NEWS ANALYSIS : High Court Strengthens Rights of Landowners : Development: Several federal rulings have reduced the latitude of local governments in demanding land dedications and public improvements.


After more than 50 years of favoring government regulation, the legal pendulum of property rights is swinging rapidly back toward the side of private landowners.

Acting most recently in a case involving the proprietor of an Oregon plumbing supply store, the U.S. Supreme Court in the last seven years has progressively strengthened the rights of property owners.

In the Oregon case, city officials wanted the store owner to dedicate part of her property for public improvements. But the court said such demands, a longtime practice in California and across the country, can amount to nothing more than blatant land grabs if they are too extreme.

Through its rulings, the court is reining in cities and counties that overstep their bounds as regulators of the land-use approval process, legal and planning experts say.

While of great interest to developers, local planners and of course lawyers, the recent spate of decisions and what preceded them also have an indirect but profound effect on the general public, influencing both the high cost of housing and the scarcity of public amenities.

How severely the emerging trend will affect California municipalities remains to be seen. But it will doubtless force local officials to be more restrained when they horse-trade with developers. A city that once might have asked the developer of a housing tract to donate land for a fire station, park and horse trail might now just ask for the fire station.

"These decisions basically say there is no free lunch," said Los Angeles City Planning Director Con Howe. "They make it clear that public needs ultimately have to be met with public commitments."

In other words, the public--and not individual developers--must foot the bill for improvements that benefit everyone, such as bike paths or parks or even flood control channels.

That's the way it was before Proposition 13 passed in 1978 and virtually wiped out local governments' ability to levy taxes to fund public improvements.

Before Proposition 13, developers had been required only to provide improvements directly related to their projects, such as the internal streets of a subdivision.

But after the tax-cutting measure passed, local governments--uncannily adept at sniffing out money--turned to developers to provide all sorts of public improvements, whether they were directly connected to the development or not.

During the boom of the 1980s, such arrangements worked well enough. Developers grumbled, but viewed the so-called "exactions" demanded by local officials as the cost of doing business.

Those exactions, imposed by municipalities statewide, ranged from fees to pay for new roads to dedications of land for amenities such as parks or schools. Often, such demands were suggested by homeowner groups opposing a developer's plan--and many of the groups became adept at persuading governments to squeeze more and more out of builders.

"Developers were willing to do it," said Sherman Oaks real estate attorney Fred Gaines. "The fact that they had to spend an extra amount of money was irrelevant because the value of their property was going up so fast."

Besides, the added costs were passed along to consumers. Even today, exaction fees in some parts of California can make up as much as 20% of the price of a new home, developers and government officials say.

But it was a shell game. When the boom soured, more and more property owners protested as local governments continued to demand more and more from them.

Ironically, though, it was not the big development concerns that challenged the exactions all the way to the Supreme Court. It has been the cases of smaller landowners, who had less to lose and less need to keep friends in local government, that have largely shaped the property rights debate in recent years.

The cases that made it to the Supreme Court, starting in the 1980s, include a Ventura couple who wanted to remodel their beach house, a Glendale church that wanted to rebuild its Tujunga Canyon retreat for disabled children, a South Carolina developer who wanted to build his dream home on the coast, and finally the subject of the most recent Supreme Court decision: an Oregon woman who wanted to expand her plumbing supply store.

The rulings, taken together, have created a body of law propping up the rights of landowners, said Jerold Kayden, senior fellow at the Lincoln Institute of Land Policy in Cambridge, Mass. "The court is building one brick at a time."

Perhaps the most significant case involved the Nollan family of Ventura, who wanted to demolish their old bungalow and put up a new three-bedroom house on the coast. The California Coastal Commission demanded that the Nollans dedicate part of their property to improve public beach access.

In 1987, the high court ruled that the Nollans did not have to dedicate their land because there was no reasonable connection between the private action of building a new house and the public benefit of improving beach access.

That decision put the brakes on cities and counties asking for outlandish exactions. The California Legislature even passed a law defining how much local governments could legitimately ask for.

But the case of the Oregon plumbing supply store takes the requirements established in the Nollan case one step further. The high court held that local governments need even more proof that the exactions they demand are to offset effects of a development.

Florence Dolan wanted to expand her plumbing supply store, but the city of Tigard demanded in exchange that she dedicate 10% of her property for a public bike path and flood control area.

The city argued that the bike path would reduce extra traffic and the flood control area would improve public safety. The Supreme Court said the connection was not strong enough. A plumbing store might indeed increase traffic a bit, but the request for a dedication of land was simply too much, the court said.

Governments retain some leverage, however. Even while bolstering landowners' rights, the high court has affirmed the right of local governments to demand that new development pay its own way. Officials can still force a developer to remedy the negative effects of a project, such as traffic congestion, but only to the extent that they can prove a definite connection.

What frightens local officials and delights property rights advocates about the Dolan case is a footnote suggesting the burden of proof in such cases should switch from the property owner to the municipality. In other words, instead of the property owner proving that an action was unfair, the municipality would have to prove that it was not.

Some municipal leaders say they now must look to other funding sources to finance public improvements that the public is unwilling to pay for and developers can no longer be forced to pay for.

But critics of that approach argue instead that local governments should simply go without.

"It's time for municipalities to turn and look at themselves and figure out what they don't want to pay for," said Robin Rivett, director of the environmental law section for the Pacific Legal Foundation in Sacramento.

"Pretty soon they are going to have to say we cannot provide those kinds of services anymore," Rivett said. "If the public wants them, then the public is going to have to pay for them."

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