Thomas Bennett Real Estate Lawyer Boston MA

Wednesday, June 27, 2012

Zoning and the Concept of Linkage

Thomas V. Bennett

Zoning, in theory, is a simple process. Basically it provides that in one area of town there will be homes and in another area there will be industry and in the middle somewhere there will be retail stores.
Real estate taxation is again, in theory, also simple. The concept is that property owners will pay money in the form of taxes for services provided in the community.
In recent years, however, there has been an increasing trade off between granting zoning concessions and taking payments either by way of fees or land use grants to the town for those concessions. The concept of "linkage" payments in the City of Boston is a classic example of how a municipality will grant a developer the permit to overbuild a site for a payoff for building low income housing.
If a building inspector took a bribe to permit a developer to violate the zoning bylaws, the building inspector would go to jail. However, if the community takes the bribe that apparently is okay. The result of that kind of thinking is that a zoning system becomes corrupted.
The Supreme Court of the United States recently had occasion to analyze that kind of municipal behavior in the case of Dolan v. City of Tigard, 512 U.S., 114 S. Ct. 2309 (1994). The owner of a city lot in Oregon on which she operated a retail store applied to the city for a building permit for a bigger store, a paved and expanded parking area and an additional structure for complementary businesses. The city's planning commission granted the application subject to the conditions that the owner dedicate to the city: (1) as a greenway, a portion of a lot within the 100-year flood plan of a creek which flowed through one corner and along one boundary of the lot; (2) a pedestrian/bicycle pathway and (3) an additional 15-foot strip of land adjacent to the flood plain.
The owner claimed the dedication requirements were not related to the proposed development and, therefore, constituted an uncompensated taking of property in violation of the takings clause of the Federal Constitution's Fifth Amendment. The Oregon Supreme Court expressed the view that the permit conditions both (1) had an essential nexus to the development of the proposed site and (2) were reasonably related to the impact of the expansion of the owner's business which, based upon prior Supreme Court cases, would make the action by the municipality lawful.
The United States Supreme Court, in reviewing the law in this area, held that the Government may not require a person to give up a constitutional right--here the right to receive just compensation when the property is taken for public use--in exchange for a discretionary benefit conferred by the Government where the property sought has little or no relationship to the benefit. The Court indicated that in evaluating a linkage arrangement, it must first be determined whether or not an "essential nexus" exists between the "legitimate state interest" and the permit condition exacted by the city.
The second part of the analysis determines whether or not the degree of exactions demanded by the city's permit conditions bears a required relationship to the likely impact of the petitioner's proposed development. The Court indicated that such an analysis requires a determination as to whether or not there is a reasonable relationship between what the city requires and what the petitioner is to obtain. The Court found that the term "rough proportionality" best encapsulates the requirements of the Fifth Amendment. It held that no precise mathematical calculation as required, but the 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.
The Court found here that the city was overreaching in that the city not only wanted the petitioner not to build in the flood plain, but also wanted petitioner's property along the creek for its greenway system. The Court found significant that as a public greenway, the owner of the property lost her ability to exclude other people from it. That was overreaching. The Court found that to exclude others is "one of the most essential sticks in the bundle of rights that are commonly characterized as property." The Court concluded that the findings that the city relied on did not show a reasonable relationship between the flood plain easement and the petitioner's proposed new building. The Court indicated that dedications of streets, sidewalks, and other public ways are generally reasonable exactions to avoid excessive congestion from a proposed property use but that on the record before the Court the city had not met its burden in demonstrating that the additional number of vehicles and bicycle trips generated from the petitioner's development reasonably related to the city's requirement for the dedication of a pedestrian/bicycle pathway easement.
The interesting thing about the case is that the Court held that the city had the burden of justifying the exaction for the zoning relief granted to the petitioner. As a result of this case, cities and towns should be less aggressive in seeking exactions amounting to bribes and as a result the integrity of the zoning system of the cities and towns will be far less endangered.

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