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San Benito
June 21, 2024

Builders’ group sues Hollister over building fees

The Building Industry Association of the Bay Area is suing Hollister while claiming the city inappropriately hiked building permit fees.

The building industry association filed the lawsuit in the San Benito County Superior Court on Feb. 6. The suit alleges the city’s updated building fees approved Oct. 15, weeks before the November election, were developed through a flawed process. The builders are claiming the city did not use a “reasonable, reliable nexus” to determine the increased fees.

The plaintiffs are seeking a reexamination of the fees and attorney’s fees, according to the document.

That suit described its interpretation of the council’s update to the building fees, referring to the action as invalid and claiming Hollister violated the law by using not compiling “reasonable costs for providing regulatory service.” Those costs, according to the plaintiff, include such categories as staff time, photocopying costs and other costs directly attributable to the regulatory services.

Mayor Ignacio Velazquez, outspoken against rapid growth, reacted to the lawsuit this week and said the Building Industry Association, or BIA, has been “hanging around here lately quite a bit” and was “very active in the last campaign season.”

“For whatever reason, they’ve been attending different meetings here, lobbying people, trying to keep us from implementing slow growth,” he said. “Now they want to make sure we don’t raise fees.”

Velazquez went on: “Tell them to come and fix our roads and build our schools and all these things we’re behind on.”

The builders’ association, though, lays out an argument that the city failed to go through a proper, legal process in reformulating the fees after the last update in 2004.

The legal document describes that around June 2004, the city retained MuniFinancial to review the current fee structure and effectiveness in recovering costs for a user fee report. It argues the fees “cannot be used to generate revenue unless the fees are approved by two-thirds of the electorate.”

The 2004 study consultant also recommended adoption of the 1997 Uniform Building Code fee-setting tables like nearby jurisdictions had done, and that the council adjust the permit and inspection fees on an annual basis through wage and earning indices.

“According to the Attorney General, the use of such tables violates the statutory scheme contemplated by the Mitigation Fee Act …” according to the lawsuit.

Over the next 14 years, the city did not update the 2004 fee study or associated building permit and inspection fees, according to the suit.

“Instead of updating and evaluating its fees based on reliable data of actual costs, or a nexus study, the city used the same 2004 fee study without explaining its basis for doing so,” according to the lawsuit.

The building association argues there was no nexus to support the “significant increase” in fees and the city used the same cost methodology as the 2004 study when a building moratorium had been in place. The state ordered that building moratorium from 2002-2008 due to a 15-million-gallon sewer spill in 2002 and a belief the city’s infrastructure had not kept pace with rapid growth.

“Instead of reviewing and collecting data about its own actual costs for building permits and inspections, the City simply looked to recent increases in nearby jurisdictions and employed an automated fee escalation, which was devoid of supporting data,” the lawsuit claims.

The lawsuit also claims the following:

  • It calls the city’s increase “arbitrary and capricious and invalid as a matter of law.”
  • The BIA expects no monetary recovery from its “enforcement of this broad and important public right.”
  • The rates constitute a special tax in violation of Prop. 13 and Prop. 26 of the California Constitution.
  • The city violated public notice requirements and was barred from making the new fees effective less than 60 days after the action.

Graphics Below are Hollister Impact Fee Numbers from the city council’s October Approval:

Photo caption: Work continues on the Allendale development near the Park Hill area of Hollister on Friday.