North Murrieta Community, LLC v. City of Murrieta

Filed 6/8/20
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
NORTH MURRIETA COMMUNITY,
LLC,
E072663
Plaintiff and Appellant,
(Super.Ct.No. RIC1800423)
v.
OPINION
CITY OF MURRIETA et al.,
Defendants and Respondents.
APPEAL from the Superior Court of Riverside County. Randall S. Stamen, Judge.
Affirmed.
Cox, Castle & Nicholson and Kenneth B. Bley for Plaintiff and Appellant.
Best Best & Krieger, Jeffrey V. Dunn, and Daniel L. Richards for Respondent,
Western Riverside Council of Governments.
No appearance for Respondent, the City of Murrieta
1
Appellant, North Murrieta Community, LLC (North Murrieta), is the master
developer of a large development project in the City of Murrieta (the City) called the
Golden City Project.
As part of the planning and approval process, North Murrieta sought to take
advantage of certain statutory land use planning tools—vesting tentative maps and
development agreements—that enable builders to lock in place regulations, conditions,
and fees municipalities may enforce against them while a project proceeds. These tools
encourage development by, among other things, helping to make costs predictable despite
the fact this kind of project can take years or even decades to complete.
In July 1999, North Murrieta obtained approval for a vesting tentative map on part
of the Golden City Project property. The map locked in place fees the City could charge
the developer until the vesting tentative map expired two years later. In March 2001, four
months before the map would expire, North Murrieta and the City entered a development
agreement covering the entire Golden City Project property. The agreement extended the
term of the vesting tentative map for 15 years and also locked in place regulations and
fees the City could enforce against the developer on the entire project for the same
period.
Critically, however, the development agreement explicitly allowed the City to
impose new fees on North Murrieta to mitigate the effects of development, provided the
new fees were generally applicable and designed to address effects not fully mitigated by
fees or exactions in place when the parties entered the development agreement. The City
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subsequently passed the Western Riverside County Transportation Uniform Mitigation
Fee Program Ordinance (the TUMF ordinance), which was designed for just that purpose.
(Murrieta Ord. No. 277-03.)
In 2017, the City charged the new mitigation fees to a subsequent purchaser and
developer of a subset of the affected properties. The builder made $541,497 in TUMF
payments from July to October 2017, and the City transferred the bulk of those funds to
respondent, Western Riverside Council of Governments (WRCOG). Both the developer
and North Murrieta protested the fees. The purchaser assigned their rights to North
Murrieta, who brought a petition for writ of mandate.
North Murrieta asked the trial court to order return of the TUMF payments and
requested declarations that the City couldn’t impose the new mitigation fees under the
extended vesting tentative map until it expired in 2019 and can’t impose those fees under
the development agreement until it expires in 2021. The trial court held the development
agreement established the parties’ rights and permitted the City to impose the new fees
under the TUMF ordinance. North Murrieta appealed.
We agree with the trial court. Though the vesting tentative map limited the fees
the City could collect to those in place when the City approved the map, North Murrieta
agreed to modify those rights—both extending their duration and allowing the City to
impose new generally applicable mitigation fees—by entering the development
agreement with the City. The development agreement is a contract, which the trial court
correctly enforced. We therefore affirm the judgment.
3
I
FACTS
A. The Vesting Tentative Map and the Development Agreement
The parties largely agree on the relevant facts. In 1999, North Murrieta applied for
approval of vesting tentative map 28532 (the vesting tentative map), which covers part of
the Golden City Project area. Approval of a vesting tentative map generally precludes a
city from imposing certain conditions not in effect at the time it approves the map.
“When a local agency approves or conditionally approves a vesting tentative map, that
approval shall confer a vested right to proceed with development in substantial
compliance with . . . the ordinances, policies, and standards in effect at the time the
vesting tentative map is approved or conditionally approved.” (Gov. Code, § 66498.1; see
also Gov. Code, § 66474.2; unlabeled statutory citations refer to this code.) The City
approved North Murrieta’s application for vesting tentative map 28532 on July 28, 1999.
Developers may also obtain a measure of certainty about the costs associated with
multi-year projects by entering development agreements with municipalities. “Unless
otherwise provided by the development agreement, rules, regulations, and official
policies governing permitted uses of the land, governing density, and governing design,
improvement, and construction standards and specifications, applicable to development
of the property subject to a development agreement, shall be those rules, regulations, and
official policies in force at the time of execution of the agreement.” (§ 65866.)
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On March 6, 2001, the City and North Murrieta entered a development agreement
for the Golden City Project Specific Plan, which set out the terms and conditions for
development of the entire Golden City Project, including the property subject to vesting
tentative map 28532. The Murrieta City Council (City Council) passed Ordinance No.
230-01 adopting the development agreement on the same day.
In passing the ordinance, the City Council found the development agreement “is in
the best interest of the City because it provides for the construction of infrastructure
needed to serve development in the area; allows the City to collect fees for operational
costs for police and fire services which cannot otherwise be collected under existing City
ordinances; allows the City to impose future mitigation fees on the project if said fees are
applied throughout the City; provides funds for fire and police services and facilities
earlier than required under the previous Public Facilities Financing Plan for the project;
and is consistent with the General Plan Land Use Designation of ‘Specific Plan’, the
Golden City Specific Plan and Section 16.54 of the Murrieta Municipal Code.”
Among many other things, the agreement extended the term of the vesting
tentative map at issue in this case. Generally, such maps expire within 24 months of
approval. (§ 66452.6, subd. (a).) However, municipalities may extend them by entering
development agreements. (Ibid.) Here, the City and the developer entered a development
agreement extending the vesting tentative map—and certain of the developer’s rights
under the map—for 15 years, until March 5, 2016—the agreement’s termination date.
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The City later (on December 9, 2015) extended the term of the development agreement to
March 5, 2021.
The same section of the development agreement makes clear it froze most of the
terms, conditions, and fees the City could impose on the developer. “In extending the
duration of tentative tract maps, City shall not impose any additional conditions or fees,
or changes in design, density or other policies, rules or regulations which differ from the
original approval of the Project except as otherwise provided for herein.”
However, the agreement does purport to make two changes to the developer’s
rights. First, under the heading “Permit Conditions and Exactions (Fees and Charges),”
the agreement changes the date on which the developer’s rights vested. “The
development impact fees, user fees, linkage fees, assessments, charges, general or special
taxes, municipal financing, land dedication requirements, fees and charges . . . which may
be imposed by the City . . . are limited to those Exactions . . . currently adopted by the
City as of the Effective Date,” which we’ve noted was March 5, 2001. That’s
approximately two years later than the freeze date North Murrieta had previously
obtained for the portion of the property covered by the vesting tentative map.
Second, the same section also reserved to the City the power to impose additional
fees or to increase fees, so long as they are “effective Citywide (not specifically enacted
to apply or be discriminately adverse to SPM-5) for project impacts which are not fully
mitigated by existing fees or exactions at the time of the City’s approval of this
Development Agreement.” Though the parties haven’t submitted a copy of the vesting
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tentative map, they appear to agree it didn’t allow the City discretion to impose new
mitigation fees like the development agreement envisions.
B. The Transportation Uniform Mitigation Fee Ordinance
About two years later, on February 4, 2003, the City Council adopted the TUMF
ordinance. The ordinance originated as a program designed by WRCOG for adoption by
the authorities in its member jurisdictions, which includes the City. WRCOG’s purpose
was to have all member cities adopt the program ordinance and raise funds to improve
the regional transportation system to meet the needs of regional development.
In adopting the TUMF ordinance, the City Council found new fees were needed to
avoid traffic congestion and ensure the availability of safety services for the public. The
council found “[a]bsent a Transportation Uniform Mitigation Fee (TUMF), existing and
known future funding sources will be inadequate to provide the necessary improvements
to the Regional System, resulting in an unacceptably high level of traffic congestion
within and around Western Riverside County.” They also found “the failure to mitigate
growing traffic impacts on the Regional System within Western Riverside County will
substantially impair the ability of public safety services (police and fire) to respond. The
failure to mitigate impacts on the Regional System will adversely affect the public health,
safety and welfare.”
The ordinance provides for new mitigation fees to mitigate the effects of
development projects on transportation. “The purpose of this section is to mitigate
growing traffic impacts on the Regional System within Western Riverside County by
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collecting fees from residential and non-residential developments. The fees will be used
to construct the transportation improvements that are necessary for the safety, health and
welfare of the residential and non-residential users of the development projects on which
the TUMF will be levied.”
The TUMF ordinance applies generally to “all new development projects within
the City,” but contained a list of exceptions. Relevant here, the ordinance initially
exempted “[p]rojects with vesting tentative tract or parcel maps.” However, in 2010 the
City Council removed the exemption for projects with vesting tentative maps. This act
made the TUMF ordinance apply by its terms to the Golden City Project.
C. Imposition of TUMF
On February 5, 2015, North Murrieta completed its application for a grading
permit on a portion of the property that would be designated as tract 28532-4, which is a
portion of the property within the Golden City Project covered by vesting tentative map
1
28532.
About a year later, on February 26, 2016, the City Council approved the final map
creating tract 28532-4 and the City recorded the final map, less than a month before the
vesting tentative map and the development agreement were set to expire. On May 17,
2016, the City issued a grading permit for the lots within tract 28532-4. Typically, the
1Though the City admits North Murrieta completed its application for a grading
permit, WRCOG denied this in its answer, saying it lacked sufficient information to
admit the allegation. They claim no record evidence supports the allegation and contest
its truth on appeal. We conclude the fact isn’t relevant to deciding the case but include it
here for background.
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rights conferred by a vesting tentative map expire one year after the recording of a final
map. (Gov. Code, § 66498.5, subd. (b); Murrieta Mun. Code, § 16.96.050.C.3.) However,
the City approved an application to extend the vesting rights to March 26, 2019. As we
previously noted, the City had already extended the term of the development agreement
to March 5, 2021.
D.R. Horton is the developer of the lots within final tract 28532-4. After the City
demanded payment of additional mitigation fees, they made TUMF payments to the City
totaling $541,497 from July to October 2017. The City transferred the mitigation fees to
WRCOG, retaining only a $4 administrative fee on each transaction. Thus, WRCOG
received TUMF payments of $541,253 from D.R. Horton, and the City retained $244 as
administrative fees.
D.R. Horton and North Murrieta objected to having these fees imposed. Both
companies sent letters explaining their objections on October 5 and November 6, 2017.
According to both companies, neither the City nor WRCOG refunded the fees. On
December 5, 2017, D.R. Horton assigned to North Murrieta its claim for a refund of the
TUMF payments. Both companies submitted to the trial court declarations and copies of
the assignment to support North Murrieta’s ability to challenge the collection of the fees.
D. Petition for Writ of Mandate
On January 5, 2018, North Murrieta filed a petition for writ of mandate seeking to
recover the TUMF payments from the City and WRCOG. The petition stated three causes
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of action. In the first two, they sought refunds of the TUMF payments from the City and
WRCOG, respectively.
In the third cause of action, they asked for a declaratory judgment that TUMF
payments couldn’t be required in connection with lots in final tract map 28532-4 until
after March 26, 2019 because the City had extended the vested rights until that date. They
also asked for a declaration that TUMF payments cannot be required in connection with
any of the lots within the Golden Project Specific Plan (which includes the lots under
final tract map 28532-4) until after March 5, 2021, because the City extended the
development agreement to that date, and the agreement bars such fees.
E. Trial and Judgment
The Riverside County Superior Court held trial on November 9, 2018 and issued a
written ruling on February 4, 2019.
The trial court denied the petition on the ground the development agreement
controlled and allowed the City to require TUMF payments on lots within the map.
“Development Agreement SPM-5 was entered into under Government Code sections
65864, et seq., the Development Agreement Law. Section D.2.b., of the Development
Agreement provides that the City may impose new fees for development impact,
provided the fees: apply Citywide; are not enacted to discriminatorily apply to the subject
development; and, mitigate impacts that were not fully mitigated by the fees in existence
at the time the Development Agreement was approved by the City (March 6, 2001).
Petitioner does not argue or provide evidence contradicting the plain reading of the
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Development Agreement. It is undisputed that the TUMF was effective Citywide and that
it was not discriminately applied to developer D.R. Horton. Section 2 of the City’s
TUMF ordinance, City of Murrieta Ordinance No. 277-03, provides that the development
impact fees prior to the ordinance were insufficient and that future development required
increased fees for all developments.”
In the most basic terms, the trial court concluded the City agreed to extend the
vesting rights of the tentative map, but North Murrieta agreed the City could impose
additional, generally applicable mitigation fees if the mitigation fees already in place
were inadequate. The City determined it did need to impose additional mitigation fees
and did so in conformity with the terms of the agreement. Accordingly, the trial court
entered judgment in favor of the City and WRCOG and against North Murrieta on all
three causes of action.
North Murrieta filed a timely notice of appeal. In its opening brief, they waived
their right to recover the $244 in administrative fees the City retained from their
payments. Though they appealed the entire judgment, they seek recovery of only the fees
ultimately collected by WRCOG. Perhaps for this reason, though the City remains a party
to the appeal, they have not filed a brief, leaving it to WRCOG to defend the collection of
mitigation fees from D.R. Horton under the TUMF ordinance.
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II
ANALYSIS
North Murrieta argues the trial court erred by concluding the development
agreement governed the rights of the parties. They argue the vesting tentative map
statutes provide a way of fixing a developer’s rights that operates beyond the reach of any
2
development agreement.
It’s well established that when “a local agency approves a vesting tentative map
(§ 66498.1, subd. (b) ) or enters into a development agreement (§§ 65865, 65866), the
builder is entitled to proceed on the project under the local rules, regulations, and
ordinances in effect at the time of the approval.” (1901 First Street Owner, LLC v. Tustin
Unified School Dist. (2018) 21 Cal. App. 5th 1186, 1195.) In this case, of course, the City
approved a vesting tentative map (in 1999) and entered a development agreement
3
(in 2001) affecting the same property. The question we must resolve is whether a
subsequent development agreement can alter the builder’s vested rights under the vesting
tentative map. This is a legal question which we review independently. (Center for
2 Because North Murrieta argues the vesting tentative map statute and the City’s
act approving the vesting tentative map are the source of their rights, the parties spend
large sections of their briefs contesting whether the vesting tentative map expired at
various points over the 20 years since its approval. We conclude those arguments are
irrelevant because the development agreement validly changed North Murrieta’s rights
and the City validly imposed the new mitigation fees under the agreement’s terms.
3 Though, as we’ve noted, the development agreement covered the entire Golden
City Project, while the vesting tentative map at issue in this appeal covered only a portion
of the larger development.
12
Community Action & Environmental Justice v. City of Moreno Valley (2018) 26
Cal. App. 5th 689, 698 (Center for Community Action).)
We start by noting vesting tentative maps and development agreements share a
purpose. The Legislature enacted the vesting tentative map provisions “to freeze in place
those ‘ordinances, policies and standards in effect’ at the time the vesting tentative map
application is deemed complete . . . [and] ‘offer[] developers a degree of assurance, not
previously available, against changes in regulations.’” (Bright Development v. City of
Tracy (1993) 20 Cal. App. 4th 783, 793.) Similarly, it is “a purpose of the [development
agreement] statutory scheme that the public planning process will be strengthened and
private participation in comprehensive planning and cost reduction will be encouraged
where the applicant for a development project may receive assurances through such an
agreement that, upon approval of the project, the applicant may proceed in accordance
with existing policies, rules and regulations.” (National Parks & Conservation Assn. v.
County of Riverside (1996) 42 Cal. App. 4th 1505, 1521.)
Thus, obtaining either a vesting tentative map or entering a development
agreement allows a builder to rely on the regulations, conditions, and fees that exist at the
planning stage when assessing the economics of completing a development that may take
years or even decades to complete. “The purpose of [a] vesting tentative map and [a]
development agreement is to allow a developer who needs additional discretionary
approvals to complete a long-term development project as approved, regardless of any
intervening changes in local regulations.” (City of West Hollywood v. Beverly Towers,
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Inc. (1991) 52 Cal. 3d 1184, 1194; see also §§ 65864 [development agreements], 66498.9
[vesting tentative maps].)
North Murrieta argues the City was required to give force to the limits on fees
(and other conditions) conveyed by the approval of the vesting tentative map until that
map formally expired. They argue that would extend the map’s limitations, for the lots at
issue in this appeal, until March 26, 2019, the date to which the City extended the vesting
rights after approving the final map for tract 28532-4. We think their position misstates
the situation. A vesting tentative map doesn’t freeze regulations and fees indefinitely. The
tentative map statute, which applies to vesting tentative maps, provides all tentative maps
expire 24 months after their initial approval, though that period may be extended by
ordinance up to 12 months. (§ 66452.6, subd. (a).) Here, the City approved North
Murrieta’s vesting tentative map on July 28, 1999. That means the map—and North
Murrieta’s rights—were set to expire on July 28, 2001. (§ 66452.6, subd. (a).)
As it happens, the City and North Murrieta came to an agreement to extend the
term of the vesting tentative map by nearly 15 years. They accomplished this by entering
the development agreement. The Legislature specifically allowed “a tentative map on
property subject to a development agreement . . . may be extended for the period of time
provided for in the agreement, but not beyond the duration of the agreement.” (66452.6,
subd. (a).) So, in March 2001, when North Murrieta was four months away from losing
all the rights the vesting tentative map had conferred, they negotiated an extension of
those rights with the City as part of the development agreement concerning the entire
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Golden City Project. Without the development agreement, North Murrieta would have
lost the vesting rights; with the development agreement, they retained at least some of
those rights for an additional 15 years—20 years counting the later extension of the
agreement.
However, the terms of the development agreement make clear the City did not
agree to extend all the rights conveyed by the vesting tentative map. North Murrieta
made concessions. For one, the parties agreed the date on which the City would be barred
from imposing new fees and conditions was March 5, 2001, the effective date of the
agreement, not the date the vesting tentative map was approved. “The development
impact fees, user fees, linkage fees, assessments, charges, general or special taxes,
municipal financing, land dedication requirements, fees and charges . . . which may be
imposed by the City . . . are limited to those Exactions . . . currently adopted by the City
as of the Effective Date.”
Critically, North Murrieta also agreed to allow the City to impose new mitigation
fees under certain conditions. Under the headings “Public Improvements” and “Permit
Conditions and Exactions,” the agreement provides the City would limit various types of
fees as discussed above and would “impose only the Permitted Exactions as set forth and
described herein.”[CT 415} However, the agreement also says “the City shall have the
right to: [¶] . . . [¶] . . . impose fees, increase permit fees and or exactions provided that
they are effective Citywide (not specifically enacted to apply or be discriminately adverse
to [development agreement] SPM-5) for project impacts which are not fully mitigated by
15
existing fees or exactions at the time of the City’s approval of this Development
Agreement.” (Italics added.) The plain meaning of this provision was that the City could
charge North Murrieta new, generally applicable mitigation fees like those imposed by
the TUMF ordinance, so long as existing mitigation fees don’t already suffice.
This provision was evidently an important concession by North Murrieta. In
adopting the development agreement as an ordinance, the City Council found the
development agreement “is in the best interest of the City because it provides for the
construction of infrastructure needed to serve development in the area.” The City Council
included a short list of features of the agreement that made it notably beneficial, a list
which included the fact that the development agreement “allows the City to impose future
mitigation fees on the project if said fees are applied throughout the City.” (Murrieta Ord.
No. 230-01.)
In short, by entering the development agreement, North Murrieta agreed the City
could impose fees already in place by March 6, 2001, and also agreed the City could
impose other generally applicable fees the City determined were needed, beyond existing
fees, to mitigate effects of development. The agreement is binding on both the City and
the developer. (§ 65865.4 [“a development agreement shall be enforceable by any party
thereto notwithstanding any change in any applicable general or specific plan, zoning,
subdivision, or building regulation adopted by the city, county, or city and county
entering the agreement, which alters or amends the rules, regulations, or policies
specified in Section 65866”].) And the City must approve development agreements as
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ordinances and record the agreements to give notice to the public, especially prospective
purchasers such as D.R. Horton. (§ 65868.5 [“[T]he clerk of the legislative body shall
record with the county recorder a copy of the agreement, which shall describe the land
subject thereto. From and after the time of such recordation, the agreement shall impart
such notice thereof to all persons as is afforded by the recording laws of this state”].) The
same provision directs that “the burdens of the agreement shall be binding upon, and the
benefits of the agreement shall inure to, all successors in interest to the parties to the
agreement.” (Ibid.)
North Murrieta offers no authority—and really no reason—for thinking vesting
tentative maps impart a species of super rights that cannot be negotiated away. Nor do
they offer any reason for thinking development agreements should be treated differently
than other contractual agreements. The law says development agreements are contracts,
enforceable like normal contracts. “A development agreement ‘is an enforceable contract
between the municipality and the developer.’ [Citation.] ‘In essence, the statute allows a
city or county to freeze zoning and other land use regulation applicable to specified
property to guarantee that a developer will not be affected by changes in the standards for
government approval during the period of development.’ [Citations.] It also permits
‘municipalities to extract promises from the developers concerning financing and
17
4
construction of necessary infrastructure.’” (Center for Community Action, supra, 26
Cal.App.5th at pp. 696-697.)
North Murrieta argues the vesting tentative map provides a separate source for
their rights, unaffected by the development agreement. But this position can’t withstand
scrutiny of the terms of agreement. As our discussion reveals, altering the protections of
the vesting tentative map was an explicit and critical part of the agreement. Some
provisions benefited the developer. They obtained the City’s agreement to limit for a
period of 15 years their ability to impose new regulations, conditions, and fees not
provided for by the agreement. But some provisions benefited the City. Most importantly,
the provision giving it discretion to increase mitigation fees so long as they were
generally applicable and aimed at mitigation not already provided for. North Murrieta
can’t claim the benefit of the provisions that benefit them but disclaim the provisions that
don’t. (See Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes (2010)
191 Cal. App. 4th 435, 443-444 [“a legislatively approved development agreement gives
both parties vested contractual rights”].)
The City took advantage of the provision allowing it to impose additional
mitigation fees when it adopted the TUMF ordinance. The City Council found the new
fees were needed to avoid traffic congestion and ensure the availability of safety services
and determined the new fees were needed because “existing and known future funding
4 The sole exception is that, as a legislative act, a development agreement is
subject to referendum, but that wrinkle isn’t at issue in this case. (Center for Community
Action, supra, 26 Cal.App.5th at p. 697.)
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sources will be inadequate to provide the necessary improvements to the Regional
System.” The ordinance specifies the new mitigation fees were imposed “to mitigate
growing traffic impacts on the Regional System within Western Riverside County by
collecting fees from residential and non-residential developments” and will be used to
“construct the transportation improvements that are necessary for the safety, health and
welfare of the residential and non-residential users of the development projects on which
the TUMF will be levied.” The new fees apply generally to “all new development
projects within the City.” Though the ordinance, as initially passed in 2003, exempted
“[p]rojects with vesting tentative tract or parcel maps” the City Council removed that
exemption in 2010, which made it applicable to the Golden City Project.
We conclude the development agreement gave the City the authority to impose
new, generally applicable mitigation fees. Since North Murrieta doesn’t contest the fees
were generally applicable or imposed to mitigate effects of development not already
covered by fees existing as of March 6, 2001, they have provided no basis for concluding
the City overstepped its bounds by enacting the TUMF ordinance or charging and
collecting the fees from D.R. Horton.
North Murrieta’s complaint that the City’s imposition of additional mitigation fees
has frustrated its own and D.R. Horton’s reliance expectations is not well taken. North
Murrieta negotiated this agreement, which included the provision allowing the City to
impose new mitigation fees. The City recorded the development agreement to give notice
to prospective buyers. And D.R. Horton purchased the property with notice of the
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development agreement as well as the fact that the City had in fact imposed additional
mitigation fees. Developers are sophisticated entities, capable of and expected to conduct
due diligence to determine their rights and duties. If either North Murrieta or D.R. Horton
didn’t factor these fees into their planning, the fault lies with them.
III
DISPOSITION
We affirm the judgment. The Western Riverside Council of Governments is
entitled to their costs on appeal.
CERTIFIED FOR PUBLICATION
SLOUGH
Acting P. J.
We concur:
FIELDS
J.
RAPHAEL
J.
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