The Nollan-Dolan Test: A Guide to Land Use Exactions & Constitutional Limits

Table of Contents#

1. What Are Land Use Exactions?
2. Origins of the Nollan-Dolan Test 2.1 Nollan v. California Coastal Commission (1987) 2.2 Dolan v. City of Tigard (1994)
3. Breaking Down the Two Prongs of the Test 3.1 Prong 1: Essential Nexus (Nollan Requirement) 3.2 Prong 2: Rough Proportionality (Dolan Requirement)
4. Real-World Applications of the Test
5. Criticisms and Evolving Interpretations
6. Key Takeaways for Stakeholders
7. References

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1. What Are Land Use Exactions?#

Land use exactions are conditions local governments attach to development permits to offset the harms caused by new construction. Common examples include:

• Land dedications: Requiring a developer to set aside part of their property for public use (e.g., a park, sidewalk, or flood control easement).
• Infrastructure contributions: Mandating the construction of roads, sewer lines, or bike paths to support increased traffic or population.
• Impact fees: Charging developers monetary fees to fund public services (e.g., schools, fire departments) strained by the new development.

While exactions are a legitimate tool for balancing private development with public good, they must comply with the Fifth Amendment, which prohibits the government from taking private property for public use without just compensation. The Nollan-Dolan Test sets the constitutional standard for when an exaction crosses into an unlawful taking.

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2. Origins of the Nollan-Dolan Test#

The test emerged from two consecutive Supreme Court cases that clarified the limits of governmental authority over land use:

2.1 Nollan v. California Coastal Commission (1987)#

Facts: The Nollans, a California family, wanted to rebuild their small beachfront home into a larger 1,800-square-foot structure. The California Coastal Commission approved the permit but required the Nollans to grant a permanent lateral easement across their property, allowing public access to the beach. The Commission argued the easement would offset the loss of public ocean views caused by the larger home.

Ruling: The Supreme Court struck down the easement, finding no logical connection between the exaction and the supposed harm. The Court held that for an exaction to be constitutional, there must be an essential nexus between the condition and the government’s stated purpose. In this case, public beach access did not restore the blocked ocean views—so the easement was an unlawful taking of private property.

2.2 Dolan v. City of Tigard (1994)#

Facts: Florence Dolan owned a hardware store in Tigard, Oregon, and wanted to expand her store and add parking. The city approved the permit but required two conditions:

1. Dedicate 7,000 square feet of her land for a flood control easement to mitigate increased runoff from the expanded parking lot.
2. Set aside a 15-foot-wide strip for a pedestrian/bike path to offset increased traffic from the larger store.

Ruling: The Supreme Court ruled against the city, expanding on the Nollan decision. While the city showed a nexus between the exactions and the development’s impacts (flooding and traffic), it failed to prove that the exactions were roughly proportional to the harm. The Court introduced the second prong of the test: governments must demonstrate a reasonable relationship between the magnitude of the exaction and the severity of the development’s impact.

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3. Breaking Down the Two Prongs of the Test#

The Nollan-Dolan Test requires local governments to satisfy two distinct prongs to justify a land use exaction:

3.1 Prong 1: Essential Nexus (Nollan Requirement)#

The exaction must directly address a legitimate government interest tied to the development’s specific impacts. In other words, the condition must solve or mitigate a problem caused by the proposed development—not be a pretext for acquiring property or funds unrelated to the project.

Example: If a developer plans to build a 200-unit apartment complex that will increase local traffic, requiring them to widen a nearby road has a clear nexus. But requiring them to fund a downtown park (unrelated to traffic) would fail this prong.

3.2 Prong 2: Rough Proportionality (Dolan Requirement)#

The burden imposed on the property owner must be roughly proportional to the scale of the development’s impact. This does not require exact mathematical parity, but the government must provide evidence linking the size or cost of the exaction to the harm it aims to mitigate.

Example: If a subdivision will increase local school enrollment by 10%, requiring the developer to fund 10% of a new school addition is likely proportional. Demanding that the developer fund an entire new school would not be.

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4. Real-World Applications of the Test#

The Nollan-Dolan Test has been applied in thousands of cases across the U.S. Here are two notable examples:

Case 1: Affordable Housing Exactions#

A city requires a developer to set aside 10% of units in a new apartment complex as affordable housing. To pass the test, the city must:

• Show a nexus: The development will increase local population, leading to higher demand for affordable housing (a legitimate government interest).
• Prove proportionality: The 10% requirement matches the projected increase in demand for low-income housing caused by the development.

Case 2: Green Infrastructure Requirements#

A city requires a commercial developer to install rain gardens on their property to reduce stormwater runoff. The city must:

• Demonstrate nexus: The developer’s parking lot will increase runoff, which harms local water quality.
• Show proportionality: The size of the rain gardens is sufficient to capture the additional runoff generated by the new construction.

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5. Criticisms and Evolving Interpretations#

While the Nollan-Dolan Test is a cornerstone of land use law, it has faced criticism and evolved over time:

Criticisms#

• Vagueness: The "rough proportionality" standard is subjective, leading to inconsistent rulings across courts. Some argue it creates uncertainty for both developers and local governments.
• Barrier to Public Policy: Critics claim the test makes it harder for cities to address systemic issues like climate change or housing inequality, as these goals may not have a direct, proportional link to individual development impacts.

Evolving Interpretations#

In Koontz v. St. Johns River Water Management District (2013), the Supreme Court extended the test to monetary exactions and permit denials. Previously, the test only applied to permit approvals with conditions. Now, if a government denies a permit unless an owner agrees to pay a fee or donate land, the test still applies.

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6. Key Takeaways for Stakeholders#

• Property Owners & Developers: If faced with an exaction, ask the government to provide written evidence linking the condition to your development’s specific impacts. If they cannot, you may have grounds to challenge the exaction in court.
• Local Governments: Document the nexus and proportionality of all exactions. Use data (e.g., traffic studies, flood risk assessments) to justify conditions, and avoid using exactions as a way to raise funds or acquire land unrelated to the development’s impacts.
• Legal Professionals: Stay updated on evolving court interpretations, especially regarding monetary exactions and climate-related regulations.

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7. References#

1. Nollan v. California Coastal Commission, 483 U.S. 825 (1987).
2. Dolan v. City of Tigard, 512 U.S. 374 (1994).
3. Koontz v. St. Johns River Water Management District, 570 U.S. 595 (2013).
4. Cornell Law School Legal Information Institute. "Takings Clause." https://www.law.cornell.edu/wex/takings_clause
5. Urban Land Institute. "Understanding Land Use Exactions." https://www.uli.org/knowledge/understanding-land-use-exactions