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April 05, 2022 Articles

Land Use Exactions: Continued Expansion Beyond the Supreme Court’s Koontz v. St. Johns River Water Mgmt. Dist.

The U.S. District Court in Massachusetts recently issued a decision applying the familiar yet ever-evolving rules of government takings to a somewhat novel situation, further developing the interplay and tension between federal and state law, and between federal constitutional supremacy and home rule authority.

By Gina M. Kim and Robert K. Hopkins

In a recent decision out of the U.S. District Court for the District of Massachusetts, Symes Dev. & Permitting LLC v. Town of Concord, et al., Civil Action No. 21-10556-NMG, 2022 U.S. Dist. LEXIS 4178 (D. Mass. Jan. 10, 2022), Judge Nathanial Gorton balanced the interplay between federal and state law and between federal constitutional supremacy and home rule authority. In doing so, he applied the familiar yet ever-evolving rules of government takings, in particular regulatory takings, to a somewhat novel situation, further developing, and highlighting the tension between, these various legal themes.

In Symes, the plaintiff received approval from defendant Town of Concord Planning Board for the development of an 18-lot subdivision. That approval, however, was conditioned on the plaintiff’s reservation of five of the 18 lots for three years for possible future use by defendant Town of Concord, with the option for the town to purchase or take those lots during that period. Through this reservation condition, the planning board precluded the plaintiff from developing, disturbing, or improving the reserved lots in any manner. The plaintiff filed suit claiming that the reservation condition consituted an uncompensated taking of those five lots pursuant to 42 U.S.C. section 1983. The defendants sought to dismiss the suit, claiming that the reservation could not be considered a taking because the condition was merely temporary. Judge Gorton rejected that argument, noting that courts, including the United States Supreme Court, have repeatedly rejected the argument that government action must be permanent to be a taking. Judge Gorton ultimately held that the plaintiff’s allegations of a taking were sufficient to survive the motion to dismiss, relying on Nollan v. Cal. Coastal Com., 483 U.S. 825 (1987), Dolan v. City of Tigard, 512 U.S. 374 (1994), and Koontz v. St. Johns River Water Mgmt. Dist., 570 U.S. 595 (2013).

It is unconstitutional for the government to take private property without just compensation. See U.S. Const. amend. V; Knight v. Metro. Gov't of Nashville & Davidson Cty., No. 3:20-cv-00922, 2021 U.S. Dist. LEXIS 221927 (M.D. Tenn. Nov. 16, 2021) (“If a city or state government simply requires a property owner to dedicate a portion of her property for public use, without compensation, that would unambiguously be an unconstitutional taking.”) (citing Dolan, 512 U.S. at 384 and Nollan, 483 U.S. at 831). The U.S. Constitution requires not just that there be fair compensation for the “taking” but also that there be a valid public purpose for the taking. See Lingle v. Chevron USA Inc., 544 US 528 (2005). “Traditionally, unconstitutional takings are manifest either through a ‘physical taking’ or a ‘total regulatory taking.’” Symes, 2022 U.S. Dist. LEXIS 4178, at *7–8. However, in Koontz, the courts recognized a third kind of taking: land use exactions. Koontz, 570 U.S. at 612. Frequently, this kind of taking arises in the context of zoning regulations, where a municipal board imposes a condition on the grant of a permit. These types of conditions may be constitutional, provided that there is (1) an essential nexus between some legitimate state interest and the permit condition at issue; and (2) there is rough proportionality between the exaction and the condition—that is, “whether the degree of the exactions demanded by the city’s permit conditions bears the required relationship to the projected impact of petitioner’s proposed development.” Dolan, 512 U.S. at 388.

The municipality in Koontz conditioned the approval of a land-use permit on the payment of a fee, but the excaction was unlike typical taxes and fees, which the court affirmed were not takings, because it was tied to a specific property interest apart from the money itself. The Koontz court found a per se taking occurred because the monetary exaction required as a condition of the land-use permit approval did not satisfy the requirments of Nollan and Dolan, even though instead of granting the permit with a condition, the government instead denied the requested permit while also suggesting approval could be obtained if Koontz agreed to the exaction. Thus, while Koontz represented an expansion of the takings doctrine, Symes suggests that federal courts may be willing to stretch the doctrine even further, provoking renewed consideration of the interplay between federal constitutional supremacy, state police powers, and home rule authority.

The Sixth Circuit Court of Appeals had the opportunity to elaborate in F.P. Dev., LLC v. Charter Twp. Of Canton, 16 F.4th 198 (6th Cir. 2021). In that case, a municipal ordinance required that property owners obtain permission to remove trees on their own property (absent limited exceptions), and mandated removal mitigation of either the installation of trees elsewhere or payment into a town tree fund. The court discussed rough proportionality as a “required relationship” that need not be “exacting[,]” but cannot be merely “generalized.” Id. at 206 (quoting Dolan, 512 U.S. at 389–90). The municipality “must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.” Id. The Charter Township of Canton did nothing to demonstrate that F.P.’s tree clearing degraded the surrounding area, nor made individualized assessment of whether some other mitigation might in fact be more environmentally beneficial on the property. The court noted that “[a]ccording] to Canton’s own representaitve, F.P.’s removal of regulated trees triggers the mitigation requirements, regardless of the specific impact caused by their removal,” and determined Canton did not make the necessary individualized determination in holding Canton imposed an unconstitutional condition. Id. at 207.

However, governmental bodies can have fairly wide discretion to impose monetary fees, depending on how such fees are imposed. In Ballinger v. City of Oakland, 24 F.4th 1287, 2022 U.S. App. LEXIS 2862 (9th Cir. 2022), the Ninth Circuit Court of Appeals characterized municipally imposed tenant relocation fees (required from property owners who stopped renting their properties for good cause) as a “wealth-transfer” provision, but not an unconstitutional taking, exaction or seizure. “The Supreme Court ‘has consistently affirmed that States have broad power to regulate housing conditions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails.’” Id. at *7. The Ninth Circuit determined that the provision constituted a fee, but distinguised the relocation costs from the fees in F.P. or Knight.

Rather, the court found that these relocation costs required by the City of Oakland did not constitute a taking because the city’s ordinance imposed a “general obligation to pay money and does not identify any specific fund of money[.]” Id. at *13. If money is “taken from known persons in the form of a specific, identified property interest to which those persons were already entitled” then it may constitute a taking. Id. at *14. Of course, the fees demanded in Ballinger were in a sense related to a piece of property, but no more so than are taxes or user fees, which are “not generally compensable under the Fifth Amendement because taxes and user fees are collected in exchange for government benefits to the payor.” Id.

Meanwhile, what might also be characterized as a “wealth transfer” was treated as an impermissible taking in Levin v. City & Cty. of S.F., 71 F. Supp. 3d 1072 (N.D. Cal. 2014). In Levin, a city ordinance required landlords who wanted to withdraw their “rent-controlled property from the rental market to pay a lump sum to displaced tenants.” Id. at 1074. The ordinance at issue “require[d] that property owners pay the greater of a relocation payment due under a 2005 Ordinance or the new, ‘enhanced’ amount: twenty-four times the difference between the units’ current monthly rate and an amount that purports to be the fair market value of a comparable unit in San Francisco, as calculated by a schedule developed by the Controller’s Office.” Id. The city argued that the payout amount satisfied the Nollan and Dolan requirements because “the property owner’s withdrawal of a unit from the housing market ‘causes’ the evicted tenant to be exposed to market rents.” Id. at 1086. The district court disagreed and concluded that “the Ordinance is a monetary exaction that ‘lack[s] an essential nexus and rough proportionality to the effects of the proposed new use of the specific property at issue.’” Id. at 1088–89 (quoting Koontz, 570 U.S. at 614).

This area of the law is complicated, to say the least. Symes is yet another in a long line of cases that are continually setting the ever-shifting contours of takings law—and it has not even been fully adjudicated; the Symes decision was rendered in response to a Federal Rules of Civil Procedure 12(b)(6) motion to dismiss. Even though zoning and land-use regulatory law are, generally, the creatures of state statute and local ordinance or bylaw, these decisions show that the Constitution nonetheless can and does matter in local permitting proceedings.

Gina M. Kim and Robert K. Hopkins are with Phillips & Angley in Boston, Massachusetts.

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