Recently, the California Supreme Court granted review to answer two questions: First, is the constitutionality of a reasonably probable dedication requirement under Nollan and Dolan a question that must be resolved by a jury pursuant to article I, section 19 of the California Constitution? Second, was the City’s dedication requirement a “project effect” that must be ignored in determining just compensation for the taking under Code of Civil Procedure section 1263.330?
The court held that the essential nexus and rough proportionality inquiries under Nollan and Dolan are properly decided by a court, not by a jury because the relevant section of the California Constitution requires only factually intensive questions directly related to compensation to be submitted to a jury and because the Nollan and Dolan issues are mixed questions of law and fact in which the legal issues predominate.
The court also held that the project effect rule generally applies, and the Porterville doctrine does not apply, when it is probable at the time a dedication requirement is put in place that the property subject to the dedication will be included in the project for which the condemnation is sought. The project effect rule, codified in section 1263.330, states that the fair market value of the property taken cannot include any increase or decrease in the value of the property that is attributable to either the project for which the property is taken or any preliminary actions of the plaintiff relating to the taking of the property.
The court went on to distinguish cases in which the Porterville doctrine applies and cases in which the project effect rule applies and instructed the trial court as to how to make that determination on remand. The Porterville doctrine applies when the evidence establishes that a dedication requirement reflects an agency original expectation that an improvement would occur as a result of development of adjacent properties in order to mitigate the impact of the development. However, in a condemnation action where a government entity claims under Porterville that it would have required a dedication of some or all of the property being condemned had the property been developed, courts determining just compensation must look to whether the dedication requirement was put in place before it was probable that the property would be included in a government project.
Because the date of a property’s probable inclusion within a project is a preliminary factual determination that pertains to the admissibility of evidence regarding valuation, it is for the trial court rather than the jury to determine. In this case, the parties do not appear to agree on when it became probable that the 1.66–acre strip would be included in the government project, but the trial court did not make any finding on this issue because it believed the project effect rule did not apply at all.
Bowman v. California Coastal Commission, 179 Cal. Rptr. 3d 299 (Cal. Ct. App. 2014)
Walton Emmick owned approximately 400 acres in San Luis Obispo County. When he purchased the property, there was a single-family residence and a barn on it, and the property included about one mile of shoreline along noncontiguous parcels, separated by a parcel owned by another property owner. The house and the barn were one mile from the shoreline. In 2002, Emmick applied to the County for a coastal development permit (CDP) to connect an existing well to the house. Later that year, he also obtained over-the-counter permits authorizing dry-rot removal and roof and deck repairs.
Emmick had begun work on the house pursuant to the over-the-counter permits when a County inspector told him to stop until the County issued the CDP. Emmick died in 2003, and the SDS Family Trust (SDS) succeeded to the property. A year later, the County approved the CDP and conditioned it on SDS’s offer to dedicate a lateral easement for public access along the shorefront portion of the property.
Nine months later, SDS applied to the County for another CDP, which included, at the suggestion of the County, construction of a 4,576-square-foot barn to replace the existing barn, among other conditions. The application also requested the removal of the condition requiring an offer to dedicate a lateral coastal access easement imposed by the first CDP. The County approved the second CDP, including the removal of the condition. After the Sierra Club, the Surfrider Foundation, and two coastal commissioners appealed the County’s approval of the second CDP, the California Coastal Commission determined that the easement condition was permanent and binding on the landowner and conditioned its permit on the implementation on the easement condition in the first CDP.
SDS argued that the access easement condition constituted an unlawful exaction of its property under Nollan and Dolan. The court agreed and reversed the judgment below finding that the Nollan / Dolan test had not been met here because there was no rational nexus and no rough proportionality between work on a private residence a mile from the coast and a lateral public access easement.
Cheatham v. City of Hartselle, 2015 WL 897583 (N.D. Ala. 2015)
Plaintiffs submitted a request to subdivide their property to the Hartselle Planning Commission in July 2013. A subdivision request for land within the planning jurisdiction requires approval of the Planning Commission and the Morgan County Engineer. Morgan County subdivision regulations require a proposed subdivision to provide a 60-foot right-of-way for minor roads. The Planning Commission will not approve a subdivision request until the application includes the required right-of-way dedication.
Plaintiffs’ request was denied because the right-of-way dedication was only 30 feet and the county required 60 feet. Plaintiffs declined to provide the additional feet because they believed having to do so would be a taking under the Alabama Constitution, and they were not offered any payment. They filed this action pursuant to 42 U.S.C. § 1983, asserting that the demand for an additional 15-foot right-of-way before the subdivision is approved constitutes inverse condemnation in violation of the Fifth Amendment to the U.S. Constitution.
Applying Nollan and Dolan, the court found that an “essential nexus” between the legitimate state interest of having the ability to widen the road and requiring the 15-foot dedication did exist because the state identified the safe and efficient flow of traffic on all roads as a legitimate state interest. Under the “rough proportionality” test, however, the court found that the defendant failed to meet its burden and therefore granted plaintiffs’ motion for summary judgment.
BEG Investments, LLC v. Alberti, 85 F. Supp. 3d 54 (D.D.C. 2015)
Plaintiff BEG Investments, LLC, claimed that six members of the D.C. Alcohol Beverage Control Board violated the Racketeer Influence and Corrupt Organizations Act (RICO) and the Takings Clause of the Fifth Amendment when they conditioned plaintiff’s liquor license on the hiring of a police detail to patrol the area surrounding plaintiff’s establishment, Twelve Restaurant and Lounge.
Upon finding that there had been three assaults and fifteen calls to the Metropolitan Police Department (MPD) at the establishment, and that MPD had increased patrols in the area due to intoxicated individuals leaving the establishment, the Board granted plaintiff’s application for renewal of its license on the condition that plaintiff hire an MPD reimbursable detail whenever the establishment provides any entertainment. Upon plaintiff’s motion for reconsideration, the Board modified its order to require a detail only when the establishment provides any DJs or live music as entertainment. The modified order also required that the MPD detail be hired for a minimum of four hours and end no sooner than one hour after closing.
When the Board fined plaintiff $1,500 for failing to hire an MPD reimbursable detail after a DJ performed at the establishment, plaintiff initiated this action alleging, inter alia, deprivation of property interests pursuant to the Takings Clause of the Fifth Amendment. Plaintiff argued that Koontz provided new support for plaintiff’s claim because the liquor license that plaintiff would have lost if it had refused to pay for the MPD detail was a governmental benefit. The court declined to extend Koontz because it found there was no link to real property in this case and denied plaintiff’s motion for reconsideration of its taking claim.
California Building Industry Association v. City of San Jose, 136 S. Ct. 928 (2016)
The City of San Jose, California, enacted a housing ordinance that compelled all developers of new residential development projects with 20 or more units to reserve a minimum of 15 percent of for-sale units for low-income buyers. Those units had to be sold to low-income buyers at an “affordable housing cost,” which meant at a below-market price not to exceed 30 percent of these buyers’ median income. The petitioner, the California Building Industry Association, sued to enjoin the ordinance. A California state trial court enjoined the ordinance, but the Court of Appeal reversed, and the Supreme Court of California affirmed that decision. The California Building Industry Association then petitioned the U.S. Supreme Court for writ of certiorari.
Concurring in the Court’s denial of certiorari, Justice Thomas wrote that until the Court decides the issue of whether the existence of a taking should turn on the type of governmental entity responsible for the taking, property owners and local governments would be left uncertain about what legal standards govern legislative ordinances and whether cities could legislatively impose exactions that would not pass muster if done administratively. This case, however, did not present an opportunity to resolve the conflict.
County of El Paso v. Navar, 2015 WL 4711191 (Tex. App. 2015)
Joel Navar owned mobile home lots in Fabens, Texas. The Texas Local Government Code required an owner of land situated within 50 miles of an international border to file a plat with the County Clerk if subdividing a parcel of land into lots for sale or lease. The plat had to include certifications that utility services to the lots met or would meet minimum state standards.
If the commissioners’ court approved a plat, it was required to issue to the person applying for the approval a certificate stating that the plat has been reviewed and approved. The applicant could also request certain determinations be made by the commissioners’ court. Rodriguez, the Lead Planner of the County’s Road & Bridge Department / Public Works Department, denied the issuance of the certificates requested by Navar because the residences situated on his parcels of land were not in compliance with statutory authority. Rodriguez did not identify the statutory authority on which he relied.
Navar sued the County for failing to issue the certificates and failing to make the determinations he requested. Shortly thereafter, the County issued the certificates of compliance and made the determinations, but Navar still proceeded with several actions against the County, including for wrongful taking of personal property. Navar argued that the County’s conduct constituted a regulatory taking under either Penn Central unreasonable-interference test of the Nollan / Dolan exaction test. The court determined that although he posited his regulatory taking claim was viable under either test, it was evident from his argument that he was proceeding under the theory that the County’s conduct constituted a taking under Penn Central, not Nollan and Dolan.
The court found that Navar’s petition adequately alleged that the County’s refusal to issue certificates of compliance to him without a legitimate basis unreasonably interfered with his right to use and enjoy his property as a mobile home park. The County, however, argued that the trial court should have dismissed Navar’s claim requesting a declaration of his rights with respect to the issuance of the certificates of compliance; the court agreed and ultimately found that Navar’s claim was barred by governmental immunity.
Golf Course Assoc, LLC v. New Castle County, 2016 WL 1425367 (Del. Super. Ct. 2016)
After a lengthy permitting process to obtain the necessary approvals for the development of 263 single-family homes on the site of the former Delaware National golf course, the developer, Toll Brothers, appealed the disapproval of its Traffic Impact Study (TIS) by the Department of Land Use, the rejection of the Record Plan, and the resulting expiration of its subdivision plan to the New Castle County Board of Adjustment. The County’s Unified Development Code (UDC) required that the completed TIS be provided to the Delaware Department of Transportation (DelDOT) and that DelDOT approve the TIS, approve it with conditions, or disapprove it.
In this case, DelDOT retained an engineering firm to review the TIS and rate it. The firm found that the proposed development would not meet the County’s standards, which meant that the UDC would require the Department to disapprove the TIS. The disapproval of the TIS precluded the developer from submitting its Record Plan, which in turn resulted in the expiration of the three-year window provided by the UDC to obtain the necessary approvals for the development. The Department disapproved the TIS, and the Board affirmed the Department’s decision. Shortly thereafter, the developer brought a petition for a writ of certiorari challenging the Board’s decision.
In its petition, the developer argued that the denial of its application for a permit was an unconstitutional exaction. The court, however, found that the record showed there was never a demand on the developer by the County, and therefore it had not attempted to impose an unconstitutional exaction. The court also noted that the unconstitutional exactions doctrine should not have even been applied in this case because many courts have held that general statutory restrictions do not constitute an unconstitutional exaction under Nollan, Dolan, and Koontz. Rather, the exaction must be in the form of a demand arising from an administrative requirement particular to the requested land use permit.
Koontz Coalition v. City of Seattle, 2014 WL 5384434 (W.D. Wash. 2014)
The “downtown bonus program” was a section of the City’s land use code, which allowed developers to build more square footage on their property than otherwise permitted. If a developer wanted to construct a building that exceeded applicable square footage limitations, the developer could either provide a certain amount of affordable housing to the community or pay a “fee in-lieu.” In December 2013, the City passed an ordinance, raising in-lieu fees in the downtown core to be commensurate with a new rate established in the South Lake Union.
The Coalition challenged the Ordinance by arguing that the Ordinance failed the “nexus” and “rough proportionality” test established in Nollan and Dolan and expanded upon in Koontz. The Coalition asserted that the City’s Ordinance requiring in-lieu exactions as a condition of permit approval impermissibly burdened its members’ Fifth Amendment right to be free from unconstitutional takings.
The court found that the Coalition raised two different kinds of Nollan / Dolan claims, both of which were unripe because the exaction had not yet been made, no permit applications had been submitted, and no property development had yet been subjected to the Ordinance. The court found the same was true of the Coalition’s regulatory takings challenge because the Coalition failed to make any factual allegations related to this claim and granted to City’s motion for summary judgment with respect to the Coalition’s federal claims, dismissing those claims, and remanded the remaining state law claims to the court below.
Sammartino v. Planning & Zoning Comm’n of Town of Andover, 2016 WL 1099398 (Conn. Super. Ct 2016)
Plaintiff Christine Sammartino filed an application with the planning and zoning commission of Andover to subdivide a 7.77 acre parcel of land on into four lots. The Commission unanimously granted the application with conditions, including the provision of a fire cistern or sprinkler system pursuant to section 18.16 of Andover’s subdivision regulations. Shortly thereafter, the plaintiff filed an appeal alleging that section 18.16 exceeded the Commission’s statutory authority and that requiring a cistern constituted an exaction.
The test the court applied in determining whether the requirement was an exaction was whether the requirement was uniquely attributable to the subdivider’s activity. If so, then it is a permissible exercise of the police power. Based on that test, the court found that the regulation was a reasonable exercise of the commission’s police power to protect public safety and that the commission’s requirement of the cistern by the regulation was solely attributable to the plaintiff’s activity in undertaking to establish a subdivision and dismissed the case.
K.L.N. Construction Company, Inc. v. Town of Pelham, 107 A.3d 658 (N.H. 2014)
In 1999, the Town of Pelham adopted an impact fee ordinance, which allowed the Town to assess fees on new development in order to pay for capital improvements necessitated by development. The ordinance also provided that, if the Town had not spent or otherwise encumbered the impact fees within six years, then the current property owners of property on which impact fees have been paid could apply for a full or partial refund of such fees, together with any accrued interest.
After enacting the ordinance, the Town required certain residential real estate developers, including the petitioners, to pay impact fees. After paying the fees, the petitioners sold the properties to individual homeowners. The Town imposed those fees to partially fund the construction of a new fire station, the balance of which was to be borne by the Town. Between 2002 and 2010, the Town spent some of the impact fees paid by petitioners on feasibility studies, architectural drawings, and construction estimates related to the fire station. Several times between 2006 and 2010, voters in the Town rejected proposals to appropriate the additional funds needed to construct the fire station.
In March 2012, the petitioners filed an action seeking a refund of the impact fees they paid more than six years earlier and a declaration that the Town’s expenditure of funds for pre-construction activity violated both the impact fee statute and the ordinance. The petitioners further alleged that because the Town had failed to lawfully use the impact fees within six years, they were entitled to a refund. The court found that the Town was within its authority to enact an ordinance directing that any refund of impact fees be paid to the current property owner, and that since the petitioners no longer owned any of the properties for which they paid the impact fees at issue, they had no standing to seek a refund.
City of San Marcos v. Loma San Marcos, LLC, 234 Cal. App. 4th 1045 (Cal. Ct. App. 2015)
Loma San Marcos, LLC purchased a 15-acre property subject to a security and lien agreement with the City of San Marcos. The agreement was entered into by the property’s former owner to securitize fees due pursuant to a conditional use permit that allowed the owners to convert the property from a recycling facility into a movie studio. Under the agreement, the property owner was obligated to pay the City impact mitigation fees by certain dates. After purchasing the property and negotiating an amendment to the agreement extending the payment deadlines, Loma San Marcos failed to pay the fees. Shortly thereafter, the City brought this judicial foreclosure action. After a trial, the court entered judgment in favor of the City.
Loma San Marcos appealed, contending that the fees were not due because, inter alia, even if the renegotiated agreement was enforceable, the fees were unconstitutional pursuant to the takings clause because the City could not show a nexus between its interests and the permit fees or a rough proportionality between the public impact of the land use change and the fees. The court, however, found that the City had met its burden of showing a rough proportionality between the public impact of the land use change and the fees and affirmed the trial court’s judgment in favor of the City because Loma San Marcos did not have a right to challenge the fees under the Mitigation Fee Act or the takings clause, and even if it did, the payment of impact mitigation fees by prior owners of the property when it was used as a recycling facility did not render the agreed fees for the use of the property as a film studio invalid.
5750 Post Rd. Med. Offices, LLC v. E. Greenwich Fire Dist., 138 A.3d 163 (R.I. 2016)
After the Board of Fire Commissioners of the East Greenwich Fire District adopted a resolution imposing development impact fees on developers that applied for building permits, five corporations sued the fire district and the Town of East Greenwich alleging that the imposition and collection of development impact fees pursuant to this resolution violated the Rhode Island Development Impact Fee Act (RIDIFA) because the fire district is not a city, town, or governmental entity authorized by RIDIFA to enact an ordinance imposing impact fees. Alternatively, the fire district argued that the fire district was clearly a unit of local government as defined by the RIDIFA and that it was the intent of the RIDIFA in combination with the fire district’s charter that the fire district was authorized to impose the fees.
The court ultimately found that the resolution adopted by the fire district was invalid because the fire district failed to present any evidence that the proposed resolution had been advertised by publication before it was enacted and, accordingly, did not comply with either RIDIFA’s mandate that the fees be imposed through an ordinance or the town’s notice and public hearing requirements for the enactment of ordinances.
China Grove 152, LLC v. Town of China Grove, 773 S.E.2d 566 (N.C. Ct. App. 2015)
The Town of China Grove enacted an Adequate Public Facilities Ordinance (APFO), which required land developers to pay impact fees as a condition of obtaining the necessary permits for development. The APFO’s stated purpose was to “ensure that public facilities needed to support new residential development meet or exceed the level of service standards established herein.” Shortly thereafter, the North Carolina Supreme Court struck down a nearby county’s APFO on the basis that “absent specific authority from the General Assembly, APFOs that effectively require developers to pay an adequate public facilities fee to obtain development approval are invalid as a matter of law.” In light of this decision, developer China Grove 152, LLC and David R. Investments, LLC, sent a letter to the Town requesting reimbursement of the APFO fee they paid in order to begin their development plus interest. The Town sent the plaintiffs a check for a sum representing a return of their payment, but did not include interest. The plaintiffs responded by filing a complaint for declaratory judgment to secure the interest owed on the principal APFO sum, which was granted by the trial court.
On appeal, the Town argued that the APFO was a valid ordinance and that the trial court erred in entering judgment in favor of the plaintiffs. The court of appeals disagreed and held that there was no provision in the North Carolina Statutes authorizing the Town to make its development approval contingent on securing funds to subsidize its law enforcement, fire protection, and parks and that the Town’s APFO was invalid as a matter of law. Furthermore, contrary to the Town’s assertion that the plaintiffs failed to state a claim upon which relief could be granted, North Carolina state statute explicitly permits developers to seek interest on fees illegally exacted by cities and counties. Accordingly, the court affirmed the trial court’s order granting the plaintiffs’ motion for judgment on the pleadings and denied defendant’s motion to dismiss.
Quality Built Homes Inc. v. Town of Carthage, 789 S.E.2d 454 (N.C. 2016)
The Town of Carthage adopted certain water and sewer impact fee ordinances that triggered immediate charges for future water and sewer system expansion upon approval of a subdivision of real property, regardless of whether the landowner connects to the system or whether the Town expands the system. The plaintiffs, North Carolina corporations engaged in residential homebuilding that, at the time of filing this action, had paid the Town a total of $123,000 in water and sewer impact fees, filed a complaint seeking a declaratory judgment and monetary damages, alleging that the Town acted outside the scope of its authority by charging the impact fees without a specific delegation of authority from the General Assembly.
The Supreme Court of North Carolina determined that while the state enabling statutes allowed the Town to charge for the contemporaneous use of its water and sewer systems, it was not empowered to impose impact fees for future services. The court held, therefore, that the ordinances were invalid and reversed the decision of the Court of Appeals.
Sullins v. Central Arkansas Water, 454 S.W.3d 727 (Ark. 2015)
Appellant taxpayers filed suit against Central Arkansas Water, the Pulaski County Judge, and Pulaski County, Arkansas, alleging that the watershed fee imposed by Central Arkansas Water constituted an illegal exaction because the Watershed Protection Agreement between Central Arkansas Water and Pulaski County was improper since it was a contract for the joint exercise of governmental powers, privileges, and authority and it failed to comply with the applicable statutory terms. Appellees argued that the agreement was proper under the Interlocal Agreement Act because it was an agreement for administrative services.
The Supreme Court of Arkansas agreed with appellees and ruled that the Watershed Protection Agreement was a valid agreement under Arkansas law because it did not enact new policy, but rather provided for the enforcement of the existing zoning ordinance. The court held further that because the contract was authorized by the Interlocal Agreement Act, the expenditure of funds under the contracts was not an illegal exaction and the circuit court property granted summary judgment against the appellants.