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Heads Up Property Owners and Developers! Local challenges implicating Subdivision Map Act may impose 90-day statute of limitations – Aiuto v. City and County of San Francisco

By Matthew Hinks
In most instances, causes of action for inverse condemnation and regulatory takings in California are governed by the 5-year statute of limitations of Civil Procedure Code §§ 318 and 319. Preemption claims are governed by the 3-year statute of limitations of Civil Procedure Code § 338(a). Section 1983 claims in California state courts are governed by the 2-year personal injury statute of limitations of Code of Civil Procedure § 335.1. However, according to the court in Aiuto v. City and County of San Francisco, 201 Cal. App. 4th 1347 (2011), where such claims are brought in connection with a facial challenge to a local ordinance or administrative action enacted or taken pursuant to the Subdivision Map Act, the 90-day statute of limitations of Government Code § 66499.37 applies.

In 1979, the City and County of San Francisco established a Below Market Rate Condominium Conversion Program (BMR Program) pursuant to the Subdivision Map Act. The stated purpose of the BMR Program was to expand “opportunities for home ownership while preserving and expanding the supply of low- and moderate-income housing” and required, among other things, property owners seeking to convert apartments into condominiums to set aside a certain number of their units for the BMR Program. This was accomplished by conditioning approval of subdivision maps upon restrictions of sales and rental prices of each affected unit. The affordable housing restrictions were then reflected as conditions set forth in the Planning Commission’s subdivision map approvals and on each property’s subdivision map.

On December 19, 2008, given a dispute that had arisen between the City and certain owners of BMR units regarding the duration of the Program’s restrictions, the City adopted a new ordinance. The ordinance, which applied both retroactively and prospectively, “clarif[ied] the City’s intent that the requirements of the BMR Program apply in perpetuity” and, in addition, (1) set out procedures for calculating the sale price for BMR units and for selling such units; (2) specified how the City adds costs for capital improvements to the base resale price of the units; (3) established rental restrictions; and (4) allowed certain unit owners to pay a fee to have their units released from the BMR Program, so long as they make such election 24 months from the effective date of this legislation.

Plaintiffs, owners of BMR units, filed suit in federal district court on May 13, 2009, almost 5 months after the City adopted the ordinance. That suit was later dismissed and, on August 6, 2010, Plaintiffs filed a new lawsuit in San Francisco Superior Court alleging causes of action for (1) regulatory taking; (2) state law preemption; and (3) civil rights violations under 42 U.S.C. § 1983. On January 18, 2011, the court entered an order granting plaintiffs’ motion for preliminary injunction and providing that, to preserve plaintiffs’ option of having their units released from the BMR Program in exchange for a fee should their challenge to the ordinance fail, the deadline in the ordinance for making the election would be extended, from 24 months after the effective date of the legislation, to 90 days after final judgment in the litigation.

The court of appeal reversed reasoning that plaintiffs’ claims were time-barred as result of the 90-day limitations period of Government Code § 66499.37 and that, therefore, plaintiffs could not establish that they were likely to prevail on the merits. According to the court, the Map Act establishes a strict 90-day limitations period for any action or proceeding to attack a governmental decision “concerning a subdivision … or to determine the reasonableness, legality, or validity of any condition attached thereto . . . .” The trial court had refused to apply Section 66499.37 to plaintiffs’ claims on the grounds that the section “would only apply if plaintiffs were seeking to challenge the affordable housing conditions originally imposed as part of the subdivision process when plaintiffs’ apartment buildings were being subdivided into condominiums.” The court of appeal rejected that reasoning holding that Section 66499.37 imposes a 90-day statute of limitations “in a more expansive manner” to all claims seeking to attack or review any decision “concerning a subdivision” and not just to “subdivision decisions and ordinances directly affecting current subdivision approvals”.

The implication of the court’s holding is potentially wide-reaching. Not only does Section 66499.37 apply to direct attacks on administrative or other local action as part of the original subdivision process, but under the reasoning of Aiuto, could apply to all causes of action brought to challenge local legislative or administrative acts or decisions taken pursuant to the Map Act or ordinances enacted pursuant to the Map Act. Property owners and developers are urged to act promptly to seek legal advice concerning any adverse local agency affecting subdivisions.