A California appellate court has ruled that the "pay-or-perform under protest" procedures of Government Code sections 66020 and 66021 do not apply to all types of development exactions. In its opinion, the Sixth Appellate District narrowed the scope of the statutory pay under protest provisions, and held that they should be interpreted so as to be available for review of exactions imposed by a local agency as a condition of development approval only if the exaction is "for the purpose of defraying all or a portion of the cost of public facilities related to the development project."

The court held that there was no showing that the City's affordable housing requirement imposed on the developer (exacting five homes at admittedly "below market" prices set by the City) was intended to serve the purpose of defraying the cost of public facilities related to the development project, so the pay under protest procedure was not applicable and the developer's protest and action for review were deemed untimely. The court emphasized that its decision was limited to the facts of this case.