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DIR1999-00002 P FEB 26 '99 12:03PM 0'D( ELL, RAMIS • ] P,2 RAMIS Agenda Item No. lag CRAW Meeting of �fc lag CORRIGAN � / i BACHRACH, 1.,12 C y �` ` 6' � ' ' ATTORNEYS AT LAW 1727 N.W. Hoyt Sheet MEMORANDUM Portland, X97 (503) 222-4402 Fax: (503) 243 -2944 TO: Tigard City Council FROM: Timothy V. Ramis, James M. Coleman, Gary Firestone of City Attorney's Office DATE: February 26, 1999 RE: Approvals, Denials, and Conditions of Approval I, INTRODUCTION Since Dolan v. City of Tigard, 512 US 374 (1994) was decided, planning staff and the City Attorney's Office have been working together dealing with the issues raised by Dolan and applying Dolan to land use applications, The City has developed appropriate responses to various Dolan challenges brought by developers. Although the U.S. Supreme Court has not expanded on Dolan, lower court and state court decisions have resulted in substantial clarification of the Dolan decision. The knowledge gained through the evaluation of the post Dolan court cases and the practical experience gained through the processing of applications in which Dolan issues are present allows us to reassess Dolan at this time. The reassessment is intended to provide guidance so that the City continues to respond to development applications in a manner that ensures compliance with Dolan while preserving the City's right to impose development standards and to exact appropriate dedications and public improvements. Dolan requires that every exaction imposed as a condition of a land approval be related to and roughly proportional to the impact of the development.' The government must demonstrate rough proportionality based on an individual assessment in each case. All provisions of the Community Development Code must be interpreted in light of the Dolan standard. The City may, however, deny applications based on a failure to meet established criteria, as long as the criteria do not require an exaction. The City can deny an application if required public 'The most common exactions are requirements to dedicate land for rights -of -way and requirements to provide on -site or off -site public improvements. FEB 26 '99 12 :03PM O'DC :LL, RAMIS P.3 Memorandum re: Approvals, Denials, and Conditions of Approval February 26, 1999 Page 2 services or improvements are not available but cannot deny an application because the applicant failed to provide the required public improvements when the burden of the exaction would significantly exceed the impact of the development. H. ANALYSIS A Fyery xaptiQn Must Be Justified by /Rough Proportionality Analysis A requirement to dedicate right -of -way or to construct public improvements is an exaction. There must be an "essential nexus" between any exaction imposed as a condition of development and • the impact of the development, Nollan v. California Coastal Comm 'n, 483 US 825 (1987). The exaction must be "roughly proportional" to the impact of the development. Dolan v. City of Tigard, 512 US 374 (1994). Dolan requires "some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development." Under Dolan, every exaction must be justified under the rough proportionality test, with the burden of proof being on the City. LUBA has taken the position that requiring additional right-of- way on a street bordering a development cannot be justified as a matter of course, but must meet the rough proportionality standard. Gens'man v. City of Tigard, 29 Or LUBA 505 (1995). Therefore, • even a condition that an applicant dedicate right-of-way for an adjoining street must meet the rough proportionality standard and be based on an individualized evaluation of the traffic impact created by the development. B. Local Govemmemts May Deny art.ApplicationBased on Ujnifozmj. Standards and Criteria that • Do Not Require an Exaction As recognized by the U.S. Supreme Court in Nollan v. California Coastal Commission, 483 US 825 (1987), a local government may deny a request for a land use approval if objective standards regarding the property or the level of services available justify a denial. However, the holding in Dolan precludes a denial based on the failure to meet a code requirement if the code requirement requires an exaction and the exaction is disproportionate to the impact of the development. In other words, if the City could not require an exaction as a condition of approval under Dolan , it cannot deny the application on the basis that the exaction was not provided. However, if the code requires 'The "essential nexus" requires a relationship between the type of impact and the type of exaction. This test is met if the impact is on the road transportation system and the exaction is a street dedication or improvement. The test is not met if the impact is on the sewer system but the . exaction is a street dedication or improvement unrelated to any sewer line, EEB 26 '99 12:04PM O'Dr" 'LL, RAMIS P.4 Memorandum re: Approvals, Denials, and Conditions of Approval February 26, 1999 Page 3 that certain public improvements or services be in place and meet certain standards, Dolan does not prevent a denial based on the lack of existing public improvements. In the case of rights- of-way and street improvements, a requirement that all developments must have direct access to a street that meets city standards would survive a Dolan challenge, a requirement that the applicant dedicate right-of -way and improve all adjacent streets so that they meet City standards would not satisfy Dolan unless the City could demonstrate that the dedication and improvement are roughly proportional to the traffic impact of the development. The Dolan standard applies in all situations involving exactions. It applies to local streets, to developments with more than one street frontage, to single family residences, and to redevelopment. In the case of redevelopment, the impacts that can be compensated for by an exaction are limited to the increase resulting from the redevelopment. In our presentation to Council, we will identify some of the specific factual situations where these issues arise. You will be able to see the kinds of judgments that the staff, and ultimately the Planning Commission and Council, will be called upon to make. III. SUMMARY In deciding land use applications in which dedications or improvements may be an issue, the City should apply the CDC in light of the Dolan requirements that all exactions must be related to and roughly proportional to the impact of the development and that the rough proportionality evaluation must be based on an individualized assessment. Failure to apply existing code provisions in light of Dolan could result in takings claims. El geamailoza299.wpd • . i DATE: 2/26/1999 _ I CODE SECTIONS: [TOPIC :I Approvals, Denials, and Conditions of Approval *City Attorney's Office (2/26/99 memo) held a Study Session on 3/2/99 with the City Council to Reassess Dolan Compliance. INTERPRETATION: I. INTRODUCTION Since Dolan v. City of Tigard, 512 US 374 (1994) was decided, planning staff and the City Attorneys Office have been working together dealing with the issues raised by Dolan and applying Dolan to land use applications. The City has developed appropriate responses to various Dolan challenges brought by developers. Although the U.S. Supreme Court has not expanded on Dolan, lower court and state court decisions have resulted in substantial clarification of the Dolan decision. The knowledge gained through the evaluation of the post -Dolan court cases and the practical experience gained through the processing of applications in which Dolan issues are present allows us to reassess Dolan at this time. The reassessment is intended to provide guidance so that the City continues to respond to development applications in a manner that ensures compliance with Dolan while preserving the City's right to impose development standards and to exact appropriate dedications and public improvements. Dolan requires that every exaction imposed as a condition of a land approval be related to and roughly proportional to the impact of the development. (See footnote 1) The government must demonstrate rough proportionality based on an individual assessment in each case. All provisions of the Community Development Code must be interpreted in light of the Dolan standard. The City may, however, deny applications based on a failure to meet established criteria, as long as the criteria do not require an exaction. The City can deny an application if required public services or improvements are not available but cannot deny an application because the applicant failed to provide the required public improvements when the burden of the exaction would significantly exceed the impact of the development. II. ANALYSIS A. Every Exaction Must Be Justified by a Rough Proportionality Analysis A requirement to dedicate right -of -way or to construct public improvements is an exaction. There must be an "essential nexus" between any exaction imposed as a condition of development and the impact of the development, Nollan v. California Coastal Commission, 483 US 825 (1987). (See footnote 2) The exaction must be "roughly proportional" to the impact of the development. Dolan v. City of Tigard, 512 US 374 (1994). Dolan requires "some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development." Under Dolan, every exaction must be justified under the rough proportionality test, with the burden of proof being on the City. LUBA has taken the position that requiring additional right -of -way on a street bordering a development cannot be justified as a matter of course, but must meet the rough proportionality standard. Gensman v. City of Tigard, 29 Or LUBA 505 (1995). Therefore, even a condition that an applicant dedicate right -of -way for an adjoining street must meet the rough proportionality standard and be based on an individualized evaluation of the traffic impact created by the development. B. Local Government May Deny an Application Based on Uniform Standards and Criteria that Do Not Require an Exaction: As recognized by the U.S. Supreme Court in Nollan v. California Coastal Commission, 483 US 825 (1987), a local government may deny a request for a land use approval if objective standards regarding the property or the level of services available justify a denial. However, the holding in Dolan precludes a denial based on the failure to meet a code requirement if the code requirement requires an exaction and the exaction is disproportionate to the impact of the development. In other words, if the City could not require an exaction as a condition of approval under Dolan, it cannot deny the application on the basis that the exaction was not provided. However, if the code requires that certain public improvements or services be in place and meet certain standards, Dolan does not prevent a denial based on the lack of existing public improvements. In the case of rights -of -way and street improvements, a requirement that all developments must have direct access to a street that meets city standards would survive a Dolan challenge, a requirement that the applicant dedicate right -of -way and improve all adjacent streets so that they meet city standards would not satisfy Dolan unless the City could demonstrate that the dedication and improvement are roughly proportional to the traffic impact of the development. The Dolan standard applies in all situations involving executions. It applies to local streets, to developments with more than one street frontage, to single family residences, and to redevelopment. In the case of redevelopment, the impacts that can be compensated for by an exaction are limited to the increase resulting from the redevelopment. III. SUMMARY In deciding land use applications in which dedications or improvements may be an issue, the City should apply the CDC in light of the Dolan requirements that all exactions must be related to and roughly proportional to the impact of the development and that the rough proportionality evaluation must be based on an individualized assessment. Failure to apply existing code provisions in light of Dolan could result in takings claims. • Footnote 1: The most common exactions are requirements to dedicate land for rights -of -way and requirements to provide on -site or off -site public improvements. Footnote 2: The "essential nexus" requires a relationship between the type of impact and the type of exaction. This test is met if the impact is on the road transportation system and the exaction is a street dedication or improvement. The test is not met if the impact is on the sewer system but the exaction is a street dedication or improvement unrelated to any sewer line.