The United States Supreme Court has had numerous opportunities in recent years to address an important and unsettled issue under the Takings Clause: whether heightened scrutiny under Nollan, Dolan, and Koontz applies in cases where an alleged taking arises from a legislatively imposed condition rather than an administrative one. The Court’s most recent denial of certiorari in such a case occurred on October 30, 2017, in 616 Croft Ave., LLC v. City of West Hollywood (Case No. 16-1137).
616 Croft Ave. concerned the City of West Hollywood’s imposition of a $540,000 “in-lieu” affordable housing fee, under the City’s inclusionary housing ordinance, in connection with the development of an 11-unit condominium project. The case addressed the California Supreme Court’s denial of a petition to review a Second District Court of Appeal decision that upheld the legality of the fee pursuant to the state Supreme Court’s decision in California Building Industry Association v. City of San Jose, 61 Cal. 4th 435 (2015).
In CBIA, the California Supreme Court held that a legislative land use measure is not a taking and survives a constitutional challenge so long as the measure bears “a reasonable relationship to the public welfare.” In contrast, under Ehrlich v. Culver City, 12 Cal. 4th 854 (1996), the “reasonable relationship” and “rough proportionality” requirements established in Nollan, Dolan, and Koontz apply only when exactions or permitting fees are imposed on an ad hoc, or administrative basis, rather than to exactions and fees that are legislatively imposed and generally applicable.
We have written about this arbitrary and problematic distinction a number of different times, including the following posts on this blog:
- California Supreme Court Rules that Ordinance Intended to Increase Number of Affordable Housing Units is a Lawful Exercise of the Police Power
- U.S. Supreme Court Denies Review of California Supreme Court Decision Upholding San Jose Inclusionary Housing Ordinance
- Court Rejects Takings Challenge to City’s Imposition of $550,000 in Fees for 11-Unit Infill Project
- New Cert Petition Asks SCOTUS if Legislatively Mandated Permit Conditions are Subject to Heightened Scrutiny
Our concern remains the same as that expressed by Justice Clarence Thomas and the late Justice Sandra Day O’Connor in their dissent from the Court’s denial of certiorari in Parking Association of Georgia, Inc. v. City of Atlanta, 515 U.S. 1116, 1117 (1995) (Thomas, J., dissenting from denial of certiorari):
“It is hardly surprising that some courts have applied Dolan’s rough proportionality test even when considering a legislative enactment. It is not clear why the existence of a taking should turn on the type of governmental entity responsible for the taking. A city council can take property just as well as a planning commission can. Moreover, the general applicability of the ordinance should not be relevant in a takings analysis. If Atlanta had seized several hundred homes in order to build a freeway, there would be no doubt that Atlanta had taken property. The distinction between sweeping legislative takings and particularized administrative takings appears to be a distinction without a constitutional difference.”
Given that lower courts have been divided on this unresolved issue for decades, Justice Thomas reiterated his well-founded concerns in his concurrence in the Court’s denial of certiorari in California Building Industry Association v. City of San Jose (Case No. 15-330):
“I continue to doubt that “the existence of a taking should turn on the type of governmental entity responsible for the taking.” Parking Assn. of Georgia, supra, at 1117–18. Until we decide this issue, property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively. These factors present compelling reasons for resolving this conflict at the earliest practicable opportunity.”
Because the current composition of the U.S. Supreme Court leans ideologically conservative by any traditional measure and it takes only four of nine Justices to grant certiorari, on the surface it is surprising that the Court has yet to take up a case, such as CBIA or 616 Croft Ave., that would finally resolve this distinction between sweeping legislative takings and particularized administrative takings. The surprise is enhanced to a degree by the fact that the Court considered both cases in conference four times, which suggests a serious interest in the issue.
The Court ultimately denied certiorari in CBIA due to various procedural defects. Because 616 Croft Ave. does not appear to suffer from such defects, however, the Court’s denial of certiorari is more unexpected. My friend and ABA Section of State and Local Government Law colleague, Robert H. Thomas, who writes the excellent inversecondemnation.com blog, reasons that the pro-property rights Justices may not believe there are five reliable votes and thus may be strategically denying certiorari so as to avoid the risk of making more “bad” law. I suspect he may be right, and if so then there is a bit of a silver lining to consider: In particular, in light of the Court’s unfortunate recent “relevant parcel” decision in Murr v. Wisconsin, __ U.S. __ (2017) (Case No. 15-214), which we wrote about here, those that would like the Court to abolish this “distinction without a constitutional difference” may be grateful that resolution of this critical issue must wait for another day.
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.