High court should settle exaction of property issue

TAKINGS TALK

One of the problems with the U.S. Supreme Court's ability to maintain control over constitutional law as it is practiced nationwide is that there is only one Supreme Court and myriad lower courts. While all of the latter are sworn to follow the lead of the former, at least as relates to interpreting the U.S. Constitution, the reality sometimes comes up short.

A major issue over the last several years has been application of the Supreme Court's decisions dealing with the exaction of property as a condition to granting land use permission. Not that the high court has been silent. Far from it. It has issued opinions in three cases making clear the court's conclusion that such exactions are subject to stringent rules in order to pass constitutional muster. The cases are Nollan v. California Coastal Commission, 483 U.S. 825 (1987); Dolan v. City of Tigard, 512 U.S. 374 (1994); and Koontz v. St. Johns River etc. District, 570 U.S. 595 (2013) (hereafter, "the Nollan trilogy").

The current problem is that some lower courts have concluded that the Constitution only precludes unlawful exactions by some government agencies in certain proceedings, but not all, and not at all times. Specifically, the issue is whether the rules laid down in the Nollan trilogy govern only the conduct of administrative proceedings but not legislative proceedings. Having rejected petitions raising this issue several times, the issue is again before the Supreme Court. We should learn after the summer recess whether this attempt has gotten the court's attention.

The issue ought to be simple. The Constitution measures a taking of property by what the government does, not how it frames the issue or what institutional arm takes the action. Thus, if it is a municipality or a state administrative agency that makes a property exaction an unlawful condition of a development permit, each individual application of such an exaction demand would constitute a constitutional taking requiring compensation. But what if it was the state legislature, or a city council, or some other agency with the power to make across-the-board rules, rather than case-by-case adjudications? There's the rub.

In California Building Industry Association v. City of San Jose, 61 Cal. 4th 435 (2015), the California Supreme Court dealt with an exaction imposed legislatively by the city council. In a nutshell, the city council commanded that, as a condition to being permitted to build market-rate housing, all residential developers must sell at least 15 percent of the units at a price that is "affordable" to low or moderate income occupants. Confronted with the argument that the U.S. Supreme Court's consistent decisions regarding permit exactions, the California Supreme Court responded that it need not pay attention to the Nollan trilogy because the condition under review was not an exaction at all, but merely a regulation of land use. It knew that because it was a condition that applied city-wide, and not merely to a single development. Such legislative determinations were not, the court concluded, covered by the Nollan trilogy.

Can that be true? Doesn't look like it from here. From the vantage point of either the developer or the regulator, it doesn't matter whether the regulation was imposed on property one parcel at a time or in a wholesale manner to all similar parcels in the city. The effect is identical. Moreover, and contrary to the California analysis, the decisions in the Nollan trilogy were not based on facts peculiar to any particular parcel of land. In Nollan, the exaction was based on the California Coastal Commission's conclusion -- on a statewide basis -- that it would be a good idea to have a publicly dedicated beach stretching from Oregon to Mexico. Thus, although the condition would be imposed on individual parcels as their owners sought development permission, the policy was a generalized legislative one. The same is true of Dolan. There, the city concluded that it needed a series of easements to protect a creek that meandered through town. Thus, as a general policy, the city concluded that any application for development permission must be conditioned on dedication of three easements proceeding outward from the creek: one to protect the creek, one for pedestrians, and one for bicycles. No room could be granted for individualization. For the project to work, all land bordering the creek had to be subject to the same three easements. Thus, there could be no individualized treatment. In other words, it was a legislative decision.

California continues to hew to the idea that legislative decisions are, by definition, not "exactions," and thus not subject to the Nollan trilogy. The San Jose ruling was followed in 616 Croft Ave., LLC. v. City of West Hollywood, 3 Cal. App. 5th 621 (2016). For reasons never disclosed, the Supreme Court denied certiorari review in both cases.

The reason for raising this issue again at this time is that the U.S. Supreme Court has been given another chance. A new certiorari petition has been filed in a case that directly raises the question whether legislatively imposed conditions are subject to the Nollan trilogy. In Dabbs v. Anne Arundel County, 182 A.3d 798 (Md. 2018), Maryland's highest court held that impact fees imposed on a broad basis by legislative action are not subject to federal constitutional scrutiny. That petition will be examined during the summer recess and, hopefully, we will have an answer soon after the Supreme Court opens its next session in October. Perhaps it has seen enough examples of this issue arriving in the mail to finally take one and provide a definitive answer. Some of us -- perhaps including the members of the court -- thought the answer was already clear. Perhaps we should hold our collective breath.