Advisory Opinion 226

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Parties: Sean Reddish and Hurricane City

 

Issued:  July 31, 2020

 

 

TOPIC CATEGORY:

 

Exactions on Development

 

 

An exaction on development is lawful insofar as the burden imposed on development is roughly proportionate, or roughly equivalent, to its impact. Where a property abuts two streets as a corner lot, an exaction requiring installation of improvements along both streets according to generally applicable ordinances is roughly equivalent to the property’s impact due to its unique character as a corner lot. Exactions may take several forms and address different aspects of development impact. Where multiple exactions are assessed on a single development, the cumulative effect of the developer’s cost does not amount to a taking so long as each exaction independently satisfies constitutional requirements. A municipality’s development standards may reasonably determine the respective impact and cost of development and may differ from other localities, effectively making development in some areas more expensive than in others. When total development costs become prohibitive to a single developer for a proposed development, it does not automatically amount to a taking insofar as the costs continue to proportionately address impact in the aggregate.

 

DISCLAIMER

The Office of the Property Rights Ombudsman makes every effort to ensure that the legal analysis of each Advisory Opinion is based on a correct application of statutes and cases in existence when the Opinion was prepared.  Over time, however, the analysis of an Advisory Opinion may be altered because of statutory changes or new interpretations issued by appellate courts.  Readers should be advised that Advisory Opinions provide general guidance and information on legal protections afforded to private property, but an Opinion should not be considered legal advice. Specific questions should be directed to an attorney to be analyzed according to current laws.

 

 

Advisory Opinion

 

Advisory Opinion Requested By:                 Sean Reddish

Local Government Entity:                             Hurricane City

Type of Property:                                          Residential

Date of this Advisory Opinion:                      July 31, 2020

Opinion Authored By:                                   Richard B. Plehn, Attorney

…..                                                               Office of the Property Rights Ombudsman

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Issue 

Was an exaction excessive where a developer of a subdivision was required to dedicate land and install right-of-way improvements for two roads abutting a corner lot? Can the cumulative effect of several exactions applicable to a single development amount to an unlawful taking?

 

Summary of Advisory Opinion

An exaction on development is lawful insofar as the burden imposed on development is roughly proportionate, or roughly equivalent, to its impact. Where a property abuts two streets as a corner lot, an exaction requiring installation of improvements along both streets according to generally applicable ordinances is roughly equivalent to the property’s impact due to its unique character as a corner lot. Exactions may take several forms and address different aspects of development impact. Where multiple exactions are assessed on a single development, the cumulative effect of the developer’s cost does not amount to a taking so long as each exaction independently satisfies constitutional requirements. A municipality’s development standards may reasonably determine the respective impact and cost of development and may differ from other localities, effectively making development in some areas more expensive than in others. When total development costs become prohibitive to a single developer for a proposed development, it does not automatically amount to a taking insofar as the costs continue to proportionately address impact in the aggregate.

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Review

A Request for an Advisory Opinion may be filed at any time prior to the rendering of a final decision by a local land use appeal authority under the provisions of Title 13, Chapter 43, Section 205 of the Utah Code. An advisory opinion is meant to provide an early review, before any duty to exhaust administrative remedies, of significant land use questions so that those involved in a land use application or other specific land use disputes can have an independent review of an issue. It is hoped that such a review can help the parties avoid litigation, resolve differences in a fair and neutral forum, and understand the relevant law. The decision is not binding, but, as explained at the end of this opinion, may have some effect on the long-term cost of resolving such issues in the courts.

A Request for an Advisory Opinion was received from Sean Reddish on October 28, 2019. A copy of that request was sent via certified mail to Kaden DeMille, Hurricane City Recorder, 147 North 870 West Hurricane, Utah 84737 on October 31, 2019.

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Evidence

The Ombudsman’s Office reviewed the following relevant documents and information prior to completing this Advisory Opinion:

  1. Request for an Advisory Opinion, submitted by Sean Reddish, received October 28, 2019.
  2. Email from Clark R. Fawcett, Hurricane City Manager, and attached letter from Arthur O. LeBaron, Hurricane City Engineer, received November 18, 2019.
  3. Email from Sean Reddish, received May 19, 2020.
  4. Telephone conversation with Sean Reddish June 16, 2020.
  5. Telephone conversation with Clark Fawcett June 16, 2020.
  6. Email from Arthur LeBaron, received June 17, 2020, together with attachment Figure No. 1 – Horrocks Engineers, City of Hurricane Minor Collector Cross Section.

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Background

Sean Reddish owns five acres of property in Hurricane City, bordered by two existing streets, 650 South to the north, and 920 West to the west. These existing streets are paved, but unimproved as to curb, gutter, planter strip and sidewalk. Mr. Reddish applied to subdivide his five-acre parcel in order to build a personal residence on the southernmost two acres and develop three additional lots for the remaining three acres to the north, with each new parcel facing out to and having access on 920 West. The northern corner lot faces out on 920 West but is bordered to the north by 650 South for that length of the parcel.

Hurricane City Code contains development standards for roads and right-of-way. 650 South and 920 West are both designated as Minor Collector streets consisting of a 60-foot right-of-way divided into designated parts for vehicle travel, shoulder, park strip, and sidewalk. The City conditioned the subdivision approval on an exaction on both streets of mandatory dedication of land to sufficiently widen the half-width abutting his property to comply with city standards, and required installation of curb, gutter, planter strip and sidewalk on his respective half of each street for the length that borders the property. The road improvements included relocating existing electrical services underground for a certain portion along the property frontage. In addition to dedication and required improvements, Mr. Reddish was also required to pay all impact fees applicable to new development. Mr. Reddish disputes the exaction of land and installation of approximately 338’ of curb, gutter, planter strip and sidewalk on 650 South only, which borders the frontage of the northernmost corner lot. Mr. Reddish also feels the cumulative burden of improvements, dedication, and impact fees combined is excessive.

Mr. Reddish submitted a request for an Advisory Opinion to address whether the totality of the City’s requirements amount to an illegal exaction.[1]

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Analysis

I.     Exactions Must Pass the Rough Proportionality Test to be Constitutional

Development exactions are required contributions to a governmental entity imposed as a condition precedent to approving the developer’s project, and may take the form of: (1) mandatory dedication of land for roads, schools or parks, as a condition to plat approval, (2) fees-in-lieu of mandatory dedication, (3) water or sewage connection fees, and (4) impact fees.[2]

Exactions arise from the principle that development causes impacts to a community. Development exactions are legal and appropriate only if they are “roughly proportionate” to the impact the development creates—this principle governing exactions is derived from the U.S. Supreme Court’s landmark decisions in Nollan v. California Coastal Comm’n,[3] and Dolan v. City of Tigard,[4] wherefrom the resulting legal analysis is termed the “rough proportionality test,” that has been codified in Utah law as follows:

A municipality may impose an exaction or exactions on development proposed in a land use application . . ., if:

(a) an essential link exists between a legitimate governmental interest and each exaction; and,

(b) each exaction is roughly proportionate, both in nature and extent, to the impact of the proposed development.[5]

While no precise mathematical calculation is required, a City must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.[6]

In a series of related opinions known as the “BAM” cases dealing with an exaction of land dedication for road expansion, Utah appellate courts have further explained the rough proportionality test as found in Utah code.[7]

The Utah Supreme Court clarified that while the U.S. Supreme Court used the term roughly proportionate, what it actually meant is more closely captured by using the term roughly equivalent.[8] The court explained the nature aspect of the analysis in terms of a solution and problem, in that the impact is the problem, or the burden the community will bear because of the development, and the exaction should address the problem. As to the extent aspect of the analysis, the court determined that the most appropriate measure is cost—specifically, the cost of the exaction and the impact to the developer and municipality, respectively.

If a proposed exaction satisfies this test, it is valid. If the exaction fails the test, it violates protections guaranteed by the Takings Clauses of the Utah and U.S. Constitutions.[9] An exaction is valid and proportionate when it offsets the costs of a development’s impact. An excessive exaction requires a property owner to pay for impacts beyond his own.[10]

Accordingly, the City’s requirements that Mr. Reddish dedicate land for right-of-way, relocate utilities and install curb, gutter, planter strip and sidewalk, and pay impact fees, must all satisfy the rough proportionality test. The proposed exactions must each solve problems the proposed subdivision creates. Moreover, the costs to Mr. Reddish must be proportionate to the impacts the development imposes on the City’s ability to provide services.

II.     Right-of-way Exaction on 650 South

Mr. Reddish’s development is bordered by two existing streets to the west and north, 920 West and 650 South, respectively. Hurricane’s City Code establishes right-of-way standards for roads based on their classification. In furtherance of the City’s General Plan, the 2019 Transportation Master Plan designates both 650 South and 920 West as Minor Collector Streets, consisting of a 60-foot right-of-way divided into designated parts for vehicle travel, shoulder, park strip, and sidewalk.[11]  Currently these roads, although having been paved, do not meet city standards as intended for residential use in that they have not been improved with curb, gutter, and sidewalk.[12] The City states that its ordinances require any proponent of a project under these circumstances to complete the improvements along any street that is to be constructed within, or that fronts the proposed project. The City therefore has required that Mr. Reddish install curb, gutter, and sidewalk on one half of both 920 West and 650 South directly abutting his property, for the length of the property on each street.

Notably, Mr. Reddish does not dispute the exaction as it relates to 920 West, but only on 650 South. Therefore, because the same exaction is not disputed as to 920 West, this office will assume that there is no dispute from Mr. Reddish as to whether there exists an “essential link” between a legitimate government interest and an exaction, in general, to dedicate land and improve curb, gutter, planter strip and curb.[13] Rather, the only dispute is as to whether the exaction on the corner lot for 650 South is roughly proportionate, both in nature and extent, to its impact. Mr. Reddish argues that his cost of being subjected to an exaction for both streets bordering the corner lot is not roughly equivalent to its burden, and therefore unlawful.

A.     The 650 South Exaction Satisfies the Nature Aspect of the Analysis

A court engaging in a rough proportionality analysis must first determine whether the nature of the exaction and impact are related. To determine this relationship, Utah courts have adopted the method of looking at the exaction and impact in terms of a solution and problem, respectively.[14] The impact is the problem, or the burden that the community will bear because of the development. If the exaction addresses the problem, the nature component is satisfied.[15]

The area surrounding Mr. Reddish’s property is planned for medium density residential development in the City’s General Plan, and the City’s transportation plan has therefore designated 650 South as a Minor Collector to serve existing and anticipated development of the larger area. Mr. Reddish’s subdivision introduces new residential use along the portion of 650 South abutting his property, which is paved but not improved to city standards for a Minor Collector road. Therefore, the impact of the development that the community will bear is the cost of improving 650 South to comply with right-of-way standards along the portion of the new development. The exaction of dedicating sufficient right-of-way for 650 South as a Minor Collector and the installation of improvements of curb, gutter, and sidewalk required by city code, including necessary relocation of electrical services, addresses the impact in that it is a solution to the problem caused by development. As such, the nature component of the rough proportionality test is satisfied.

B.    The 650 South Exaction Satisfies the Extent Aspect of the Analysis

The City’s stated basis for imposing upon Mr. Reddish the right-of-way exactions for both streets, including 650 South, is because it is a residential development that fronts both streets. Mr. Reddish does not dispute the appropriateness of the City’s requirement that he install curb, gutter, planter strip, and sidewalk along 920 West, as all the homes in the subdivision face, and have access on, 920 West. In other words, Mr. Reddish views “frontage” as limited to the forward facing, access-bearing side of the property. Mr. Reddish distinguishes 650 South as not being a frontage road to the corner lot as the structure does not face or have access the road.

Mr. Reddish’s definition of “frontage” is overly restrictive. While the name itself could appear misleading, “frontage” is not commonly limited to only the “front” side of a lot that a structure is considered to face, where more than one side abuts a street. Hurricane City Code defines Lot Frontage as “[t]he distance, measured along the front lot line, that a lot adjoins a street.”[16] However, corner lots are defined as “[a] lot abutting two (2) intersecting or intercepting streets . . .”[17] Additionally, lots can have “double frontage” when it abuts two parallel streets.[18] Despite that the structure may have a primary entrance facing only one street, or that the property in its current state only has an existing access on one street,[19] the corner lot does, in fact, have frontage on both 920 West and 650 South as the property abuts both streets.

Corner lots are often subject to ordinances and regulations not applicable to interior lots based on characteristics unique to corner lots. For example, Hurricane City Code subjects corner lots to greater setbacks and other landscaping restrictions to ensure an unobstructed clear-sight triangle.[20] In general, such restrictions uniquely applied to corner lots are lawful because they are generally applicable to all corner lots, relate to characteristics of corner lots that do not apply to other lots, and still allow for beneficial use of the land despite the restrictions.

A development exaction is aimed at offsetting a developer’s own impact so that the burden is not otherwise born by the larger community. Hurricane’s existing regulatory scheme imposes on each lot direct responsibility for the required improvements along their respective frontage. In a perfect application, this ensures that all required right-of-way improvements on all sides are installed by incoming developers in respective shares without burdening citizens at large with project infrastructure costs. However, under Mr. Reddish’s view of road frontage, he would not be responsible for the improvements on 650 South along the portion abutting his property because the property does not face or utilize 650 South for access. In absence of his contribution through exaction, no one else stands in his place as directly responsible for the required improvements along that portion of 650 South.

The Utah Supreme Court has held that the most appropriate measure of extent is cost.[21] However, measuring whether a developer’s cost is roughly equivalent to the development’s impact is done by comparing the developer’s cost to the City’s cost to offset the development’s impact. Although subjecting a corner lot to an exaction for right-of-way improvements for all applicable frontages may result in more improvements, per capita, than a nearby interior lot, this is merely reflective of the lot having more frontage due to its character as a corner lot. Requiring the developer of a corner lot to solely bear the burden of those exactions offsets the impact that would otherwise extend beyond the developer to the community at large if the community needed to make up for improvements on at least one side of all corner lots containing a single access.

Here, it follows that the City’s approach satisfies the extent aspect of the rough proportionality analysis. The approach does not require Mr. Reddish to dedicate or construct improvements that another party should arguably provide. In other words, it only seeks to offset the City’s cost to address the impacts of the proposed development. Consequently, the requirement to dedicate and install improvements on 650 West where it abuts the development is valid and appropriate in this case.

III.     Accumulation of Exactions

Mr. Reddish’s Request for Advisory Opinion, as submitted, was limited to the issue of whether the 650 South exactions were proper as to the corner lot.[22] However, in subsequent communications with the parties, Mr. Reddish made additional mention of also having to pay impact fees on top of dedicating property for right-of-way, installing required right-of-way improvements, and relocating/burying electrical services due to right-of-way construction.

An impact fee is a species of  development exaction, consisting of a one-time charge imposed by a local government to mitigate the impact on local infrastructure caused by new development.[23] Growth in the form of new homes and businesses requires expansion or enlargement of public facilities to maintain the same level and quality of public services for all residents of a community, and impact fees help fund expansion of public facilities necessary to accommodate new growth.[24] As a form of exaction, impact fees must also comply with the rough proportionality test, in addition to specific requirements imposed by the Utah Impact Fees Act.[25]

The issue of whether the impact fee amounts assessed to Mr. Reddish’s property, independently, amount to a proper exaction is not adequately briefed by either party, as no detail has been provided as to what fees were assessed or for which public facilities. Rather, Mr. Reddish’s purpose in mentioning impact fees appears to be to assert that the cumulative effect of paying several forms of exactions is overly burdensome. Therefore, the Office will assume that the amounts of the impact fees, in particular, are not disputed, but that we are only asked to address whether a developer can be subjected to “too many” exactions on a single development.

As analyzed above, a single exaction complies with the rough proportionality test when it is found that the cost to the developer is roughly equivalent, both in nature and extent, to its impact. If that is the case for each single exaction, it will remain true for multiple exactions. This can be illustrated by a balance scale. If one side of the scale represents the impact of development on the community, and the other side represents the cost to the developer, then a roughly proportionate exaction is represented by the two sides of the scales being balanced. If additional equivalent weight is added to each side of a balanced scale, representing another roughly proportionate exaction, the scales continue to remain balanced, no matter how much weight is added to the scales so long as the weight to both sides remains equivalent. Where multiple exactions are assessed on a single development, the accumulation does not amount to a taking so long as each independently satisfies the rough proportionality test, because each exaction addresses an equivalent impact on the community.

“Real estate development is a speculative enterprise,”[26] being that an owner of property holds it subject to zoning ordinances enacted pursuant to the state’s police power.[27] Utah municipalities enjoy a broad delegation of that police power, and enact development standards aimed to further the community’s vision of the general welfare by providing for health and safety, promoting posterity, improving comfort, convenience, and aesthetics, or protecting the tax base and property values.[28] A municipality’s development standards establish a certain level of service that determines the respective impact and cost of new development. As standards differ among localities, development is inevitably more expensive in some areas as opposed to others. Constitutional exactions, even in aggregate, are “part of the price of doing business in real estate development, and developers assume the risk that they might not be recouped when individual lots are sold.”[29]

Total development costs, though pricy or even prohibitive to an individual developer for intended development does not amount to a taking so long as each exaction remains constitutionally proportionate to the respective impact it addresses.

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Conclusion

Hurricane City’s exactions for right-of-way improvements and dedication imposed as a condition of subdivision approval were constitutional as applied to the impact of Mr. Reddish’s proposed development. The fact that Mr. Reddish is subject to cumulative exactions in the form of impact fees in addition to right-of-way exactions does not, of itself, amount to an illegal taking of property insofar as each form of exaction is lawful.  

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Jordan S. Cullimore, Lead Attorney

Office of the Property Rights Ombudsman

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NOTE:

This is an advisory opinion as defined in § 13-43-205 of the Utah Code.  It does not constitute legal advice, and is not to be construed as reflecting the opinions or policy of the State of Utah or the Department of Commerce.  The opinions expressed are arrived at based on a summary review of the factual situation involved in this specific matter, and may or may not reflect the opinion that might be expressed in another matter where the facts and circumstances are different or where the relevant law may have changed. 

While the author is an attorney and has prepared this opinion in light of his understanding of the relevant law, he does not represent anyone involved in this matter.  Anyone with an interest in these issues who must protect that interest should seek the advice of his or her own legal counsel and not rely on this document as a definitive statement of how to protect or advance his interest. 

An advisory opinion issued by the Office of the Property Rights Ombudsman is not binding on any party to a dispute involving land use law.  If the same issue that is the subject of an advisory opinion is listed as a cause of action in litigation, and that cause of action is litigated on the same facts and circumstances and is resolved consistent with the advisory opinion, the substantially prevailing party on that cause of action may collect reasonable attorney fees and court costs pertaining to the development of that cause of action from the date of the delivery of the advisory opinion to the date of the court’s resolution.

Evidence of a review by the Office of the Property Rights Ombudsman and the opinions, writings, findings, and determinations of the Office of the Property Rights Ombudsman are not admissible as evidence in a judicial action, except in small claims court, a judicial review of arbitration, or in determining costs and legal fees as explained above.

The Advisory Opinion process is an alternative dispute resolution process.  Advisory Opinions are intended to assist parties to resolve disputes and avoid litigation.  All of the statutory procedures in place for Advisory Opinions, as well as the internal policies of the Office of the Property Rights Ombudsman, are designed to maximize the opportunity to resolve disputes in a friendly and mutually beneficial manner.  The Advisory Opinion attorney fees provisions, found in Utah Code § 13-43-206, are also designed to encourage dispute resolution.  By statute they are awarded in very narrow circumstances, and even if those circumstances are met, the judge maintains discretion regarding whether to award them.

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Endnotes

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[1] Mr. Reddish’s request, as originally submitted, additionally asked that the opinion address an exaction regarding the water main. That issue, however, was resolved by the parties prior to the issuance of this opinion, and that matter will not be addressed in this opinion.

[2] B.A.M. Dev., L.L.C. v. Salt Lake Cty. (BAM I), 2006 UT 2, ¶ 34.

[3] 483 U.S. 825 (1987).

[4] 512 U.S 374 (1994).

[5] Utah Code Ann. § 10-9a-508(1).

[6] BAM I, 2006 UT 2, ¶ 39. (citing Dolan, 512 U.S. at 391-92).

[7] See B.A.M. Dev, L.L.C. v. Salt Lake Cnty. (BAM I), 2006 UT 2; B.A.M. Dev., L.L.C. v. Salt Lake Cnty. (BAM II), 2008 UT 74; B.A.M. Dev., L.L.C. v. Salt Lake Cnty. (BAM III), 2012 UT 26 (reh’g denied, B.A.M. v. Salt Lake Cnty., 2012 Utah LEXIS 111). See also B.A.M. Dev., L.L.C. v. Salt Lake Cty., 2005 UT 89 (initial Utah Supreme Court ruling holding that the Nolan/Dolan rough proportionality test applied to legislative, ordinance-based development exactions).

[8] BAM II, 2008 UT 74, at ¶10.

[9] Call v. West Jordan, 614 P.2d 1257, 1259 (Utah 1980).

[10] Banberry Development Corporation v. South Jordan City, 631 P.2d 899, 903 (Utah 1981).

[11] Hurricane City Code § 10-2-3; City of Hurricane, 2019 Transportation Master Plan (2019), http://cityofhurricane.com/uploads/fb/gis/HC_MPStreets_2020Feb.pdf; E-mail attachment from Arthur LeBaron, Hurricane City Engineer (June 17, 2020).

[12] See Hurricane City Code § 10-32-5 (“Required Landscaping”)

[13] While this opinion forgoes an in-depth analysis, we nevertheless conclude and note here that such an essential link likely exists in that the City’s legitimate government interest is safe and efficient traffic flow for both vehicles and pedestrians, and that establishing public thoroughfares comprised of both a paved road for vehicular travel and sidewalk for pedestrian travel, delineated by a curb/gutter and planter strip buffer to safely separate people from vehicles, accomplishes this objective. See Carrier v. Lindquist, 2001 UT 105, ¶ 18, 37 P.3d 1112, 1117 (“In order for a government to be effective, it needs the power to establish or relocate public throughways . . . for the convenience and safety of the general public.”) See also Utah Code Ann. § 10-8-8.

[14] BAM II, 2008 UT 74 at ¶10.

[15] Id.

[16] Hurricane City Code § 10-3-4.

[17] Id.

[18] Id.

[19] It is not uncommon for corner lots to have an additional access. Despite the current status of the property, arguably, nothing prohibits the owner from later cutting curb and installing an access onto 650 South.

[20] See, e.g. Hurricane City Code § 10-37-9(E)(2).

[21] BAM II, 2008 UT 74, ¶ 11.

[22] See note 1, supra.

[23] See, Salt Lake Cty. v. Bd. of Educ. of Granite Sch. Dist., 808 P.2d 1056, 1058 (Utah 1991)

[24] Id., 808 P.2d 1056, 1058-59.

[25] Utah Code Ann. § 11-36a-101 et seq..

[26] Bradshaw v. Wilkinson Water Co., 2004 UT 38, ¶ 17.

[27] W. Land Equities v. Logan, 617 P.2d 388, 390 (Utah 1980).

[28] Utah Code Ann. § 10-9a-102.

[29] Alpine Homes, Inc. v. City of W. Jordan, 2017 UT 45, ¶ 37.