Highway 4 Dedication Demand Ruled Constitutional

September 24, 2007

Contra Costa County, CP&DR Staff, Legal Digest, Takings, Vol. 22 No. 10 Oct 2007

The requirement that two Antioch property owners dedicate land for a new highway bypass when they develop their property is constitutional, the First District Court of Appeal has ruled.

The ruling overturned a trial court judge who found that the dedication requirement violated the Dolan "rough proportionality" test because the two property owners were treated differently than property owners whose land was not along the bypass alignment. The trial court also determined the dedication requirement violated the equal protection clause because the two property owners were not treated the same.

"In our view, the [trial] court misconstrued Dolan and judged the legality of the dedication requirement using a benchmark — equality of burden among all property owners benefiting from the bypass project — that is not required by Dolan, and not otherwise mandated by state or federal law," Justice Sandra Margulies wrote for the unanimous three-judge panel of the First District, Division One.

The decision came not in a case directly challenging an exaction or regulation, but in an eminent domain valuation case. Composed of Contra Costa County and the cities of Antioch and Brentwood, the State Route 4 Bypass Authority is an 18-year-old joint powers authority whose mission is to build a new freeway in Eastern Contra Costa County. The authority long ago adopted a policy requiring its member agencies, when granting development approvals to property owners along the chosen freeway alignment, to require dedication of a 110-foot-wide right-of-way. More recently, the authority began eminent domain proceedings to acquire a 250-foot-wide strip across lands owned separately by Toshiko Morimoto and Ronald Nunn. The authority sought a total of 16.9 acres from Morimoto, and 3.3 acres from Nunn.

The authority contended that the value of the 110-foot-wide strips that would have to be dedicated in the future should be based on existing agricultural uses. Thus, 4.7 acres of the Morimoto property would be valued as farmland, while the remaining property would be valued based on its highest and best use as commercial and residential development. Similarly, 1.5 acres of the Nunn property would be valued as agricultural land, with the rest valued based on its potential for commercial and residential development. This approach is permitted under City of Porterville v. Young, (1987) 195 Cal. App.3d 1260, according to bypass authority.

The landowners did not agree with this approach, and, ultimately, neither did Contra Costa County Superior Court Judge Joyce Cram, who ruled that the dedication requirement ran afoul of Dolan and the equal protection clause.

In Dolan v. City of Tigard, (1994) 512 U.S. 374, the U.S. Supreme Court built on its landmark Nollan decision. In Nollan, the Supreme Court ruled that there must be an "essential nexus" between an exaction and a project's impact. In Dolan, the court ruled that there must also be a "rough proportionality" between the exaction and the project's impact.

The First District ruled that Judge Cram misread Dolan because she concluded that Dolan prohibited the authority from placing a greater financial burden on property owners' based on the location of their property. The appellate court ruled that Dolan does not require consideration of other property owners.

"[T]he takings clause, as construed in Dolan and other cases, only protects a property owner from being assessed for more than the full spillover costs of developing his or her property; it does not compel public agencies to pick the most equitable possible method of distributing such costs," Justice Margulies wrote.

"The trial court's formulation of the Dolan test would also lead to a multitude of practical problems," Margulies continued. "Trying to establish that a developer challenging a dedication condition is not being asked to shoulder a greater financial burden than any other similarly situated developer would not be easy, and would likely become a fruitful source of litigation."

Moreover, there was no evidence that Morimoto and Nunn were being disparately burdened, the court concluded, noting that impact fee and road dedication policies would apply to any developer in the area, and that property owners along the future freeway would gain additional economic benefits.

"Although the trial court and [property owners] take the position that it would be fairer and more rational to do away with the dedication requirement and raise [East Contra Costa Regional Fee and Financing Authority] fee levels for all developers, the equal protection clause is not a rule of thumb for determining the relative fairness and wisdom of public policy choices," the court ruled. "It is a safeguard against wholly irrational policies that do not advance a legitimate state interest or that single out an unpopular group for discriminatory treatment."

The trial court had also ruled that the dedication requirement violated the equal protection clause because the Nunn property was expected to generate up to three times as much traffic as the Morimoto property, yet the authority sought one-third as much land from Nunn. However, the First District again said evidence was lacking "to draw any conclusions about the relative burdens placed on property owners to mitigate area-wide transportation problems."

The First District sent the case back to the trial court for further proceedings based on the authority's use of the Porterville approach to valuation.

The Case:

State Route 4 Bypass Authority v. Superior Court, No. A116834, 07 C.D.O.S. 9398, 2007 DJDAR 12099. Filed August 8, 2007.

The Lawyers:

For the authority: John Makin, Greenan, Peffer, Sallander & Lally, (925) 866-1000.
For the property owners: Matthew Gray, Bingham McCutchen, (925) 937-8000.