Exactions After Koontz V. St. John’s River WMD

By Alan Sorem

Oregon land use laws have a substantial effect on all Oregon business and individuals. As members of the public, we benefit from living in a well-planned state and city. As taxpayers, we have an interest in seeing property developments pay their fair share of the costs of necessary public streets, utilities, and parks. However, as property owners applying for development entitlements, one quickly realizes that the concept of paying a “fair share” is subjective, and can be contentious.

One issue that arises with such developments relates to exactions. Exactions occur when you, your business, or your charitable or religious organization apply for a development permit and the local jurisdiction conditions the approval of the new building upon the payment of a fee, construction of a public improvement, or dedication of real property. Required public improvements often include the construction of traffic improvements such as street modifications or signalization, extending or enlarging existing utility lines, and can even include the construction of improvements that serve large portions of a community, such as the construction of public parks, water reservoirs and main sewer trunk lines.

The requirements of exactions were recently addressed in the United States Supreme Court. On June 25, 2013, the United States Supreme Court’s decision in Koontz v. St. John’s River Water Management District granted property owners new judicial protections from government takings or exactions. The Koontz decision held such exactions must have a “nexus” and be “roughly proportionate” to the effects of the proposed development. For example, if an owner is proposing to develop a property that is served by a busy road, the local jurisdiction might require additional land to be dedicated, for the developer to widen the road and for the developer to pay for all or a portion of a new traffic facility (traffic light).

However, issues arise if the land to be dedicated is not used for vehicular traffic improvements but for some other purpose. Similarly, if the new development is being forced to pay for all or substantial portion of the traffic improvements, the owner might be able to challenge whether the exactions are roughly proportionate to the impact of the new development. These are difficult questions to fully answer and usually require the continued efforts of government officials, engineers, and attorneys.

The Koontz decision ensures that all property owners are afforded an opportunity of judicial review of their exactions. However, the proper procedures must be followed in order to preserve these potential claims against wrongful government takings. Failure to raise timely the issue that a condition of approval may be an unlawful exaction or failing to raise the issue with enough specificity will bar a person from recovering his or her damages.

If you are concerned about any exactions imposed as a condition of your development project, please contact our Real Estate and Land Use department. We can help you evaluate the proposed conditions and whether the protections granted in the Koontz decision would apply to your development.