Land Development Conditions

• Author: David L. Callies/Daniel J. Curtin Jr./Julie A. Tappendorf
• Pages: 5-90

ments. Following a discussion of these fundamental legal issues, the book con-

tinues with a discussion of more particular problems, such as comprehensive

plan conformity,character of the agreement (administrative or legislative), and

binding of other governmental agencies. It ends with a series of model statutes,

ordinances, checklists, and agreements in a comprehensive appendix.

II. Land Development Conditions

A. Introduction and Background

Land development of any size and substance requires a variety of public facili-

ties to support it. Most common is the need for additional roads, public utilities,

parks, and schools. To this list one could logically add police and fire stations

and sanitary landfills. The time is long past since government, particularly local

government, has borne the principal burden of the costs of these facilities. State

and local financial resources have been woefully inadequate at least since the

end of massive federal subsidies in the early 1980s. For decades, local govern-

ment has charged land developers for a part of the cost of such public facilities,

at least with respect to those facilities intrinsic to the development, in the form

of subdivision dedications and fees. Initially “charged” as the price of drawing

and recording the simpler and cheaper subdivision plat in place of the lengthy,

tedious, and easily flawed metes and bounds description for land development,

these fees and dedications soon became part of the regulatory land use process,

exercised by local government under the police power for the health, safety,and

welfare of the people, often as a method to control or manage growth.5

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II. LAND DEVELOPMENT CONDITIONS

5. Robert H. Freilich, From Sprawl to Smart Growth (1999); Julian Con-

rad Juergensmeyer & Thomas E. Roberts, Land Use Planning and Con-

trol Law (2d ed. 2002); Exactions, Impact Fees, and Dedications: Shaping

Land-Use Development and Funding Infrastructure in the Dolan Era

(Robert H. Freilich & David W. Bushek eds., 1995); David L. Callies et al.,

Cases and Materials on Land Use 148 (West 3d ed. 1999) [hereinafter

Callies et al., Cases and Materials on Land Use]; Robert H. Freilich &

Michael M. Shultz, National Model Subdivision Regulations, Planning,

and Law 1-6 (Planners Press 1994); Daniel R. Mandelker, Land Use Law

(4th ed. 1997); Susan P. Schoettle & David G. Richardson, Nontraditional Uses of

the Utility Concept to Fund Public Facilities,25Urb. Law. 519, 519-22 (1993);

Frona M. Powell, Challenging Authority for Municipal Subdivision Exactions: The

Ultra Vires Attack,39DePaul L. Rev. 635, 635-36 (1990); Julian Conrad Juergens-

meyer & Robert M. Blake, Impact Fees: An Answer to Local Government’s Capital

Funding Dilemma,9Fla. St. U. L. Rev. 415 (1981); Thomas M. Pavelko, Subdi-

vision Exactions: A Review of Judicial Standards,25J. Urb. & Contemp. L. 269

(1983); Development Exactions (James E. Frank & Robert M. Rhodes eds., 1987).

The British also continue to experiment with land development conditions.

See, e.g., Tom Cornford, Planning Gain and the Government’s New Proposals on

Planning Obligations,3J. Plan. & Envtl. L. 796 (2002); David L. Callies &

Malcolm Grant, Paying for Growth and Planning Gain: An Anglo American Com-

parison of Development Conditions, Impact Fees, and Development Agreements,

23 Urb. Law. 221 (1991) [hereinafter Callies & Grant, Paying for Growth and

Planning Gain].

However,by justifying such land development dedications and fees as police

power regulations, rather than “voluntary” costs of using the subdivision pro-

cess, local governments invite judicial scrutiny under the TakingsClause of the

Fifth Amendment to the U.S. Constitution, which permits the taking of private

property for public use only upon payment of just compensation. While early

cases generally upheld such intrinsic dedications and fees, the more recent

charges of “impact fees” for the shared construction by several land develop-

ments of large and expensive public facilities (such as municipal wastewater

treatment plants and sanitary landfills) outside or extrinsic to the development

upon which the fee is levied, led knowledgeable courts to scrutinize the connec-

tion between these fees and the need generated by the charged development for

the particular facility in question.6Nevertheless, it is generally agreed that the

law applicable to impact fees, exactions, and in lieu fees, as well as to compul-

sory dedications, is similar, given that they all represent land development con-

ditions levied at some point in the land development process, such as subdivi-

sion plat approval, shoreline management permit application, building permit

application, occupancy permit application, or utility connection.7Therefore,

except where the test specifically makes such distinctions, the terms are used

here interchangeably.

The major legal issue with respect to fees, dedications, and exactions, is the

connection or “nexus” to the land development. Without this connection or

“nexus,” such land development regulations are generally unconstitutional

takings of property without compensation, particularly after the U.S. Su-

preme Court decisions in Nollan v. California Coastal Commission,8and

Dolan v. City of Tigard.9Therefore much of this part II is devoted to these

cases and their progeny.

Critical as the takings/nexus issue is, there are other legal requirements for at-

taching conditions to the development of land. Among these are the need for au-

thority to levy such dedications, fees, and other exactions, in the form of enabling

legislation and local ordinances, to avoid the charge that they are “ad hoc,” and

the need to expend the fee, whether “in lieu” of a dedication requirement or an

impact fee, within a reasonable period of time after collection. As the history and

cases make abundantly clear,such land development conditions are development

driven, i.e., to be valid, they must be collected (and exactions and dedications re-

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BARGAINING FOR DEVELOPMENT

6.Ira M. Heyman & Thomas K. Gilhool, The Constitutionality of Imposing Increased

Community Costs on New Suburban Residents Through Subdivision Exactions,73

Yale L.J. 1119 (1964); see also John D. Johnston Jr., Constitutionality of Subdivi-

sion Exactions: The Quest for a Rationale,52Cornell L.Q. 871 (1967).

7.Board of County Comm’rs v. Bainbridge, Inc., 929 P.2d 691, 698 (Colo. 1996) (cit-

ing Donald G. Hagman & Julian Conrad Juergensmeyer, Urban

Planning and Land Development Control Law §9.8 (West 2d ed. 1986));

Development Exactions,supra note 5, at 3-4.

8.483 U.S. 825, 107 S. Ct. 3141, 97 L. Ed. 2d 677, 17 ELR 20918 (1987).

9.512 U.S. 374, 114 S. Ct. 2309, 129 L. Ed. 2d 304, 24 ELR 21083 (1994).

quired) for, and only for,public facilities and infrastructure for which land devel-

opment causes a need.10 Courts uniformly strike down—usually as an unautho-

rized tax—land development conditions that are not so connected. Generally,this

includes attempts to remedy existing infrastructure deficiencies11 or to provide

for operation and maintenance of facilities.12 Of course, if payment for a public

facility, or its construction or dedication, is in part fulfillment of a landowner’s

contractual obligations under a development agreement between landowner

and local government, then the legal issues and analysis are entirely different

and the need for nexus and proportionality, at least as a matter of constitutional

law,disappears.13 Parts III and IV of this book discuss this issue in more detail.

In a few states, local governments have the authority to impose excise taxes

that may accomplish the same purpose as an impact fee. The key here is “autho-

rization,” almost always through a specific enabling statute. For example, the

Colorado Supreme Court determined that a road impact fee levied by Cherry

Hills Village was actually a tax, but it went on to hold that it was an excise tax

that the city was authorized to impose.14 In a much later case, the Ohio Supreme

Court upheld a local road impact fee after rejecting an appellate court’sapplica-

tion of the tax/fee distinction; the Ohio high court found that the distinction

was not critical in Ohio.15 The Pennsylvania Supreme Court has upheld an ex-

cise tax imposed on gross receipts of a construction company, holding that it

was a valid gross receipts tax and not an unauthorized tax on homebuilding.16

In contrast, the WashingtonSupreme Court has struck down a “residential de-

velopment unit fee” imposed on rental dwelling units, in addition to a busi-

ness licensing fee imposed on the entire business location. The court found

that the fee was an unauthorized property tax and not an excise tax, which

would have been allowed under the Washington Constitution.17 The Massa-

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II. LAND DEVELOPMENT CONDITIONS

10.James C. Nicholas, Impact Exactions: Economic Theory, Practice, and Incidence,

50 Law & Contemp. Probs. 85 (1987); James C. Nicholas et al., A

Practioner’s Guide to Development Impact Fees 37-38 (1991); Takings:

Land Development Conditions and Regulatory Takings After Dolan

and Lucas (David L. Callies ed., 1996).

11.Rohn v. City of Visalia, 263 Cal. Rptr. 319, 214 Cal. App. 3d 1463 (1989).

12. But see Bloom v. City of Fort Collins, 13 Brief Times Rptr. 1548, 784 P.2d 304

(Colo. 1989).

13.Callies & Grant, Paying for Growth and Planning Gain,supra note 5, at 239-50.

14.Cherry Hills Farms, Inc. v. City of Cherry Hills, 670 P.2d 779 (Colo. 1983).

15.Home Builders Ass’n of Dayton & the Miami Valley v. City of Beavercreek, 89

Ohio St. 3d 121, 729 N.E.2d 349 (Ohio 2000).

16.School Dist. of Scranton v. Dale & Dale Design & Dev., 559 Pa. 398, 741 A.2d 186

(1999).

17. Harbour Village Apts. v. City of Mukilteo, 139 Wash. 2d 604, 989 P.2d 542

(1999).