A new decision from the California’s fifth district Court of Appeals might have a big effect on the fees that some California cities impose on developers to help fund affordable housing. Or it might not. City attorneys in the Tri-Counties are waiting to see what kind of scope the decision gains.

The initial dispute arose between the Building Industry Association of Central California and the city of Patterson in Stanislaus County. In order to build homes, a developer either had to agree to build a certain number of affordable units or pay an “in-lieu” fee for permits to build market-rate units.

Patterson’s fee was initially set at $734 a unit, and its agreement with the developer said any fee increase had to be “reasonably justified.” Patterson raised its fee to nearly $21,000.

The appeals court found that the increase wasn’t reasonably justified under the terms of the developer’s agreement. But the reasoning the court used to reach that decision could have big implications.

The city’s agreement “precluded [the] City from imposing a fee that bears no reasonable relationship to the need for affordable housing generated by [the] Developer’s project,” the ruling reads.

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