Hard Bargains and Real Steals: Land Use Exactions Revisited

Iowa Law Review

Volumn 86, Issue 1, 2000, Pages 1-84

  Fennell, Lee Anne ^a  

^a NONE

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EID: 0034555479     PISSN: 00210552     EISSN: None     Source Type: Journal    
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References (380)

1. While much regulation of land use is local, land is also regulated for various purposes at the state, regional, and federal levels. See generally FRED BOSSELMAN & DAVID CALLIES, THE QUIET REVOLUTION IN LAND USE CONTROL (1972) (analyzing state and regional responses to land use issues); Robert H. Nelson, Federal Zoning: The New Era in Environmental Policy, in LAND RIGHTS: THE 1990s' PROPERTY RIGHTS REBELLION 295 (Bruce Yandle ed., 1995) (discussing the increasing federal role in land use regulation).
2. While much regulation of land use is local, land is also regulated for various purposes at the state, regional, and federal levels. See generally FRED BOSSELMAN & DAVID CALLIES, THE QUIET REVOLUTION IN LAND USE CONTROL (1972) (analyzing state and regional responses to land use issues); Robert H. Nelson, Federal Zoning: The New Era in Environmental Policy, in LAND RIGHTS: THE 1990s' PROPERTY RIGHTS REBELLION 295 (Bruce Yandle ed., 1995) (discussing the increasing federal role in land use regulation).
3. WILLIAM A. FISCHEL, REGULATORY TAKINGS 341 (1995) [hereinafter FISCHEL, REGULATORY TAKINGS] (noting that "[d]evelopers in most communities pay various types of fees or provide goods in kind to get permission to do their projects," which are "collectively known as 'exactions'"); see Vicki Been, "Exit" as a Constraint on Land Use Exactions: Rethinking the Unconstitutional Conditions Doctrine, 91 COLUM. L. REV. 473, 478-83 (1991) (providing an overview of the history of exactions and descriptions of various types of exactions).
4. WILLIAM A. FISCHEL, REGULATORY TAKINGS 341 (1995) [hereinafter FISCHEL, REGULATORY TAKINGS] (noting that "[d]evelopers in most communities pay various types of fees or provide goods in kind to get permission to do their projects," which are "collectively known as 'exactions'"); see Vicki Been, "Exit" as a Constraint on Land Use Exactions: Rethinking the Unconstitutional Conditions Doctrine, 91 COLUM. L. REV. 473, 478-83 (1991) (providing an overview of the history of exactions and descriptions of various types of exactions).
5. In this Article, I focus only on the limits imposed by the U.S. Supreme Court, which relate to the Takings Clause in the Federal Constitution. State law and constitutions may also place limits on exactions. See, e.g., Amoco Oil Co. v. Vill. of Schaumburg, 661 N.E.2d 380, 387 n.5 (Ill. App. Ct. 1995) (discussing test for development conditions formulated by the Illinois Supreme Court); Stewart E. Sterk, Nollan, Henry George, and Exactions, 88 COLUM. L. REV. 1731, 1731 & n.4 (1988) [hereinafter Sterk, Nollan, Henry George, and Exactions] (discussing and providing examples of state law doctrines limiting exactions). These state limits are not expressly addressed here, although much of my analysis may apply to them as well.
6. For examples, see ALAN A. ALTSCHULER & JOSE A. GOMEZ-IBANEZ, REGULATION FOR REVENUE: THE POLITICAL ECONOMY OF LAND USE EXACTIONS (1993) ; DEVELOPMENT EXACTIONS (James E. Frank & Robert M. Rhodes eds., 1987) [hereinafter DEVELOPMENT EXACTIONS]; Been, supra note 2; Symposium, Discretionary Limits in Local Land-Use Control, 15 N. ILL. U. L. REV. 477 (1995); Symposium, Exactions: A Controversial New Source for Municipal Funds, 50 LAW & CONTEMP. PROBS. 1 (Richard F. Babcock, Special Ed.) (1987) [hereinafter Symposium, Exactions]; Symposium, The Jurisprudence of Takings, 88 COLUM. L. REV. 1581 (1988).
7. For examples, see ALAN A. ALTSCHULER & JOSE A. GOMEZ-IBANEZ, REGULATION FOR REVENUE: THE POLITICAL ECONOMY OF LAND USE EXACTIONS (1993) ; DEVELOPMENT EXACTIONS (James E. Frank & Robert M. Rhodes eds., 1987) [hereinafter DEVELOPMENT EXACTIONS]; Been, supra note 2; Symposium, Discretionary Limits in Local Land-Use Control, 15 N. ILL. U. L. REV. 477 (1995); Symposium, Exactions: A Controversial New Source for Municipal Funds, 50 LAW & CONTEMP. PROBS. 1 (Richard F. Babcock, Special Ed.) (1987) [hereinafter Symposium, Exactions]; Symposium, The Jurisprudence of Takings, 88 COLUM. L. REV. 1581 (1988).
8. For examples, see ALAN A. ALTSCHULER & JOSE A. GOMEZ-IBANEZ, REGULATION FOR REVENUE: THE POLITICAL ECONOMY OF LAND USE EXACTIONS (1993) ; DEVELOPMENT EXACTIONS (James E. Frank & Robert M. Rhodes eds., 1987) [hereinafter DEVELOPMENT EXACTIONS]; Been, supra note 2; Symposium, Discretionary Limits in Local Land-Use Control, 15 N. ILL. U. L. REV. 477 (1995); Symposium, Exactions: A Controversial New Source for Municipal Funds, 50 LAW & CONTEMP. PROBS. 1 (Richard F. Babcock, Special Ed.) (1987) [hereinafter Symposium, Exactions]; Symposium, The Jurisprudence of Takings, 88 COLUM. L. REV. 1581 (1988).
9. For examples, see ALAN A. ALTSCHULER & JOSE A. GOMEZ-IBANEZ, REGULATION FOR REVENUE: THE POLITICAL ECONOMY OF LAND USE EXACTIONS (1993) ; DEVELOPMENT EXACTIONS (James E. Frank & Robert M. Rhodes eds., 1987) [hereinafter DEVELOPMENT EXACTIONS]; Been, supra note 2; Symposium, Discretionary Limits in Local Land-Use Control, 15 N. ILL. U. L. REV. 477 (1995); Symposium, Exactions: A Controversial New Source for Municipal Funds, 50 LAW & CONTEMP. PROBS. 1 (Richard F. Babcock, Special Ed.) (1987) [hereinafter Symposium, Exactions]; Symposium, The Jurisprudence of Takings, 88 COLUM. L. REV. 1581 (1988).
10. For examples, see ALAN A. ALTSCHULER & JOSE A. GOMEZ-IBANEZ, REGULATION FOR REVENUE: THE POLITICAL ECONOMY OF LAND USE EXACTIONS (1993) ; DEVELOPMENT EXACTIONS (James E. Frank & Robert M. Rhodes eds., 1987) [hereinafter DEVELOPMENT EXACTIONS]; Been, supra note 2; Symposium, Discretionary Limits in Local Land-Use Control, 15 N. ILL. U. L. REV. 477 (1995); Symposium, Exactions: A Controversial New Source for Municipal Funds, 50 LAW & CONTEMP. PROBS. 1 (Richard F. Babcock, Special Ed.) (1987) [hereinafter Symposium, Exactions]; Symposium, The Jurisprudence of Takings, 88 COLUM. L. REV. 1581 (1988).
11. 483 U.S. 825 (1987).
12. Id. at 837.
13. 512 U.S. 374 (1994).
14. Id. at 391.
15. See infra Part I.A.I (providing an overview of the current law); see also Jan G. Laitos, Causation and the Unconstitutional Conditions Doctrine: Why the City of Tigard's Exaction Was a Taking, 72 DENV. U. L. REV. 893, 905 (1995) (noting that Dolan requires a relationship between the exaction and the harm caused by the development); infra note 122 (discussing the relationship between the nexus and proportionality requirements). Several unanswered questions about the scope of these decisions have divided lower courts. See Part I.A.I, infra (discussing these unresolved questions).
16. See City of Monterey v. Del Monte Dunes, 526 U.S. 687, 702 (1999) ("Although in a general sense concerns for proportionality animate the Takings Clause, we have not extended the rough-proportionality test of Dolan beyond the special context of exactions - land-use decisions conditioning approval of development on the dedication of property to public use.") (citations omitted); Agins v. City of Tiburon, 447 U.S. 255, 260 (1980) ("The application of a zoning law to particular property effects a taking if the ordinance does not substantially advance legitimate state interests or denies an owner economically viable use of his land.") (citations omitted).
17. 526 U.S. 687 (1999).
18. See id. at 702-03 (stating that "the rough-proportionality test of Dolan is inapposite to a case such as this one"). However, the Court found proper a jury instruction that asked whether the denial of the development proposal was "reasonably related to a legitimate public purpose." Id. at 706-08.
19. See generally Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) (discussing justification for governmental zoning powers and explaining that zoning ordinances must be arbitrary and unreasonable before they can be declared unconstitutional).
20. The Supreme Court dodged an important manifestation of this disconnect when it denied certiorari in Parking Ass'n of Georgia v. City of Atlanta, 450 S.E.2d 200 (Ga. 1994), cert. denied, 515 U.S. 1116 (1995) (Thomas & O'Connor, JJ., dissenting). In that case, the Supreme Court of Georgia considered whether Dolan's "rough proportionality" standard applied to legislative "conditions" on development, as well as to conditions imposed through individual adjudicative negotiations. Id.
21. The potential inefficiency of limits on land use bargains has not gone unnoticed. See generally David A. Dana, Land Use Regulation in an Age of Heightened Scrutiny, 75 N.C. L. REV. 1243 (1997) (discussing ways in which nexus and proportionality rules can diminish allocative efficiency); William A. Fischel, The Economics of Land Use Exactions: A Property Rights Analysis, 50 LAW & CONTEMP, PROBS. 101, 104-06 (1987) [hereinafter Fischel, The Economics of Land Use Exactions] (discussing restraints on the alienation of land use entitlements and resulting inefficiencies); William A. Fischel, Introduction: Utilitarian Balancing and Formalism in Takings, 88 COLUM. L. REV. 1581, 1583 (1988) [hereinafter Fischel, Introduction] ("Judicial rules that inhibit these exchanges [between landowners and communities], such as rules against contract zoning, are barriers to Pareto improvements - that is, voluntary exchanges that leave all parties - the community, the developer and ultimately the developer's customers - better off.").
22. The potential inefficiency of limits on land use bargains has not gone unnoticed. See generally David A. Dana, Land Use Regulation in an Age of Heightened Scrutiny, 75 N.C. L. REV. 1243 (1997) (discussing ways in which nexus and proportionality rules can diminish allocative efficiency); William A. Fischel, The Economics of Land Use Exactions: A Property Rights Analysis, 50 LAW & CONTEMP, PROBS. 101, 104-06 (1987) [hereinafter Fischel, The Economics of Land Use Exactions] (discussing restraints on the alienation of land use entitlements and resulting inefficiencies); William A. Fischel, Introduction: Utilitarian Balancing and Formalism in Takings, 88 COLUM. L. REV. 1581, 1583 (1988) [hereinafter Fischel, Introduction] ("Judicial rules that inhibit these exchanges [between landowners and communities], such as rules against contract zoning, are barriers to Pareto improvements - that is, voluntary exchanges that leave all parties - the community, the developer and ultimately the developer's customers - better off.").
23. The potential inefficiency of limits on land use bargains has not gone unnoticed. See generally David A. Dana, Land Use Regulation in an Age of Heightened Scrutiny, 75 N.C. L. REV. 1243 (1997) (discussing ways in which nexus and proportionality rules can diminish allocative efficiency); William A. Fischel, The Economics of Land Use Exactions: A Property Rights Analysis, 50 LAW & CONTEMP, PROBS. 101, 104-06 (1987) [hereinafter Fischel, The Economics of Land Use Exactions] (discussing restraints on the alienation of land use entitlements and resulting inefficiencies); William A. Fischel, Introduction: Utilitarian Balancing and Formalism in Takings, 88 COLUM. L. REV. 1581, 1583 (1988) [hereinafter Fischel, Introduction] ("Judicial rules that inhibit these exchanges [between landowners and communities], such as rules against contract zoning, are barriers to Pareto improvements - that is, voluntary exchanges that leave all parties - the community, the developer and ultimately the developer's customers - better off.").
24. See generally Gregory S. Alexander, Takings, Narratives, and Power, 88 COLUM. L. REV. 1752 (1988) (discussing the ways in which implicit "narratives of power" have influenced takings jurisprudence).
25. Because my analysis focuses on the Nollan and Dolan bargaining limits as articulated by the Supreme Court, I assume (counterfactually) that there is perfect compliance with these limits. I fully recognize that developers and local governments often engage in transactions that violate the Nollan and Dolan standards. Such circumvention ameliorates certain problems I identify here while creating new and different ones. See infra note 109 (discussing circumvention). Widespread noncompliance with bargaining restrictions powerfully suggests that the restrictions are inconsistent with the interests of the parties. This inconsistency can be most plainly seen by focusing, as I do here, on how the limits would operate absent such circumvention. The fact that the negative impacts of a legal rule may be softened by real-world circumvention provides no principled basis for retaining it over other, more coherent, alternatives.
26. "Overregulation" is regulation in excess of the socially efficient point. See Been, supra note 2, at 491 n.93 (citing several reasons why governments overregulate); see also infra Part I.C.2 (discussing overregulation risks).
27. See Nollan v. Cal. Coastal Comm'n, 483 U.S. at 825, 837 (1987) (stating that a permit condition which does not bear an essential nexus to the governmental purpose justifying the development ban is "'an out and out plan of extortion'") (citation omitted).
28. See RICHARD A. EPSTEIN, BARGAINING WITH THE STATE 4-5 (1993) [hereinafter EPSTEIN, BARGAINING WITH THE STATE] (discussing problems with governmental "givings"); Kathleen M. Sullivan, Unconstitutional Conditions, 102 HARV. L. REV. 1413, 1489 (1989) (discussing problem with government receipt of certain rights); infra Part II.A (discussing the unconstitutional conditions doctrine).
29. See RICHARD A. EPSTEIN, BARGAINING WITH THE STATE 4-5 (1993) [hereinafter EPSTEIN, BARGAINING WITH THE STATE] (discussing problems with governmental "givings"); Kathleen M. Sullivan, Unconstitutional Conditions, 102 HARV. L. REV. 1413, 1489 (1989) (discussing problem with government receipt of certain rights); infra Part II.A (discussing the unconstitutional conditions doctrine).
30. A bargain is Pareto-efficient if it makes at least one party better off and makes no one worse off. See, e.g., David D. Haddock, Fred S. McChesney & Menahem Spiegel, An Ordinary Economic Rationale for Extraordinary Legal Sanctions, 78 CAL. L. REV. 1, 15 & n.42 (1990). The resulting distribution, in which at least one party is better off and nobody is worse off, is Pareto-superior to the pre-bargain allocation. See id. at 16 & n.43. Pareto-optimality is achieved when no further trades could make any party better off without making at least one party worse off. CHARLES J. GOETZ, CASES AND MATERIALS ON LAW AND ECONOMICS 248 (1984).
31. A bargain is Pareto-efficient if it makes at least one party better off and makes no one worse off. See, e.g., David D. Haddock, Fred S. McChesney & Menahem Spiegel, An Ordinary Economic Rationale for Extraordinary Legal Sanctions, 78 CAL. L. REV. 1, 15 & n.42 (1990). The resulting distribution, in which at least one party is better off and nobody is worse off, is Pareto- superior to the pre-bargain allocation. See id. at 16 & n.43. Pareto-optimality is achieved when no further trades could make any party better off without making at least one party worse off. CHARLES J. GOETZ, CASES AND MATERIALS ON LAW AND ECONOMICS 248 (1984).
32. A number of scholarly proposals have been designed to foster market (or market-like) transactions in the land use field, some of which involve abolishing traditional zoning. See generally BERNARD H. SIEGAN, LAND USE WITHOUT ZONING (1972) [hereinafter SIEGAN, LAND USE WITHOUT ZONING] (proposing elimination of zoning and discussing land use alternatives); Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. CHI. L. REV. 681 (1973) [hereinafter Ellickson, Alternatives to Zoning] (discussing liability rules and other alternatives to zoning); Douglas W. Kmiec, Deregulating Land Use: An Alternative Free Enterprise Development System, 130 U. PA. L. REV. 28 (1981) (discussing an alternative to zoning based on land use intensity ratings). Carol Rose has noted that many market-oriented proposals have had limited practical impact, "perhaps because they would require a forbidding array of changes in current land use regulatory practice." Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 CAL. L. REV. 837, 844 (1983) [hereinafter Rose, Planning and Dealing].
33. A number of scholarly proposals have been designed to foster market (or market-like) transactions in the land use field, some of which involve abolishing traditional zoning. See generally BERNARD H. SIEGAN, LAND USE WITHOUT ZONING (1972) [hereinafter SIEGAN, LAND USE WITHOUT ZONING] (proposing elimination of zoning and discussing land use alternatives); Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. CHI. L. REV. 681 (1973) [hereinafter Ellickson, Alternatives to Zoning] (discussing liability rules and other alternatives to zoning); Douglas W. Kmiec, Deregulating Land Use: An Alternative Free Enterprise Development System, 130 U. PA. L. REV. 28 (1981) (discussing an alternative to zoning based on land use intensity ratings). Carol Rose has noted that many market-oriented proposals have had limited practical impact, "perhaps because they would require a forbidding array of changes in current land use regulatory practice." Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 CAL. L. REV. 837, 844 (1983) [hereinafter Rose, Planning and Dealing].
34. A number of scholarly proposals have been designed to foster market (or market-like) transactions in the land use field, some of which involve abolishing traditional zoning. See generally BERNARD H. SIEGAN, LAND USE WITHOUT ZONING (1972) [hereinafter SIEGAN, LAND USE WITHOUT ZONING] (proposing elimination of zoning and discussing land use alternatives); Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. CHI. L. REV. 681 (1973) [hereinafter Ellickson, Alternatives to Zoning] (discussing liability rules and other alternatives to zoning); Douglas W. Kmiec, Deregulating Land Use: An Alternative Free Enterprise Development System, 130 U. PA. L. REV. 28 (1981) (discussing an alternative to zoning based on land use intensity ratings). Carol Rose has noted that many market-oriented proposals have had limited practical impact, "perhaps because they would require a forbidding array of changes in current land use regulatory practice." Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 CAL. L. REV. 837, 844 (1983) [hereinafter Rose, Planning and Dealing].
35. A number of scholarly proposals have been designed to foster market (or market-like) transactions in the land use field, some of which involve abolishing traditional zoning. See generally BERNARD H. SIEGAN, LAND USE WITHOUT ZONING (1972) [hereinafter SIEGAN, LAND USE WITHOUT ZONING] (proposing elimination of zoning and discussing land use alternatives); Robert C. Ellickson, Alternatives to Zoning: Covenants, Nuisance Rules, and Fines as Land Use Controls, 40 U. CHI. L. REV. 681 (1973) [hereinafter Ellickson, Alternatives to Zoning] (discussing liability rules and other alternatives to zoning); Douglas W. Kmiec, Deregulating Land Use: An Alternative Free Enterprise Development System, 130 U. PA. L. REV. 28 (1981) (discussing an alternative to zoning based on land use intensity ratings). Carol Rose has noted that many market-oriented proposals have had limited practical impact, "perhaps because they would require a forbidding array of changes in current land use regulatory practice." Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 CAL. L. REV. 837, 844 (1983) [hereinafter Rose, Planning and Dealing].
36. My proposed call option mechanism builds on insights in Ian Ayres & Eric Talley, Solomonic Bargaining: Dividing a Legal Entitlement to Facilitate Coasean Trade, 104 YALE. L.J. 1027, 1038-47 (1995), which builds, in turn, on Guido Calabresi and Douglas Melamed's pathbreaking article, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089 (1972). A call option is usually conceptualized as a type of liability rule. See id. at 1105-06 (discussing liability rules); Madeline Morris, The Structure of Entitlements, 78 CORNELL L. REV. 822, 852-54 (1993) (discussing "calls" as a form of liability rule). However, my call option arrangement could also be recast as an adjustment in the community's property rights. See Carol M. Rose, The Shadow of The Cathedral, 106 YALE L.J. 2175, 2178-79 (1997) [hereinafter Rose, The Shadow of The Cathedral] (noting that a liability rule equates to a "property right subject to an option"); see also infra notes 242-244 and accompanying text (discussing alternative conceptual formulations of the call option). Under my proposal, the landowner's "option" would extend only to land uses that are otherwise permissible under criminal law and non-negotiable public health and safety laws and regulations. For example, a landowner could maneuver around a zoning restriction specifying a particular lot size by using his call option, but he would hold no option to use his property to commit crimes.
37. My proposed call option mechanism builds on insights in Ian Ayres & Eric Talley, Solomonic Bargaining: Dividing a Legal Entitlement to Facilitate Coasean Trade, 104 YALE. L.J. 1027, 1038-47 (1995), which builds, in turn, on Guido Calabresi and Douglas Melamed's pathbreaking article, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089 (1972). A call option is usually conceptualized as a type of liability rule. See id. at 1105-06 (discussing liability rules); Madeline Morris, The Structure of Entitlements, 78 CORNELL L. REV. 822, 852-54 (1993) (discussing "calls" as a form of liability rule). However, my call option arrangement could also be recast as an adjustment in the community's property rights. See Carol M. Rose, The Shadow of The Cathedral, 106 YALE L.J. 2175, 2178-79 (1997) [hereinafter Rose, The Shadow of The Cathedral] (noting that a liability rule equates to a "property right subject to an option"); see also infra notes 242-244 and accompanying text (discussing alternative conceptual formulations of the call option). Under my proposal, the landowner's "option" would extend only to land uses that are otherwise permissible under criminal law and non-negotiable public health and safety laws and regulations. For example, a landowner could maneuver around a zoning restriction specifying a particular lot size by using his call option, but he would hold no option to use his property to commit crimes.
38. My proposed call option mechanism builds on insights in Ian Ayres & Eric Talley, Solomonic Bargaining: Dividing a Legal Entitlement to Facilitate Coasean Trade, 104 YALE. L.J. 1027, 1038-47 (1995), which builds, in turn, on Guido Calabresi and Douglas Melamed's pathbreaking article, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089 (1972). A call option is usually conceptualized as a type of liability rule. See id. at 1105-06 (discussing liability rules); Madeline Morris, The Structure of Entitlements, 78 CORNELL L. REV. 822, 852-54 (1993) (discussing "calls" as a form of liability rule). However, my call option arrangement could also be recast as an adjustment in the community's property rights. See Carol M. Rose, The Shadow of The Cathedral, 106 YALE L.J. 2175, 2178-79 (1997) [hereinafter Rose, The Shadow of The Cathedral] (noting that a liability rule equates to a "property right subject to an option"); see also infra notes 242-244 and accompanying text (discussing alternative conceptual formulations of the call option). Under my proposal, the landowner's "option" would extend only to land uses that are otherwise permissible under criminal law and non-negotiable public health and safety laws and regulations. For example, a landowner could maneuver around a zoning restriction specifying a particular lot size by using his call option, but he would hold no option to use his property to commit crimes.
39. My proposed call option mechanism builds on insights in Ian Ayres & Eric Talley, Solomonic Bargaining: Dividing a Legal Entitlement to Facilitate Coasean Trade, 104 YALE. L.J. 1027, 1038-47 (1995), which builds, in turn, on Guido Calabresi and Douglas Melamed's pathbreaking article, Property Rules, Liability Rules, and Inalienability: One View of the Cathedral, 85 HARV. L. REV. 1089 (1972). A call option is usually conceptualized as a type of liability rule. See id. at 1105-06 (discussing liability rules); Madeline Morris, The Structure of Entitlements, 78 CORNELL L. REV. 822, 852-54 (1993) (discussing "calls" as a form of liability rule). However, my call option arrangement could also be recast as an adjustment in the community's property rights. See Carol M. Rose, The Shadow of The Cathedral, 106 YALE L.J. 2175, 2178-79 (1997) [hereinafter Rose, The Shadow of The Cathedral] (noting that a liability rule equates to a "property right subject to an option"); see also infra notes 242-244 and accompanying text (discussing alternative conceptual formulations of the call option). Under my proposal, the landowner's "option" would extend only to land uses that are otherwise permissible under criminal law and non-negotiable public health and safety laws and regulations. For example, a landowner could maneuver around a zoning restriction specifying a particular lot size by using his call option, but he would hold no option to use his property to commit crimes.
40. See Ellickson, Alternatives to Zoning, supra note 22, at 738-48 (discussing liability rules for regulating land use); see also Ian Ayres & J.M. Balkin, Legal Entitlements as Auctions: Property Rules, Liability Rules, and Beyond, 106 YALE L.J. 703, 717-20 (1996) (discussing Ellickson's proposal as an example of a "second-order liability rule").
41. See Ellickson, Alternatives to Zoning, supra note 22, at 738-48 (discussing liability rules for regulating land use); see also Ian Ayres & J.M. Balkin, Legal Entitlements as Auctions: Property Rules, Liability Rules, and Beyond, 106 YALE L.J. 703, 717-20 (1996) (discussing Ellickson's proposal as an example of a "second-order liability rule").
42. In this respect, the call option resembles "performance zoning," which allows developers to engage in desired land uses by meeting certain objective performance standards. See LANE KENDIG ET AL., PERFORMANCE ZONING passim (1980); Frederick W. Acker, Note, Performance Zoning, 67 NOTRE DAME L. REV. 363, 364 (1991). Under my approach, the developer is required to remediate all cognizable negative externalities in order to exercise her option, or she may choose to propose a more efficient alternative to the governmental body. Robert D. Cooler captures the intuition behind the in-kind call option when he suggests that landowners be given the choice of mitigating or offsetting harms. ROBERT D. COOTER, THE STRATEGIC CONSTITUTION 299-302 (2000). However, he does not develop a mechanism for offering such a choice. Id. Douglas Kmiec's proposed alternative to zoning also involves in-kind consideration from developers to local governments but ties the level of "payment" not to the remediation of externalities, but to the difference between the fair market value of undeveloped land and the fair market value of the land with a desired land use intensity ("LUI") rating. Kmiec, supra note 22, at 69. Under Kmiec's system, the community establishes schedules of LUI ratings; the landowner may develop at any desired level of intensity by providing public improvements equal to the associated difference in land value. Id. at 66-70.
43. In this respect, the call option resembles "performance zoning," which allows developers to engage in desired land uses by meeting certain objective performance standards. See LANE KENDIG ET AL., PERFORMANCE ZONING passim (1980); Frederick W. Acker, Note, Performance Zoning, 67 NOTRE DAME L. REV. 363, 364 (1991). Under my approach, the developer is required to remediate all cognizable negative externalities in order to exercise her option, or she may choose to propose a more efficient alternative to the governmental body. Robert D. Cooler captures the intuition behind the in-kind call option when he suggests that landowners be given the choice of mitigating or offsetting harms. ROBERT D. COOTER, THE STRATEGIC CONSTITUTION 299-302 (2000). However, he does not develop a mechanism for offering such a choice. Id. Douglas Kmiec's proposed alternative to zoning also involves in-kind consideration from developers to local governments but ties the level of "payment" not to the remediation of externalities, but to the difference between the fair market value of undeveloped land and the fair market value of the land with a desired land use intensity ("LUI") rating. Kmiec, supra note 22, at 69. Under Kmiec's system, the community establishes schedules of LUI ratings; the landowner may develop at any desired level of intensity by providing public improvements equal to the associated difference in land value. Id. at 66-70.
44. In this respect, the call option resembles "performance zoning," which allows developers to engage in desired land uses by meeting certain objective performance standards. See LANE KENDIG ET AL., PERFORMANCE ZONING passim (1980); Frederick W. Acker, Note, Performance Zoning, 67 NOTRE DAME L. REV. 363, 364 (1991). Under my approach, the developer is required to remediate all cognizable negative externalities in order to exercise her option, or she may choose to propose a more efficient alternative to the governmental body. Robert D. Cooler captures the intuition behind the in-kind call option when he suggests that landowners be given the choice of mitigating or offsetting harms. ROBERT D. COOTER, THE STRATEGIC CONSTITUTION 299-302 (2000). However, he does not develop a mechanism for offering such a choice. Id. Douglas Kmiec's proposed alternative to zoning also involves in-kind consideration from developers to local governments but ties the level of "payment" not to the remediation of externalities, but to the difference between the fair market value of undeveloped land and the fair market value of the land with a desired land use intensity ("LUI") rating. Kmiec, supra note 22, at 69. Under Kmiec's system, the community establishes schedules of LUI ratings; the landowner may develop at any desired level of intensity by providing public improvements equal to the associated difference in land value. Id. at 66-70.
45. My framework contemplates a number of procedural adjustments as well. See infra notes 264-273 and accompanying text.
46. 483 U.S. 825 (1987).
47. 512 U.S. 374 (1994).
48. Nollan, 483 U.S. at 828.
49. Id. 31. Id. at 837-42.
50. Id. at 836-37.
51. Dolan, 512 U.S. at 380. The condition required the dedication of the portion of Ms. Dolan's land lying within a one hundred-year floodplain for improvements to a storm drainage system, as well as a fifteen-foot strip of land lying adjacent to the floodplain for a bike path. Id.
52. Id. at 387, 394-95.
53. Id. at 394-95; see id. at 405 (Stevens, J., dissenting) (noting the "novel burden of proof" imposed on the city).
54. In Nollan, the Court suggested that a stricter standard than rational basis review applies to land use regulations. Nollan, 483 U.S. at 834 n.3. However, the Court neither addressed whether the underlying development restriction in that case met the standard nor discussed the implications of the standard outside of the bargaining realm. See id. at 835 (assuming, without deciding, that legitimate governmental purposes underlay the development restriction).
55. See Ronald H. Rosenberg, The Non-Impact of the United States Supreme Court Regulatory Takings Cases on the State Courts: Does the Supreme Court Really Matter?, 6 FORDHAM ENVTL. L.J. 523, 540-42 (1995) (detailing state court cases interpreting and applying Nollan).
56. City of Monterey v. Del Monte Dunes, 526 U.S. 687, 702 (1999). Although the Court split on many other issues in the case, it was unanimous in observing that Dolan is confined to the exactions context. Id.
57. Id. at 703.
58. 450 S.E.2d 200 (Ga. 1994), cert. denied, 515 U.S. 1116 (1995) (Thomas & O'Connor, JJ., dissenting).
59. See id. at 203 n.3 (rejecting application of Dolan proportionality test to legislative enactment). In Dolan, the Court noted that cases such as Agins v. City of Tibron, 447 U.S. 255 (1980), involved "essentially legislative determinations classifying entire areas of the city" which were distinguishable from the "adjudicative decision" made on Ms. Dolan's permit application. Dolan v. City of Tigard, 512 U.S. 374, 385 (1994). Lower courts are in conflict as to the significance of this distinction. See, e.g., Parking Ass'n of Ga., 515 U.S. at 1117 (Thomas & O'Connor, JJ., dissenting from denial of certiorari); Garneau v. City of Seattle, 147 F.3d 802, 811 (9th Cir. 1998) (noting that "the Supreme Court has left unsettled the question whether Dolan's rough proportionality test applies to legislative, as opposed to administrative exactions"); Amoco Oil Co. v. Vill. of Schaumburg, 661 N.E.2d 380, 390 (Ill. App. Ct. 1995) (citing with approval Justice Thomas's dissent in Parking Ass'n of Georgia and asserting that "a municipality should not be able to insulate itself from a takings challenge merely by utilizing a different bureaucratic vehicle when expropriating its citizen's property"); see also David L. Callies, Regulatory Takings and the Supreme Court: How Perspectives on Properly Rights Have Changed from Penn Central to Dolan, and What State and Federal Courts Are Doing about It, 28 STETSON L. REV. 523, 572-74 (1999) (collecting cases); Dana, supra note 15, at 1261 n.91 (collecting court decisions applying nexus and rough proportionality review in contexts other than case-by-case decisionmaking); Inna Reznik, The Distinction Between legislative and Adjudicative Decisions in Dolan v. City of Tigard, 75 N.Y.U. L. REV. 242, 252-57 (2000) (discussing confusion in the courts regarding the legislative/adjudicative distinction).
60. See id. at 203 n.3 (rejecting application of Dolan proportionality test to legislative enactment). In Dolan, the Court noted that cases such as Agins v. City of Tibron, 447 U.S. 255 (1980), involved "essentially legislative determinations classifying entire areas of the city" which were distinguishable from the "adjudicative decision" made on Ms. Dolan's permit application. Dolan v. City of Tigard, 512 U.S. 374, 385 (1994). Lower courts are in conflict as to the significance of this distinction. See, e.g., Parking Ass'n of Ga., 515 U.S. at 1117 (Thomas & O'Connor, JJ., dissenting from denial of certiorari); Garneau v. City of Seattle, 147 F.3d 802, 811 (9th Cir. 1998) (noting that "the Supreme Court has left unsettled the question whether Dolan's rough proportionality test applies to legislative, as opposed to administrative exactions"); Amoco Oil Co. v. Vill. of Schaumburg, 661 N.E.2d 380, 390 (Ill. App. Ct. 1995) (citing with approval Justice Thomas's dissent in Parking Ass'n of Georgia and asserting that "a municipality should not be able to insulate itself from a takings challenge merely by utilizing a different bureaucratic vehicle when expropriating its citizen's property"); see also David L. Callies, Regulatory Takings and the Supreme Court: How Perspectives on Properly Rights Have Changed from Penn Central to Dolan, and What State and Federal Courts Are Doing about It, 28 STETSON L. REV. 523, 572-74 (1999) (collecting cases); Dana, supra note 15, at 1261 n.91 (collecting court decisions applying nexus and rough proportionality review in contexts other than case-by-case decisionmaking); Inna Reznik, The Distinction Between legislative and Adjudicative Decisions in Dolan v. City of Tigard, 75 N.Y.U. L. REV. 242, 252-57 (2000) (discussing confusion in the courts regarding the legislative/adjudicative distinction).
61. See id. at 203 n.3 (rejecting application of Dolan proportionality test to legislative enactment). In Dolan, the Court noted that cases such as Agins v. City of Tibron, 447 U.S. 255 (1980), involved "essentially legislative determinations classifying entire areas of the city" which were distinguishable from the "adjudicative decision" made on Ms. Dolan's permit application. Dolan v. City of Tigard, 512 U.S. 374, 385 (1994). Lower courts are in conflict as to the significance of this distinction. See, e.g., Parking Ass'n of Ga., 515 U.S. at 1117 (Thomas & O'Connor, JJ., dissenting from denial of certiorari); Garneau v. City of Seattle, 147 F.3d 802, 811 (9th Cir. 1998) (noting that "the Supreme Court has left unsettled the question whether Dolan's rough proportionality test applies to legislative, as opposed to administrative exactions"); Amoco Oil Co. v. Vill. of Schaumburg, 661 N.E.2d 380, 390 (Ill. App. Ct. 1995) (citing with approval Justice Thomas's dissent in Parking Ass'n of Georgia and asserting that "a municipality should not be able to insulate itself from a takings challenge merely by utilizing a different bureaucratic vehicle when expropriating its citizen's property"); see also David L. Callies, Regulatory Takings and the Supreme Court: How Perspectives on Properly Rights Have Changed from Penn Central to Dolan, and What State and Federal Courts Are Doing about It, 28 STETSON L. REV. 523, 572-74 (1999) (collecting cases); Dana, supra note 15, at 1261 n.91 (collecting court decisions applying nexus and rough proportionality review in contexts other than case-by-case decisionmaking); Inna Reznik, The Distinction Between legislative and Adjudicative Decisions in Dolan v. City of Tigard, 75 N.Y.U. L. REV. 242, 252-57 (2000) (discussing confusion in the courts regarding the legislative/adjudicative distinction).
62. See id. at 203 n.3 (rejecting application of Dolan proportionality test to legislative enactment). In Dolan, the Court noted that cases such as Agins v. City of Tibron, 447 U.S. 255 (1980), involved "essentially legislative determinations classifying entire areas of the city" which were distinguishable from the "adjudicative decision" made on Ms. Dolan's permit application. Dolan v. City of Tigard, 512 U.S. 374, 385 (1994). Lower courts are in conflict as to the significance of this distinction. See, e.g., Parking Ass'n of Ga., 515 U.S. at 1117 (Thomas & O'Connor, JJ., dissenting from denial of certiorari); Garneau v. City of Seattle, 147 F.3d 802, 811 (9th Cir. 1998) (noting that "the Supreme Court has left unsettled the question whether Dolan's rough proportionality test applies to legislative, as opposed to administrative exactions"); Amoco Oil Co. v. Vill. of Schaumburg, 661 N.E.2d 380, 390 (Ill. App. Ct. 1995) (citing with approval Justice Thomas's dissent in Parking Ass'n of Georgia and asserting that "a municipality should not be able to insulate itself from a takings challenge merely by utilizing a different bureaucratic vehicle when expropriating its citizen's property"); see also David L. Callies, Regulatory Takings and the Supreme Court: How Perspectives on Properly Rights Have Changed from Penn Central to Dolan, and What State and Federal Courts Are Doing about It, 28 STETSON L. REV. 523, 572-74 (1999) (collecting cases); Dana, supra note 15, at 1261 n.91 (collecting court decisions applying nexus and rough proportionality review in contexts other than case-by-case decisionmaking); Inna Reznik, The Distinction Between legislative and Adjudicative Decisions in Dolan v. City of Tigard, 75 N.Y.U. L. REV. 242, 252-57 (2000) (discussing confusion in the courts regarding the legislative/adjudicative distinction).
63. EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 11.
64. In theory, a broadly applicable legislative enactment might be thought to carry with it an intrinsic political check that an adjudicative decision would lack. However, where land use regulation is undertaken in piecemeal fashion by local governmental bodies, there is reason to question whether the legislative/adjudicative distinction is meaningful. See Rose, Planning and Dealing, supra note 22, at 846 (stating that "local land use decisions should not be classed as either 'legislative' or 'judicial'; these rubrics are drawn from a separation-of-powers doctrine more appropriate to larger governmental units").
65. Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 841 (1986).
66. Nollan, 483 U.S. at 841.
67. Dolan, 512 U.S. at 385. The Court's statement in Del Monte Dunes that Dolan has not been extended beyond "land-use decisions conditioning approval on the dedication of property to public use," City of Monterey v. Del Monte Dunes, 526 U.S. 687, 702 (1999) (emphasis added), could be read as limiting the rough-proportionality analysis to land concessions. It is not yet clear how lower courts will interpret this language. The analysis will likely turn on whether the phrase "dedication of property" denotes only concessions of real estate, or whether it can be read more broadly to include the payment of fees.
68. See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992) (noting that permanent physical invasion is compensable "no matter how minute the intrusion" and explaining that any other regulation of property is deemed to constitute a taking if it "denies all economically beneficial or productive use of land").
69. See Clajon Prod. Corp. v. Petera, 70 F.3d 1566, 1578 (10th Cir. 1995) ("[W]e believe that Nollan and Dolan are best understood as extending the analysis of complete physical occupation cases to those situations in which the government achieves the same end (i.e., the possession of one's physical property) through a conditional permitting procedure.").
70. 147 F.3d 802 (9th Cir. 1998).
71. See generally id. (involving a challenge to Seattle's Tenant Relocation Assistance Ordinance, which requires landlords to provide cash relocation assistance to tenants displaced as a result of redevelopment).
72. Id. at 812.
73. See, e.g., Ehrlich v. City of Culver City, 911 P.2d 429, 439 (Cal. 1996) (plurality opinion) (concluding that Nollan and Dolan "apply under the circumstances of this case, to the monetary exaction imposed by Culver City as a condition of approving plaintiffs [rezoning] request."); Benchmark Land Co. v. City of Battle Ground, 972 P.2d 944, 950 (Wash. Ct. App. 1999) (holding that Nollan and Dolan apply "where the City requires the developer as a condition of approval to incur substantial costs improving an adjoining street"). The dissent in Garneau argued that the applicability of Dolan to monetary exactions can be inferred from the U.S. Supreme Court's action in granting certiorari to summarily vacate and remand the prior decision in Ehrlich for further consideration in light of Dolan. Garneau, 147 F.3d at 815 & n.5 (O'Scannlain, J., concurring in part and dissenting in part) (citing Ehrlich, 512 U.S. at 1231). See also Callies, supra note 41, at 568-72 (discussing case law on this point); Mark W. Cordes, Legal Limits on Development Exactions: Responding to Nollan and Dolan, 15 N. ILL. U. L. REV. 513, 540-43 (1995) (noting split among commentators and courts on this question); Douglas W. Kmiec, Inserting the Last Remaining Pieces Into the Takings Puzzle, 38 WM. & MARY L. REV. 995, 1036-37 & n.215 (1997) (discussing the "artificial distinction" drawn by some courts between dedications and monetary exactions, and citing cases that "lamely" denied heightened scrutiny to the latter); Nancy E. Stroud, Note, A Review of Del Monte Dunes v. City of Monterey and Its Implications for Local Government Exactions, 15 J. LAND USE & ENVTL. L. 195, 202-06 (1999) (discussing the split among courts on this point and possible implications of Del Monte Dunes).
74. See, e.g., Ehrlich v. City of Culver City, 911 P.2d 429, 439 (Cal. 1996) (plurality opinion) (concluding that Nollan and Dolan "apply under the circumstances of this case, to the monetary exaction imposed by Culver City as a condition of approving plaintiffs [rezoning] request."); Benchmark Land Co. v. City of Battle Ground, 972 P.2d 944, 950 (Wash. Ct. App. 1999) (holding that Nollan and Dolan apply "where the City requires the developer as a condition of approval to incur substantial costs improving an adjoining street"). The dissent in Garneau argued that the applicability of Dolan to monetary exactions can be inferred from the U.S. Supreme Court's action in granting certiorari to summarily vacate and remand the prior decision in Ehrlich for further consideration in light of Dolan. Garneau, 147 F.3d at 815 & n.5 (O'Scannlain, J., concurring in part and dissenting in part) (citing Ehrlich, 512 U.S. at 1231). See also Callies, supra note 41, at 568-72 (discussing case law on this point); Mark W. Cordes, Legal Limits on Development Exactions: Responding to Nollan and Dolan, 15 N. ILL. U. L. REV. 513, 540-43 (1995) (noting split among commentators and courts on this question); Douglas W. Kmiec, Inserting the Last Remaining Pieces Into the Takings Puzzle, 38 WM. & MARY L. REV. 995, 1036-37 & n.215 (1997) (discussing the "artificial distinction" drawn by some courts between dedications and monetary exactions, and citing cases that "lamely" denied heightened scrutiny to the latter); Nancy E. Stroud, Note, A Review of Del Monte Dunes v. City of Monterey and Its Implications for Local Government Exactions, 15 J. LAND USE & ENVTL. L. 195, 202-06 (1999) (discussing the split among courts on this point and possible implications of Del Monte Dunes).
75. See, e.g., Ehrlich v. City of Culver City, 911 P.2d 429, 439 (Cal. 1996) (plurality opinion) (concluding that Nollan and Dolan "apply under the circumstances of this case, to the monetary exaction imposed by Culver City as a condition of approving plaintiffs [rezoning] request."); Benchmark Land Co. v. City of Battle Ground, 972 P.2d 944, 950 (Wash. Ct. App. 1999) (holding that Nollan and Dolan apply "where the City requires the developer as a condition of approval to incur substantial costs improving an adjoining street"). The dissent in Garneau argued that the applicability of Dolan to monetary exactions can be inferred from the U.S. Supreme Court's action in granting certiorari to summarily vacate and remand the prior decision in Ehrlich for further consideration in light of Dolan. Garneau, 147 F.3d at 815 & n.5 (O'Scannlain, J., concurring in part and dissenting in part) (citing Ehrlich, 512 U.S. at 1231). See also Callies, supra note 41, at 568-72 (discussing case law on this point); Mark W. Cordes, Legal Limits on Development Exactions: Responding to Nollan and Dolan, 15 N. ILL. U. L. REV. 513, 540-43 (1995) (noting split among commentators and courts on this question); Douglas W. Kmiec, Inserting the Last Remaining Pieces Into the Takings Puzzle, 38 WM. & MARY L. REV. 995, 1036-37 & n.215 (1997) (discussing the "artificial distinction" drawn by some courts between dedications and monetary exactions, and citing cases that "lamely" denied heightened scrutiny to the latter); Nancy E. Stroud, Note, A Review of Del Monte Dunes v. City of Monterey and Its Implications for Local Government Exactions, 15 J. LAND USE & ENVTL. L. 195, 202-06 (1999) (discussing the split among courts on this point and possible implications of Del Monte Dunes).
76. See Jerold S. Kayden, Zoning for Dollars: New Rules For an Old Game? Comments On the Municipal Art Society and Nollan Cases, 39 WASH. U. J. URB. & CONTEMP. L. 3, 34 (1991) (stating that Nollan "threatens to prohibit exercises of the technique [incentive zoning] for unrelated amenities").
77. City of Monterey v. Del Monte Dunes, 526 U.S. 687, 722-23 (1999). The Court declined to engage in a "precise demarcation of the respective provinces of judge and jury in determining whether a zoning decision substantially advances legitimate governmental interests." Id. at 722. Nevertheless, the possibility of presenting one's case to a jury on such land use issues is likely to increase the volume of litigation. See David G. Savage, Juries OK'd in Land Development Cases, L.A. TIMES, May 25, 1999, at A25 (quoting John D. Echeverria, who predicts the case will "encourage more burdensome and costly litigation against local governments over land-use issues").
78. I treat nexus and proportionality as a package here, though nexus might be thought to follow proportionality automatically in this context. It is difficult to imagine a regulation that is "proportionate" to the harm caused by a given land use, but which fails to address the harm or harms to which it is proportionate.
79. I am not the first to recognize the aptness of Hunter S. Thompson's signature phrase in the land use context. See, for example, Michael B. Gerrard, Fear and Loathing in the Siting of Hazardous and Radioactive Waste Facilities: A Comprehensive Approach to a Misperceived Crisis, 68 TUL. L. REV. 1047 (1994); Robert L. Glicksman, Fear and Loathing on the Federal Lands, 45 U. KAN. L. REV. 647 (1997); Mitchell F. Disney, Note, Fear and Loathing on the California Coastline: Are Coastal Commission Property Exactions Constitutional?, 14 PEPP. L. REV. 357 (1987).
80. I am not the first to recognize the aptness of Hunter S. Thompson's signature phrase in the land use context. See, for example, Michael B. Gerrard, Fear and Loathing in the Siting of Hazardous and Radioactive Waste Facilities: A Comprehensive Approach to a Misperceived Crisis, 68 TUL. L. REV. 1047 (1994); Robert L. Glicksman, Fear and Loathing on the Federal Lands, 45 U. KAN. L. REV. 647 (1997); Mitchell F. Disney, Note, Fear and Loathing on the California Coastline: Are Coastal Commission Property Exactions Constitutional?, 14 PEPP. L. REV. 357 (1987).
81. I am not the first to recognize the aptness of Hunter S. Thompson's signature phrase in the land use context. See, for example, Michael B. Gerrard, Fear and Loathing in the Siting of Hazardous and Radioactive Waste Facilities: A Comprehensive Approach to a Misperceived Crisis, 68 TUL. L. REV. 1047 (1994); Robert L. Glicksman, Fear and Loathing on the Federal Lands, 45 U. KAN. L. REV. 647 (1997); Mitchell F. Disney, Note, Fear and Loathing on the California Coastline: Are Coastal Commission Property Exactions Constitutional?, 14 PEPP. L. REV. 357 (1987).
82. FISCHEL, REGULATORY TAKINGS, supra note 2, at 61-62 (internal cross-reference omitted); see Richard A. Epstein, The Harms and Benefits of Nollan and Dolan, 15 N. ILL. U. L. REV. 479, 481 (1995) [hereinafter Epstein, Harms and Benefits] (noting that the Nollan case "was born of defiance and frustration"); Fischel, Introduction, supra note 15, at 1597 ("Nexus is one of those 'tokens' to which Michelman refers that reminds us that there is some line between private and public activity.") (footnote omitted); Frank Michelman, Takings, 1987, 88 COLUM. L. REV. 1600, 1628 (1988) (suggesting that illogical doctrines in takings jurisdiction "can still make sense ideologically as tokens of the limitation of government").
83. FISCHEL, REGULATORY TAKINGS, supra note 2, at 61-62 (internal cross-reference omitted); see Richard A. Epstein, The Harms and Benefits of Nollan and Dolan, 15 N. ILL. U. L. REV. 479, 481 (1995) [hereinafter Epstein, Harms and Benefits] (noting that the Nollan case "was born of defiance and frustration"); Fischel, Introduction, supra note 15, at 1597 ("Nexus is one of those 'tokens' to which Michelman refers that reminds us that there is some line between private and public activity.") (footnote omitted); Frank Michelman, Takings, 1987, 88 COLUM. L. REV. 1600, 1628 (1988) (suggesting that illogical doctrines in takings jurisdiction "can still make sense ideologically as tokens of the limitation of government").
84. FISCHEL, REGULATORY TAKINGS, supra note 2, at 61-62 (internal cross-reference omitted); see Richard A. Epstein, The Harms and Benefits of Nollan and Dolan, 15 N. ILL. U. L. REV. 479, 481 (1995) [hereinafter Epstein, Harms and Benefits] (noting that the Nollan case "was born of defiance and frustration"); Fischel, Introduction, supra note 15, at 1597 ("Nexus is one of those 'tokens' to which Michelman refers that reminds us that there is some line between private and public activity.") (footnote omitted); Frank Michelman, Takings, 1987, 88 COLUM. L. REV. 1600, 1628 (1988) (suggesting that illogical doctrines in takings jurisdiction "can still make sense ideologically as tokens of the limitation of government").
85. FISCHEL, REGULATORY TAKINGS, supra note 2, at 61-62 (internal cross-reference omitted); see Richard A. Epstein, The Harms and Benefits of Nollan and Dolan, 15 N. ILL. U. L. REV. 479, 481 (1995) [hereinafter Epstein, Harms and Benefits] (noting that the Nollan case "was born of defiance and frustration"); Fischel, Introduction, supra note 15, at 1597 ("Nexus is one of those 'tokens' to which Michelman refers that reminds us that there is some line between private and public activity.") (footnote omitted); Frank Michelman, Takings, 1987, 88 COLUM. L. REV. 1600, 1628 (1988) (suggesting that illogical doctrines in takings jurisdiction "can still make sense ideologically as tokens of the limitation of government").
86. The extortion language used by Justice Scalia originally appeared in a New Hampshire Supreme Court opinion. Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 837 (1986) (quoting J.E.D. Assocs., Inc. v. Atkinson, 432 A.2d 12, 14-15 (N.H. 1981)); see Been, supra note 2, at 475 & n.14 (citing cases using "extortion" and similar expressions).
87. Alexander, supra note 16, at 1764-67. This is not the only story that might emerge from a land dispute, of course. See id. at 1767-68 (discussing a counter-narrative in which private landowners are powerful and manipulative); David Mendell & Gary Washburn, Neighbors Win 1 Over Goliath, CHI. TRIB., Mar. 10, 2000, at N1 (discussing community's zoning victory over "powerful, well-heeled development interest").
88. Alexander, supra note 16, at 1764-67. This is not the only story that might emerge from a land dispute, of course. See id. at 1767-68 (discussing a counter-narrative in which private landowners are powerful and manipulative); David Mendell & Gary Washburn, Neighbors Win 1 Over Goliath, CHI. TRIB., Mar. 10, 2000, at N1 (discussing community's zoning victory over "powerful, well-heeled development interest").
89. Alexander, supra note 16, at 1771.
90. See BLACK'S LAW DICTIONARY 557 (6th ed. 1990) (defining "exaction" as "[t]he wrongful act of an officer or other person in compelling payment of a fee or reward for his services, under color of his official authority, where no payment is due" and directing readers to "[s]ee also Extortion"); Symposium, Exactions, supra note 4, at 1 (quoting WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 431 (1986)).
91. See BLACK'S LAW DICTIONARY 557 (6th ed. 1990) (defining "exaction" as "[t]he wrongful act of an officer or other person in compelling payment of a fee or reward for his services, under color of his official authority, where no payment is due" and directing readers to "[s]ee also Extortion"); Symposium, Exactions, supra note 4, at 1 (quoting WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 431 (1986)).
92. See BLACK'S LAW DICTIONARY 557 (6th ed. 1990) (defining "exaction" as "[t]he wrongful act of an officer or other person in compelling payment of a fee or reward for his services, under color of his official authority, where no payment is due" and directing readers to "[s]ee also Extortion"); Symposium, Exactions, supra note 4, at 1 (quoting WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY 431 (1986)).
93. See infra Part II.
94. The volume of existing scholarship and court opinions using this term has confounded my efforts to eliminate it from this Article without sacrificing clarity. If it is too late in the day to switch to a more neutral word, such as "concession" or "in-kind payment," it is at least necessary to consciously strip the inapt term "exaction" of its negative connotations. See DEVELOPMENT EXACTIONS, supra note 4, at 3-4 (explaining decision to continue use of the word "exactions" despite its negative connotations).
95. See Alexander, supra note 16, at 1753 ("Takings doctrine is shaped by striking pictures and powerful metaphors . . . about who holds power and how those who hold power use it.").
96. See, e.g., Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 837 (1987) (providing an example of such language); William J. Jones Ins. Trust v. Fort Smith, 731 F. Supp. 912, 914 (W.D. Ark. 1990) (stating that without a showing of externalities relating to planned expansion, "the condition which the City attaches to building permits is simple extortion"); Outdoor Sys. v. City of Mesa, 819 P.2d 44, 53 (Ariz. 1991) (Cameron, J., dissenting) ("To require the landowner to give up what he is legally permitted to have in order to obtain what he may already be entitled to, is bureaucratic extortion, if not judicial extortion."); Seawall Assocs. v. City of New York, 542 N.E.2d 1059, 1070 (N.Y. 1989) ("Permitting the owners to avoid the illegal confiscation by paying a 'ransom' cannot make it lawful.").
97. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 344-45 (arguing that the problem with the bargain invalidated in Nollan was that people did not view Nollan's proposed use - a larger house - as an illegitimate land use that should require special permission).
98. Zoning may lack a meaningful political check, as it often burdens those who are not yet residents of the community - for example, those planning to move into a new development. See generally Fischel, The Economics of Land Use Exactions, supra note 15, at 107 (noting that zoning may burden non-residents). It has also traditionally received a relatively low level of judicial review. See generally Agins v. City of Tiburon, 447 U.S. 255 (1980); Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926). However, this may be changing as the reasoning of cases like Nollan and Dolan seeps into the analysis of the underlying regulations, and as cases like Del Monte Dunes suggest a broader role for fact-finding in assessing regulatory action.
99. Nollan, 483 U.S. at 837 n.5.
100. See Kayden, supra note 53, at 3 ("Faced with mounting social needs and continuing fiscal constraints, more and more cities 'mint' money through their zoning codes to finance a wide array of public amenities."). Creating and selling new rules is actually much more efficient than minting money would be, since the creation of additional rules channels dollars from landowners to the local government without diluting their value.
101. See Been, supra note 2, at 491 (discussing the potential for abuse if the government can sell violation rights).
102. See Frank I. Michelman, Property, Utility, and Fairness: Comments on the Ethical Foundations of 'Just Compensation' Law, 80 HARV. L. REV. 1165, 1214-18 (1967) [hereinafter Michelman, Property, Utility, and Fairness] (discussing the "demoralization costs" associated with takings); id. at 1228 (discussing the physical invasion test by reference to the fact that "[t]he psychological shock, the emotional protest, the symbolic threat to all property and security, may be expected to reach their highest pitch when government is an unabashed invader").
103. ROBERT H. NELSON, ZONING AND PROPERTY RIGHTS: AN ANALYSIS OF THE AMERICAN SYSTEM OF LAND-USE REGULATION 1, 15-18 (1977) (describing zoning as a collective property right). In this Article, I use the term "zoning" as shorthand for all forms of land use regulation.
104. For present purposes, "the community" can be thought of in simplistic terms as incorporating the preferences of everyone in the relevant area except for the individual landowner in question. Later, I will introduce the complications presented when the interests of the politically dominant portions of the community in charge of the regulatory apparatus diverge from the interests of a minority segment of the community. The simplified version will typically conform to reality where a relatively homogenous neighborhood engages in land use regulation. See id. at 16 ("Although zoning rights are held by local government, in all except a very few instances, local legislatures can be counted on to follow the residents' wishes in administering the zoning of a neighborhood.").
105. See William A. Fischel, Equity and Efficiency Aspects of Zoning Reform, 27 PUB. POL'Y 301, 302 (1979) [hereinafter Fischel, Zoning Reform] (noting that zoning transfers "property rights or 'entitlements' from those who own undeveloped land ('the landowners') to other community residents (the 'community')").
106. See Fischel, The Economics of Land Use Exactions, supra note 15, at 110 (discussing the distinction between property rules and liability rules articulated in Calabresi & Melamed, supra note 23, at 1105-06). Granting the community a property right is not the only possible arrangement. See Ellickson, Alternatives to Zoning, supra note 22, at 711-38 (discussing the use of other legal rules, including nuisance remedies and covenants, to regulate land use); infra Part III (offering a new framework for land use bargains).
107. See Fischel, The Economics of Land Use Exactions, supra note 15, at 110 (discussing the distinction between property rules and liability rules articulated in Calabresi & Melamed, supra note 23, at 1105-06). Granting the community a property right is not the only possible arrangement. See Ellickson, Alternatives to Zoning, supra note 22, at 711-38 (discussing the use of other legal rules, including nuisance remedies and covenants, to regulate land use); infra Part III (offering a new framework for land use bargains).
108. See Fischel, The Economics of Land Use Exactions, supra note 15, at 110 (discussing the distinction between property rules and liability rules articulated in Calabresi & Melamed, supra note 23, at 1105-06). Granting the community a property right is not the only possible arrangement. See Ellickson, Alternatives to Zoning, supra note 22, at 711-38 (discussing the use of other legal rules, including nuisance remedies and covenants, to regulate land use); infra Part III (offering a new framework for land use bargains).
109. The idea of graphically representing a "restriction index" is borrowed from William Fischel. Fischel, Zoning Reform, supra note 74, at 304 fig.1; FISCHEL, REGULATORY TAKINGS, supra note 2, at 343 fig.9.1. My graphical formulation suggests that regulation always operates to restrict the intensity of development. Anecdotal evidence suggests this is not always the case. For example, I observed one neighborhood zoning meeting in Chicago in which local business owners opposed a residential proposal because it would not help to generate additional traffic through the area - in other words, interested property owners sought to ban the use for being insufficiently intensive. Nevertheless, land use regulations typically operate with increasing force against increasingly intensive land uses, making Figure 1 a helpful approximation of reality.
110. The idea of graphically representing a "restriction index" is borrowed from William Fischel. Fischel, Zoning Reform, supra note 74, at 304 fig.1; FISCHEL, REGULATORY TAKINGS, supra note 2, at 343 fig.9.1. My graphical formulation suggests that regulation always operates to restrict the intensity of development. Anecdotal evidence suggests this is not always the case. For example, I observed one neighborhood zoning meeting in Chicago in which local business owners opposed a residential proposal because it would not help to generate additional traffic through the area - in other words, interested property owners sought to ban the use for being insufficiently intensive. Nevertheless, land use regulations typically operate with increasing force against increasingly intensive land uses, making Figure 1 a helpful approximation of reality.
111. See Fischel, Zoning Reform, supra note 74, at 311 (noting that nuisance law could be invoked to prevent certain land uses).
112. The terms "noxious," "intensive," and "innocuous" do not carry self-evident meanings, and reasonable minds may differ as to the quantity of uses falling into each of these categories. They are, however, convenient labels for purposes of illustration. This is obviously not the only possible way of dividing up the universe of land uses. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 353 fig.9.2 (dividing the spectrum of possible land uses into categories labeled "subnormal," "normal," and "supernormal").
113. Fischel, Zoning Reform, supra note 74, at 317-18. Although zoning is often rationalized by analogizing to nuisance law, "zoning provides the community with a far larger and more diverse bundle of entitlements than even the most generous definition of actionable nuisances." Id. at 318.
114. See Pa. Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) ("[W]Hile property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking."); see also Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1027 (1992) ("Where the state seeks to sustain regulation that deprives land of all economically beneficial use, we think it may resist compensation only if the logically antecedent inquiry into the nature of the owner's estate shows that the proscribed use interests were not part of his title to begin with."). Whether or not Z3 would be viewed as going "too far" would depend on the legitimacy of the state interests advanced to ban certain innocuous uses, and whether the remaining permissible uses were economically viable.
115. See Dana, supra note 15, at 1269 ("[O]ver-regulation may benefit the dominant political majority even though it does not maximize the welfare of the community as a whole."). Of course, zoning regulations may not reflect the interests of a majority at all, but may instead be the result of "rent-seeking" by powerful interest groups. Rent-seeking occurs when parties try to convince the government to intervene in the market in ways that will allow those parties to attain above-market returns. See Jonathan R. Macey, Promoting Public-Regarding Legislation Through Statutory Interpretation: An Interest Group Model, 86 COLUM. L. REV. 223, 224 n.6 (1986). When regulation is influenced in this manner, the initial allocation of property rights might be expected to diverge even further from the social optimum.
116. See Dana, supra note 15, at 1269 ("[O]ver-regulation may benefit the dominant political majority even though it does not maximize the welfare of the community as a whole."). Of course, zoning regulations may not reflect the interests of a majority at all, but may instead be the result of "rent-seeking" by powerful interest groups. Rent-seeking occurs when parties try to convince the government to intervene in the market in ways that will allow those parties to attain above-market returns. See Jonathan R. Macey, Promoting Public-Regarding Legislation Through Statutory Interpretation: An Interest Group Model, 86 COLUM. L. REV. 223, 224 n.6 (1986). When regulation is influenced in this manner, the initial allocation of property rights might be expected to diverge even further from the social optimum.
117. See supra note 73 (assuming initially that "the community" incorporates the preferences of everyone in the relevant area except for the individual landowner in question).
118. See Fischel, Zoning Reform, supra note 74, at 325 fig.2. My analysis in working through Figure 2 draws heavily on Fischel's work. However, my formulation differs in two important respects from the analysis employed by Fischel. First, I explicitly incorporate the intuition that in the absence of outside constraints or strategic motives, a community will always choose regulatory point A - the point at which no further marginal benefits can be derived from additional regulations. Second, my graph explicitly takes account of the fact that further regulations are possible beyond this point (an intuition to be developed further in Figure 3, infra), and that the community might continue regulating well into this costly regulatory range for purely strategic reasons.
119. Of course, benefits may be tangible or intangible, monetary or nonmonetary. They may include, for example, aesthetic or social value. For simplicity, however, I am assuming that the relevant benefits can be translated into dollar units.
120. See Fischel, Zoning Reform, supra note 74, at 304.
121. As is made explicit in Figure 3, at this point the community's total benefits begin to decline as a result of regulation.
122. Fischel, Zoning Reform, supra note 74, at 325 fig.2. I have replaced Fischel's slightly curving lines with straight lines for the sake of simplicity, and have extended the ends of the curves below the horizontal axis to illustrate that overly restrictive regulations will at some point prove costly for the community, and that the loosening of regulations will at some point prove costly to the landowner. The precise shape of the marginal cost and benefit curves is an empirical question that will vary from landowner to landowner and from community to community.
123. See id. at 305 (stating that there is a "maximum benefit assignment" where "[n]either party can bribe the other to accept more or fewer restrictions").
124. See id. at 326 (discussing potential bargaining dynamics).
125. See id.
126. See id. at 316 (discussing incentives for communities and developers to misstate the costs associated with development, making the "establishment of an efficient degree of restriction . . . largely a matter of guesswork").
127. See NELSON, supra note 72, at 10-15 (noting that zoning originated as a means for protecting the property values of the affluent). Nelson analogizes the zoning of available land to governmentally-imposed automobile production quotas mandating highly unrealistic proportions of Rolls Royces and Cadillacs. Id. at 105. Critics of zoning have long noted that it interferes with the satisfaction of consumer demand. See generally SIEGAN, LAND USE WITHOUT ZONING, supra note 22 (proposing elimination of zoning to better match consumer demand).
128. See NELSON, supra note 72, at 10-15 (noting that zoning originated as a means for protecting the property values of the affluent). Nelson analogizes the zoning of available land to governmentally-imposed automobile production quotas mandating highly unrealistic proportions of Rolls Royces and Cadillacs. Id. at 105. Critics of zoning have long noted that it interferes with the satisfaction of consumer demand. See generally SIEGAN, LAND USE WITHOUT ZONING, supra note 22 (proposing elimination of zoning to better match consumer demand).
129. See Mun. Art Soc'y v. City of New York, 522 N.Y.S.2d 800, 804 (App. Div. 1987) ("Zoning benefits are not cash items."); NELSON, supra note 72, at 2 ("Unlike most other property rights, [zoning rights] have never been legally salable.").
130. 272 U.S. 365 (1926).
131. See id. at 387-88 (noting that "the law of nuisances . . . may be consulted, not for the purpose of controlling, but for the helpful aid of its analogies in the process of ascertaining the scope of, the [police] power"); see also Udell v. Haas, 235 N.E.2d 897, 900 (N.Y. 1968) ("Zoning is not just an expansion of the common law of nuisance."), quoted in SIEGAN, LAND USE WITHOUT ZONING, supra note 22, at 1.
132. See NELSON, supra note 72, at 27 ("[N]uisance-law rationales for neighborhood zoning could not offer a good justification for community zoning, but the planning theory of zoning was able to fill the gap.").
133. See City of New York v. 17 Vista Assocs., 599 N.Y.S.2d 549, 552 (1993) ("It is not for any governmental agency, like Chaucer's Pardoner, to sell indulgences."); NELSON, supra note 72, at 84 (observing that the sale of zoning rights seems unsuitable "as an exercise of the police power" and unethical "as an instrument for the implementation of public land-use plans"); Fischel, Zoning Reform, supra note 74, at 327 ("Selling zoning, as long as this [police power] rationale persists, is analogous to selling health inspections to restaurants, elevator safety certification to apartment houses, and licenses to speed to automobile operators.").
134. Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 837 (1987).
135. See Kayden, supra note 53, at 7 (discussing criticism of "incentive zoning" as a form of "sanctioned bribery, abiding a private sector that can 'buy' its way out of legal restrictions").
136. See id. at 42 n.140 ("When government willingly allows an exception to the 'shout fire' ban, for a related or unrelated $100 contribution, it intrinsically demonstrates that the ban itself is not strictly necessary.").
137. See NELSON, supra note 72, at 174-75 ("Although long explained as an exercise of police powers, most applications of zoning laws clearly have little to do with protections of health, safety, or morals."); id. at 11-15 (discussing zoning's role in protecting neighborhood quality and property values).
138. See id. at 128 ("Although zoning was justified as a method of nuisance control and as an instrument for implementing public plans, both of these justifications were largely fictions that camouflaged zoning's actual purposes."); SIDNEY BROWER, GOOD NEIGHBORHOODS: A STUDY OF IN-TOWN AND SUBURBAN RESIDENTIAL ENVIRONMENTS 43 (1996) ("Arguments in favor of comprehensive planning in the early twentieth century were really arguments for social segregation.") (citations omitted).
139. Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926); see also NELSON, supra note 72, at 14 ("The essential protection that zoning provided for the newly emerging suburban neighborhoods of the prosperous is a possible explanation for the surprising approval granted to it by the conservative Supreme Court of the 1920s.").
140. See NELSON, supra note 72, at 51 ("Creating collective property rights without also establishing an adequate mechanism for transfer of those rights when needed to allow for changes in land use has had very unhappy consequences for land development.").
141. See id. at 87 ("In many cases, sale of zoning rights has benefited not any neighborhood residents but corrupt local zoning administrators, who have succumbed to the enormous financial pressures for transitions in use that zoning inflexibility can provide."); SIEGAN, LAND USE WITHOUT ZONING, supra note 22, at 196 ("Zoning procedures are particularly susceptible to graft."); Ellickson, Alternatives to Zoning, supra note 22, at 701 (discussing frequency of corruption and other forms of "special influence").
142. See id. at 87 ("In many cases, sale of zoning rights has benefited not any neighborhood residents but corrupt local zoning administrators, who have succumbed to the enormous financial pressures for transitions in use that zoning inflexibility can provide."); SIEGAN, LAND USE WITHOUT ZONING, supra note 22, at 196 ("Zoning procedures are particularly susceptible to graft."); Ellickson, Alternatives to Zoning, supra note 22, at 701 (discussing frequency of corruption and other forms of "special influence").
143. Barter arrangements often embody such inefficiencies. Fischel, Zoning Reform, supra note 74, at 307 ("The range of tradable goods is limited and may be subject to indivisibilities, and the value of the gift to the community may be less than the cost to the donor.").
144. See Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 837 (1987) (requiring an essential nexus between the purpose of permit conditions and the purpose of the development ban).
145. Indeed, the limits have spawned at least one law review article dedicated to outright circumvention. See generally Douglas T. Kendall & James E. Ryan, "Paying" for the Change: Using Eminent Domain to Secure Exactions and Sidestep Nollan and Dolan, 81 VA. L. REV. 1801 (1995). The Kendall/Ryan proposal involves taking land through eminent domain, and then offering the landowner a choice between cash compensation and a development permit. Id. at 1803. The authors admit that this approach is "not obviously constitutional." Id. at 1804.
146. This assumes that the bargaining limits have operative force. It is possible that, as a practical matter, developers and local governments will find ways around the legal rules. See Dana, supra note 15, at 1286-99 (discussing circumvention of nexus/rough proportionality review). For example, a developer may tolerate conditions that fail to meet the Nollan/Dolan criteria when it is a "repeat player" that expects to interact again with the local government. Id. at 1288; see Frederik Jacobsen & Craig McHenry, Exactions on Development Permission, in WINDFALLS FOR WIPEOUTS 342, 348 (Donald G. Hagman & Dean J. Misczynski eds., 1978) [hereinafter WINDFALLS FOR WIPEOUTS] ("Since developers are more concerned with cost than with constitutional theory, they will often agree to exactions that are not valid but cost less than a court challenge."). The empirical prevalence of circumvention is symptomatic of theoretical problems with the bargaining limits themselves; such theoretical problems are the focus of my analysis.
147. See Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) (stating that 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").
148. I am assuming that the community could refuse to grant the zoning variance necessary for the project to go forward. This is the case under current law, see supra note 79, as long as the regulation upon which the refusal is based does not go so far as to amount to a "taking." It would be possible to formulate a system of land use that did not grant the community this veto power, of course. See infra note 239 (noting that community would not have veto power if its interests were protected only by a liability rule).
149. See Ellickson, Alternatives to Zoning, supra note 22, at 689 ("It will rarely be efficient to eliminate all nuisance costs, since that action will ordinarily require unacceptable levels of prevention costs.").
150. See Dana, supra note 15, at 1277 ("Nothing in the Nollan or Dolan majority opinions (or the subsequent state court case law) indicates that a court may or should consider the anticipated positive externalities of a development project in determining 'proportionality' under the nexus/rough proportionality standard.").
151. In reality, it is possible that the conditions themselves might generate some small surplus for the community if "rough proportionality" were stretched to its outer limit. A community might also be induced to engage in a land use transaction by graft or other covert transfers of surplus. The key insight, however, is that some surplus must be forthcoming from some quarter to make land use transactions worthwhile for a community under a nexus and proportionality bargaining regime.
152. See infra Part I.C.2 (discussing overregulation).
153. See Dana, supra note 15, at 1277 (discussing the situation in which development generates "net negative externalities").
154. See. supra note 112; see also Been, supra note 2, at 544 (noting that "the remedy for the harm may be more costly than the value of preventing the harm").
155. The term "deadweight loss" denotes a loss of surplus that could otherwise be enjoyed by one or both of the parties. It occurs when one party is forced to bear costs associated with a particular expenditure or activity that exceed the gains to the other party from that expenditure or activity. See Robert C. Ellickson, Property in Land, 102 YALE L.J. 1315, 1326 (1993) ("[A]n individual's self-interested, opportunistic act will create a deadweight loss whenever the costs it inflicts on others exceed the individual's benefits from the act."); David A. Weisbach, Line Drawing, Doctrine, and Efficiency in the Tax Law, 84 CORNELL L. REV. 1627, 1650 (1999) (explaining that "deadweight loss of the tax is the loss in value to consumers in excess of the revenue raised by the government").
156. The term "deadweight loss" denotes a loss of surplus that could otherwise be enjoyed by one or both of the parties. It occurs when one party is forced to bear costs associated with a particular expenditure or activity that exceed the gains to the other party from that expenditure or activity. See Robert C. Ellickson, Property in Land, 102 YALE L.J. 1315, 1326 (1993) ("[A]n individual's self-interested, opportunistic act will create a deadweight loss whenever the costs it inflicts on others exceed the individual's benefits from the act."); David A. Weisbach, Line Drawing, Doctrine, and Efficiency in the Tax Law, 84 CORNELL L. REV. 1627, 1650 (1999) (explaining that "deadweight loss of the tax is the loss in value to consumers in excess of the revenue raised by the government").
157. See Fischel, The Economics of Land Use Exactions, supra note 15, at 105 (presenting a similar example).
158. Kayden, supra note 53, at 47-48; see. COOTER, supra note 25, at 299-301 (providing examples to demonstrate potential superiority of offsetting harms rather than mitigating them); Dana, supra note 15, at 1277-82 (providing examples that demonstrate the potential inefficiency of nexus and proportionality).
159. EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 183-84.
160. Nexus on its own might be rather broadly construed. For example, a development ban and a development condition might both serve a vague purpose such as "maintaining the neighborhood atmosphere." There might well be multiple concessions that would satisfy the essential nexus requirement, permitting at least a small bargaining range. However, Dolan's added requirement of rough proportionality eliminates such flexibility. This additional requirement refines and reinforces the essential nexus requirement by making it clear that conditions must not only serve the same purpose as the development ban, but must affirmatively remediate identifiable harms that lend themselves to careful quantification. The result is virtual elimination of any bargaining range.
161. One might argue that a rough proportionality requirement on its own, without a nexus requirement, would effectively provide such a cap. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 349 ("[I]f the Court is willing to supervise the terms of trade for regulations with its new 'rough proportionality' rule, the old nexus doctrine is unnecessary even for that task."). Yet it is difficult to imagine meaningful monitoring of proportionality in the absence of nexus. Only when the asserted harm and the asserted cure are conceptually linked to each other is it realistically possible to assess their proportionality. The nexus requirement keeps the bargaining chips in a common metric so that they can be counted, while rough proportionality requires that the chips be tallied up with at least rough accuracy.
162. For this to be the case, the bargaining limits would have to reduce "the resource losses from destructive bargaining games." EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 188. This reduction must be by an amount greater than the efficiency losses from blocked bargains. See Fischel, The Economics of Land Use Exactions, supra note 15, at 104-05 (illustrating this principle with an example of costs related to reducing congestion).
163. For this to be the case, the bargaining limits would have to reduce "the resource losses from destructive bargaining games." EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 188. This reduction must be by an amount greater than the efficiency losses from blocked bargains. See Fischel, The Economics of Land Use Exactions, supra note 15, at 104-05 (illustrating this principle with an example of costs related to reducing congestion).
164. See Robert C. Ellickson, Suburban Growth Controls: An Economic and Legal Analysis, 86 YALE L.J. 385, 428 (1977) [hereinafter Ellickson, Suburban Growth Controls] (describing a "typical scenario" in which a "suburb deliberately imposes excessive development standards" but "in fact has no interest in promoting the deadweight loss that would result if homeowners complied with these wasteful standards" and is imposing the standards only to gain "maximum leverage in the subsequent bargaining").
165. See Been, supra note 2, at 491 ("Requiring a local government to spend exactions on projects that are germane to the harm the development causes limits the potential profit from overregulation and thereby helps to ensure the efficient level of regulation."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 183-84 (suggesting that nexus provides a useful, albeit "second-best," constraint on governmental abuses). Epstein's criticism of land use bargains is that they potentially "bundle" a socially efficient shift (the transfer of land use rights from the community to the landowner) with an inefficient shift (the transfer of an easement from the landowner to the community, even though it is worth more to the landowner than to the community). See generally Epstein, Harms and Benefits, supra note 57. His preferred solution would be to "unbundle" these components of the bargain and require the government to pay for any easement it acquires. Id. He does not, however, make the symmetrical suggestion that landowners be required to pay for the land use rights they wish to acquire, presumably because he believes the land use restrictions are illegitimate in the first place and would be lifted for free if they could not be used to leverage acquisition of the easement. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 181, 183.
166. See Been, supra note 2, at 491 ("Requiring a local government to spend exactions on projects that are germane to the harm the development causes limits the potential profit from overregulation and thereby helps to ensure the efficient level of regulation."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 183-84 (suggesting that nexus provides a useful, albeit "second-best," constraint on governmental abuses). Epstein's criticism of land use bargains is that they potentially "bundle" a socially efficient shift (the transfer of land use rights from the community to the landowner) with an inefficient shift (the transfer of an easement from the landowner to the community, even though it is worth more to the landowner than to the community). See generally Epstein, Harms and Benefits, supra note 57. His preferred solution would be to "unbundle" these components of the bargain and require the government to pay for any easement it acquires. Id. He does not, however, make the symmetrical suggestion that landowners be required to pay for the land use rights they wish to acquire, presumably because he believes the land use restrictions are illegitimate in the first place and would be lifted for free if they could not be used to leverage acquisition of the easement. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 181, 183.
167. See Been, supra note 2, at 491 ("Requiring a local government to spend exactions on projects that are germane to the harm the development causes limits the potential profit from overregulation and thereby helps to ensure the efficient level of regulation."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 183-84 (suggesting that nexus provides a useful, albeit "second-best," constraint on governmental abuses). Epstein's criticism of land use bargains is that they potentially "bundle" a socially efficient shift (the transfer of land use rights from the community to the landowner) with an inefficient shift (the transfer of an easement from the landowner to the community, even though it is worth more to the landowner than to the community). See generally Epstein, Harms and Benefits, supra note 57. His preferred solution would be to "unbundle" these components of the bargain and require the government to pay for any easement it acquires. Id. He does not, however, make the symmetrical suggestion that landowners be required to pay for the land use rights they wish to acquire, presumably because he believes the land use restrictions are illegitimate in the first place and would be lifted for free if they could not be used to leverage acquisition of the easement. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 181, 183.
168. See Been, supra note 2, at 491 ("Requiring a local government to spend exactions on projects that are germane to the harm the development causes limits the potential profit from overregulation and thereby helps to ensure the efficient level of regulation."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 183-84 (suggesting that nexus provides a useful, albeit "second-best," constraint on governmental abuses). Epstein's criticism of land use bargains is that they potentially "bundle" a socially efficient shift (the transfer of land use rights from the community to the landowner) with an inefficient shift (the transfer of an easement from the landowner to the community, even though it is worth more to the landowner than to the community). See generally Epstein, Harms and Benefits, supra note 57. His preferred solution would be to "unbundle" these components of the bargain and require the government to pay for any easement it acquires. Id. He does not, however, make the symmetrical suggestion that landowners be required to pay for the land use rights they wish to acquire, presumably because he believes the land use restrictions are illegitimate in the first place and would be lifted for free if they could not be used to leverage acquisition of the easement. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 181, 183.
169. See Dana, supra note 15, at 1277 (discussing "development generating no net negative externalities").
170. By "better off," I do not mean merely financially better off, but truly better off in the community's own view - counting whatever tangibles and intangibles the community itself finds relevant. Although I am using monetized costs and benefits for simplicity, I do not mean to suggest that a community is acting strategically any time it takes a land use action that fails to make it better off financially. See supra note 84 (contemplating nonmonetary benefits). Rather, I am talking here about truly strategic land use regulation, in which a community bans development that it would actually prefer, for the sole purpose of extracting concessions from the landowner.
171. See Dana, supra note 15, at 1277 (pointing out insufficiency of nexus and rough proportionality standards where development will generate no net negative externalities). Nexus and proportionality can reduce the size of the surplus that a community can extract as a result of its overregulation. Likewise, the requirement that a community prove nexus and proportionality can further shrink its expected surplus from a given land use deal. Nevertheless, these requirements are unlikely to curb the overregulation itself.
172. If Simon's community is a democracy, the political process will automatically provide some limits. However, the political process would not stop rules targeted at politically powerless or unpopular groups, or rules that are automatically suspended at the request of the politically powerful. For example, if few people ever walk anywhere in Simon's community (or, alternatively, if dispensations are given away for free to the powerful elements of the community), the hopping rule might not be subject to a political check.
173. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 346 (noting that the California Coastal Commission did not relax its regulations in the seven years following the Nollan decision). Fischel points out that most regulations "are adopted for a reason," suggesting that "making the regulations inalienable via the unconstitutional conditions doctrine is not going to make the regulations go away." Id. at 346-47.
174. Because Figure 3 shows total benefits rather than marginal ones, it is difficult to pinpoint the spot where the marginal benefits of the landowner and the community are equivalent. Figure 2, which depicts marginal benefits, provides a clearer picture of the efficient point.
175. See Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 834-35 (1987) (recognizing that no taking occurs where a regulation "substantially advances" a legitimate state interest).
176. This assumes that there are, in fact, expected differences in health care costs. Such an assumption is not completely implausible (even on these facts) and is in no way inconsistent with the fact that the hopping rule is, on balance, one that generates costs for the community. The costs associated with the visual disturbance caused by hopping may far outweigh the health benefits associated with hopping, but this does not eliminate the possibility that the rule does actually generate some health benefits.
177. See Dana, supra note 15, at 1277 (observing that the Nollan and Dolan decisions do not contemplate consideration of positive benefits generated by a development in assessing proportionality).
178. A developer can make a credible "exit threat" if he would be able to exit the jurisdiction and develop elsewhere with relative ease. See generally Been, supra note 2 (discussing "exit"). To the extent exit threats are credible and place meaningful limits on regulation, such limits would exist independent of the nexus and proportionality requirements. See infra notes 195-197 and accompanying text (discussing exit); infra Part II.B (same).
179. See Been, supra note 2, at 506 (concluding that nexus is not designed to address underregulation).
180. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 349-50 (discussing potential of third-party intervention on Nollan grounds to interfere with deals between developers and regulatory bodies).
181. A bargain that requires the landowner to remediate only a small portion of the harm she causes might suggest that some additional consideration is flowing from the landowner to the decisionmakers in violation of the nexus requirement. Alternatively, it might suggest that the landowner is part of a newly-powerful interest group that has inordinate influence on decisionmaking. (If the powerful landowners controlled decisionmaking at the time the underlying land use restrictions were being considered, they presumably would have blocked the restrictions.)
182. Where legislative or regulatory outcomes are controlled by a majority, one might expect minority interests to receive too little protection from externalities. Where these outcomes are controlled by interest groups (powerful developers, for example), the potential for underregulation could be even greater.
183. See Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 862 (1987) (Brennan, J., dissenting) ("[T]he Commission should have little difficulty in the future in utilizing its expertise to demonstrate a specific connection between provisions for access and burdens on access produced by new development.").
184. Dolan v. City of Tigard, 512 U.S. 374, 385 (1994).
185. Id.
186. See id. at 407 (Stevens, J., dissenting) ("This case inaugurates an even more recent judicial innovation than the regulatory takings doctrine: the application of the 'unconstitutional conditions' label to a mutually beneficial transaction between a property owner and a city."); Laitos, supra note 9, at 893-94 & n.6 (taking issue with the Dolan Court's characterization of the doctrine as "well-settled"). The unconstitutional conditions doctrine has never been applied with consistency. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 9 (noting that the unconstitutional conditions doctrine "roams about constitutional law like Banquo's ghost, invoked in some cases, but not in others"); Sullivan, supra note 20, at 1416 ("As applied . . . the doctrine of unconstitutional conditions is riven with inconsistencies.").
187. Sullivan, supra note 20, at 1421-28.
188. See Richard A. Epstein, Unconstitutional Conditions and Bargaining Breakdown, 26 SAN DIEGO L. REV. 189, 190 (1989) [hereinafter Epstein, Unconstitutional Conditions] ("The initial query with unconstitutional conditions is disarmingly simple. Why have the doctrine at all? In the usual case, the state is in a position to offer or withhold some benefit to an individual; likewise, that person may accept or reject the benefit at will."); Sullivan, supra note 20, at 1417 ("[W]hy invalidate conditions that burdened parties are free to accept or reject, and why invalidate conditions on benefits that government is free to grant or withhold in the first place?").
189. Searches for a unifying theoretical explanation of the doctrine's workings have been largely fruitless. See, e.g., LOUIS MICHAEL SEIDMAN & MARK V. TUSHNET, REMNANTS OF BELIEF: CONTEMPORARY CONSTITUTIONAL ISSUES 84 (1996) ("Because the problem is complex, it is little wonder that no one has satisfactorily resolved it. It is too bad, however, that so many people purport to have done so."). Some scholars have suggested that the search, and perhaps the doctrine as well, should be abandoned altogether. See generally Frederick Schauer, Too Hard: Unconstitutional Conditions and the Chimera of Constitutional Consistency, 72 DENV. U. L. REV. 989 (1995) (arguing that the unconstitutional conditions doctrine presents problems so difficult that a solution is unlikely to be found); Cass R. Sunstein, Why the Unconstitutional Conditions Doctrine is an Anachronism with Particular Reference to Religion, Speech and Abortion, 70 B.U. L. REV. 593 (1990) (arguing that the unconstitutional conditions doctrine should be abandoned).
190. Searches for a unifying theoretical explanation of the doctrine's workings have been largely fruitless. See, e.g., LOUIS MICHAEL SEIDMAN & MARK V. TUSHNET, REMNANTS OF BELIEF: CONTEMPORARY CONSTITUTIONAL ISSUES 84 (1996) ("Because the problem is complex, it is little wonder that no one has satisfactorily resolved it. It is too bad, however, that so many people purport to have done so."). Some scholars have suggested that the search, and perhaps the doctrine as well, should be abandoned altogether. See generally Frederick Schauer, Too Hard: Unconstitutional Conditions and the Chimera of Constitutional Consistency, 72 DENV. U. L. REV. 989 (1995) (arguing that the unconstitutional conditions doctrine presents problems so difficult that a solution is unlikely to be found); Cass R. Sunstein, Why the Unconstitutional Conditions Doctrine is an Anachronism with Particular Reference to Religion, Speech and Abortion, 70 B.U. L. REV. 593 (1990) (arguing that the unconstitutional conditions doctrine should be abandoned).
191. Searches for a unifying theoretical explanation of the doctrine's workings have been largely fruitless. See, e.g., LOUIS MICHAEL SEIDMAN & MARK V. TUSHNET, REMNANTS OF BELIEF: CONTEMPORARY CONSTITUTIONAL ISSUES 84 (1996) ("Because the problem is complex, it is little wonder that no one has satisfactorily resolved it. It is too bad, however, that so many people purport to have done so."). Some scholars have suggested that the search, and perhaps the doctrine as well, should be abandoned altogether. See generally Frederick Schauer, Too Hard: Unconstitutional Conditions and the Chimera of Constitutional Consistency, 72 DENV. U. L. REV. 989 (1995) (arguing that the unconstitutional conditions doctrine presents problems so difficult that a solution is unlikely to be found); Cass R. Sunstein, Why the Unconstitutional Conditions Doctrine is an Anachronism with Particular Reference to Religion, Speech and Abortion, 70 B.U. L. REV. 593 (1990) (arguing that the unconstitutional conditions doctrine should be abandoned).
192. See Seth F. Kreimer, Allocational Sanctions: The Problem of Negative Rights in a Positive State, 132 U. PA. L. REV. 1293, 1300-01, 1352-59 (1984) (arguing that it is necessary to distinguish governmental "offers" from "threats"); Kenneth W. Simons, Offers, Threats, and Unconstitutional Conditions, 26 SAN DIEGO L. REV. 289, 308-11 (1989) (discussing significance of the threat/offer distinction); see also ALAN WERTHEIMER, COERCION 202-21 (1987) (analyzing coercive proposals by focusing on offers, threats, and baselines).
193. See Seth F. Kreimer, Allocational Sanctions: The Problem of Negative Rights in a Positive State, 132 U. PA. L. REV. 1293, 1300-01, 1352-59 (1984) (arguing that it is necessary to distinguish governmental "offers" from "threats"); Kenneth W. Simons, Offers, Threats, and Unconstitutional Conditions, 26 SAN DIEGO L. REV. 289, 308-11 (1989) (discussing significance of the threat/offer distinction); see also ALAN WERTHEIMER, COERCION 202-21 (1987) (analyzing coercive proposals by focusing on offers, threats, and baselines).
194. See Seth F. Kreimer, Allocational Sanctions: The Problem of Negative Rights in a Positive State, 132 U. PA. L. REV. 1293, 1300-01, 1352-59 (1984) (arguing that it is necessary to distinguish governmental "offers" from "threats"); Kenneth W. Simons, Offers, Threats, and Unconstitutional Conditions, 26 SAN DIEGO L. REV. 289, 308-11 (1989) (discussing significance of the threat/offer distinction); see also ALAN WERTHEIMER, COERCION 202-21 (1987) (analyzing coercive proposals by focusing on offers, threats, and baselines).
195. See, e.g., EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 25-38; SEIDMAN & TUSHNET, supra note 147, at 72-90; Kreimer, supra note 148, at 1351-78;
196. See, e.g., EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 25-38; SEIDMAN & TUSHNET, supra note 147, at 72-90; Kreimer, supra note 148, at 1351-78;
197. See, e.g., EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 25-38; SEIDMAN & TUSHNET, supra note 147, at 72-90; Kreimer, supra note 148, at 1351-78;
198. See, e.g., EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 25-38; SEIDMAN & TUSHNET, supra note 147, at 72-90; Kreimer, supra note 148, at 1351-78;
199. Sunstein, supra note 147, at 602-04.
200. This much-discussed example is Robert Nozick's. See Simons, supra note 148, at 312 & n.74 (citing Robert Nozick, Coercion, in PHILOSOPHY, SCIENCE, AND METHOD 440, 450 (S. Morgenbesser et al. eds., 1969)).
201. This much-discussed example is Robert Nozick's. See Simons, supra note 148, at 312 & n.74 (citing Robert Nozick, Coercion, in PHILOSOPHY, SCIENCE, AND METHOD 440, 450 (S. Morgenbesser et al. eds., 1969)).
202. See Nozick, supra note 150, at 450-51 (preferring a normative baseline); Simons, supra note 148, at 312-13 (discussing the determination of threats and offers).
203. See generally Thomas W. Merrill, Dolan v. City of Tigard: Constitutional Rights as Public Goods, 72 DENV. U. L. REV. 859 (1995) (suggesting that the unconstitutional conditions doctrine can be understood as a response to the public goods aspects of constitutional rights).
204. "Structural" concerns have often been noted in the unconstitutional conditions context. See, for example, Been, supra note 2, at 497-98 & n.125 (discussing the "structural" version of the inalienability argument); Kreimer, supra note 148, at 1387-90 (discussing structural justifications for making certain rights non-waivable).
205. Public choice theory casts doubt on the ability of political entities to register the preferences of majorities accurately. See DANIEL A. FARBER & PHILIP P. FRICKEY, LAW AND PUBLIC CHOICE: A CRITICAI. INTRODUCTION 12-37 (1991) (discussing public choice and its implications); Dana, supra note 15, at 1269-74 and sources cited therein (discussing political forces at work in development decisions). Nevertheless, local communities may be among the most "majoritarian" institutions known to government, presenting all of the risks that "majoritarianism" entails. See Fischel, Introduction, supra note 15, at 1582 ("Local governments are more prone to majoritarianism than other levels of government because they usually lack the electoral diversity that comes with large land area and large population and because, as derivative governments, they also lack the other constitutional checks on the will of the majority, such as bicameral legislatures and separation of powers."); see also FISCHEL, REGULATORY TAKINGS, supra note 2, at 137 (observing that legislation by the national legislature should be given higher judicial deference). I will assume for the present discussion that a political majority controls land use decisions, while recognizing that this is something of an oversimplification.
206. Public choice theory casts doubt on the ability of political entities to register the preferences of majorities accurately. See DANIEL A. FARBER & PHILIP P. FRICKEY, LAW AND PUBLIC CHOICE: A CRITICAL. INTRODUCTION 12-37 (1991) (discussing public choice and its implications); Dana, supra note 15, at 1269-74 and sources cited therein (discussing political forces at work in development decisions). Nevertheless, local communities may be among the most "majoritarian" institutions known to government, presenting all of the risks that "majoritarianism" entails. See Fischel, Introduction, supra note 15, at 1582 ("Local governments are more prone to majoritarianism than other levels of government because they usually lack the electoral diversity that comes with large land area and large population and because, as derivative governments, they also lack the other constitutional checks on the will of the majority, such as bicameral legislatures and separation of powers."); see also FISCHEL, REGULATORY TAKINGS, supra note 2, at 137 (observing that legislation by the national legislature should be given higher judicial deference). I will assume for the present discussion that a political majority controls land use decisions, while recognizing that this is something of an oversimplification.
207. Public choice theory casts doubt on the ability of political entities to register the preferences of majorities accurately. See DANIEL A. FARBER & PHILIP P. FRICKEY, LAW AND PUBLIC CHOICE: A CRITICAL. INTRODUCTION 12-37 (1991) (discussing public choice and its implications); Dana, supra note 15, at 1269-74 and sources cited therein (discussing political forces at work in development decisions). Nevertheless, local communities may be among the most "majoritarian" institutions known to government, presenting all of the risks that "majoritarianism" entails. See Fischel, Introduction, supra note 15, at 1582 ("Local governments are more prone to majoritarianism than other levels of government because they usually lack the electoral diversity that comes with large land area and large population and because, as derivative governments, they also lack the other constitutional checks on the will of the majority, such as bicameral legislatures and separation of powers."); see also FISCHEL, REGULATORY TAKINGS, supra note 2, at 137 (observing that legislation by the national legislature should be given higher judicial deference). I will assume for the present discussion that a political majority controls land use decisions, while recognizing that this is something of an oversimplification.
208. Public choice theory casts doubt on the ability of political entities to register the preferences of majorities accurately. See DANIEL A. FARBER & PHILIP P. FRICKEY, LAW AND PUBLIC CHOICE: A CRITICAL. INTRODUCTION 12-37 (1991) (discussing public choice and its implications); Dana, supra note 15, at 1269-74 and sources cited therein (discussing political forces at work in development decisions). Nevertheless, local communities may be among the most "majoritarian" institutions known to government, presenting all of the risks that "majoritarianism" entails. See Fischel, Introduction, supra note 15, at 1582 ("Local governments are more prone to majoritarianism than other levels of government because they usually lack the electoral diversity that comes with large land area and large population and because, as derivative governments, they also lack the other constitutional checks on the will of the majority, such as bicameral legislatures and separation of powers."); see also FISCHEL, REGULATORY TAKINGS, supra note 2, at 137 (observing that legislation by the national legislature should be given higher judicial deference). I will assume for the present discussion that a political majority controls land use decisions, while recognizing that this is something of an oversimplification.
209. In other contexts, notably criminal procedure, "the state" with whom one is bargaining is not a majoritarian entity, but rather a police officer or a prosecutor. It is possible that the lower degree of protection generally attending waivers of constitutional rights in the area of criminal procedure can be explained by the fact that majoritarian influences are generally more attenuated in that context. However, majoritarian risks are undeniably present in certain Fourth Amendment contexts, as where suspicionless searches are made prerequisites for benefits such as welfare, public housing, extracurricular public school activities, and public employment.
210. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 4-5 (discussing problems with governmental "givings"); Sullivan, supra note 20, at 1489 (focusing on problem of the government receiving relinquishment of certain rights).
211. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 4-5 (discussing problems with governmental "givings"); Sullivan, supra note 20, at 1489 (focusing on problem of the government receiving relinquishment of certain rights).
212. See Sunstein, supra note 147, at 620-21 (suggesting unconstitutional conditions doctrine should be abandoned in favor of context-specific inquiries into incursions on rights).
213. See id. at 605-06 (discussing a similar argument for preserving the unconstitutional conditions doctrine).
214. See Lucas v. Colo. Gen. Assembly, 377 U.S. 713, 736-37 (1964) ("A citizen's constitutional rights can hardly be infringed simply because a majority of the people choose that it be."); W. Va. State Bd. of Educ. v. Barnette, 319 U.S. 624, 638 (1943) ("[T]He very purpose of a Bill of Rights was to withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials.").
215. As the web of government benefits grows ever larger, and as people become increasingly dependent on those benefits, the line between withholding benefits and imposing burdens blurs. See Sunstein, supra note 147, at 601-04 (arguing that the distinction between subsidies and penalties is anachronistic in the post-Lochner era). See generally Charles A. Reich, The New Property, 73 YALE L.J. 733 (1964) (discussing growth of various forms of government largess and its implications for individual rights).
216. The classic statement of the "greater includes the lesser" argument was made by Justice Holmes: "The petitioner may have a constitutional right to talk politics, but he has no constitutional right to be a policeman." McAuliffe v. Mayor of New Bedford, 29 N.E. 517, 517 (Mass. 1892). This view has been repeatedly and explicitly rejected by the Supreme Court, see, e.g., Bd. of County Comm'rs v. Umbehr, 518 U.S. 668, 674 (1996), although its spirit lingers on in some settings. See Been, supra note 2, at 474 n.7 (citing cases from the last 125 years which illustrate the "greater includes the lesser argument").
217. See Been, supra note 2, at 496-97 (discussing inalienability theory of unconstitutional conditions); see generally Margaret Jane Radin, Market-Inalienability, 100 HARV. L. REV. 1849 (1987) (discussing the form of inalienability that forbids sale of rights).
218. See Sullivan, supra note 20, at 1479-80 (discussing inalienability theories).
219. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 14-15 (discussing shortfalls of dignitary theories for restricting choice); Been, supra note 2, at 497 n.120 (noting that the inalienability theory is internally contradictory); Kreimer, supra note 148, at 1383-84 (discussing argument that making rights waivable enhances autonomy); Sullivan, supra note 20, at 1478, 1486-87 (discussing objections to inalienability theories); see also Radin, supra note 162, at 1898-1903 (discussing and rejecting such objections to inalienability).
220. Sullivan, supra note 20, at 1488-89.
221. See Kreimer, supra note 148, at 1391 (explaining that the government may be "prohibited from attempting to affect exercise of the right in question because of effects on the structure of society").
222. See Wyman v. James, 400 U.S. 309, 328 (1971) (Douglas, J., dissenting) ("[T]He central question is whether the government by force of its largesse has the power to 'buy up' rights guaranteed by the Constitution.").
223. See generally Epstein, Unconstitutional Conditions, supra note 146, at 197 (positing that while an individual might consent to waive First Amendment rights to gain access to a key benefit, such as use of the highways, "all people prefer to have a social order in which speech is not compromised, but protected"); Merrill, supra note 152 (discussing "public goods" aspects of constitutional rights).
224. See Kreimer, supra note 148, at 1387-89 (discussing waivable and non-waivable rights); id. at 1391-93 (discussing problems associated with certain governmental requests for waivers).
225. See Sherbert v. Verner, 374 U.S. 398, 404 (1963) (stating that the government cannot force an individual to "choose between following the precepts of her religion and forfeiting benefits, on the one hand, and abandoning one of the precepts of her religion in order to accept work, on the other hand").
226. See Schneckloth v. Bustamonte, 412 U.S. 218, 222 (1973) ("[A] search conducted pursuant to a valid consent is constitutionally permissible.").
227. See Wyman, 400 U.S. at 309 (holding that conditioning AFDC benefits on home visits does not violate Fourth Amendment). Other procedural protections can also be waived under appropriate circumstances. See McMann v. Richardson, 397 U.S. 759, 766 (1970) (involving waiver of right to trial); Miranda v. Arizona, 384 U.S. 436 (1966) (involving waiver of privilege against self-incrimination). Under my model, the validity of such waivers would depend on what the government actor is offering in exchange. In the search and seizure context, for example, if a police officer "offers" something back that she had no right to take away in the first place (such as the right to continue going on one's way), or something that is misappropriated from the public at large (such as a promise to give the person a chance to escape if incriminating evidence is found), the resulting bargain should be considered constitutionally invalid.
228. See U.S. CONST. amend. V ("[N]or shall private property be taken for public use without just compensation."). Other constitutional protections, such as the First Amendment, are also implicated in some land use bargains. In addition, equal protection and substantive due process may have a role to play in addressing unfair land use bargains. See Vill. of Willowbrook v. Olech, 528 U.S. 562, 562 (2000) (per curiam) (recognizing that an equal protection claim could be brought by a single homeowner, where a municipality conditioned connection of water service on what was alleged to be an "irrational and wholly arbitrary" easement demand); infra note 277 and accompanying text (discussing substantive due process).
229. See Hanoch Dagan, Takings and Distributive Justice, 85 VA. L. REV. 741, 764 (1999) (discussing Michelman's link between landowner demoralization and majoritarian exploitation); Saul Levmore, Just Compensation and Just Politics, 22 CONN. L. REV. 285, 309 (1990) ("A central theme of takings law is that protection is offered against the possibility that majorities may mistreat minorities."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 194-95 (noting problems with majority decisionmaking in land use context); Louise A. Halper, Parables of Exchange: Foundations of Public Choice Theory and the Market Formalism of James Buchanan, 2 CORNELL J.L. & PUB. POL'Y 229, 231
230. See Hanoch Dagan, Takings and Distributive Justice, 85 VA. L. REV. 741, 764 (1999) (discussing Michelman's link between landowner demoralization and majoritarian exploitation); Saul Levmore, Just Compensation and Just Politics, 22 CONN. L. REV. 285, 309 (1990) ("A central theme of takings law is that protection is offered against the possibility that majorities may mistreat minorities."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 194-95 (noting problems with majority decisionmaking in land use context); Louise A. Halper, Parables of Exchange: Foundations of Public Choice Theory and the Market Formalism of James Buchanan, 2 CORNELL J.L. & PUB. POL'Y 229, 231 (1993) ("The paradigmatic majoritarian decision is to redistribute wealth: the non-wealthy majority confiscates the wealth of the wealthy minority.").
231. See Hanoch Dagan, Takings and Distributive Justice, 85 VA. L. REV. 741, 764 (1999) (discussing Michelman's link between landowner demoralization and majoritarian exploitation); Saul Levmore, Just Compensation and Just Politics, 22 CONN. L. REV. 285, 309 (1990) ("A central theme of takings law is that protection is offered against the possibility that majorities may mistreat minorities."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 194-95 (noting problems with majority decisionmaking in land use context); Louise A. Halper, Parables of Exchange: Foundations of Public Choice Theory and the Market Formalism of James Buchanan, 2 CORNELL J.L. & PUB. POL'Y 229, 231 (1993) ("The paradigmatic majoritarian decision is to redistribute wealth: the non-wealthy majority confiscates the wealth of the wealthy minority.").
232. See Hanoch Dagan, Takings and Distributive Justice, 85 VA. L. REV. 741, 764 (1999) (discussing Michelman's link between landowner demoralization and majoritarian exploitation); Saul Levmore, Just Compensation and Just Politics, 22 CONN. L. REV. 285, 309 (1990) ("A central theme of takings law is that protection is offered against the possibility that majorities may mistreat minorities."); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 194-95 (noting problems with majority decisionmaking in land use context); Louise A. Halper, Parables of Exchange: Foundations of Public Choice Theory and the Market Formalism of James Buchanan, 2 CORNELL J.L. & PUB. POL'Y 229, 231 (1993) ("The paradigmatic majoritarian decision is to redistribute wealth: the non-wealthy majority confiscates the wealth of the wealthy minority.").
233. See generally Haw. Hous. Auth. v. Midkiff, 467 U.S. 229 (1984) (upholding use of eminent domain power to break up oligopoly of land ownership).
234. Just as there are certain realms in which money should have little or no influence, see generally MICHAEL WALZER, SPHERES OF JUSTICE (1983), the takings clause defines a realm in which votes (unaccompanied by money or other compensation) cannot hold sway.
235. See RICHARD A. EPSTEIN, TAKINGS 195-215 (1985) [hereinafter EPSTEIN, TAKINGS] (discussing "implicit in-kind compensation").
236. See supra note 80 (discussing these standards).
237. Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365, 389 (1926). Later in the opinion, the Court approvingly quotes a Louisiana Supreme Court opinion deferring to political judgments on land use matters. See id. at 393 ('"If [municipal land use ordinances] are not satisfying to a majority of the citizens, their recourse is to the ballot-not the courts.'") (quoting State v. New Orleans, 97 So. 440, 444 (La. 1923)).
238. The line is semi-permeable in two senses. First, the majority can always effect a transfer of land to itself by paying just compensation. Though money may change hands, the transaction nevertheless represents a legitimate incursion of the majority into an area normally controlled by market forces. The money with which just compensation is paid will be raised through some form of political action, such as the levying of a tax, making it questionable whether the true cost is internalized by the governmental entity. See Daryl J. Levinson, Making Government Pay: Markets, Politics, and the Allocation of Constitutional Costs, 67 U. CHI. L. REV. 345 passim (2000) (arguing that government does not internalize costs in the same manner as private firms). Moreover, the amount of compensation will not necessarily equal the price that the landowner would demand in a private transaction. See EPSTEIN, TAKINGS, supra note 177, at 183 (noting that the "real but subjective" value placed on land is left out of the market valuation formula). The line between majority-controlled and vote-controlled realms may also be permeated from the other side. Unless land use bargains are banned, a landowner may try to use her money or property to influence decisions of the majority concerning land use.
239. The line is semi-permeable in two senses. First, the majority can always effect a transfer of land to itself by paying just compensation. Though money may change hands, the transaction nevertheless represents a legitimate incursion of the majority into an area normally controlled by market forces. The money with which just compensation is paid will be raised through some form of political action, such as the levying of a tax, making it questionable whether the true cost is internalized by the governmental entity. See Daryl J. Levinson, Making Government Pay: Markets, Politics, and the Allocation of Constitutional Costs, 67 U. CHI. L. REV. 345 passim (2000) (arguing that government does not internalize costs in the same manner as private firms). Moreover, the amount of compensation will not necessarily equal the price that the landowner would demand in a private transaction. See EPSTEIN, TAKINGS, supra note 177, at 183 (noting that the "real but subjective" value placed on land is left out of the market valuation formula). The line between majority-controlled and vote-controlled realms may also be permeated from the other side. Unless land use bargains are banned, a landowner may try to use her money or property to influence decisions of the majority concerning land use.
240. See Been, supra note 2, at 497 (noting that the Fifth Amendment permits the government to obtain property by paying just compensation for it, and observing that landowners have broad latitude to agree to whatever price they deem acceptable and can even give away their land to the government).
241. The government might, however, be disabled from receiving land use concessions that implicate other constitutional protections, such as the right to free expression. See BERNARD H. SIEGAN, PROPERTY AND FREEDOM: THE CONSTITUTION, THE COURTS, AND LAND-USE REGULATION 162-64 (1997) (suggesting that free-speech questions were implicated by the "fee in lieu of art" exaction upheld in Ehrlich v. City of Culver City, 911 P.2d 429 (Cal. 1996)).
242. See Thomas Ross, Metaphor and Paradox, 23 GA. L. REV. 1053, 1056 (1989) (discussing the "bundle of sticks" metaphor of property).
243. Been, supra note 2, at 497.
244. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 194-95 (suggesting a market mechanism is superior to the political process in determining the course of land development).
245. See supra notes 148-151 and accompanying text (discussing setting of regulatory baseline from which to assess governmental offers).
246. Discussions of this threat are ubiquitous in the literature. See Kreimer, supra note 148, at 1354 & n.223 (describing the gunman threat example as "tattered by decades of use" but "still illuminating").
247. See LEO KATZ, ILL-GOTTEN GAINS: EVASION, BLACKMAIL, FRAUD, AND KINDRED PUZZLES OF THE LAW 138-39 (1996) (analyzing various forms of coercion, including the gunman's threat, as offers to sell back what was wrongfully taken).
248. See Ellickson, Alternatives to Zoning, supra note 22, at 702 ("A more common, and legal, technique is to restrict most of the undeveloped land within the municipality, and then require developers to buy the development rights through some form of public contribution."); Nicholas V. Morosoff, Note, "'Take' My Beach, Please!": Nollan v. California Coastal Commission and a Rational-Nexus Constitutional Analysis of Development Exactions, 69 B.U. L. REV. 823, 859 (1989) ("Municipalities can attempt to base their exactions schemes on development prohibitions that are excessive - i.e., prohibitions that are not constitutional exercises of the police power - and then proceed to sell development 'permission' back to the developer.").
249. See Ellickson, Alternatives to Zoning, supra note 22, at 702 ("A more common, and legal, technique is to restrict most of the undeveloped land within the municipality, and then require developers to buy the development rights through some form of public contribution."); Nicholas V. Morosoff, Note, "'Take' My Beach, Please!": Nollan v. California Coastal Commission and a Rational-Nexus Constitutional Analysis of Development Exactions, 69 B.U. L. REV. 823, 859 (1989) ("Municipalities can attempt to base their exactions schemes on development prohibitions that are excessive - i.e., prohibitions that are not constitutional exercises of the police power - and then proceed to sell development 'permission' back to the developer.").
250. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 345 (using example of a "large hotel, which truly would have blocked the view and stood out like the proverbial sore thumb").
251. See City of Monterey v. Del Monte Dunes, 526 U.S. 687, 702 (1999); supra notes 38-39 and accompanying text.
252. The phrase "illegitimate overregulation" is not redundant. Regulation in excess of the socially optimal point is not necessarily illegitimate as a constitutional matter. Of course it is possible to advocate a constitutional standard that tracks the social optimum, effectively collapsing the inquiries. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 90-103. If such a standard were enforced, land use bargains would be wholly unnecessary.
253. Id. at 183-84; Been, supra note 2, at 491; see Morosoff, supra note 189, at 861 ("[W]hile the rational-nexus test is admittedly not aimed directly at the true evil with which the courts are concerned, in the end it does eradicate that evil.").
254. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 11 ("Takings law is about the fairness of initial entitlements. Supervising their exchange, as the exactions cases do, does little to cure the burden of the original regulation.").
255. Vicki Been's insightful work on "exit" in the exactions context, see generally Been, supra note 2, provides an excellent exploration of this topic. Been builds on Albert O. Hirschman's work discussing the response mechanisms of "exit" and "voice." See id. at 476 (citing ALBERT O. HIRSCHMAN, EXIT, VOICE, AND LOYALTY (1970)). See also infra Part II.B (discussing exit as a response to monopoly power). For criticisms of Been's analysis and conclusions,
256. see EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 184-87;
257. Stewart E. Sterk, Competition Among Municipalities as a Constraint on Land Use Exactions, 45 VAND. L. REV. 831 (1992).
258. See Been, supra note 2, at 506-28 (building on Charles Tiebout's theory of local government competition).
259. Specifically, "exit" offers a powerful antidote to the sort of undue market power which is deemed problematic whether held by private or public actors. See infra Part II.B (discussing exit).
260. I use the term "majority" here as shorthand for the dominant group within the political process, while acknowledging this may not always be an accurate designation. See supra note 154. The same (or heightened) risks exist when those in charge of the political apparatus do not represent the interests of a political majority. Graft presents a polar case: the bribed official and the landowner are made better off at the expense of the rest of the community. It is also possible that the political process takes into account all of the interests existing within the geographic boundaries of the political subdivision, but disadvantages an affected group that does not (or does not yet) reside within those boundaries. See Clayton P. Gillette, Expropriation and Institutional Design in State and Local Government Law, 80 VA. L. REV. 625, 629 (1994) (discussing "risk that local decisions will be made in a way that does not internalize adverse consequences").
261. Epstein makes a similar point when he observes that every governmental "giving" of benefits involves an antecedent "taking," which may or may not be legitimate. EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 4.
262. Such action may be ultra vires in a quite literal, as well as metaphorical, sense. Local governments regulate land pursuant to state enabling legislation, and actions like the one described here might well violate the terms of that enabling legislation. See generally Frona M. Powell, Challenging Authority for Municipal Subdivision Exactions: The Ultra Vires Attack, 39 DEPAUL. L. REV. 635 (1990) (discussing ultra vires challenges to municipal subdivision exactions).
263. Nollan v. Cal. Coastal Comm'n, 483 U.S. 825, 837-38 n.5 (1987).
264. See Been, supra note 2, at 504 & n.149 (noting concern with undei regulation as articulated by scholars and by the Court in Nollan). Been does not view the problem of underregulation as implicating the unconstitutional conditions doctrine, and asserts that "none of the 'solutions' that have been offered for the dangers posed by land use exactions, such as Nollan's nexus test, makes sense as an effort to control underregulation." Id. at 505-06. The first point is questionable, given the uncertain status, scope, and purpose of the unconstitutional conditions doctrine. The second point seems incorrect as a functional matter. It is also somewhat surprising given Been's discussion of the concern with underregulation expressed in Nollan, id. at 504 & n.149, and her criticism of Fischel's failure to attend to the risk of underregulation in his efficiency critique of Nollan, see id. at 544 n.332 (discussing Fischel's article, The Economics of Land Use Exactions: A Property Rights Analysis, 50 LAW & CONTEMP. PROBS. 101, 104-05 (1987)).
265. See Nollan, 483 U.S. at 837 (observing that although "requiring a $100 tax contribution to shout fire is a lesser restriction on speech than an outright ban, it would not pass constitutional muster").
266. For example, see Wendy Kummerer, Developers Walk on Office Project, CHI. TRIB., Feb. 5, 2000, § 4, at 12 (describing how a developer abandoned a proposed project in Hanover Park after eighteen months of negotiations with the community; according to Director of Economic Development John Said, "'[T]hey have just gone away.'").
267. See. EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 186 (observing that after a developer exercises her right to exit, the new location will be generally "inferior to the first location, for otherwise the developer would have gone there first").
268. Some land use regulation occurs at the regional, state, or federal level. See supra note 1. Where a land use regulation covers a broad geographic area, as the California Coastal Commission's regulations did in Nollan, the possibilities for "exit" will be correspondingly constrained. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 186.
269. The term "extortion" is a bit inapt here, since we are assuming that the government is not able to manipulate the regulatory background illegitimately. However, the phrase "personalized extortion" nicely captures the notion that the government's market power can have troubling consequences.
270. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 185; D.L. Bennett, Cherokee in the New Millennium; County Embracing Pay-as-You-Grow Policy, ATLANTA J. & CONST., Aug. 19, 1999, at 1JQ (discussing discrepancies in exactions imposed on different developers, prior to adoption of standardized impact fee schedule). This is one reason why land use conditions set through an "adjudicative" process are more troubling than those set through a legislative process. See Dolan v. City of Tigard, 512 U.S. 374, 385 (1994) (drawing distinction between legislative determinations that affect large areas of a city, and adjudicative decisions regarding individual parcels). The legislative/adjudicative distinction has been the subject of some criticism, see Parking Ass'n of Ga. v. City of Atlanta, 450 S.E.2d 200 (Ga. 1994), cert. denied, 515 U.S. 1116, 1117-18 (1995) (Thomas & O'Connor, JJ., dissenting), though it is possible that exactions imposed in individual situations are more likely to be invidious. See Sterk, Nollan , Henry George, and Exactions, supra note 3, at 1750 (recognizing that unequal treatment is more difficult to detect in individualized exactions than in traditional zoning). For an excellent treatment of the problem of piecemeal land use regulation and the difficulties associated with the legislative/adjudicative distinction, see generally Rose, Planning and Dealing, supra note 22, at 846.
271. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 185; D.L. Bennett, Cherokee in the New Millennium; County Embracing Pay-as-You-Grow Policy, ATLANTA J. & CONST., Aug. 19, 1999, at 1JQ (discussing discrepancies in exactions imposed on different developers, prior to adoption of standardized impact fee schedule). This is one reason why land use conditions set through an "adjudicative" process are more troubling than those set through a legislative process. See Dolan v. City of Tigard, 512 U.S. 374, 385 (1994) (drawing distinction between legislative determinations that affect large areas of a city, and adjudicative decisions regarding individual parcels). The legislative/adjudicative distinction has been the subject of some criticism, see Parking Ass'n of Ga. v. City of Atlanta, 450 S.E.2d 200 (Ga. 1994), cert. denied, 515 U.S. 1116, 1117-18 (1995) (Thomas & O'Connor, JJ., dissenting), though it is possible that exactions imposed in individual situations are more likely to be invidious. See Sterk, Nollan , Henry George, and Exactions, supra note 3, at 1750 (recognizing that unequal treatment is more difficult to detect in individualized exactions than in traditional zoning). For an excellent treatment of the problem of piecemeal land use regulation and the difficulties associated with the legislative/adjudicative distinction, see generally Rose, Planning and Dealing, supra note 22, at 846.
272. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 185; D.L. Bennett, Cherokee in the New Millennium; County Embracing Pay-as-You-Grow Policy, ATLANTA J. & CONST., Aug. 19, 1999, at 1JQ (discussing discrepancies in exactions imposed on different developers, prior to adoption of standardized impact fee schedule). This is one reason why land use conditions set through an "adjudicative" process are more troubling than those set through a legislative process. See Dolan v. City of Tigard, 512 U.S. 374, 385 (1994) (drawing distinction between legislative determinations that affect large areas of a city, and adjudicative decisions regarding individual parcels). The legislative/adjudicative distinction has been the subject of some criticism, see Parking Ass'n of Ga. v. City of Atlanta, 450 S.E.2d 200 (Ga. 1994), cert. denied, 515 U.S. 1116, 1117-18 (1995) (Thomas & O'Connor, JJ., dissenting), though it is possible that exactions imposed in individual situations are more likely to be invidious. See Sterk, Nollan , Henry George, and Exactions, supra note 3, at 1750 (recognizing that unequal treatment is more difficult to detect in individualized exactions than in traditional zoning). For an excellent treatment of the problem of piecemeal land use regulation and the difficulties associated with the legislative/adjudicative distinction, see generally Rose, Planning and Dealing, supra note 22, at 846.
273. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 185; D.L. Bennett, Cherokee in the New Millennium; County Embracing Pay-as-You-Grow Policy, ATLANTA J. & CONST., Aug. 19, 1999, at 1JQ (discussing discrepancies in exactions imposed on different developers, prior to adoption of standardized impact fee schedule). This is one reason why land use conditions set through an "adjudicative" process are more troubling than those set through a legislative process. See Dolan v. City of Tigard, 512 U.S. 374, 385 (1994) (drawing distinction between legislative determinations that affect large areas of a city, and adjudicative decisions regarding individual parcels). The legislative/adjudicative distinction has been the subject of some criticism, see Parking Ass'n of Ga. v. City of Atlanta, 450 S.E.2d 200 (Ga. 1994), cert. denied, 515 U.S. 1116, 1117-18 (1995) (Thomas & O'Connor, JJ., dissenting), though it is possible that exactions imposed in individual situations are more likely to be invidious. See Sterk, Nollan , Henry George, and Exactions, supra note 3, at 1750 (recognizing that unequal treatment is more difficult to detect in individualized exactions than in traditional zoning). For an excellent treatment of the problem of piecemeal land use regulation and the difficulties associated with the legislative/adjudicative distinction, see generally Rose, Planning and Dealing, supra note 22, at 846.
274. See Epstein, Harms and Benefits, supra note 57, at 483 (discussing this example in context of land use exactions); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 54-58 (same).
275. See Epstein, Harms and Benefits, supra note 57, at 483 (discussing this example in context of land use exactions); see also EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 54-58 (same).
276. For example, it may be desirable, as a normative matter, to institute procedures that will minimize the chance of monopolistic overreaching in land use bargains. See infra text accompanying notes 264-273 (discussing procedural adjustments to equalize bargaining power).
277. Significantly, placing useful limits on the scope of land use regulation will not necessarily eliminate the need for bargaining. The need for bargaining would only be eliminated if one could perfectly calibrate land use regulation so that it tracked the social optimum. See supra text accompanying note 88. To the extent the limits on land use diverge from this standard, the potential for advantageous bargains remains.
278. The regime I construct in this subsection is much like that proposed in Fischel, The Economics of Land Use Exactions, supra note 15, at 109 (proposing a solution which "limit[s] the community's initial entitlements to the cost of eliminating nuisance spillovers" and protects those entitlements with a property rule). This is an intermediate step to the solution I will ultimately propose in Part III, which leaves land use regulation intact but grants landowners an in-kind call option.
279. If all of the interests of all community members, including the landowner, were perfectly aggregated in determining land use policies, these policies would track the social optimum and no bargaining would be necessary.
280. This resembles a limited application of a Calabresian system of general deterrence, in which "all activities are permitted if they pay for their external costs." Ellickson, Alternatives to Zoning, supra note 22, at 707 (citing GUIDO CALABRESI, COST OF ACCIDENTS 95-106 (student ed. 1970)). In my model, only land use regulations (and not generally applicable civil and criminal laws) can be circumvented, and then only through the actual remediation of externalities rather than through the payment of specified money damages.
281. This resembles a limited application of a Calabresian system of general deterrence, in which "all activities are permitted if they pay for their external costs." Ellickson, Alternatives to Zoning, supra note 22, at 707 (citing GUIDO CALABRESI, COST OF ACCIDENTS 95-106 (student ed. 1970)). In my model, only land use regulations (and not generally applicable civil and criminal laws) can be circumvented, and then only through the actual remediation of externalities rather than through the payment of specified money damages.
282. Because the costs generated by normal or innocuous land uses (however defined) are not cognizable, the landowner is not faced with the impossible task of remediating all negative impacts associated with his land use. He need only remediate those negative impacts that are cognizable - the marginal impacts associated with using the land in an unusually intensive manner within a given context.
283. Fischel, Zoning Reform, supra note 74, at 324 (citing Calabresi & Melamed, supra note 23).
284. Fischel, Zoning Reform, supra note 74, at 324 (citing Calabresi & Melamed, supra note 23).
285. I recognize it will often be infeasible or prohibitively expensive to actually remediate externalities. See Been, supra note 2, at 544 (observing that "there may be no technologically feasible way to have both a high-rise and a sunny park"); Dana, supra note 15, at 1282-84 (discussing externalities that are impossible to mitigate). However, in-kind remediation remains a meaningful concept, if only because it sets the most logically cohesive benchmark from which to negotiate. If we assume the externalities are real, and properly cognizable, it is appropriate that the community be able to forbid any uses that generate them. See Fischel, The Economics of Land Use Exactions, supra note 15, at 110 (describing community's entitlement to elimination of a negative externality such as congestion). The community can legitimately set the price of consent to such externalities at any level it finds appropriate - and, as a practical matter, such payments will usually be far more attractive to the parties than the actual remediation of externalities would be.
286. See Ellickson, Alternatives to Zoning, supra note 22, at 688-89 ("Prevention costs will tend to be higher when either or both of the parties are compelled to undertake specific steps than when they are permitted to select voluntarily among available preventative measures.").
287. To the extent unequal bargaining power remains (as it might where there is no technologically feasible way to remediate the externalities), procedural adjustments can help to level the playing field. See supra Part II.B (discussing issues associated with monopoly power); infra text accompanying notes 249-258 (discussing procedural adjustments).
288. See supra text accompanying note 89 (providing an example of a surplus that will be subject to bargaining).
289. Because the prospect of theft of development rights has been removed under this model, a primary problem with exit is eliminated.
290. See Fischel, Zoning Reform, supra note 74, at 326 (suggesting that the developer is likely to be the more adroit negotiator and be able to capture most or all of the surplus generated by a sale of zoning).
291. To use the terminology suggested by Robert Ellickson, "nuisance costs" would not be completely eliminated in such situations. See Ellickson, Alternatives to Zoning, supra note 22, at 688 (distinguishing "nuisance costs" resulting from externalities from "prevention costs" associated with remediating the nuisance costs).
292. Somewhat overinclusive line-drawing may also be necessary in the interest of limiting enforcement and administrative costs. See Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365, 388-89 (1926) (explaining that the "inclusion of a reasonable margin to insure effective enforcement" does not make a law invalid where "the bad fades into the good by such insensible degrees that the two are not capable of being readily distinguished").
293. Constitutionally limiting land use regulations to the remediation of negative externalities would be inconsistent with the general approach of the Supreme Court in the post-Lochner era. See Molly S. McUsic, The Ghost of Lochner; Modern Takings Doctrine and Its Impact on Economic Legislation, 76 B.U. L. REV. 605, 640 (1996) ("In post-Lochner-era cases, the Court explicitly rejected the notion that the Takings Clause permitted the government to regulate property for the good of the community only to the extent that the owner was harming the community."). McUsic notes, however, that a shift may be underway that would tighten the reins on property regulation. Id. While I do not attempt to determine the precise location of the line between constitutionally permissible and constitutionally impermissible land use regulations in this Article, I do assume that some constitutional limits exist.
294. See supra Part I.C.2.
295. See supra note 217.
296. See supra Part II.A.2. Again, this assumes that the line between permissible and impermissible regulations, whatever its precise location, corresponds to constitutional requirements.
297. See Dana, supra note 15, at 1266 (noting the need to determine which effects of development "are legitimately labeled externalized social costs or benefits"); Michelman, Property, Utility, and Fairness, supra note 71, at 1197 (using example of a ban on billboards to illustrate this difficulty: "Shall we construe this regulation as one which prevents the 'harms' of roadside blight and distraction, or as one securing the 'benefits' of safety and amenity?"). In our earlier example, Simon was able to frame an externality in the form of "higher" medical costs by measuring from an unfair baseline - a world in which all pedestrians hop.
298. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 351-55 (arguing that the "normal behavior" standard should be used to assess land use regulations); Ellickson, Alternatives to Zoning, supra note 22, at 728-33 (discussing "unneighborliness" as a standard for land use liability). For example, the hopping rule discussed supra might be invalidated on the grounds that it prohibited normal behavior - walking on city sidewalks.
299. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 351-55 (arguing that the "normal behavior" standard should be used to assess land use regulations); Ellickson, Alternatives to Zoning, supra note 22, at 728-33 (discussing "unneighborliness" as a standard for land use liability). For example, the hopping rule discussed supra might be invalidated on the grounds that it prohibited normal behavior - walking on city sidewalks.
300. In Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922), the Court indicated that land use regulations that yielded an "average reciprocity of advantage" for those on whom they were imposed might be upheld as valid. See Richard Epstein, A Clear View of The Cathedral: The Dominance of Property Rules, 106 YALE L.J. 2091, 2103 (1997) (discussing a situation in which "[t]he benefits to each side from undertaking its preferred activities are the compensation that each side receives from bearing the small slights caused by others").
301. Smoking, in contrast, is no longer considered normal in most settings. Nonsmokers are disadvantaged by smoking, but do not impose any reciprocal disadvantages on smokers. Because nonsmokers constitute a majority, the judgment to relegate smoking to the subnormal category is relatively straightforward.
302. The call option would only extend to the kind of land use regulations typified by zoning; it would not allow a landowner an "option" to violate other, non-negotiable regulations and laws (such as fire codes, health codes, and ordinary criminal and civil laws). Government should have reasonably broad discretion under the police power to designate any legitimate law or regulation as "non-negotiable" and thereby withdraw it from the realm of the landowner's "call option." This is true even when the law impacts in some way on land use - as, for example, fire codes do.
303. A party holding an interest protected by a property rule retains the power to veto any and all deals at her option, while a party whose interest is protected only by a liability rule lacks such veto power. Morris, supra note 23, at 853-54. Under current law, the community's interest in compliance with valid zoning regulations constitutes a property interest, in that it need not approve any noncompliant proposals.
304. See Ayres & Talley, supra note 23, at 1041 & n.49 (explaining that under a liability rule, a defendant holds a "call option" and can elect "to buy the entitlement for the damage amount"); Morris, supra note 23, at 852 (discussing "call" as a form of liability rule).
305. The call option is uniquely associated with a particular piece of land and runs with the land until it is exercised or sold to the local governing body. This feature distinguishes the call option from a system of transferable development rights ("TDRs"), in which the right to develop can be severed from a particular piece of property and transferred to a different piece of property. See Frank Schnidman, Transferable Development Rights, in WINDFALLS FOR WIPEOUTS, supra note 109, at 532, 536. TDR-like outcomes might nevertheless be achieved under the call option system. See infra note 270.
306. See Calabresi & Melamed, supra note 23, at 1105-06 (distinguishing liability rules, in which "an external, objective standard of value is used to facilitate the transfer of the entitlement" from property rules, in which the transfer occurs only at the entitlement holder's option "and at the price at which he subjectively values the property"); see also Ellickson, Alternatives to Zoning, supra note 22, at 738-48 (discussing a system of liability rules in which land uses could be pursued upon payment of damages).
307. See Calabresi & Melamed, supra note 23, at 1105-06 (distinguishing liability rules, in which "an external, objective standard of value is used to facilitate the transfer of the entitlement" from property rules, in which the transfer occurs only at the entitlement holder's option "and at the price at which he subjectively values the property"); see also Ellickson, Alternatives to Zoning, supra note 22, at 738-48 (discussing a system of liability rules in which land uses could be pursued upon payment of damages).
308. A formidable body of scholarly work has developed around the property rule/liability rule distinction pioneered by Calabresi and Melamed. See, e.g., Ayres & Talley, supra note 23; Louis Kaplow & Steven Shavell, Property Rules Versus Liability Rules: An Economic Analysis, 109 HARV. L. REV. 713 (1996); James E. Krier & Stewart J. Schwab, Property Rules and Liability Rules: The Cathedral in Another Light, 70 N.Y.U. L. REV. 440 (1995); A. Mitchell Polinsky, Resolving Nuisance Disputes: The Simple Economics of Injunctive and Damage Remedies, 32 STAN. L. REV. 1075 (1980); Symposium, Property Rules, Liability Rules, and Inalienability: Twenty-Five Year Retrospective, 106 YALE L.J. 2083 (1997).
309. A formidable body of scholarly work has developed around the property rule/liability rule distinction pioneered by Calabresi and Melamed. See, e.g., Ayres & Talley, supra note 23; Louis Kaplow & Steven Shavell, Property Rules Versus Liability Rules: An Economic Analysis, 109 HARV. L. REV. 713 (1996); James E. Krier & Stewart J. Schwab, Property Rules and Liability Rules: The Cathedral in Another Light, 70 N.Y.U. L. REV. 440 (1995); A. Mitchell Polinsky, Resolving Nuisance Disputes: The Simple Economics of Injunctive and Damage Remedies, 32 STAN. L. REV. 1075 (1980); Symposium, Property Rules, Liability Rules, and Inalienability: Twenty-Five Year Retrospective, 106 YALE L.J. 2083 (1997).
310. A formidable body of scholarly work has developed around the property rule/liability rule distinction pioneered by Calabresi and Melamed. See, e.g., Ayres & Talley, supra note 23; Louis Kaplow & Steven Shavell, Property Rules Versus Liability Rules: An Economic Analysis, 109 HARV. L. REV. 713 (1996); James E. Krier & Stewart J. Schwab, Property Rules and Liability Rules: The Cathedral in Another Light, 70 N.Y.U. L. REV. 440 (1995); A. Mitchell Polinsky, Resolving Nuisance Disputes: The Simple Economics of Injunctive and Damage Remedies, 32 STAN. L. REV. 1075 (1980); Symposium, Property Rules, Liability Rules, and Inalienability: Twenty-Five Year Retrospective, 106 YALE L.J. 2083 (1997).
311. A formidable body of scholarly work has developed around the property rule/liability rule distinction pioneered by Calabresi and Melamed. See, e.g., Ayres & Talley, supra note 23; Louis Kaplow & Steven Shavell, Property Rules Versus Liability Rules: An Economic Analysis, 109 HARV. L. REV. 713 (1996); James E. Krier & Stewart J. Schwab, Property Rules and Liability Rules: The Cathedral in Another Light, 70 N.Y.U. L. REV. 440 (1995); A. Mitchell Polinsky, Resolving Nuisance Disputes: The Simple Economics of Injunctive and Damage Remedies, 32 STAN. L. REV. 1075 (1980); Symposium, Property Rules, Liability Rules, and Inalienability: Twenty-Five Year Retrospective, 106 YALE L.J. 2083 (1997).
312. A formidable body of scholarly work has developed around the property rule/liability rule distinction pioneered by Calabresi and Melamed. See, e.g., Ayres & Talley, supra note 23; Louis Kaplow & Steven Shavell, Property Rules Versus Liability Rules: An Economic Analysis, 109 HARV. L. REV. 713 (1996); James E. Krier & Stewart J. Schwab, Property Rules and Liability Rules: The Cathedral in Another Light, 70 N.Y.U. L. REV. 440 (1995); A. Mitchell Polinsky, Resolving Nuisance Disputes: The Simple Economics of Injunctive and Damage Remedies, 32 STAN. L. REV. 1075 (1980); Symposium, Property Rules, Liability Rules, and Inalienability: Twenty-Five Year Retrospective, 106 YALE L.J. 2083 (1997).
313. See Rose, The Shadow of The Cathedral, supra note 23, at 2178-79 (explaining that a liability rule merely divides entitlements in a particular way).
314. See supra note 225 and accompanying text.
315. While some uses of land are regulated at the federal level, property law remains primarily the province of state government (which states may choose to delegate to localities). See Butner v. United States, 440 U.S. 48, 55 (1979) ("Property interests are created and defined by state law.").
316. See Jacobsen & McHenry, supra note 109, at 346-47 (discussing state zoning enabling acts).
317. Of course, the bargaining limits articulated in Nollan and Dolan would need to be overruled as an initial matter, in order to clear the way for this proposed alternative.
318. An important feature of most liability rules is the fact that the damage amount is determined by an independent entity and does not necessarily track the subjective valuation of the party who is protected by the liability rule. See Morris, supra note 23, at 854 n.82 ("The 'objective' price set by the collective (usually, by a court) may or may not equal the holder's subjective valuation of the in-kind component."); see also Ayres & Talley, supra note 23, at 1065-72 (discussing the advantages of "untailored" damages assessments). Given the fact that remediation of cognizable externalities is amenable to (more or less) objective determination, it is unclear whether it would be necessary to add a "neutral" administrative body to determine the adequacy of a proposed externality fix or whether the threat of judicial review would be sufficient to make the government act in good faith in approving or disapproving a particular externality fix. External standards might also be appropriate in certain situations, such as those that currently govern the cleanup and redevelopment of "brownfield" sites. See J. Linn Allen, Toxic Land Healthy for Developer, CHI. TRIB., Jan. 30, 2000, at C1, available at 2000 WL 3631755 (reporting that the EPA issues a "no further remediation" letter after a review of a developer's documentation indicates the cleanup meets the applicable standards).
319. Exercising the call option would transfer relevant pieces of the community's interests in nondevelopment to the landowner at the specified in-kind price. The landowner's share of property interests in the land would be expanded (a leftward move in Figure 1). I assume that the transferred portion of the interest would be protected by a property rule, such that the call option, once exercised, could not then be repurchased by the governmental body to end the land use in question. See Ayres & Talley, supra note 23, at 1041 n.50 (discussing the same assumption, while noting that a contrary rule permitting repurchase would be possible, and citing Ellickson, Alternatives to Zoning, supra note 22, at 738-48, for an example in which a factory's option to "pollute and pay" might be revoked).
320. Choices 2 and 3 correspond to the two "Coasean Bargains" identified by Ayres and Talley under a liability rule. See Ayres & Talley, supra note 23, at 1038, 1042 tbl.1. The utility or disutility that each party associates with the land use will be signalled by the alternatives each seeks to pursue; in this way, the call option serves an "information-forcing" function. Id. at 1100.
321. The community would, of course, be subject to applicable constitutional and statutory restrictions in seeking to realize associational preferences.
322. See Ayres & Talley, supra note 23, at 1044 (noting that parties who place a low value on the exercise of a call option "might feign a high valuation so that plaintiffs would bribe them not to exercise their option").
323. See Haw. Hous. Auth. v. Midkiff, 467 U.S. 229, 241 (1984) (stating that the court "will not substitute its judgment for a legislature's judgment as to what constitutes a public use 'unless the use be palpably without reasonable foundation'") (quoting United States v. Gettysburg Elec. Ry. Co., 160 U.S. 668, 680 (1896)).
324. The amount of compensation should reflect the value of the land with the call option intact - that is, the amount the land would be worth to a landowner who has the power to engage in any given land use by remediating the cognizable negative externalities associated with that use.
325. This is a tactic that is frequently used by conservation groups to stop unwanted development. See, for example, Barbara Sherlock, Conservation Trust May Step in to Buy Batavia Land Slated for Development, CHI. TRIB., Jan. 30, 2000, at C5, available at 2000 WL 3631402 (reporting that the Trust for Public Land was considering the purchase of a fourteen-acre marsh area slated for retail development).
326. See Clayton P. Gillette, Courts, Covenants, and Communities, 61 U. CHI. L. REV. 1375, 1395 (1994) [hereinafter Gillette, Courts, Covenants, and Communities] (observing that for "those who desire more control than can be afforded by zoning or market mechanisms alone, covenants provide both a private means of rulemaking that reflects those desires and a stabilizing precommitment device against changing preferences").
327. See id. at 1384-85 (discussing residential association covenants governing such matters as "kinds of pets that can be kept within the association, numbers of guests that can be accommodated, the erection of a satellite dish, the size of a mailbox, exterior colors, and the types of vehicles maintained on the premises") (citations omitted); see also JOHN DELAFONS, LAND-USE CONTROLS IN THE UNITED STATES 85 (2d ed. 1969) ("If the controls exercised by public authorities over land-use in America seem excessively detailed and capricious, the controls happily adopted by private citizens are positively sadistic.").
328. This assumes that a community group that sold its call options would continue to have controlling power with the local governmental body. Where such control is uncertain, a binding agreement to refrain from exercising call options for some time period might be a preferable approach.
329. This assumes that the underlying zoning regulations are constitutionally permissible and that the community is not exercising its veto power in a manner that otherwise violates the Constitution (or state or federal law). The content of a call option, and implications of retaining or selling it, will depend upon the operative constitutional limits on land use regulation.
330. I am assuming here that the call option, once sold, could not be repurchased by the landowner. However, this makes little practical difference. Even without the call option, a landowner can still try to convince the community not to exercise its veto power with respect to a proposed development by offering a very attractive deal. The amount of extra compensation required to overcome the community's veto power should be precisely equivalent to the amount she would have to pay to "repurchase" the call option if this were allowed.
331. A bargain that would leave one of the parties better off while leaving the other no worse off would also be Pareto-efficient, although the no-better-off party might refuse to consent to the deal unless some of the surplus accruing to the other party were shared with her.
332. See Ayres & Talley, supra note 23, at 1043 (stating that "defendants will never consent to pay more than $50 for what they can take nonconsensually for $50").
333. See id. at 1049-50 (discussing a "take-it-or-leave-it" bargaining interaction).
334. See id. (describing bargaining move in which a defendant offers to purchase an entitlement from the plaintiff at a price chosen by the defendant).
335. See id. at 1050 (discussing the alternatives remaining to a defendant holding a call option if her take-it-or-leave-it offer is rejected).
336. Id. at 1049 n.74.
337. Morris, supra note 23, at 859-60 n.98.
338. Though this would present obvious enforcement challenges, it should be no more difficult to implement and enforce than prohibitions on bribery and graft. The fact that the landowner would be in a position to inform on an overreaching governmental official should make such communications relatively rare.
339. For example, certain communities might be particularly receptive to solutions that would minimize overall development within a given area. The ability to enter into binding contracts not to exercise one's call option, see Gillette, Courts, Covenants, and Communities, supra note 257 and accompanying text, introduces the possibility of TDR-like alternatives to the externality fix. For example, a landowner proposing a development that would increase density on a particular block might be able to purchase the consent of the community more affordably by showing that all of the surrounding landowners on that block have contractually bound themselves not to exercise their call options. A community could publicly signal its receptivity to such arrangements and perhaps even facilitate such private side-arrangements (by, for example, maintaining a register of interested parties), as long as the choice whether to propose such a solution remained with the developer. Similarly, impact fees might be publicized as an acceptable alternative to fixing certain sorts of externalities, though the option to propose an alternative or to engage in an externality fix would remain with the developer.
340. Cf. Rose, Planning and Dealing, supra note 22, at 907-08 (suggesting that a system which "encourages communities to think ahead and publicize their intentions" can increase predictability and reduce unfairness).
341. Cf. Ellickson, Alternatives to Zoning, supra note 22, at 709 ("Although it may appear corrupt on the surface, an excellent way to handle conflicts is to encourage the landowner to distribute monetary payments to his neighbors to enlist their support for his project.").
342. If the governmental entity were fully aware of the preferences of the community and acted as a perfect proxy for those preferences, the community's reactions to proposals would not be expected to change outcomes. However, it seems probable that community preferences are not likely to be fully formulated, much less fully voiced, until after a focal point of some ind has been placed on the bargaining table.
343. See Ellickson, Alternatives to Zoning, supra note 22, at 709 ("A landowner seeking a variance, conditional use permit, or zoning amendment is more likely to be successful if the affected neighbors are not opposed.").
344. See Rose, Planning and Dealing, supra note 22, at 894-96 (discussing the importance and limitations of notice and hearing in the context of piecemeal land use changes).
345. This would make local government action in violation of this principle subject to challenge as a matter of state law. See generally Powell, supra note 200 (discussing challenges to municipalities' statutory authority to impose exactions).
346. See Electro-Tech, Inc. v. H.F. Campbell Co., 445 N.W.2d 61, 78-81 (Mich. 1989) (Brickley, J., dissenting) (collecting cases and discussing the application of substantive due process to land use cases); J. Peter Byrne, Ten Arguments for the Abolition of the Regulatory Takings Doctrine, 22 ECOLOGY L.Q. 89, 131 (1995) (noting the potential role of the Due Process Clause in preserving fairness in land use regulations).
347. See EPSTEIN, TAKINGS, supra note 177, at 112-21 (discussing antinuisance rationale for the police power); Douglas W. Kmiec, At Last, the Supreme Court Solves the Takings Puzzle, 19 HARV. J.L. & PUB. POL'Y 147, 154 (1995) ("[C]ommon law nuisance can govern the constitutional acceptability of land use regulation.").
348. See EPSTEIN, TAKINGS, supra note 177, at 112-21 (discussing antinuisance rationale for the police power); Douglas W. Kmiec, At Last, the Supreme Court Solves the Takings Puzzle, 19 HARV. J.L. & PUB. POL'Y 147, 154 (1995) ("[C]ommon law nuisance can govern the constitutional acceptability of land use regulation.").
349. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 61 ("The 'nuisance exception' [to the takings clause] may be a sensible rule, but it begs the question of who is to decide what constitutes a nuisance."). But see EPSTEIN, TAKINGS, supra note 177, at 120 ("The nuisance language may be often misunderstood and misused, but the conception has no inherent weakness that makes misuse inescapable.").
350. See FISCHEL, REGULATORY TAKINGS, supra note 2, at 61 ("The 'nuisance exception' [to the takings clause] may be a sensible rule, but it begs the question of who is to decide what constitutes a nuisance."). But see EPSTEIN, TAKINGS, supra note 177, at 120 ("The nuisance language may be often misunderstood and misused, but the conception has no inherent weakness that makes misuse inescapable.").
351. See, for example, ALTSCHULER & GOMEZ-IBANEZ, supra note 4, at 77-96.
352. See Ellickson, Alternatives to Zoning, supra note 22, at 733 (citing Mathewson v. Primeau, 395 P.2d 183 (Wash. 1964), in which a neighbor's hogs were deemed an actionable nuisance due to their wafting odor, but piles of junk heaped on the neighbor's premises were not deemed actionable). Aesthetics may be the greatest source of concern in the land use context. See Rose, Planning and Dealing, supra note 22, at 910 (noting possibility that "the most serious spillovers or externalities of land use fall within the vague field of aesthetics: the way the area looks, sounds, feels, and smells").
353. See Ellickson, Alternatives to Zoning, supra note 22, at 733 (citing Mathewson v. Primeau, 395 P.2d 183 (Wash. 1964), in which a neighbor's hogs were deemed an actionable nuisance due to their wafting odor, but piles of junk heaped on the neighbor's premises were not deemed actionable). Aesthetics may be the greatest source of concern in the land use context. See Rose, Planning and Dealing, supra note 22, at 910 (noting possibility that "the most serious spillovers or externalities of land use fall within the vague field of aesthetics: the way the area looks, sounds, feels, and smells").
354. See NELSON, supra note 72, at 10-15 (discussing zoning as a device to protect the property values of the well-off).
355. See Vill. of Euclid v. Ambler Realty Co., 272 U.S. 365, 394 (1926) ("[V]ery often the apartment house is a mere parasite, constructed in order to take advantage of the open spaces and attractive surroundings created by the residential character of the district.").
356. For example, see Cheryl Meyer, Small-House Request Fails First Zoning Bid, CHI. TRIB., Feb. 12, 2000, § 4, at 12 (reporting that the Lakewood zoning board unanimously rejected proposal to ease the requirement that homes contain a minimum of 2800 square feet, with at least 1800 square feet on the first level of a two-story home). Interestingly, one Chicago suburb is seeking to impose maximum square footage requirements to prevent developers from replacing demolished homes with new ones that will "unpleasantly dwarf their neighbors." Karen Meilen, Glencoe Studies Zoning Changes to Scale Back Teardowns, CHI. TRIB., Apr. 27, 2000, § 2, at 3.
357. For example, see Cheryl Meyer, Small-House Request Fails First Zoning Bid, CHI. TRIB., Feb. 12, 2000, § 4, at 12 (reporting that the Lakewood zoning board unanimously rejected proposal to ease the requirement that homes contain a minimum of 2800 square feet, with at least 1800 square feet on the first level of a two-story home). Interestingly, one Chicago suburb is seeking to impose maximum square footage requirements to prevent developers from replacing demolished homes with new ones that will "unpleasantly dwarf their neighbors." Karen Meilen, Glencoe Studies Zoning Changes to Scale Back Teardowns, CHI. TRIB., Apr. 27, 2000, § 2, at 3.
358. See FISCHEL., REGULATORY TAKINGS, supra note 2, at 260-61 (discussing how zoning responds to the risk that people would build inexpensive houses in upscale communities in order to obtain high-quality services without paying high taxes).
359. See NELSON, supra note 72, at 23 ("[A]dvantaged communities face a steady and high demand for entry from residents of less desirable communities" who could gain access in the absence of zoning "[b]y occupying high-density housing and thereby economizing on land costs.").
360. See Bruce W. Hamilton, Zoning and Property Taxation in a System of Local Governments, 12 URB. STUD. 205, 205 (1975) (contending that in the absence of zoning ordinances requiring residents to consume some minimum amount of housing and to pay the associated property taxes, "the Tiebout Hypothesis seems to be a formula for musical suburbs, with the poor following the rich in a never-ending quest for a tax base").
361. Gerald E. Frug, City Services, 73 N.Y.U. L. REV. 23, 31 (1998).
362. See Ellickson, Alternatives to Zoning, supra note 22, at 767 ("Although homeowners may believe that construction of a nearby apartment building will depress property values, there is little evidence to support such fears.") (citing FHA valuation standards reported in Bernard H. Siegan, Non-Zoning in Houston, 13 J.L. & ECON. 71, 103, 106 (1970)).
363. See Ellickson, Alternatives to Zoning, supra note 22, at 767 ("Although homeowners may believe that construction of a nearby apartment building will depress property values, there is little evidence to support such fears.") (citing FHA valuation standards reported in Bernard H. Siegan, Non-Zoning in Houston, 13 J.L. & ECON. 71, 103, 106 (1970)).
364. This was the rationale in the controversial Mount Laurel decisions. See S. Burlington County NAACP v. Township of Mount Laurel, 456 A.2d 390, 483-91 (N.J. 1983) (Mount Laurel II) (formulating remedies to ensure communities provide a "fair share" of low and moderate income housing); S. Burlington County NAACP v. Township of Mount Laurel, 336 A.2d 713, 731-32 (N.J. 1975) (Mount Laurel I) (stating that a municipality "must, by its land use regulations, make realistically possible the opportunity for an appropriate variety and choice of housing for all categories of people who may desire to live there, of course including those of low and moderate income"); see also Hills Dev. Co. v. Township of Bernards, 510 A.2d 621, 642-43 (N.J. 1986) (discussing the extent of the constitutional obligation to provide a fair share of lower income housing). For a discussion of the Mount Laurel cases and their impact, see Lawrence Berger, Inclusionary Zoning Deviens as Takings: The Legacy of the Mount Laurel Cases, 70 NEB. L. REV. 186 (1991).
365. See, for example, Tim Pareti, Palatine Rejects Town Home Plans, CHI. TRIB., Jan. 30, 2000, § 16, at 71, reporting that council members who rejected a town home proposal expressed concern that the roof lines did not sufficiently resemble single-family homes.
366. Cf. Fischel, The Economics of Land Use Exactions, supra note 15, at 110-11 (stating that in order to fairly allocate initial land use entitlements, a determination must be made as to the types of development a community should be permitted to regulate).
367. See Ronald Coase, The Problem of Social Cost, 3 J. L. & ECON. 1, 15 (1960) (observing that where "market transactions are costless . . . a rearrangement of rights will always take place if it would lead to an increase in the value of production").
368. Frederick Acker's performance zoning proposal draws similar lines between "harms" (such as fumes, noise, and traffic) and "nonharms" (such as "[u]nattractive design" and "small lot size"). Acker, supra note 25, at 394.
369. Cf. Fischel, Zoning Reform, supra note 74, at 311-12 (noting potential equity concerns that would be associated with the abolition of zoning).
370. It would not, however, be eliminated, assuming that the governmental body would be permitted to purchase the call option from the landowner. See supra Part III.B.2 (discussing the government's ability to buy the landowner's call option).
371. See Ellickson, Alternatives to Zoning, supra note 22, at 703-05 (discussing exclusionary and discriminatory effects of zoning).
372. An additional possibility is that a new understanding of property could evolve over time as a result of moral insights. See T. Nicolaus Tideman, Takings, Moral Evolution, and Justice, 88 COLUM. L. REV. 1714, 1720 (1988) (analogizing new moral insights to technological insights; once chlorofluorocarbons were found to be harmful, "[w]e could not design a change that made no one worse off than he or she expected to be because what we expected, the continued costless emission of CFC's, turned out to be impossible.").
373. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 188-89 (contending that a test of consistency should be applied to exactions); Ellickson, Suburban Growth Controls, supra note 125, at 44849 (pointing out that early arrivals contribute just as much to congestion as do late arrivals).
374. See EPSTEIN, BARGAINING WITH THE STATE, supra note 20, at 188-89 (contending that a test of consistency should be applied to exactions); Ellickson, Suburban Growth Controls, supra note 125, at 44849 (pointing out that early arrivals contribute just as much to congestion as do late arrivals).
375. Ellickson, Alternatives to Zoning, supra note 22, at 768.
376. See Charles M. Tiebout, A Pure Theory of Local Expenditures, 64 J. POL. ECON. 416, 419-20 (1956) (discussing ways in which communities might seek to achieve optimum size).
377. See Ellickson, Alternatives to Zoning, supra note 22, at 769 (contending that public regulation is less likely than private decisionmaking to achieve optimal distribution).
378. Id.
379. Landowners retain veto power and cannot be forced to sell their call options. This assures them of the ability to develop if the externality fix is implemented.
380. The absurdity of arguing that the price of a given commodity should remain constant over time and across localities is apparent. Members of a society with a market economy understand that they may at times have to pay a higher price than their neighbors for an identical good, merely because of the vagaries of timing, supply, demand, and other market conditions. Here, the commodity in question - consent to development that generates negative externalities - fluctuates in response to various conditions and pressures. Although the government is involved in aggregating and registering community preferences, the shift is closely analogous to an ordinary market shift that would not trigger any special landowner protections. See BRUCE A. ACKERMAN, PRIVATE PROPERTY AND THE CONSTITUTION 145-50 (1977) (observing that the takings clause is understood to restrain only reductions in property value that involve a significant degree of state involvement).