The Supreme Court Expands the Nollan/Dolan Standard
The United States Supreme Court’s recent decision in Koontz v. St. Johns River Water Management Dist. has broad implications for state and local governments attempting to work with developers to find mutually agreeable solutions that will mitigate the impacts of development projects. The decision expands the application of the unconstitutional conditions doctrine articulated in Nollan v. California Coastal Commission and Dolan v. City of Tigard (“the Nollan/Dolan standard”) to a broader range of land use permitting decisions while providing little guidance as to how reviewing courts will actually apply the expanded doctrine. This standard was previously applied only in limited circumstances where an adjudicative land use permitting decision required a dedication of property to offset impacts on the public from a particular project to ensure that the requisite property dedication had a reasonable nexus to the public impact of the proposed project and was roughly proportional to the size of the impact of the project. If these two prongs were not satisfied, the dedication was found to be a taking of private property requiring payment of just compensation under the Fifth Amendment.
In Koontz, the Supreme Court held that the Nollan/Dolan standard applies not just to situations in which a permit is issued with conditions, giving rise to a Fifth Amendment takings claim, but also to situations where a permit is denied because the landowner rejects the conditions. In such cases, a landowner must look to state or federal statutes, not the Fifth Amendment of the U.S. Constitution, for a remedy. The Court also explained that requiring payment of money alone as a condition for issuance of a permit can be a per se taking if it is tied to the ownership and right to use real property. The California Supreme Court reached this same conclusion in Ehrlich v. Culver City (1996) 12 Cal.4th854, with respect to fees imposed in ad hoc adjudicative land use proceedings, but the Supreme Court’s decision in Koontz does not distinguish between ad hoc and generally applicable fees; therefore, the opinion may extend this reasoning to generally applicable development fees in California.
In reaching these holdings, the Supreme Court appears to have expanded the reach of the Nollan/Dolan standard to a broader range of land-use permitting situations than those that previously fell within its gambit, adding considerable risk to municipalities dealing with such situations. As a precautionary measure, when adopting generally applicable legislative conditions involving in-lieu fees, municipalities should consider including findings establishing that the fees satisfy the Nollan/Dolan tests.ShareThis