|
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its earlier ruling in favor of defendant city in an unpublished opinion.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 |