Home Builders Ass'n of Cent. Arizona v. City of Scottsdale

Decision Date16 February 1995
Docket NumberNo. 1,CA-CV,1
PartiesHOME BUILDERS ASSOCIATION OF CENTRAL ARIZONA, a non-profit Arizona corporation; for and on behalf of all similarly situated; Grupe Development Co. Inc., an Arizona corporation; Knoell Bros. Construction, Inc., an Arizona corporation; Marlborough Development Corporation, an Arizona corporation, Plaintiffs-Appellees, v. CITY OF SCOTTSDALE, a municipal corporation, Herbert R. Drinkwater, Rene Wendell, James D. Bruner, Kathryn Campana, Myron R. Deibel, William Soderquist, and Bill Walton, members of the City Council of the City of Scottsdale, Defendants-Appellants. 92-0210.
CourtArizona Court of Appeals

Carmichael & Powell, P.C. by Ronald W. Carmichael, Sid A. Horwitz, Brian A. Hatch, Claudia J. Resnick, Phoenix, for plaintiffs-appellees.

Richard W. Garnett III, Scottsdale City Atty., Scottsdale, and Johnston, Maynard, Grant & Parker by Charles J. Adornetto, Phoenix, for defendants-appellants.

Shelley & Bethea by J. LaMar Shelley, Mesa, for amicus curiae League of Arizona Cities and Towns.

SUPPLEMENTAL OPINION

WEISBERG, Presiding Judge.

After we filed our original opinion in this case, 150 Ariz.Adv.Rep. 47, 179 Ariz. 5, 875 P.2d 1310 (App. October 26, 1993), Plaintiffs-Appellees petitioned the Arizona Supreme Court to grant review. The supreme court granted review and remanded the matter to this court with directions to reconsider our opinion in light of the recent United States Supreme Court decision in Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994). See Ariz.R.Civ.App.P. 23(i)(2). We now expressly consider whether Dolan has any effect on our prior opinion. 1

I. DOLAN V. CITY OF TIGARD

In Dolan, the United States Supreme Court faced the issue of whether a condition placed on the granting of a redevelopment permit was an unconstitutional taking.

As required by the State of Oregon, the City of Tigard adopted a land management program entitled the Community Development Code (the "CDC"). To minimize flood damage, the CDC required the preservation of greenways within the city's floodplain. For property within this area, the CDC required the city to condition development permits upon a dedication of "sufficient open land" to establish these greenways. To minimize traffic congestion, the CDC also required new developers within a delineated area to dedicate land for pedestrian/bicycle pathways.

Florence Dolan owned a store on property partly within the floodplain. She wanted to enlarge her store and parking lot and applied to the city for a redevelopment permit. Pursuant to the CDC, the city granted the permit on the condition that Dolan dedicate to the city for greenway all of that portion of her land within the floodplain, and an additional portion of land for a pedestrian/bicycle path.

After requesting and being denied a variance, Dolan brought suit against the city, arguing that its conditions were an unconstitutional taking under the Fifth and Fourteenth Amendments. The Oregon state courts upheld the city's conditions, finding that they were "reasonably related" to the city's interests in minimizing flooding and traffic congestion. The United States Supreme Court granted certiorari and reversed.

The Court analyzed the conditions under a two-step approach. First, it considered whether an "essential nexus" existed between the legitimate state interest and the conditions exacted by the city. 512 U.S. at ----, 114 S.Ct. at 2317. The Court had previously developed this step of the analysis in Nollan v. California Coastal Comm'n, 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987). In Dolan, the Court readily found an essential nexus between the city's interests and the conditions. 512 U.S. at ----, 114 S.Ct. at 2318.

Having found an essential nexus, the Court moved beyond Nollan to consider "the required degree of the connection between the exactions and the projected impact of the proposed development." Id. at ----, 114 S.Ct. at 2317. The Court determined that the required degree of connection was "rough proportionality," which is similar to the "reasonable relationship" standard adopted by the majority of state courts. Id. at ----, 114 S.Ct. at 2319. The Court ruled in favor of Dolan because the city had failed to show that its conditions were "roughly proportional" in nature and extent to the burdens imposed by Dolan's proposed development. Id. at ----, 114 S.Ct. at 2321.

II. DEVELOPMENT FEES IMPLICATE THE TAKINGS CLAUSE OF THE U.S. CONSTITUTION

In analyzing the effect of Dolan on this court's opinion, we must first consider whether the fees charged by Scottsdale in this case Development fees, according to Arizona's enabling statute, are fees charged by the municipality to the developer of land "to offset costs to the municipality associated with providing necessary public services to [the] development." Ariz.Rev.Stat.Ann. ("A.R.S.") § 9-463.05 (1990). Development fees are generally considered regulatory fees if they are reasonably related to the needs created by the new development and are used to benefit the land on which they are imposed. On the other hand, they are considered taxes if the fees are not related to the new development and are used to benefit other property. See, e.g., Russ Bldg. Partnership v. City & County of San Francisco, 234 Cal.Rptr. 1, 5-6 (Ct.App.1987); Contractors & Builders Ass'n v. City of Dunedin, 329 So.2d 314, 317-20 (Fla.1976); see also Susan M. Denbo, Development Exactions: A New Way to Fund State and Local Government Infrastructure Improvements and Affordable Housing?, 23 Real Est.L.J. 7, 12 (1994); Brian W. Blaesser & Christine M. Kentopp, Impact Fees: "The Second Generation", 38 Wash.U.J.Urb. & Contemp.L. 55, 64 (1990); Gus Bauman & William H. Ethier, Development Exactions & Impact Fees: A Survey of American Practices, 50 Law & Contemp.Probs. 51, 54 (1987).

                [183 Ariz. 246] even implicate the power of eminent domain. 2  If the fees constitute a land-use regulation, eminent domain is implicated.  If the fees are a tax, however, they are not subject to the Takings Clause. 3
                

In the instant case, the payment of the fee was a condition to the city's issuance of a building permit. The fee charged by Scottsdale was for the express purpose of providing future water to the subject property. Thus, the fee was to be used to benefit the property on which the fee was imposed, rather than for general revenue. Also, the extent of the property's need for future water was directly related to the new development. We therefore conclude that Scottsdale's development fee is a regulatory fee rather than a tax.

We also note that development fees are distinguishable from special assessments which are not subject to a takings analysis. See, White v. Kaibab Road Improvement Dist., 24 Ariz.App. 258, 537 P.2d 986 (1975) ("White I "), disapproved on other grounds, 113 Ariz. 209, 550 P.2d 80 (1976) ("White II "); City of Tucson v. Rickles, 15 Ariz.App. 244, 488 P.2d 180 (1971), vacated on other grounds, 109 Ariz. 82, 505 P.2d 253 (1973). Although both are monetary fees to fund public improvements, and are charged to the benefitted landowners, they differ in several significant respects.

Development fees are imposed by the government upon property-owners who wish to develop their land. Special assessments, however, generally are imposed only after the affected property-owners have petitioned for the creation of an improvement district. See White II, 113 Ariz. at 210, 550 P.2d at 81. The creation of the improvement district is for the express purpose of making the desired improvements. White I, 24 Ariz.App. at 261, 537 P.2d at 989. Given this process, there can be little concern that the government is "forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Dolan, 512 U.S. at ----, 114 S.Ct. at 2316 (quoting Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960)).

Development fee ordinances are also more akin to land-use regulations than are special assessments because the fees are a condition on the ability to develop one's property. In addition, the fees are directly necessitated by the needs created by the new development. By comparison, special assessments are neither conditions on development, nor are they necessarily caused by new development. Thus, development fees, unlike special assessments Moreover, the fact that the Scottsdale ordinance merely requires the payment of a fee does not preclude the application of a takings analysis. Courts have frequently applied a takings analysis to regulations that exact only money. See, e.g., Commercial Builders of N. Cal. v. City of Sacramento, 941 F.2d 872 (9th Cir.1991) (applying a takings analysis to an ordinance conditioning building permits on payment of fee to offset burdens of providing low-income housing for workers at such developments), cert. denied, 504 U.S. 931, 112 S.Ct. 1997, 118 L.Ed.2d 593 (1992); Blue Jeans Equities W. v. City and County of San Francisco, 3 Cal.App.4th 164, 4 Cal.Rptr.2d 114 (1992) (applying a takings analysis to an ordinance conditioning building permit on payment of fee for traffic control programs). Also, the United States Supreme Court's remand of Ehrlich v. City of Culver City, 15 Cal.App.4th 1737, 19 Cal.Rptr.2d 468 (1993), indicates that the Supreme Court would apply a takings analysis to a purely monetary condition. See Ehrlich v. City of Culver City, --- U.S. ----, 114 S.Ct. 2731, 129 L.Ed.2d 854 (1994). In Ehrlich, the developer wished to rezone his property. The city conditioned approval on the payment of a $280,000 "mitigation fee" to compensate for the community's loss of recreational facilities. The appellate court applied a takings analysis but determined that the condition was constitutional under the Takings Clause. The United States...

To continue reading

Request your trial
8 cases
  • Amoco Oil Co. v. Village of Schaumburg, 1-94-3648
    • United States
    • United States Appellate Court of Illinois
    • 29 d5 Dezembro d5 1995
    ...Coastal Landowners' Association v. San Mateo (1995), 38 Cal.App.4th 523, 45 Cal.Rptr.2d 117; Home Builder's Association of Central Arizona v. City of Scottsdale (1995), 183 Ariz. 243, 902 P.2d 1347; and Waters Landing Limited Partnership v. Montgomery County (1994), 337 Md. 15, 650 A.2d 712......
  • Home Builders Assn. of Dayton and the Miami Valley v. City of Beavercreek
    • United States
    • Ohio Court of Appeals
    • 23 d5 Outubro d5 1998
    ... ... the general public. Compare, Home Builders Assn. v. City ... of Scottsdale (1997), 187 Ariz. 479, 930 P.2d 993, 995, ... certiorari denied, ___ U.S. ___, 117 S.Ct ... ...
  • Home Builders Ass'n v. West Des Moines
    • United States
    • Iowa Supreme Court
    • 8 d3 Maio d3 2002
    ...(Fed.Cl.1998); Swisher Int'l, Inc. v. United States, 178 F.Supp.2d 1354, 1362 (Ct.Int'l Trade 2001); Home Builders Ass'n v. City of Scottsdale, 183 Ariz. 243, 902 P.2d 1347, 1350 (1995), rev'd on other grounds, 187 Ariz. 479, 930 P.2d 993 (1997). See generally 71 Am.Jur.2d State and Local T......
  • Home Builders Ass'n of Cent. Arizona v. City of Scottsdale, CV-95-0160-PR
    • United States
    • Arizona Supreme Court
    • 7 d2 Janeiro d2 1997
    ...reaffirmed its initial decision, holding that Dolan did not dictate a different result. Home Builders Ass'n v. City of Scottsdale, 183 Ariz. 243, 902 P.2d 1347 (App.1995) (Home Builders II ). The case is now before us on petition for review. We must determine the validity of the city's deve......
  • Request a trial to view additional results
3 books & journal articles
  • Case List
    • United States
    • Bargaining for Development Case List
    • 19 d6 Julho d6 2003
    ...Ass’n of Cent. Ariz. v. City of Scottsdale , 179 Ariz. 5, 875 P.2d 1310 (1994) Home Builders Ass’n of Cent. Ariz. v. City of Scottsdale , 902 P.2d 1347 (Ariz. Ct. App. 1995) Home Builders Ass’n of Cent. Ariz. v. City of Scottsdale , 187 Ariz. 479, 930 P.2d 993 (1997) 168 CASE LIST Home Buil......
  • Land Development Conditions
    • United States
    • Bargaining for Development Article
    • 19 d6 Julho d6 2003
    ...be applied to reduce succeeding unpaid installments ...orre-funded to the property owner. 361. Id. at 706, 32 ELR at 20422. 362. Id. 363. 902 P.2d 1347 (Ariz. Ct. App. 1995). 364. Id . at 1350. 365. Id. 63 BARGAINING FOR DEVELOPMENT lative, rather than adjudicative, determination, Dolan did......
  • Order for the Courts: Reforming the Nollan/dolan Threshold Inquiry for Exactions
    • United States
    • Seattle University School of Law Seattle University Law Review No. 35-04, June 2012
    • Invalid date
    ...that would offset the burden of new development. Id. at 994-95. 18. See, e.g., Home Builders Ass'n of Cent. Ariz. v. City of Scottsdale, 902 P.2d 1347 (Ariz. Ct. App. 1995) (declining to apply Nollan/Dolan analysis because Dolan involved an adjudicative, rather than legislative, exaction). ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT