▪ Big Problems With Maui's Proposed "Affordable Housing" Exaction Ordinance (pt II)

This post continues the prior, discussing the legal problems with the County of Maui's proposed "affordable housing" impact fee ordinance.  The details of the proposed ordinance are reported here.

The blanket requirement that a property owner who wishes to make reasonable use of his or her property first donate some portion of it to the pool of affordable housing, or instead pay a cash fee, would be subject to challenge under both Hawaii Const. art. 1 § 20, and the Fifth Amendment to the U.S. Constitution.  The courts have established two requirements before an exaction may be imposed as a mandatory condition of development, "nexus" and "rough proportionality."

First, there must be a close connection (also known as a “nexus”) between the condition imposed on the use of land and the social evil that would otherwise be caused by the unregulated use of the owner’s property.  See Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987). 

Absent a nexus, a permit condition is “not a valid regulation of land use but ‘an out-and-out plan of extortion.’ ”  Id. (citations omitted).  In other words, the courts are worried that impact fees, in-lieu fees, and development exactions would become a form of “pay to play” where local governments are tempted to take advantage of the fact that a property owner seeks permits, and treat it as an opportunity to leverage land, other property, or cash in order to address other impacts not caused by the property owner. 

The constitutional protections are designed to keep property owners from being forced to shoulder a disproportionate share of public burdens, if it cannot be shown individually that they caused the problem.  The protections are “designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”  Armstrong v. United States, 364 U.S. 40 (1960). 

In other words, if there is a shortage of affordable housing on Maui, the proposed bill’s requirements must be related to some condition the developer created.  The proposed bill makes no attempt to establish this factual nexus.  There are many factors that have resulted in the issue the Council seeks to address, not just developers. 

The second requirement is that there must be a close “fit” between the development exaction and the burdens created by a proposed development plan.  See Dolan v. City of Tigard, 512 U.S. 374 (1994).  As the Supreme Court held, if there is a “nexus” as required by Nollan, there must also be a “degree of connection between the exactions and the projected impact of the proposed development.”  Id. at 386.  In other words, there must be “rough proportionality” — “some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.”  Id. at 391.

Under this second requirement, it is difficult to imagine how the proposed bill would pass judicial scrutiny.  It proposes blanket rules and percentages, not “individualized determination[s] that the required dedication is related both in nature and extent to the impact of the proposed development.”  The law requires an examination of whether this development is causing a particular problem, and then only allows the government to address the problem in a proportional manner by imposing mitigation measures on a developer.