At issue in this case was whether the U.S. Supreme Court should grant certiorari to decide whether the Takings Clause of the Fifth Amendment to the United States Constitution, as interpreted by the Court in Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), should apply to land-use permit conditions that exact, not real property (the context of Nollan and Dolan), but rather money and personal property from the property owner. The two-part Nollan-Dolan inquiry (“essential nexus” and “rough proportionality”) scrutinizes a land-use permit exaction to determine whether it is commensurate with the proposed development’s likely public impact. If so, the exaction is a legitimate exercise of the police power. However, if the exaction is unrelated to, or disproportionate with, the project’s likely public impact, it is a compensable taking.
In this case, the Petitioner, West Linn Corporate Park L.L.C. (“WLCP”), spent over $824,000 and dedicated personal property to complete many off-site public improvement projects required by respondent, the city of West Linn, Oregon (“the City”) as conditions to build its corporate office park. These projects included expanding the city’s waterline and improving traffic intersections. WLCP sought compensation from West Linn under Nollan-Dolan, arguing primarily that its offsite public improvement duties far exceeded its development’s likely public impact. The federal Court of Appeals for the Ninth Circuit summarily concluded that Nollan-Dolan applied only to real-property exactions and therefore dismissed WLCP’s federal takings claim.
In its brief, NELF argued that the Nollan-Dolan standard of review should apply to any permit condition that exacts any kind of private property. The standard should not be limited to exactions of real property, contrary to the Ninth Circuit’s holding below. NELF argued that the Nollan-Dolan standard embodies the core principle of distributive fairness in the allocation of social costs that animates the Court’s takings jurisprudence. Under this principle, no one property owner should be singled out to bear the burden of a social cost that should be shared instead by the general public, whether through general taxation or through the payment of just compensation to the property owner. The Nollan-Dolan standard serves this core principle of distributive justice by limiting the government’s permitting power to the imposition of permit conditions that are commensurate with the likely public harm or impact that the property owner may cause. Under Nollan-Dolan, an exaction that is unrelated to, or disproportionate with, the likely public impact of a land-use development is a compensable taking. To give full effect to this constitutional requirement of economic parity between the impact and the exaction, it should not matter what kind of property the government seeks to exact from the property owner. What matters is whether the value and use of the property exacted are commensurate with the development’s likely public impact.
NELF also argued that an inclusive application of the Nollan-Dolan standard is necessary to address the Court’s concern that, in the land-use permit process, “there is heightened risk that the purpose [of the permit conditions] is avoidance of the compensation requirement [under the Takings Clause], rather than the stated police-power objective.” Nollan, 483 U.S. at 841. The potential for abuse of the police power inheres in the discretionary, adjudicative permit approval process, an ad hoc, monopoly power that is typically unaccountable to the political process and is generally subject to deferential judicial review. Under those insulating circumstances, where local government has the discretion to deny a permit altogether, it may abuse its power by singling out a property owner with unduly burdensome permit conditions that may serve primarily to coerce the forfeiture of private property without just compensation.
Unfortunately, the Supreme Court denied certiorari on November 14, 2011.