The League’s initial analysis finds that this case may not have the same impact in California as it may elsewhere because of a 1996 California Supreme Court decision in Ehrlich v. City of Culver City that applied what is known as the Nollan/Dolan standards.
Nollan v. California Coastal Commission and Dolan v. City of Tigard established that the government may not condition the approval of a land use permit on the owner giving up a portion of his/her property unless the dedications demanded of the owner are proportional to the anticipated impacts of the development. The legal terminology for this test is "nexus" and "rough proportionality."
Background on Koontz
The St. Johns River Water Management District refused to approve Mr. Koontz's request to develop a portion of his Florida wetlands property unless he paid to replace culverts on one District-owned parcel or fill in ditches on another District-owned parcel. Either of those projects would have enhanced approximately 50 acres of District-owned wetlands.
Mr. Koontz believed that the conditions were excessive and sued under Florida state law. The Florida Supreme Court held that Nollan/Dolan did not apply because the condition required the payment of money and because the project was denied. The case ultimately made its way to the U.S. Supreme Court. The Court reversed the Florida Supreme Court’s holding and held that the Nollan/Dolan standard applies in both circumstances.
The Court did not dispute the District’s authority to impose a monetary condition but ruled that the District had not justified the condition under the Nollan/Dolan standard. The Court sent the case back to the District to determine if the same condition could be imposed using the stricter Nollan/Dolan standard.
Background on Ehrlich
Mr. Ehrlich wanted to build condominiums on the site of a private tennis and recreational facility. He planned to demolish the private tennis and recreational facility in order to build the condos. Culver City imposed a $280,000 recreation fee to mitigate for the loss of the recreational facilities.
The California Supreme Court in the Culver City case held that the Mitigation Fee Act (AB 1600) must be interpreted in light of the Nollan/Dolan cases. The Court said that the Nollan/Dolan standards are incorporated into AB 1600’s requirements. The Court sent the case back to Culver City so that the City could comply with AB 1600 when imposing the recreation fee on Mr. Ehrlich's development. This means that in California, when a government agency adopts or imposes a fee pursuant to the Mitigation Fee Act, the agency must comply with the Nollan/Dolan standard.
It remains to be seen what will happen but the League will be monitoring the issue and will report on further developments.