The answer to that question seems rather obvious to property owners—if the government demands that you give up a portion of your property in exchange for a development permit, why should it matter what particular branch is making the demand? After all, the Fifth Amendment of the U.S. Constitution broadly prohibits the government from taking private property without payment of just compensation, not just some low-level bureaucrat perched behind the permit desk. Thus legislative exactions—just like all other exactions—are subject to heightened constitutional scrutiny under the “essential nexus” and “rough proportionality” tests established by Nollan v. California Coastal Commission (1987) and Dolan v. City of Tigard (1992).
Case closed, right?
Sadly, no. Over the years, several states, including California, have adopted rules holding only those conditions imposed at the discretion of permitting officials to be subject to meaningful scrutiny. Demands made by the legislature will be upheld upon a showing that the government’s appropriation of private property will advance some public welfare goal. Let there be no doubt, that standard is nothing more than a license to steal.
For example, in 616 Croft Ave. LLC v. City of West Hollywood, the City decided to address its longstanding affordable housing problem by demanding that anyone who builds new residences either donate a percentage of the newly-built homes at below-market rates or pay a hefty fee in lieu. As a result, the City demanded that the owners of a small 11-unit condominium project pay a half-million dollar “affordable housing” fee in order to secure permission to build new housing. Not only is that type of demand counterproductive and counterintuitive (not to mention, misses the true cause of the housing crisis), but it plainly violates the nexus and proportionality requirements because it asks individual property owners to pay to solve a preexisting public problem that has absolutely nothing to do with the proposed development. Indeed, in 616 Croft, the city actually lauded the proposed development for adding to the stock of affordable housing.
Given the plain injustice of using the permit process to force owners to pay for preexisting public problems, it is unsurprising that Justices from the U.S. Supreme Court have expressed interest in resolving the legislative exactions question as soon as possible. It is also unsurprising that the 616 Croft petition drew so much support from pro-liberty organizations across the nation.
Earlier this week, PLF attorneys filed the reply brief in 616 Croft, explaining why this case is the right vehicle for finally resolving the harmful legislative exactions rule. The petition is now fully briefed and scheduled for conference on September 25, 2017.
SCOTUSblog, which highlighted the case as a petition to watch in the upcoming term, has collected all of the briefs here.