Author: Luke A. Wake
Last week Pacific Legal Foundation sent a letter to the San Francisco Municipal Transportation Agency (SFMTA), commenting on the legal implications of its proposal to impose "Transit Impact Development Fees" on new residential developments in the City. The plan would substantially raise the cost of development in the City, and would thereby raise the cost of residential units for San Franciscans. As a result, one could expect fewer development projects in the City, and consequently greater strain on the City's public transportation system from commuters. Surely, that is not what SFMTA wants to see, but those would be the practical consequences of the its proposed policy. Yet, setting aside those prudential considerations, our letter explained that the proposal may violate state and federal law.
The current plan calls for a fee of $11,352 for all new homes of two bedrooms or more, a fee of $8,531 for one bedroom or studio units, and a fee of $5,676 for senior housing tracts. But, the City can't just impose fees whenever it wants to. There are limitations on its power. Specifically, the Takings Clause of the Fifth Amendment of the U.S. Constitution limits the circumstances where municipalities can use the permitting process for the public coffer. Under the Supreme Court precedent we set in 1987, in Nollan v. California Coastal Commission, conditions imposed upon a development permit must bear some relationship to the impact the project will have on the public. Additionally, permit conditions must be roughly proportional to the anticipated development. In other words, a condition imposed on a development permit is unconstitutional under the Fifth Amendment unless it is reasonably necessary to mitigate the project's impact on the public.
California law codified these constitutional requirements in the Mitigation Fee Act (MFA). Under the MFA, the government bears the burden of demonstrating that there is a reasonable relationship between any fee imposed as a condition of a permit and its impact on public facilities. So, if SFMTA decides to impose fees upon new residential development permits, it would have to ensure that the fees are proportional to any impact the development would actually have on the City's public transportation system. Without empirical studies demonstrating that residential development causes strain on transit facilities, and justifying the fee in question, SFMTA's proposal may run afoul of these constitutional and statuary protections for property owners.
Apparently our letter has come to the attention of the SF Examiner, which discussed it in a blog post on Monday afternoon. The post reports that SFMTA has stepped away from its plan to impose these fees on residential developers; however, as of last week, SFMTA's office stated that the proposal had been tabled so as to allow for more time for public comment. But, whether the proposal is alive or dead is beside the point from our perspective; we were writing simply to remind SFMTA that it was bound by the limitations imposed by the Constitution and the Mitigation Fee Act. Contrary to the Examiner's posting, we did not threaten a lawsuit.
At this point, we are watching SFMTA, just as we watch the California Coastal Commission and other government agencies. Our effort to monitor government agencies is an essential part of the fight for liberty, as is educating the public of their rights, and litigating to set good precedent when an appropriate case presents itself. Of course, we have challenged and struck down unconstitutional revenue generating schemes in the past, and we will continue to hold government accountable in the courts when it oversteps it legitimate authority.