Hard Bargains and Real Steals: Land Use Exactions Revisited

Posted: 28 Aug 2000

See all articles by Lee Anne Fennell

Lee Anne Fennell

University of Chicago - Law School


Landowners and governmental bodies, such as local zoning boards, often make deals in which land use restrictions are eased in exchange for a concession of some sort. Nollan v. California Coastal Commission and Dolan v. City of Tigard place restrictions on the sorts of deals that can be struck, yet the underlying land use restrictions are subject to relatively little judicial oversight. The result is a conceptual disconnect that has become increasingly problematic in the years since Nollan and Dolan were decided. This article maintains that the current state of land use jurisprudence, which couples relatively open-ended regulatory power with tight restrictions on regulatory bargains, represents the worst of both worlds. Without meaningful constraints on the underlying land use regulations, limits on land use bargains cannot provide landowners with meaningful protection against overregulation and subsequent "extortion." Instead, these bargaining limits only add insult to injury, generating vast inefficiencies that harm landowners and communities.

I suggest scrapping the bargaining limits contained in Nollan and Dolan, while using a core insight from these decisions - the relevance of negative externalities to land use regulation - to formulate a more coherent alternative. In the course of my analysis, I examine the strategic bargaining dilemmas that prompted the Nollan/Dolan bargaining limits, and suggest a new way of framing and resolving the unconstitutional conditions problems implicated by land use bargains. The centerpiece of my proposed approach is a mechanism that amounts to an in-kind "call option." This mechanism would allow landowners to engage in otherwise forbidden land uses by providing in-kind remediation of cognizable negative externalities, much as they might under performance zoning. However, the call option would merely place a ceiling on the permissible bargaining range while leaving landowners and governmental entities free to pursue other mutually preferred alternatives without regard to the Nollan/Dolan criteria. The call option would itself be alienable as well, allowing communities effectively to buy veto rights with respect to development on a given parcel of land.

Suggested Citation

Fennell, Lee Anne, Hard Bargains and Real Steals: Land Use Exactions Revisited. Iowa Law Review, Vol. 86, 2000. Available at SSRN: https://ssrn.com/abstract=237916

Lee Anne Fennell (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0603 (Phone)

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