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sr-061681-Rh.t.. City Council Meeting 6-16-81 Santa Aionica, California STAFF REPORT T0: Mayor and City Council FROM: City Attorney SUBJECT: Claim for Vested Rights from Emergency Building Moratorium, Claim Number M-027, by Robert Davis et al. for a Vested Right to Construct a 3-Story Office Building at 1545 26th Street PROJECT DESCRIPTION Claimants seek to proceed: with the construction of a 3-story office building at 1545 26th Street. .The property is zoned M-1 and is currently vacant. Although the project is _ intended as office condominiums, claimant is not seeking a vested right or hardship with respect to the subdivision issue. (The tentative subdivision map was disapproved by the City Council on May 26, 1981.) The building will be located on a 15,886 square feet lot. The building will contain 13,700 square feet of gross building area and was designed as a three-story structure (two stories for. office use and one story for parking). VESTED RIGHT A determination of a vested right depends on whether the claimants have secured the last governmental approval necessary for construction and, in good faith reliance thereon, performed substantial work or incurred substantial liabilities in furtherance thereof. 1. Governmental Approvals. In connection with this claim, the following. governmental approvals were obtained prior to April 22, 1981: Demolition Permit ARB Approval Building Permit 11-13-79 & 12-11-79 12-17-80 4-14-81 In the present case, claimants secured the final governmental approval necessary to complete the construction of the office building. 2. Expenditures and Liabilities. Claimants indicate that the total cost of development is $1,620,000, including land acquisition. The propety itself was purchased for $485,000. The actual cost of construction is estimated not to exceed $1,135,000. According to claimants, they have expended $294,954.43. These expenditures consist princigally of land acquisition costs and architectural fees incurred prior to the issuance of the building permit. In a supplemental letter in support of their claim, claimants "conservatively" identify $23,341.07 of expenses in direct reliance on their building permit. A major portion of this expense is the liability incurred in connection with entering into a construction contract. Although claimants were seeking construction financing, none was obtained prior to the adoption of the Emergency Building Moratorium. 2 The liabilities listed by claimant prior to April 22, 1981, are stated to be $335,006. These claimed liabilities primarily consist of land acquisition costs, advanced deposits by a prospective lessee, and the ,balance of architectural fees. None of these claimed liabilities should be considered in determining a vested right. (Land acquisition and architectural fees are not the type of expenditures considered for a vested right; the lease entered into with the prospective tenant created no liabilities other than to return advanced payments made.). In the present case, claimants have not performed substantial construction prior to the adoption of the Emergency Building Moratorium. Their claimed expenditures are neither quantitatively substantial nor substantial in relationship to overall project costs. Claimants have pointed to two cases where small dollar amounts are said to have vested rights to proceed under lawfully granted permits. Claimants' cite Kissinger v. City of Los Angeles, 161 Cal. App. 2d 454, 327 P.2d 10 (1958), for the proposition that a $2,300 expenditure is substantial. However., claimants did not describe the work represented by .this expenditure: "The work consisted of the clearing of the property, erection of the power poles, trenching and setting of forms for foundations, the prefabrication. of plumbing and the delivery of lumber onto the property." 327 P.2d at 13. Claimants also cite Trans-Oceanic dil Corp. v. City of Santa Barbara, 85 Cal. App. 2d 776, 194 P.2d 148 (1948}, for the 3 proposition that a $4,500 expenditure is substantial. Once again, claimants did not describe the work represented by the expenditure: "At a cost of approximately $4,500 it constructed substantial concrete foundations for a derrick, erected an oil derrick, dug a sump hole, erected a power house, moved boilers into place, and laid necessary pipe lines to the site." 194 P.2d°. at 150. In other cases, larger expenditures have not been found to be substantial. See Cooper v. County of Los Angeles, 69 Cal. App. 3d 529, 138 Cal. Rptr. 229 (1977) ($5,000 not substantial); Environmental Law Fund, Inc. v. Town of Corte Madera, 49 Cal. App. 3d 105, 122 Cal. Rptr. 282 (1975) ($10,000 to $15,000 in expenditures not substantial); Burger v. County of Mendocino, 45 Cal. App. 3d 322, 119 Cal. Rptr. 568 (1975) ($6,500 in expenditures not substantial). Because claimants have not commenced construction and because their expenditures are neither quantatively substantial nor substantial in relationship to overall project costs, claimants have not secured a vested right. Claimants have given a detailed description of the economic hardship .that they state will be incurred. if the project cannot proceed. The declarations accompanying the Claim for Vested Right contain this description. 4 RECOMMEA'DATION 1. It is respectfully recommended that the claim for vested right be denied. Prior to April 22, 1981, claimants did not perform substantial work or incur substantial liabilities. 2. If, under the facts as presented above or as may be determined at the time of the hearing,~`the City Council should determine that application of the moratorium to claimants' project would result in an unfair hardship to claimants, an exemption on the basis of unfair hardship should be granted. 5