CALIFORNIA BUILDING INDUSTRY ASSOCIATION v. CITY OF SAN JOSE (AFFORDABLE HOUSING NETWORK OF SANTA CLARA COUNTY)

Respondent’s Reply Brief on the Merits

Cal.February 20, 2014

IN THE SUPREME COURT OF THE STATE OF CALIFORNIA No. 8212072 CALIFORNIA BUILDING INDUSTRYASSOCIATION, SUPREME COURT Petitioner, FILED Vv. FEB2 0 20%4 CITY OF SAN JOSE, Respondent. Frank A. McGuire Clerk Deputy AFFORDABLE HOUSING NETWORK OF SANTA CLARA COUNTY,etal., Intervenors. After an Opinion by the Court of Appeal, Sixth Appellate District (Case No. H038563) On Appeal from the Superior Court of Santa Clara County (Case No. CV167289, Honorable Socrates Manoukian, Judge) PETITIONER’S REPLY BRIEF Ons Wr e RASei DAVID P. LANFERMAN, - DAMIENM.SCHIFF, No. 235101 No. 71593 *ANTHONY L. FRANCOIS, Rutan & Tucker, LLP No. 184100 Five Palo Alto Square Pacific Legal Foundation 3000 El Camino Real, Suite 200 930 G Street Palo Alto, CA 94306-9814 Sacramento, California 95814 Telephone: (650) 320-1507 Telephone: (916) 419-7111 Facsimile: (650) 320-9905 Facsimile: (916) 419-7747 E-Mail: dlanferman@rutan.com E-mail: alf@pacificlegal.org Attorneys for Petitioner California Building Industry Association (see other sidefor additional attorney) NICK CAMMAROTA,No. 159152 California Building Industry Association 1215 K Street, Suite 1200 Sacramento, California 95814 Telephone: (916) 443-7933 E-mail: ncammarota@cbia.org PAUL CAMPOS,No. 165903 Building Industry Association of the Bay Area 101 Ygnacio Valley Road, Suite 210 Walnut Creek, California 94596-5160 Telephone: (925) 274-1365 E-mail: pcampos@biabayarea.org TABLE OF CONTENTS Page TABLE OF AUTHORITIES ........... 2.0.0 cece cece eee eee iV INTRODUCTION ....... 0.2.2.teen eens 1 I. AFFORDABLE HOUSING IS NOT ON TRIALIN THIS OFNS)6l Il. CBIA HAS NOT CHANGEDITS THEORY, OR WAIVED ITS CLAIM BELOW ......... 0.0.0 eee cence eee ene 2 Il. STERLING PARK—THE ORDINANCE EXACTS MONEY AND PROPERTY FROM HOMEBUILDERS................. 6 A. The City Ignores the Text, Purpose, and Record of Adoption of the Ordinance in Arguing ThatIt Is Not an |p.¢:(018(0)6 7 1. The Text and Record Show Thatthe City Will Record Liens Against Affordable Units ................ 7 2. The City Concedes That the Purpose and Effect of the Ordinance Is To Ensure That Only the City Can Receive Money in Excessofthe Original Affordable Cost of Affordable Units ................... 9 B. The Only Way the City Can Deny Appreciation to the BuyerIs by First Exacting That Interest from the Builder ..... 10 C. CBIA Argues That the OrdinanceIs Subject to San Remo Hotel, Not That It Is Subject to Nollan/Dolan ......... 11 IV. SANREMO HOTEL—LEGISLATIVE EXACTIONS MUST REASONABLY RELATE TO IMPACTS OF DEVELOPMENTS ON WHICH THEY AREIMPOSED ....... 12 A. Respondents Take the Terms “Means-ends” and “Mitigation” Out of Their Context in San Remo Hotel ....... 13 Page B. Intervenors Concede That the Ordinance Purports To Mitigate Impacts ofNew Home Building ................. 16 C. Patterson Properly Applies San Remo Hotel to Affordable Housing Exactions ................00 00 eee eee 18 1. Contrary to Intervenors’ Assertion, Patterson’s Fee Was Not “Expressly Intendedas a Mitigation Measure” ...... 0.0... cece cee eee teens 18 2. Contrary to the City’s Assertion, Patterson Imposed Its Fee to Fund Construction of Affordable Housing ..... 21 D. Respondents’ Discussion of the Ordinance Under the Police Power Test Is Not Relevant ...................0055 21 V. THE CITY CANNOT IMMUNIZE ITSELF FROM JUDICIAL SCRUTINY BEHIND A DISCRETIONARY WAIVER PROVISION ...... 0.0. c cece cent tte een eens 23 A. Immunizing an Unconstitutional Ordinance from aFacial Challenge Would Be Pernicious ..................0000005 25 B. No California Court Has Cited City ofNapa for Yhis Proposition 2.0...ccc ence een eee e eens 28 VI. KOONTZ CASTS DOUBT ON EARLICH’S PUBLIC ART FEE HOLDING ... 1...eeenn n ene nens 30 Vil. THE ALTERNATIVE EXACTIONS ARE NOT SEVERABLE .. 31 A. The Record Demonstrates That the Alternative Exactions Are Not Volitionally Severable ................. 31 B. City Has Not Shown What Text Would Have To Be Stricken in Order to Sever Any Provision ................. 32 CONCLUSION ........ cece ecete ete n een nnnes 32 CERTIFICATE OF COMPLIANCE............ 000.2. e eee eee 34 _ii- Page DECLARATION OF SERVICE BY MAIL .................0005. -l- - ii - TABLE OF AUTHORITIES Page Cases Action Apartment Ass’n v. City ofSanta Monica, 41 Cal. 4th 1232 20ceceeee eens 29 Associated Homebuilders, Inc. v. City of Walnut Creek, 4 Cal. 3d 582 (1971) 2.0. nee nee 22 Building Industry Association ofCentral Californiav. City ofPatterson, 171 Cal. App. 4th 886 (2009) ......... 18-21, 28-29 ~ Calfarm Ins. Co. v. Duekmejian, 48 Cal. 3d 805 (1989) .............. 31 California Building Industry Ass’n. v. City ofSan Jose, 157 Cal. Rptr. 3d 813 (2013) 2...eens7 City ofBerkeley v. City ofBerkeley Rent Stabilization Board, 27 Cal. App. 4th 951 (1994) 2.0...cceee eee 25 Ehrlich v. City ofCulver City, 12 Cal. 4th 854 (1996) ............... 30 Fisher v. City ofBerkeley, 37 Cal. 3d 644 (1984) ................05. 25 Fogarty v. City ofChico, 148 Cal. App. 4th 537 (2007) ............ 6, 11 Greater Atlanta Homebuilders Ass’n v. DeKalb County, 588 S.E.2d 694 (Ga. 2003) 2...ccc cee ee eens 29 Hensler v. City ofGlendale, 8 Cal. 4th 1 (1994) .................... 24 HomeBuilders Ass’n ofNorthern California v. City ofNapa, 90 Cal. App. 4th 188 (2001) ............. 24-25, 28-30 Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013) 2...ceeee 3-4, 12, 26, 30 McMahanv. City & County ofSan Francisco, 127 Cal. App. 4th 1368 (2005) .. 0...ccc cee eee 31 -iv- Page Palmer/Sixth Street Properties, LP v. City ofLos Angeles, 175 Cal. App. 4th 1396 (2009) 2... 0.ceeee 23 Regan v. Taxation with Representation of Wash., 461 U.S. 540 (1983) eeee eee eee net n ee eee eee teen eee eens 27 San Remo Hotel L.P. v. City & County ofSan Francisco, 27 Cal. 4th 643 (2002) 2...ceetenes passim Santa Monica Beach, Ltd. v. Superior Court, 19 Cal. 4th 952 (1999), cece nee ee eee en ee eee eee nee ene tent eee ences 22,29 Sterling Park, L.P. v. City ofPalo Alto, 57 Cal. 4th 1193 (2013) 2...ceecee eens passim State Statutes Cal. Gov’t Code § 65915 oeccceee teenies 2 Cal. Bus. & Prof. Code § 11546 2.0.0.0...cccc eee 22 Cal. Bus. & Prof. Code § 11546(e) ...... 0...eeeeee 22 Miscellaneous San Jose Mun. Code § 5.08.600(A) ........... 0.0... ccc eee ee ene 10 San Jose Mun. Code § 5.08.720(A), (D), (E) «2.0... eee eee 24 INTRODUCTION Petitioner California Building Industry Association (CBIA) hereby respectfully submits the following Reply to the Response Briefs on the Merits of the City and the Intervenors (jointly Respondents). I AFFORDABLE HOUSINGIS NOT ON TRIALIN THIS CASE Respondents’ background information on the history and reported accomplishments ofinclusionary housing in California provide some context for this case, but are not specifically germaneto the question before the Court, which is whether using residential development exactions to fund affordable housingis constitutional if there is not a reasonable relationship between the exactions and any impact of the developments. Opening Brief at 1. To the extent that Respondents’recitation implies that unconstitutional exactions are the only means offinancing affordable housing in California orin the City, CBIA submitsthat neither the law northe record supports that implication. To the contrary, CBIA’s Opening Briefdemonstratesfromthe record that the City was aware ofa range of actions that could fund its desired expenditure on affordable housing. Opening Briefat 1. The importanceofaffordable housing is not at issue in this case. The underlying dispute arises from the City’s choice of who will pay for affordable housing, and whether the method it selected is constitutional.’ I CBIA HAS NOT CHANGEDITS THEORY, OR WAIVED ITS CLAIM BELOW The City previously rehearsed this argument when it opposed this Court’s grant ofreview. In its Answerto Petition for Review,at pages 16 and 19, the City asserted that CBIA had waived any andall claims based on the Takings Clause in the courts below. This argument was specious then, as CBIA showedin its Reply in Support of Petition for Review at page 11, note 3, as well as its Opposition to the City’s Motion to Dismiss Review. The argument remains specious today. ' CBIA also notes that Respondents cite nothing in state law that either requires or even authorizes the set asides and related exactions in the Ordinance. Rather, state law generally requires density bonuses be awarded to home builders who voluntarilyprovide affordable housing. Cal. Gov’t Code § 65915 (Density Bonus Law). Despite Respondents’citations to the Housing Element Law, CBIA showedevidencein the recordattrial that the California Department ofHousing and CommunityDevelopment considers the Ordinance to be a potential constraint in the City’s housing element. RT 33:13-27; see also AA 1060 (MayorReed discussing letter from Housing and Community Development). Furthermore, Governor Brownhasrecently expressedat least some scepticism as to the efficacy of inclusionary housing as a means of increasing affordable housing. Governor’s Veto Message for Assembly Bill 1229 of 2013 (“As Mayor of Oakland, I saw howdifficult it can be to attract development to low and middle income communities. Requiring developers to include below-marketunits in their projects can exacerbate these challenges, even while not meaningfully increasing the amount of affordable housing in a given community.”). CBIA’s complaint expressly invokesthe state and federal constitutional standards governing exactions and conditions ofdevelopmentapproval,as set forth in San Remo Hotel L.P. v. City & County ofSan Francisco. Complaint 427, page 10 (AA 0010). A cursory examination ofSan Remo Hotel informs the attentive readerthat the constitutional standards applicable to development exactions established in that case are based on the California Constitution’s Takings Clause, as informed by the United States Supreme Court’s case law interpreting the United States Constitution’s Takings Clause. 27 Cal. 4th 643, 649, 663-64 (2002). Thereare at least two species ofclaims that arise under the federal and state Takings Clauses. One is a claim for compensation whenproperty has been taken, which includes regulatory takings as well as physical invasions of property. As repeatedly stated below (in response to the City’s repeated assertion of legal principles applicable generally only to regulatory takings cases), that is not this case. CBIA does not seek compensationforitself orits members, and has not alleged that the Ordinance has worked a regulatory taking of any property. CBIA makesa different species of claim under the Takings Clause, specifically that the Ordinance violates the unconstitutional conditions doctrine, as applied to developmentexactions. See Koontz v. St. Johns River WaterManagementDistrict, 133 S. Ct. 2586, 2594 (2013) (“[A]n overarching principle, known asthe unconstitutional conditions doctrine, . . . vindicates the Constitution’s enumerated rights by preventing the governmentfrom coercing people into giving them up.”). Koontz is instructive in clarifying that the unconstitutional conditions doctrine holds that a “government’s demand for property can violate the Takings Clause”evenifno property is actually taken from the plaintiff. Jd. at 2596. Extortionate demands for property in the land-use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burdenthe right not to have property taken without just compensation. As in other unconstitutional conditions cases in which someonerefuses to cede a constitutional right in the face of coercive pressure, the impermissible denial of a government benefit is a constitutionally cognizable injury. Id. CBIAhasprosecuted an unconstitutional conditions claim against the Ordinance throughoutthis litigation, starting with the Complaint (AA 0010), proceeding throughpre-trial briefing, see Plaintiff's Opening Trial Briefat 9- 10 (AA 0319-0320), and at trial, see RT 34:21-35:7; 74:18-23; and 75:1-S. CBIA consistently defended this claim in the appellate court below. Respondents Brief in the Court ofAppeal at 2. And CBIApresented exactly this claim to this Court in its Petition for Review at 1-2, and its Opening Brief at 1-2, 9, 17. Throughoutthis litigation, the City has pressed the simplistic argument that any claim for relief premised on the Takings Clause can only be a -4- regulatory takings-based compensation claim, subject to the ripeness and exhaustion requirements that apply in regulatory takings claims. The current iteration of that argument appears in the City’s Response Brief at 22-25. CBIAhasconsistently and patiently rebutted this error andclarified thatit is litigating an unconstitutional conditions claim andis not seeking compensation for a taking ofproperty, as actually evidencedbythecitationsto the recordin the City’s Response Brief at 17-19. See, e.g., Plaintiff's Post-Trial Briefat 2:14-19, AA 3321 (“Plaintiffdoes not allege that anypropertyhas been‘taken’ by the Ordinance, nor doesit seek ‘just compensation’ from the City.”); RT 34:21-35:7 (clarifying that this is an unconstitutional conditions case, not a compensation or regulatory takings case); RT 74:18-23 (same). These rebuttals have been greetedbythe City’s now oft-repeatedrefrain that any claim related to the Takings Clause has been waived, as though using the word “taking” to describe (and disclaim) a compensation claim based on a regulatory taking bars an unconstitutional conditions claim merely because that claim also arises under the Takings Clause. CBIAidentified the constitutional basis of its claim in both thetrial court and the court of appeal, repeatedly citing the rule in San Remo Hotel, whichis itself based on the State and (by application of federal decisions in San Remo Hotel) federal Takings Clauses. CBIA did notdisclaim anyandall claimsarising under the federal or state constitutional Takings Clauses, and could not have, since those constitutional provisionsare the basis for the rule in San Remo Hotel. CBIA repeatedly made clear that it was bringing an unconstitutional conditions claim under the Takings Clause and San Remo Hotel, while not bringing a compensation claim for a regulatory taking of property. And, as explained above, CBIA hasnotreverseditselfin this Court. iil STERLING PARK—THE ORDINANCE EXACTS MONEY AND PROPERTY FROM HOME BUILDERS Contrary to the concerns raised by Respondents, CBIA does not argue that all development conditions are subject to the rule in San Remo Hotel. Rather, CBIA argues that those development conditions which exact money or property are subject to San Remo Hotel, and that the Court’s recent decision in Sterling Park, L.P. v. City ofPalo Alto provides the test for identifying whethera condition is an exaction. 57 Cal. 4th 1193, 1204 (2013). Exactions transfer cash or property, while mere land use regulations and related conditions simply limit use of the property without transferring cash or property. /d.; Fogarty v. City ofChico, 148 Cal. App. 4th 537, 543-44 (2007). CBIA’s Opening Brief, at 27-31, applies this test to the Ordinance’s basic set aside requirement and each ofthe alternatives, for both for-sale and rental homes, and taking into account the long-term restrictions applicable to each housing type. The Ordinance meetsthe Sterling Park definition ofexactions, and as suchis not a mere land use regulation. Sterling Park, 57 Cal. 4th at 1207. The court ofappeal below erroneously held that the Ordinanceis simply a land use regulation, California Building Industry Ass’n. v. City ofSan Jose, 157 Cal. Rptr. 3d 813, 824 (2013), and thus erroneously held that as a land use regulation it was only subject to scrutiny as an exercise of the police power. A. The City Ignores the Text, Purpose, and Record of Adoption of the Ordinancein Arguing That It Is Not an Exaction The City argues that the long-term restrictions in the Ordinance “will not necessarily result” in the recordation ofliens against affordable units. This is belied by the text of the Ordinance andthe record, and missesthe point in any event. 1. The Text and Record Show Thatthe City Will Record Liens Against Affordable Units The City states that “documents may be recorded against a development”but that this will not “necessarily result in the City acquiring a recorded lien or other compensable property interest.” City’s Response Brief at 43-44. But the Ordinanceactually states: The inclusionary housing guidelines shall include standard documents, in a form approvedby the city attorney, to ensure the continued affordability of the inclusionary units .... The documents may include, but are not limited to, inclusionary housing agreements, regulatory agreements, promissory notes, deedsoftrust, resale restrictions, rights of first refusal, options to purchase, and/or other documents, and shall be recorded against... all inclusionary units... . SJMC § 5.08.600(A), AA 0700-01 (emphasis added). It is not at all clear which ofthese documents (promissory notes, deedsoftrust, resale restrictions, etc.), if any of them, would not be a transfer of an interest in the affordable units to the City. The City certainly does not explain how anyofthese would not be an interest in the affordable units. Therecord disclosesthat the City will implement the Ordinance’s long- term restrictions by recordingliens that function as a second mortgage against the affordable unit. AA 1250, 1253-55 (November 19 staff presentation to Planning Commission). This staffpresentation describes the lien mechanism andresults in detail, without reference to any other means ofimplementing the long-term restrictions, and without describingit as a tentative or preliminary plan. So while the City arguesthat it theoretically could proceed in a different manner, the record demonstrates that the City will acquire a lien against affordable units that operates as a second mortgage on the home. 2. The City Concedes That the Purpose and Effect of the Ordinance Is To Ensure That Only the City Can Receive Moneyin Excess of the Original Affordable Cost of Affordable Units The City concedes that the purpose and effect of any long-term restriction on the for-sale affordable units is to ensure that in the event of a subsequentsale to a non-eligible buyerat the prevailing marketprice,it is the City, and only the City, that will receive the cash difference between the original affordable price and the prevailing market price at subsequentresale. _8- City’s Response Brief at 43; see SIMC § 5.08.600(A), AA 0701. See also Krutko November 26 Memorandum to City Council, page 6, AA 1133 (explaining operation ofshared equity and recapture provision). Sothe effect of any document recorded against an affordable unit would beto securethis cash benefit to the City. The receipt ofsuch cashis an exaction, andthe right to receive it is transferred by the Ordinance from the builder to the City, regardless of which recorded instrument accomplishesthe task. B. The Only Way the City Can Deny Appreciation to the BuyerIs by First Exacting That Interest from the Builder The City also argues that “the shared appreciation provisions will not operate against a developer but against subsequent purchasers.” City’s Response Brief at 44. Thisis incorrect in two respects. First, there are two quanta ofcash value that the long-term restrictions capture. Thefirst is the spread betweenthe marketand affordable price at the time oforiginal sale. The secondis the appreciation abovethe original market price. SJMC § 5.08.600(A), AA 0701. The right to the initial “market- affordable” cash spreadis always exacted from the builder and transferred via the recorded long-term restrictions to the City. It is not exacted from the subsequent purchaser. See Opening Brief at 26 n.13; 28 n.14. -9- Second, the reason the City is able to deprive the original affordable homepurchaserof the cash appreciation value on resale is because the right to receive that money has already been exacted from the builder prior to the original sale. Stated from the purchaser’s perspective, the builder would not have been abletosell the purchaserthis right, because the builder would have already transferred that interest to the City via the recorded long-term restrictions under the Ordinance. C. CBIA Argues That the Ordinance Is Subject to San Remo Hotel, Not That It Is Subject to Nollan/Dolan Intervenors claim that CBIAis trying to use the Sterling Park decision as a back door means of applying Nollan/Dolan scrutiny to legislative exactions. Intervenors’ Response Brief at 34. This is manifestly incorrect. CBIA argues that San Remo Hotel, not Nollan/Dolan, apply to legislative affordable housing exactions such as the Ordinance. Opening Briefat1, 9, 17- 19, 31. CBIA’s argumentas to Sterling Park is that this recent decision, by providinga clear distinction between exactions andland use regulations,also provides the appropriate test for determining when San Remo Hotelapplies. Opening Brief at 25,31. CBIAalso notes that the court, in Sterling Park, did not interpret the term “other exaction”in the Mitigation Fee Act solely with reference to the Act. Instead, the court started with the “usual and ordinary meaning of the word” as used in Fogarty v. City ofChico, and then applied that general meaning of the term to the Mitigation Fee Act. 57 Cal. 4th at -10- 1204 (citing Fogarty, 148 Cal. App. 4th at 543-44). So, Sterling Park’ s definition of the term “exaction”is not limited to the Mitigation Fee Act. San Remo Hotel directly addresses development fees, while Sterling Park addresses an integrated program ofaffordable housingset asides and in- lieu alternatives, which the Court found to be exactions underthe Mitigation Fee Act. Sterling Park, 57 Cal. 4th at 1196, 1208. Both of these types of development conditions are “functionally equivalent” exactions, Koontz, 133 S. Ct. at 2599, and there would be noreasonto afford a lowerlevelofscrutiny to property interest exactions than San Remo Hotel affords to in-liew fees. Cf San Remo Hotel, 27 Cal. 4th at 671 (property interests generally entitled to greater protection than payments ofmoney). Applying San Remo Hotel only to in-lieu fees while applying a lower, police powerlevel of scrutiny to other property exactions would provide an easily abused protocol for local governments to legislatively exact more significant property interests while withdrawing or reducing the availability of in-lieu fees. IV SANREMO HOTEL—LEGISLATIVE EXACTIONS MUST REASONABLY RELATE TO IMPACTS OF DEVELOPMENTS ON WHICH THEY ARE IMPOSED The appellate court below erred in ruling that San Remo Hotel did not apply to the Ordinance because the Court’s decision in the case only applies -I1- to mitigation measures. Opening Briefat 31-35. Respondentstake this a step further by arguing that San Remo Hotelis not really even a mitigation fee case. A. Respondents Take the Terms “Means-ends” and “Mitigation” Out of Their Context in San Remo Hotel The text ofthe Court’s opinion in San Remo Hotel showsthat the court did not intendthe rule in that case to apply only whena city purposelyjustified an exaction as a mitigation measure. Instead, the court intended that the reasonablerelation to deleterious public impacts formula to applyto all in-lieu fees and related exactions. To begin with, in surveying federal exactions decisions, the court describes the Nollan/Dolan test as a relationship between an “exaction andits purposes”andalso states in the same discussion that the test identifies the “required degree ofconnection betweenthe exactionsandthe projected impact of the proposed development.” San Remo Hotel, 27 Cal. 4th at 666. Thatis, the court used a less precise “means-ends” terminology even in describing Nollan/Dolan, which CBIA doubts even Respondents would characterize as an everyday“relationship to legitimate public purposes”test. Butthe crux ofthe matter arises in the court’s discussion ofthe Hotel’s “zoning for sale” hypothetical. 27 Cal. 4th at 670-71. The San Remo Hotel posited that without Nollan/Dolan scrutiny, a city could zone every parcel for a single uniform use, and then offer variancesfor arbitrary prices to those who wanted to build other types of developments. Jd. at 670. The court’s -12- subsequentdescription of the “deleterious public impacts” rule is entirely in responseto this hypothetical. Jd. at 671. “A city council that charged extortionate fees for all property development, unjustifiable by mitigation needs, wouldlikely face widespread and well-financed opposition at the next election.” Jd. (emphasis added). That is the context in which the court then said,“Norare plaintiffs correct that . . legislatively imposed development mitigation fees are subject to no meaningful means-ends review. As a matter of both statutory and constitutional law, such fees must bear a reasonable relationship, in both intended use and amount,to the deleterious public impact ofthe development.” Id. (citations omitted). That is to say, even if a city council imposed exactions that are not intended to mitigate any harm caused by development, those fees would still have to pass the test of whether they are reasonably related (in purpose and amount) to impacts proximately caused by the developments on which they are imposed. The tone of the court’s response to the Hotel’s hypothetical suggests that it soundedslightly absurd, at the time, that a local government would even attempt to impose fees that did not at least purport to mitigate some harm caused by development.” Andyet, despite the remote likeliness of such a program of exactions, the court in San Remo Hotel explained the standard that such fees “unjustifiable bymitigation needs” would * In this case the City claimsit has done exactly that. - 13- have to meet. “Plaintiffs’ hypothetical city could only “put[its] zoning up for sale” in the mannerdescribedifthe “prices” charged, and the intended use of the proceeds, bore a reasonable relationship to the impacts of the various developmentintensity levels on public resources and interests.” Jd. at 671. The court stated the test a city would face if it imposed fees and other exactions which were not intended to mitigate any harm caused by development (as the City claims to be doing in this case). “While the relationship between means and endsneed notbe so close or so thoroughly established for legislatively imposed fees as for ad hoc fees subject to Ehrlich, the arbitrary and extortionate use of purported mitigation fees, even where legislatively mandated, will not pass constitutional muster.” Jd. The use of the terms “means and ends” and “mitigation” in this last sentence do not limit the rule in San Remo Hotel only to those legislative exactions whose proponentslack the creativity to describe them as something other than mitigation fees. This sentence doesnot establishthat theruleisjust a particular version of the “reasonable relationship to a legitimate public purpose”test. Respondents would not describe the No/lan/Dolantest this way, but that is one waythe court in one sentence describedthat test (“exaction and its purposes”). Similarly, the court’s reference to means and ends cannot be taken as a shorthand way of saying that the entire San Remo Hotel decisionis -14- just a particular caseofthe ordinary test applicable to exercises ofthe police power. Justice Baxter’s partial concurrence in San Remo Hotel certainly does not read the majority the way Respondents do. Hestates the rule in the majority opinion withoutreference to mitigation atall, simply stating that the tule applies to “in-lieu fees.” Jd. at 686-87 “[T]his formulation makesplain that something moreis required than mererational-basis review[.]” /d. at 687. In describing what he would have added to furtherclarify the test, he states that the “subjects of the inquiry” are “the governmental regulation and the public impact of the development” without qualifying the regulation as a mitigation measure. Id. B. Intervenors Concede That the Ordinance Purports To Mitigate Impacts of New HomeBuilding Given Respondents’ argument that San Remo Hotel only applies where an exaction is intended to mitigate harms caused by development,it is hard to know what to make ofIntervenors’ argumentthat the Ordinancereally is a mitigation measureafter all, Intervenors’ Response Brief at 53-55, directly counter to almost all ofRespondents’ argumentsattrial, Opening Briefat 1 1- 12. The trial court found no evidence in the record to support any reasonablerelationship between the Ordinance and anynegative impact ofnew residential development. AA 3353. Respondents’briefs attrial, on appeal, -15- and in this Court cite no such evidencein the record, andthere is no indication that this finding is seriously challenged on appeal. City’s Opening Brief on Appeal at 21 (“the pertinent facts are undisputed”). CBIA,forits part, carried any burdenit had of showingthat the record wasdevoid of such evidence. Opening Brief at 10-11 (citing to the record), 39 (same, and discussing burden ofproof). But Intervenors’ argument on this point raises a significant question about their narrow and limited view of San Remo Hotel. How does one determine if a fee is a mitigation fee or not for purposes of applying their rewritten San Remo Hotel test? In this case, the Ordinance purports, on its face, to mitigate certain supposed impacts, but the City and Intervenors disclaimedattrial that it was intended to do so. What determines whether San Remo Hotel applies, under their test, other than their litigation position? The only sound answerto this question is that San Remo Hotel applies regardless ofhow the adopting authority characterizes the exaction, either on its face, in the record,or in its litigation positions. C. Patterson Properly Applies San Remo Hotel to Affordable Housing Exactions CBIA’s Opening Brief shows that City ofPatterson properly applies San Remo Hotel to affordable housing in-lieu fees, and that the court ofappeal erroneously distinguished City of Patterson. Opening Brief at 19-23. -16- Respondents’ make two spurious arguments in the effort to manufacture a distinction between City ofPatterson and this case: that the fee in City of Patterson “was explicitly designed to address the impacts of new development,” Intervenors’ Response Brief at 30 (emphasis in original), and that the fee in City of Patterson was not dedicated solely for affordable housing purposes, City’s Response Briefat 40. 1. Contrary to Intervenors’ Assertion, Patterson’s Fee Was Not “Expressly Intended as a Mitigation Measure” BuildingIndustryAssociation ofCentral California v. City ofPatterson surveys the history of the affordable housing fee increase at issue, andrecites the underlying study’s title as “Development Impact’ Fee Justification Study 2005/06 Update,” referring to it subsequently as the Fee Justification Study. 171 Cal. App. 4th 886, 891 (2009). The Fee Justification Study calculated the amount necessary to provide affordable housing subsidies to three different incomeclassifications, id. at 891-92, then multiplied these amounts by the number of units needed in each category (based on the number of such units assigned by the county in the current Regional Housing Needs Assessment)to reach “the total amountofthe subsidy needed for affordable housing” of$73.5 * This single occurrence ofthe word “impact”is the only pointin the opinion that remotely characterizes Patterson’s $20,000 fee increase as a mitigation fee. Everything else in the opinion showsnotonly that it was not a mitigation fee, but that Patterson neverreally intendedit as such. -17- million, id. at 892 n.6-7. Finally, the Study spreadthis figure overthe city’s then current stock of 5,507 entitled units to arrive at just under $21,000 per unit. City ofPatterson held that Patterson’s affordable housing fee was not substantively different from San Francisco’s Housing Conversion Ordinance, and thus was subject to San Remo Hotel. Id. at 898. The common features that the court ofappeallisted were that they were both formulaic, legislatively mandated fees imposed as conditions to developing property, not ad hoc exactions. Jd. The court of appeal then concludedthat Patterson’s fee would only meet the San Remo Hotel standardifthere was a reasonablerelationship between the increased amountofthe fee and “the deleterious public impact of the development.” /d. (citing San Remo Hotel, 27 Cal. 4th at 671). The court of appeal noted that Patterson had stated conclusorily that the Study “clearly showsthe needfor affordable housing generatedbythe new construction.” Jd. The court went on to explain that its own review of the record revealed no evidenceat all for this proposition, but instead that the new fee was based solely on the numberandcostofthe affordable units assigned to Patterson by the county in the Regional Housing Needs Assessment. /d. at 898-99. So the case does not support the Intervenors’ characterization of either the fee or the court of appeal’s reasoning. The court’s recitation ofthe facts ofthe Fee Justification Study, 171 Cal. App. 4th at 891-92, showsthat the fee - 18 - was not designed to mitigate any impacts of new development, and the subsequentdiscussion showsthere was no other evidencein the record “that demonstrates or implies that the increased fee was reasonably related to the need for affordable housing associated with the project,” id. at 898-99. The characterofthe discussion in City ofPatterson belies Intervenors’ description in at least two ways. First, the court of appeal did not hold that San Remo Hotel applied because Patterson claimed at argumentorin its briefs that the affordable housing fee was a mitigation measure. Rather, the court ofappeal so held because the fees in both cases were formulaic,legislatively mandated development fees. Second, the court acknowledged that Patterson argued, conclusorily, that the increased fee was based on impacts ofthe development, without saying that this had anything to do with whySan Remo Hotelapplied. Rather, this observation occurs after the court ofappeal had already concluded that San Remo Hotel applied. The court expressly found that there was no evidenceto support Patterson’s assertion anywherein the record. It is obvious from the discussion that the purpose of the fee in City of Patterson was completely unrelated to the new homeson whichit was imposed. Instead,its purpose wasto collect enough cash to build enough units to meet the city’s assignment in the regional housing needs assessment from the county. Patterson’s forlorn effort to claim its $20,000 increase was a mitigation feeis -19- not why San Remo Hotel applied in that case. But it is part of why the fee failed the San Remo Hoteltest in that case. 2. Contrary to the City’s Assertion, Patterson Imposed Its Fee to Fund Construction of Affordable Housing Asdiscussed above, the fee in City ofPatterson was calculated in an amount necessary to fully fund the construction of 642 units of affordable housing. 171 Cal. App. 4th at 899. There is nothing CBIA canfind in City of Patterson to suggest that the affordable housing fee could be used for anything other than affordable housing. This is not a basis for distinguishing City of Patterson from this case. D. Respondents’ Discussion of the Ordinance Underthe Police Power Test Is Not Relevant These arguments, in City’s Response Brief at 26-29, and Intervenors’ ResponseBriefat 41-53, all rest on the position that the court ofappeal below properly held that the Ordinance should bejudged merely as an exercise ofthe police power. Since that is not the proper standard in this case, these argumentsare not relevant.’ If the Court were to hold that this is the proper test, then the case should be remandedtothetrial court, as the court ofappeal ruled. 157 Cal. Rptr. 3d at 825. * It is possible that an exaction would have to meet both the San Remo Hotel standard andthe police powertest, in a case in whichthe plaintiff challenged both the relationship of an exaction to a development’s impacts andthat the purposeofthe exaction was nota legitimate state interest. - 20 - Noris Respondent’s reliance on Associated Homebuilders, Inc. v. City ofWalnut Creek, 4 Cal. 3d 582 (1971), well placed. That case upheld the City of Walnut Creek’s implementation of California Business and Professions Code section 11546, which authorized cities or counties to require, as a condition ofnon-industrial subdivisionmap approval, that developers dedicate land for parks and recreation, provided that, amongothercriteria, “the amount and location of land to be dedicated or the fees to be paid shall bear a reasonable relationship to the use of the park and recreational facilities by future inhabitants of the subdivision.” 4 Cal. 3d at 635-36 (quoting Cal. Bus. & Prof. Code § 11546(e)). This criteria for authorizing recreational and park land exactionsis essentially what became the San Remo Hotel test. So, City of Walnut Creek cannot support the argument that no such relationship need be shown in this case. Respondentalso cites to Santa Monica Beach, Ltd. v. Superior Court, 19 Cal. 4th 952 (1999), for the argumentthatthe set aside provision should be considereda price control, similar to the rent control context. However, there are critical distinctions between the Ordinanceand rent control. Amongthese differences, rent control applies outside ofthe developmentpermitting context. See,e.g., id. at 957. State law also ensures the right ofrental property owners whoare subject to rent control lawsto set the initial rental rate and to remove the unit from the rental market and sell it. See, e.g., Palmer/Sixth Street -21- Properties, LP v. City of Los Angeles, 175 Cal. App. 4th 1396 (2009) (Los Angeles affordable rental housing ordinance pre-empted by Costa- Hawkins Act). More fundamentally, though, rent control does not involve the transfer of the rental owner’s property or cash to the local governmentin the way that the exactions in the Ordinance do. Through the long term restrictions, the Ordinance ensures that the City ultimately receives the difference between the affordable and market price of the affordable units. The Ordinanceis not a price control. Instead,it controls who actually receives the marketprice, by transferring the right to receive the market price from the builder to the City. Vv THE CITY CANNOT IMMUNIZE ITSELF FROM JUDICIAL SCRUTINY BEHIND A DISCRETIONARY WAIVER PROVISION Respondents arguethat the City is immunefrom a facial constitutional challenge to the validity of the Ordinance, because the Ordinance allows the City the discretion to adjust, reduce, or waive the requirements following an adjudicatory process in which the City would make an ad hoc determination as to whether (a) the Ordinance either violated San Remo Hotel or took property in violation ofthe state or federal Constitutions, and (b) the extent of -2)- adjustment, reduction, or waiver. SJMC § 5.08.720(A), (D), (E).. This argumentrests on the decision in Home Builders Ass’n ofNorthern California v. City ofNapa, 90 Cal. App. 4th 188 (2001). City ofNapa was a facial claim that the Napa inclusionary housing ordinance was a regulatory taking, using the Agins rule which was then understoodto state the appropriate test. /d. at 195. The court ofappealin that case applied what the Opinion below described as the “stricter” version of standardfora facial challenge, stating that a regulation could only befacially invalidifit did not permit constitutional application. Jd. The court framed the facial challenge this way because it viewed the claim as “predicated on the theory that “the mere enactment of the . . . ordinance worked a taking of plaintiff's property ....” Jd. at 194 (citing Hensler v. City ofGlendale, 8 Cal. Ath 1, 24 (1994)). From that premise, the court concludedthat “[s]ince the City has the ability to waive the requirements imposed by the ordinance, the ordinance cannotand doesnot, onits face, result in a taking.” Jd. City ofNapa foundthat the ordinance substantially advanced a legitimate state interest. Jd. at 195-96. In discussing plaintiff's due process claim, Napa again briefly discussed administrative relief as preventing facial challenge,this time citing ° This strategem would convert every permit that followedthis procedureinto an ad hoc permit, because the Ordinance provides wide discretion to the City to limit, reduce, or waive the requirements, based on adjudicatory factfinding about the impact of the developmenton the need for affordable housing and the relationship of the Ordinance’s exactionsto that impact. -23- Fisherv. City ofBerkeley, 37 Cal. 3d 644, 684 (1984), and City ofBerkeley v. City ofBerkeley Rent Stabilization Board, 27 Cal. App. 4th 951, 962 (1994). There are some important limitations to City ofNapa that distinguish it from this case. It does not employ the samestandardfor a facial challenge as employed in San Remo Hotel (generality or great majority of cases). It treats Napa inclusionary housing ordinanceas a generally applicable land use regulation, 90 Cal. App. 4th at 194-95, whichis at odds with the court’s recent decision in Sterling Park. City ofNapa also does not discuss any long-term affordability provisions of Napa’s ordinance. And, City ofNapa has never been relied on by any California court for the “waiver” rule for which Respondents argue. A. Immunizing an Unconstitutional Ordinance from aFacial Challenge Would Be Pernicious The Court should not adopt or apply the waiverrule as Intervenors have argued for it in this case. In the context of an unconstitutional conditions claim, where the harm imposedis asking people to waivetheir constitutional rights as a condition of government action, Koontz, 133 S. Ct. at 2596, there is no sound reason for allowing cities to avoid facial constitutional scrutiny simplyby inserting a self-serving waiver provision in an ordinance. This is not a question ofwhethera plaintiff who brings a regulatory takings claims must -24- first exhaust administrative remedies. We are not addressing a regulatory takings challengein this case. Respondents’ desired waiverprinciple is only discussedin the context of this case, but the unconstitutional conditions doctrine extends far beyond development exactions. See Koontz, 133 S. Ct. at 2594(listing examples). If a city can insulate itself from facial attack under the unconstitutional conditions doctrine by reserving the powerto essentially ignore its enactment, such a “waiver rule” would perforce immunize the following hypothetical ordinances: A city adopts an ordinancerestricting the display ofall yard signs, without any exception for political signs. A provision allowsthe city code enforcementoffice to waive the ban on a discretionary basis where residents can demonstrate that the ordinance operates as a prior constraintontheir First Amendmentrights. A county adopts an ordinancelimiting the ability ofmobile home park owners to rent homes or spaces to undocumented immigrants, which is immediately effective and requires owners to evict current tenants who are undocumented immigrants. The ordinance allows the county public works department to waive the prohibition in the event mobile home park owners demonstrate that their vested right in currently lawful useoftheir propertyis impaired. -25- Respondents propose no limiting principle that would prevent their “waiver rule” from insulating either ofthese ordinances from facial challenge under the unconstitutional conditions doctrine. In both cases, it is evident that the sole purpose ofthe waiver provisionis to both avoid facial challenge and to limit, by its practical effect, the numberofpeople that will avail themselves ofthe relief and to impose hurdles before those few whowill seek relieffrom the Ordinance. Seen from this perspective, the Court should consider the Ordinance’s waiver provision as aggravating the unconstitutionality of the Ordinance, not aS mitigating it. The very basis of the unconstitutional conditions doctrineis that “the government may not deny a benefit to a person because he exercises a constitutional right.” Regan v. Taxation with Representation ofWash., 461 U.S. 540, 545 (1983). The structure ofthe Ordinance’s waiverprovision turns this right on its head, by requiring those whohold the right (to be free of coercive demands to waive their right to just compensation) to demonstrate that they even have the right in the first place. Respondents’ waiver rule should be rejected. CBIA also notes the irony of the showing required to be afforded discretionary reliefunder the Ordinance’s waiverprovision. Respondents have arguedthroughoutthis litigation that the City has no obligation to demonstrate any relationship between the exactionsin the Ordinance and the impact ofany - 26 - newresidential project, and that the Ordinanceis not subject to review under San Remo Hotel. Opening Brief at 11-13 (citations to the trial record). At the same time, Respondents argue that the Ordinance is immune from facial challenge becauseit includes a provision that gives it discretion to adjust, reduce, or waive the exactions based on an applicant showing that the Ordinance violates San Remo Hotelas to a singleproject. B. No California Court Has Cited City ofNapa for Yhis Proposition City ofNapa has not been relied upon by California courts for the propositions that are salient to this case. San Remo Hotel, decided within a year of City of Napa, does not cite it at all.° Given their very different treatment of housing exactions, this Court’s decision in San Remo Hotel prevails as to what test applies to affordable housing exactions. City of Patterson, 171 Cal. App.4th at 898 n.14. Similarly, Sterling Park did not cite City ofNapa in its discussion of whether Palo Alto’s affordable housing set aside was an exaction under the Mitigation Fee Acct. Nor have other California courts relied on City ofNapa’s “waiver” tule.’ The Opinion below does not address the City’s waiver argument, ° IfRespondents were correct aboutthe narrow scope ofSan Remo Hotel, one might expect to see City ofNapa cited therein, making clear that San Remo Hotelis really just a police powercase. ’ City ofNapa is noted in Greater Atlanta Homebuilders Ass'n v. DeKalb (continued...) 27 - because the court below did not apply what it described as the “stricter” version ofthe standard for facial challenges. 157 Cal. Rptr. 3d at 813, 818 &19 n.6.° The Opinion doescite City ofNapa’srulingthatan inclusionary housing ordinance substantially advances the important government interest of providing affordable housing, 157 Cal. Rptr. 3d at 819, but whetherthat is the correct standard is of course the issue before this Court, so City ofNapais hardly controlling. The court ofappeal in Action Apartment Ass’n v. City ofSanta Monica also declined to address a waiver argument premised on City ofNapa. 166 Cal. App. 4th 456, 471 (2008). City ofPatterson distinguishes City ofNapa becauseit was a facial challenge without an as-applied challenge, and it was decided prior to San Remo Hotel. Patterson, 171 Cal. App. 4th at 898 n.14. At best, City ofNapa, properly read as a regulatory taking case, stands for the truism that a facial regulatory takings claim will almost always face 7 (...continued) County, 588 S.E.2d 694, 697 n.13 (Ga. 2003), for the ability of “special exceptions and administrative appeals” to defeat a facial regulatory takings claim. However,like City ofNapa, this case was a regulatory takings claim, andthe tree preservation ordinance in question wasnot an exaction but a land use regulation (“it only regulates the way in which new and existing trees must be managed during the development process”’) under the Fogarty/SterlingPark test for land use regulations. 8 The Opinion doesnot say the court ofappeal declinedthis analysis based on CBIA’s disclaimer of regulatory takings(i.e., compensation) claims. - 28 - ripeness and exhaustion defenses. But sincethis is not a regulatory takings case, City ofNapais not on point. VI KOONTZCASTS DOUBT ON EHRLICH’S PUBLIC ART FEE HOLDING Respondents misconstrue CBIA’s argument as to Koontz and Ehrlich v. City of Culver City, 12 Cal. 4th 854 (1996). CBIA does not argue that Koontz requires the Court to revisit whether Nollan and Dolan apply to legislative exactions. Instead, CBIA argues that Koontz and SterlingPark call into question the Court’s holding in Ehrlich that Culver City’s art in public placesin-lieu fee was properly considered an aesthetic zoning law reviewable as an exercise ofthe police power. Opening Brief at 35-38. This argumentis germane because the court of appeal below held that the Ordinance is reviewable as an exercise ofthe police power, as though it were a generalland use or zoning law. Koontz’ equationofin-lieu fees as functionally equivalent to other land use exactions, along with Sterling Park’s definition of the distinction between exactions and land use regulations, both suggest that Ehrlich’s holding that in-lieu fees can be equivalent to land use or zoning regulations should berevisited. Vil THE ALTERNATIVE EXACTIONS ARE NOT SEVERABLE -29 - The Court should notseverthe alternative complianceprovisionsofthe Ordinance. A. The Record Demonstrates That the Alternative Exactions Are Not Volitionally Severable California case law prescribes “three criteria for severability: the invalid provision must be grammatically, functionally, and volitionally separable.” Calfarm Ins. Co. v. Duekmejian, 48 Cal. 3d 805, 821 (1989). Ail three criteria must be satisfied. McMahanv. City & County ofSan Francisco, 127 Cal. App. 4th 1368, 1374 (2005)(citation omitted). There is no showing that the alternative complianceprovisionsofthe Ordinance are volitionally severable. Instead, the January 12, 2010, presentation made by City staff to the City Council when it adopted the Ordinance,consisting of 16 slides, AA 0846 - 0861, discusses the alternatives in seven ofthe slides. In three of theslides, the alternatives are set out side- by-side with the basic set aside requirement. AA 0848-50. Housing Director Krutko’s December 7, 2009, Memorandum to the City Council, at page 3, discloses that a year earlier, the Council had directed staff to propose an inclusionary housing ordinance that included compliancealternatives, which the staff had proposed subject to certain modifications. AA 0865. The same memorandum, at pages 11-14, provides extensive detail on the various alternatives in the Ordinance. AA 0873 - 0876. - 30- These pagescontain parallel columns, the middle ofwhich contains the Council’s detailed direction for each ofthe alternative compliance options. It is impossible to review this evidence and concludethat the City Council would have adopted the Ordinance with none of these alternative compliance provisions. They are all in the Ordinanceat the specific direction of the Council. B. City Has Not Shown What Text Would Have To Be Stricken in Order to Sever Any Provision The City’s three sentence argument that the alternative compliance provisions can be severed fails to even disclose which provisionsthe City considers severable, or analyze whetherthese provisionsare grammatically or functionally severable from what would remain. CONCLUSION Based upon the foregoing, the Court should reverse the court below, affirm the Judgmentofthetrial court, hold that the Ordinanceis subject to the standard of review set forth in San Remo Hotel, hold that San Remo Hotel applies regardless of whether a development exaction purports to mitigate -31- development impacts, and reject Respondents’ proposed waiverrule immunity from facial constitutional challenge. DATED:February 19, 2014. Respectfully submitted, DAMIENM.SCHIFF ANTHONY L. FRANCOIS DAVID P. LANFERMAN NICK CAMMAROTA PAUL CAMPOS ae By MefoesS "ANTHONY. FRANCOIS Attomeys for Petitioner California Building Industry Association -32- CERTIFICATE OF COMPLIANCE Pursuant to California Rule of Court 8.204(c)(1), I hereby certify that the foregoing PETITIONER’S REPLY BRIEFisproportionately spaced, has a typeface of 13 points or more, and contains 7,334 words. DATED: February 19, 2014. wz fr ceo3 ANTHONY L. FRANCOIS - 33 - DECLARATIONOF SERVICE BY MAIL I, Suzanne M. MacDonald, declare as follows: I am a resident of the State of California, residing or employed in Sacramento, California. I am over the age of 18 years and am nota party to the above-entitled action. My business addressis 930 G Street, Sacramento, California 95814. On February 19, 2014, true copies ofPETITIONER’S REPLY BRIEF were placed in envelopes addressedto: DAVID P. LANFERMAN Rutan & Tucker, LLP Five Palo Alto Square 3000 El Camino Real, Suite 200 Palo Alto, CA 94306-9814 Telephone: (650) 320-1507 ANDREW L. FABER THOMASP. MURPHY Berliner Cohen Ten Almaden Boulevard, 11th Floor San Jose, CA 95113-2233 Telephone: (408) 286-5800 MARGO LASKOWSKA Office of the City Attorney City of San Jose 200 East Santa Clara Street San Jose, CA 95113-1905 Telephone: (408) 535-1900 CORINA I. CACOVEAN Wilson Sonsini Goodrich & Rosati, P.C. One MarketPlaza Spear Tower, Suite 3300 San Francisco, CA 94105-1126 Telephone: (415) 947-2017 MICHAEL F. RAWSON The Public Interest Law Project California Affordable Housing Law Project 449 15th Street, Suite 301 Oakland, CA 94612 Telephone: (510) 891-9794 MELISSA ANTOINETTE MORRIS Law Foundation OfSilicon Valley 152 North Third Street, 3rd Floor San Jose, CA 95112 Telephone: (408) 280-2429 L. DAVID NEFOUSE Wilson Sonsini Goodrich & Rosati, P.C. 650 Page Mill Road Palo Alto, CA 94304-1050 Telephone: (650) 565-3812 NICK CAMMAROTA California Building Industry Association 1215 K Street, Suite 1200 Sacramento, CA 95814 Telephone: (916) 443-7933 PAUL CAMPOS Building Industry Association of the Bay Area 101 Ygnacio Valley Road, Suite 210 Walnut Creek, CA 94596-5160 Telephone: (925) 274-1365 COURT CLERK California Court of Appeal Sixth Appellate District 333 West Santa Clara Street, Suite 1060 San Jose, CA 95113 Telephone: (408) 277-1004 HONORABLE SOCRATES MANOUKIAN Santa Clara County Superior Court Old Courthouse 191 North First Street San Jose, CA 95113 Telephone: (408) 882-2310 which envelopes, with postage thereon fully prepaid, were then sealed and deposited in a mailbox regularly maintained by the United States Postal Service in Sacramento, California. I declare under penalty ofperjury that the foregoing is true and correct and that this declaration was executed this 19th day of February, 2014, at Sacramento, California. hob SH. SolaceLelie a ZANNEM. MacBONALD