STATE ROUTE 4 BYPASS AUTHORITY v. THE SUPERIOR COURT

Filed 8/8/07

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION ONE

These consolidated writ petitions arise from two condemnation cases brought by the State Route 4 Bypass Authority (Bypass Authority), a joint powers agency empowered to acquire property for construction of a highway in East Contra Costa County. The superior court consolidated the two cases for purposes of a bifurcated trial on an issue material to the condemnation value of both properties: the constitutional validity of a right-of-way dedication requirement applicable to properties lying along the route of the planned highway. The trial court found the requirement to be unconstitutional, which will result in a higher valuation for the properties when the next phase of the condemnation trials is conducted. The Bypass Authority filed petitions for a writ of mandate overturning the trial courts decision as to both cases on the grounds that the trial court erred in finding the dedication requirement invalid.

Finding that writ relief is appropriate under the circumstances of these cases (see City of Glendale v. Superior Court (1993) 18 Cal.App.4th 1768, 1776), we stayed further proceedings on valuation, and issued an order to show cause why the relief prayed for in the petition should not be granted. We now hold that the Bypass Authoritys position is meritorious, and will direct issuance of a peremptory writ.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Bypass Authority is a joint powers agency established in 1989 by Contra Costa County and the Cities of Brentwood and Antioch, pursuant to Government Code section 6500 et seq. The Bypass Authority was formed in part to facilitate construction of a new roadway in eastern Contra Costa County linking the State Route 4/160 interchange in the City of Antioch to Marsh Creek Road in the City of Brentwood (hereafter Bypass Project). For that purpose, the Bypass Authority is empowered to acquire real property through the exercise of eminent domain.

The precise alignment of the Bypass Project crosses two properties situated in the City of Antioch that are the subject of the petitions before this courtthe Morimoto property (owned by Toshiko Morimoto, Nobuyoshi Morimoto, and Union Land Development), and the Nunn property (owned by Ronald E. Nunn). The petitions arise from separate condemnation actions filed by the Bypass Authority in Contra Costa Superior Court to acquire the Morimoto and Nunn properties: State Route 4 Bypass Authority v. Toshiko Morimotoet al. (No. C05-00485) (hereafter Morimoto) and State Route 4 Bypass Authority v. Ronald Nunn et al. (No. C05-00857) (hereafter Nunn). The Morimoto and Nunn cases both involve a valuation issue that arises under what is known as the Porterville doctrine, a name derived from the case of City of Porterville v. Young (1987) 195 Cal.App.3d 1260 (Porterville).

A. The Porterville Issue

The Porterville case held that when a public agency conditioned the development of a property on a dedication of frontage to widen a public street, the portion subject to the dedication should be valued for condemnation purposes based on the existing use of the undeveloped property, not on its highest and best commercial use, as developed. (Porterville, supra, 195 Cal.App.3d at p. 1269.)[1] A later case restated the Porterville doctrine in the following terms: When there is a reasonable probability that a public agency would require dedication of the take as a condition of development, the take should be valued based on the use that can be made of the property in its undeveloped state. (ContraCostaCounty Flood Control etc. Dist. v. Lone Tree Investments (1992) 7 Cal.App.4th 930, 937.) Essential to the determination that a dedication condition is reasonably probable is a finding that such a requirement would be legally permissible: [P]roof that a conditional dedication is a reasonable probability requires a showing not only that plaintiff would probably have imposed the dedication condition if defendants had sought to develop the property, but also that the proposed dedication requirement would have been constitutionally permissible. . . . [I]t is not a reasonable probability that a governmental entity would actually succeed in imposing an unconstitutional dedication requirement. (City of Hollister v. McCullough (1994) 26 Cal.App.4th 289, 297 (City of Hollister).)

The Porterville issue arose as follows in the Morimoto case: The Bypass Authority seeks to acquire seven different components of the Morimoto property, including fee title to an approximately 16.94-acre parcel consisting of a strip of property some 250 feet wide lying across the centerline of the Bypass Project. The Bypass Authority adopted a policy requiring its member agencies, when granting development approvals to properties along or fronting the Bypass Project, to condition such approvals as follows: The agencies shall require the dedication, as a part of any significant development entitlement, free and clear, of the 110 feet of right-of-way lying about the centerline of the SR4 Bypass. Significant development shall include but not be limited to the approval of tentative maps or change in land use. Relying on the Porterville doctrine, the Bypass Authoritys appraiser concluded that a 4.69-acre portion of the 16.94-acre Morimoto parcel, consisting of a 110-foot-wide strip lying about the centerline of the Bypass Project,[2] should be valued based on its existing, agricultural use, rather than at the higher valuation that would be applied to the remaining 12.25 acres of the parcel, based on the parcels highest and best use as a commercial and residential development.

Similarly, the Nunn property includes an approximately 3.31-acre parcel, which the Bypass Authority seeks to acquire, consisting of a 250-foot-wide strip centered on the path of the Bypass Project. The Bypass Authority concluded that if Nunn were to propose development of this property, it is reasonably probable that the City of Antioch would require Nunn to dedicate a 110-foot-wide strip of his parcel (1.49 acres of the 3.31-acre parcel) under the dedication policy described earlier. Using Porterville, the Bypass Authoritys appraiser estimated the value of the 3.31-acre parcel by adding the undeveloped, agricultural value of the 1.49-acre strip to a higher valuation of the other 1.82 acres of the parcel that is not subject to the dedication requirement, based on its potential future residential and commercial development.

B. The Bifurcated Trial

Pursuant to the parties stipulations in both condemnation cases, the trial court entered an order bifurcating trial of the Porterville issue from the subsequent trial on valuation, and coordinating the two cases solely for purposes of trial on the Porterville issue. The parties agreed that the trial would include the following issues: (1) whether the City of Antioch would require the defendants to dedicate a portion of the right-of-way for the Bypass Project as a condition of development of the subject properties to their highest and best uses; and (2) whether the required dedication would be lawful under California law, the California Constitution, and the federal Constitution.

Trial on the Porterville issue commenced on June 26, 2006. The Bypass Authority presented witnesses Dale Dennis, program manager for the Bypass Authority, Joseph Brandt, city engineer and director of community development for the City of Antioch, and Gerard Walters, traffic engineer and traffic planner retained by the Bypass Authority. Morimoto and Nunn did not present any witnesses. The parties stipulated that: (1) the Morimoto and Nunn properties were presently agricultural land subject to potential development, and (2) the highest and best use of the properties would be commercial and residential uses. The parties also stipulated to the amounts that each property would be worth depending on whether the Bypass Authoritys dedication condition would or would not be applied to them in a developed state.

Dennis was employed as a program manager for both the Bypass Authority and a related joint powers agency, the East Contra Costa Regional Fee and Financing Authority (ECCRFFA). He testified and presented documentary evidence that the latter agency was formed to collect a transportation fee from developers to help finance regional transportation projects in eastern Contra Costa County, including the Bypass Project. Dennis also discussed the Bypass Authoritys dedication policy. He testified that all member agencies had enforced the dedication requirement and that he knew of no development along the Bypass route where the dedication was not imposed. On cross-examination, Dennis acknowledged that the policy applied the same 110-foot dedication requirement to all developments on property located along the route of the Bypass without regard to whether the development was commercial or residential, and without any determination of the added transportation load that the development might be expected to cause.

Brandt testified that the City of Antioch requires developers to dedicate and construct roads within new subdivisions, and to contribute at least one-half of the land and construction costs for roads adjoining developments. He stated that it was commonly understood in the development business that certain projects would cause more traffic than other developments. Brandt agreed that one of the purposes of Antiochs dedication requirements is to provide a way of handling the traffic generated by new developments. Regarding the Bypass Project, Brandt testified that it would mainly service regional traffic coming out of Brentwood, as well as some traffic from more distant locations, and some local traffic. On cross-examination, Brandt admitted that in applying the Bypass Authoritys dedication requirement, he would not typically take into account any traffic study done in connection with a development or the nature of the development proposed. In fact, Brandt testified that he would recommend that Antioch apply a similar dedication requirement even if that were not the written policy of the Bypass Authority. He stated that he believed the Bypass Authority had done the necessary nexus studies to justify such a requirement, and that he would rely on what they had done.[3]

Walters testified that he was retained by the Bypass Authority to perform individualized nexus studies of the Nunn and Morimoto properties, comparing the traffic impacts attributable to the developments proposed for these properties with the cost to each property of meeting the dedication requirement and paying the ECCRFFA fees that would be imposed for such developments.[4] He concluded that the impacts of these developments on the transportation system would greatly outweigh the cost to the property owners of the dedication and fees combined. Using established traffic estimating models, Walters calculated that the anticipated commercial and retail development of the Nunn property would result in an increased traffic load of 12,720 vehicle trips per day. The cost of the added transportation capacity necessary to accommodate this traffic was 15 times higher than the combined cost of the development fee and dedication that would be imposed if the development was approved. For the Morimoto property, Walters estimated that daily vehicle trips to the site would increase by approximately 5,000. He calculated that the added transportation construction cost attributable to development of the Morimoto property would be 1.9 or 1.4 times the combined cost to the owner of the development fee and dedication requirement, depending on the particular mix of retail, commercial, and residential units chosen as the highest and best use of the property.

Walters also testified that the properties reaped other, less quantifiable benefits due to their proximity to the Bypass Project. Since both properties were expected to include retail components, they would benefit from having more potential customers within convenient driving range. The Bypass would also make the properties more visible to more drivers passing by them. Further, without the Bypass, the developers of these sites would most likely have to incur added mitigation costs to address increased traffic on surrounding arterial streets.

C. The Trial Courts Decision on the Porterville Issue

The trial court entered a statement of decision on February 14, 2007. The court held that there was no dispute that the City of Antioch would have sought to require a dedication of a 110-foot area about the centerline of the Bypass alignment in connection with any development of the properties. However, for reasons discussed in greater detail post, the court held that such a requirement would not be constitutionally permissible under the United States Supreme Courts decision in Dolan v. City of Tigard (1994) 512 U.S. 374 (Dolan). The trial court further found that the dedication requirement violated the Equal Protection Clause of the United States Constitution. In essence, the court determined that the requirement imposed an unfair and unconstitutional burden on Nunn and Morimoto relative to other property owners who benefited from the Bypass Project, but whose property did not lie in its path.

D. Proceedings in This Court

With a trial on the remaining valuation issues in both cases scheduled to begin on May 7, 2007, the Bypass Authority filed a petition for writ of mandate and request for an immediate stay of the Morimoto action on February 22, 2007 (A116834) and a mandate petition and request for stay in the Nunn case the next day (A116851). At this courts request, the Bypass Authority filed an amended petition in A116834 on March 1, 2007, correcting certain technical deficiencies in its original filings.

By order entered on April 4, 2007, this court: (1) consolidated A116834 and A116851 for decision on the merits; (2) stayed trials in the Morimoto and Nunn cases pending a decision on the merits of the consolidated petitions; and (3) issued an order to show cause to the respondent court why the relief prayed for in the petition should not be granted.

II. DISCUSSION

The central issue raised by the present petitions is whether the trial court was correct in holding that the Bypass Authoritys dedication requirement was unconstitutional under the standards set forth in Dolan. In our view, the court misconstrued Dolan and judged the legality of the dedication requirement using a benchmarkequality of burden among all property owners benefiting from the Bypass Projectthat is not required by Dolan, and not otherwise mandated by state or federal law.

A. The Dolan Test

We begin by considering the immediate legal context in which the Dolan case arose. The Takings Clause of the Fifth Amendment provides: [N]or shall private property be taken for public use without just compensation. (U.S. Const., 5th Amend.) The Fifth Amendment is incorporated into and made applicable to the states by the Fourteenth Amendment. (Chicago, Burlington &c. Rd v. Chicago (1897) 166 U.S. 226, 239.) The California Constitution also requires the payment of just compensation when property is taken for public use. (See Cal. Const., art. I,  19.)

There is no question under Fifth Amendment law that compelling a property owner outright to relinquish a portion of their land to public use constitutes an unlawful taking. (Nollan v. California Coastal Commn (1987) 483 U.S. 825, 831, 834 (Nollan).) But the issue presented in Dolan and related cases is a more difficult one: Under what circumstances may a public agency require a dedication of property as a condition of granting a land-use permit, without triggering the owners right to just compensation?

The petitioners in Nollan sought a coastal development permit to build a three-bedroom house on their beachfront property. (Nollan, supra, 483 U.S. at p. 828.) The California Coastal Commission granted the permit on condition that the petitioners allow the public an easement across their property to connect two public beaches located immediately to the north and south of petitioners property. (Ibid.) The commission made factual findings that the new house would increase blockage of the publics view of the ocean, thus contributing to  a wall of residential structures  that would inhibit the public from becoming aware of the existence of this stretch of coastline, and, along with other private development in the area, would cumulatively burden the publics ability to enjoy the shorefront. (Id. at pp. 828829.) The commission argued that it could therefore properly require the petitioners to offset that burden by providing lateral access to the public beaches in the form of an easement across their property. (Id. at p. 829.) The petitioners sought judicial redress, arguing that the access condition violated the Takings Clause. (Ibid.)

The Supreme Court agreed. The majority assumed for purposes of analysis that the commissions stated purposes for imposing the access condition reflected legitimate governmental objectives that would enable it to deny outright the petitioners permit to build if their new house would, either alone or cumulatively in combination with other construction, substantially impede their attainment. (Nollan, supra, 483 U.S. at pp. 835836.) The court further agreed with the commissions argument that a permit condition that serves the same legitimate police-power purpose as a refusal to issue the permit should not be found to be a taking if the refusal to issue the permit would not constitute a taking. (Id. at p. 836.) As the court reasoned, the agencys assumed power to forbid construction of the house in order to protect the publics view of the beach must surely include the [less invasive] power to condition construction upon some concession by the owner, even a concession of property rights, that serves the same end. (Ibid.) Thus, a condition requiring the owner to provide a viewing spot on the property so that passersby could see the ocean would have been lawful. (Ibid.) But the fatal flaw in the commissions easement condition was that it did not, in fact, do anything to further the governmental purpose of protecting the publics view of the beach. (Id. at p. 838.) As the court pointed out, [i]t is quite impossible to understand how a requirement that people already on the public beaches be able to walk across the [petitioners] property reduces any obstacles to viewing the beach created by the new house. (Ibid.)

In the Supreme Courts formulation, the beach easement condition amounted to an uncompensated taking because it lacked an essential nexus to the governmental objective for which it was ostensibly imposed. (Nollan, supra, 483 U.S. at p. 837.) Absent that nexus, the government was leveraging an otherwise lawful method of regulating land usethe power to deny a building permitinto an improper seizure of property, without compensation, for purposes unrelated to the harms that justified imposition of the permit requirement in the first place. (Ibid.) Thus, regardless of the validity of the objective served by the condition, the petitioners could not be compelled to contribute toward it, except by the exercise of eminent domain and payment of just compensation. (Id. at pp. 841842.)

In Dolan, the Supreme Court took its analysis in Nollan one step further. The petitioner in Dolan applied to the city planning commission for a permit to replace the existing building housing her plumbing and electrical supply store with a larger one, and to expand the parking lot. (Dolan, supra, 512 U.S. at p. 379.) The commission approved petitioners permit application, but required her to dedicate one portion of the property (which was within a 100-year floodplain) for a public greenway that would improve storm drainage, and another strip adjacent to the greenway for a pedestrian and bicycle pathway. (Id. at p. 380.) The dedicated portions would have comprised about 10 percent of the petitioners total property. (Ibid.) The commission made a series of findings concerning the relationship between the dedication conditions and the projected impacts of the petitioners project: (1) it was  reasonable to assume  that some future customers and employees of the store would use the pedestrian/bicycle pathway for their transportation and recreational needs, noting that the site plan included a bicycle rack in front of the proposed new building; (2) creation of a convenient, safe pedestrian/bicycle pathway system  could offset some of the traffic demand on [nearby] streets and lessen the increase in traffic congestion ; and (3) increased storm water runoff from the site, caused by paving over a greater portion of the surface area for a parking lot, would add to the need for better management of the floodplain for drainage purposes. (Id. at pp. 381382.)

The petitioner pursued administrative and judicial remedies, arguing that the citys dedication requirements were not related to the proposed development and therefore constituted an uncompensated taking of her property under the Fifth Amendment. (Dolan, supra, 512 U.S. at p. 382.) The Supreme Court began by addressing whether the citys permit conditions satisfied the Nollan essential nexus test. It first found that there was a sufficient logical nexus to satisfy Nollan between the legitimate governmental interest in reducing the risk of flooding and the greenway dedication condition, which was intended to improve storm drainage. (Dolan, at p. 387.) It found further that requiring dedication of a strip of petitioners land for a pedestrian/bicycle pathway was also sufficiently related to the objective of reducing traffic congestion to pass the Nollan test. (Dolan, at pp. 387388.) But, as Dolan makes clear, the nexus standard merely defines a minimum threshold for determining the validity of a dedication requirement or condition. To avoid classification as a taking requiring the payment of just compensation under established Fifth Amendment jurisprudence, such a condition must also bear a reasonable relationship in degree to the projected impact of the proposed development. (Id. at p. 388.)

The court surveyed prevailing state law as to the necessary connection between the required dedication and the proposed development. (Dolan, supra, 512 U.S. at p. 389.) It noted that in some states, very generalized statements by the agency imposing a dedication condition were sufficient, whereas in other states the agency must demonstrate that its exaction is  specifically and uniquely attributable  to a need created by the proposed development. (Id. at pp. 389390, fn. 7.) The Supreme Court rejected the former standard as too lax to adequately protect the petitioners right to just compensation, but it also rejected the  specifi[c] and uniquely attributable  test, stating that the federal Constitution does not require such exacting scrutiny, given the nature of the interests involved. (Id. at pp. 389, 390.) Instead, the court expressed its approval of what it characterized as an intermediate standard, followed in a majority of the states. (Id. at pp. 390391.) In those states, the agency must show that there is a  reasonable relationship  between the dedication and the impact of the proposed development. (Ibid.) Rather than adopt this standard as such, the Supreme Court chose to reformulate it as follows: We think a term such as rough proportionality best encapsulates what we hold to be the requirement of the Fifth Amendment. No precise mathematical calculation is required, but the city 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. (Id. at p. 391, fn. omitted.)

In applying this standard to the pedestrian/bicycle pathway condition imposed by the City of Tigard, the Supreme Court quoted from and enlarged upon the reasoning of a dissenting opinion filed earlier in the case by an Oregon Supreme Court justice:  [T]he findings of fact that the bicycle pathway system could offset some of the traffic demand is a far cry from a finding that the bicycle pathway system will, or is likely to, offset some of the traffic demand. [Citation.] No precise mathematical calculation is required, but the city must make some effort to quantify its findings in support of the dedication for the pedestrian/bicycle pathway beyond the conclusory statement that it could offset some of the traffic demand generated. (Dolan, supra, 512 U.S. at pp. 395396.)

Regarding the greenway requirement, the Dolan court found the ostensible purpose of improving storm drainage could as readily be served by requiring a private greenway as by compelling the petitioner to dedicate land for a public greenway. (Dolan, supra, 512 U.S. at pp. 393394.) It therefore held that the citys findings failed to show a reasonable relationship between the public greenway easement and the petitioners proposed new development, noting that the analysis might turn out differently if the development would encroach on the citys existing public greenway space. (Id. at pp. 394395.)

B. The Trial Courts Decision

The trial court found that there was no dispute that the City of Antioch would require dedication of a full 110-foot-wide strip straddling the centerline of the Bypass alignment as a condition for the development of both the Nunn and Morimoto properties. Thus, the first prong of the Porterville test was met: It was reasonably probable that if the owners had sought approval to develop their properties, the City would have conditioned such approval on the specified dedication. The salient, disputed issue under the Porterville doctrine was whether applying such condition to the hypothetical development of the properties would have been constitutionally permissible.

1. Essential Nexus

The statement of decision does not expressly address the Nollan standard, i.e., whether the dedication requirement would have advanced the same ostensible objective as a ban on development of the subject properties for their highest and best usesthe mitigation of traffic and transportation-related costs that such development would generate. However, real parties concede that traffic control is a legitimate governmental purpose, and they did not cite or raise any issues under Nollan in their posttrial briefing. We therefore assume for purposes of our analysis that the dedication requirement satisfies the Nollan essential nexus standard.[5]

The principal disputed issues in the trial court were whether the dedication requirement satisfied the Dolan standard that it be based on (1) some sort of individualized determination, and whether that determination, if made, showed that the exaction was (2)  rough[ly] proportiona[l]  to the impact of the proposed development. (Dolan, supra, 512 U.S. at p. 391.)

Story Continues as Part II

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[1] The Porterville court explained the rationale for this rule as follows: [I]f the take is so valued, and if the remainder of the parcel is not developed beyond its present agricultural use, owner will have been paid exactly what the take was worth; if the remainder of the parcel is developed for commercial purposes, owner will have been paid for the land he would have been required to dedicate to city to obtain the building permits or conditional use permit necessary for the commercial development. (Porterville, supra, 195 Cal.App.3d at p. 1269, fn. omitted.)

[2] For reasons not explained in the record, the relative acreages of the 110-foot-wide and 250-foot-wide strips are not proportional to their widths. However, the parties stipulated to the acreages involved and the amounts are not material to the analysis.

[3] Walters explained that a nexus study analyzes a development projects use of or impact on the transportation system in comparison to the financial burden of any responsibilities imposed on the project as conditions for its approval, including the payment of development fees. While ECCRFFA had done a nexus study in connection with its adoption of the development fee program, there was no evidence in the record that the Bypass Authority had done a nexus study before adopting the dedication policy.

[4] To translate traffic impacts into dollar figures, Walters determined the shares and dollar amounts of the total cost of the transportation capacity expansion projects funded under the ECCRFFA program that he calculated were attributable to the anticipated traffic impact of the Nunn and Morimoto developments. He used information supplied by the Bypass Authoritys appraiser to determine the financial cost of the dedication requirement.

[5] Real parties do raise a Nollan-like issue based on City of Hollister. As discussed post, the City of Hollister case is distinguishable on its facts.