June 22, 2012 Work Session 7
Development Conditions – Overview and Issues
Exactions & Takings
Contract Zoning
Daniel D. Crean, Pembroke, New Hampshire
IMLA CLE SEMINAR
Guidance from Federal
Decisions
Note: Portions of this presentation
derived from one made for a NHMLA
CLE seminar held
June 30, 2010
 Takings
and exactions with an eye
toward application in the context
of development conditions
 Contract
v. Conditional Zoning
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
Source of Takings Law:
◦ 5th Amdt applied to states (& local govt) by 14th
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Substantive Due Process & Equal Protection and
Due Process Constitutional principles also apply
and have been sources of confusion in defining
takings.
State Constitutional requirements may differ.
What is “property” that can be taken?
◦ May differ from takings under state law.
◦ Still in flux as discussed later.
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Physical invasion and actual appropriation in
earliest cases evolved to interference with use
of property rights in broad sense (property
rights as a bundle – e.g., right to exclude).
Mere devaluation in value does not mean a
taking occurs (e.g., Euclid v. Ambler Realty).
But, in Penn Coal, taking occurs when
regulation “goes too far”!
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
Some 50 years later, federal courts began
to seek definition of Holmes’ statement:
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Whole parcel rule – Penn Central
Takings “2-step” – Agins
Remedy – Compensation or not – San Diego
Physical Invasion revisited – Loretto
1987 Trilogy
◦ Bundle of rights, property definition,
investment-backed expectations & a new test
 “Going too far” revisited - Keystone
 Compensation for a temporary taking – 1st English
 Rational Nexus - Nollan
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Judicial Activism & Property Protections???
◦ Per se takings – economic wipeouts – Lucas
 Development of more vocal dissents
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Getting to court is half the battle or more . . .
◦ Ripeness – Final Decision – State Remedy
◦ Williamson County, Yee, & Palazzolo
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Property rights and regulations existing at time of
taking title
◦ Palazzolo, again
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Moratoria – a moratorium on takings?
◦ Tahoe-Sierra
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Redefinition & replacement
◦ Sharpening focus, SCOTUS (now) appears to
recognize that SDP and Takings are not the same!
◦ Did so in a case that was not a land use case (Lingle)
◦ Revert to Penn Central analysis – effect on parcel as
whole – what goes into numerator and denominator
that is so “onerous that its effect is tantamount to a
direct appropriation or ouster” of property rights
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Side notes
◦ Who’s got the ball? – choosing the forum – San Remo
◦ Eminent domain – Kelo and the Kelo backlash
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
Supreme Court doctrine and dicta that will likely
be fleshed out and clarified in future decisions
may include (see paper):
◦ Ripeness and exhaustion v. res judicata effect
◦ Investment-backed expectations v. regulation enacted
after property acquisition v. background principles of
state property law
◦ Limitation on full property use
◦ Functional appropriation of property rights
◦ Judicial decisions as takings
◦ Rational Nexus/Rough Proportionality applied
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
Property rights – and full usage
◦ Casitas
 Diminution in use of property need not be total
 Not a U.S. Supreme Court ruling
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How much compensation is enough?
◦ Rose Acre Farms
 Lost Profits & Economic Impact
 “Mere” 10% loss is slight and temporary
 Also not a SCOTUS decision
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Stop the Beach Renourishment
◦ Is a property right taken?
 Deference to state law definitions of property
 Consistent w. Penn Coal, Keystone, even Lucas ??
 Orientation toward purpose and result
 Benefit-conferring or harm-preventing
 Acquisitive intent or not
 Expectations of owners under state property rights law
◦ Is there such a thing as a judicial taking and did it
occur by Florida Supreme Court’s ruling?
 Not answered, but three or perhaps four justices said
there appears to be such a taking.
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
Exaction = requirement to do something or not do
something as a condition of obtaining a land use
approval.
◦ May involve physically doing something;
◦ May involve paying for doing something;
◦ May involve not doing something (e.g., lesser level of
development, land in open space, etc.);
◦ May involve “donating” land – dedications;
◦ May involve one or more of above or even something else.
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Exactions are neither per se valid or invalid.
Tests used to assess their validity have varied
from stringent (specifically and directly
attributable) to liberal (but/for).
Exactions are designed to offset impacts on
development:
◦ Are not designed to raise revenue (not taxes)
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Key factors, then, even before recent rulings
included:
◦ Relationship to development?
◦ How much is too much?
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State law tests will vary – subject to overriding
requirement of meeting federal property
protection requirements -
◦ For example, NH rational nexus test under Land/Vest
seemingly still applies.
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Federal Base Line set by Nollan and Dolan
◦ Rational nexus (Nollan) neither remarkable nor
overly stringent – look at (1) why property is asked
for exaction and (2) what does exaction have to do
with the actions proposed?
◦ Rough Proportionality (Dolan) – some numerical
basis for amount of exaction required – need not be
mathematically precise.
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A selective list of what has occurred recently includes
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Quantifying rough proportionality – B.A.M. Development
Affordable housing – state mandates – Palmer, et al.
Enabling legislation & limits – N.J. Shore Builders Assn.
Cost analysis – McLung Tapps Brewing
Revising assessments – Building Assn. v. Patterson
Analysis of decisions such as those listed above will
be key in responding to Nollan, and particularly
Dolan, challenges. Ability to demonstrate “why” and
“how much” will be essential to defense.
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
Clare v. Hudson – also discussed in W.S. 8
◦ Not the first time that NH Supreme Court has
misunderstood or at least misapplied (in my view)
exactions:
 Conceptually, and legally, exactions imposed administratively
are different from impact fees.
 Bottom line, though, requires that municipality demonstrate
that rational nexus and rough proportionality are met, no
matter whether imposed via exaction or impact fee.
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Keys to take from decision
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Do homework to justify
Don’t forget the paper work and recordkeeping
Keep a tickler file
Use a developer agreement
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
Hopefully these are more useful than
these directional arrows
Start with examining enabling legislation & court
decisions
What authority can and should be used
What public needs or impacts are involved
(qualitative – rational relationship analysis)
What are costs of current and future needs
(quantitative and relative – proportional analysis)
When burden/needs exceed fees otherwise paid
(including tax revenue considerations), what
exactions may be appropriate
What level of exaction does NOT impose
disproportionate burden
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Much has been written and said about Dolan’s
mention of rough proportionality in the
context of an adjudicative decision (i.e., by a
land use board on a particular application).
The distinction has caused courts and
commentators to examine concepts such as:
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Legislative deference – applied or not
Motivation of ordinance
When does heightened scrutiny apply
How does it get applied in context
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From a constitutional perspective, particularly
under Lingle, the question of when an exaction
may violate rational nexus or rough proportionality
need not depend on whether local government is
acting legislatively or adjudicatively (aka
administratively or quasi-judicially).
Real issue and question to be examined is the
extent to which the burden shifted to the property
owner – however shifted – is disproportionate to
the burdens that should be borne.
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In some respects, the foregoing
analysis may be bringing us back full
circle to Penn Coal.
The evolution of both takings and
exactions law, however, has somewhat
sharpened the focus of how local
governments may and must allocate
burdens that seek to accommodate
development of property.
The municipal burden of justifying
ordinances and decisions is not
onerous but requires understanding
and demonstration of supportable base
for decision.
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Contract Zoning
Archaic Idea or
Constraint on
Conditions
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Contract zoning as a “term
of art” may be viewed as
archaic and something
reserved for the hallowed
halls of academia.
Although perhaps more
honored in concept than
application in court,
rezoning premised upon
performance of conditions
may raise concerns.
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
One definition:
◦ Contract Zoning is an agreement between a
property owner and a zoning authority, which binds
the property owner to special restrictions on the
use of the property and, in turn, binds the local
zoning authority to grant the rezoning.
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In and of itself, it is not necessarily “Invalid.”
Concerns may arise when:
◦ It constitutes an exercise of the police power for
reasons other than the usual public purpose
standard; and
◦ Conditions are not met.
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“contract made by a zoning authority to zone
or rezone or not to zone is illegal and the
ordinance is void because a municipality may
not surrender its governmental powers and
functions or thus inhibit the exercise of its
police or legislative powers.”
State ex rel. Zupancic v. Schimenz, 46 Wis.2d 22, 174
N.W.2d 533 (1970).
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May be similar in some instances to issues
associated with identifying improper spot zoning
(e.g., not in conformity with Master Plan)
Lack of enabling authority for conditional or
flexible zoning (ultra vires)
Contractual relationship outside of zoning power
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
If conditions are not met, does that invalidate the
zoning?
◦ What about after development started? What is effect of
“return to status prior to rezoning”?
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If contract zoning (by whatever name) is found to
be invalid, what is the remedy?
◦ Invalidate conditions
◦ Invalidate rezoning
◦ Impeach the planning board/commission and legislative
body
◦ And don’t forget the lawyers who set up the whole deal!
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Keep public purpose foremost in studies,
findings, and wording
◦ WORDS DO MATTER
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Tie conditions (performance of developer
obligations to a public purpose or use – other
than “show me the money!”
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MUCH ADO
ABOUT
NOTHING
But
YOU BE THE
JUDGE!
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Questions, Comments, Concerns
Contact:
Attorney Daniel Crean
Crean Law Office
Pembroke, NH 03275
928-7760
creanlaw@comcast.net
www.creanlaw.com
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