The Evolution of the "Essential Nexus": How State and Federal Courts Have Applied Nollan and Dolan and Where They Should Go from Here

I. Introduction In Nollan v. California Coastal Commission1 andDolan v. City of Tigard,2 the Supreme Court imposed federal constitutional limits on governments that attempt to exact property from landowners in return for development approval.3 In Nollan, the Court ruled that these exactions violate the Takings Clause of the Fifth Amendment unless there is an "essential nexus" between the required concessions and the public impact of the proposed development.4 The Court held that the California Coastal Commission violated the new nexus standard when it demanded that the Nollans give up a lateral beachfront easement in exchange for a building permit.5 In Dolan, the Court added to the nexus test, declaring that an exaction of property must be "roughly proportional" in nature and extent to the impact of the proposed land development.6 The Court again found a taking when a landowner was required to give up an easement in land in exchange for a development permit.7 Although there always has been some disagreement about the crux of these decisions - whether it was the fact that government engaged in a physical invasion of land,8 the potential abuse of government permitting power,9 or a simple desire on the part of the Court to elevate property rights in the constitutional hierarchy10 - the cases at least seemed to call for increased judicial scrutiny of land use conditions.11 Yet, while some post-Dolan federal and state cases indeed reflect a more skeptical stance toward the permitting process,12 many others have discovered exceptions to the essential nexus rule13 that preclude its application to many, if not most, of the exactions commonly imposed by government. In particular, there is great confusion over the applicability of the essential nexus to exactions that amount to a demand for money14 and to exactions that originate from a legislative act.15 Many courts have concluded that both types of land use conditions fall outside the scope of Nollan and Dolan. This Article contends that courts misread Nollan and Dolan and undermine the purposes of the Takings Clause when they hold that the essential nexus does not apply to monetary or legislative exactions. Part II briefly reviews Nollan and Dolan and summarizes the rules that flow from each of those decisions. Part III surveys post-Dolan lower court decisions dealing with monetary exactions and explores the judicial debate over relevance of the source of the exaction. Part IV argues that the purposes underlying Nollan and Dolan and the Takings Clause compel application of the essential nexus to both monetary and legislative exactions. Finally, Part V concludes that courts should apply the essential nexus test equally to all land use conditions, not only because the thrust of the cases requires this application, but also because the most narrow holdings of Nollan and Dolan are rendered meaningless without an integrated and consistent takings doctrine in the exaction context. II. A Brief Review of Nollan and Dolan Nollan burst onto the scene in 1987 as part of a "trilogy" of regulatory takings cases decided that year.16 The case had its genesis, however, in a land use process that dated to the 1970s.17 Since that time, the California Coastal Commission required coastal landowners to dedicate easements across their property when seeking permission to improve their land. …