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In this month’s E-Letter we will discuss land use approvals with conditions, including the basics, when imposing conditions on land use approvals is allowed, and the legal pitfalls to avoid. First, we will briefly discuss the basics of land use approvals with conditions and where the authority to impose conditions is derived. Second, we will discuss when conditions can be imposed. Third, we will discuss the unconstitutional conditions doctrine and how imposing certain conditions can become an unconstitutional “Taking” under the Fifth Amendment of the U.S. Constitution.

The Basics of Imposing Conditions

An “approval with conditions” is when a public body, such as a township board, city council, planning commission, or zoning board of appeals (“ZBA”), imposes conditions as part of its land use approval. For example, a planning commission may require a developer to widen and pave a private road or driveway in order to accommodate emergency vehicles as an approval of a special use permit with “conditions.” Approvals with conditions can be used in a variety of creative ways to ensure that land uses are in conformance with the applicable ordinance and a good fit with the surrounding community.

The authority to impose conditions when providing for approvals can come from many sources of law. Most frequently, approvals with conditions are used in the zoning context by planning commissions and ZBAs. The Michigan Zoning Enabling Act (“MZEA”) provides that “[r]easonable conditions may be required with the approval of a special land use, planned unit development, or other land uses or activities permitted by discretionary decision.” MCL 125.3504(4). While this is a broad grant of authority that allows local governments to issue approvals with conditions, there are some limitations and potential risks that can cause problems if conditions are not imposed properly.

How and When to Impose Conditions?

As stated above, the MZEA allows for conditions to be required with the approvals of SUPs, PUDs, or “other land uses or activities.” Id. However, conditions should not be unrelated to the underlying land use approval being sought. The MZEA provides examples of the types of conditions that “may” be imposed, stating that “conditions may include conditions” : (1) “necessary to insure that public services and facilities affected by a proposed land use or activity will be capable of accommodating increased service and facility loads caused by the land use or activity”; (2) “to protect the natural environment and conserve natural resources and energy”; (3) “to insure compatibility with adjacent uses of land”; and (4) “to promote the use of land in a socially and economically desirable manner.” Id. The use of the phrase “may include conditions” is an indication that these four categories are permissive and not mandatory obligations.

Accordingly, when deciding to impose conditions, the conditions can relate to any of the above four examples. While these are broad categories and could encompass a wide variety of conditions, a common theme is that the condition should relate to the underlying land use and the potential impacts of that land use. However, to be valid under the MZEA, conditions “shall meet all of the following requirements”:

1. Be designed to protect natural resources, the health, safety, and welfare, as well as the social and economic well-being, of those who will use the land use or activity under consideration, residents and landowners immediately adjacent to the proposed land use or activity, and the community as a whole.
2. Be related to the valid exercise of the police power and purposes which are affected by the proposed use or activity.
3. Be necessary to meet the intent and purpose of the zoning requirements, be related to the standards established in the zoning ordinance for the land use or activity under consideration and be necessary to insure compliance with those standards. [Id]

While these requirements may seem complex, they can be summarized into three easy requirements. First, the condition should be related to the potential impact of the proposed land use. Second, the condition being imposed is a valid exercise of power (discussed further in Part III below). And third, the condition should advance the purpose and goals of the underlying zoning requirements.

One final note on how to impose conditions on a land use approval. Always attempt to have a developed record, in writing, with independent factual findings that underpin the justification for imposing certain conditions. The MZEA hints at this by requiring conditions to be recorded in the record of the approval and the record must be retained. MCL 125.3504(5). To increase the defensibility of approvals with conditions, always maintain a developed record that contains the factual findings and land use concerns that justify the specific conditions being imposed. As discussed above, the MZEA has specific requirements for conditions. If a condition is challenged in court as being an unconstitutional condition, as discussed below, a developed record will help to tie the rationale for the condition to the requirements in the MZEA.

Legal Pitfalls to Avoid: The Unconstitutional Conditions Doctrine

Under the “Takings Clause,” which is within the Fifth Amendment of the U.S. Constitution, governments are prohibited from “taking” private property “for public use, without just compensation.” The Takings Clause can apply when the government indirectly interferes with property rights by offering a benefit (e.g. a permit) on the condition that a party waives its constitutional right to “just compensation.” This scenario may implicate the “unconstitutional conditions doctrine.”

The unconstitutional conditions doctrine limits a government’s ability to make “exactions” that violate the U.S. Constitution. An “exaction” is a condition imposed upon the development of a certain property that is often meant to make the developer or landowner internalize the negative externalities or costs associated with the proposed development. The Supreme Court, through a string of cases, has developed a test for “unconstitutional conditions” that is often called the Nollan Dolan test. This test is designed to carefully balance the competing interests of the landowner and the government in the context of land use or development exactions.

Generally, the Nollan Dolan test has three parts: First, a court asks whether the condition would qualify as a “Taking” if the government had directly required it outside of the permit approval context. If yes, the government shows a “nexus” between the condition and the project’s social costs. This “nexus” requirement means that the condition must be imposed because of the potential impacts of the land use and not for other reasons. Finally, the government shows a “rough proportionality” between the condition and the impacts of the land use. In other words, the condition’s burdens on the owner must be proportional to the project’s burdens on society.

While courts have noted that each condition will be evaluated on a case-by-case basis, and thus there is no precise mathematical calculation required, there must be some sort of individualized determination that the required condition is reasonably related in nature and extent to the impact of the proposed land use. This again underscores the importance of supporting conditions with developed factual records and independent findings and conclusions. Developed records enable the municipality to point to concrete facts and justifications to prove that there is a “nexus” and “rough proportionality” between the condition and the impacts of the proposed land use on the surrounding community.

In a recent Sixth Circuit Court of Appeals case pertaining to this issue, Knight v. Metro Gov’t of Nashville & Davidson County, the court was deciding whether Nashville’s sidewalk ordinance satisfied the Nollan Dolan test. Basically, Nashville’s sidewalk ordinance required property owners who were applying for building permits to either (1) build a sidewalk on their property; or (2) pay the “in lieu” fee (which goes to Nashville’s account for building more sidewalks). However, all landowners were required to give Nashville a public sidewalk easement across their property.

Unfortunately, the court did not reach the merits of this decision and determine whether the ordinance at issue imposed unconstitutional conditions. But, the court notes that perhaps Nashville’s sidewalk ordinance could impose these conditions, but the ordinance must satisfy the “nexus” and “rough-proportionality” requirements from Nollan Dolan. Thus, requiring public dedications of land as a permit condition could potentially satisfy the test and not be a “Taking” in violation of the Constitution. Additionally, the court in Knight clarifies that administrative decisions on permits, such as a zoning official imposing a specific condition on a permit, and legislative conditions that are imposed by the legislative body, are both subject to Nollan Dolan’s requirements. This latter issue is up for review in another case before the United States Supreme Court this term, and that decision may reverse or otherwise elaborate on how Nollan Dolan’s requirements could apply to legislative actions.

Takeaways and Conclusion

The main takeaway from this discussion of land use approvals with conditions is that conditions can be imposed by a broad range of municipal public bodies and officials, but these conditions must meet some basic requirements in order to be valid. Conditions must be related to the potential impact of the proposed land use, be a valid exercise of power, and advance the purpose and goals of the underlying zoning requirements. Additionally, the conditions being imposed should have a “nexus” and “rough proportionality” between the condition and the impacts of the proposed land use on the surrounding community. Imposing conditions is a valuable tool that can allow for more flexibility while also protecting the community from adverse impacts caused by certain land uses or developments.

When a condition is challenged, a court will determine the validity of the condition on a case-by-case basis. This is a very fact-based inquiry and will depend heavily on the record that has been developed by the public body that imposed the condition. Accordingly, it is very helpful to the municipality to maintain a detailed record of the factual findings and conclusions that justify the conditions being imposed. The findings and conclusions should be on the record and written directly in the meeting minutes of the meeting where the decision to approve with conditions was made. This factual record is your best defense against a challenge to the condition.

If you keep these requirements in mind when imposing conditions, you can use approvals with conditions to be creative with land use concerns and facilitate development in a way that is beneficial to the community.

By: Chris Patterson and Trent Cunningham

This publication is intended for educational purposes only. This communication highlights specific areas of law and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.