decisions about which projects can be completed.
“It’s the $8 million question,” McLaughlin said.

“There are quite a few calculations that are going to have to take place over the next few weeks.”
Mayor Willie Weatherford did not respond to calls from the Sun Post Wednesday.

Thanks to Monday’s settlement, the city will still collect fees from two other builders that were part of the original lawsuit, Woodside Homes and Standard Pacific Corp.

They agreed to pay the increased fee if the city allowed them an extra two years to come up with $1.5 million in outstanding fees that would have been due April 8.

After a closed-door meeting Monday, March 31, the City Council voted unanimously to accept the settlement.

The city has offered a similar fee postponement deal for developers that were not involved in the lawsuit.

Woodside and Standard Pacific believed the lawsuit would succeed, Lanferman said, but felt it was more important to delay the upcoming payments.

“They were put in a very awkward spot,” Lanferman said. “The only way the city was willing to delay payment was if they dismissed the lawsuit.”

A second lawsuit over the “facilities fee” has yet to go to court.

The Building Industry Association of the Delta, a developers’ lobbying group, has also claimed the fee increase is unjustified and excessive. BIA spokesman John Beckman said he hopes to settle on a reduced fee by July.

If there is a reduction, Woodside and Standard Pacific will pay the lower fee, according to their settlement.