Ever wondered why the government sometimes asks property owners to give up part of their land or pay fees in exchange for building permits? This is called an exactions taking. If you’re facing a permit condition or land dedication requirement, it’s important to understand your rights. In this blog, you’ll learn what exactions are, how landmark cases like Nollan and Dolan protect you, and what to do if you think a permit condition goes too far.
What Is an Exactions Taking?
An exactions taking happens when the government requires you, as a property owner, to give up something, like land, money, or an easement, to get a building permit. The idea is that what you give up should help balance out any impact your new development might have on the community. For example, if you want to build an apartment building, the city might ask you to set aside land for a sidewalk, a bike path, or even a playground. These exactions can take different forms, such as:
- Requiring you to dedicate a portion of your land for public use, like a road or park.
- Asking you to pay impact fees, which are payments meant to cover increased demand on public services like schools, fire departments, or water systems.
- Mandating that you grant an easement, which is legal permission for the public or city to use part of your property for a specific purpose, like utilities or drainage.
Most of the time, exactions are meant to make sure your new project doesn’t harm the neighborhood and that the costs of new development aren’t unfairly pushed onto everyone else. But sometimes, these requirements can be too much or not really connected to your project at all. That’s when the law steps in to protect you.
The Nollan and Dolan Cases: Setting the Rules
Two Supreme Court cases, Nollan v. California Coastal Commission and Dolan v. City of Tigard, set the ground rules for when permit conditions cross the line into an illegal taking.
Nollan: The “Essential Connection”
Let’s start with Nollan. In this case, the California Coastal Commission told the Nollan family they had to allow the public to walk across their beachfront property if they wanted a permit to rebuild their house. The Supreme Court said there must be an “essential connection” between what the government wants and the impact of the building project. If there’s no real link between them, it’s not fair for the government to force the owner to give up their rights.
Imagine you want to add a second story to your home, and the city says, “Sure, but you have to allow public access through your backyard.” If there’s no connection between your addition and the need for that access, this could be an illegal exaction under Nollan.
Dolan: The “Rough Proportionality” Test
Dolan expanded on Nollan’s rule. In Dolan, a business owner wanted to expand her store and parking lot. The city said she’d have to dedicate part of her land for a public bike path and a floodplain as a permit condition. The Supreme Court agreed there needed to be a connection, but added a second rule: the demand must also be roughly proportional to the project’s impact. That means the government can’t ask for more than what’s reasonable to offset what your project will actually cause.
For example, if your small coffee shop is expanding its patio, the city shouldn’t demand land for a major new road that mostly benefits other neighborhoods. The requirement needs to match the scale and effect of your project.
How Permit Conditions Can Lead to a Taking
Permit conditions are a normal part of development, but there’s a line between a fair request and an exactions taking. If the government’s demand feels unrelated to your project or much bigger than your project’s impact, it might cross that line into an unlawful taking.
Let’s say you’re building a single-family home. The city asks you to pay a fee for a new school across town, even though your project won’t add enough new residents to affect school crowding. Or, you’re required to dedicate land for a large park when your project is only a small addition. In these cases, the demands may be excessive or not connected to your actual impact, potentially making them illegal exactions.
When this happens, courts use what’s called the Nollan Dolan test. First, is there a real, logical connection between the permit condition and the public need created by your project? Second, is the requirement roughly proportional, meaning is it a fair match, to the impact your project will actually have? If the answer to either of these is no, you may have grounds to challenge the permit condition.
Challenging Dedication Requirements and Permit Conditions
If you think the government’s request is unfair, you don’t have to accept it without question. Here’s what you can do:
- Ask for a clear explanation of why the condition is needed and how it relates to your project. Don’t be afraid to request specifics, government agencies should be able to explain their reasoning.