When a court labels the Nollan/Dolan line of decisions “so-called exaction cases” (and your claim is that an exaction is not related or proportional) you know right away you are in trouble.
First, the dry summary. In Action Apartment Ass’n v. City of Santa Monica,No. B201176 (Aug. 28, 2008) (slip opinion available here), the California Court of Appeal (SecondDistrict) denied a facial challenge to the city of Santa Monica’saffordable housing exaction ordinance. The court relied upon thelegislative/adjudicative distinction holding that Nollan/Dolananalysis is only applicable to individual decisions regarding permitapplications, and cannot be used to challenge legislative decisionsgenerally applicable.
Second, some background on “facial” challenges as contrasted with “as applied” challenges. A “facial” takings challenge to a statute or ordinance asserts thatits mere enactment is unconstitutional. The U.S.Supreme Court recently explained the nature of facial challenges:
Under United States v. Salerno,481 U. S. 739 (1987), a plaintiff can only succeed in a facialchallenge by “establish[ing] that no set of circumstances exists underwhich the Act would be valid,” i.e., that the law is unconstitutional in all of its applications. Id., at 745.
Washington State Grange v. Washington State Republican Party, No. 06-713 (Mar. 18, 2008). In other words, a facial challenge is a claim that a statute or ordinance is unconstitutional in all situations, whereas an “as applied” challenge is one where the plaintiff claims that the law may be generally valid, but as applied to the plaintiff, it is unconstitutional.
Third, a summary of the Nollan/Dolan reasoning. InNollan v. California Coastal Comm’n, 483 U.S. 825 (1987), the Supreme Courtrecognized that “a permit condition that serves the same legitimatepolice-power purpose as a refusal to issue the permit should not befound to be a taking if the refusal to issue the permit would notconstitute a taking.” Id. at 836. But the Court held that government has the burden of establishing an “essential nexus” between a permit condition and thealleged negative burden or impact of the proposed use or development. Id. at 837. Absent that logical and factual relationship, the condition is a taking of privateproperty without compensation – “not a valid regulation of land use but ‘an out-and-out plan of extortion.'” Id. (citations omitted). In otherwords, there must be some cause-and-effect relationship between theproposed use of land, and the condition imposed on governmentpermissions. In Nollan, the Court held that a permit condition thatrequired a landowner donate public access across its property was ataking because the landowner’s proposed use would not interfere withpublic access.
In Dolan v. City of Tigard, 512 U.S. 374(1994), the Court explained how close a fit must exist between a permitcondition and a project’s negative impacts. The Court held that evenwhen an essential nexus exists, government must still demonstrate a “degree of connection between the exactions and the projected impact ofthe proposed development.” Id. at 386. There must be “roughproportionality” – “some sort of individualized determination that therequired [condition] is related both in nature and extent to the impactof the proposed development.” Id. at 391 (emphasis added). Dolan madeclear that this burden is on government – not the property owner – todemonstrate the requisite nexus and rough proportionality demanded bythe Takings Clause. Id.
The Court recently affirmed thecontinued vitality of the Nollan/Dolan heightened review as TakingsClause tests for conditions on property use. In Lingle, the Court heldthat both Nollan and Dolan “involve a special application of thedoctrine of ‘unconstitutional conditions.'” Lingle, 544 U.S. at 547(quoting Dolan, 512 U.S. at 385). Under that doctrine, “the governmentmay not require a person to give up a constitutional right – here theright to receive just compensation when property is taken for a publicuse – in exchange for a discretionary benefit conferred by thegovernment where the benefit has little or no relationship to theproperty.” Dolan, 512 U.S. at 385. Whenever government imposes acondition on the otherwise lawful use or development of property –whether legislatively or administratively, and whether the governmentdemands money or land – courts must apply heightened scrutiny todetermine whether the condition is an unconstitutional taking ofprivate property under the Fifth Amendment.
Back to Action Apartment. Where the opinion gets interesting is the court’s summary of its view of takings law. It first contrasted whatit referred to as “categorical” takings with “regulatory” takings. Slip op. at 13-15. “Categorical takings,” according to the court, arewhen “an owner’s property is taken in whole or in part, by governmentfor a public purpose.” The court divided “compensable regulatorytakings” into two types: those that deprive an owner of alleconomically beneficial use (aka Lucas wipeouts), and those where a “complex set of factors are considered” (aka Penn Centralad hoc takings). The court also separated the Nollan/Dolan analysis from the above categories, and treated those cases as a completely separate type of regulatory taking.
These takings classifications are odd. Regulatory takings law defies most attempts to refine a unitary theory,but that is the nature of the enterprise since the government claims itis merely regulating, while the property owner asserts that theregulation has singled it out to bear more than her fair share. My read of takings law is that claims generally can be put into categories, but not the ones the Action Apartment court recites.
The first class of takings is straight condemnations, or the affirmative exercise of eminent domain: those cases where the government affirmatively attempts to take property for public use, and acknowledges its obligation to pay just compensation. You know one of those when you see it. You get the “dear homeowner” letter, or maybe get served with a complaint for condemnation in which you or your property is the defendant.
The second type of takings is inverse condemnations, where the government has undertaken some act which has the same effect as if the government exercised eminent domain but the government has not acknowledged that it has affected property or any obligation to pay compensation. Inverse condemnations are “inverse” because the property owner has to sue the government (not the other way around as in straight condemnations) to stop the taking, or to compel compensation.
Inverse condemnations can be further broken down into two types: physical takings and regulatory takings. Physical takings are those where the government invades private property (or invites other to do so under color of right). Examples of physical takings are flooding caused by government conduct, actual government trespass, and trespass by the public at government invitation. These actions, like straight condemnations, are considered takings without regard to the impact on the property’s value. Classic Nollan/Dolan cases fall within this category and the last example.
In a regulatory taking, a regulation does not compel an actual invasion of property, but has some effect on the property’s value. When a regulation deprives the owner of all beneficial use (the Lucas wipeout), the court will not examine anything else since a deprivation of use is the functional equivalent of a physical invasion. In the last category, if a regulation affects property but does not deprive the owner of all beneficial use, the Penn Central factors are considered, and if, on the whole, the regulation forces an owner to alone bear public burdens which should be shared by all, the regulation is a taking.
Action Apartment‘s use of the term “compensable regulatorytaking” is especially strange. After all, is there any kind ofregulatory taking other than one that is compensable? If a regulation”goes too far” and takes property, the Fifth Amendment requirescompensation, and regulations that do not require compensationaren’t regulatory takings at all, are they? They’re just valid regulations.
Having incorrectly categorized Nollan/Dolan claims as a separate branch of regulatory takings, Action Apartment wandered further off course when it stated:
Both the United States and California Supreme Courts have explained the two part Nollan/Dolan test developed for use in land exaction takings applies only in the case of individual adjudicative permit approval decisions; not to generally applicable legislative general zoning decisions.
Slip op. at 15. While it is true that the California Supreme Court follows this rule, the issue has never been directly addressed, much less settled, by SCOTUS. If further review of Action Apartment is sought, however, maybe it will.