Ehrlich v. City of Culver City, California Supreme Court (1996)

Facts:
The plaintiff acquired a 2.4-acre lot on Overland Ave in Culver City between 1973 and 1975. City approval was given to develop the site as a private tennis club and rec facility. At the plaintiff’s request, the City amended its zoning and general plan ordinances governing uses on the property from a split zone R-1 (Single Family Residential) and C-2 (retail commercial) to C-3 (commercial). A specific plan was also adopted providing for the development of this private sports club. In 1974, the City recognized “the need for additional tennis facilities in this city is a real one” (pg. 3). The planning commission recommended approval. From 1975 to 1988, the sports complex remained in operation with a swimming pool, five tennis courts, racquetball courts, and weight training and aerobic facilities. In 1981, in response to financial losses, the plaintiff applied for a change in land use in order to construct an office building,
which was abandoned after its recommended rejection by the city planning commission. The club closed in August of 1988 due to financial troubles. In September, the plaintiff applied for an amendment to the general plan, a zoning change, and amendment of the specific plan to allow construction of a 30-unit condominium complex valued at $10 million. Shortly thereafter, the City expressed interest in buying the property as a municipally owned sports complex because it felt it was deficient in municipal recreation facilities, but later reported that they lacked the funds. In April 1989, the city council disapproved plaintiff’s application based on concerns over the loss of a recreational land use needed by the community. In the meantime, plaintiff acquired a demolition permit and tore down the existing site improvements, donating the still-useful equipment to the city.

Following several meetings to restructure plaintiff’s project, the city council approved plaintiff’s application under condition that a payment of certain “monetary exactions” (pg. 4). In lieu of the construction of four tennis courts as a condition of approval, the city would accept payment of $280,000 to be used “for additional [public] recreational facilities” (pg. 4). In addition to this in-lieu-of fee, the City also required plaintiff to pay $33,200 in the name of they city’s “art in public places” program. The fee was to be paid, but plaintiff’s successor in interest placed art on the site rather than pay the fee. In addition, a $30,000
parkland fee was paid to the City, and has gone unchallenged by the plaintiff. The plaintiff then filed formal written protests to the imposition of both fees, later alleging that the imposition of the fees amounted to an unconstitutional taking without just compensation. The plaintiff later agreed to pay the $280,000 recreation fee in return for the building and grading permits. The site was then developed.


Procedure:
A petition for writ of mandate was filed, whereupon the trial court invalidated the $280,000 fee, holding that there was “no reasonable relation” between the project and the need for tennis courts in the City (pg. 5). The $33,200 art fee, however, was deemed constitutional.

The Court of Appeal initially affirmed the trial court judgment in its entirety, but on rehearing, modified its opinion to reverse that portion of the judgment invalidating the $280,000 Recreation Fee. The Court of Appeal found there was a "substantial nexus" between the proposed condominium project and the $280,000 exaction. Thus, the Recreation Fee was not, in the Court of Appeal's judgment, an unconstitutional taking without just compensation. The Court of Appeal also upheld the art fee.

Plaintiff then sought certiorari from the California Supreme court, which granted his petition and remanded the case for further consideration in light of its recent opinion in the Dolan v. City of Tigard case. The court of appeal reached an identical result, citing that the recreation fee was “roughly proportional” in nature and extent to the needs generated by the project.

Issue:
Is the imposition of fees as a condition of the approval of rezoning a property an unconstitutional taking without just compensation? Do the tests formulated in relation to the Dolan and Nollan cases for determining whether a compensable regulatory taking has occurred under the takings clause of the Fifth Amendment, “substantial nexus” and “rough proportionality”, apply to monetary exaction or only to cases that involve the dedication of real property to public use as a condition of permit approval?

Holding:
The Court of Appeal reviewed the case in light of Nollan and Dolan and reversed its decision, finding that the recreation fee was an unconstitutional taking. In addition, the court held that the art in-lieu fee was constitutional and valid.

Rationale:
The court found that although the “relationship between monetary exaction and the withdrawal of a parcel of land within Culver City restrictively zoned for private recreational use satisfies the essential nexus standard, the present record is inadequate to support the requirement that plaintiff pay a recreational fee for the desired permit.” While there is a satisfied essential nexus, the test of ‘rough proportionality’ fails in respect that “Plaintiff is being asked to pay for something that should be paid for wither by the public as a whole, or by private entrepreneur in business for a profit. The city may not constitutionally measure the magnitude of its loss, or of the recreational exaction, by the value of facilities it had no right to appropriate without payment” (pg.17).

This also falls under the Mitigation Fee Act’s “reasonable relationship” statute, of which the fee could not satisfy.

The art in public places fee is not a development exaction of the kind subject to the Nollan-Dolan takings analysis. The requirement to provide an in-lieu fee or art is more akin to traditional land-use regulations. Such aesthetic conditions have long been held to be valid exercises of the city’s traditional police power, and are not takings (pg. 19).