Beware - the Supreme Court Further Restricts the Authority of Municipalities to Condition Development Approvals

JurisdictionUnited States,Federal,Kansas
CitationVol. 64 No. 11 Pg. 30
Pages30
Publication year1995
Kansas Bar Journals
Volume 64.

64 J. Kan. Bar Assn. November, 30 (1995). BEWARE - THE SUPREME COURT FURTHER RESTRICTS THE AUTHORITY OF MUNICIPALITIES TO CONDITION DEVELOPMENT APPROVALS

Journal of the Kansas Bar Association
November, 1995

DOLAN V. CITY OF TIGARD: KANSAS LOCAL GOVERNMENTS BEWARE -- THE SUPREME COURT FURTHER RESTRICTS THE AUTHORITY OF MUNICIPALITIES TO CONDITION DEVELOPMENT APPROVALS

Stephen P. Chinn

Neil R. Shortlidge

N. Cason Boudreau

Copyright (c) 1995 by the Kansas Bar Association; Stephen P. Chinn, Neil R. Shortlidge and N. Cason Boudreau

I. INTRODUCTION

On June 24, 1994, the United States Supreme Court issued its long-awaited opinion in the case of Dolan v. City of Tigard. [FN1] The Dolan decision will certainly result in changes in the land use regulatory process in Kansas municipalities as we know it. Kansas communities that ignore Dolan and do not adjust their exaction approach to conform to Dolan's mandates subject themselves to expanded "taking" liability, unless they are one of those rare communities that either does not impose exactions as a part of the development process or has routinely made individualized determinations that each exaction is related, both in nature and extent, to the impact of the proposed development which the Supreme Court now says are required.

In this article, the authors discuss the Dolan decision, analyze its impact on the development approval process, discuss Kansas takings jurisprudence and suggest alternative approaches for use by Kansas municipal land use practitioners that will assist in complying with Dolan's mandates.

*31 II. FACTS OF THE CASE

Pursuant to a comprehensive state-wide land use management program, [FN2] the City of Tigard, Oregon, adopted a comprehensive plan that was implemented through a Community Development Code (CDC). The CDC required property owners in the central business district to comply with a 15 percent open space and landscaping requirement, thereby limiting total site coverage to 85 percent of the parcel. The City had also performed a transportation study that identified congestion in the central business district as a particular problem. In response, the City adopted a plan for a pedestrian/bicycle pathway that was designed to encourage alternatives to automobile transportation. The CDC further required new development located on a street with a designated bike path or adjacent to a designated greenway/open space/park to dedicate land for the bike path or deposit funds for construction in lieu thereof. The City had also adopted a Master Drainage Plan that specifically identified flooding along Fanno Creek and found that increased impervious surface associated with continued urbanization would exacerbate these flooding problems. The plan recommended a series of improvements to Fanno Creek Basin and that its floodplain be preserved as greenways and remain free of structures to minimize flood damage.

Florence Dolan owned a plumbing and electrical supply store located on a 1.67 acre parcel in the City's central business district. Proposing to nearly double the size of her store and to pave a parking lot, she submitted an application for a building permit to the City. The application was approved by planning commission on the condition that she dedicate the portion of her property within the 100-year floodplain of Fanno Creek, which flows through the southwest corner and along the western boundary of her lot, for storm drainage system improvements and also dedicate an additional 15-foot strip of land adjacent to the floodplain as a pedestrian/bicycle pathway. The total dedication required was equal to roughly 10 percent of her property. Mrs. Dolan requested variances from the standards of the CDC which the planning commission denied. In so doing, the planning commission made a series of findings concerning the relationship between the dedication requirements and the projected impact of Mrs. Dolan's project, including the following:

. "[i]t is reasonable to assume that consumers and employees of the future uses of this site could utilize a pedestrian/bicycle pathway adjacent to this development for their transportation and recreational needs"; . "[i]t is reasonable to expect that some of the users of the bicycle parking provided for by the site plan will use the construction adjacent to Fanno Creek if it is constructed"; . "[a pedestrian/bicycle pathway system] could offset some of the traffic demand on [nearby] streets and lessen the increase in traffic congestion"; . "anticipated increased storm water flow from the subject property to an already strained creek and drainage basin can only add to the public need to manage the stream channel and floodplain for drainage purposes"; and . "the requirement of dedication of floodplain area on the site is related to the applicant's plan to intensify development on the site." [FN3] The Tigard City Council approved the planning commission's final order. [FN4]

Mrs. Dolan appealed the Council's order to the Oregon Land Use Board of Appeals (LUBA), claiming that the City's dedication requirements were not related to the proposed development, and that consequently, those requirements constituted an uncompensated taking of property under the Fifth Amendment. LUBA concluded that there was a reasonable relationship between the proposed development and the requirement to dedicate land along Fanno Creek for a greenway and also between alleviating the impacts of increased traffic from the development and facilitating the provision of a pedestrian/bicycle pathway as an alternate means of transportation. [FN5]

Both the Oregon Court of Appeals and Oregon Supreme Court affirmed LUBA on the basis that an "essential nexus" existed between the proposed development and both the pedestrian/bicycle pathway dedication and the storm drainage dedication, that the conditions were reasonably related to the impact of the expansion of Mrs. Dolan's business, and, therefore, no Fifth Amendment taking was established. In its opinion, the Oregon Supreme Court read the U.S. Supreme Court's earlier decision in Nollan v. California Coastal Commission, [FN6] to mean that an "exaction is reasonably related to an impact if the exaction serves the same purpose that a denial of the permit would serve." [FN7] The U.S. Supreme Court granted certiorari because of its perceived conflict between the Oregon Supreme Court's decision and its decision in Nollan.

III. THE SUPREME COURT'S ANALYSIS

The Supreme Court began its opinion by citing Agins v. City of Tiburon, [FN8] for what has become its governing takings principle. "A land use regulation does not effect a taking if it 'substantially advance[s] legitimate state interests' and does not 'den[y] an owner economically viable use of his land."' [FN9] The Court clearly saw this as an opportunity

Page 32

to provide further guidance to regulators and the regulated community on takings cases [FN10] involving the first prong of the Agins takings principle. [FN11] To clarify which aspect of this principle was at issue, the Court distinguishes this case from Lucas v. South Carolina Coastal Council, [FN12] its most recent takings case, [FN13] and its other takings cases involving the second -- or economic impact -- aspect of the governing principle. [FN14]

The Supreme Court most recently addressed the first prong of the governing principle in Nollan, one of its trilogy of 1987 takings cases. In Nollan, the Court held that an exaction requiring the dedication of a lateral easement across the Nollan's beachfront property to allow the public to pass "utterly fail[ed] to further the end advanced" of protecting the public's ability to see the beach, of assisting the public in overcoming the psychological barrier to using the beach that is created by a developed shorefront, and of preventing congestion on the public beaches. [FN15] The Court held that there was no "essential nexus" between the condition imposed and the purposes that the commission sought to achieve by such condition. [FN16] The Court stated:

[U]nless the permit condition serves the same governmental purpose as the governmental ban, the building restriction is not a valid regulation of land use but "an out-and-out plan of extortion." [FN17] Because the Court determined that there was no connection between the regulation and the state interest, it had no occasion to reach the more difficult issue of "what type of connection between the regulation and the state interest satisfies the requirement that the former substantially advance the latter." [FN18] In Dolan, the Court did address this issue.

The Court initiated this portion of its takings analysis by a reference to what it terms the "well-settled doctrine of 'unconstitutional conditions."' [FN19] The Court stated "the government may not require a person to give up a constitutional right -- here the right to receive just compensation when a property is taken for public use -- in exchange for a discretionary benefit conferred by the government where the property sought has little or no relationship to the benefit." [FN20] The Court refers to this doctrine because the essence of plaintiff's challenge was that she was forced to choose between the building permit and her right under the Fifth Amendment to just compensation for the dedications. Mrs. Dolan did not challenge the authority of the City to exact some form of dedication as a condition of the granting of the building permit, but instead challenged the showing the City made in its effort to justify the specific exactions in question.

The Court next articulated the methodology that it intended to use in this case to determine whether the dedications at issue violated the first prong of the Agins principle:

In evaluating petitioner's claim, we must first determine whether the "essential nexus" exists between the "legitimate state...

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