Last month, the Sixth Circuit Court of Appeals issued an important decision in the area of property rights, development exactions, and the Fifth Amendment. In Knight v. Metropolitan Government of Nashville & Davidson County, Tennessee, case number 21-6179, plaintiffs James Knight and Jason Mayes challenged the constitutionality of a City of Nashville’s “sidewalk” ordinance, which imposes sidewalk-related conditions on landowners who seek building permits.
Specifically, to obtain a building permit, the City requires the developer to either grant an easement across its land and agree to build a sidewalk, or otherwise pay an “in-lieu” fee to help build sidewalks in other parts of the City. The plaintiffs, who were subjected to the ordinance as part of a proposed housing development application, argued that the ordinance and the resulting condition of approval constituted a takings without just compensation.
The key issue before the Sixth Circuit was which “legal test” or “standard” applied to its review of the facts. The City wanted the court to view the ordinance like any other zoning or generally applicable development restriction, and the petitioner wanted the court to view it as an unlawful exaction (i.e., a form of extortion). As the Court explained this issue:
In particular, the parties  disagree over the “test” that we should use to judge whether the sidewalk ordinance commits a taking. The landowner plaintiffs ask us to apply the “unconstitutional-conditions” test that the Supreme Court adopted to assess conditions on building permits in Nollan v. California Coastal Commission, 483 U.S. 825 (1987). Nashville responds that the Court has applied Nollan’s test only to ad hoc administrative conditions that zoning officials impose on specific permit applicants—not generally applicable legislative conditions that city councils impose on all permit applicants. For legislative conditions, Nashville says, we should turn to the deferential “balancing” test that the Court adopted to assess zoning restrictions in Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978).