Also known as: land use exaction · land-use exactions · land use exactions · exaction
Written by attorneys — see sources below.
A condition attached to a land-use permit that requires a developer to dedicate land or make monetary payments to offset impacts of the proposed development.
Liam Larson sought a permit to build a warehouse on his property. The city required him to pay a charge calculated from projected revenue and collected with his tax return if he declined to install certain stormwater features. The charge raised substantial revenue and varied with business income. The court treated the charge as a tax rather than a regulatory exaction because its operation matched ordinary tax collection.
Lorenzo Lugo applied to expand his retail store. The city conditioned approval on dedicating a strip of land for a bike path and greenway. The city offered no individualized findings linking the dedication's extent to the store's traffic impact. The court held the exaction failed rough proportionality because the burden on Lugo exceeded the projected effects.
Latoya Lane requested a permit to subdivide waterfront acreage. The district demanded she pay for off-site wetland restoration instead of granting the permit outright. Lane challenged the demand as an unconstitutional condition. The court applied exaction scrutiny because the monetary requirement functioned like a demand for property interests.
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 caseLuis Lopez sought to rebuild a beachfront home. The commission granted the permit only if Lopez recorded a public access easement across the lot. The easement served general recreational goals unrelated to any specific harm from the new house. The court struck the condition for failing the nexus test.
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 caseLily Lopez challenged a city ordinance that lowered building heights across an entire zoning district. The ordinance applied to all owners without requiring any dedication or payment from Lopez. The court held the rule was not an exaction because it imposed no individualized condition on a permit application.
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 caseLila Lin obtained a federal warehouse license. State regulators then conditioned a local building permit on compliance with additional state storage rules. The court found the state conditions conflicted with the federal licensing scheme and could not stand as an enforceable exaction.
Respondents Santa Fe Elevator Corp. and other entities operated public grain warehouses in Illinois under licenses issued by the Secretary of Agriculture pursuant to the United States Warehouse Act. The Rice partnership, an owner, shipper, and dealer in grain, served as one of their customers, while the Illinois Commerce Commission held regulatory jurisdiction over public grain warehouses under state law. In 1944 Rice filed a complaint with the Illinois Commerce Commission alleging that respondents maintained unjust and unreasonable rates, discriminated in storage rates in favor of the federal government, operated in dual conflicting positions as warehousemen and grain dealers, failed to provide reasonable and adequate facilities, issued securities and entered affiliate contracts without prior approval, operated without a state license, abandoned service without consent, failed to file and publish rate schedules, and mixed public grain with inferior grades. Respondents moved to dismiss the complaint on the ground that the federal Warehouse Act superseded state authority. The Commission denied the motion and set the matter for hearing. Respondents then filed suits in federal district court seeking to enjoin further Commission proceedings and any enforcement actions by the Illinois Attorney General. The district court granted petitioners' motions to dismiss the suits. The Circuit Court of Appeals reversed. The Supreme Court granted certiorari because of the public importance of the questions presented. The United States Warehouse Act was enacted in 1916 and originally made federal regulation subservient to state warehouse laws, including by requiring bonds conditioned on compliance with state obligations. Congress amended the Act in 1931 to delete the state-law bond requirement and to provide that the Secretary's power, jurisdiction, and authority shall be exclusive for persons holding federal licenses. The complaint also raised three additional matters not expressly addressed in the federal Act. These were failure to obtain prior Commission approval for management, construction, and financial contracts with affiliates. They also included failure to obtain approval for contracts and leases with other public utilities. Finally they included failure to obtain approval for issuance of long-term securities.
View caseThe government must demonstrate that the exaction is roughly proportional in nature and extent to the projected impact of the development. It bears the burden of making individualized findings rather than relying on general assertions.
Yes. The Court has held that demands for money in connection with land-use permits receive the same nexus and proportionality review as demands for real property interests.
A charge functions as a tax when it is collected through the tax system, varies with income or revenue, and is expected to raise substantial revenue, even if labeled a penalty or linked to regulatory goals.
An exaction requires an individualized dedication or payment as a condition of permit approval. A general regulation applies across the board without conditioning a specific permit on conveyance of property interests.