and Road Exactions After Dolan
L. Callies, AICP
Benjamin A. Kudo Professor
William S. Richardson School
The University of Hawaii at Manoa
Planning Association Annual Conference
New York, New York
Monday, April 17, 2000, 1:00 - 2:15 p.m
imposes impact fees and exactions on the land development process
in order to pay for public facilities such as streets and roads needed
to service a particular project. To the extent that the fee or exaction
exceeds the land developer's proportionate share of the facility's
cost, the levy is an unconstitutional taking of property. Courts
scrutinize the calculations for imposing such fees and exactions by
government, particularly if they are "ad hoc". It is therefore
useful, if not necessary, for government to "regularize"
the land development condition process through appropriate local ordinances.
Land development of any
size and substance drives the need for a variety of public facilities
to support it. Most common is the need for additional streets and roads,
public utilities, parks and schools. The time is long past since government
- particularly local government - has borne the principal burden of
these costs. State and local financial resources have been woefully
inadequate at least since the end of massive federal subsidies in the
early 1980's. For decades, local government has charged land developers
for a part of the cost of such public facilities, at least with respect
to those facilities intrinsic to the development, in the form of subdivision
dedications and fees. Initially "charged" as the price of
drawing and recording the simpler and cheaper subdivision plat in place
of the lengthy, tedious and easily-flawed metes and bounds description
for land development, these fees and dedications soon became part of
the regulatory land use process, exercised by local government under
the police power for the health, safety and welfare of the people, often
as a method to control or manage growth.
However, by justifying such
land development dedications and fees as police power regulations, rather
than "voluntary" costs of using the subdivision, local governments
invite judicial scrutiny under the takings clause of the Fifth Amendment
to the U.S. Constitution, which permits the taking of private property
for public use only upon payment of just compensation. Of course, where
takings for roadway improvements are compensated, as in private
roads acts like those in Michigan, there is no taking
of property without compensation (though there may be a public purpose
problem if a court views the taking for private use only) and so no
5th Amendment takings problem. While early cases by and large upheld
such intrinsic dedications and fees, the more recent charges of "impact
fees" for the shared construction by several land developments
of large and expensive public facilities (such as highway bypass, municipal
wastewater treatment plants and sanitary landfills) outside or extrinsic
to the development upon which the fee is levied, led knowledgeable courts
to scrutinize the connection between such fees and the need generated
by the charged development for the particular facility in question.
Nevertheless, it is generally agreed that the law applicable to impact
fees, exactions and in lieu fees, as well as to compulsory dedications,
is the same, given that they all represent land development conditions,
levied at some point in the land development process such as subdivision
approval, building permit, occupancy permit or utility connection.
Therefore, except where the text specifically makes such distinctions,
the terms are here used interchangeably.
The search for such a connection
or "nexus," without which such fees, dedications and exactions
are generally unconstitutional takings of property without compensation,
is the major legal issue with respect to such land development regulations,
particularly after the U.S. Supreme Court decisions in Nollan v.
California Coastal Commission, and Dolan
v. City of Tigard. Therefore much of this paper
is devoted to these cases and their progeny.
Critical as the takings/nexus
issue is, there are other legal requirements for attaching conditions
to the development of land. Among these are the need for authority
to levy such dedications, fees and other exactions, in the form of enabling
legislation and local ordinances, to avoid the charge that they are
"ad hoc," and the need to expend the fee, whether "in
lieu" of a dedication requirement or an impact fee, within a reasonable
period of time after collection. As the history and cases make abundantly
clear, such land development conditions are development driven: to
be valid, they must be collected (and exactions and dedications required)
for, and only for, public facilities and infrastructure for which land
development causes a need. Courts uniformly strike
down (usually as an unauthorized tax) land development conditions which
are not so connected. Generally, this includes
attempts to remedy existing infrastructure deficiencies,
or to provide for operation and maintenance of facilities.
Of course, if payment for a public facility, or its construction or
dedication, is in part fulfillment of a landowner's contractual obligations
under a development agreement between landowner and local government,
then the legal issues and analysis are entirely different and the need
for nexus and proportionality, at least as a matter of constitutional
II. Nexus, Proportionality,
and Takings: Nollan, Dolan and Progeny
Once courts recognized land
development conditions such as impact fees, dedications and other exactions
as an exercise of the police power, limitations thereon soon became
obvious and evident. A series of state cases dealt with such issues
throughout the 1970's and 1980's. However, the U.S. Supreme Court's
decisions in Nollan v. California Coastal Commission
and Dolan v. City of Tigard, imposed a
national uniformity on the police power common law with respect to such
land development conditions, particularly concerning the necessary connection
between the exaction or condition and the land development project which
is subject to such an exaction or condition. The cases preceding Nollan
and Dolan are therefore less important as a class than those
which follow. Both, however, are treated in this extended section.
A. Nollan and Nexus.
Decided on the last day of the U.S. Supreme Court's 1987 term, Nollan
v. California Coastal Commission deals ostensibly
with beach access. The plaintiffs sought a coastal development permit
from the California Coastal Commission in order to tear down a beach
house and build a bigger one. The Commission imposed a condition on
the permit, requiring the granting of an easement to permit the public
to use one‑third of the property on the beach side. For the privilege
of substantially upgrading a beach house, the owner was forced to dedicate
to the public lateral access over much of his backyard for more beach
for the public to walk upon. The California Court of Appeal had held
this was a valid exercise of the Commission's police power under its
statutory duty to protect the California Coast.
The U.S. Supreme Court reversed.
Noting that the taking of such an access over private property by itself
would require compensation, the Court then examined whether the same
requirement, imposed under the police or regulatory power of the Commission
rather than under its powers of eminent domain, would modify the "just
compensation" requirement. The direct holding
of the Court was that in this case it did not and that compensation
was required. The rationale of the Court is critical. The Court observed
that land use regulations do not effect takings if they substantially
advance legitimate state interests and do not deny an owner the economically
viable use of his land. But even assuming (without deciding) that legitimate
state interests include, in the Commission's words, protecting public
views of the beach and assisting the public in overcoming the psychological
barrier to the beach created by overdevelopment, the Court could not
accept the Commission's position that there was any nexus between
these interests and the condition attached to Nollan's beach house redevelopment:
It is quite impossible to understand
how a requirement that people already on the public beaches be able
to walk across the Nollans' property reduces any obstacles to viewing
the beach created by the new house. It is also impossible to understand
how it lowers any "psychological barrier" to using the public
beaches, or how it helps to remedy any additional congestion on them
caused by construction of the Nollans' new house. We therefore find
that the Commission's imposition of the permit condition cannot be treated
as an exercise
of its land use power for any of these purposes.
said the Court, it is an altogether different matter if there is an
"essential nexus" between the condition (read impact fee or
exaction) and what the landowner proposes to do with the property:
Thus, if the Commission attached
to the permit some condition that would have protected the public's
ability to see the beach notwithstanding the construction of the new
house‑‑for example, a height limitation, a width restriction,
or a ban on fences‑‑so long as the Commission could have
exercised its police power (as we assumed it could) to forbid construction
of the house altogether, imposition of the condition would also be constitutional.
Moreover (and here we come closer to the facts of the present case),
the condition would be constitutional even if it consisted of the requirement
that the Nollans provide a viewing spot on their property for passersby
with whose sighting of the ocean their new house would interfere.
. . .
The evident constitutional
propriety disappears, however, if the condition substituted for the
prohibition utterly fails to further the end advanced as the justification
for the prohibition. . . . the lack of nexus between the condition and
the original purpose the building restriction converts that purpose
into 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. Whatever may be the outer
limits of "legitimate state interests" in the takings and
land use context, this is not one of them.
short, the Supreme Court appears to have adopted the "rational
nexus" test concerning exactions, in‑lieu fees and impact
B. Dolan and Proportionality.
In Dolan v. City of Tigard, the Supreme Court struck down a municipal
building permit condition that the landowner dedicate bike path and
greenway/floodplain easements to the city. As the Court pointed out,
had Tigard simply required such dedications, it would be required to
pay compensation under the Fifth Amendment. Attaching them as building
permit conditions required a more sophisticated analysis closely following
Nollan v. California Coastal Commission, since the police power
is implicated rather than the power of eminent domain. In the process,
the Court signalled how far local government may go in passing on the
cost of public facilities to landowners. The answer: only to the extent
that the required dedication is related both in nature and extent to
the impact of the proposed development.
The Dolans own and operate
a 9700 square foot plumbing and electrical supply store on main street
in Tigard's central business district. Seeking to double the size of
the store and pave a 39-space parking lot, the Dolans applied for a
building permit from the City Planning Commission. Tigard had previously
adopted a comprehensive land use plan required by state comprehensive
land use management statutes, in accordance with statewide goals.
Many of the plan's features are codified in Tigard's Community Development
Code (CDC). Among the plan's requirements:
1. In accordance
with a pedestrian/bicycle pathway plan, new development must dedicate
land for pathways where shown on the plan;
2. In accordance
with a master drainage plan, to combat the risks of flooding in 100-year
floodplains, especially as exacerbated by increased impervious surface
through development, developers along waterways such as Fanno Creek
(which borders the Dolan parcel to the west), must guarantee the floodway
and floodplain are free of structures and able to contain floodwaters
by preserving the land alongside as greenway.
As a result of the plan
and its codification in the CDC, the Commission granted the Dolans their
building permit upon condition that they dedicate the portion of their
property in the floodplain as a greenway, and that an additional 15-foot
strip be dedicated adjacent to the greenway as a pedestrian bicycle
path. The basis of these requirements is a series of Commission findings.
With respect to the bikeway,
the Commission found that the pathway system as an alternative means
of transportation "could" offset some of the traffic demand
on nearby streets and lessen the increase in traffic congestion. The
Commission also found it was reasonable to assume that some of the Dolans'
customers and staff could use the pathway for transportation and recreation.
With respect to the floodplain greenway dedication, the Commission found
it was reasonably related to the Dolans' application since the site
would have more impervious surface. This would result in increased
stormwater drainage. Therefore the dedication requirement was related
to the applicants' plans for more intensive development of their land.
After appealing to various
local and state administrative agencies and to the Oregon courts without
success, the Dolans challenged the holding of the Oregon Supreme Court
that the City of Tigard could condition the approval of their building
permit on the dedication of property for flood control and traffic improvement.
The U.S. Supreme Court granted certiorari to set out the "required
degree of connection between the exactions imposed by the city and the
projected impacts of the proposed development."
The Court essentially adopted a three-part
1. Does the permit condition
seek to promote a legitimate state interest?
2. Is there an essential
nexus between the legitimate state interest and the permit condition?
3. Is there a required
degree of connection between the exactions and the projected impact
of the development?
The Court disposed of the
first two quickly and affirmatively. Certainly the prevention of flooding
along the creek and the reduction of traffic in the business district
"qualify as the type of legitimate public purposes we have upheld.
"Moreover, the court held it was "equally obvious" that
a nexus exists between preventing flooding and limiting development
within the creek's floodplain, and that "the same may be said for
the city's attempt to reduce traffic congestion by providing for alternative
means of transportation" like a "pedestrian/bicycle pathway."
So far, so good: we have public purpose (which the Court assumed without
deciding in Nollan) and essential nexus (which the Court decided
was lacking in Nollan). The question remained, with respect
to the third test: "[W]hether 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."
The Court said no: the
city's "tentative findings" concerning increased stormwater
flow from the more intensively developed property, together with its
statement that such development was "anticipated to generate additional
vehicular traffic thereby increasing congestion" on nearby streets,
were simply not "constitutionally sufficient to justify the conditions
imposed by the city on petitioner's building permit."
The Court's test is "rough proportionality":
[T]he city 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.
Applying the test to the
Dolan hardware store property, the Court concluded that the City of
Tigard demanded too much to pass this third nexus/rough proportionality
test. Simply concluding that a bikeway easement could offset some of
the traffic demand which the new hardware store would generate did not
constitute sufficiently quantified findings for the taking of an easement.
While the Court
[has] no doubt that the city was
correct in finding that the larger retail sales facility proposed by
petitioner will increase traffic on the streets . . . the city has not
met its burden of demonstrating that the additional number of vehicle
and bicycle trips generated by the petitioner's development reasonably
relate to the city's requirement for a dedication of the pedestrian/bicycle
pathway easement. The city simply found that the creation of the pathway
"could offset some of the traffic demand . . . and lessen the increase
in traffic congestion
. . . ." [T]he city
must make some effort to quantify its findings . . . beyond the conclusory
statement [quoted above].
to the greenway easement, while the Court said
It is axiomatic that increasing the
amount of impervious surface will increase the quantity and rate of
storm-water flow from petitioner's property . . . the city demanded
more--it not only wanted petitioner not to build in the floodplain,
but it also wanted petitioner's property along Fanno Creek for its Greenway
system. The city has never said why a public greenway, as opposed
to a private one, was required in the interest of flood control.
constitutional problem in both instances is "the loss of [their]
ability to exclude" which the Court reminds us is one of the most
essential sticks in the bundle of rights that are characterized as property:
We see no reason why the Takings Clause
of the Fifth Amendment, as much a part of the Bill of Rights as the
First Amendment [free speech, press, religion, association, assembly]
or Fourth Amendment, [search and seizure] should be relegated to the
status of a poor relation in these comparable circumstances.
C. Applicability to
All Land Development Conditions. An initial issue is the range
of land development conditions to which Nollan and Dolan
are applicable. At one extreme is the view that only land dedication
conditions are affected by these two decisions, since land dedications
were the only such conditions at issue in either case. This view is
bolstered by the language in Dolan and other recent U.S. Supreme
Court opinions which focus on property rights and the ability to exclude,
which Chief Justice Rehnquist either wrote, or in which he concurred.
At the other extreme is the view that the cases apply to all land development
conditions. An arguable middle view is that the cases apply to impact
and in lieu fees as well as land dedications.
The cases which strike down
street and road dedications for lack of nexus and/or proportionality
are legion, both pre- and post- Nollan and Dolan. One
such case, from the Second Circuit, is Walz v. Town of Smithtown,
There, landowners were denied access to the public water supply when
they refused to deed the front fifteen feet of their property to Smithtown
for road widening purposes. Finding a total lack of nexus between water
service and road widening, the court found that "As landowners,
the Walzes surely had a right not to be compelled to convey some of
their land in order to obtain utility service."
Similarly, the court in
Schultz v. City of Grants Pass struck down
the city's condition that Schultz dedicate a parcel for street widening
in exchange for approval of an application to partition the parcel.
The court first addressed the extent of the dedication, concluding that
the dedication would require the owners to part with 20,000 square feet
of their land. The city had determined that with full development of
the parcel, 15 to 20 homes could be placed on the parcel, causing considerable
impact on transportation on the streets. The court held that the city
was required to examine the actual proposed development--here partitioning
into 2 lots--to determine the impact on transportation. Applying Dolan
to the proposed condition, the court concluded that a slight increase
of traffic from the two lots did not justify a 20,000 square foot dedication,
and therefore there was no rough proportionality between the exaction
and the impact from the development.
Applying a specifically
and uniquely attributable test a Connecticut court in Timber Trails
Corp. v. Planning and Zoning Comm'n of the Town of Sherman,
struck down an off-site road improvement condition on subdivision approval
on the ground that problems with existing highways were not so specifically
and uniquely attributable to abutting subdivisions. The Connecticut
Supreme Court applied a less stringent test in Property Group, Inc.
v. Planning and Zoning Comm'n of the Town of Tolland,
striking down a road widening condition on a subdivision approval for
only ten lots. The court found that the road problems were preexisting
and there was no substantial evidence the widening was necessitated
by the proposed development. The Kentucky court of appeals also struck
down a bridge construction and dedication requirement as a subdivision
approval and rezoning requirement in Lexington-Fayette Urban County
Government v. Schneider and Hi Acres Development Company,
because there was no reasonable relationship between the development
and the need for the bridge.
A more egregious example
is Amoco Oil Co. v. Village of Schaumburg,
in which the Village attempted to exact 20% of Amoco's land for roadway
widening purposes before permitting other redevelopment at a gasoline
service station. Finding that such an exaction on the basis of a 0.4%
increase in traffic "does not correspond with the slightest notions
of rough proportionality," the court held
that exaction "constitutes a taking under both the Fifth Amendment
of the United States Constitution and Article I, Section 15 of the Illinois
To the same effect is Cobb
v. Snohomish County, striking down a road
improvement fee because the county could not show the improvements were
reasonably necessary for the particular level of service to be provided;
Dellinger v. City of Charlotte, striking
down a road dedication requirement for failure to make written findings
relating dedication to traffic from a proposed subdivision; and The
Luxembourg Group, Inc. v. Snohomish County,
striking down the dedication of a 60 foot right of way as a disproportional
condition for approving a 15 lot subdivision.
Although the above cases
deal mainly with land dedication requirements, it is difficult
to support the view that the proportionality and nexus tests identified
in Nollan and Dolan apply only to such land dedications.
First, the Court remanded the California impact fees case of Ehrlich
v. Culver City to the California Court of Appeals just days after
deciding Dolan, with the direction that it be reviewed in light
of the Dolan decision. Second, and equally as important, the
California Supreme Court accepted review of the remanded Court of Appeals
decision in Ehrlich and in a lengthy and complex opinion, held
that Dolan applied beyond land dedication conditions to impact
fees, though only to a limited range of such fees as are ad hoc and
not part of a regularized system of exactions.
Citing Nollan, the Ehrlich court expressed concern that
adjudicative, ad hoc conditions on development present "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 response to this
concern, the court drew a distinction between legislatively formulated
development fees imposed on a broad class of property owners and individually
The court held that in the
"relatively narrow class of land use cases" that involve individual
"land use 'bargains' between property owners and regulatory bodies.
. . where the individual property owner-developer seeks to negotiate
approval of a planned development. . . the combined Nollan and
Dolan test quintessentially applies."
In the more common situation when exactions are imposed pursuant to
a general legislative act, cities act within their traditional police
The Ehrlich court
is not alone in holding that such legislative exactions are immune to
Dolan's proportionality/nexus standards.
Why this should be so is not particularly clear. Justice Thomas of
the U.S. Supreme Court has commented that "The distinction between
sweeping legislative takings and particularized administrative takings
appears to be a distinction without a difference."
Although noting that it was not bound by Justice Thomas's dissent, an
Illinois court concurred, stating that it found his comments ".
. . particularly persuasive and consonant with the rationale underlying
Dolan and similar cases. Certainly a municipality should not
be able to insulate itself from a takings challenge merely by utilizing
a different bureaucratic vehicle when expropriating a citizen's property."
To the same effect is Shultz v. City of Grants Pass,
striking down a 20,000 square foot exaction required by the terms and
standards of a local ordinance.
To be fair, there are cases
which would limit such exactions to land dedications only, but most
are pre-Ehrlich and the reasoning does not appear as sound.
Most courts, however, apply Dolan beyond dedications, at least
to impact fees and in-lieu fees. The reasoning is compelling. As an
Oregon appeals court said in Clark v. City of Albany:
[T]he fact that Dolan itself involved
conditions that required a dedication of property interests does not
mean that it applies only to conditions of that kind. . . . For purposes
of a takings analysis, we see little difference between a requirement
that a developer convey title to the part of the property that is to
serve a public purpose and a requirement that the developer himself
make improvements on the affected and nearby property and make it available
for the same purpose.
Thus, for example, in Castle
Homes & Dev't, Inc. v. City of Brier,
the court struck down a $3000 per lot road impact fee on a proposed
28 lot subdivision on nexus and proportionality grounds. The court
in Trimen Dev't County v. King Co.
upheld a park development fee, but only after finding proportionality.
Other pre-Dolan cases similarly applied nexus/proportionality
standards in either upholding or striking down fees rather than dedications
of land: Lancaster Redevelopment Agency v. Dibley,
striking down a traffic impact fee to fund housing; Shapell Indus.
Inc. v. Governing Bd. of the Milpitas Unified Sch. Dist.,
striking down school impact fee designed to benefit all new students
rather than those generated only by the development.
D. Level of Detail for
Showing Nexus and Proportionality. Few if any courts
are enforcing the "uniquely and specifically attributable"
test, particularly after Dolan, although they are arguably free
to do so as the test is more protective of constitutionally protected
private property rights. Several courts have addressed this issue,
both before and after Nollan and Dolan. They also deal
concretely with the level of detail required to meet proportionality
and nexus standards. An excellent example of what is required comes
from the New Jersey case of F & W Associates v. County of Somerset.
Holding that traffic impact fees assessed against a developer met the
rational nexus test, the court held:
The developer's pro-rata
share must be "necessitated or required by the construction or
improvements within such subdivision. . . ." [citation omitted]
The statute is a codification . . . which focused on the "rational
nexus" between the needs created by, and the benefits conferred
upon, the subdivision and the cost of the off-tract improvements.
that the ordinance assessing the impact fees was adopted "only
after a comprehensive study of such factors as existing road facilities,
current zoning, projected population growth, and existing commercial
uses in the area[,]" the court dismissed
the notion that:
a causal nexus between the necessity
for off-tract improvements and the development must be measured with
precision. . . . What must be demonstrated is a "rational"
nexus, not mathematical certainty. For example, the assessment should
not be invalidated simply because there may be residual benefit conferred
to the general public in its use of the off-tract road improvement.
An assessment is subject to challenge only if the developer is required
to pay a "disproportionate share of the cost of improvements that
also benefit other persons."
court set out in detail what an acceptable comprehensive study should
The study devised a volume-capacity
ratio, measuring the demand volume and Mountain Boulevard's capacity.
Based on projected full development of potential residential, retail
and office use, the study adopted vehicle "trip generation"
methodology and from this model, predicted incremental traffic impact
resulting from future development of the land. The study estimated
how much extra traffic would be generated by each development in the
target area (Mountain Boulevard and surrounding roadways). The estimates
were grounded on industrial standards, observations and empirical data
obtained from traffic counts. The study then suggested what roadway
improvements would be needed to accommodate the increased demands, and
estimated the cost of those improvements.
Noting that the township
ordinance adopted the results of this "exacting study," the
court observed that the ordinance authorized traffic impact fees according
to the formula for calculating each developer's share of the cost of
the needed off-tract improvements. Not only does the ordinance provide
for adjustment of the developer's pro rata share if conditions change,
but it also exempts a developer from the fee altogether if the development's
off-tract impact is negligible, or if the developer does not benefit
from the highway improvement.
The appellate court in Homebuilders
Ass'n of Dayton v. City of Beavercreek, also
set out at length the studies and surveys which helped the City to establish
a level of service sufficient to help calculate a road impact fee, even
though it noted certain defects in the process. Although the court
indicated it might have ruled differently if it were the trier of fact,
it nevertheless upheld the City's numbers and conclusions against landowner
1. Level of service
studies used wrong time periods;
2. Traffic projections
3. New roads
to be built with impact fees were designed to accommodate "full
build-out" not expected until mid-2000.
the court found that the City failed adequately to require that credits
or reductions be funded, and that its inclusion of sidewalks and storm
sewers (but not curbs and gutters) as basic fee add-ons lacked sufficient
factual basis and were "conclusory."
Even before Dolan,
the court in Northern Illinois Home Builders Ass'n, Inc. v. County
of Du Page also set out a procedure
for land development conditions described by one expert in the field
as "overwhelming" and demonstrating "a level of effort
that he had never seen before." The county
was seeking to meet Illinois' strict "specifically and uniquely
attributable" test for road improvement impact fees provided for
by statute. First, the court held that the county met the test of imposing
a fee only for road improvements made necessary by the additional traffic
generated by the new development:
The formula used by the county imposes
fees only on road improvement costs generated by new development. In
order to quantify the amount of travel generated by different types
of development, the county used the Chicago Area Transit (CATS) model,
which mathematically traces cars as they leave particular developments
and enter on the roads. The county also used trip-generation data collected
by the Institute for Transportation Engineering.
Furthermore, Du Page County developed
its own computer model which gave it the ability to model future travel
based on new development. The County did travel surveys which allowed
it to determine which road segments were deficient due to existing development.
Impact fee funds are not spent on those roads. . . . We hold that the
data gathered by Du Page County ensures that it imposes impact fees
only for the improvements made necessary by new development.
the court further found that under the county system the new developments
receive direct and material benefit from the road improvements financed
by their impact fees:
Du Page County divided
itself into 11 districts based on the following criteria: location
of existing and proposed municipal boundaries; locations of major
developable parcels of land; existing
major retail/employment centers; location of potential transportation
corridors; CATS one-quarter-section-based zone system; and the existing
county highway system. The funds collected from new development in
a particular district are used to finance improvements in that same
district. Testimony at trial established that fee payers in a district
do benefit from the decrease in congestion resulting from the improvements
made in that district.
While most courts will uphold
a local government exaction or impact fee as an extension of statutory
subdivision or development code police power authority,
several states have nevertheless passed specific legislation to enable
the collection of impact fees on the land development process. Typically,
these statutes tend to place limits on exactions and impact fees - either
by type or by extent - rather than extend authority beyond what can
usually be fairly implied from planning and subdivision state enabling
statutes. Typical in this regard is the new impact fees enabling act
in Hawaii which requires a series of preliminary steps, including a
needs study, before a county can levy such a fee.
But on balance, courts increasingly decide the validity of fees and
exactions on police power issues discussed in Section II, rather than
on the basis of specific statutory authority.
There are nevertheless some
cases which imply that enabling legislation is necessary in order to
impose impact fees as opposed to intrinsic subdivision dedications and
in-lieu fees which are based upon planning and subdivision statutes,
although they pertain to public facilities other than streets and roads.
Thus, for example, in Englewood Water Dist. v. Halstead,
a Florida court upheld impact fees for a new water and sewer system
because a state enabling statute authorized the District "to fix
and collect rates, fees and other charges for the use of the facilities
and services provided by any water system or sewer system."
Also, in City of Arvade v. Denver, the
Colorado Supreme Court upheld a development fee for water on all new
development on virtually identical statutory grounds. It also similarly
upheld a "facilities development fee" for sewers,
while striking down a school impact fee on the ground the county lacked
Other courts have held that
if a county has the power to fail to approve a plat because of the inadequacy
of park and recreational space, it has the power to levy a fee in lieu
of dedication. In Jenad, Inc. v. Village of Scarsdale,
the New York Court of Appeals held that the planning board's requirement
that a subdivider dedicate land within the subdivision for a park, or
pay a fee in lieu of such dedication, was a valid exercise of the police
power. The court rejected the argument that the fees were a tax, and
analogized them to a type of zoning, like setback and side yard regulations.
If counties have the power to zone lands for recreational purposes,
they certainly should have the power to exact fees to accomplish the
This is not a tax at all but a reasonable
form of village planning for the general community good. . . This was
merely a kind of zoning, like setback and side yard-regulations, minimum
size of lots, etc., and akin also to other reasonable requirements necessary
sewers, water mains, lights, sidewalks, etc. If the developers did
not provide for parks. . . the municipality would have to do it.
Jenad's rationale supports the
general proposition that the authority to enact an impact fee springs
from the discretion to deny subdivision approval, unless parks were
suitably located. The power to restrict includes the power to compel:
We find in section 179-1 of the Village
Law a sufficient grant to villages of power to make such exactions.
In specific terms the statute validates "in proper case" requirements
by village planning boards that a subdivision map, to obtain approval,
must show "a park or parks suitably located for playground and
recreational purposes." There is, to be sure, no such specificity
as to a village rule setting up a "money in lieu of land system."
However, section 179-1 says that a village planning board, when specific
circumstances of a particular plat are such that park lands therein
are not requisite, may "waive" provisions therefor, "subject
to appropriate conditions and guarantees."
authority to levy one exaction--for school site dedication or in-lieu
fee at the subdivision approval stage--has been held to preempt a county
from levying a later (occupancy certificate stage) impact fee for facilities
construction and expansion, however.
Of Funds, Credits And Refunds
Funds collected by local
government as impact fees must be placed in separate bank accounts relating
to the public facility for which the fee is collected, and then used
only for that kind or type of public facility. Thus, for example, it
would be illegal to use road impact fees for the construction of schools.
Of course, under the proportionality and rational nexus principles discussed
above, the facility constructed must be useful to the developer paying
the fee, which usually means it must be nearby. This requirement has
led many local governments to create "zones" in which needed
public facilities will be constructed with funds only from new developments
in the same zone.
Capital improvements or
public facilities, constructed with impact fees, must "adequately"
benefit the new development which paid the fee. By earmarking fees
collected into separate accounts apart from general funds, and spending
those funds reasonably quickly, local governments avoid charges that
the fees are merely veiled attempts at taxation--for which they must
have specific authority from the state. In Home Builders Ass'n v.
Board of County Commissioners of Palm Beach County,
the court held that benefits accruing to the community generally do
not adversely affect the validity of a development regulation as long
as the fee does not exceed the cost of the improvements serving the
new development and the improvements adequately benefit the development
which is the source of the fee. The court reasoned: "It is difficult
to envision any capital improvement for parks, sewers, drainage, roads,
or whatever, which would not in some measure benefit members of the
community who do not reside in or utilize the new development."
Earlier, Amherst Builders Ass'n v. City of Amherst
upheld a sewer tap-in charge, requiring the fees to be placed into a
sewer fund, apart from general revenues. Coulter v. City of Rawlins
held: "The limitation on this power is the requirement that any
fees collected in lieu of raw-land dedication must be earmarked to accounts
for the purpose of acquiring needed park and maintenance of existing
park facilities." Indeed, a Utah court has struck down a fee charged
for improving a water and sewer system because the fees collected went
into the general fund. To the same effect is
Lafferty v. Payson City, Waterbury Dev't
Co. v. Witten, and Hayes v. City of Albany.
Dividing the County into
impact fee districts, depending upon the public facility or capital
improvement is recommended to "localize" the benefit, ensuring
that capital improvements or public facilities funded "adequately"
benefit the new development which paid the fee, even if the community
at large also benefits. Thus, for example, the
Palm Beach County ordinance based fees in Home Builders Ass'n v.
Board of County Commissioners of Palm Beach County
on a formula that considered the costs of road construction and the
number of motor vehicle trips generated by different types of land use.
Alternatively, the developer may determine his fair share by furnishing
his own independent study. Fees are deposited into one of the special
trust funds established for each of forty zones within the county, and
funds may be spent only in the zone from which they were collected.
If funds are not spent within a reasonable time (six years), they are
returned to the present owner of the property.
Even though improvements constructed with the fees collected will benefit
the community generally, the above factors insured that the ordinance
satisfied the two prong rational nexus test which requires 1) that the
fee not exceed the cost of the improvements required by the new development,
and 2) that the improvements adequately benefit the development which
is the source of the fee. Likewise, in Homebuilders
Ass'n of Dayton v. City of Beavercreek the
court found that the City sufficiently conferred benefits on the fee
payers for a road fee by restricting the use of funds to the fee district
and contiguous areas. However, the City violated the intent of the
applicable ordinance by failing to segregate interest on the
funds collected, as well as the funds themselves.
As indicated in the discussion
of the Home Builders case above, if the fee collected and deposited
in an appropriate fund is not used within a reasonable period of time
it must be refunded to the developer, on the ground that this development-driven
fee is really not needed after all. Moreover, if the land developer
has already made contributions in the form of money, land or facilities,
or if development property tax dollars are going to pay for part of
the new facility, the developer is usually credited against the fee
normally levied for these amounts. By the same
reasoning, it has been held that specific statutory authority to require
dedication of land or levy fees in lieu thereof for school purposes
will preempt a county from levying an additional impact fee for school
facilities at the occupancy certificate stage, based on state general
Courts are more likely to
uphold impact fees, and the fees are more successfully and logically
calculated, when the local government has a plan - which anticipates
growth - which shows how and when public facilities needs are likely
to be generated in terms of type and location of facility.
Few cases turn on this requirement, but at least one state supreme court
has held that impact fees and other exactions can be collected only
if pursuant to a local government's comprehensive plan.
Most well drafted impact fee ordinances require such a plan.
Exactions are levied for
a variety of public facilities. The law applicable to such fees is
not generally dependant on the type of fee, but rather the strength
of the public purpose behind the fee. Such a demonstrated public purpose,
while often presumed, is necessary before reaching either nexus or proportionality.
Within the two subsets of
dedication and impact fees exists an expansive list of what can be considered
an exaction. School facilities, water and sewer improvements, park
and recreational fees, low-income housing fees, street improvements,
all have been imposed as either dedication or fee conditions to development
or redevelopment of property. Courts have upheld both on-site and off-site
conditions. As might logically be expected, the more clearly the exaction
relates to the impact of the development, the more likely a court is
to uphold the exaction. On this basis, as a class, street improvements
and sewer and water improvements are more likely to be upheld than low-income
housing fees and set-asides, as the former are more clearly impacted
by most land development than the latter. If the local government can
show that there is an essential or rational nexus between the exaction
and the government's legitimate state interests in relieving the impact
of the development by imposing the exaction, and that the exaction is
roughly proportionate to the impact of the development, the exaction
will withstand judicial scrutiny. If, however, either test cannot be
met, courts will strike down the exaction as an uncompensated taking.
In sum, the type of exaction itself may well determine whether there
exists an essential nexus, and the character of the exaction may impact
on the proportionality requirement.
VII. Cost And Calculation
Impact fees are charged
for a variety of public facilities in local governments throughout the
United States, including, but not limited to, transportation, wastewater
treatment, water distribution, solid waste disposal, parks, schools,
libraries, public electricity, police and fire stations, and public
housing. According to a recent study, such fees can add considerably
to the cost of the development upon which they are levied.
road/street impact fee calculations might look like this:
Type of Impact Fee
Single Home Per Unit
General Industry Per 1000 sq. foot
Per 1000 sq. foot
Per 1000 sq. foot
* These averages originate
from the 206 local governments participating in this survey.
An impact fee ordinance
should relate the fee charged to needs generated by the new development
and benefits conferred. Calculation of the fees should be tied to a
study, report, or plan based on an analysis of new development's impact,
as cases discussed in parts II and VI. As with all types of impact
fees, the analysis should demonstrate that the road improvements planned
with the funds collected are necessitated at least in part by the fee
payor, and that fees collected will adequately benefit the new development
paying the fee.
David L. Callies, AICP,
is the Benjamin A. Kudo Professor of Law at the University of Hawaii
where he teaches land use, state and local government, and property
law. The author and coauthor of 10 books and 75 articles on land use
and property (including 2 law school casebooks on land use and property),
he regularly counsels both state and local governments and landowners
on land development and regulation, often serving as an expert witness.
He has edited 2 books on takings and land development conditions for
the American Bar Association's Section of State and Local Government
Law, and his most recent article on land development conditions and
takings, "Regulatory Takings and the Supreme Court," was published
as the lead article in the 1999 annual local government edition of the
Stetson Law Review (Vol. 28, pp. 523-576). He is a member of the American
Law Institute, the American Institute of Certified Planners, and a life
member of Clare Hall, Cambridge University. He can be reached at firstname.lastname@example.org.
Impact Fees and Dedications: Shaping Land-Use Development and
Funding Infrastructure in the Dolan Era (Robert H. Freilich
& David W. Bushek eds., 1995); David L. Callies et al.,
Cases and Materials on Land Use 148 (2d ed. 1994); Robert
L. Freilich and Michael M. Shultz, National Model Subdivision
Regulations, Planning and Law 1-6 (1994); Daniel R. Mandelker,
Land Use Law (3d ed. 1993); Susan P. Schoettle &
David G. Richardson, "Nontraditional Uses of the Utility
Concept to Fund Public Facilities," 25 Urb. Law. 519, 519-22
(1993); Frona M. Powell, "Challenging Authority for Municipal
Subdivision Exactions: The Ultra Vires Attack," 39 DePaul
L. Rev. 635, 635-36 (1990); Julian C. Juergensmeyer & Robert
M. Blake, "Impact Fees: An Answer to Local Governments'
Capital Funding Dilemma," 9 Fla. St. U. L. Rev. 415 (1981);
Thomas M. Pavelko, "Subdivision Exactions: A Review of
Judicial Standards," 25 J. Urb. & Contemp. L. 269 (1983);
Development Exactions (James E. Frank & Robert M.
Rhodes eds., 1987).
Grass Lake Twp. Supervisor, N.W.2d (Mich.
. Ira M.
Heyman & Thomas K. Gilhool, "The Constitutionality
of Imposing Increased Community Costs on New Suburban Residents
Through Subdivision Exactions," 73 Yale L.J. 1119 (1964);
See also John D. Johnston, Jr., "Constitutionality
of Subdivision Exactions: The Quest for a Rationale,"
52 Cornell L.Q. 871 (1967).
of County Commissioners of Boulder Co., Colo. v. Homebuilders
Ass'n of Metropolitan Denver, No. 95SC479, 1996 WL 700564
at *4 (Colo. 1996) (citing Donald G. Hagman & Julian C.
Juergensmeyer, Urban Planning and Land Development Control
Law § 9.8 (2d ed. 1986)); Frank & Rhodes, supra
note 1, at 3-4.
v. California Coastal Comm'n, 483 U.S. 825 (1987).
v. City of Tigard, 114 S. Ct. 2309 (1994).
C. Nicholas, "Impact Exactions: Economic Theory, Practice,
and Incidence," 50 Law & Contemp. Probs. 85 (1987);
Nicholas, Nelson & Juergensmeyer, A Practitioner's Guide
to Development Impact Fees 37-38 (1991); Takings: Land
Development Conditions and Regulatory Takings after Dolan and
Lucas (David L. Callies ed., 1996).
cases cited infra part IV.
v. City of San Clemente, 277 Cal. Rptr. 550 (1991).
. But see Bloom
v. City of Fort Collins, 784 P.2d 304 (1989).
. David L. Callies & Malcolm
Grant, "Paying for Growth and Planning Gain: An Anglo-American
Comparison of Development Conditions, Impact Fees and Development
Agreements," 23 Urb. Law. 221, 239-40 (1991); See
Rohan, chapter 9A on Development Agreements.
. Nollan v. California
Coastal Comm'n, 483 U.S. 825 (1987).
. Dolan v. City of Tigard,
114 S. Ct. 2309 (1994).
483 U.S. 825 (1987).
Sullivan, "Oregon Blazes a Trail," in State
and Regional Comprehensive Planning: Implementing New Methods
for Growth Management (Buchsbaum & Smith eds., 1993).
144 S. Ct. at 2312.
at 2318 (citing Agins v. Tiburon, 447 U.S. 255, 260-62
114 S. Ct. at 2318.
at 2320 (emphasis added).
e.g., Kaiser Aetna v. United States, 444 U.S.
F.3d 162 (2d Cir. 1995).
at 169 (citing Dolan v. City of Tigard, 114 S. Ct. 2309,
P.2d 569 (Or. 1994).
27 21 70, 1992 WL 239100 (Conn. Super. Ct. Sept. 16, 1992).
A.2d 1277 (Conn. 1993).
S.W.2d 557 (Ky. Ct. App. 1992).
N.E.2d 380 (Ill. 1995).
P.2d 169 (Wash. Ct. App. 1991).
also Dellinger v. City of Charlotte, 441 S.E.2d
626 (N.C. Ct. App. 1994) (striking down a road dedication requirement
because the city planning staff failed to make written findings
relating the dedication to traffic from the proposed subdivision).
S.E.2d 626 (N.C. 1994).
P.2d 446 (Wash. 1995).
P.2d 429 (Cal. 1996).
. Ehrlich v. Culver City,
911 P.2d 429, 439 (Cal. 1996).
Arcadia Development Corp. v. City of Bloomington, 552
N.W.2d 281 (Minn. 1996), Lambert v. C. & C. of San Francisco,
67 Cal. Rptr. 2d 562 (Cal. Ct. App., 1997) and Pringle v.
City of Wichita 917 P.2d 1351 (Kans. Ct. App. 1996).
. Parking Ass'n of Georgia v. City of Alabama, 115 S. Ct. 2268, 2269 (1995) (Thomas,
. Amoco Oil Co. v. Village of Schaumburg, 661 N.E.2d 380, 390 (Ill. 1995).
P.2d 569 (Or. 1994).
Sarasota County v. Taylor Woodrow Homes, 652 So. 2d 1247
(Fla. 1995); McCarthy v. City of Leawood, 894 P.2d 836
(Kan. 1995); and Village Pond Inc. v. Town of Darien,
60 F.3d 1273 (7th Cir. 1995).
P.2d 185 (Or. 1995).
P.2d 1172 (Wash. 1994).
P.2d 187 (Wash. 1994).
Cal. Rptr. 2d 593 (1993).
Cal. Rptr. 2d 818 (1991).
A.2d 482 (N.J. Super. Ct. App. Div. 1994).
at 486 (citations omitted).
(citing Holmdel Builders Ass'n v. Township of Holmdel,
583 A.2d 277, 287 (N.Y. 1990)).
. Homebuilders Ass'n of Dayton v. City of Beavercreek, 1998 WL 735931 (Ohio App. 3d Dist.).
N.E.2d 1012 (Ill. Ct. App. 1993), aff'd
in part, rev'd in part, No. 76503, 1995
WL 123705 (Ill. March 23, 1995).
at 1020 (citing Dr. James Nicholas, professor at the University
of Florida, who surveyed impact fee programs across the country).
. Id. For an odd opinion which implies
no need for specificity allegedly based on Ehrling but
clearly counting on Bolloy, see Homebuilders Association
of Central Arizona v. City of Scottsdale, 930 P.2d 993 (Ariz.
few - generally older cases - have not: See Norwick
v. Village of Winfield, 225 N.E.2d 30 (Ill. 1967); Home
Builders Ass'n, Inc. v. Riddel, 510 P.2d 376 (Ariz. 1973).
. See Nicholas and Davidson, Impact Fees in Hawaii:
Implementing the State Law (Land Use Research Foundation
of Hawaii 1992). This statute is set out in full as an appendix
to this chapter.
& Blake, supra
note 1, at 427.
So. 2d 172 (Fla. 1983).
P.2d 611 (Colo. 1983).
. Loup-Miller Construction Co. v. Denver, 676 P.2d 1170 (Colo. 1974).
. Board of County Commissioners of Douglas County v. Homebuilders
Ass'n of Metropolitan Denver,
929 P.2d 961 (Colo. 1997).
N.E.2d 673 (N.Y. 1966).
. Board of County Commissioners of Boulder Co., Colo. v. Homebuilders Ass'n of Metropolitan Denver,
No. 95SC479, 1996 WL 700564 (Colo. 1996).
et al., supra note 6; Fred P. Bosselman & Nancy E.
Stroud, "Pariah to Paragon, Developer Exactions in Florida,"
14 Stetson L. Rev. 527, 537 (1989).
So. 2d 140 (Fla. Dist. Ct. App. 1983).
N.E.2d 1181, 1184 (Ohio 1980).
P.2d 888, 903 (Wyo. 1983).
. Weber Basin Home Builders Ass'n v. Roy City, 487 P.2d 866 (Utah 1971).
P.2d 376 (Utah 1982).
N.E.2d 505 (Ohio 1978).
P.2d 1018 (Or. 1971) (upholding fee in part on segregation of
Structure of Infrastructure Finance
41 (Lincoln Institute of Land Policy Monograph No. 85-5 Feb.
So. 2d 140 (Fla. Dist. Ct. App. 1983).
WL 735931 (Ohio App. 2 Dist.).
& Davidson, supra
. Board of County Commissioners v. Homebuilders Ass'n of Metropolitan
No. 95SC479, 1996 WL 700564 (Colo. 1996).
et al., supra note 6.
. City of Fayetteville v. IBI, 659 S.W.2d 505 (Ark.
1983); Accord Nicholas et al., supra note 6, at
37-38 (1991); Morgan, Duncan & McLendon, "Drafting
Impact Fee Ordinances: Legal Foundation for Exactions,"
9 Zoning & Plan. L. Rep. 49, 56 (1986).
& Davidson, supra
note 75, at 9.
Florida's Experience with Impact Fees, (Lincoln Institute
of Land Policy Monograph No. 85-5, Feb. 1985).
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