CITY COUNCIL SUPPLEMENTAL MATERIAL 7-27--26

4 Subject to the applicability of heightened scrutiny in speciﬁed circumstances (discussed further below), a land use regulation lies within the local agency’s police power if it is reasonably related to the public welfare. (See Associated Home Builders of the Greater East Bay, Inc. v. City of Livermore, 18 Cal.3d 582, 600-01 (1976).) The concept of the “public welfare” is broad and inclusive. (Berman, 348 U.S. at 33.) Accordingly, given this deferential standard, courts generally uphold a local agency’s action so long as it (1) is not arbitrary or capricious, (2) substantially advances a legitimate governmental interest, and (3) does not deny an owner all economically beneﬁcial use of its land. However, if the power is not exercised within constitutional or statutory mandates, the decision or regulation at issue must be set aside. (See Cal. Const. Art. XI, § 7; see also California Building Ass’n v. Governing Bd of the Newhall Sch. Dist. 206 Cal. App. 3d 212, 234 (1988).) B. Federal Constitutional Requirements3: Nollan/Dolan Essential Nexus 1. In General As noted above, the ability to regulate land use derives from the local agency’s police power, which is limited under the “Takings Clause” of the Fifth Amendment (i.e., the government cannot take private property for public use without just compensation). (See also Cal. Const. Art I, § 19.) This includes not just direct seizure of property but also indirect seizure through the regulatory process. There are four types of regulatory takings: (1) permanent physical invasions; (2) denial of all economically beneﬁcial use; (3) regulatory takings in which the regulation goes “too far”; and (4) development exactions. All four types “share a common touchstone”: Each aims to identify regulatory actions that are functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain. Accordingly, each of these tests focuses directly upon the severity of the burden that government imposes upon private property rights. (Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 548 (2005).) Of particular relevance here is the fourth type, wherein exactions are imposed as a condition on land use approvals to offset project impacts on the public. These exactions can take the form of land dedication requirements, obligations to fund and/or construct public improvements, and payment of development impact fees. In general, the standard applied to determine whether an exaction is valid depends on whether it is possessory (dedication of land) or non-possessory (monetary); and whether the local agency applies it pursuant to a generally applicable legislative enactment or in an ad hoc manner on to a speciﬁc project. 2. Relevant Decisions Several key U.S. Supreme Court and California Supreme Court cases delineate the primary legal contours of this takings analysis that are relevant to the case at hand (see, e.g., 3 In addition to constitutional principles governing regulatory takings, there are other federal constitutional mandates that must be followed including, without limitation, those involving due process, wherein decisions and regulations must be reasonable and non-discriminatory, and not arbitrary and capricious. (See, e.g., G&D Holland Construction Co. v. City of Marysville, 12 Cal. App. 3d 989, 994 (1970).)