Will Constitutionality of Development Agreements Be Challenged?

In a potentially important case, an appellate court has ruled that the City of Oakland has the power to impose additional impact fees on a developer many years after the city and developer signed an agreement laying out the amount and schedule of fees on the project. The court concluded that the city cannot “contract away” its power to impose fees later. “Even interpretation of the Agreement were correct, any provisions in the Agreement that bar the City from imposing its new impact fees on the Project are untenable and cannot be enforced,” the First District Court of Appeal wrote. “That is because any such provisions would be an invalid infringement on the City’s police power.” The case deals with an Oakland-specific 2005 agreement titled “Agreement for Payment of City Fees and Reimbursement of Specialized Consultant and Employee Services,” which was signed by both parties as part of the Conditions of Approval for the project’s approval. But it could have broader implications – specifically for the state’s 40-year-old development agreement law, which undergirds hundreds of developments in the state but has always been viewed as potentially legally vulnerable because of the “contracting away” risk.

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