Also known as: development exactions · exaction
Written by attorneys · grounded in primary & secondary sources — see below
A condition imposed by a government on a developer seeking permission to improve land. The condition requires conveyance of money, land, or other value to the government in exchange for the permit.
Deanna Davenport sought a permit to expand her manufacturing facility. The city required her to pay an annual charge calculated as a percentage of projected revenue and collected with her income tax return. The charge was expected to generate substantial revenue for local services. A court examined the charge's operation and effect rather than its label to determine its constitutional character.
Danielle Dixon applied to enlarge her retail store. The city conditioned approval on dedication of a strip of land for a greenway and bike path. Dixon challenged the condition after the city failed to demonstrate that the required dedication matched the projected traffic impact from the expansion.
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Damian Decker proposed filling wetlands on his parcel to build homes. The water district offered two options: reduce the project size and deed the rest of the land or pay for off-site mitigation credits. Decker sued after the district refused to issue the permit without one of the options.
Diane Dawson sought to replace her beachfront cottage with a larger home. The coastal commission granted the permit only if Dawson recorded an easement allowing the public to cross the beach portion of the lot. Dawson contested the condition as lacking an essential connection to any impact from the new house.
Demetrius Douglas planned a new assembly plant on land occupied by residences. The city approved the project only after Douglas agreed to fund relocation of existing homeowners and transfer title to cleared parcels for public use. Residents challenged the arrangement as exceeding the city's authority to condition the permit.
Darrell Duncan applied to redevelop a commercial site. The city required him to fund public improvements unrelated to the project's scale. Duncan argued the condition failed to advance any legitimate interest tied to the proposed use and sought to invalidate it under the Takings Clause.
A development exaction requires the owner to convey money, land, or other value to the government as the price of receiving a permit. Ordinary zoning rules limit use of the property without requiring any transfer of value to the public.
A monetary exaction functions as a tax when it is collected through the tax system, varies with income or revenue measures, and is expected to raise substantial revenue, even if labeled a penalty. The constitutional characterization turns on practical operation rather than the label chosen by the government.
The government must demonstrate an essential nexus between the dedication and a legitimate interest that would justify denying the permit outright. It must also show that the dedication is roughly proportional in nature and extent to the projected impact of the development.
Yes. Permit conditions that require conveyance of property interests are subject to the Takings Clause and must satisfy both the nexus and rough proportionality requirements. Failure to meet those standards renders the condition an unconstitutional taking.
…law). As I noted in Bowen v. Roy : “The fact that the underlying dispute involves an award of benefits rather than an exaction of penalties does not grant the Government license to apply a different version of the Constitution. . . . The fact that appellees seek exemption from a precondition that the Government…