Regulatory Takings: When Permit Conditions Go Too Far

Anyone who's ever been involved in real estate development knows that as part of the permit approval process, developers are routinely required to make concessions to the government in order to move forward with proposed development plans.  And, if you're building near the coast, you usually need to jump through even more hoops (sometimes backwards and through fire) to please the Coastal Commission.  But when do the demanded concessions go too far?

We've covered in the past the "rough proportionality" and "nexus" requirements that development conditions must satisfy in order to withstand scrutiny, but a recent trial court decision in San Mateo County serves as a good reminder.  The case, Sterling v. California Coastal Commission, involves the owners of 143 acres of vacant land in Half Moon Bay challenging a dedication requirement imposed by the Coastal Commission.  The owners sought a permit to build a 6,000 square foot home, and in return, the Coastal Commission demanded that the owners convey an agricultural easement which would require farming the remainder of the property forever (with no other uses allowed).  You may be wondering, where's the nexus; where's the proportionality? 

As suspected, the "forced farming" condition was shot down by the court.  But the Coastal Commission decided to try again and came back with a new condition:  that the owners dedicate the remainder of the property to open space for the public good.  This imposed condition sure doesn't sound any better. 

The trial court once again shot down the condition, finding that the Coastal Commission's imposition of the open space requirement constituted an unconstitutional taking of property, as it is disproportionate to the public impact of the proposed development.  The Pacific Legal Foundation represented the owners, and it reports the court's ruling as follows:

The new condition, in the form of an open space deed restriction is not tailored to the development and is once again irreconcilable with Nollan and Dolan. As compared to the Commission’s prior failed attempt to impose an agricultural easement on the property, the Commission’s new attempt is a distinction without a difference.

The case serves as a good reminder that when conditions of approval go too far, they can constitute a regulatory taking of property.  You can read a more detailed summary by reviewing PLF's Press Release. 

  • Bradford B. Kuhn
    Partner

    Brad Kuhn, Chair of Nossaman's Eminent Domain & Valuation Group, guides private and public sector clients through complex real estate development and infrastructure projects – particularly with eminent domain/inverse ...

California Eminent Domain Report is a one-stop resource for everything new and noteworthy in eminent domain in California. We cover all aspects of eminent domain in California, including condemnation, inverse condemnation, and regulatory takings. We also keep track of current cases, project announcements, budget issues, legislative reform efforts, and report on all major California eminent domain conferences and seminars.

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