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BUILDING INDUSTRY STOPS ILLEGAL HOSPITAL DISTRICT FEE

Riverside, CA (September 7, 2017)—A Riverside County judge has handed a victory to those who work to see housing and other development become more affordable.  The Building Industry Legal Defense Foundation (BILD) and Building Industry Association of Southern California, Riverside County Chapter (BIASC-RC) won their lawsuit to stop what they called an illegal development fee from being imposed by the San Gorgonio Memorial Health Care District. 

The fee would have tacked on thousands of dollars onto all new development in the area including residential, commercial, and institutional projects, like churches and schools.  Sample fees would have been $228,400 for a 100-unit subdivision, $92,050 for a small, 50-unit apartment complex, and $114,100 for a small, neighborhood strip center. 

BILD and BIASC-RC sued in May of 2015 to stop the fee claiming the Healthcare District had no legal authority to adopt development fees of any kind in any amount.  In addition, the lawsuit claimed that the fee failed to meet state law requirements, that the District was infringing on local municipalities’ police powers, and that the building plans that the District was basing the fee on failed to undergo review under the California Environmental Quality Act. 

BIASC-RC and BILD were concerned not only for the damaging effect that the fee would have had on local development, but also for the potential effect that letting the District adopt the fee might have on other agencies.  “Special districts only have the powers the legislature gives them,” said BILD General Counsel, Shanda Beltran, “if you let one district ignore those limits and do whatever they want, soon you’ll have districts all over California adopting fees without any real power to do so.” 

After more than a year in court, Riverside County Judge Sharon Waters ruled that the Healthcare District acted unlawfully in adopting the fee and directed the District to cancel the fee.  BIASC and BILD’s outside lawyer, David Lanferman with Rutan & Tucker was pleased with the judgement and stated: “The Court’s decision in this case provides significant relief to the housing industry in Riverside County, and an important reminder that State law limits the power of agencies to create burdensome fees on new construction activity without clear constitutional and legislative authorization.” 

The building industry sued the Healthcare District only after more than a year of protracted discussions regarding the fee.  Said Bill Blankenship, Executive Officer of BIASC-RC about the results of the case and the run up to it: “We are pleased with the eventual outcome; however, we are saddened that the local residents will shoulder the burden of a bad decision by the District’s Elected Board Members for a funding strategy for expanding the hospital that was outside their legal authority.  Even after it was made clear to them that the District had alternate options within their state-mandated powers, they still decided to pursue a funding option for that was clearly illegal and not within their authority.”

The case of Building Industry Association of Southern California and Building Industry Legal Defense Foundation v. San Gorgonio Memorial Healthcare District was filed in Riverside County Superior Court and the Court’s judgement can be found HERE.

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BILD Claims Victory As State Supreme Court Rules SANDAG EIR Need Not Abide by Governor's Executive Order on GHG

In an effort that has taken nearly two and a half years to resolve, the California Supreme Court upheld the greenhouse gas (GHG) analysis in the San Diego Association of Governments’ (SANDAG) Environmental Impact Report (EIR) for their Regional Transportation Plan/Sustainable Communities Strategy (RTP/SCS) (the first such document of its kind initially adopted in 2011).  The Supreme Court’s opinion, handed down on July 13, 2017 in the case of Cleveland National Forest Foundation v. San Diego Association of Governments, not only reinforces the general rule that lead agencies under the California Environmental Quality Act (CEQA) have discretion to determine how to evaluate environmental impacts and significant thresholds, but also that executive orders are not legal mandates having the same force of law as legislation that would force a lead agency’s hand in CEQA considerations.  BILD appeared as a friend of the court, representing the interests of the building industry as a whole, at multiple levels of the litigation. 

At the heart of the lawsuit was the consideration of then-Governor Schwarzenegger’s executive order announcing a goal of reducing GHG to 80% below 1990 levels by 2050.  While SANDAG’s EIR included a discussion of the executive order in the EIR for the RTP/SCS, it did not consider adherence to its goal as a requirement, choosing instead to look to applicable legislation found in AB 32 (requiring GHG reductions to 1990 levels by 2020), as a significance threshold.  After the case wound its way through the lower courts, the Supreme Court took review on the narrow issue of whether the EIR had to include analysis of the RTP/SCS consistency with the executive order’s GHG reduction goals. 

In a very narrow ruling, the Supreme Court found that “based on information available at the time, about the [RTP/SCS’ GHG] impacts and its potential inconsistency with state climate change goals,” the EIR provided sufficient information to the public.  However, the Court went on to state that lead agencies, moving forward, would be required in their GHG analyses to “stay in step with evolving scientific knowledge and state regulatory schemes.” 

Given the amount of time that has passed since the case first was filed and the laws that have have been adopted to regulate GHG in the state since that time, including SB 32—requiring GHG reductions to 40% below 1990 levels by 2030—the ruling in the SANDAG case may appear to be too little too late.  However, the check on executive power represented by the Court’s ruling, especially in the area of GHG regulation, should not go unnoticed. 

As regulation of GHG in California continues to evolve and regulatory burdens on the building industry, especially the transportation/infrastructure sectors, grow, BILD will continue to lead the charge against overregulation and will challenge the imposition of unachievable/unrealistic goals for GHG reductions. 

BILD would like to thank our outside counsel, Nancy Miller, with Renne Sloan Holtzman Sakai LLP, for her work on the amicus briefs filed on BILD’s behalf. 

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BILD Chalks Up a Win Defending the “Right to Repair” Alleged Construction Defects

The Building Industry Legal Defense Foundation (BILD), along with its coalition partners, the California Building Industry Association and Leading Builders of America, garnered a win in the case of Gillotti v. Stewart (No. C075611, Cal. Ct. of App. 3d Dist. Filed 4/26/17, publication order 5/18/17).  The case arose from a dispute over alleged damage from removal of trees and their connections to soil placement and driveway leveling. 

First, as amicus curie before the Third District Court of Appeal, BILD supported the builder/seller, general contractor, and grading subcontractor of the property in their arguments that SB 800 and its “right to repair” was the exclusive avenue for resolution of an alleged defects at the property—not an action for common law negligence.  BILD continues to argue that the Liberty Mutual decision (Liberty Mutual Insurance Co. v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98) was wrongly decided as it allowed for common law claims in construction defect actions despite SB 800’s “right to repair.”  The Court of Appeal agreed with BILD and the building industry, rejected Liberty Mutual, and upheld the “right to repair” finding that SB 800 “clearly and unequivocally expresses the legislative intent that the [SB 800] apply to all actions seeking relief of recovery of damages arising out of, or related to deficiencies in, residential construction, except as specifically set forth in [SB 800],” and that SB 800 “does not specifically except actions arising from actual damages.”  (Gillotti at *10).  After achieving a victory in the opinion in Gillotti¸ BILD had to step in again and fight to have the Court’s opinion published, as it was initially unpublished, which would have made it uncitable as precedent.  Upon hearing BILD’s arguments in favor of publication, the Court released its opinion in Gillotti for publication on May 18, 2017.    

The Third District Court of Appeal’s opinion in Gillotti is the second time that it has disagreed with Liberty Mutual having also upheld the “right to repair” in the case of Elliott Homes v. Superior Court (Hicks) (2016) 6 Cal.App.5th 333, a case which is currently pending review before the California Supreme Court along with the Fifth Appellate District’s rejection of Liberty Mutual in McMillin Albany LLC v. Superior Court (2015) 192 Cal. Rptr. 3d 53.  (BILD is also an amicus curiae in the McMillin case, and our brief can be found here.)  Thus, the split between California courts continues to grow regarding how to manage construction defect claims and whether or not to abide by the “right to repair” as the sole remedy. 

BILD will continue to defend SB 800 and the “right to repair” and thanks its outside counsel in the Gillotti case, Kathleen Carpenter at Donahue Fitzgerald and Alan Packer at Newmeyer & Dillion for their outstanding work in this matter.  A copy of BILD’s amicus brief in the Gillotti case can be found here, and a copy of the request for publication can be found here.

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