Eminent Domain
Affordable Housing Ordinances: Exactions or Use Restrictions in the Post- Koontz Era? An Analysis of California Building Industry Association v. City of San Jose
by James D. O'Donnell
MANY LOCAL GOVERNMENTS AND MUNICIPALITIES require a developer or property owner to absorb some of the costs or negative impacts of proposed development. These conditions attached to development approval, commonly known as “exactions,” serve to mitigate potential harm caused by new development, including providing for the need for public services and facilities created by that development.1 For example, if a developer wishes to build a new strip mall, the municipality may condition permit approval on the developer providing infrastructural necessities that the project will require such as streets, sewer lines, water lines, and utility structures, which would otherwise not be needed but for the new development.2 Some other common examples of exactions include impact fees, construction requirements, dedications of land, or conditions on future land use.3 While developers and property owners may consider exactions a burden on development, exactions are essential for local governments to prevent costs associated with new development from being externalized onto taxpayers.4