GUEST BLOG: SCOTUS Mulling Cert. Petition on Key Takings Law Issue in 616 Croft Ave.

We're thrilled to have Tim Mulvaney (Texas A&M) step in to guest blog on a potential SCOTUS takings case:

On October 27, 2017, the Supreme Court will consider for the third time the petition for certiorari in 616 Croft Ave. v. City of West Hollywood, a case that raises the open question of whether the probing scrutiny applicable in takings cases involving individualized administrative exactions also should be applied in cases involving generalized legislative exactions. While the fact that 616 Croft has been relisted multiple times is no guarantee that the Court will agree to hear the case, history suggests that re-listing for a future conference significantly increases the chances that it will do so.

616 Croft centers on a California municipality’s inclusionary housing ordinance, a commonly adopted measure seeking to increase the availability of affordable housing. The ordinance requires that developers sell or rent a portion of newly constructed units at below-market rates or, alternatively, to pay a formula-derived “in lieu” fee designated to funding the construction of the equivalent number of units elsewhere in the city. Here, a development company sought permission to build an 11-unit condominium complex. When the city applied the inclusionary housing ordinance, the development company paid the fee “under protest” and unsuccessfully challenged the ordinance on its face in state court as an unconstitutional taking of property in accord with the Supreme Court’s “exaction takings” decisions of Nollan v. California Coastal Commission, Dolan v. City of Tigard, and Koontz v. St. John’s.

Seemingly out of concern that administrative exactions present the possibility for extortionate, targeted conduct by government officials with authority to deny permitting applications, the Court asserted in Nollan and Dolan more than two decades ago that the government shoulders the burden of proving that at least those administrative exactions requiring permanent public occupation of the permitee’s land—in these cases, a public walking and bicycling easement, respectively—bear an “essential nexus” to and are in “rough proportionality” with the proposed development’s impacts to avoid having to pay takings compensation. These decisions have been described as imposing a form of heightened scrutiny in the sense that their tests shift the burden of proof away from the claimant and toward the defendant government entity, authorize review of the relationship between an exaction’s design and the public goals in imposing that exaction (a traditional due process question, only more probing), and allow for takings liability findings in instances where the economic impact of the exaction is quite modest. In 2011, Koontz extended application of Nollan and Dolan to some still-unspecified class of individualized mitigation fees.

In its petition for certiorari in 616 Croft, the development company argues that the takings scrutiny applied to the exactions imposed via case-by-case administration in Nolan, Dolan, and Koontz is also applicable in situations where the government imposes exactions via broadly applicable legislative formulas or schemes. Such a holding by the Court very well could limit not only the adoption of inclusionary housing ordinances but also myriad approaches to wetland mitigation, infrastructure support, and the like.

The Petitioners in 616 Croft are represented by the Pacific Legal Foundation, a prominent libertarian public interest law firm familiar to takings mavens for representing property owners in Nollan, Koontz, Palazzolo v. Rhode Island, and, most recently, Murr v. Wisconsin, among many other takings cases before the Supreme Court. Amicus briefs in support of the petition have been filed by the Cato Institute, the Citizens’ Alliance for Property Rights Legal Fund, and a collection of land use and economics scholars headlined by renowned Yale law professor Bob Ellickson.

Last year, I published this paper that sets out the many competing arguments surrounding the appropriate measure of takings scrutiny in cases involving legislative exactions. In the piece, I suggested that proponents of progressive conceptions of property have a number of strong first-order reasons to support immunizing legislative exactions from Nollan/Dolan scrutiny, but that several secondary effects of this approach make the issue a more challenging one for progressive property scholars and advocates than it initially might appear.

Stay tuned to the Property Prof Blog for an update on the Supreme Court’s upcoming conference on 616 Croft!