An Analysis of Affordable/Work-Force Housing Initiatives and Their Legality in the State of Florida, Part I
Despite the nationwide slowdown in the housing market and the 2007 property tax package adopted by the Florida Legislature, many communities in Florida are still struggling to foster the development of affordable housing. In some areas, housing prices have become so high that many local governments have changed the vernacular from striving to provide “affordable housing” to providing “work-force housing.”1 The difference in terms reflects a change in priorities from assisting the poor to ensuring that low- to middle-income workers ( e.g. , police officers, teachers, paramedics) are able to live in the same communities that they serve.
There are a host of reasons that could be cited for the current disparity between average housing prices and average household incomes. Culprits for the so-called “affordability gap” include high land costs, exclusionary design and zoning regulations, high development and construction costs, lack of buildable land, tourism, and government impact fees. While a complete discussion of these factors and their effects on the housing market is beyond the scope of this article, the authors concede that a range of initiatives to encourage both affordable and workforce housing is necessary. Nevertheless, despite the panoply of reasons for the affordable housing dilemma, many local governments have limited their responses to the imposition of mandatory affordable housing requirements as a condition of granting development approvals. Developers are often forced either to pay into an affordable housing fund or set aside a certain number of newly constructed dwelling units to be utilized as affordable housing. These mandatory measures — generally referred to as “inclusionary zoning” — have significant legal constraints not often considered at the time they are adopted. In this article, the authors will provide an analysis of the current state of Florida and federal law regarding impact fees and development exactions as they relate to mandatory inclusionary zoning initiatives.
Planning and Zoning as a Way to Encourage Affordable Housing
Government interest in affordable housing is not a new phenomenon. Beginning with the United States Housing Act of 1937 and continuing today with programs such as the Low-Income Housing Tax Credit, governments at all levels have sponsored a variety of programs designed to either increase the supply of affordable housing units or assist individuals in locating and meeting the demand of paying for suitable housing they could not otherwise afford. Over the same duration, however, local governments have established and enforced zoning policies and land use regulations to effectively prevent the construction of affordable housing. Referred to as “exclusionary zoning,” these development regulations include mechanisms that often limit residential development to single-family homes at low overall residential densities with little to no opportunity for the development of a variety of housing types that are affordable to low- to middle-income residents. These local regulatory regimes have “work[ed] indirectly by shaping local housing markets, encouraging or prohibiting the construction of certain types of housing, and thereby conditioning the tenure (rent versus own) and price of housing.”2
In 1975, the New Jersey Supreme Court set out to reverse the exclusionary aspects of local land use controls by requiring local governments in that state to provide meaningful opportunities for affordable housing through their zoning regulations. In Southern Burlington County NAACP v. Township of Mt. Laurel, 336 A.2d 713 (N.J. 1975) (Mt. Laurel I), the New Jersey Supreme Court held that:
[T]he presumptive obligation arises for each municipality affirmatively to plan and provide, by its land use regulations, the reasonable opportunity for an appropriate variety and choice of housing, including, of course, low and moderate cost housing, to meet the needs, desires, and resources of all categories of people who may desire to live within its boundaries. 3
In the wake of the Mt. Laurel decision, the New Jersey Legislature enacted the state’s Fair Housing Act, which codified the requirement that affordable housing must be considered and ensured in the context of local land development regulations.
comparison, the Florida Legislature has enacted the Growth Management Act, which is codified in F.S. Ch. 163, Part II. The cornerstone of the Growth Management Act is the requirement that Florida counties and municipalities must adopt comprehensive plans that operate as a blueprint for future growth in the community. These comprehensive plans are required to take into account housing supply and affordability. Moreover, the Growth Management Act further requires that local government land development regulations must be consistent with and implement the adopted comprehensive plan.
Despite its laudable intentions, the authors submit that comprehensive planning has resulted in more aspirational goal-setting as opposed to realistic planning. Specifically, the goals, policies, and objectives of local plans have often gone unrealized or been less than fully implemented. The classic example of this paradigm is the community that expresses a desire for affordable housing; establishes maximum residential densities in the comprehensive plan consistent with achieving the goal; but then promulgates development regulations that cap permissible development at a density far less than the density envisioned by the comprehensive plan.
The authors also recognize that the restrictive nature of land development regulations is not the sole cause of the affordable housing crisis. Opponents to intensive residential development could make a persuasive argument that unbridled residential development could result in land speculation, over-inflated pricing, and give rise to a luxury housing market intended to capitalize on residents who live in Florida on a seasonal basis. There are simply no guarantees that merely opening the floodgates to more residential development would necessarily result in more affordable housing for the community. Look no further than Florida’s current housing market as proof: a market with an overabundance of housing units, but one in which the affordability problem persists nonetheless.
• Heightened Sensitivity to the Regulation of Identity of Users Rather Than the Physical Attributes of the Development
The failure of effective land use planning has compelled some local governments to incorporate inclusionary zoning measures in their land development regulations.4 Other local governments have opted to wait for the dust to settle on at least one ongoing challenge against the City of Tallahassee’s recently adopted inclusionary zoning ordinance. Whether a local government can require developers to build a certain number of units, or pay a fee for affordable housing through inclusionary zoning, depends on whether the state delegated such authority in an enabling act or in other legislative measures.
Historically, courts have examined whether local government authority to review development proposals is confined to a review of the geometric or physical elements of a development proposal (e.g., the type of land use, lot size, setbacks, building height, floor area ratio) and not the economic characteristics of the prospective owners or users of the development. For example, in Fox v. The Town of Bay Harbor Islands, 450 So. 2d 559 (Fla. 3d DCA 1984), the Third District Court of Appeal held that an ordinance requiring the bottom floor of an apartment building to be utilized solely by a building superintendent was arbitrary and invalid. Writing for the court, Judge Pierson explained the court’s heightened sensitivity to land development regulations geared toward the identity of the user rather than the physical characteristics or actual use of the structure:
The generally accepted justifications for a reasonable setback requirement are that it secures adequate air and light, promotes safety from fire and other dangers, prevents overcrowding of land…and enhances aesthetic values…. Particularly pertinent here is the principle that zoning ordinances are much less suspect when they focus on the use than when they command inquiry into who are the users. Consistent with that principle, courts have struck down ordinances which limited the occupancy of a dwelling unit to a narrowly defined family on the ground, among others, that such ordinances have, at most, a tenuous relation to the city’s legitimate goal of preventing overcrowding, defraying traffic problems, and avoiding an overload in the school system…. It is clear to us that in the ordinance under consideration the identity of the person who occupies the ground floor apartment has not the slightest bearing upon the health, safety, morals or welfare of the public at large….5
• State Policy on Authorization of Inclusionary Zoning
Legislative authorization for inclusionary zoning measures differs from state to state.6 In Florida, the state legislature has authorized cities and counties to adopt inclusionary zoning measures in their land development codes. In 2001, the Florida Legislature enacted legislation stating that municipalities and counties “may adopt and maintain in effect any law, ordinance, rule, or other measure that is adopted for the purpose of increasing the supply of affordable housing using land use mechanisms such as inclusionary housing ordinances.”7
Under the foregoing legislative framework, local governments in Florida may examine a number of affordable housing strategies.8 As suggested by the legislature, a local government may attempt to establish an inclusionary zoning program. The local government must decide, however, whether the program should be made voluntary or mandatory.
Under a voluntary program, a local government would encourage affordable housing by offering various incentives to the developer in exchange for either providing affordable housing as part of the new development or paying a fee in lieu of providing any inclusionary units. Incentives could include any combination of density bonuses, impact fee waivers, expedited permitting, or more flexible development standards (e.g., less strenuous setback requirements).
Under a more aggressive mandatory program, local governments would require new development either to set aside a specified number of residential units to be sold as affordable housing units, or pay a fee in lieu of providing units. Mandatory programs sometimes provide a density bonus to the developer, and, in some instances, the developer may be allowed to provide offsite inclusionary units. A local government could also decide simply to impose mandatory linkage fees on all new development instead of allowing the option to provide inclusionary units and then use the revenues raised to construct affordable units on its own. In any event, a mandatory program leaves the developer with no choice as to whether an affordable housing element will be part of the project.
The common theme with either strategy is that each one is designed to provide affordable housing with limited governmental resources, primarily because the cost burden is borne by the developer, and ultimately passed on to the buyers of the units sold at market rate.9 The task for the local government is to ensure that the chosen strategy is lawfully implemented. Therefore, local governments must understand the nature of that task in order to determine which strategy to pursue.
The Scope of Local Government Authority to Impose Mandatory Inclusionary Zoning Measures
No Florida court has squarely addressed the issue of how local governments can lawfully increase the supply of affordable units and bridge the “affordability gap” through land use controls. Florida courts have shown sensitivity, however, to developers when local governments have attempted to arbitrarily hoist the responsibility of providing affordable housing on individual developers. In the often-quoted case of Debes v. City of Key West, 690 So. 2d 700 (Fla. 3d DCA 1997), Judge Schwartz of the Third District Court of Appeal stated:
The claim that the city’s action may be justified as promoting the creation of adequate housing is, if anything, even more obviously deficient. While this aim may represent a desirable public policy — which might support, for example, the condemnation of property for that use… it emphatically may not be promoted on the back of a private landowner by depriving him of the constitutionally protected use of his property.10
The authors note that Debes involved a challenge to the City of Key West’s decision to deny an application to rezone a parcel of property from residential to commercial. The city, in pertinent part, attempted to justify its denial on the basis of preserving affordable housing in the city without providing any nexus between the denial and the need for affordable housing.11 Further, Debes did not involve an inclusionary zoning ordinance. Nevertheless, the court’s pronouncements in Debes, coupled with numerous Florida and federal cases pertaining to the law of exactions and impact fees, provide a compelling indication that inclusionary zoning ordinances requiring mandatory set-asides or fees in lieu thereof will be highly problematic and subject to considerable judicial scrutiny.
• Inclusionary Zoning Under a Taking Analysis
Since its landmark decision in Village of Euclid v. Ambler Realty, Co., 272 U.S. 365 (1926), the U. S. Supreme Court has repeatedly held that state and local governments have the authority to adopt land use regulations pursuant to the police power. The U.S. Supreme Court has also indicated, however, that there are instances in which land use regulations may violate the Takings Clause of the Fifth Amendment of the U.S. Constitution.
The U.S. Supreme Court has identified five forms of governmental action that may be unconstitutional under the Takings Clause of the Fifth Amendment. These are 1) direct governmental seizures of private property; 2) permanent physical invasions of private property as described in Loretto v. Teleprompter Manhattan CATV Corporation, 458 U.S. 419 (1982); 3) regulations that completely deprive a private landowner of any economic value in property, like the regulation at issue in Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992); 4) regulations that fail to satisfy the factors set forth in Penn Central Transportation Company v. New York City, 438 U.S. 104 (1978); and 5) takings that result from development exactions imposed on landowners as a condition of development approvals, such as those described in Nollan v. California Coastal Commission, 483 U.S. 825, 834 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994).12 The first two categories are considered takings per se and require just compensation to the landowner “without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner.”13 The third and fourth categories are generally referred to as “regulatory takings,” and they occur when the government over-regulates or limits the use of private property while not physically intruding upon it.14 The fifth category is the most amorphous in that development exactions “share certain features of each form of taking [per se and regulatory], but like any offspring, struggle to fashion their own identity.”15
Development exactions in the form of land dedications “resemble physical takings in the sense that they typically require the permanent surrender of private property for public use.”16 On the other hand, mandatory fees in lieu of dedications, connections charges, and impact fees are more closely related to regulatory takings.17 Of course, virtually all inclusionary zoning ordinances incorporate both mandatory set-asides and fees-in-lieu thereof. Therefore, the authors submit that inclusionary zoning ordinances properly fall within the development exactions category and are subject to the Nollan/Dolan analysis.
• The Nollan/Dolan Analysis
In Nollan, the U.S. Supreme Court articulated a “means-ends” standard for reviewing land development exactions under the Takings Clause of the Fifth Amendment of the U. S. Constitution. The property owners in Nollan sought a permit to replace their small beachfront bungalow with a new, larger home.18 The California Coastal Commission agreed to grant the building permit, but only if the owners dedicated an easement on the beach that traversed their property. The easement would have been located between the high water line and a seawall that ran along the rear property line. The commission justified the exaction on the basis that the new home would block public view of the beach and further contribute to a “psychological barrier” to the public beach when placed next to other homes along the shore.19
The U.S. Supreme Court began its analysis by establishing that an unconstitutional taking of property would have occurred if the commission had just outright demanded an uncompensated easement along the beach. The issue, however, was whether the commission could constitutionally demand that same uncompensated easement as a condition of approval for a development permit. In that regard, the Supreme Court reiterated the concept that “a land use regulation does not effect a taking if it substantially advances a legitimate state interest and does not deny an owner economically viable use of this land.”20
In other words, a land use restriction must, at the very least, substantially advance a legitimate state interest.21 Then, without deciding whether public views and minimizing psychological barriers to the beach were substantial governmental purposes, the U.S. Supreme Court found that the required easement did nothing to advance those objectives.22 failing to advance a legitimate state interest, the uncompensated exaction was deemed unconstitutional.
The commission argued that the easement would have served the public interest because it was part of a “comprehensive program” to provide continuous public access along the beach. In response, the U.S. Supreme Court said it:
may well be right that [the comprehensive program] is a good idea, but that does not establish that the Nollans alone can be compelled to contribute to its realization. Rather, California is free to advance its “comprehensive program,” if it wishes, by using its power of eminent domain for this “public purpose”; but if it wants an easement across the Nollans’ property, it must pay for it.23
Seven years later, the U.S. Supreme Court explained that the permit conditions in Nollan may have been valid if the commission had simply imposed limitations on building width or height, or required the provision of a “viewing spot” along the property perpendicular to the beach. The commission’s regulatory authority was “set completely adrift from its constitutional moorings,” because there was absolutely no connection, or “essential nexus,” between the easement and visual access to the beach.24 Because no nexus was found, the U.S. Supreme Court had no reason to decide the degree to which any such nexus should exist. That question was answered in Dolan.
In Dolan,a property owner applied for a permit to redevelop land on which her plumbing and electric supply store was located. The property owner wanted to construct a larger store and a paved parking lot. The city commission granted approval of the project, but imposed a condition that the owner had to dedicate a portion of her land that was within the 100-year floodplain to be used as an open greenway and another portion of her land for a public pedestrian/bicycle path.25 The property owner argued that the conditions had no relation to her proposed redevelopment and, thus, constituted an unconstitutional taking of property.26
The U.S. Supreme Court found an essential nexus between the exactions and the justifications advanced by the city in Dolan. More specifically, the city’s interest in preventing flooding in the area of the proposed redevelopment was related to the need for an open greenway given that the redevelopment would contribute to increased stormwater runoff. Further, the proposed redevelopment featured a larger store than what previously existed onsite, which in turn, would result in 435 additional vehicle trips to the property. The city wanted to mitigate any congestion caused by higher traffic and the pedestrian/bicycle pathway was related to that objective because it facilitated alternative means of transportation.27
The U.S. Supreme Court then addressed the issue of whether the nexus was “constitutionally sufficient to justify the conditions imposed by the city.”28 Citing the Wisconsin Supreme Court’s decision in Jordan v. Menomonee Falls, 137 N.W.2d 442 (Wis. 1965), the U.S. Supreme Court ruled that “the dedication should have some reasonable relationship to the needs created by the [development].”29 In doing so, the U.S. Supreme Court established an intermediate standard of review to be used in development exaction cases. To avoid confusing this standard with the more deferential rational basis test used in equal protection cases, the U.S. Supreme Court avoided the phrase “rational nexus,” but clarified that:
the term “rough proportionality” best encapsulates what we hold to be the requirement of the Fifth Amendment. No precise mathematical calculation is required, but the [c]ity 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.30
The exactions in Dolan were unconstitutional because they were not “roughly proportionate” to the impacts created by the proposed redevelopment. The U.S. Supreme Court acknowledged that an open greenway would help alleviate flooding by keeping the floodplain open, but the exaction was not proportionate because the city did not simply require that the space be left open. The city demanded that the land be handed over as public space, although it never showed why a public greenway instead of a private greenway was required for flood control.31
The U.S. Supreme Court also accepted the city’s argument that the proposed store would increase traffic in the area. However, the dedication of the pedestrian/bicycle pathway did not reasonably relate to that increase. The city merely stated that the pathway “could offset some of the traffic demand. . . [which] is a far cry from a finding that the bicycle pathway system will, or is likely to, offset some of the traffic demand.”32
In the final analysis, Nollan and Dolan require that a local government must do more than assert mere conclusory statements when imposing conditions upon new development. The local government must take affirmative steps to quantify its findings that justify the imposition of exactions, regardless of how commendable the government’s motives may be. The U.S. Supreme Court concluded the Dolan decision by explaining that “[a] strong public desire to improve the public condition [will not] warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.”33
Local governments should take heed of the analysis set forth in Nollan and Dolan and duly consider how or whether new development actually affects the supply of affordable housing. It is one thing to assert that new development gives rise to housing needs because it generates employment opportunities. It also may be easy to accept that these new jobs offer low to median wages. It is another thing altogether, however, to maintain that new development actually makes the housing needed by those employees to be prohibitively expensive. Thus, even if a local government performs the rigorous analysis of linking the construction of new residential, commercial, or industrial space to an increased demand for housing for low- to median-wage workers, a mandatory program that does not justly compensate new development will likely fail to meet the threshold nexus requirement described by the U.S. Supreme Court in Nollan for one very important reason: it is virtually impossible to demonstrate that new residential or nonresidential development in and of itself causes housing to be unaffordable.
In Nollan, the U.S. Supreme Court assumed that the California Coastal Commission’s reasons for requiring the easement at issue in that case (visual access and overcoming psychological barriers to the beach) were legitimate state interests; however, that fact did not dispose of the issue of whether the exaction was permissible.34 Likewise, the fact that affordable housing is needed within the community because a median-income household cannot obtain an average-priced home cannot, on its own, be the foundation upon which mandatory exactions on new development are based.35 In discussing the required nexus between development exactions and legitimate state interests, the U.S. Supreme Court revealed in Nollan that exactions must serve those interests in the same manner that a prohibition on new development would serve it.36 The U.S. Supreme Court explained in Nollan that “the [c]ommission unquestionably would be able to deny the Nollans their permit outright if their new house. . . would substantially impede these [legitimate state] interests, unless the denial would interfere so drastically with the Nollans’ use of their property as to constitute a taking.”37
The California Coastal Commission took this statement to mean that anything less than a prohibition (i.e., imposing a condition to a development permit) must also fall with its police power if the police power may be construed so broadly. The U.S. Supreme Court agreed, but only to the extent the condition and the prohibition would accomplish the same legitimate purpose. However, “[T]he evident constitutional propriety disappears. . . if the condition substituted for the prohibition utterly fails to further the end advanced as the justification for the prohibition.”38
The U.S. Supreme Court further explained that:
the lack of nexus between the condition and the original purpose of the building restriction coverts that purpose to something other than what it was.. . . In short, unless the permit condition serves the same governmental purpose as the development ban, the building restriction is not a valid regulation of land use but “an out-and-out plan of extortion.”39
Thus, under Nollan, it must be shown that a development condition is an adequate substitution for a prohibition on development.
Based on Nollan, if the legitimate state interest behind mandatory affordable housing fees or exactions is the desire to increase the supply of affordable housing units, the underlying truth must be that a moratorium on new development would also achieve that purpose. Any local government measure that imposes affordable housing mandates will survive a challenge brought under Nollan only if the local government demonstrates that a moratorium would also serve the affordable housing shortage. The authors respectfully submit that a moratorium on new development will not necessarily serve the affordability crisis and it will be the local government’s task to prove otherwise. Indeed, to the extent that the legitimate state interest is simply to increase the supply of affordable units, then a moratorium would certainly not advance that interest because no new units would be constructed in the community. As such, the housing crisis cannot be blamed on new development (because even in the absence of it, the affordability problems will likely persist, if not worsen), and as a matter of well-established law, new development cannot be burdened with a problem that is not of its creation. In sum, the local government has to make some kind of factual showing that new development is causing the inability for people to find housing that is affordable.40
• The Level of Constitutional Scrutiny May Depend on the Manner by Which Inclusionary Zoning is Applied
As previously stated, the manner by which a mandatory inclusionary zoning ordinance is attacked may depend on how it is applied. Most local governments will likely defend an inclusionary zoning ordinance on the grounds that it is a legislative act and, therefore, entitled to greater judicial deference than adjudicatory decisions. Generally speaking, land use ordinances are considered constitutional unless they are “clearly arbitrary and unreasonable” and “bear no substantial relation to the public health, safety, morals, or general welfare.”41 focusing on the fact that inclusionary zoning ordinances are legislatively imposed, while development exactions are typically imposed as a condition of approval in an adjudicatory or quasi-adjudicatory proceeding, a local government may argue that the “rough proportionality” standard does not apply. Moreover, by characterizing an inclusionary zoning ordinance as a generally applicable zoning regulation, the landowner will shoulder the initial burden of proving that the ordinance is unconstitutional, whereas the government must make the threshold showing of rough proportionality under the Nollan/Dolan analysis. That is exactly what happened in the California case of Home Builders Association of Northern California v. City of Napa, 108 Cal. Rptr. 2d 60 (2001).
In Napa, the California Appellate Court upheld an inclusionary zoning ordinance that required, in pertinent part, that residential developers42 had to chose between 1) developing 10 percent of their units for affordable housing; 2) submitting an alternative equivalent proposal such as the dedication of land, or the construction of affordable housing units on the other site if the proposed alternative results in affordable housing opportunities equal to or greater than those created by the 10 percent requirement; 3) paying a fee into a housing trust fund; or 4) appealing for an adjustment or waiver of the requirement if the required dedication lacked a reasonable relationship or nexus between the impact of the development and the inclusionary requirement.43 In exchange, the ordinance offered development incentives, loans, and expedited processing of development applications. A consortium of builders challenged the ordinance arguing, inter alia, that the ordinance constituted an unconstitutional taking on its face and violated the due process clause of the federal and state constitutions.44
The California court upheld the ordinance against the facial challenge because it gave developers the right to request a waiver of the inclusionary requirements. In that regard, the court stated, “Since the [c]ity has the ability to waive the requirements imposed by the ordinance, the ordinance cannot and does not, on its face, result in a taking.”45
Napa rejected the developers’ claim that the waiver provision improperly placed the burden upon them to show a waiver would be appropriate. Relying on Dolan, Napa ruled that the party challenging a generally applicable zoning regulation has the burden of showing there could be no constitutional application.46
Napa also ruled that the ordinance satisfied the takings analysis described in Agins v. City of Tiburon, 477 U.S. 255 (1980), because it did not fail to substantially advance the legitimate state interest of producing affordable housing units. On that point, the developers contended that the Napa ordinance should not be afforded the deference given to traditional zoning ordinances, but rather, scrutinized under the intermediate level of review established in Nollan and Dolan that applies to development exactions.47 Napa disagreed, stating that the:
[i]ntermediate standard of judicial scrutiny formulated by the high court in Nollan and Dolan is intended to address. . . land use bargains between property owners and regulatory bodies.. . . But a different standard applies to development fees that are generally applicable through legislative action because the heightened risk of extortionate use of the police power to exact unconstitutional conditions is not present.48
Finally, Napa concluded that the City of Napa could enforce the inclusionary zoning measures despite that its past zoning policies may have contributed to the housing shortage.49
Whether Napa will influence Florida courts is an open question. The authors note, however, that Napa should not serve as a bell-weather for an ultimate constitutional determination regarding inclusionary zoning ordinances. First, Napa held that the ordinance could not be facially unconstitutional by virtue of the waiver provision. Specifically, the court could envision circumstances in which the city waived the requirement, thereby saving the ordinance from constitutional infirmity. contrast, in the context of facial challenges to ordinances, Florida courts have permitted certain facial challenges to be heard without requiring the aggrieved party to first appear before an administrative body.50
Depending on its text, a waiver provision itself may run afoul of Florida law prohibiting arbitrary decisionmaking and lack of meaningful standards. Put simply, in the context of quasi-judicial proceedings, Florida courts may reject a local government’s ability to selectively waive a requirement in their code. As Judge Fletcher noted in his concurring opinion in Miami-Dade County v. Brennan, Miami-Dade County v. Brennan, 802 So. 2d 1153 (Fla. 3d DCA 2001), the failure to afford definitive standards:
places the quasi-judicial zoning boards in a position where they are able to amend the zoning regulations within the various categories…on specific application so as to create non-uniform requirements for properties within the same zoning category. Obviously amending the zoning regulations themselves is a legislative function which cannot be delegated to a quasi-judicial board….51
Moreover, Napa refused to review the ordinance under the Nollan/Dolan analysis given that the inclusionary zoning ordinance was of general applicability rather than a development exaction imposed as a condition of approval designed to offset the impacts caused by a specifically proposed plan of development. However, the “legislative/adjudicatory” dichotomy is not as clear cut as the California court suggests in Napa. The court essentially reasoned that the ordinance was a legislative function of the city and, therefore, subject to a lesser standard of review. However, the authors note that most land use decisions cannot be placed neatly in either the legislative or adjudicative camps, and “courts and scholars are unanimous in their assessment that the scope of the Nollan/Dolan analysis is unsettled.”52
In B.A.M. Development v. Salt Lake County, 128 P.3d 1161 (Utah 2006), the Utah Supreme Court was presented with the question of whether a county ordinance that required developers to dedicate land as a condition of subdivision approval should be reviewed under the Nollan/Dolan test. The government argued that rough proportionality did not apply given that the ordinance was one of general applicability. Ultimately, the Utah Supreme Court did not have to answer the question presented because it found that the Utah Legislature had codified the Nollan/Dolan analysis in a statute that set forth the basis for development exactions in that state.53 Therefore, rough proportionality applied, not because the court resolved the legislative/adjudicatory debate, but because the legislature had already said so. As in Utah, the heightened level of scrutiny established in Nollan and Dolan is essentially the same level of scrutiny that Florida law demands of both impact fee ordinances passed legislatively and development exactions made in exchange for a specific development approval.
1 For example, in Palm Beach County, the term “work-force housing” refers to housing that is affordable to households earning up to 120 percent of the median household income in a particular community. In Palm Beach County, a household must earn an annual salary of at least $130,000 to qualify for a median-priced house, which currently sells for more than $400,000. Linda Rawls, Palm Beach County Home Sales Bust the Boom, Palm Beach Post, July 26, 2006. The median household income in Palm Beach County is not $130,000 or even $100,000. Most households earn far less than that amount. In fact, 120 percent of the median household income in Palm Beach County is only about $70,000. Hector Florin, Survey: Affordable Housing Dwindles in Palm Beach County, Palm Beach Post, July 6, 2006.
2 Bruce Katz, Margery A. Turner, Karen D. Brown, Mary Cunningham, and Noah Sawyer, Rethinking Local Affordable Housing Strategies: Lessons From 70 Years of Policy and Practice, The Brookings Institution Center on Urban and Metropolitan Policy and The Urban Institute 68 (December 2003), available at www.brookings.edu/~/media/Files/rc/reports/2003/12metropolitanpolicy_katz/housingreview.pdf.
3 Southern Burlington County NAACP v. Township of Mt. Laurel, 336 A.2d at 727-28. In its subsequent decision in Southern Burlington County NAACP v. Township of Mt. Laurel, 456 A.2d 390 (N.J. 1983) (Mt. Laurel II), the New Jersey Supreme Court elaborated on the municipalities’ duty to provide realistic affordable housing opportunities. The Mt. Laurel II court explained that the municipality should offer incentives for the provision of affordable housing, but if incentives were not successful, then devices such as mandatory set-asides or affordable housing zoning districts would need to be utilized. Id. at 446.Then, the New Jersey Supreme Court ruled in Holmdel Builders Association v. Township of Holmdel, et al., 583 A.2d 277, 280 (N.J. 1990), that it was constitutionally sufficient for new development to pay affordable housing impact fees instead of actually constructing affordable housing units, reasoning that the two requirements were functionally equivalent. Holmdel, 583 A.2d at 288-91.
4 On November 20, 2007, the Second Circuit Court granted the City of Tallahassee’s Motion for Summary Judgment — thus upholding the city’s ordinance against a facial challenge. Florida Home Builders Association, Inc. v. City of Tallahassee Builders Association, Inc., Case No. 37 2006 CA 000579 (November 20, 2007). In that case, a coalition of builders argued that the city’s ordinance constituted a physical taking of property. The court in pertinent part ruled that the city’s ordinance could not be categorized as a physical taking of property. Id. at 5. As in the Napa decision, the court further noted that there may be instances where the ordinance could be applied constitutionally (e.g., the added value of the property due to density bonuses may serve as compensation or the developer could request a waiver). Id. at 8. The court further found that because the ordinance is a regulation, it does not constitute an unlawful tax. Id. at 9. At the time of submittal for publication, the case had been appealed by both parties and is under review by the First District Court of Appeal.
5 Fox, 450 So. 2d 559(emphasis added) (citations omitted).
6 For example, in California, the state legislature has granted broad land use planning authority to local governments and California courts have interpreted the state’s enabling act and subsequent legislation as permitting inclusionary zoning measures §65913.9, California Government Code; Home Builders Ass’n of Northern California v. City of Napa, 90 Cal. App. 4th 188 (2001). In sharp contrast, an en banc opinion of the Virginia Supreme Court struck down an early inclusionary zoning program initiative that required developers to set aside a certain number of dwelling units for low-medium income residents. Board of Supervisors of Fairfax County v. De Groff Enterprises, Inc., 214 Va. 235 (Va. 1973) (ruling that “[t]he amendment, in establishing maximum rental and sale prices for 15 percent of the units in the development, exceeds the authority granted by the enabling act to the local governing body because it is socio-economic zoning and attempts to control the compensation for the use of land and the improvements thereon”).
7 Fla. Stat. §166.04151, (2005) (municipalities); Fla. Stat. §125.01055 (2005) (counties).
8 Similarly, the Growth Management Act provides that counties are “encourage[d] [to use] innovative land development regulations which include provisions such as transfer of development rights, incentive and inclusionary zoning, planned-unit development, impact fees, and performance zoning.” Fla. Stat. §163.3202(2)(h)(3) (2005). Fla. Stat. §163.3177 of the Growth Management Act further states, in pertinent part, that local governments shall incorporate a housing element in their comprehensive plans to encourage, among other things, the “creation or preservation of affordable housing to minimize the need for additional local services and avoid the concentration of affordable housing units only in specific areas of the jurisdiction.”
Other Florida Statutes with provisions that relate to local governments and affordable housing are:
• Fla. Stat. §§125.379 and 166.0451 direct counties and municipalities to draft an inventory list of all government-owned lands that are appropriate sites for affordable housing.
• The “Community Redevelopment Act of 1969” allows for the creation of community redevelopment agencies. Fla. Stat. §§163.330, et seq. (2005).
• Fla. Stat. §§253.034 and 253.0341 allow local governments to request the surplus of the state-owned lands, and directs the State of Florida to surplus state-owned lands upon request for the purposes of providing or maintaining affordable housing;
• Fla. Stat. §1001.43 authorizes school districts to use portions of school sites to provide affordable housing for teachers and other school district personnel;
• Fla. Stat. §380.06 provides greater development of regional impact standards and substantial deviation thresholds for developments of regional impact when they provide a certain amount of affordable housing.
9 William M. Merrill & Robert K. Lincoln, The Missing Link: Legal Issues and Implementation Strategies for Affordable Housing Linkage Fees and Fair Share Regulations, 22 Stet. L. Rev. 469, 474 (1993).
10 Debes, 690 So. 2d at 702 (emphasis added).
11 Id.
12 Lingle v. Chevron, Inc., 544 U.S 528, 537-38 (2005).
13 Loretto, 458 U.S. at 434-35.
14 Yee v. City of Escondido, 503 U.S. 519, 532, 539 (1992).
15 B.A.M. Development, L.L.C. v. Salt Lake County, 128 P.3d 1161 (Utah 2006).
16 Id.
17 Id.
18 Nollan, 483 U.S. at828.
19 Id.
20 Id. at 834 (citing Agins v. Tiburon, 444 U.S. 255 (1980)).
21 Id.
22 Id. at 838-39.
23 Id. at 841-42.
24 Dolan, 512 U.S. at 388.
25 Id. at 380.
26 Id. at 382.
27 Id. at 387-88.
28 Id. at 390.
29 Id. at 390-91 (citing Jordan v. Menomonee Falls, 137 N.W.2d 442 (Wis. 1965)).
30 Id. at 391.
31 Id. at 393-94.
32 Id. at 395 (emphasis in original) (citations omitted).
33 Id. at 396 (quoting Penn. Coal, 260 U.S. at 416).
34 Nollan, 483 U.S. at 835.
35 See also, Volusia County, 760 So. 2d at 135 (rejecting countywide need for improvements as basis for imposing impact fees on new development).
36 Nollan, 483 U.S. at 835-36.
37 Id.
38 Id. at 837 (emphasis added).
39 Id. (quoting J.E.D. Assoc., Inc. v. Atkinson, 432 A.2d 12, 14-15 (1981) (emphasis added)).
40 Nollan, 483 U.S. at 841.
41 Village of Euclid v. Ambler Realty, Co., 272 U.S. 365, 395 (1926); Agins v. City of Tiburon, 477 U.S. 255, 260-63 (1980).
42 The City of Napa’s inclusionary zoning ordinance applied to both nonresidential and residential development. Developers of nonresidential projects are required to pay a housing fee. The court’s opinion primarily speaks to the requirements placed on residential developers. See City of Napa Code of Ordinances §15.94.040.
43 The nature of the development (e.g., multi-family vs. single family) dictated whether the options were available as of right or whether approval from the city council was required. For example, developers of single-family units could pay a fee into the affordable housing fund as of right whereas developers of multi-family units were required to obtain the consent of the city council before they could exercise the option to pay a fee in lieu of constructing units. Id. at 192.
44 Napa, 108 Cal. Rptr. 2d at 63.
45 Id. at 64.
46 Id.
47 Id. at 65.
48 Id.
49 Id. at 66.
50 Sarnoff v. Florida Dept. of Hwy. Safety, 825 So. 2d 351, 357 (Fla. 2002).
51 Miami-Dade County v. Brennan, 802 So. 2d 1153 (Fla. 3d D.C.A. 2001).
52 B.A.M. Development v. Salt Lake County, 2004 UT App. 34, 43 (Utah App. 2004).
53 Id. at 46.
J. Michael Marshall is a land use and planning attorney with the firm of Siemon & Larsen, P.A., in Boca Raton. Mr. Marshall earned a B.S. in civil engineering, cum laude, from North Carolina State University, an M.B.A., magna cum laude, from the University of North Carolina, Wilmington, and received his J.D., cum laude, from The Florida State University College of Law.
Mark A. Rothenberg is a land use attorney with the firm of Morgan Lewis & Bockius. Mr. Rothenberg practices in both Florida and California. Mr. Rothenberg’s experience includes having represented numerous local governments in Florida in formulating land use controls and in obtaining development entitlements on behalf of institutional clients in Florida and California. He received his J.D., magna cum laude, from the University of Miami School of Law, where he served on the editorial board of the law review. The authors thank Charles L. Siemon, Wendy U. Larsen, and Jeffrey Bercow for their assistance and support.
This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Melissa Murphy, chair, and William P. Sklar and Richard R. Gans, editors.
Part two of this article: