Also known as: development exactions · exaction
Written by attorneys — see sources 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.
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.
In 1972, Coy A. Koontz, Sr. purchased an undeveloped 14.9-acre tract of land on the south side of Florida State Road 50 east of Orlando that lies entirely within the jurisdiction of the St. Johns River Water Management District. The property contains wetlands as defined by Florida statute. A drainage ditch runs along the property's western edge, and high-voltage power lines bisect it into northern and southern sections. The northern 3.7-acre section drains well despite its classification. The southern section includes a small creek, forested uplands, and wetlands that sometimes have water as much as a foot deep. In 1984 the District adopted a rule requiring permit applicants whose projects would adversely impact wetlands to offset that loss by creating, enhancing, or preserving wetlands elsewhere. That requirement could be satisfied by purchasing credits from a mitigation bank. In 1994 Koontz applied to the District for Management and Storage of Surface Water and Wetlands Resource Management permits to develop the northern 3.7 acres. He proposed to raise the elevation of the building site, install a dry-bed pond, and grant a conservation easement over the remaining 11 acres. The District found the mitigation inadequate. It stated it would approve the permits only if Koontz reduced the development to one acre and deeded the remaining 13.9 acres to the District. In the alternative, Koontz could pay contractors to replace culverts or fill ditches on District-owned land several miles away to enhance approximately 50 acres of wetlands. Koontz found both alternatives unacceptable and filed suit in Florida circuit court under Fla. Stat. § 373.617(2) alleging that the demands constituted an unreasonable exercise of the state's police power. After a two-day bench trial at which experts testified that the northern section had already been seriously degraded by surrounding construction, the trial court found the demands lacked the required nexus and rough proportionality and awarded damages. The Florida District Court of Appeal affirmed, but the Florida Supreme Court reversed on the grounds that the permit denial was not a taking and that the District had not actually demanded any property from Koontz. The United States Supreme Court granted certiorari to resolve a conflict among state courts of last resort on whether the Nollan and Dolan standards apply to a land-use agency's demand for money.
View caseDiane 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.
The Nollans own a beachfront lot in Ventura County, California. A concrete seawall approximately eight feet high separates the beach portion of their property from the rest of the lot. The historic mean high tide line determines the lot's oceanside boundary. The Nollans originally leased their property with an option to buy, and the building on the lot was a small bungalow totaling 504 square feet. The Nollans' option to purchase was conditioned on their promise to demolish the bungalow and replace it. On February 25, 1982, they submitted a permit application to the California Coastal Commission proposing to demolish the existing structure and replace it with a three-bedroom house. The Commission informed them that the permit would be granted subject to the condition that they allow the public an easement to pass across a portion of their property bounded by the mean high tide line and their seawall. On June 3, 1982, the Nollans filed a petition for writ of administrative mandamus in the Ventura County Superior Court to invalidate the access condition. The court remanded the case to the Commission for a full evidentiary hearing. After the hearing, the Commission reaffirmed the condition. The Superior Court ruled in favor of the Nollans on statutory grounds and directed that the permit condition be struck. While the Commission's appeal to the California Court of Appeal was pending, the Nollans tore down the bungalow, built the new house, and bought the property. The Court of Appeal reversed the Superior Court. The Nollans appealed to this Court, raising only the constitutional question.
View caseDemetrius 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.
This case arises out of a plan by the Detroit Economic Development Corporation to acquire, by condemnation if necessary, a large tract of land to be conveyed to General Motors Corporation as a site for construction of an assembly plant. The plaintiffs, a neighborhood association and several individual residents of the affected area, brought suit in Wayne Circuit Court to challenge the project on several grounds. In the spring of 1980, General Motors informed the City of Detroit that it would close its Cadillac and Fisher Body plants located within the city in 1983. General Motors offered to build an assembly complex in the city if a suitable site could be found meeting four criteria: an area of between 450 and 500 acres, a rectangular shape, access to a long-haul railroad line, and access to the freeway system. The city evaluated nine potential sites and selected a parcel of approximately 465 acres straddling the Detroit-Hamtramck border known as Central Industrial Park. In July 1980 the Detroit Common Council approved the boundaries of the project. On September 30, 1980, the completed project plan was approved by the Detroit Economic Development Corporation. On October 31, 1980, the Common Council passed a resolution approving the project plan with minor modifications and declaring that the project constituted a public purpose. General Motors required that title to the entire site and the rail marshalling yard must be vested in the City of Detroit by May 1, 1981. The projected public cost of preparing a site agreeable to the board of directors of General Motors is over $200 million. The site was to be sold to General Motors for little more than $8 million. The trial court conducted a ten-day trial on defendants’ motion to dismiss from November 17 to December 2, 1980, limited to the question whether the city abused its discretion in determining that condemnation of plaintiffs’ property was necessary under 1980 PA 87. On December 9, 1980, the court entered judgment for defendants and dismissed the complaint. Plaintiffs filed a claim of appeal with the Court of Appeals on December 12, 1980, and an application for bypass with the Michigan Supreme Court on December 15, 1980, which the Court granted along with a motion for immediate consideration.
View caseDarrell 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.
In 1997, the State of Hawaii had a highly concentrated wholesale oil market due to its small size and isolation over 1,600 miles from the mainland, with only two refineries and six gasoline wholesalers operating in the state. Chevron U.S.A. Inc. was the largest refiner and marketer, controlling 60 percent of the in-state gasoline market and 30 percent of the wholesale market on Oahu. Gasoline was sold at retail through approximately 300 service stations, about half leased by oil companies to independent lessee-dealers. Chevron operated 64 such lessee-dealer stations under arrangements where it leased land, constructed stations, and leased them to dealers while setting wholesale prices and requiring supply contracts. In June 1997, the Hawaii Legislature enacted Act 257, which capped the rent oil companies could charge lessee-dealers at 15 percent of gross profits from gasoline sales plus 15 percent of other product sales, and imposed other restrictions on station ownership. Thirty days after enactment, Chevron filed suit in the United States District Court for the District of Hawaii against the Governor and Attorney General, challenging the rent cap. The parties stipulated that the cap would reduce aggregate rent on 11 of Chevron's stations by about $207,000 per year but allow increases on the remaining 53, potentially raising overall rental income by nearly $1.1 million annually, and that Chevron had not recovered station maintenance costs through rent alone over the past 20 years. The District Court granted summary judgment to Chevron. On appeal, the Ninth Circuit vacated the judgment and remanded the case. After a one-day bench trial featuring competing expert economists, the District Court entered judgment for Chevron. The Ninth Circuit affirmed, and the Supreme Court granted certiorari in 2004.
View caseA 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…