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Jonathan Lowell October 26, 2015 Page 3 Substantially Reducing the Number of Units Would Result In A Regulatory Taking Recent rase law makes clear that a local agency can be liable for takings damages if it makes an abrupt change in how it applies its code and policies. (See Lockaway Storage v. County ofAlameda (2013) 216 Cal.App.4th 161 (upholding damages award to developer of $989,640 and attorney fee award of $728,015 for County's change of position on interpretation of Measure DJ.) The current application had been deemed complete for over four years. During that time, staff has indicated that a 50 -unit project complies with Measure PP and QQand all other applicable land use controls. A substantial reduction in the number of units in the project would result in a regulatory taking under the Penn Central test. The Penn Central test consists of "three core factors: (I) the economic effect on the landowner; (2) the extent of the regulation's interference with investment- backed expectations; and (3) the character of the governmental action." (Avenida San Juan Pship v. City of San Clemente (2011) 201 Cal.App.4th 1256, 1272.) Here, the potential approval of a 10 -unit project after years of the City indicating that a 50- unit project was consistent with the project site's land use controls would be similar to the facts that resulted in a compensable taking in Lockaway Storage. First, as to the economic impact of ncc proposed 10 -unit project, even ignoring the millions of dollars already spent in acquiring the property and processing the application to date, no reasonable developer would pursue such a vastly reduced project due to the project infrastructure costs, City fees and other hard and soft costs. Preliminary estimates indicate that a road and crossing to Sunset Creek Lane alone would cost over $2 million. This would be a fixed cost that would be the same for a 10 -unit project as it would for a 50 -unit project. Also, the costs associated with the roadway and infrastructure work in the main subdivision would be several times the cost of a Sunset Creek connection for a 50 -unit project. These costs would not be substantially lower for a 10 -unit project because the same utility mains and length and width of roadways would be required for a smaller project, though there would be some savings for lateral connections to the lots: Any increased value for a larger lot in a 10 -unit project would be insufficient to absorb this cost burden and project would simply not pencil if the City Council were inclined to take such dramatic action. The City's Assistant City Manager and Assistant City Attorney agreed at the February 25, 2015 Planning Commission workshop on the project that applicants rely on the Ciry for guidance on an appropriate scale of development and that a 10 -unit alternative would raise the risk a takings claim by Lund Ranch. The potential approval of a ten -unit alternative would also meet the second prong of the Penn Central test by interfering with Lund Ranch's reasonable investment - backed expectations. In Lockaway Storage, Alameda County, after two -years of processing an application for a storage facility, reinterpreted its regulations and determined that a storage facility would not be permitted and denied the application. No party argued that there would not be other commercially viable uses of the land. Yet, despite the opportunity to explore alternatives to proposed project, the Court of Appeal held a taking had occurred because the County, similar to the City here, repeatedly informed the applicant that its project was feasible and worked closely with the applicant in processing the