|
CITY OF CULVER CITY et al., Defendants and Appellants.
The judgment of the Court of Appeal
is reversed; the cause is remanded to that court with directions to
order the case returned to the City of Culver City. Opinion by Arabian, J., * with
Lucas, C. J., and George, J., concurring. Concurring opinion by Mosk,
J. Concurring and dissenting opinion by Kennard, J., with Baxter,
J., concurring. Concurring and dissenting opinion by Werdegar, J. * Retired Associate Justice of
the Supreme Court sitting under assignment by the Chairperson of the
Judicial Council. ARABIAN, J. * -- This case comes to us by a circuitous route, having been remanded after the United States Supreme Court issued a writ of certiorari to the Court of Appeal and vacated that court's judgment in favor of defendant City of Culver City. The high court's order of remand directed the Court of Appeal to [**433] reexamine its prior judgment "in light of Dolan v. City of Tigard (1994) 512 U.S. 374 [129 L. Ed. 2d 304, 114 S. Ct. 2309]. . . ." (Ehrlich v. City of Culver City (1994) 512 U.S. [129 L. Ed. 2d 854, 114 S. Ct. 2731].)
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - * Retired Associate Justice of the Supreme Court
sitting under assignment by the Chairperson of the Judicial Council. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - Following remand, a divided Court of Appeal reaffirmed
its earlier ruling in favor of defendant city in an unpublished opinion.
We then granted the petition for review by plaintiff, a property owner
and developer, to consider important and unsettled questions concerning
the extent to which the high court's opinions in Dolan v. City of Tigard
(1994) 512 U.S. 374 [129 L. Ed. 2d 304, 114 S. Ct. 2309] (Dolan) and
the earlier case of Nollan v. California Coastal Comm'n (1987) 483 U.S.
825 [97 L. Ed. 2d 677, 107 S. Ct. 3141] (Nollan) apply to development
permits that exact a fee as a condition of issuance, rather than, as
in both Nollan and Dolan, the possessory dedication of real property. As we explain, we conclude that the tests formulated
by the high court in its Dolan and Nollan opinions for determining whether
a compensable regulatory taking has occurred under the takings clause
of the Fifth Amendment to the federal Constitution apply, under the
circumstances of this case, to the monetary exaction imposed by Culver
City as a condition of approving plaintiff's request that the real property
in suit be rezoned to permit the construction of a multi-unit residential
condominium. We thus reject the city's contention that the heightened
takings clause standard formulated by the court in Nollan and Dolan
applies only to cases in which the local land use authority requires
the developer to dedicate real property to public use as a condition
of permit approval. We arrive at this conclusion not by reference
to the constitutional takings clause alone, but within the statutory
framework presented by the Mitigation Fee Act. (Gov. Code, § 66000
et seq.) We will conclude in this case that, in order to avoid substantial
questions concerning the constitutional sufficiency of the legislative
standard embodied in the act, the tests formulated by the high court
in its Dolan and Nollan opinions for determining when a regulatory taking
has occurred apply here to the act's requirement that the local regulatory
authority demonstrate a "reasonable relationship" between the monetary
exaction and the public impact of the development. We thus interpret the act's "reasonable relationship"
standard, as applied to the development fee at issue in this case, as
embodying the standard of review formulated by the high court in its
Nollan and Dolan opinions--proof by the local permitting authority of
both an "essential nexus" or relationship between the permit condition
and the public impact of the proposed development, and of a "rough proportionality"
between the magnitude of the fiscal exaction and the effects of the
proposed development. Applying this standard in this case, we conclude,
first, that the city has met its burden of demonstrating the required
connection or nexus between the rezoning--to permit a residential use
of a parcel of land zoned for private recreational use--and the imposition
of a monetary exaction to be expended in support of recreational purposes
as a means of mitigating that loss. We conclude, however, that the record
before us is insufficient to sustain the city's determination that plaintiff
pay a so-called mitigation fee of $280,000 as a condition for approval
of his request that the property be rezoned to permit the construction
of a condominium project. Because the city may be able to justify the
imposition of some fee under the recently minted standard of Dolan,
we follow the Oregon Supreme Court's disposition in that case and direct
that the cause be remanded to the city for additional proceedings in
accordance with this opinion. I. FACTUAL AND PROCEDURAL BACKGROUND A Between 1973 and 1975, plaintiff acquired a vacant
2.4-acre lot on Overland Avenue in Culver City and obtained city approval
to develop the site as a private tennis club and recreational facility.
At plaintiff's request, the city amended its zoning and general plan
ordinances governing uses on the property from a split zone R-1 (single-family
residential) [**434] and C-2 (retail commercial) to C-3 (commercial).
A specific plan was also adopted by the city providing for the development
of a privately operated tennis club and recreational facility. n1 A
report prepared by city planning officials in 1974 recommending approval
of the development permit recognized that "the need for additional tennis
facilities in this city is a real one"; the planning commission resolution
recommending approval likewise observed that "[t]he proposed zoning
of the property in conjunction with the specific plan will provide a
suitably located area within the City for additional tennis club facilities
in the form of a private tennis club." From 1975 to 1988, plaintiff,
alone or through others, operated the sports complex--consisting by
then of a swimming pool, five tennis courts, racquetball courts, and
weight training and aerobic facilities--on the site. - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n1 A "specific plan" implements and refines the
general plan by allowing for greater specificity as to permissible uses.
(Gov. Code, §65450.) - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - In 1981, in response to financial losses, plaintiff
applied to the city for a change in land use in order to construct an
office building on the site; that application was abandoned after the
city planning commission recommended against approval on the ground
that the existing sports and tennis club provided a needed commercial
recreational facility within the city. The club continued in operation
under a series of managers until August 1988, when plaintiff closed
it as a result of continuing financial losses. The following month,
he again applied to the city for an amendment to the general plan, a
zoning change and amendment of the specific plan to allow construction
of a 30-unit condominium complex valued at $10 million. Shortly after the submission of plaintiff's application,
the city expressed an interest in acquiring the property for operation
as a municipally owned sports facility and hired outside consultants
to study the feasibility of the acquisition. The impetus behind the
city's interest was a perceived deficiency in existing municipal recreational
facilities. Buying the property, according to a city council staff report,
offered the "opportunity to preserve an existing sports/recreational
facility for public use and relieve pressure on existing facilities."
The feasibility study concluded that, by national standards, the city
was two to four tennis courts short, and deficient in the number of
its public swimming pools and gymnasiums. The study also concluded that
plaintiff's club had encountered financial problems through a combination
of management problems, poor maintenance, and a lack of competitive
amenities offered by other clubs. Without extensive capital improvements,
the study concluded, the club could not "compete financially in today's
health and fitness market." Based upon the findings of the study, the city
concluded that it lacked the funds to purchase and operate the club
as a general public sports complex, and would incur substantial financial
risks if it purchased and operated the club on a limited membership,
fee-for-service basis. In April 1989, the city decided not to purchase
the property. At the same time, the city council disapproved plaintiff's
application based on concerns over the loss of a recreational land use
needed by the community. In the meantime, plaintiff obtained a demolition
permit and tore down the existing site improvements. The still-useful
equipment, including the tennis court lights, nets, and lockers, he
donated to the city. Following the rejection of his application, plaintiff
entered into discussions with members of the city council and city staff
in an attempt to restructure the project. He asserts that he was informed
the project would not be approved unless he agreed to build new recreational
facilities for the city. In response, plaintiff apparently raised the
possibility of constructing four new municipal tennis courts. During
this time period plaintiff filed, but did not serve, a petition for
writ of mandate and complaint for damages commencing this lawsuit. Following
a closed-door meeting ostensibly to discuss the pending litigation,
the city council voted to approve plaintiff's application conditioned
upon the payment of certain monetary exactions. In lieu of the construction
of four tennis [**435] courts as a condition of approval, the city required
the payment of $280,000 "to be used" as stated in the ratifying ordinance,
"for additional [public] recreational facilities as directed by the
City Council." The minutes of the city council meeting state that the
$280,000 fee was to be used "for partial replacement of the lost recreational
facilities . . ." occasioned by the specific plan amendment. The amount
of the fee was based upon a city study which showed that the replacement
costs for the recreational facilities "lost" as a result of amending
the specific plan would be $250,000 to $280,000 for the pool, $135,000
to 150,000 for the paddle tennis courts, and $275,000 to $300,000 for
the tennis courts. In addition to the $280,000 recreation fee, the
city also required plaintiff to pay an exaction under the city's "art
in public places" program. By municipal ordinance, new residential development
projects of more than four units, as well as all commercial, industrial,
and public building projects with a building valuation exceeding $500,000,
are required to provide "art work" (as defined by the ordinance) for
the project in an amount equal to 1 percent of the total building valuation,
or to pay an equal amount in cash to the city art fund. The city valued
plaintiff's project at $3.2 million. He elected initially to pay the
fee, which totaled $33,200, but his successor in interest apparently
subsequently placed art of his own choosing on the site rather than
pay the in-lieu fee. n2 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n2 Plaintiff was also apparently required to
pay a $30,000 in-lieu "parkland" fee pursuant to section 33-E.1 of the
Culver City Municipal Code, to provide ostensibly for local park and
recreational facilities to serve the residents of plaintiff's condominium
development. Plaintiff has not challenged this in-lieu fee in the present
action. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - Thereafter, plaintiff filed with the city formal
written protests to the imposition of the $280,000 recreation fee and
the $33,200 art in public places exaction, pursuant to Government Code
sections 66020 and 66021. The city rejected both protests. Plaintiff
then amended his complaint to allege that imposition of the fees amounted
to an unconstitutional taking without just compensation in violation
of the Fifth and Fourteenth Amendments of the United States Constitution
and article I, section 19 of the California Constitution. n3 The parties
later entered into an agreement whereby plaintiff agreed to pay the
$280,000 recreation fee under protest in exchange for the necessary
building and grading permits for the project. Plaintiff retained the
right to proceed with his lawsuit, and agreed that the city would obtain
a lien on the property as security for payment of the $280,000 fee.
The site was subsequently developed and residential units were sold
to the public. - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n3 The Fifth Amendment provides that "No person
shall be . . . deprived of . . . property, without due process of law;
nor shall private property be taken for public use, without just compensation."
The Fifth Amendment was made applicable to the states through the Fourteenth
Amendment in Chicago, B & Q Ry. Co. v. Chicago (1897) 166 U.S. 226
[41 L. Ed. 979, 17 S. Ct. 581]. The parallel provision of the California Constitution
provides, "Private property may be taken or damaged for public use only
when just compensation . . . has first been paid to, or into court for,
the owner." (Cal. Const., art. I, § 19.) - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - B The petition for writ of mandate, by which plaintiff
sought to set aside the $280,000 recreation fee and the $33,200 in-lieu
art fee as unconstitutional takings, was bifurcated from the balance
of the complaint. Following a hearing, the trial court invalidated the
$280,000 recreation fee, holding that there was "no reasonable relation
. . . between the plaintiff's project and the need for public tennis
courts in the City." The trial court concluded that the exaction was
"simply an effort to shift the cost of providing a public benefit to
one no more responsible for the need than any other taxpayer." The trial
court declined to set aside the $33,200 art fee, however, ruling that
it was not an unconstitutional taking. The Court of Appeal initially affirmed the judgment
in its entirety but on rehearing modified its opinion to reverse that
portion of the judgment invalidating the $280,000 recreation fee. (Ehrlich
v. City of Culver City (1993) 15 Cal. App. 4th 1737 [19 Cal. Rptr. 2d
468].) The Court of Appeal found there was a [**436] "substantial nexus"
(id. at p. 1749) between the proposed condominium project and the $280,000
exaction. "The mitigation fee was imposed to compensate the City for
the benefit conferred on the developer by the City's approval of the
townhome project and for the burden to the community resulting from
the loss of recreational facilities." (Id. at p. 1750.) Thus, the recreation
fee was not, in the Court of Appeal's judgment, an unconstitutional
taking without just compensation. The Court of Appeal also affirmed
that portion of the judgment upholding the in-lieu art fee. Plaintiff then sought certiorari from the United
States Supreme Court. The high court granted his petition, vacated the
Court of Appeal judgment, and remanded the case for further consideration
in light of its opinion in Dolan. (Ehrlich v. City of Culver City, supra,
512 U.S. [129 L. Ed. 2d 854, 114 S. Ct. 2731].) As noted, following
remand, a divided Court of Appeal reached the identical result. In addition
to its earlier conclusions, it found that the $280,000 fee was "roughly
proportional" in nature and extent to the needs generated by the project,
and therefore passed muster under Dolan, supra, 512 U.S. at p. [129
L. Ed. 2d at p. 320, 114 S. Ct. at pp. 2319-2320]. We granted plaintiff's
petition for review and now reverse. II. THE MITIGATION FEE ACT (GOV. CODE, §66000
ET SEQ.) As noted, this case arises within the statutory
framework of the Mitigation Fee Act (the Act), introduced in the Legislature
as Assembly Bill No. 1600, 1987-1988 Regular Session, and enacted as
Statutes 1987, chapter 927, effective January 1, 1989. The Act, codified
as sections 66000-66003 of the Government Code, sets forth procedures
for protesting the imposition of fees and other monetary exactions imposed
on a development by a local agency. As its legislative history evinces,
the Act was passed by the Legislature "in response to concerns among
developers that local agencies were imposing development fees for purposes
unrelated to development projects." (Centex Real Estate Corp. v. City
of Vallejo (1993) 19 Cal. App. 4th 1358, 1361 [24 Cal. Rptr. 2d 48];
Sen. Local Gov. Com. analysis of Assem. Bill No. 1600 (1987-1988 Reg.
Sess.) p. 1; see also Garrick Development Co. v. Hayward Unified School
Dist. (1992) 3 Cal. App. 4th 320 [4 Cal. Rptr. 2d 897].) Plaintiff complied with the requirements of Government
Code section 66020 by filing a protest with the city which enumerated
all of the bases of his challenge to the recreational and art fees,
including his constitutional takings claim. These claims were subsequently
set forth in the complaint and writ petition. In the subsequent agreement
between plaintiff and the city, plaintiff agreed to pay the disputed
fees and to have a lien recorded against the property, and the city
agreed to allow the project to proceed, and further stipulated that
"[n]othing in this agreement shall in any way waive or restrict [plaintiff's]
rights to pursue the protest [plaintiff] has made under [former] Government
Code § 66008 [now section 66020] and by the above-mentioned lawsuit."
Thus, the agreement expressly preserved both the statutory claim under
the Act and the takings claims set forth in plaintiff's statutory protest
and in his lawsuit. n4 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n4 In its brief on the merits, the city has raised
two additional issues. It asserts that plaintiff preserved only his
right to challenge the exactions under the Act. This argument was not
raised below or in a counterpetition for review; it is therefore not
cognizable before this court. (Cal. Rules of Court, rule 29(b)(1).)
Furthermore, it is factually inaccurate. The city also asserts that
the takings challenge is somehow not "ripe" because plaintiff waived
all but his statutory challenge to the fees. The argument was not raised
below and is therefore not cognizable before this court. Moreover, as
noted above, it is also factually untenable. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - Although for the most part procedural in nature,
the Act also embodies a statutory standard against which monetary exactions
by local governments subject to its provisions are measured. Government
Code section 66001 requires the local agency to determine "how there
is a reasonable relationship" between the proposed use of a given exaction
and both "the type of development project" and "the need for the public
facility and the [**437] type of development project on which the fee
is imposed." (Gov. Code, § 66001, subd. (a)(3), (4), italics added.)
In addition, the local agency must determine how there is a "reasonable
relationship" between "the amount of the fee and the cost of the public
facility or portion of the public facility attributable to the development
on which the fee is imposed." (Id., § 66001, subd. (b), italics
added.) The Act thus codifies, as the statutory standard applicable by definition to nonpossessory monetary exactions, the "reasonable relationship" standard employed in California and elsewhere to measure the validity of required dedications of land (or fees imposed in lieu of such dedications) that are challenged under the Fifth and Fourteenth Amendments. (See, e.g., Ayres v. City Council of Los Angeles (1949) 34 Cal. 2d 31 [207 P.2d 1, 11 A.L.R.2d 503]; Associated Home Builders etc., Inc. v. City of Walnut Creek (1971) 4 Cal. 3d 633 [94 Cal. Rptr. 630, 484 P.2d 606, 43 A.L.R.3d 847] (Associated Home Builders); Grupe v. California Coastal Com. (1985) 166 Cal. App. 3d 148 [212 Cal. Rptr. 578]; cf. Nollan, supra, 483 U.S. at pp. 839-840 [97 L. Ed. 2d at pp. 690-691]; Dolan, supra, 512
U.S. at p. [129 L. Ed. 2d at p.320, 114 S. Ct. at p. 2319] ["Some form
of the reasonable relationship test has been adopted in many . . . jurisdictions."].) As we explain, the high court's opinions in Nollan
and Dolan cast substantial doubt on the sufficiency of the Associated
Home Builders standard, at least as applied to cases such as this one,
where the property owner challenges an individualized exaction imposed
as a condition of issuance of a development permit as an uncompensated
taking under the Fifth Amendment. The high court's recent takings jurisprudence,
as we comprehend it, underlines the separate nature of the takings clause
as an independent constitutional guarantee, one that is not only distinct
from the commands of the due process and equal protection provisions
of the federal Constitution, but which embodies a standard of judicial
review that is greater than the "minimal level of scrutiny" mandated
by those provisions. (Dolan, supra, 512 U.S. at p. [129 L. Ed. 2d at
p. 320, 114 S. Ct. at p. 2319].) We do not believe, however, that these conceptual
obscurities need cause problems in practice. Although the Act predates
the formulation adopted by the high court in Dolan, we believe the Act's
"reasonable relationship" language should be construed in light of Dolan's
"rough proportionality" test for two reasons. First, the statutory scheme
authorizes "any party on whom a fee, tax, assessment, dedication, reservation,
or other exaction has been imposed, the payment or performance of which
is required to obtain governmental approval of a development," to protest
such an imposition by following the procedures provided in section 66020
of the Act. (Gov. Code, § 66021, subd. (a), italics added.) Such
a broadly formulated and unqualified authorization is consistent with
the view that the Legislature intended to require all protests to a
development fee that challenge the sufficiency of its relationship to
the effects attributable to a development project--regardless of the
legal underpinnings of the protest--to be channeled through the administrative
procedures mandated by the Act. Such claims would encompass not only
statutory grounds, but contentions that a given imposition offends the
commands of the takings clause of the Fifth Amendment. Requiring that
constitutionally based claims be determined under the provisions of
the Act does not itself raise a constitutional issue "[i]f the government
has provided an adequate process for obtaining compensation, and if
resort to that process" yield[s] just compensation, "'. . . .'" (Hensler
v. City of Glendale (1994) 8 Cal. 4th 1, 13 [32 Cal. Rptr. 2d 244, 876
P.2d 1043], quoting Williamson Planning Comm'n v. Hamilton Bank (1985)
473 U.S. 172, 194-195 [87 L. Ed. 2d 126, 143-144, 105 S. Ct. 3108].)
This is so because the Fifth Amendment "leaves to the state . . . the
procedures by which compensation may be sought." (8 Cal. 4th at p. 13.) Second, because the Legislature incorporated
into Government Code section 66001, subdivision (a)(3) of the Act a
standard that generally corresponds to the one reflected in the high
court's takings jurisprudence (see Dolan, supra, 512 U.S. at p. [129
L. Ed. 2d at p. 320, 114 S. Ct.at p. 2319] ["We think the 'reasonable
relationship' test adopted by a majority of the state courts is closer
to the federal constitutional [**438] norm .. . . [W]e do not adopt
it as such, partly because the term . . . seems confusingly similar
to the term 'rational basis' . . . ."]), it is appropriate for this
court to interpret the statutory standard in a manner consistent with
the high court's decisions in Nollan and Dolan so that a development
fee imposed pursuant to the act, and that satisfies its requirements,
will not be subject to challenge on constitutional grounds. By interpreting
the "reasonable relationship" standard adopted by Government Code section
66001 as imposing a requirement consistent with the Nollan/Dolan standard,
we serve the legislative purpose of protecting developers from disproportionate
and excessive fees, and carry out the legislative intent of imposing
a statutory relationship between monetary exaction and development project
that accurately reflects the prevailing takings clause standard. n5 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n5 Contrary to the assertion of Justice Kennard
that "[t]his case was litigated under the takings clause, not our state's
Mitigation Fee Act; thus, there is no need to construe the Mitigation
Fee Act to decide this case" (conc. & dis. opn. of Kennard, J.,
post, at p. 903), plaintiff complied with the requirements of the Act
by asserting both statutory and the constitutional takings claims in
his protest. (See fn. 4, ante, at p. 865.) We resolve plaintiff's claim
in the context of the Act for the reasons set forth in the main text,
that is, the unqualified statutory language channeling all protests
to development fees through the procedures prescribed by the Act and
the formulaic identity of the statutory and constitutional standards. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - We must, in other words, recognize that in the
wake of Dolan the term "reasonable relationship" embraces both constitutional
and statutory meanings which, for all practical purposes, have merged
to the extent that the Dolan decision applies to development fees--an
issue we address below. Thus, developers who wish to challenge a development
fee on either statutory or constitutional grounds must do so via the
statutory framework provided by the Act. (Cf. Hensler v. City of Glendale,
supra, 8 Cal. 4th at pp. 13-15.) III. "LEVERAGING" THE PERMIT POWER AND THE TAKINGS
CLAUSE Our account of the factual record should make
it clear that we view this case as one presenting the earmarks of what
has come to be characterized in recent takings jurisprudence as a form
of regulatory "leveraging." We mean to convey by such a characterization
what Justice Scalia appears to have had in mind when, describing the
California Coastal Commission's exaction of a beachfront easement from
a homeowner as a condition of issuing a development permit, he wrote
in Nollan, supra, 483 U.S. 825, that "One would expect that a [permit]
regime in which this kind of leveraging [i.e., the imposition of unrelated
exactions as a condition for granting permit approval] of the police
power is allowed would produce stringent land-use regulation which the
State then waives to accomplish other purposes . . . ." (Id. at p. 837,
fn. 5 [97 L. Ed. 2d at p. 690], italics added.) In our view, the intermediate standard of judicial
scrutiny formulated by the high court in Nollan and Dolan is intended
to address just such indicators in land use "bargains" between property
owners and regulatory bodies--those in which the local government conditions
permit approval for a given use on the owner's surrender of benefits
which purportedly offset the impact of the proposed development. It
is in this paradigmatic permit context--where the individual property
owner-developer seeks to negotiate approval of a planned development--that
the combined Nollan and Dolan test quintessentially applies. Its effect,
at least as to those conditions that fail to exhibit the constitutionally
required nexus, is to rule out the imposition of a certain species of
regulatory conditions: those which are either logically unrelated to
legitimate regulatory objectives or fail to exhibit the constitutionally
required "fit" between conditional means and legitimate governmental
ends. Where the local permit authority seeks to justify
a given exaction as an alternative to denying a proposed use, Nollan
requires a reviewing court to scrutinize the instrumental efficacy of
the permit condition [**439] in order to determine whether it logically
furthers the same regulatory goal as would outright denial of a development
permit. A court must also, under the standard formulated in Dolan, determine
whether the factual findings made by the permitting body support the
condition as one that is more or less proportional, in both nature and
scope, to the public impact of the proposed development. Thus, although we conclude that the combined
test of Nollan and Dolan applies to the monetary exaction imposed by
Culver City in this case, we also conclude that the heightened standard
of scrutiny is triggered by a relatively narrow class of land use cases--those
exhibiting circumstances which increase the risk that the local permitting
authority will seek to avoid the obligation to pay just compensation.
Neither Nollan nor Dolan is, after all, a conventional regulatory takings
case. Rather, as the court's rationale for its result in Nollan demonstrates,
both are cases in which the local government attached a condition to
the issuance of a development permit which, but for the claim that the
exaction is justified by the greater power to deny a permit altogether,
would have amounted to an uncompensated requisition of private property. As Justice Scalia's opinion in Nollan, supra,
483 U.S. 825, makes clear, such a discretionary context presents an
inherent and heightened risk that local government will manipulate the
police power to impose conditions unrelated to legitimate land use regulatory
ends, thereby avoiding what would otherwise be an obligation to pay
just compensation. In such a context, the heightened Nollan-Dolan standard
of scrutiny works to dispel such concerns by assuring a constitutionally
sufficient link between ends and means. It is the imposition of land-use
conditions in individual cases, authorized by a permit scheme which
by its nature allows for both the discretionary deployment of the police
power and an enhanced potential for its abuse, that constitutes the
sine qua non for application of the intermediate standard of scrutiny
formulated by the court in Nollan and Dolan. The remainder of our opinion seeks to demonstrate
the accuracy of these conclusions, which we then apply to the record
before us in this case. n6 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n6 Scholarly comment on the two cases is almost
unmanageably large. (See, e.g., Kmiec, At Last, The Supreme Court Solves
the Takings Puzzle (1995) 19 Harv. J. L. & Pub. Pol'y. 147; Kendall
& Ryan, "Paying" FOR THE CHANGE: Using Eminent Domain to Secure
Exactions and Sidestep Nollan and Dolan (1995) 81 Va. L. Rev. 1801;
Funk, Reading Dolan v. City of Tigard (1995) 25 Envtl. L. 127; Huffman,
Dolan v. City of Tigard: Another Step in the Right Direction (1995)
25 Envtl. L. at p. 143; Kushner, Property and Mysticism: The Legality
of Exactions as a Condition for Public Development Approval in the Time
of the Rehnquist Court (1992) 8 J. Land Use & Envtl. L. 53; Been,
'Exit' as a Constraint on Land Use Exactions: Rethinking the Unconstitutional
Conditions Doctrine (1991) 91 Colum. L. Rev. 473; Notes, " 'Take' My
Beach Please!": Nollan v. California Coastal Commission and a Rational-Nexus
Constitutional Analysis of Development Exactions (1989) 69 B. U. L.
Rev. 823; Kmiec, The Original Understanding of the Taking Clause Is
Neither Weak Nor Obtuse (1988) 88 Colum. L. Rev. 1630; Lawrence, Means,
Motives, and Takings: The Nexus Test of Nollan v. California Coastal
Commission (1988) 12 Harv. Envtl. L. Rev. 231; Epstein, Unconstitutional
Conditions, State Power, and the Limits of Consent (1988) 102 Harv.
L. Rev. 1, 58; Michelman, Takings, 1987 (1988) 88 Colum. L. Rev. 1600;
Epstein, Takings: Descent and Resurrection (1987) 1987 Sup. Ct. Rev.
1; Karlin, Back to the Future: From Nollan to Lochner (1988) 17 Sw.U.
L. Rev. 627; Peterson, Land Use Regulatory 'Takings' Revisited: The
New Supreme Court Approaches (1988) 39 Hastings L. J. 335; Falik &
Shimko, The "Takings" Nexus--The Supreme Court Chooses a New Direction
in Land-Use Planning: A View From California (1988) 39 Hastings L. J.
359; Note: Taking a Step Back: A Reconsideration of the Takings Test
of Nollan v. California Coastal Commission (1988) 102 Harv. L. Rev.
448; The Supreme Court--Leading Cases (1988) 101 Harv. L. Rev. 119,
240.) - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - A. Nollan and the "Essential Nexus" Standard In Nollan, supra, 483 U.S. 825, residential property
owners challenged a requirement of the California Coastal Commission
that they grant a lateral easement for public access across the back
(or seaside) of their beachfront property as a condition for approval
of a building permit to construct a larger beach house. The issue, as
the high court framed it, was not whether the permit condition would
have deprived the Nollans of [**440] all economically viable use of
their property (it would not have), but rather whether the exaction
furthered a legitimate state interest. The Coastal Commission argued
that the easement condition was necessary to foster "visual access"
to the beach and to overcome the "psychological barrier" to its use
created by shorefront development. (483 U.S. at p. 835 [97 L. Ed. 2d
at p. 688].) The Supreme Court assumed that the purposes advanced
by the Coastal Commission represented legitimate state interests and
were, at least in the abstract, constitutionally inoffensive. (483 U.S.
at pp. 835-836 [97 L. Ed. 2d at p. 688].) The court explained, however,
that "[t]he evident constitutional propriety disappears . . . if the
[permit] condition . . . utterly fails to further the end advanced as
the justification for the prohibition." (Id. at p. 837 [97 L. Ed. 2d
at p. 689].) When "that essential nexus is eliminated," the court observed,
the legitimacy of the exaction is undermined and it "becomes, quite
simply, the obtaining of an easement to serve some valid governmental
purpose, but without payment of compensation." (Ibid., italics added.)
Applying the newly minted "essential nexus" standard, the court found
the required relationship between the Nollans' permit condition and
the asserted state interest to be absent. The permit condition was an
easement for lateral access to allow visitors to traverse the Nollans'
property while passing from one beach to another. The court found it
"quite impossible to understand" how such an easement furthered the
"visual access" or lowered the "psychological barriers" of people already
on the beach. (Id. at p. 838 [97 L. Ed. 2d at p. 690].) It was this
absence of a link between the permit condition and the commission's
purported public purpose for requiring it that made the exaction a taking.
(Id. at pp. 841-842 [97 L. Ed. 2d at pp. 691-693].) n7 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n7 The Nollan majority also made clear that the
standard for evaluating a takings claim differs from that applied to
a due process challenge. The latter, the majority explained, requires
merely that the state "could rationally have decided" that the land-use
regulation adopted could achieve its objective, and thus invokes only
a minimal level of judicial review. (483 U.S. at p. 834, fn. 3 [97 L.
Ed. 2d at p. 688], italics omitted.) To survive a takings claim, however,
the court stressed that the regulation must "substantially advance"
a legitimate state interest. (Ibid.) Thus, the Nollan majority consciously
embraced what Justice Brennan had critically characterized as a more
"demanding standard" (483 U.S. at p. 848 [97 L. Ed. 2d at p. 696] (dis.
opn. of Brennan, J.)) requiring a more "precise fit between the forms
of burden and [the permit] condition . . . ." than had previously been
demanded for purposes of due process. (Id. at p. 847 [97 L. Ed. 2d at
p. 696].) In a particularly expressive rejoinder to Justice
Brennan, the Nollan majority rejected the argument that the easement
condition represented a reasonable "exchange" in return for the "benefit"
of the development permit, declaring that "the right to build on one's
own property--even though its exercise can be subjected to legitimate
permitting requirements--cannot remotely be described as a 'governmental
benefit.'" (483 U.S. at pp. 833-834, fn. 2 [97 L. Ed. 2d at p. 687].) - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - B. Dolan and the "Rough Proportionality" Standard The "essential nexus" test announced in Nollan
has recently been applied and extended by the high court in Dolan, supra,
512 U.S. 374. The facts and the holding in Dolan demand our particular
attention in view of the court's subsequent grant of certiorari in this
case and its order directing the Court of Appeal to reexamine its prior
judgment in light of the Dolan opinion. The facts were fairly straightforward.
The plaintiff, Mrs. Dolan, owned a chain of plumbing and electrical
supply stores, one of which--located in the City of Tigard, a Portland,
Oregon suburb--she sought to expand by constructing a new building on
the existing parcel, nearly doubling the retail sales space. The city
had conditioned approval of the necessary building permit on dedications
of a portion of the parcel for flood control and traffic improvements.
Invoking its local development code, the city had required Mrs. Dolan
to dedicate a percentage of the parcel adjacent to a floodplain as part
of the city's "Greenway" system to prevent additional stress on its
storm drainage system. (Id. at p. [129 L. Ed. 2d at p. 313, 114 S. Ct.
at p. 2314].) Torelieve traffic congestion in the downtown area, the
city had also required the dedication of an additional 15-foot [**441]
strip of land adjacent to the floodplain as a pedestrian/bicycle pathway.
(Ibid.) The city had made generalized findings concerning
the relationship between its dedication conditions and the projected
impacts of Mrs. Dolan's project. As to the pedestrian pathway, the city's
planning commission had found it was "'reasonable to assume that customers
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.'" (512 U.S. at p. [129 L. Ed.2d at p. 314, 114 S. Ct. at p. 2314],
italics added.) As for the drainage system dedication, the planning
commission found that the"' 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.'" (Id. at p. [129 L. Ed. 2d at p. 313,114 S.
Ct. at p. 2315], italics added.) The Oregon state courts upheld the
city's permit conditions, rejecting Mrs. Dolan's argument that the dedication
requirements were an uncompensated taking of her property because they
were not sufficiently related to her proposed development project. The United States Supreme Court reversed, establishing
in its opinion a two-step procedure for analyzing so-called regulatory
takings claims that builds on the holding in Nollan, supra, 483 U.S.
825. First, as it had explained in Nollan, a court confronted with a
property owner's claim that conditions imposed by a local government
for issuance of a development permit must "determine whether the 'essential
nexus' exists between the 'legitimate state interest' and the permit
condition exacted by the city." (Dolan, supra, 512 U.S. at p. [129 L.
Ed. 2d at p. 317, 114 S. Ct. at p. 2317], quoting Nollan, supra, 483
U.S. at p. 837 [97 L. Ed. 2d at p. 689.) If the court finds the presence
of such a nexus, it "must then decide the required degree of connection
between the exactions and the projected impact of the proposed development."
(Id. at p. [129 L. Ed. 2d at p. 317], italics added.) In elaborating upon this latter requirement--one
that had not appeared in the formulation adopted by the court in Nollan--the
Chief Justice's opinion observed that state courts "have been dealing
with this problem a good deal longer than we have" and typically apply
one of three standards. (512 U.S. at p. [129 L.Ed. 2d at p. 319, 114
S. Ct. at p. 2318].) "In some States," the court noted, "very generalized
statements as to the necessary connections between the required dedication
and the proposed development seem to suffice." (Ibid.) The high court
rejected this "deferential" standard as "too lax" to adequately protect
a landowner's right to just compensation if her property is taken for
a public purpose. (Dolan, supra, 512 U.S. at p. [129 L. Ed. 2d at pp.
319-320,114 S. Ct. at p. 2319].) Other state courts have required a very strict
correspondence between the exaction and the development, described as
the "specifically and uniquely attributable test." Under this standard,
the local government must demonstrate that the exaction is precisely
proportional to a burden directly and specifically created by the development;
otherwise, the regulation becomes, in the words of the Illinois Supreme
Court, "a veiled exercise of the power of eminent domain and a confiscation
of private property behind the defense of police regulations." (Pioneer
Trust & S. Bank v. Village of Mount Prospect (1961) 22 Ill.2d 375
[176 N.E.2d 799, 802].) The high court also rejected this test as one
requiring a more exacting standard of scrutiny than the federal Constitution
demands. (Dolan, supra, 512 U.S. at p. [129 L. Ed.2d at pp. 319-320,
114 S. Ct. at p. 2319].) Still other states have adopted what the Dolan
court characterized as an "intermediate position," requiring the municipality
to show a "reasonable relationship" between the required exaction and
the impact of the proposed development. Typical of these, according
to the court, is Simpson v. City of North Platte (1980) 206 Neb. 240
[292 N.W.2d 297], in which the Nebraska Supreme Court observed that
the distinction between a proper exercise of the police power and an
improper exercise of eminent domain turned on whether there was" some
reasonable relationship or nexus to the use to which the property is
being made or is merely being used as an excuse for taking property
simply because at that particular moment the landowner is asking the
city for some license [**442] or permit." (Id. at p. 301, italics added.)
A city may not, the Nebraska high court held, impose an exaction for
some future public use as a condition of permit approval when such future
use is not "occasioned by the construction sought to be permitted."
(Id. at p. 302, italics added.) The Dolan court concluded that the "reasonable
relationship" test was the closest to the federal constitutional norm;
it declined, however, to adopt the "reasonable relationship" terminology
because of the potential for confusion with the less stringent "rational
basis" standard describing "the minimal level of scrutiny under the
Equal Protection Clause of the Fourteenth Amendment." (512 U.S. at p.
[129 L. Ed. 2d at p. 320, 114 S. Ct. at p. 2319].) Instead, the court
adopted the term "rough proportionality," explaining that such a formulation
entails "some sort of individual ized determination that the required
dedication is related both in nature and extent to the impact of the
proposed development." (Id. at p. [129 L. Ed. 2d at p. 320, 114 S. Ct.
atpp. 2319-2320], italics added, fn. omitted.) Although, as the court
explained, no "precise mathematical calculation is required," the city
must nevertheless "make some effort to quantify its findings in support
of the dedication" beyond mere conclusory statements that it will mitigate
or offset some anticipated burden created by the project. (Id. at p.
[129 L. Ed. 2d at p. 323, 114 S. Ct. at p. 2322].) Applying these principles to the facts before
it, the Dolan court concluded that the city's required dedications to
its "Greenway" system and the pedestrian pathway were not "reasonably
related" to Mrs. Dolan's proposed development project. Chief Justice
Rehnquist's opinion for the majority conceded that keeping portions
of the floodplain adjacent to the petitioner's property free of development
could logically mitigate pressures on the city's sewage system. However,
the court observed, "the city demanded more--it not only wanted petitioner
not to build in the floodplain, but it also wanted petitioner's property
along [the] Creek for its Greenway system." (512 U.S. at p. [129 L.
Ed. 2d at p. 321, 114 S. Ct. at p. 2320].) Yet nothing in the city's
findings explained "why a public greenway, as opposed to a private one,
was required in the interest of flood control." (Ibid., italics added.)
The court thus found it "difficult to see" how public access to petitioner's
floodplain easement was "sufficiently related to the city's [admittedly]
legitimate interest in reducing flooding problems along [the] Creek,
and the city has not attempted to make any individualized determination
to support this part of its request." (Id. at p. [129 L. Ed. 2d at p.
321, 114 S. Ct. at pp. 2320-2321].) Hence, the court held, "the findings
upon which the city relies do not show the required reasonable relationship
between the floodplain easement and the petitioner's proposed new building."
(Id. at p. [129 L. Ed. 2d at p.322, 114 S. Ct. at p. 2321].) As for the proposed pedestrian pathway dedication,
the court likewise acknowledged that the property owner's development
might lead to increased traffic in the downtown streets. Nevertheless,
it concluded the city had not demonstrated that the additional traffic
generated by the development "reasonably relate[s] to the city's requirement
for a dedication of the pedestrian /bicycle pathway easement." (512
U.S. at p. [129 L. Ed. 2d at p.323, 114 S. Ct. at p. 2321.) The city
had merely found that the creation of the pathway"' could offset some
of the traffic demand . . . and lessen the increase in traffic congestion.'"
(Id. at pp. - [129 L. Ed. 2d at p. 323, 114 S. Ct. at pp. 2321-2322],
italics added, fn. omitted.) The fact that the pathway "could" have
had such an effect, however, was insufficiently precise to demonstrate
the constitutionally required relationship between the development and
the compelled property dedication. "[T]he city must make some effort
to quantify its findings in support of the dedication for the pedestrian/bicycle
pathway," the court wrote, "beyond the conclusory statement that it
could offset some of the traffic demand generated." (Id. at p. [129
L. Ed. 2d at p. 323,114 S. Ct. at p. 2322].) Concluding that "the findings
upon which the city relies do not show the required reasonable relationship,"
the court ordered the case remanded for further proceedings. (Id. at
pp., [129 L.Ed. 2d at p. 322, 114 S. Ct. at pp. 2321, 2322].) IV. DO NOLLAN AND DOLAN APPLY TO NONPOSSESSORY EXACTIONS? Both Nollan and Dolan involved regulatory schemes
under which the local government [**443] had required the possessory
dedication of real property by the owner as a condition for issuing
the necessary development permit. Moreover, language employed by Justice
Scalia in his opinion for the majority in Nollan has been read by some
students of the high court's contemporary takings jurisprudence as limiting
the operation of the "essential nexus" requirement to cases of possessory
exactions. After observing that the high court's modern takings cases
had upheld land-use restrictions that "substantially advance" a legitimate
state purpose (see, e.g., Agins v. Tiburon (1980) 447 U.S. 255 [65 L.
Ed. 2d 106, 100 S. Ct. 2138]), Justice Scalia wrote that "We are inclined
to be particularly careful about the adjective [i.e., 'substantial']
where the actual conveyance of property is made a condition for the
lifting of a land use restriction, since in that context there is heightened
risk that the purpose is avoidance of the compensation requirement,
rather than the stated police-power objective." (483 U.S. at p. 841
[97 L. Ed. 2d at p. 692], italics added.) This case, of course, does not involve a demand
by Culver City that the property owner convey a portion of the parcel
for public use as a condition of granting his rezoning request and issuing
a permit to build the desired condominium project. Rather, the city
insists on a different kind of exaction as a condition for authorizing
development: the payment of $280,000. Does this distinction in the nature
of the exaction make the diptych of Nollan and Dolan inapplicable to
this case? Some courts and commentators have concluded that it does. In Blue Jeans Equities West v. City and County
of San Francisco (1992) 3 Cal. App. 4th 164 [4 Cal. Rptr. 2d 114], for
example, our Court of Appeal concluded that "any heightened scrutiny
test contained in Nollan is limited to possessory rather than regulatory
takings cases." (Id. at p. 171.) The Court of Appeal relied in part
on the opinion by the United States Court of Appeals for the Ninth Circuit
in Commercial Builders v. Sacramento (9th Cir. 1991) 941 F.2d 872. There,
a divided court had rejected a contention by commercial developers challenging
a city ordinance conditioning nonresidential building permits on payment
of a fee to offset municipal burdens associated with the influx of low-income
workers relocating to fill jobs created by such projects, that Nollan
imposed a heightened level of scrutiny on such fee exactions. Relying
on other federal appellate court opinions that had "considered the constitutionality
of ordinances that placed burdens on land use after Nollan," the majority
concluded that "[n]one have interpreted that case as changing the level
of scrutiny to be applied to regulations that do not constitute a physical
encroachment on land." (Id. at p. 874, citing St. Bartholomew's Church
v. City of New York (2d Cir. 1990) 914 F.2d 348, 357, fn. 6, cert. den.
sub nom. Committee to Oppose Sale of St. Bartholomew's Church v. Rector
(1991) 499 U.S. 905 [113 L. Ed. 2d 214, 111 S. Ct. 1103]; Adolph v.
Federal Emergency Management Agency (5th Cir. 1988) 854 F.2d 732, 737;
Naegele Outdoor Advertising, Inc. v. City of Durham (4th Cir. 1988)
844 F.2d 172, 178; see also Leroy Land Dev. v. Tahoe Regional Planning
Agency (9th Cir. 1991) 939 F.2d 696.) "As a threshold matter," the Ninth
Circuit concluded, "we are not persuaded that Nollan materially changes
the level of scrutiny we must apply" to the Sacramento ordinance at
issue. (941 F.2d at p. 874; see also Kushner, Property and Mysticism:
The Legality of Exactions as a Condition for Public Development Approval
in the Time of the Rehnquist Court, supra, 8 J. Land Use & Envtl.
L. 53, 166.) There is no question that the takings clause
is specially protective of property against physical occupation or invasion--a
proposition that the court's opinion in Loretto v. Teleprompter Manhattan
CATV Corp. (1982) 458 U.S. 419 [73 L. Ed. 2d 868, 102 S. Ct. 3164] makes
clear. It is also true, as the city points out, that government generally
has greater leeway with respect to noninvasive forms of land-use regulation,
where the courts have for the most part given greater deference to its
power to impose broadly applicable fees, whether in the form of taxes,
assessments, user or development fees. Both Blue Jean Equities West
v. City and County of San Francisco, supra, 3 Cal. App. 4th 164, and
Commercial [**444] Builders v. Sacramento,supra, 941 F.2d 872, dealt
with such legislatively formulated development assessments imposed on
a broad class of property owners. Fees of this nature may indeed be
subject to a lesser standard of judicial scrutiny than that formulated
by the court in Nollan and Dolan because the heightened risk of the
"extortionate" use of the police power to exact unconstitutional conditions
is not present. Nonetheless, we reject the proposition that Nollan and
Dolan are entirely without application to monetary exactions. When such
exactions are imposed--as in this case--neither generally nor ministerially,
but on an individual and discretionary basis, we conclude that the heightened
standard of judicial scrutiny of Nollan and Dolan is triggered. One of the central promises of the takings clause
is that truly public burdens will be publicly borne. Where the regulatory
land-use power of local government is deployed against individual property
owners through the use of conditional permit exactions, the Nollan test
helps to secure that promise by assuring that the monopoly power over
development permits is not illegitimately exploited by imposing conditions
that lack any logical affinity to the public impact of a particular
land use. The essential nexus test is, in short, a "means-ends" equation,
intended to limit the government's bargaining mobility in imposing permit
conditions on individual property owners--whether they consist of possessory
dedications or the exaction of cash payments--that, because they appear
to lack any evident connection to the public impact of the proposed
land use, may conceal an illegitimate demand--may, in other words, amount
to "'out-and-out . . . extortion.'" (Nollan, supra, 483 U.S. at p. 837
[97 L. Ed. 2d at p. 689].) Under this view of the constitutional role of
the consolidated "essential nexus" and "rough proportionality" tests,
it matters little whether the local land use permit authority demands
the actual conveyance of property or the payment of a monetary exaction.
In a context in which the constraints imposed by legislative and political
processes are absent or substantially reduced, the risk of too elastic
or diluted a takings standard--the vice of distributive injustice in
the allocation of civic costs--is heightened in either case. Support
for this view of the scope of the test can be drawn from a close reading
of the text of Justice Scalia's opinion in Nollan and from the Chief
Justice's opinion in Dolan. A The Nollan opinion begins its substantive analysis
of the takings claim with the proposition that "[h]ad California simply
required the Nollans to make an easement across their beachfront available
to the public on a permanent basis in order to increase public access
to the beach . . . we have no doubt there would have been a taking."
(483 U.S. at p. 831 [97 L. Ed. 2d at p. 685].) Assuming the state's
unilateral and uncompensated requisition of a lateral easement from
the Nollans would have offended the takings clause, the court then asked
"whether requiring [an easement] to be conveyed as a condition for issuing
a land-use permit alters the outcome." (Id. at p. 834 [97 L. Ed. 2d
at p. 687].) The answer to that question, the court said, was "yes."
The imposition of a permit condition that "serves the same legitimate
police-power purposes as a refusal to issue the permit," the high court
reasoned, "should not be found to be a taking if the refusal to issue
the permit would not constitute a taking." (Id. at p. 836 [97 L. Ed.
2d at p. 689], italics added.) "Thus, if the Commission attached to
the permit some condition that would have protected the public's ability
to see the beach notwithstanding construction of the new house . . .
so long as the Commission could have exercised its police power . .
. to forbid construction of the house altogether, imposition of the
condition would also be constitutional." (Ibid.) The heart of the takings analysis, Justice Scalia's
opinion continued, lay in the presence (or absence) of a link between
the commission's power to deny the Nollans a development permit altogether,
and its power to impose a condition on its issuance that furthers the
same end as an outright prohibition on development. "If a prohibition
designed to accomplish that purpose would be a legitimate exercise of
the police power rather than [**445] a taking, it would be strange to
conclude that providing the owner an alternative to that prohibition
which accomplishes the same purpose is not." (483 U.S. at pp. 836-837
[97 L. Ed. 2d at p. 689], italics added.) The vice of the commission's permit condition
in Nollan, however, was the absence of any logical connection between
the condition and the purported justification for an outright ban on
development. "The evident constitutional propriety"--between denying
a permit and conditioning its issuance on achieving the same purpose
through alternative means-- "disappears," the court wrote, "if the condition
substituted for the prohibition utterly fails to further the end advanced
as the justification for the prohibition. When that essential nexus
is eliminated, the situation becomes the same as if California law forbade
shouting fire in a crowed theater, but granted dispensations to those
willing to contribute $100 to the state treasury. . . [T]he lack of
nexus between the condition and the original purpose of the building
restriction converts that purpose to something other than what it was.
The purpose then becomes, quite simply, the obtaining of an easement
to serve some valid governmental purpose, but without payment of compensation."
(483 U.S. at p. 837 [97 L. Ed. 2d at p. 689], italics added.) "In short," Justice Scalia concluded, "unless
the permit condition serves the same governmental purpose as the development
ban, the building restriction is not a valid regulation of land use
but 'an out-and-out plan of extortion.'" (483 U.S. at p. 837 [97 L.
Ed. 2d at p. 689], quoting J.E.D. Associates v. Town of Atkinson (1981)
121 N.H. 581 [432 A.2d 12, 14-15], italics added.) n8 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n8 Justice Scalia, the author of the majority
opinion in Nollan, supra, 483 U.S. 825, elaborated on his view of the
essence of the takings clause in his dissent in Pennell v. San Jose
(1988) 485 U.S. 1, 15 [99 L. Ed. 2d 1, 17, 108 S. Ct. 849], a case challenging
a rent control ordinance on the ground that one of its criteria for
increases--whether a proposed hike would work a hardship to a tenant--constituted
an uncompensated taking. Although a majority held the takings claim
premature, Justice Scalia would have held "that the . . . provision
. . . effects a taking of private property without just compensation
. . . ." (Ibid.) Invoking the language of Armstrong v. United States
(1960) 364 U.S. 40, 49 [4 L. Ed. 2d 1554, 1561, 80 S. Ct. 1563], his
dissent reasoned that "[t]raditional land-use regulation . . . does
not violate" the principle embodied in Armstrong" because there is a
cause-and-effect relationship between the property use restricted by
the regulation and the social evil that the regulation seeks to remedy."
(485 U.S. at p. 20 [99 L. Ed. 2d at p. 19] (dis. opn. of Scalia, J.).)
The essence of the takings clause, the dissent reasoned, "is simply
the unfairness of making one citizen pay, in some fashion other than
taxes, to remedy a social problem that is none of his creation." (Id.
at p. 23 [99 L. Ed. 2d at p. 22]; cf. Nollan, supra, 483 U.S. at p.
825, fn. 4 [97 L. Ed. 2d at p. 688].) - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - In briefing before this court, plaintiff and
several supporting amici curiae insist that because the club was a privately
operated facility, accessible only by dues-paying members, a zoning
change withdrawing the parcel from such private recreational use could
not have a cognizable public impact as a matter of law. The trial court,
in its memorandum opinion granting judgment for plaintiff, adopted this
argument, reasoning that "[plaintiff's] club . . . was at all times
private property; the city never owned any interest in it nor was any
part of it ever dedicated to public use. . . . [Plaintiff's] actions
cannot be said to deprive the City of tennis courts, because neither
did [plaintiff] have an affirmative duty to provide tennis courts to
the City or its residents nor would tennis courts necessarily be available
to the City but for [plaintiff's] project. . . . [P] The City could
have condemned a portion of [plaintiff's] property for use as City tennis
courts, but the City would then of course have had to pay for the land.
Here, instead of taking land for which it would have had to pay, the
City proposes to take not land but money. This is equally impermissible." The assumption that, because property is designated
for private recreational use, it lacks public value and that its subsequent
withdrawal has no public impact is flawed as a matter of logic. Although
privately owned and operated, plaintiff's health club was a business
establishment, accessible to the public on the payment of a membership
fee. The opportunity of Culver City residents to use such private recreational
facilities created a public benefit by enlarging the availability of
such facilities. Without such a facility, [**446] residents would have
to travel farther, wait longer, and put up with other inconveniences
and restricted choices in their recreational pursuits. Thus, the fact
that a recreational facility is privately rather than publicly owned
does not erase its value to the public. This principle--that the discontinuation of a
private land use may have distinctly public consequences--is well accepted
in land-use law. Indeed, in Nollan itself Justice Scalia as much as
conceded that the loss of private open space resulting from residential
beach development could lead to an adverse public impact--a diminution
of coastal views--justifying a requirement that the Nollans "provide
a viewing spot on their property for passersby with whose sighting of
the ocean their new house would interfere." (483 U.S at p. 836 [97 L.
Ed. 2d at p. 689].) Although, as we explain below, the fact that a recreational
facility is privately rather than publicly owned may affect the magnitude
of the value the city may constitutionally place on its loss, private
status alone does not per se erase its intrinsic public value for land-use
regulatory purposes. In short, it is well accepted in both the case
and statutory law that the discontinuance of a private land use can
have a significant impact justifying a monetary exaction to alleviate
it. We perceive no reason why the same cannot be said of the loss of
land devoted to private recreational use through its withdrawal from
such a use as a result of being "up zoned" to accommodate incompatible
uses. There thus exists a potential basis in logic
for a connection between a social need generated by plaintiff's condominium
project and the $280,000 mitigation fee imposed by the city. B The opinion by the Chief Justice in Dolan, supra,
512 U.S. 374, both incorporates the essential nexus test of Nollan,
and takes the next analytical step--determining the extent to which
the takings clause imposes not only a logical connection between a permit
condition and the public impact of a given land use, but dictates the
nature of the required "fit" between means and ends. While the court
in Nollan was concerned with the nature of the relationship between
a proposed development and a governmental exaction, its focus in Dolan
is on the degree of the required connection. Instead of asking "what
is the nature of the relationship between a given permit condition and
the public costs of a proposed land use" (a question answered in Nollan
by the "essential nexus" formulation), the court asked in Dolan "[W]hat
is the required degree of connection between the exactions imposed by
the city and the projected impact[] of the proposed development?" (Id.
at p. [129 L. Ed. 2d at p. 311, 114 S. Ct. at p. 2312], italics added.) The answer to that question, as we have seen,
is twofold. The condition imposed by the challenged regulation must
not only be roughly proportional, the Dolan court held, both in "nature
and extent to the impact of the proposed development" (512 U.S. at p.
[129 L. Ed. 2d at p. 320, 114 S. Ct. at p. 2320]), but the required
proportionality must be demonstrated by "some sort of individualized
determination." (Id. at p. [129 L. Ed. 2d at p. 320,114 S. Ct. at p.
2319].) The court framed the first leg of its rough proportionality
test as an inquiry into "whether the degree of the exactions demanded
by the city's permit conditions bear the required relationship to the
projected impact of petitioner's proposed development." (Id. at p. [129
L. Ed. 2d at p. 318, 114 S. Ct. at p. 2318].) The antecedent question
underlying that inquiry is, of course, the exact nature of the "required
relationship" imposed by the takings clause. As we have seen, the court
answered its own question by applying an "intermediate" level of constitutional
scrutiny--"rough proportionality"--to the relationship between the city's
permit conditions and the public costs associated with Mrs. Dolan's
proposed development. We need not repeat here the extended account of the Dolan court's reasoning set out above (ante, at pp. 869-872), except to note that, as we read the high court's opinion, the chief analytical advance of Dolan over the formulation by the court in Nollan appears to lie in the requirement that the local permit authority "make some sort of individualized determination that the required [**447] dedication is related both in
nature and extent to the impact of the proposed development." (512 U.S.
at pp. - [129 L. Ed. 2d atp. 320, 114 S. Ct. at pp. 2319-2320], italics
added, fn. omitted.) We view the requirement that the local government
demonstrate a factually sustainable proportionality between the effects
of a proposed land use and a given exaction as one which furthers the
assurances implicit in the Nollan test that the condition at issue is
more than theoretically or even plausibly related to legitimate regulatory
ends. Nollan and Dolan are thus concerned with implementing
one of the fundamental principles of modern takings jurisprudence--
"to bar Government from forcing some people alone to bear public burdens
which, in all fairness and justice, should be borne by the public as
a whole." (Armstrong v. United States, supra, 364 U.S. at p. 49 [4 L.
Ed. 2d at p. 1561].) Of course, as we have already observed, it is not
at all clear that the rationale (and the heightened standard of scrutiny)
of Nollan and Dolan applies to cases in which the exaction takes the
form of a generally applicable development fee or assessment--cases
in which the courts have deferred to legislative and political processes
to formulate "public program[s] adjusting the benefits and burdens of
economic life to promote the common good." (Penn Central Transp. Co.
v. New York City (1978) 438 U.S. 104, 124 [57 L. Ed. 2d 631, 648, 98
S. Ct. 2646].) But when a local government imposes special, discretionary
permit conditions on development by individual property owners--as in
the case of the recreational fee at issue in this case--Nollan and Dolan
require that such conditions, whether they consist of possessory dedications
or monetary exactions, be scrutinized under the heightened standard. V. APPLYING THE HEIGHTENED STANDARD IN THIS CASE We come, then, to the application of the combined
Nollan-Dolan "essential nexus" and "rough proportionality" test to the
facts in the record before us. Like the high court in Dolan, supra,
512 U.S. 374, we will conclude that, although the city's findings with
respect to the relationship between the monetary exaction and the withdrawal
of a parcel of land within Culver City restrictively zoned for private
recreational use satisfies the essential nexus standard, the present
record is inadequate to support the requirement that plaintiff pay a
recreational fee of $280,000 for the desired permit. We conclude instead
that although the city may be able to justify a monetary exaction in
some amount, what that figure is we are quite unable to say on this
record. A The land-use limitation on which the city relies
to justify its $280,000 fee exaction consists of a restriction of plaintiff's
use of his property to commercial recreational activities, a restriction
that could not be changed without amending both Culver City's general
plan and the specific plan applicable to the parcel. It is well settled
that such a limitation on use is constitutional unless the restriction
"does not substantially advance legitimate state interests . . . or
denies an owner economically viable use of his land." (Agins v. Tiburon,
supra, 447 U.S. at p. 260 [65 L. Ed. 2d at p. 112].) The general purpose of zoning and planning is
to regulate the use of land to promote the public welfare, a power the
courts have construed very broadly. Indeed, one of the traditional uses
of the police power lies in providing citizens adequate recreational
opportunities. (See, e.g., Associated Home Builders, supra, 4 Cal. 3d
633, 638 ["The elimination of open space in California is a melancholy
aspect of the unprecedented population increase which has characterized
our state in the last few decades. . . . [G]overnmental entities have
the responsibility to provide park and recreation land to accommodate
this human expansion . . . ."].) We thus have no doubt that the use
of zoning to facilitate the availability of private recreational facilities
to the residents of Culver City is within the scope of the city's police
power. [**448] Nor is it an unreasonable use of the
police power for the city to prescribe not only broad categories of
land use, such as "commercial" and "residential," but to specify, through
a general plan, specific plan, and zoning regulations, the types of
businesses that can be carried on at a given site, so long, of course,
as the restrictions meet the two-part standard embodied in Agins v.
City of Tiburon, supra, 447 U.S. 255. The record before us indicates
that private recreational facilities were in scarce supply in the city
and merited preservation and promotion. As the 1988 city staff analysis
of plaintiff's proposed project noted, "Culver City as a fully-developed
urban city has very little open space in which to develop parks and
related recreational facilities. By national standards . . . the City
is deficient in park space, tennis courts, swimming facilities, gymnasiums
and the recreational activity centers needed to maintain and enhance
the 'quality of life' in our community." We thus have no doubt as to the city's legitimate
authority to impose development impact fees for park and recreational
purposes. (See Associated Home Builders, supra, 4 Cal. 3d 633; Gov.
Code, § 66001, 66477.) Nor is there any genuine dispute that the
$280,000 fee, which the city has committed to the purchase of additional
recreational facilities, will substantially advance its legitimate interest
in correcting a demonstrated deficiency in municipal recreational resources.
Unlike Nollan, where the high court found no logical connection between
the commission's demand for a lateral easement across the owner's property
and the purported governmental purpose of enhancing visual access, the
"essential nexus" in this case is plain. B We must next decide whether there is a "rough
proportionality" between the public impact of the land use change and
the recreational fee. The Dolan court, in an effort to balance the government's
legitimate need to impose reasonable exactions against the property
owner's right to be free of undue burdens, formulated an intermediate
standard of review and a corresponding evidentiary burden on local government.
"[G]eneralized statements as to the necessary connection between the
required dedication and the proposed development" are constitutionally
insufficient, according to the court. (512 U.S. at p. [129 L. Ed. 2d
at p. 319, 114 S. Ct. at p. 2318].) As noted, however, the Dolan majority
also rejected the claim that the government "demonstrate that its exaction
is directly proportional to the specifically created need" as being
more than the Fifth Amendment demands. (Id. at p. [129 L. Ed. 2d at
p. 319, 114 S. Ct. at p. 2319].) In both Nollan and Dolan, the court conceded
that the development project at issue would have negative effects that
the city could mitigate using its police power. It found insufficiently
substantial, however, the connection between those effects and the required
public dedications. Similarly, the record before us in this case is
devoid of any individualized findings to support the required "fit"
between the monetary exaction and the loss of a parcel zoned for commercial
recreational use. The city argues that its $280,000 recreation fee is
warranted as partial compensation for the loss of some $800,000 in recreational
improvements that were formerly located on plaintiff's property. But
in this case it is error to measure the lost recreational benefits by
the lost value of plaintiff's health club. The loss which the city seeks
to mitigate by levying the contested recreational fee is not the loss
of any particular recreational facility, but the loss of property reserved
for private recreational use. The city appears to be arguing, implicitly, that
if it had refused to change its general and specific plan designations,
and insisted on a private recreational use of the land, a new recreational
facility would have been resurrected on the site, one containing four
tennis court or their equivalent. From this premise, the city asserts
that the change in land use granted plaintiff has resulted in the "loss"
of four tennis courts that would have been built had that land-use change
not been granted. Even if such a supposition could be proven, however,
it would still not justify the $280,000 fee, because the cost of these
new private tennis courts would have been paid [**449] for by the fees
of the private club members and the courts would have been private,
not open to all members of the public free of charge. Thus, under the city's formula, the public would
receive, ex gratia, $280,000 worth of recreational facilities the cost
of which it would otherwise have to finance through membership fees.
Plaintiff is being asked to pay for something that should be paid for
either by the public as a whole, or by a private entrepreneur in business
for a profit. The city may not constitutionally measure the magnitude
of its loss, or of the recreational exaction, by the value of facilities
it had no right to appropriate without payment. This is not to say, however, that some type of
recreational fee imposed by the city as a condition of the zoning and
related changes cannot be justified. The amount of such a fee, however,
must be tied more closely to the actual impact of the land-use change
the city granted plaintiff. Although we are unable to discern, on this
record, the precise value or the economic cost of these impacts, several
possibilities suggest themselves. One such possibility is likely to
be the additional administrative expenses incurred in redesignating
other property within Culver City for recreational use. The city's director
of human services, who opposed the abandonment of a recreational use
restriction on plaintiff's property, stated that to "permit this type
of recreational development elsewhere would . . . involve arduous and
costly rezoning and public hearings." It would be reasonable to require
plaintiff to contribute toward defraying these anticipated rezoning
costs, so that the city does not have to bear them itself or pass them
along to future private developers seeking to construct recreational
facilities. More generally, the city's approval of plaintiff's
condominium project may have given rise to public costs in the form
of a diminished ability to attract private recreational development.
If the city can show that it would have to incur greater costs to attract
a developer of suitable private recreational facilities because plaintiff's
parcel is no longer reserved for such a recreational use, it may consider
these costs to be a part of the impact of plaintiff's project, and would
be constitutionally permitted to impose such an exaction. Such a fee
would enable the city to induce private health club development by offering
monetary incentives roughly proportional to the land use incentive it
relinquished when it removed the recreational use restriction from plaintiff's
property. Of course, the city could not constitutionally
require plaintiff to dedicate the same amount of land for public recreational
facilities. It could, however, require plaintiff to transfer, so to
speak, the restricted land-use designation at the Overland Avenue site
to a comparable parcel plaintiff owns within the city, thus returning
the city to the status quo as it existed prior to approval of the condominium
project, that is, with a similar parcel of vacant land reserved for
recreational use as an inducement to the development of private recreational
facilities. If the city decides, however, that such a restricted land-use
transfer is impracticable, it may surely levy an in-lieu exaction to
accomplish the same objective. Such a fee would serve the same purpose
as do all development fees: providing the city with a means of escaping
the narrow choice between denying plaintiff his project permit altogether
or subordinating legitimate public interests to plaintiff's development
plans. We cannot say, on this incomplete record, what,
if any, recreational fee the evidence might justify. Although in calculating
its net cost as a result of upzoning the Overland Avenue parcel the
city must take into account any relative benefit that plaintiff's project
would contribute to the public interest for which the fee is imposed,
the record suggests that some exaction may be warranted. It is thus
appropriate to return the case to the city to reconsider its valuation
of the fee in light of the principles we have articulated. Remand to
the city was apparently what occurred in Dolan itself after the case
was returned to the Oregon Supreme Court. (See Dolan v. City of Tigard
(1994) 319 Or. 567 [877 P.2d 1201] [the case is "remanded to the City
of Tigard for further proceedings."].) Following remand, the city must
determine whether and to what extent approval of plaintiff's requested
land-use [**450] changes justify the imposition of a recreation fee
as a means of compensating it for the additional costs of attracting
the development of comparable private recreational facilities for its
residents. The determination of such a fee will, of course, require
the city to make specific findings supported by substantial evidence--that
is, the city "must make some effort to quantify its findings" supporting
any fee, beyond "conclusory statements, "although" [n]o precise mathematical
calculation is required" either by the takings clause or the Act. (Dolan,
supra, 512 U.S. at p. [129 L. Ed. 2d atp. 323, 114 S. Ct. at p. 2322].) VI. THE ART IN PUBLIC PLACES FEE Under the city's art in public places ordinance,
plaintiff could not receive a certificate of occupancy for any of the
30 townhouses in the project until he either paid $32,200 to the city
art fund (1 percent of the total building valuation) or contributed
an approved work of art of an equivalent value. Under the latter option,
the art may either be placed on site, in which case it remains the property
of the applicant, or it may be donated to the city for placement elsewhere.
Although petitioner initially opted to pay the fee, his successor in
interest subsequently placed art of his own choosing on the site and
received the 30 certificates of occupancy during the pendency of this
action. Plaintiff contends that the required dedication
of art or the cash equivalent thereof constitutes a taking under the
Nollan-Dolan standards. This follows, he asserts, from the fact that
the city made no individualized determination that the art mitigates
a need generated by the project. The city defends the art fee on several grounds.
As a threshold matter, it contends plaintiff failed to preserve his
right to litigate the claim because his successor satisfied the requirements
of the ordinance and accepted the benefit of receiving all 30 certificates
of occupancy during the pendency of these proceedings. The record shows,
however, that plaintiff filed a written protest to the imposition of
the fee in accordance with Government Code section 66020, and subsequently
entered into an agreement with the city in which he preserved his right
to maintain this "lawsuit" challenging both the recreation fee and the
art fee. Thus, the claim has not been waived. Nevertheless, we agree with the city that the
art in public places fee is not a development exaction of the kind subject
to the Nollan-Dolan takings analysis. As both the trial court and the
Court of Appeal concluded, the requirement to provide either art or
a cash equivalent thereof is more akin to traditional land-use regulations
imposing minimal building setbacks, parking and lighting conditions,
landscaping requirements, and other design conditions such as color
schemes, building materials and architectural amenities. Such aesthetic
conditions have long been held to be valid exercises of the city's traditional
police power, and do not amount to a taking merely because they might
incidentally restrict a use, diminish the value, or impose a cost in
connection with the property. (See, e.g., Metromedia Inc. v. San Diego
(1980) 453 U.S. 490, 508, fn. 13 [69 L. Ed. 2d 800, 815, 101 S. Ct.
2882] [approving prohibition against outdoor advertising]; Penn Central
Transp. Co. v. New York City, supra, 438 U.S. 104 [upholding municipal
power to preserve landmark structures]; Agins v. Tiburon, supra, 447
U.S. 255 [upholding condition to preserve scenic views].) The requirement
of providing art in an area of the project reasonably accessible to
the public is, like other design and landscaping requirements, a kind
of aesthetic control well within the authority of the city to impose. Conclusion A generation ago, an observer of the high court's
takings jurisprudence called the question of when land-use regulation
under the police power becomes compensable "the most haunting jurisprudential
problem in the field of contemporary land-use law." (Harr, Land-Use
Planning (3d ed. 1977) 766, quoted in The Supreme Court--Leading Cases,
supra, 101 Harv. L. Rev. 119, 241.) After more than half a century during
which the content of the takings clause lay comparatively unexamined--
[**451] roughly between Pennsylvania Coal v.Mahon (1922) 260 U.S. 393
[67 L. Ed. 322, 43 S. Ct. 158, 28 A.L.R. 1321], and Penn Central Transp.
Co. v. New York City, supra, 438 U.S. 104 --the high court decided no
less than eight such cases in a little more than a decade. n9 As several
commentators have observed, the task of making this blitz of opinions
doctrinally coherent is daunting; even the short-term direction of the
court's recent takings jurisprudence remains uncertain. Perhaps Nollan
and Dolan mark, as some scholars have suggested, "a major shift of the
power of government in "land use cases." (Epstein, Takings: Descent
and Resurrection, supra, 1987 Sup. Ct. Rev. 1, 43); perhaps, as others
have argued, they represent "a step backwards" from the heightened protection
of property rights. (Note, Taking a Step Back: A Reconsideration of
the Takings Test of Nollan v. California Coastal Commission, supra,
102 Harv. L. Rev. 448, 468.) Our own reading lies somewhere between
these two margins. - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n9 Penn Central Transp. Co. v. New York City,
supra, 438 U.S. 104; Agins v. Tiburon, supra, 447 U.S. 255; Loretto
v. Teleprompter Manhattan CATV Corp., supra, 458 U.S. 419; Keystone
Bituminous Coal Assn. v. DeBenedictis (1987) 480 U.S. 470, 485 [94 L.
Ed. 2d 472, 488, 107 S. Ct. 1232]; First Lutheran Church v. Los Angeles
County (1987) 482 U.S. 304 [96 L. Ed. 2d 250, 107 S. Ct. 2378]; Nollan,
supra, 483 U.S. 825; Lucas v. South Carolina Coastal Council (1992)
505 U.S. 1003, 1015-1016 [120 L. Ed. 2d 798, 813-814, 112 S. Ct. 2886,
2893-2894]; Dolan, supra, 512 U.S. 374. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - The judgment of the Court of Appeal is reversed;
the cause is remanded to that court with directions to order the case
returned to the City of Culver City. Lucas, C. J., and George, J., concurred. CONCURBY: MOSK; KENNARD (In Part); WERDEGAR (In
Part) CONCUR: MOSK, J., Concurring.--I concur in the plurality's judgment,
and agree with much of its analysis. I fully agree with part V of the
plurality opinion--that Culver City (the City) may be able to charge
a fee for the loss of property designated for recreational use, but
that it failed to employ the proper method of calculating such a fee.
I agree, too, with part VI of the plurality opinion--that the art fee
is constitutional. I write separately to address the larger question
of the appropriate constitutional standard for reviewing monetary exactions
on development. As I will elaborate below, the heightened standard of
scrutiny found in Nollan v. California Coastal Comm'n (1987) 483 U.S.
825 [97 L. Ed. 2d 677, 107 S. Ct. 3141] (Nollan) and Dolan v. City of
Tigard (1994) 512 U.S. 374 [129 L. Ed. 2d 304, 114 S. Ct. 2309] (Dolan)
is generally not applicable to development fees; the present case is
thus more the exception than the rule. This view is consistent with
the plurality's analysis, and our difference in this regard is more
one of emphasis than of substance. As explained below, nothing in the United States
Supreme Court's recent takings jurisprudence can be understood to signify
a change in the rule--founded on the fundamental principles of the separation
of powers and judicial restraint--that state and local governments possess
considerable authority to impose different and unequal financial burdens
on property owners, subject only to the rational basis requirements
of the Fourteenth Amendment's equal protection clause. Only when the
government engages in the physical taking or invasion of real and personal
property, or singles out individual property owners by conditioning
development permits on the payment of ad hoc fees not borne by a larger
class of developers or property owners, does the heightened scrutiny
of Nollan and Dolan apply. I. A. Physical Takings, Regulatory Takings, and
the Nollan/Dolan Standard. Nollan and Dolan must be viewed within the general framework of takings jurisprudence. One of the cornerstones of such jurisprudence is the special protection given to the physical invasion or occupation of real property under the Fifth Amendment. A government regulation that affects the use of land, such as a zoning ordinance, is generally not deemed to be a taking unless the regulation "does not substantially advance legitimate [**452] state interests [citation] or denies an owner economically viable use of his land [citation]." (Agins v. Tiburon (1980) 447 U.S. 255, 260 [65 L. Ed. 2d 106, 112, 100 S. Ct. 2138].) In these cases, the burden rests with those challenging the regulation to demonstrate its unconstitutionality. (See Dolan, supra, 512 U.S. at p. , fn. 8 [129 L. Ed. 2d at p. 320, 114 S.
Ct. at p. 2320].) However, "regulations that compel the property owner
to suffer a physical 'invasion,'" will generally be determined to be
takings "no matter how minute the intrusion, and no matter how weighty
the public purpose behind it . . . ." (Lucas v. South Carolina Coastal
Council (1992) 505 U.S. 1003, 1015 [120 L. Ed. 2d 798, 812, 112 S. Ct.
2886, 2892], italics added.) The centrality of physical invasion in takings
jurisprudence is nowhere more clearly stated than in Loretto v. Teleprompter
Manhattan CATV Corp. (1982) 458 U.S. 419 [73 L. Ed. 2d 868, 102 S. Ct.
3164] (Loretto). There the court invalidated a New York law requiring
owners of apartment buildings to permit cable television companies to
install cable wires and boxes on their premises. The court stated that
it had "long considered a physical intrusion by government to be a property
restriction of an unusually serious character for purposes of the Takings
Clause. Our cases further establish that when the physical intrusion
reaches the extreme form of a permanent physical occupation, a taking
has occurred. In such case, 'the character of the government action'
not only is an important factor in resolving whether the action works
a taking but is also determinative." (Id. at p. 426 [73 L. Ed. 2d at
p. 876].) As the court emphasized, "[a] landowner's right to exclude
[is] 'one of the most essential sticks in the bundle of rights that
are commonly characterized as property.' " (Id. at p. 433 [73 L. Ed.
2d at p. 881].) In a permanent physical occupation of property "the
government does not simply take a single 'strand' from the 'bundle'
of property rights: it chops through the bundle, taking a slice of every
strand." (Id. at p. 435 [73 L. Ed. 2d at p. 882].) The court therefore
found the cable statute to be unconstitutional because of its requirement
that landlords consent to the permanent occupation of their property,
although the economic impact of this statute was far less onerous than
a number of other regulations upheld by the court that restricted the
use of property but did not authorize its physical invasion. (See, e.g.,
Penn Central Transp. Co. v. New York City (1978) 438 U.S. 104 [57 L.
Ed. 2d 631, 98 S. Ct. 2646] [denial of permit to build a high rise for
the sake of historical preservation]; Keystone Bituminous Coal Assn.
v. DeBenedictis (1987) 480 U.S. 470 [94 L. Ed. 2d 472, 107 S. Ct. 1232]
[regulation requiring coal mines to keep 50 percent of coal in the ground
in order to prevent subsidence not a taking].) Nollan must be considered as a further development
of the principles enunciated in Loretto. In Nollan, the court considered
a government regulation that permitted the physical invasion of property
as a condition of granting a development permit. The Nollans sought
to replace a dilapidated bungalow on property bordering the ocean, and
were required to obtain a coastal development permit. As a condition
of the permit, the Nollans would have been compelled to provide lateral
public access along a portion of their property bounded by the ocean
and their seawall, to enable members of the public to walk between two
public beaches bordering the Nollans' property. The court began its analysis by reaffirming the
holding in Loretto that "[w]here governmental action results in '[a]
permanent physical occupation' of the property, by the government itself
or by others [citation], 'our cases uniformly have found a taking to
the extent of the occupation, without regard to whether the action achieves
an important public benefit or has only minimal economic impact on the
owner . . . .' " (Nollan, supra, 483 U.S. at pp. 831-832 [97 L. Ed.
2d at p. 686], quoting Loretto, supra, 458 U.S. at pp. 434-435 [73 L.
Ed. 2d at p. 882].) The court continued: "We think a 'permanent physical
occupation' has occurred, for purposes of that rule, where individuals
are given a permanent and continuous right to pass to and fro, so that
the real property may continuously be traversed, even though no particular
individual is permitted to station himself permanently upon the premises."
(Nollan, supra, 483 U.S. at p. 832 [97 L. Ed. 2d at p. 686].) [**453] Given that view, it might be expected
that the court would hold that the easement in Nollan, like the cable
statute in Loretto, was a per se taking, for which the government must
pay no matter what the justification. But the court recognized that
the regulation in the case before it, unlike the statute in Loretto,
was imposed as a condition of approving a development application, and
that a public agency could, if the proposed development contravened
a valid land use regulation, deny that application altogether. "If a
prohibition [to development] designed to accomplish [a lawful state]
purpose would be a legitimate exercise of the police power rather than
a taking, it would be strange to conclude that providing the owner an
alternative to that prohibition which accomplishes the same purpose
is not." (Nollan, supra, 483 U.S. at pp. 836-837 [97 L. Ed. 2d at p.
689].) Thus, the otherwise unconstitutional imposition
of a public easement on private property derives its constitutional
legitimacy from the fact that a prohibition on development is constitutionally
justified. "The evident constitutional propriety disappears, however,
if the condition substituted for the prohibition utterly fails to further
the end advanced as the justification of the prohibition." (Nollan,
supra, 483 U.S. at p. 837 [97 L. Ed. 2d at p. 689].) Without this "essential
nexus," between the permit condition and the development ban, "the building
restriction is not a valid regulation of land use but 'an out-and-out
plan of extortion.'" (Ibid.) The Nollan court found no such nexus in
the case before it. The purported justification for limiting development--the
interference of the newly constructed house with a public view of the
ocean--was not served by a lateral easement allowing individuals to
walk along the ocean. (Id. at pp. 838-839 [97 L. Ed. 2d at p. 690].) That the Nollan case turned on the fact that
the regulation was a physical taking is further accentuated by Justice
Scalia at the conclusion of the majority opinion: "We view the Fifth
Amendment's Property Clause to be more than a pleading requirement .
. . . [O]ur cases describe the condition for abridgment of property
rights through the police power as a 'substantial advanc[ing]' of a
legitimate state interest. We are inclined to be particularly careful
about the adjective where the actual conveyance of property is made
a condition to the lifting of a land-use restriction, since in that
context there is a heightened risk that the purpose is avoidance of
the compensation requirement, rather than the stated police-power objective."
(Nollan, supra, 483 U.S. at p. 841 [97 L. Ed. 2d at p. 692], second
italics added.) Thus in Nollan, the rule that the government's physical
occupation of private property is a per se taking is transformed, in
the context of a development application, into a rule of heightened
scrutiny to ensure that a required development dedication is not a mere
pretext to obtain or otherwise physically invade property without just
compensation. In Dolan, the court considered the issue of how
close the nexus between the development restriction and the dedication
must be. In that case, Dolan sought the expansion of her hardware store.
The court conceded that the city had legitimately found that the expansion
would affect two valid government interests. First, the store expansion,
adjacent to a floodplain, would increase the risk of flooding by paving
over a greater surface area. Second, the expanded store would increase
traffic congestion on nearby streets. The court also conceded that there
was a nexus between those impacts and the development conditions in
question--the dedication of an easement along the floodplain for a public
greenway, and the dedication of an additional easement for a bicycle
path. (Dolan, supra, 512 U.S. at p. [129 L. Ed. 2d at p. 313, 114 S.
Ct. atp. 2314].) The court found, however, the nexus to be insufficient.
There must be a "rough proportionality" between the development impact
and the dedication, and a public agency "must make some sort of individualized
determination that the required dedication is related both in nature
and extent to the impact of the proposed development." (Id. at pp. -
[129 L. Ed. 2d at p. 320, 114 S. Ct. at pp. 2319-2320], fn. omitted.) The Dolan court, like the Nollan court, reiterated
that its holding depended in part on the special protection that the
takings clause affords against the physical occupation [**454] of private
property by the government. The development conditions in Dolan "were
not simply a limitation on the use petitioner might make of her own
parcel, but a requirement that she deed portions of her property to
the city. In Nollan, supra, we held that governmental authority to exact
such a condition was circumscribed by the Fifth and Fourteenth Amendments.
Under the well-settled doctrine of 'unconstitutional conditions' the
government may not require a person to give up a constitutional right--here
the right to receive just compensation when property is taken for a
public use--in exchange for a discretionary benefit conferred by the
government where the property sought has little or no relationship to
the benefit." (Dolan, supra, 512 U.S. at pp. - [129 L. Ed. 2d at p.
316, 114 S. Ct. at pp.2316-2317], italics added.) The Dolan court found
an additional reason for treating the dedication in question according
to a higher standard. Most land-use regulations "involve[] essentially
legislative determinations classifying . . . areas of the city, whereas
here the city made an adjudicative decision to condition petitioner's
application for a building permit on an individual parcel." (Id. at
p. [129 L. Ed. 2d at p. 316, 114 S.Ct. at p. 2316].) The court also
made clear that in such cases the burden rests with the city "to justify
the required dedication." (Id. at p. , fn. 8 [129L. Ed. 2d at p. 320,
114 S. Ct. at p. 2320].) Are development fees more like dedications, which
will receive a heightened judicial scrutiny, or like zoning and other
land-use restrictions, which are reviewed with greater deference? The
answer to that question is not simple--to some extent monetary exactions
are sui generis. But in one fundamental sense, monetary exactions are
more like zoning restrictions: like these restrictions they do not involve
a physical invasion of property, but merely a diminution in its economic
value. As such, development fees may be placed in a class not only with
such land use regulations, but also with other sorts of economic regulations
that may significantly reduce the profit or value derived from property,
yet are not deemed to be takings unless the regulations are arbitrary
or confiscatory. (See 20th Century Ins. Co. v. Garamendi (1994) 8 Cal.
4th 216, 292-297 [32 Cal. Rptr. 2d 807, 878 P.2d 566] [rate regulation
can only be a taking if confiscatory]; United States v. Sperry Corp.
(1989) 493 U.S. 52, 60 [107 L. Ed. 2d 290, 301, 110 S. Ct. 387] [reasonable
user fees that reduce the value of arbitration award not a taking].) It could be argued that the appropriation of
a property owner's money, in the form of a development fee, can be considered
a "physical invasion" of monetary assets, and therefore as constitutionally
objectionable as the physical occupation of real property. The United
States Supreme Court has decisively rejected such equivalency. In United
States v. Sperry Corp., supra, 493 U.S. 52 (Sperry), a case that will
be discussed at greater length below, the court upheld a deduction of
a percentage of an award received from the Iran-United States claims
tribunal as a reasonable user fee. Plaintiff corporation argued that
such a dedication "was akin to a 'permanent physical occupation' of
its property and therefore was a per se taking requiring just compensation
[citing Loretto]." (Id. at p. 62, fn. 9 [107 L. Ed. 2d at p. 303], italics
omitted.) The court responded: "It is artificial to view a deduction
of a percentage of a monetary award as physical appropriations of property.
Unlike real or personal property, money is fungible. No special constitutional
importance attaches to the fact that the Government deducted its charge
directly from the award rather than requiring [plaintiff] to pay it
separately. If the deduction in this case were a physical occupation
requiring just compensation, so would be any fee for services, including
a filing fee that must be paid in advance. Such a rule would be an extravagant
extension of Loretto." (Ibid.) In fact, unlike the physical appropriation of
real property, the government "takes" money from property owners in
numerous circumstances with typically minimal constitutional constraints,
as discussed immediately below. B. Constitutional Review of Taxes, Assessments,
User Fees, and Other Fees. To put the matter simply, the taking of money
is different, under the Fifth Amendment, from the taking of real or
personal [**455] property. The imposition of various monetary exactions--taxes,
special assessments, and user fees--has been accorded substantial judicial
deference. As elaborated below, many if not most development fees resemble
such exactions in that they are categorically applied to a general class--to
all developments or to certain types of development. The imposition
of such development fees, like other general fees, has also been given
substantial deference. What follows is a brief account of the constitutional
standards used for determining the validity of these various types of
monetary exactions. First, government is obviously able, constitutionally,
to take money from property owners as part of a valid scheme of taxation.
The separation of powers doctrine dictates that courts allow states
and their subdivisions considerable flexibility in the imposition of
varying tax burdens on different classes of taxpayers. "Of course, the
States, in the exercise of their taxing power, are subject to the requirements
of the Equal Protection Clause of the Fourteenth Amendment. But that
clause imposes no iron rule of equality . . . . [States] may impose
different specific taxes upon different trades and professions and may
vary the rate of excise upon various products. [They are] not required
to resort to close distinctions or to maintain a precise, scientific
uniformity with reference to composition, use or value." (Allied Stores
of Ohio v. Bowers (1959) 358 U.S. 522, 526-527 [3 L. Ed. 2d 480, 484,
79 S. Ct. 437].) Courts will not invalidate a state taxation scheme
unless the classifications used are without "rational basis" and are
"palpably arbitrary." (Id. at p. 527 [3 L. Ed. 2d at p. 485].) Of particular relevance for the issue of development
fees, California courts have upheld on numerous occasions excise taxes
that charge fees on new development for purposes of raising general
revenue, in which no close "nexus" or "reasonable relationship" is required.
(See Centex Real Estate Corp. v. City of Vallejo (1993) 19 Cal. App.
4th 1358 [24 Cal. Rptr. 2d 48] [upholding excise tax of $3,000 per unit
of residential development and $.30 per square foot of nonresidential
development]; The Pines v. City of Santa Monica (1981) 29 Cal. 3d 656
[175 Cal. Rptr. 336, 630 P.2d 521] [upholding $1,000 fee for sale of
new or converted condominiums]; Westfield-Palos Verdes Co. v. City of
Rancho Palos Verdes (1977) 73 Cal. App. 3d 486 [141 Cal. Rptr. 36] [upholding
excise tax of $500 per bedroom, up to a maximum of $1,000 per dwelling
unit]; Associated Home Builders, Inc. v. City of Newark (1971) 18 Cal.
App. 3d 107 [95 Cal. Rptr. 648] [uphold ng per-bedroom excise tax].)
As the Court of Appeal recently explained in Centex Real Estate Corp.,
supra, 19 Cal. App. 4th at page 1364: " '[A]n excise tax is a "tax on
the exercise of one of the incidences of property ownership," such as
the ability to transfer or devise property or the ability to use, store,
or consume it.' " Accordingly, "[a]n excise tax may properly be imposed
on the privilege of developing property" as one such incidence of property
ownership. (Ibid.) While the takings clause is concerned in part
with preventing those whose property has been appropriated or destroyed
by government action from "bear[ing] public burdens which, in all fairness
and justice, should be borne by the public as a whole" (Armstrong v.
United States (1960) 364 U.S. 40, 49 [4 L. Ed. 2d 1554, 1561, 80 S.
Ct. 1563]), the equal protection clause generally permits government
to impose unequal tax burdens on individuals as long as they are rationally
based. There is no indication that Nollan and Dolan have superseded
equal protection doctrine in the realm of taxation, even if the taxes
affect the value of property or the profits from development. But if
a municipality can constitutionally impose a development tax as long
as it is rationally based, why is a higher level of constitutional scrutiny
required when, as in the case of generally applicable development fees,
the "tax" is earmarked for use in alleviating specific development impacts
rather than for the general fund? Another kind of monetary exaction on property
owners which is subject to a fairly deferential standard of judicial
review is special assessments. Special assessment districts are established
to permit cities and counties to charge groups of property owners [**456]
for improvements from which they will especially benefit; the individual
assessments are to be calculated in proportion to the estimated benefits
to the parcels against which they are assessed. (Sts. & Hy. Code,
§ 10203-10204; Dawson v. Town of Los Altos Hills (1976) 16 Cal.
3d 676, 683-684 [129 Cal. Rptr. 97, 547 P.2d 1377] (Dawson).) Although
no recent California case considers a takings challenge to a special
assessment, the case of Waters v. Montgomery County (1994) 337 Md. 15
[650 A.2d 712] is directly relevant. In that case, Maryland's highest
court upheld a "development impact tax" that functioned much like a
benefit assessment or excise tax, imposing monetary exactions on all
development within certain undeveloped areas of Montgomery County according
to a per-residential-unit or per-square-foot measurement, and spending
the funds to improve roads and other transportation facilities within
these areas. (Id. at p. 714.) The court considered an equal protection
challenge to the fee, and upheld the fee as an economic regulation with
a "rational basis"--it was reasonable to conclude that development in
the two areas would lead to a need for increased transportation facilities.
(Id. at pp. 721-723.) The court also rejected the argument that the
takings clause, as interpreted by Dolan, requires that such an assessment
be subject to greater constitutional scrutiny than the equal protection
clause would demand. It concluded that Dolan was distinguishable in
part because it required that the property owner "'deed portions of
the property to the city.'" (Id. at p. 724.) The tax in question neither
compelled a physical invasion of the property nor denied "'all economically
beneficial or productive use of [the] land,'" and was therefore not
a taking. (Ibid.) n1 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n1 Although there are no recent takings cases
in California involving special assessments, a challenge to a special
assessment district is typically framed in terms somewhat similar to
a takings challenge--that a property owner is being asked to pay for
services from which he or she does not specially benefit, and which
should be borne by the public as a whole through taxation. (See Knox
v. Orland (1992) 4 Cal. 4th 132, 143 [14 Cal. Rptr. 2d 159, 841 P.2d
144] [assessment is challenged as failing to provide special benefits
and is therefore a "special tax"].) But as we have stated: "The scope
of judicial review of such [assessments] is . . . narrow. 'The board
of supervisors is the ultimate authority which is empowered to finally
determine what lands are benefitted and what amount of benefits shall
be assessed against the several parcels benefitted . . . . This determination
is made after a full hearing accorded to all persons interested to make
such objection as they see fit. In such a case the court will not declare
the assessment void unless it can plainly see from the face of the record,
or from facts judicially known, that the assessment so finally confirmed
is not proportional to the benefits, or that no benefits could accrue
to the property assessed." (Dawson, supra, 16 Cal. 3d at p. 684; see
also Knox v. Orland, supra, 4 Cal. 4th 132, 147 [reaffirming the validity
of the Dawson standard]; see also J.W. Jones Companies v. City of San
Diego (1984) 157 Cal. App. 3d 745 [203 Cal. Rptr. 580] [approving benefit
assessment for new development based on long-range estimates of the
need for public facilities generated by the new development].) Moreover, even if a special assessment is found
to be disproportionate to the benefit provided, and therefore a "special
tax" within the meaning of article XIII A, section 4 of the California
Constitution, it does not follow that the assessment would also be a
taking. The conclusion that a development fee is really a special tax
only signifies that the fee cannot be adopted without the approval of
two-thirds of the electorate, not that it cannot be lawfully adopted
at all, as would be the case were the assessment a taking. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - The government is also given broad discretion
to charge user fees, and the recent case of Sperry, supra, 493 U.S.
52, makes clear that judicial review of such fees under the takings
clause is similarly narrow. In that case the court upheld against a
takings challenge the deduction of a portion of a judgment awarded to
plaintiff corporation from the Iranian government in order to pay for
the expenses of the Iran-United States Claims Tribunal, although the
corporation claimed not to have proportionately benefitted from the
tribunal. (Id. at pp. 63-64 [107 L. Ed. 2d at p. 304].) As the Sperry
court reaffirmed, "the Just Compensation Clause 'has never been read
to require the . . . courts to calculate whether a specific individual
has suffered burdens . . . in excess of the benefits received' in determining
whether a 'taking' has occurred." (Id. at p. 61, fn. 7 [107 L. Ed. 2d
at p. 302].) In order to withstand a takings challenge, a user fee does
not have to be "precisely calibrated to the use that a party makes of
Government [**457] services. . . . All that we have required is that
the user fee be a " 'fair approximation of the cost of benefits supplied.'
" (Id. at p. 60 [107 L. Ed. 2d at p. 301].) The court recognized "that
when the Federal Government applies user charges to a large number of
parties, it probably will charge a user more or less than it would under
a perfect user-fee system, but we [decline] to impose a requirement
that the Government 'give weight to every factor affecting appropriate
compensation . . . .' " (Id. at p. 61 [107 L. Ed. 2d at p. 302]; see
also Webb's Fabulous Pharmacies, Inc. v. Beckwith (1980) 449 U.S. 155,
163 [66 L. Ed. 2d 358, 366, 101 S. Ct. 446] [user fees will be upheld
if they have some police power justification].) Many development fees bear a close resemblance
to the excise taxes, assessment fees and user fees discussed above.
They are perhaps best characterized as a special assessment placed on
developing property, calculated according to preestablished legislative
formulae based on square footage or per unit of development. (See J.W.
Jones Companies v. City of San Diego, supra, 157 Cal. App. 3d 745 [fee
apportioning projected future public costs of development among developers
in several areas of the city]; see also Tahoe Keys Property Owners'
Assn. v. State Water Resources Control Bd. (1994) 23 Cal.App. 4th 1459
[28 Cal. Rptr. 2d 734] [$4,000 per lot environmental mitigation fee];
Garrick Development Co. v. Hayward Unified School Dist. (1993) 3 Cal.
App. 4th 320 [4 Cal. Rptr. 2d 897] [school fees of $1.50 per square
foot of nonresidential development]); Blue Jeans Equities West v. City
and County of San Francisco (1992) 3 Cal. App. 4th 164, 170-171 [4 Cal.
Rptr. 2d 114] [transportation fee of up to $5 per square foot levied
on commercial development]; Commercial Builders v. Sacramento (9th Cir.
1991) 941 F.2d 872, 874-875 [upholding low-income housing fee on commercial
development according to legislated formula]; Shapell Industries, Inc.
v. Governing Board (1991) 1 Cal. App. 4th 218 [1 Cal. Rptr. 2d 818]
[school fees of $1.50 per square foot].) Courts have granted considerable
discretion to local government to impose such fees, and have upheld
them against takings and related challenges. (See, e.g., Garrick Development
Co. v. Hayward Unified School Dist., supra, 3 Cal. App. 4th at p. 337;
Tahoe Keys Property Owners' Assn. v. State Water Resources Control Bd.,
[94] supra, 23 Cal. App. 4th at pp. 1477-1478; Blue Jeans Equities West
v. City and County of San Francisco, supra, 3 Cal. App. 4th at pp. 170-171;
Commercial Builders v. Sacramento, supra, 941 F.2d at pp. 874-875.) The above cases illustrate the difference, for
purposes of takings clause jurisprudence, between judicial review of
the government's physical taking of property and its charging of fees.
A comparison of these cases with Loretto, supra, 458 U.S. 419, brings
this difference into clearer focus. While laws that impose generally
applicable taxes, assessments and fees will be upheld if they are rationally
based, an equivalent, generally applicable measure that authorizes the
physical occupation of a small portion of property belonging to a large
class of property owners--forced access for cable television wires and
boxes--is deemed to be a taking. (Loretto, supra, 458 U.S. at p. 438
[73 L. Ed. 2d at p. 884].) It is therefore illogical doctrinally to
assert, as plaintiff and his numerous amici curiae do in this case,
that development fees will invariably be subject to the same rigorous
constitutional scrutiny as compelled dedications [95] of property. In sum, it does not appear that Nollan or Dolan
alter the restricted judicial review applicable to general governmental
fees--a restriction rooted in the separation of powers doctrine--merely
because a property owner can recast his challenge to a fee as a takings
claim, asserting that he was being asked to pay for a disproportionate
share of public improvements or services in exchange for a development
permit. On the contrary, the cases show that the constitutionality of
such fees will be judged under a standard of scrutiny closer to the
rational basis review of the equal protection clause than the heightened
scrutiny of Nollan and Dolan. This is not to imply that legislative development
fees do not implicate the takings clause. Because these fees are forms
of land [**458] use regulation, they must "advance legitimate state
interests." (Agins v. Tiburon, supra, 447 U.S. at p. 260 [65 L. Ed.
2d at p. 112].) A disproportionate fee raises the possibility of arbitrary
or discriminatory government action. But Nollan and Dolan do not change
the basic principle that courts will not unduly interfere with the essentially
legislative [96] function of adopting fees and fee structures that advance
the public interest. In other words, such fees are "public program[s]
adjusting the benefits and burdens of economic life to promote the common
good" which will be reviewed by courts in a more deferential manner
than physical invasions of property. (Penn Central Transp. Co. v. New
York City, supra, 438 U.S. at p. 124 [57 L. Ed. 2d at p. 648].) Of course, a court's constitutional inquiry will
vary with the nature of the state interest purporting to justify the
monetary exaction under review. If the government's interest is in raising
revenue generally, then courts will uphold the tax so long as the special
burden it imposes on developers is rationally based. If, as in the case
of the art in public places fee at issue in this case, the fee is for
the purpose of furthering certain legitimate aesthetic objections, then
this fee will be upheld if it can be shown to substantially further
those objections. If the fee is imposed to mitigate the impacts of development,
then it will be upheld if there is a reasonable relationship between
the fee and the development impact. (See Associated Home Builders etc.,
Inc. v. City of Walnut Creek (1971) 4 Cal. 3d 633, 640 [94 Cal. Rptr.
630, 484 P.2d 606, 43 A.L.R.3d 847].) If the fee is defined as a user
fee, then the fee will be upheld if there is a reasonable relationship
between the government's cost of service and the fee. But in each of
these cases, the degree of scrutiny is not appreciably different. Courts
will, for federal constitutional purposes, defer to the legislative
capacity of the states and their subdivisions to calculate and charge
fees designated for legitimate government objectives, unless the fees
are plainly arbitrary or confiscatory. There are, of course, a number of legal constraints
in this state--other than the Fifth Amendment--on the government's ability
to impose development fees. Government Code section 66000 et seq. extensively
regulates the imposition of development fees, including requirements
that the purpose of the fee must be identified with specificity, and
that a "reasonable relationship" must exist between the fee's use and
the type of development project on which the fee is imposed. (Gov. Code,
§ 66001, subd. (a)(3).) n2 The statutory [**459] scheme also mandates
a public hearing process for the adoption of a fee, and a procedure
for the refund of unused portions of the fee. (Gov. Code, § 66001,
subds. (e) & (f), 66016-66018; see also Garrick Development Co.
v. Hayward Unified School Dist., supra, 3 Cal. App. 4th 320.) Moreover,
a development fee which exceeds the burdens and benefits of development
will be found to be a special tax that requires two-thirds voter approval
under article XIII A, section 4 of the California Constitution. (See
Bixel Associates v. City of Los Angeles (1989) 216 Cal. App. 3d 1208,
1220 [265 Cal. Rptr. 347] [invalidation of excessive fire hydrant fee
as a special tax]; Beaumont Investors v. Beaumont-Cherry Valley Water
Dist. (1984) 165 Cal. App. 3d 227, 238 [211 Cal. Rptr. 567] [invalidation
of water system hookup fee as a special tax].) - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n2 I agree with the plurality that Government
Code section 66001 incorporated a "reasonable relationship" standard
set forth in Associated Home Builders etc., Inc. v. City of Walnut Creek,
supra, 4 Cal. 3d at page 640, and its progeny, a standard less exacting
than Dolan's "rough proportionality" test. A review of the legislative
history of Assembly Bill No. 1600, 1987-1988 Regular Session (Assembly
Bill No. 1600), which included section 66001, confirms that view. In
an analysis of Assembly Bill No. 1600 by the Senate Local Government
Committee immediately before the enactment of the bill, it was stated:
"The U.S. Supreme Court's June 26 Nollan [case] overturned the California
Coastal Commission's imposition of a lateral public access easement
as a condition of approving a residential development in the coastal
zone. . . . Some observers have interpreted this decision as an instruction
to local agencies to find a more direct link between exactions and public
purposes. [Assembly Bill No.] 1600 moves in this direction. The issue
will be whether it goes far enough. Because the bill does not take effect
until January 1, 1989, the Legislature will have ample opportunity to
conform it with the Nollan case, if it chooses." (Sen. Local Gov. Com.
Rep. on Assem. Bill No. 1600 (1987-1988 Reg. Sess.) as amended Aug.
18, 1987, p. 2.) The fact that the Legislature did not amend the bill
after that indicates that it did not intend to fully incorporate the
Nollan standard to development fees, much less the Dolan standard formulated
seven years later. The same report also makes clear that the "reasonable
relationship" standard of section 66001 was intended to "conform to
case law," i.e., Associated Home Builders and related California cases.
(Sen. Local Gov. Com. Rep. on Assem. Bill No. 1600 at p. 3.) Whether the less demanding statutory standard
or more demanding constitutional standard applies is ultimately a constitutional
question and depends, as I have argued, and as the other members of
this court appear to agree, on whether or not the fee is generally applicable.
Whichever standard applies, the plurality is, of course, correct in
concluding that anyone challenging either the statutory or constitutional
validity of a development fee must follow the procedures set forth in
Government Code section 66020 et seq. And, while section 66001 cannot
be said to have incorporated the Nollan/Dolan standard in any formal
sense, I agree with the plurality that "the term 'reasonable relationship'
embraces both constitutional and statutory meanings which, for all practical
purposes, have merged to the extent that the Dolan decision applies
to development fees . . . ." (Plur. opn., ante, at p. 867, italics in
original.) - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - Even under more deferential review, a court's
inquiry into the validity of the reasonable relationship between a development
fee and a development impact will not be a "rubber stamp." (See, e.g.,
Shapell Industries, Inc. v. Governing Board, supra, 1 Cal. App. 4th
218, 235-236; Balch Enterprises, Inc. v. New Haven Unified School Dist.
(1990) 219 Cal. App. 3d 783, 794-795 [268 Cal. Rptr. 2d 543].) n3 But
Nollan and Dolan in most cases impose no additional constitutional burden
on the government to justify development fees beyond the burden it already
bears under the state constitution and statute. (See Garrick Development
Co. v. Hayward Unified School Dist., supra, 3 Cal. App. 4th at p. 337;
Blue Jeans Equities West v. City and County of San Francisco, supra,
3 Cal. App. 4th at p. 171.) - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n3 Indeed, it is arguable that even under a more
deferential standard of review, the recreation fee in this case would
have been invalid, because it was based on a fundamental methodological
or conceptual flaw. (See, e.g., Shapell Industries, Inc. v. Governing
Board, supra, 1 Cal. App. 4th at pp. 235-236 [school fee erroneously
attributing all future expansion of enrollment to new development partially
invalid].) - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - In sum, general development fees will usually
be subject to a less exacting standard of review under the takings clause
than the physical taking of property. C. Nollan, Dolan and the Recreation Fee. Nonetheless, I agree with the plurality that
a somewhat higher level of constitutional scrutiny should be applied
to a development fee when it is imposed "neither generally nor ministerially,
but on an individual and discretionary basis." (Plur. opn., ante, at
p. 876.) The heightened scrutiny under these circumstances is derived
from Nollan's and Dolan's central concern that government not convert
a valid regulation of land use into "'an-out-and-out plan of extortion'"
(Dolan, supra, 512 U.S. at p. [129 L. Ed.2d at p. 317, 114 S. Ct. at
p. 2317], quoting Nollan, supra, 483 U.S. at p. 837 [97 L. Ed. 2d at
p. 689]) that does not advance a legitimate governmental objective.
Although development fees are not physical takings of property, they
bear greater similarity to physical takings than to zoning and other
such land-use regulations in this sense: both physical and monetary
exactions require developers to directly contribute valuable assets
to the public weal in exchange for permission to develop their property.
In both cases, there is a potential for the government to engage in
extortionate behavior. This risk diminishes when the fee is formulated
according to preexisting statutes or ordinances which purport to rationally
allocate the costs of development among a general class of developers
or property owners--indeed, as discussed above, the separation of powers
doctrine clothes such a fee in a presumption of constitutional-constitutionality.
But when the fee is ad hoc, enacted at the time the development application
was approved, there is a greater likelihood that it is motivated by
the desire to extract the maximum revenue from the property owner seeking
the development permit, rather than on a legislative policy of mitigating
the public impacts of development or of otherwise reasonably distributing
the burdens [**460] of achieving legitimate government objectives. Indeed, even in the case of zoning regulations,
to which courts have been traditionally deferential, a more rigorous
form of judicial review, fueled by a suspicion of legislative motive,
has been employed when the regulation applies uniquely to a single property
owner--so-called "spot zoning." Spot zoning is said to exist " '[w]here
a small parcel is restricted and given less rights than the surrounding
property . . . .' " (Ross v. City of Yorba Linda (1991) 1 Cal. App.
4th 954, 960 [2 Cal. Rptr. 2d 638].) When the zoning ordinance appears
to subject a property owner to a special restriction not applicable
to similarly situated adjacent property, courts will conduct a more
searching inquiry into the reasons and motives of the legislative body
to determine if the zoning is arbitrary and discriminatory. (See Wilkins
v. City of San Bernardino (1946) 29 Cal. 2d 332, 338 [175 P.2d 542];
Ross v. City of Yorba Linda, supra, 1 Cal. App. 4th at pp. 962-963;
Arnel Development Co. v. City of Costa Mesa (1981) 126 Cal. App. 3d
330, 337 [178 Cal. Rptr. 723]; see also Longtin, California Land Use
(1995 supp.) § 1.34.) As explained in Arnel Development Co.: "The
usual test when a zoning ordinance is attacked as being in excess of
the police power is whether or not the ordinance bears a substantial
and reasonable relationship to the public welfare. [Citations.] However,
'[t]he principle limiting judicial inquiry into the legislative body's
police power objectives does not bar scrutiny of a quite different issue,
that of discrimination against a particular parcel of property. "A city
cannot unfairly discriminate against a particular parcel of land, and
the courts may properly inquire as to whether the scheme of classification
has been applied fairly and impartially in each instance."' " (Arnel,
supra, 126 Cal. App. 3d at p. 336.) In the same manner, when a municipality singles
out a property developer for a development fee not imposed on others,
a somewhat heightened scrutiny of that fee is required to ensure that
the developer is not being subject to arbitrary treatment for extortionate
motives. These singular fees present a greater possibility that the
government is unfairly imposing disproportionate public burdens on a
lone, and therefore particularly vulnerable, property owner. Hence the
need for closer judicial review. n4 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n4 I note that the distinction between generally
applicable regulations and those imposed discretionarily on a single-property
owner is critical in the context of takings jurisprudence only when
monetary fees, rather than the physical occupation of land, is in question.
As explained above, even generally applicable laws which authorize the
physical occupation of property are takings (see Loretto, supra, 458
U.S. at pp. 436-437 [73 L. Ed. 2d at p. 883]), or, in the case of regulations
that occur in the development permit process, subject to a greater presumption
that a taking has occurred. (Dolan, supra, 512 U.S. at pp. - [129 L.
Ed. 2d at pp. 311-312, 322-323, 114 S. Ct. at pp. 2313,2321-2322].)
Thus in Dolan, the bicycle path dedication regulations were legislatively
formulated, derived from the City of Tigard's Community Development
Code, which mandated dedication of land for bicycle pathways consistent
with a bicycle/pedestrian pathway plan. (Id. at p. [129 L. Ed. 2 dat
pp. 311-312, 114 S. Ct. at p. 2313].) Although it may have been constitutionally
permissible for the city to impose a bicycle path "tax" or assessment
on all downtown developers, with little or no showing of the individual
impact of each development, it was not similarly constitutional to compel
developers to cooperate in the city's land banking scheme by requiring
them to dedicate a portion of their property to the city for a bicycle
path in fulfillment of the city's general plan, irrespective of the
public impacts of their developments. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - That is not to imply that a local government's
actions will be subject to heightened scrutiny each time it engages
in the individualized assessment of a development project's public impacts.
Indeed, such assessments may be preferable, for reasons of fairness
and accuracy, to fees that are completely predetermined according to
rigid legislative formulae, and it would be illogical to impose on them
more formidable constitutional hurdles. But when, as in this case, the
local government exacts a type of development fee which is imposed on
no one else, and which is based on no preexisting legislative guidelines,
a more searching constitutional inquiry into the basis of the fee is
required. Thus, the type of judicial review set forth in
Nollan and Dolan is necessary, under the limited circumstances described
above, to ensure "that the [government's] monopoly power [**461] over
development permits is not illegitimately exploited by imposing conditions
that lack any logical affinity to the public impact of a particular
land use." (Plur. opn, ante, at p. 876.) I therefore conclude that the
recreation fee at issue in the present case is required to meet the
"rough proportionality" standard prescribed under Dolan. II. As stated above, I concur in the plurality's
analysis of the recreation fee. I would add two additional points. First, this is not a case in which the government
has asserted an interest in the protection of specific facilities or
improvements, as when government regulates the closure or conversion
of rental housing. (See Terminal Plaza Corp. v. City and County of San
Francisco (1986) 177 Cal. App. 3d 892, 898-899 [223 Cal. Rptr. 379]
[controls on conversion of residential hotels and requirements to contribute
to replacement costs upheld]; Nash v. City of Santa Monica (1984) 37
Cal. 3d 97 [207 Cal. Rptr. 285, 688 P.2d 894] [upholding ordinance controlling
exit from rental housing business]; Gov. Code, § 65863.7, subd.
(e) [authorizing local governments to require that mobile home park
owners who close their facilities pay the "reasonable costs of relocation"];
Gov. Code, § 7060.1, subd. (c)(1) [affirming the power of public
entities to "mitigate any adverse impact on persons" displaced as the
result of the closure of residential hotels].) In such cases, the government
may have a constitutionally legitimate interest in preserving an existing
private facility that has public value, and in requiring mitigation
fees if the facility is closed or put to a different use. But in the
present case, the City had asserted no interest in preserving any particular
facility, and had, indeed, permitted without condition the demolition
of plaintiff's health club. As the plurality correctly conclude, the
sole interest advanced by the City is in the preservation of a type
of land use rather than of a facility, and any recreational fee must
be measured in terms of the loss of that use. Second, it should be recognized that although
the City must employ a "rough proportionality" analysis on remand, the
issue before it is a different one from that presented in Nollan and
Dolan. In both those cases, the courts assumed that the developments
in question had public impacts of some magnitude but found the evidence
lacking that the taking of public easements significantly mitigated
those impacts. (Nollan, supra, 483 U.S. at pp. 838-839 [97 L. Ed. 2d
at p. 690]; Dolan, supra, 512 U.S. at p. [129 L. Ed. 2d at pp. 321-323,
114 S. Ct. at pp. 2320-2322].) The question that must be addressed in
the present case, on the other hand, is whether and to what extent the
change in the recreational land use designation of plaintiff's property
had a public impact--the loss of recreational opportunities to the residents
the City--that would justify a special recreational fee. But assuming
that a public impact is identified and a fee of some amount is constitutionally
justified, there is no question that the City's proposed use of such
fee--to construct public tennis courts or other such facilities--would
directly mitigate that impact. Thus, although the City must calculate the amount
of the recreation fee in terms of the added costs of inducing the creation
of private recreational facilities attributable to the changed land
use (plur. opn., ante, at p. 884), it is not constitutionally forbidden
from determining that the best use of the fee is to build public tennis
courts or other facilities. It is the role of the legislative body,
rather than the courts, to determine the best uses of the revenue obtained
from a development fee, as long as the expenditure of the fee is reasonably
related to the alleviation of the development impact that is its purported
justification. I also agree with the plurality that the art
fee is a generally applicable fee substantially related to legitimate
aesthetic objectives promoted by the City. It is therefore constitutional,
and not subject to the Nollan/Dolan analysis. DISSENT BY: KENNARD (In Part); WERDEGAR (In Part) DISSENT: KENNARD, J., Concurring and Dissenting.--I concur in the judgment
insofar as it upholds the "art in public places" fee. I [**462] agree
with the majority that this fee, imposed under an ordinance of general
applicability, is not subject to the "essential nexus" and "rough proportionality"
requirements that the United States Supreme Court established in Nollan
v. California Coastal Comm'n (1987) 483 U.S. 825 [97 L. Ed. 2d 677,
107 S. Ct. 3141] (Nollan) and Dolan v. City of Tigard (1994) 512 U.S.
374 [129 L. Ed. 2d 304, 114 S. Ct. 2309] (Dolan) to determine whether
certain development conditions violate the takings clause of the Fifth
Amendment to the United States Constitution. I further agree with the
majority that the art in public places fee is valid under traditional
standards for judging the constitutional validity of development requirements
of general applicability. I dissent from the judgment insofar as it concludes
that a city may impose a mitigation fee for the "loss" of private recreation
facilities when property on which such facilities were located is redeveloped
for a different use. On this issue, I agree with the majority that Nollan-Dolan's
"essential nexus" and "rough proportionality" requirements apply to
monetary exactions that, like the mitigation fee involved here, are
imposed on a specific parcel of property as a condition of obtaining
a development permit. I also agree with the majority that a city may
not impose a recreational mitigation fee in an amount sufficient to
replace the "lost" private facilities with new public facilities. But
I do not agree with the majority that a city may require a landowner
to compensate the city for the projected expenses of (1) imposing development
restrictions on other land, or (2) otherwise encouraging the construction
of other private recreation facilities to replace those "lost" through
redevelopment. I further disagree with the plurality's decision,
as expressed in Justice Arabian's opinion, to "gloss" certain state
laws regulating mitigation fees (Gov. Code, § 66000 et seq.; hereafter
Mitigation Fee Act) to make their provisions coincide exactly with the
restrictions imposed by the takings clause of the Fifth Amendment to
the United States Constitution. This case was litigated under the takings
clause, not our state's Mitigation Fee Act; thus, there is no need to
construe the Mitigation Fee Act to decide this case. Between 1973 and 1975, Richard Ehrlich (Ehrlich)
acquired a 2.4-acre lot in Culver City (City) and applied for approval
to develop a private tennis club and recreational facility on the site.
City amended its zoning and general plan ordinances and adopted a specific
plan to allow for the construction of the facility. When developed by
Ehrlich, the site had five tennis courts, a heated swimming pool, a
Jacuzzi, paddle tennis courts, an aerobics area, and a separate building
for lockers and other facilities. In 1981, after a number of different managers
had failed to make the private club operate at a profit, Ehrlich applied
for approval to replace the private recreational club with an office
building. When City's planning commission opposed the application on
the ground that Ehrlich's private club filled a community need for recreational
facilities, Ehrlich abandoned the application. In August 1988, Ehrlich closed the facility because
of continuing financial losses. He then applied for a specific plan
amendment and tentative tract map approval to develop the site into
a 30-unit townhouse project. City initially expressed interest in acquiring
the property for use as a city-owned recreational facility. Its staff
advised City that Ehrlich's property offered an opportunity "to preserve
an existing sports/recreational facility for public use and relieve
pressure on existing facilities." An independent feasibility study commissioned
by City concluded that, according to national standards, City needed
two to four tennis courts and more public swimming pools and gymnasiums.
Although the study criticized Ehrlich's operation of the private club
formerly on the property, it also found that extensive capital improvements
would be necessary to make the site financially viable for recreational
use. In March 1989, Ehrlich obtained a demolition
permit and demolished the recreational facilities at the site, donating
to City the equipment that was still useful after demolition. [**463]
In April 1989, City decided, based on its independent feasibility study,
that it did not have sufficient funds to acquire the site and use it
as a public sports complex. It also decided not to assume the substantial
financial risks involved in acquiring the property for operation on
a membership, fee-for-service basis. Based on its concern about the
loss of recreational land use, City denied Ehrlich's application to
develop the site with townhouses. In subsequent discussions with City, Ehrlich
was told that his development application would be granted only if he
agreed to build new recreational facilities for City. In response, Ehrlich
filed, but did not serve, the petition for writ of mandate and complaint
for damages in this case. City then rescinded its earlier denial of
Ehrlich's application and granted it subject to certain conditions,
including payment of a $280,000 recreational mitigation fee and a $33,200
"art in public places" fee. The recreational mitigation fee was to be
used "for additional recreational facilities" to replace the facilities
"lost" when Ehrlich ceased using his property for commercial recreational
purposes. The amount of this fee was based on City's estimate of the
cost of building public recreational facilities. The "art in public
places" fee was imposed under a municipal ordinance that requires commercial
projects with a value in excess of $500,000 to either provide art work
for the project in an amount equal to 1 percent of the total value of
the building or to pay an equal amount to the City art fund. n1 - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n1 City also required Ehrlich to pay a $30,000
parkland fee to provide for anticipated increased demand on public park
and recreational facilities by the residents of the proposed townhouse
development. Ehrlich has not contested the validity of this fee and
it is not at issue on this appeal. - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - Ehrlich formally protested both the recreational
mitigation fee and the "art in public places" fee. When City denied
his protests, Ehrlich amended his pleadings in this action to allege
that the fees were an unconstitutional taking. Ehrlich and City then
agreed that Ehrlich would pay the fees under protest, retaining the
right to proceed with this lawsuit, in return for City's issuance of
the necessary development permits. In Ehrlich's action, the trial court invalidated
the $280,000 recreational mitigation fee because it was "simply an effort
to shift the cost of providing a public benefit to one no more responsible
for the need than any other taxpayer." The trial court upheld the constitutionality
of the $33,200 "art in public places" fee. The Court of Appeal initially affirmed the trial
court's judgment, but then granted a rehearing and, in a published opinion
(Ehrlich v. City of Culver City (1993) 15 Cal. App. 4th 1737 [19 Cal.
Rptr. 2d 468]), reversed the trial court's ruling that the $280,000
fee was an unconstitutional taking. The Court of Appeal reasoned that
there was a substantial nexus between the proposed project and the fee
because the fee compensated City for the burden to the community caused
by the "loss" of Ehrlich's private recreational facilities. (Id. at
p. 1750.) The United States Supreme Court then granted certiorari and
remanded the case to the Court of Appeal "for further consideration
in light of Dolan v. City of Tigard, 512 U.S. 374 [129 L. Ed. 2d 304,
114 S. Ct.2309]. . . ." (Ehrlich v. City of Culver City (1994) 512 U.S.
[129 L. Ed. 2d 854, 114 S. Ct. 2731-2732].) On remand, a divided Court
of Appeal, this time in an unpublished opinion, again upheld the $280,000
recreational mitigation fee. We granted review. II The Fifth Amendment to the United States Constitution,
made applicable to state and local governments by the Fourteenth Amendment,
prohibits the government from taking private property for public use
without just compensation. "One of the principal purposes of the Takings
Clause is 'to bar Government from forcing some people alone to bear
public burdens which, in all fairness and justice, should be borne by
the public as a whole.'" (Nollan, supra, 483 U.S. 825, 835-836, fn.
4 [97 L. Ed. 2d at p. 688], quoting Armstrong v. United States (1960)
364 U.S. 40, 49 [4 L. Ed. 2d 1554, 1561, 80 S. Ct. 1563].) [**464] In two landmark decisions--Nollan, supra,
483 U.S. 825, and Dolan,supra, 512 U.S. 374--the United States Supreme
Court has defined the scope of the protection that the Fifth Amendment's
takings clause affords in the context of conditions imposed on the granting
of land use permits. In so doing, the court has drawn a distinction
between conditions legislatively imposed by laws or rules of general
applicability, on the one hand, and conditions adjudicatively imposed
on specific parcels, on the other hand. If a condition is imposed pursuant to an ordinance
or rule of general applicability--that is, as a result of a legislative
determination--the condition is constitutionally permissible unless
the landowner meets his or her burden of proving that the condition
either does not substantially advance a legitimate governmental purpose
or deprives the landowner of any economically viable use of the land.
(Dolan, supra, 512 U.S. 374, , fn. 8 [129 L. Ed. 2d304, 315-317, 320,
114 S. Ct. 2309, 2316-2317, 2320]; Agins v. Tiburon (1980) 447 U.S.
255, 260 [65 L. Ed. 2d 106, 111-112, 100 S. Ct. 2138].) If a condition is adjudicatively imposed, however,
the government bears the burden of establishing (1) that the condition
has an "essential nexus" with a legitimate government interest that
would have justified denial of the permit, and (2) that there is a "rough
proportionality" between the burden imposed by the condition and the
projected impact of the proposed development. (Dolan, supra, 512 U.S.
374, [129 L. Ed. 2d 304, 317-318, 114 S. Ct. 2309, 2317-2319]; Nollan,
supra, 483 U.S. 825, 834-837 [97 L. Ed. 2d 677, 687-689].) With these standards in mind, I proceed to the
issues presented here. A. The Mitigation Fee Act As a preliminary matter, the plurality, as explained
in Justice Arabian's opinion, decides to "gloss" the provisions of California's
Mitigation Fee Act (Gov. Code, § 66000 et seq.) to make its provisions
correspond to the standards that the United States Supreme Court enunciated
in Nollan, supra, 483 U.S. 825, and Dolan, supra, 512 U.S. 374. (Plur.
opn., ante, at pp. 859-860, 866.) I see no need for this. Ehrlich has
not challenged the validity of the Mitigation Fee Act, nor was this
issue addressed by the trial court. In the event of some conflict between
the standards set forth in the Mitigation Fee Act and the standards
required by the federal Constitution, the constitutional standards must
necessarily control. Accordingly, the issue in this case is constitutional,
not statutory. B. The "Art in Public Places" Fee The "art in public places" fee was imposed under
a municipal ordinance of general applicability. Accordingly, the $33,200
fee is constitutionally valid unless Ehrlich proves that the fee either
does not serve a legitimate government purpose or deprives him of any
economically viable use of the land. (Dolan, supra, 512 U.S. 374, ,
fn. 8 [129 L. Ed. 2d 304, 315-317, 320, 114 S. Ct.2309, 2316-2317, 2320].)
Enhancing the aesthetic environment of the community is a legitimate
government purpose, and Ehrlich has not demonstrated that the amount
of the fee, which equals only 1 percent of the project value, makes
the project economically unfeasible or otherwise deprives him of any
economically viable use of the land. Accordingly, I concur with the
majority that this fee is constitutionally permissible. C. The Recreational Mitigation Fee 1. Is Nollan-Dolan applicable to a monetary fee? In both Nollan, supra, 483 U.S. 825, and Dolan,
supra, 512 U.S. 374, the condition at issue required the landowner to
grant a possessory interest in part of the property to the public or
to the government. Seizing on this factual circumstance, City here contends
that Nollan-Dolan's "essential nexus" and "rough proportionality" requirements
apply only to such conditions and not to conditions requiring payment
of a sum of money, however large. The majority rejects this contention,
holding that the "essential nexus" and "rough proportionality" requirements
imposed by the United States Supreme Court's construction [**465] of
the takings clause apply not only to conditions requiring surrender
of a possessory interest in land, but also to conditions requiring monetary
payments, provided that the conditions are adjudicatively imposed in
a discretionary permit process. (Plur. opn., ante, at pp. 860, 866-868;
conc. & dis. opn. of Werdegar, J., post, at p. 912.) For the reasons
given by the majority, I concur in this holding. Because the $280,000 recreational mitigation
fee was imposed on Ehrlich's development application individually, and
not pursuant to an ordinance or rule of general applicability, the constitutionality
of this fee is evaluated using the Nollan-Dolan "essential nexus" and
"rough proportionality" analysis. 2. Essential Nexus The first component in the Nollan-Dolan analysis
is determining whether the challenged condition has an "essential nexus"
with a legitimate government interest that would have justified denial
of the permit. This component, in turn, may be broken down into three
steps: (1) determining whether the government could have denied the
permit application entirely; (2) identifying one or more legitimate
government interests that would have justified denial of the permit
application; (3) determining whether the condition has an "essential
nexus" with the impact of the proposed development on one or more of
the identified interests. The denial of a land-use permit application effects
a taking of the property, for which the government must pay compensation,
if the denial does not substantially advance a legitimate state interest
or if it deprives the owner of " 'economically viable use of his land.'
" (Dolan, supra, 512 U.S. 374, [129 L. Ed. 2d 304, 316, 114 S. Ct. 2309,
2316], quoting Agins v. Tiburon, supra, 447 U.S. 255, 260 [65 L. Ed.
2d 106, 112]; see also Lucas v. South Carolina Coastal Council (1992)
505 U.S. 1003, 1016, 1017 [121] L. Ed. 2d 798, 813, 112 S. Ct. 2886,
2894-2895].) Thus, it is necessary to determine whether denial of Ehrlich's
permit application would have deprived him of economically viable use
of his land. The majority entirely omits this part of the analysis. Here, Ehrlich's permit application had two purposes:
(1) to remove the specific plan restriction that Ehrlich's property
be used only for a private recreational club; and (2) to authorize development
of the property with a thirty-unit townhouse complex. The evidence presented
in the record raises a substantial question as to whether a private
recreational club was an economically viable use of the property. Ehrlich
had attempted to use the property for this purpose for a period of years
but was unable to make it profitable despite several changes of management.
Moreover, City itself declined to assume ownership of the property for
the purpose of itself operating the private recreational club, concluding
that the financial risk would be too great. A conclusion that a private health club was not
an economical ly viable use of the property would not mean, of course,
that City was required to grant the specific alternative use that Ehrlich
requested: a 30-unit townhouse complex. But it would mean that City
would be required to authorize some economically viable alternative
use, rather than simply denying all applications for redevelopment to
other uses. Although the record raises serious doubts on
the issue, I need not and do not decide whether City could have completely
denied Ehrlich's permit application on the basis of the government interest
in maintaining adequate private recreational facilities because, as
explained below, I conclude that the recreational mitigation fee fails
another part of the Nollan-Dolan test. Assuming, for purposes of argument, that a denial
of Ehrlich's permit application would not have deprived him of an economically
viable use of his property, would the condition that he pay a recreational
mitigation fee have an "essential nexus" to a legitimate government
interest? I do not doubt that a city has a legitimate government
interest in providing adequate recreational facilities, both public
and private, for its residents. But a city's exaction of a "recreational
mitigation fee" from a landowner [**466] as a condition of permit approval
must satisfy the Nollan-Dolan requirement of an "essential nexus" between
the fee and the city's interest in denying the proposed development
application. (Nollan, supra, 483 U.S. 825, 837 [97 L. Ed. 2d 677, 689].)
n2 I need not decide in this case whether the recreational mitigation
fee satisfies this essential nexus requirement, however, because as
I explain below, the fee fails under the "rough proportionality" test. - - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - - n2 Whether an essential nexus exists turns on
the connection between the condition imposed on the development and
"the projected impact of the proposed development" (Dolan, supra, 512
U.S. 374, [129 L. Ed. 2d 304, 317, 114 S.Ct. 2309, 2317]). The United
States Supreme Court has not yet clarified whether "the projected impact"
includes only positive effects such as the additional burdens that the
new development will impose on the community (in this case, the increased
demand for city services resulting from the addition of 30 townhouses)
or also negative effects such as the reduction in the total area of
land zoned for a particular use (in this case, the reduction in land
designated for recreational uses) or the loss of public benefits from
the preexisting use of the land (in this case, the benefits City residents
derived from use of the athletic facilities). - - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - - 3. Rough Proportionality The second component in the Nollan-Dolan analysis
is determining whether there is a "rough proportionality" between the
burden imposed by the permit approval condition and the projected impact
of the proposed development. (Dolan, supra, 512 U.S. 374, [129 L. Ed.
2d 304, 317-321, 114 S. Ct. 2309,2317-2320].) Because Ehrlich's proposed construction of 30
townhouses on his land would have increased the community's housing
stock and thus the number of its residents, City could reasonably impose
a fee to offset the increased demand on public recreational facilities
attributable to the increase in population resulting from the development.
City did exactly this by imposing a $30,000 "parkland" fee. (See fn.
1, ante.) Ehrlich has not disputed the validity of this fee. The $280,000 recreational mitigation fee that
City imposed on Ehrlich was designed not to offset the increased demand
on public recreational facilities caused by the addition of 30 residential
units, but instead to compensate for the "loss" of the private recreational
club that had previously existed on the property. The distinction is
crucial. The majority partly rejects and partly accepts
City's "lost use" or "lost opportunity" rationale for the recreational
mitigation fee. The majority rejects the rationale insofar as
it is based on the assumption that a landowner may be required, as a
condition to redeveloping property for a different use, to replace private
facilities on the property with comparable public facilities. Thus,
as the majority recognizes, City may not require Ehrlich to build public
recreational facilities to replace the private facilities that existed
on his property, nor may it impose a fee in an amount calculated to
achieve this end. As the majority aptly states, City "may not constitutionally
measure the magnitude of its loss, or of the recreational exaction,
by the value of facilities it had no right to appropriate without paying
for." (Plur. opn., ante, at p. 883.) But the majority accepts City's "lost use" or
"lost opportunity" rationale insofar as it is based on the assumption
that a landowner may be required, as a condition to redeveloping property
for a different use, to underwrite any government expense likely to
be incurred in the process of replacing private facilities on the property
with comparable private facilities on other privately owned land. Thus,
the majority concludes that City may charge Ehrlich a recreational mitigation
fee measured either by "the additional administrative expenses incurred
in redesignating other property within Culver City for recreational
use" (plur. opn., ante, at p. 883; see also conc. & dis. opn. of
Werdegar, J., post, at p. 912) or by the "monetary incentives" needed
"to induce private health club development" on other land (plur. opn.,
ante, at p. 884; see also conc. & dis. opn. of Werdegar, J., post,
at p. 912). I disagree. A fee calculated in either manner would require
Ehrlich to bear a grossly disproportionate share of what is essentially
a public expense. [**467] The fundamental flaw in the majority's
reasoning is the assumption that City, without violating the takings
clause, could restrict Ehrlich's property to private recreational uses.
As discussed above, such a restriction might well deprive Ehrlich of
economically viable use of his land and be invalid on that basis. But
even if constitutionally valid on that basis, the restriction would
be invalid because it impermissibly singled out Ehrlich's property for
special restriction. This is akin to prohibited spot zoning. "Spot zoning occurs where a small parcel is restricted
and given lesser rights than the surrounding property, as where a lot
in the center of a business or commercial district is limited to uses
for residential purposes thereby creating an 'island' in the middle
of a larger area devoted to other uses." (Viso v. State of California
(1979) 92 Cal. App. 3d 15, 22 [154 Cal. Rptr. 580]; see also Ross v.
City of Yorba Linda (1991) 1 Cal. App. 4th 954, 960-961 [2 Cal. Rptr.
2d 638].) Because "spot zoning" discriminates against the parcel singled
out for special restriction, it is invalid unless the government establishes
some reasonable ground for the disparate treatment. (See Penn Central
Transp. Co. v. New York City (1978) 438 U.S. 104, 132 [57 L. Ed. 2d
631, 634-635, 98 S. Ct. 2646]; Nectow v. Cambridge (1928) 277 U.S. 183,
188-189 [72 L. Ed. 842, 844-845, 48 S. Ct. 447]; Wilkins v. City of
San Bernardino (1946) 29 Cal. 2d 332, 340-341 [175 P.2d 542]; Reynolds
v. Barrett (1938) 12 Cal. 2d 244, 251 [83 P.2d 29].) Although City has a legitimate government interest
in the promotion of private recreational facilities adequate to meet
the recreational needs of its residents, in advancing this public interest
City may not single out individual landowners or small groups of landowners
to bear a disproportionate share of the burden. This is precisely what
City does when it permits only recreational uses on an individual parcel
that is otherwise indistinguishable from surrounding parcels on which
a much broader range of uses is permitted. Here, Ehrlich initially voluntarily accepted
the recreational use restriction in 1975 as a condition of approval
of the specific plan for the property. So long as Ehrlich continued
to accept the benefits of the specific plan, he might well have been
estopped to challenge the validity of the restriction. But Ehrlich has
now waived all benefits he received under the previous specific plan
in order to redevelop the property for a different use. Having surrendered
the benefits, he should no longer be required to bear the burden of
the recreational use restriction. City should now permit Ehrlich to
use his property in a manner consistent with the uses of surrounding
parcels, without unfairly penalizing him for his unsuccessful attempt
to operate a private recreational club. Had Ehrlich applied in 1975 for approval to build
townhouses rather than a private recreational club, City would have
had no reason to impose a fee for the "loss" of a recreational land-use
designation. Absent some evidence that Ehrlich gained some enduring
advantage or City suffered some lasting detriment as a result of Ehrlich's
unsuccessful efforts to operate a private recreational club on his land,
the removal of the recreational use restriction imposed in 1975 will
not support the imposition of any additional fee. (See Kmiec, At Last,
the Supreme Court Solves the Takings Puzzle (1995) 19 Harv. J. L. &
Pub. Pol'y. 147, 156, fn. 43 [characterizing as an "extraordinary notion"
the assertion "that once a private landowner has undertaken a permitted
common law use, like [construction of] a private swimming pool or tennis
court, he either must continue that use or must pay to stop"].) For example, had Ehrlich received some subsidy
as an inducement to accept the recreational use restriction, he might
well be required to reimburse City for all or part of the subsidy upon
abandonment of the use for which the subsidy had been given. But returning
the subsidy he had received would be the extent of his obligation. There
is neither justice nor logic in the majority's suggestion that Ehrlich
may now be required to fund a subsidy to induce another landowner to
accept a "spot zoning" of his or her property that would restrict that
property to private recreation al uses. Likewise, although Ehrlich may
be required to pay an application fee to compensate for City's costs
in processing [**468] his own permit applications, City may not require
him also to underwrite City's administrative costs for land use proceedings
relating to other parcels. Conclusion All of us must bear our fair share of the public
costs of maintaining and improving the communities in which we live
and work. But the United States Constitution, through the takings clause
of the Fifth Amendment, protects us all from being arbitrarily singled
out and subjected to bearing a disproportionate share of these costs.
This constitutional protection does not evaporate when we discontinue
a use of our property that we gratuitously undertook and that the government
could not constitutionally have required us to continue, no matter how
greatly the community may have benefitted from that use. Because I conclude that the trial court correctly
decided the issues in this case, I would reverse the judgment of the
Court of Appeal with directions to affirm the trial court's judgment. Baxter, J., concurred. WERDEGAR, J., Concurring and Dissenting.-- I concur in the
judgment. I also agree with the reasoning of the plurality opinion,
except for that contained in part II, respecting the Mitigation Fee
Act, Government Code section 66000 et seq. I agree with Justice Kennard
there is no need for us to construe the act in order to decide this
case. (Conc. and dis. opn. of Kennard, J., ante, at p. 903.) Accordingly,
I would decline to do so. The petition of appellant Richard K. Ehrlich for a rehearing was denied April 11, 1996. Kennard, J., and Baxter, J., were of the opinion that the petition should be granted.
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