Nexus and Proportionality: “Impact Fees” Detached from Actual Impact

Petitioner, Drebick sought approval from the City for construction of a four-story, 54,000-square-foot office building within the city limits. The City approved the proposal, subject to Drebick’s payment of a transportation impact fee of $132,328.98, calculated according to the City’s legislatively adopted fee schedule that took into account the number of infrastructure services provided in the “service area” in question. Drebick sought a fee adjustment based on the actual transportation impact his development would have but his alternative estimate was rejected ostensibly for lack of reliability and accuracy. The city examiner ruled in favor of Drebick, however the superior court reversed. The appeals court reversed in favor of Drebick, and finally the Washington Supreme Court reversed in favor of the city, basing its holding on its own precedents related to impact fees and its interpretation of the relevant statutes.

Issue Areas:

Limited Government, Property Rights

Case:

Question(s) Presented:

May local governments avoid the “nexus” and “rough proportionality” tests of Nolan v. California Coastal Commision, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374, (1994), by imposing development exactions in the form of “impact fees,” or otherwise by  legislative enactment?

ALF’s Amicus Brief:

Atlantic Legal argues that rough proportionality is a general requirement for all penalties paid by property owners for engaging in permitted development, and that violating this requirement constitutes an unconstitutional taking under the Fifth Amendment. The Washington Supreme Court was in error, because under Dolan it is impermissible to base a transportation impact fee on the service needs of a wider statutorily designated “service area” rather than upon the actual transportation impact that the development in question would have. The Washington Supreme Court affirmed the superior court’s validation of an exaction scheme justified by the “improvement that will reasonably benefit that development . . . judged by the effect of the transportation improvements in the jurisdictions as a whole.” 156 Wash. 2d 289, 307 (2006). In other words the city assesses how many of its own nearby infrastructure projects it can fund by halting the development absent a large fee, and calls this extortion a “transportation impact fee,” even though, as the city examiner found, the actual impact on transportation would be minimal.

The Washington Supreme Court has ignored what other courts and scholars have recognized as valid implications of Dolan and Nolan: that protection of property requires recognition of a bundle of rights that maybe infringed, taken, by regulation. Monetary development exactions too infringe on the owner’s right to develop his property, which should be viewed as a regulatory taking of that right, and be held to the Fifth Amendment nexus and proportionality requirements enunciated by this Court. “Nexus” requires some connection between a public purpose that is impacted or addressed by the regulation, and proportionality ensures that penalties for this impact or not excessive relative to any valuation of the impact of the activity being regulated. Public transportation is a pretext to exact funds from property owners to the pet projects of legislators and their donors. Atlantic Legal asks this Court to affirm the principles it has set out already and apply them to monetary development exactions.

Status:

On October 16, 2006, the Supreme Court denied certiorari.