Respondents Brief — William A. Dabbs, Jr., Petitioner v. Anne Arundel County, Maryland

No. 18-54

In the

Supreme Court of the United States

WILLIAM A. DABBS, JR.,

Petitioner,

v.

ANNE ARUNDEL COUNTY, MARYLAND

Respondent.

On Petition for a Writ of Certiorari to the

Court of A ppeals of Maryland

BRIEF IN OPPOSITION

Nancy McCutchan Duden

County Attorney

Hamilton F. T yler

Deputy County Attorney

A nne A rundel County

Office Of Law

2660 Riva Road, 4th Floor

Annapolis, Maryland 21401

(410) 222-7888

Mitchell Y. Mirviss

Counsel of Record

Kurt J. Fischer

Christine E. White

Venable LLP

750 East Pratt Street, Suite 900

Baltimore, Maryland 21202

(410) 244-7400

mymirviss@venable.com

Counsel for Respondent

August 9, 2018

282545

A

(800) 274-3321 • (800) 359-6859

i

QUESTION PRESENTED

Are Anne Arundel County, Maryland’s impact fees,

which are legislatively imposed on a general basis to

collect revenue to provide facilities for the general public

and constitute taxes under state and federal law, required

to satisfy the Nollan/Dolan rough proportionality test?

ii

PARTIES TO THE PROCEEDINGS BELOW

AND DISCLOSURE STATEMENT

Respondent is Anne Arundel County, Maryland,

political subdivision, agency and instrumentality of the

State of Maryland.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . i

PARTIES TO THE PROCEEDINGS BELOW

AND DISCLOSURE STATEMENT . . . . . . . . . . . . . . . ii

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . iii

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . v

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 5

I.

Factual Background . . . . . . . . . . . . . . . . . . . . . . . 5

A. Anne Arundel County’s Impact Fee

Ordinance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

(i.) Imposition of the Fees . . . . . . . . . . . . . . 5

(ii.) Use of the Fees . . . . . . . . . . . . . . . . . . . . 5

(iii.) Ref unds to Cu r rent O w ners

o f Fe e s No t E x p e n d e d o r

Encumbered Within Si x FYs

Following the FY of Collection . . . . . . . 6

(iv.) Bi l l No. 9 6 - 01: T he Cou nt y

Council Authorized Impact Fees

to Be Expended on Temporary

Classrooms That Expand the

Capacity of Schools . . . . . . . . . . . . . . . . . 6

iv

Table of Contents

Page

B. Plaintiffs’ Claims for Refunds . . . . . . . . . . . 6

II. The Trial Court Decision . . . . . . . . . . . . . . . . . . . 8

III. The Decision of the Court of Appeals of

Maryland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

I.

Issuance of a Wr it of Cer tiora r i is

Inappropriate Because the Court of Appeals

of Maryland Correctly Analyzed this

Court’s Decision in Koontz in Concluding

that the County’s Impact Fees Were

Taxes Not Subject to the Nollan/Dolan

Rough Proportionality Requirement . . . . . . . . . 11

II. The Petitioners Failed to Create A n

Appropriate Record on Which This Court

Should Consider the Federal Constitutional

Claim They seek to Assert in This Case . . . . . . 24

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

v

TABLE OF CITED AUTHORITIES

Page

Cases

Brown v. Legal Found. of Wash.,

538 U.S. 216 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

City of Portsmouth v. Schlesinger,

57 F.3d 12 (1st Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . 23

Collins Holding Corp. v. Jasper Cty.,

123 F.3d 797 (4th Cir. 1997) . . . . . . . . . . . . . . . . . . . . 21

Curtis v. Town of South Thomaston,

708 A.2d 657 (Me. 1998) . . . . . . . . . . . . . . . . . . . . . . . 23

Dolan v. City of Tigard,

512 U.S. 374 (1994) . . . . . . . . . . . . . . . . . . . . . . . passim

E. Enters. v. Apfel,

524 U.S. 498 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

E. Diversified Props., Inc. v. Montgomery Cty.,

570 A.2d 850 (Md. 1990) . . . . . . . . . . . . . . . . . . . passim

Home Builders Ass’n of Dayton & Miami Valley

v. City of Beavercreek,

729 N.E.2d 349 (Ohio 2000) . . . . . . . . . . . . . . . . . . . . 24

Home Builders Ass’n of Miss. v. City of Madison,

143 F.3d 1006 (5th Cir. 1998) . . . . . . . . . . . . . . . . . . . 20

vi

Cited Authorities

Page

Howard County v. JJM, Inc.,

482 A.2d 908 (Md. 1984) . . . . . . . . . . . . . . . . . . . . . . . 23

J.E.D. Assoc’s. v. Atkinson,

432 A.2d 12 (N.H. 1981) . . . . . . . . . . . . . . . . . . . . . . . 13

Koontz v. St. John’s River Water Mgmt. Dist.,

570 U.S. 595 (2013) . . . . . . . . . . . . . . . . . . . . . . . passim

Latrobe Brewing Co. v. Comptroller of Treasury,

192 A.2d 101 (Md. 1963) . . . . . . . . . . . . . . . . . . . . . . . . 3

Lingle v. Chevron U.S.A., Inc.,

544 U.S. 528 (2005) . . . . . . . . . . . . . . . . . . . . . . . . 13, 22

Manocherion v. Lenox Hill Hosp.,

643 N.E.2d 479 (N.Y. 1994) . . . . . . . . . . . . . . . . . . . . 23

N. Ill. Home Builders Ass’n, Inc. v.

Cty. of Du Page,

649 N.E.2d 384 (Ill. 1995) . . . . . . . . . . . . . . . . . . . . . 23

Nat’l Cable Television Ass’n v. United States,

415 U.S. 336 (1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Nollan v. Cal. Coastal Comm’n,

483 U.S. 825 (1987) . . . . . . . . . . . . . . . . . . . . . . . passim

Town of Flower Mound v.

Stafford Estates Ltd. P’ship,

135 S.W. 3d 620 (Tex. 2004) . . . . . . . . . . . . . . . . . . . . 23

vii

Cited Authorities

Page

Trimen Dev. Co. v. King Cty.,

877 P.2d 187 (Wash. 1994) . . . . . . . . . . . . . . . . . . 23-24

Valero Terrestrial Corp. v. Caffrey,

205 F.3d 130 (4th Cir. 2000) . . . . . . . . . . . . . . . . . . . . 21

United States v. Maryland,

471 F. Supp. 1030 (D. Md. 1979) . . . . . . . . . . . . . . . . . 19

United States v. Pewee Coal Co.,

341 U.S. 114 (1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Waters Landing, Ltd. P’ship v.

Montgomery Cty.,

650 A.2d 712 (Md. 1997) . . . . . . . . . . . . . . . . . . . . . . 3, 9

Weaver v. Prince George’s Cty.,

379 A.2d 399 (1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Constitution and Statutes

Anne Arundel County Code, Art. 17, Title 11,

Subtitle 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Bill No. 96-01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6, 7

Maryland Laws of 1986, Chapter 350, § 1 . . . . . . . . . . 1, 4

Md. Dec. Rights art. 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Md. Dec. Rights art. 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

viii

Cited Authorities

Page

U.S. Const. amend. V . . . . . . . . . . . . . . . . . . . . . . . . passim

U.S. Const. amend. XIV . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1

INTRODUCTION

In its 1986 Session, the Maryland General Assembly

enacted a public local law, 1986 Md. Laws, Ch. 350,

§ 1, which authorized Anne Arundel County, Maryland

(the “County”), by ordinance “to fix, impose and collect

development impact fees for financing, in whole or in part,

the capital costs of additional or expended public works,

improvements, and facilities required to accommodate

new construction or development.” Thereafter, the Anne

Arundel County Council enacted Bill No. 50-87, an

ordinance (the “Impact Fee Ordinance”) that (1) imposed

development impact fees on property owners who improve

real property and thereby impact public facilities, and

(2) established detailed rules and procedures for the

calculation and imposition of the fees. The Impact Fee

Ordinance has been amended from time to time and is

now codified in Subtitle 2 of Title II of Article 17 of the

Anne Arundel County Code (the “Code”).1

Impact fees must be paid by any person who improves

real property causing an impact on public facilities. Code

§§ 17-11-203, 206. During the fiscal years (the “FYs”)

relevant to this case, the County i mposed only

transportation and school impact fees. The amount of

1. Unless otherwise indicated, all citations will be to the Anne

Arundel County Code. The provisions of the Impact Fee Ordinance

applicable to this case can be found in the County Code, as codified

through December, 2006, and as amended by Bill No. 27-07. There

is no codification of the provisions applicable to this case. (E.12951300) (All “E.” cites are to the Record Extract before the Court

of Appeals of Maryland.) The provisions in the 2006 Code and Bill

No. 27-07 are contained in the Appendix to the County’s Brief of

Appellee before the Court of Appeals of Maryland.

2

fees is set annually on a county-wide basis by an ordinance

enacted by the County Council, and different amounts

of fees are imposed on different types of commercial

and residential development. Code § 17-11-204. Section

17-11-202 of the Code provides that the purpose of the

Impact Fee Ordinance is to require “all new development

to pay its proportionate fair share of the costs for land,

capital facilities and other expenditures necessary to

accommodate development impacts in public school,

transportation and public safety facilities.”

Under Code § 17-11-209(a), impact fees must be used

for eligible capital projects, that is, capital projects for the

expansion of the capacity of roads and schools, and not for

replacement, maintenance, or operations. On December

20, 2001, the County Council enacted Bill No. 96-01,

which, effective February 3, 2002, authorized the County

to use impact fees for temporary structures (classrooms),

provided that the temporary structures expanded the

capacity of the schools to serve new development. Finally,

Code § 17-11-210(b) provides that, if the impact fees

collected in a district are not expended or encumbered

within six FYs following the FY of collection, the County

Finance Office (the “FO”) must give notice to current

property owners that impact fees are available for refund.

In the mid-1980s, as the federal government

curtailed grants for local government infrastructure, a

number of other Maryland counties, in addition to Anne

Arundel County, imposed development impact fees. In

Eastern Diversified Properties, Inc. v. Montgomery

County, 570 A.2d 850, 854-55 (Md. 1990), the Court

of Appeals of Maryland (the “Court of Appeals”)

held that a transportation development impact fee

3

imposed by Montgomery County, which was analytically

indistinguishable from the fees imposed by Anne Arundel

County, was a tax, and as such was invalid due to lack

of legislative authorization by the Maryland General

Assembly. Notably, the Court of Appeals refused to sustain

the development impact fee on grounds that the county

had authority to impose impact fees as a regulatory fee

under its general powers to regulate roads for the public

health, safety, and welfare. Id. at 853-55. Subsequently,

in Waters Landing, Ltd. P’ship v. Montgomery Cty., 650

A.2d 712, 724 (Md. 1997), the Court of Appeals ruled

that the Nollan/Dolan test for regulatory takings had no

application to Montgomery County’s development impact

fee because it constituted a legislatively imposed tax of

general application.

In the present case, Petitioners, William A. Dabbs,

et al., plaintiffs before the trial court (hereinafter,

“Plaintiffs”), brought this class action seeking refunds

of impact fees collected by Anne Arundel County in

FYs 1997-2003. Pet’r App. at C-5. Plaintiffs are not the

individuals who paid the fees and thus do not have standing

to contend that the amounts of the fees imposed by the

County violated the Nollan/Dolan rough proportionality

test that this Court has established under the Takings

Clause. 2 Rather, Plaintiffs are the current owners of

2. Nollan v. Cal. Coastal Comm’n, 438 U.S. 825, 831-32 (1987);

Dolan v. City of Tigard, 512 U.S. 374, 384 (1994). Only a fee payer

has standing to challenge the amount of a fee. See Latrobe Brewing

Co. v. Comptroller of Treasury, 192 A.2d 101, 104 (Md. 1963)

(“[T]he modern general rule is that in the absence of a legislative

intent to the contrary, the one required by law to do so, who paid

the tax, is the one to claim and receive back on overpayment under

a statute authorizing a refund.”).

4

properties on which impact fees were paid in FYs 19972003, and in their complaint they claimed refunds of

impact fees allegedly not expended or encumbered with

six FYs as required by Code § 17-11-210(b). Pet’r App. at

C-5. Section 17-11-210(b) of the Code provides for refunds

of fees to current property owners, not feepayers, that

are not expended or encumbered in a timely manner. In

their complaint, Plaintiffs did not assert a claim that the

County’s Impact Fee Ordinance violated the Nollan/Dolan

test under the Federal Constitution. Pet’r App. at C-3 to

-5; E.62-80. The plaintiff class was certified as a class of

current owners, not feepayers. Pet’r App. at C-5, C-25.

At trial, Plaintiffs presented no evidence that the

amount of the impact fees violated the Nollan/Dolan test.

Rather, they sought impact fee refunds under Code § 17-11210(b) on grounds that the fees were not expended within

the six FYs following the FY of collection. Nevertheless,

Plaintiffs did argue that the Nollan/Dolan test should be

applied, which the trial court rejected on grounds that

(1) Plaintiffs had presented no meaningful argument

or evidence to support their claim that, as the current

owners of properties, they were entitled to refunds under

the Nollan/Dolan test (Pet’r App. at C-12 to -13), and (2)

the Court of Appeals had ruled that development impact

fees constituted taxes to which the Nollan/Dolan test

does not apply. The Court of Appeals affirmed, ruling

that Plaintiffs had failed to explain their argument under

Nollan/Dolan and, in any event, the County’s impact

fees were legislatively enacted for the primary purpose

of collecting revenue and thus constituted taxes, which

are not subject to the Nollan/Dolan test. Pet’r App. at

A-26 to -29. The General Assembly has granted specific

authority in 1986 Md. Laws, Ch. 350, § 1 to the County to

impose the fees.

5

STATEMENT OF THE CASE

I.

Factual Background.

A.

Anne Arundel County’s Impact Fee Ordinance.

(i.) Imposition of the Fees.

Code § 17-11-202(1) authorizes the County to impose

impact fees for the purpose of requiring new development

to pay its proportionate share of the costs for land and

capital facilities necessary to accommodate development

impacts on public facilities, including roads and schools.

Impact fees must be paid by any person who improves

real property causing an impact on public facilities. The

amounts of school and transportation impact fees are set

by an annual ordinance enacted by the County Council

after a public hearing. The County Council has never

set the fees in an amount sufficient to recover all the

capital costs incurred for roads and schools to serve new

development.

(ii.) Use of the Fees.

Under Code § 17-11-209(a), impact fees must be used

for eligible capital projects, that is, capital projects for the

expansion of the capacity of roads and schools, and not for

replacement, maintenance, or operations. The County has

been divided into impact fee districts for transportation

(roads) and schools, and impact fees generally must be

used for capital improvements within the district from

which they are collected. Code § 17-11-209(d).

6

(iii.) Refunds to Current Owners of Fees Not

Expended or Encumbered Within Six FYs

Following the FY of Collection.

Section 17-11-210(b) provides that, if the impact fees

collected in a district are not expended or encumbered

within six FYs following the FY of collection, the County

FO must give notice to current property owners that

impact fees are available for refund. Under Code § 1711-210(e), however, the Planning & Zoning Officer “may

extend for up to three years the date at which the funds

must be expended or encumbered under subsection (b) of

this section.” Such an extension may “be made only on a

written finding that within a three-year period certain

capital improvements are planned to be constructed that

will be of direct benefit to the property against which the

fees were charged.” Id.

(iv.) Bill No. 96 - 01: The County Council

Authorized Impact Fees to Be Expended

on Temporary Classrooms That Expand

the Capacity of Schools.

On December 20, 2001, the County Council enacted

Bill No. 96 - 01, which, effective February 3, 2002,

authorized the County to use impact fees for temporary

structures (classrooms), provided that the temporary

structures expanded the capacity of the schools to serve

new development. (E.1285-94).

B. Plaintiffs’ Claims for Refunds.

Plaintiffs are a class composed of the current owners

of properties in the County on which impact fees were paid

7

in FYs 1997-2003. Pet’r App. at C-5. In Count I of their

complaint, Plaintiffs sought a declaratory judgment that

they were entitled to refunds in an unspecified amount

because the County had failed to expend or encumber

the fees within six FYs as required by Code § 17-11-210(b)

and Articles 19 and 24 of the Maryland Declaration of

Rights. In Count I, Plaintiffs also asserted that the

County Council’s decision in Bill No. 96-01 to authorize the

County to expend impact fees on temporary classrooms

was “improper” and requested a declaration that such

expenditures could not be considered in determining

whether impact fees had been expended or encumbered

in a timely manner. Pet’r App. at C-3 to -4.

In Count II, Plaintiffs asserted a claim for “Assumpsit

and Demand for a Refund of Impact Fees” and sought

refunds in an unspecified amount for the County’s use of

impact fees to pay for temporary classrooms. Id. at C-4.

In Count III, Plaintiffs stated a claim for breach of

contract, alleging that they were “special taxpayers” as

opposed to “general taxpayers,” and that they should

receive refunds of impact fees that were not timely or

legally expended or encumbered for the benefit of the

property against which impact fees were “accessed [sic] by

the end of the FY immediately following six (6) years from

the date the transportation impact fee or school impact

fee was paid.” Id. at C-4 to -5. Plaintiffs also alleged a

right to a refund under Articles 19 and 24 of the Maryland

Declaration of Rights. Id. at C-4.

The Complaint did not allege a taking claim under the

Fifth and Fourteenth Amendments to the United States

Constitution, and none of the Plaintiffs was a feepayer with

8

standing to claim a refund of an impact fee on grounds

that the fees were unconstitutionally imposed in violation

of the Nollan/Dolan rule. Rather, as previously stated,

the Plaintiffs were current owners of properties on which

impact fees were paid who had standing to claim refunds

under Code § 17-11-210(b) on grounds that the fees were

not expended or encumbered in a timely manner. Pet’r

App. at C-5.

II. The Trial Court Decision.

At trial, the court required the defendant, the County,

to proceed first and present evidence demonstrating that,

during the relevant FYs, impact fees were collected,

expended, or encumbered in the manner required by

law. The County introduced detailed financial records

and summary charts showing the amount of collections,

expenditures, encumbrances, and interest expenditures

during all relevant FYs in all districts. The County

demonstrated that all impact fees were collected,

expended, and encumbered in a manner consistent

with the Impact Fee Ordinance and were expended as

encumbered for the purpose for which they were collected:

the expansion of public facilities to accommodate new

development. Id. at C-11 to -14, C-28 to -32.

Following the trial, the trial court issued a memorandum

and declaratory judgment ruling that the testimony of the

County’s witness, Deputy Budget Officer Kurt Svendsen,

“was credible, clear, convincing, and demonstrated a

detailed knowledge not only of the impact fee legislation

and its operation but a comprehensive understanding

of how the County’s budgeting and accounting systems

work and mesh with impact fee calculations.” Id. at C-12.

9

Further, the trial court found that the sole evidence

presented by Plaintiffs was that of Kirk Sorenson, Ph.D.,

who “demonstrated only the flimsiest knowledge of the

ordinance at issue in this case and how it operated in actual

practice and was completely unhelpful in providing any

useful testimony.” Id. at C-12 to -13. Plaintiffs withdrew

Dr. Sorenson’s testimony after cross-examination and

presented no meaningful evidence that the impact fees

were not collected and used as required by County law.

Id. at C-13.

In its memorandum and declaratory judgment, the

trial court found that the County had collected, expended,

and encumbered impact fees in compliance with the

Impact Fee Ordinance. Further, it ruled that Plaintiffs

had failed to mount a meaningful constitutional challenge

under the “rational nexus” or “rough proportionality” test.

Id. at C-31. First, the trial court found that Plaintiffs had

made no argument that the amount of the fees imposed

by the County was not roughly proportional to the capital

costs incurred. Additionally, the trial court ruled that,

although the Plaintiffs argued that the County violated

the “rough proportionality” test by spending fees on

temporary classrooms, Plaintiffs “do not articulate the

analytical basis for their argument.” Id. The trial court

ruled that, “despite reams of papers being filed, it is still

somewhat difficult to tease out precisely what Plaintiffs’

specific contentions are except for the assertion that they

should receive a refund of some unspecified amount.” Id. at

C-14. Finally, the trial court ruled that, in any event, the

Court of Appeals had ruled in Waters Landing Limited

Partnership v. Montgomery County, 650 A.2d 712, 72324 (1994), that the rough proportionality test has no

application to development impact fees, which are taxes

10

legislatively imposed on a general basis to raise revenue

to benefit the general public. Pet’r App. at C-31.

III. The Decision of the Court of Appeals of Maryland

After the Court of Special Appeals of Maryland,

Maryland’s intermediate appellate court, affirmed the

trial court, the Court of Appeals of Maryland issued a

writ of certiorari to review the decision. After briefing

and argument, the Court of Appeals affirmed the lower

courts in all respects. As to Plaintiffs’ allegation that

the County’s collection and expenditure of impact fees

had violated the Nollan/Dolan “rough proportionality”

test, the court agreed with the trial court that Plaintiffs

were arguing “sweepingly” that the County’s Impact Fee

Ordinance violated Nollan/Dolan without any meaningful

legal analysis as to why this was so. Further, the court

agreed with the trial court that, in any event, the Nollan/

Dolan rough proportionality test has no application to

the County’s impact fees, as the fees are taxes “imposed

broadly on all properties, within defined geographical

districts, that may be proposed for development. The

legislation leaves no discretion on the fee imposition or

calculation of the fee, i.e., the Impact Fee Ordinance

demonstrates how the fees are to be imposed, against

whom, and how much.” Pet’r App. at A-22 to -23.

The Court of Appeals analyzed this Court’s decision

in Koontz v. St. John’s River Water Mgmt. Dist., 570 U.S.

595 (2013) at length, stating that this Court carefully

distinguished between a taking for which compensation

is required under the Takings Clause, and taxation to

which the Takings Clause has no application. Pet’r App.

at A-17 to -22. The Court of Appeals explained that this

11

Court had ruled in Koontz that a taking for purposes of the

Takings Clause involves the government’s appropriation of

a specific interest in physical or intellectual property, such

that, if the government as a condition of a land use permit

approval requires the dedication of an interest in property

or the payment of money in lieu of the dedication of a

property interest, the Takings Clause requires that the

government demonstrate rough proportionality between

the burdens created by the proposed development and the

amount of property (or cash) demanded by the government.

Id. Koontz made clear, however, that the Takings Clause

does not apply to the government’s exercise of its taxing

authority. Id. at A-19 to -21 (discussing Koontz, 570 U.S.

at 613-15). Accordingly, the Court of Appeals held that

the County’s legislative imposition of impact fees on a

general basis in an amount established by law constituted

taxation to which the Nollan/Dolan test does not apply.

Id. at A-26 to -29.

ARGUMENT

I.

Issuance of a Writ of Certiorari is Inappropriate

Because the Court of Appeals of Mar yland

Correctly Analyzed this Court’s Decision in Koontz

in Concluding that the County’s Impact Fees Were

Taxes Not Subject to the Nollan/Dolan Rough

Proportionality Requirement.

Plaintiffs’ entire argument rests upon a false

depiction of the decision below. They posit that the

Court of Appeals’ decision rests upon a false distinction

between “legislative” and “adjudicative” exactions, when

in fact the decision rested upon a diametrically different

distinction: exactions that constitute taxes, which are

12

not subject to the Nollan/Dolan rough proportionality

requirement because they are applicable on an area-wide

basis, and exactions that do because they result from an

individualized determination of “whether an actual permit

will issue to a payor individual with a property interest.”

Pet’r App. at A-24. The Court of Appeals never mentioned

the legislative adjudicative distinction cited by Plaintiffs,

let alone applied it as the basis for its ruling that the

Nollan/Dolan test does not apply.

In arguing that the Court of Appeals’ holding

distinguishes between the respective branches of

government that imposed the exaction, Plaintiffs conflate

the nature of the exaction with the source of the exaction.

The Court of Appeals repeatedly pointed out that the fees

at issue were legislatively imposed exactions of general

application, as opposed to an assessment directed at a

specific permit-seeker, an individualized determination.

See id. at A-24 to -29. Remarkably, the Petition fails to

address the actual holding of the Court of Appeals, let

alone seek certiorari to review that holding. Even more

remarkably, the Petition instead tags the decision below

with a ruling that the Court of Appeals never made and

certainly never intended. Even if, arguendo, the issue

raised in the Petition were cert-worthy, this case fails to

present the issue. On this basis alone, the Petition should

be denied.

In any event, the Court of Appeals faithfully applied

this Court’s takings jurisprudence, including its analyses

in Nollan/Dolan and Koontz. In Nollan v. California

Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City

of Tigard, 512 U.S. 374 (1994), this Court addressed

the circumstances under which “adjudicative land-use

13

exactions–specifically, government demands that a

landowner dedicate an easement allowing public access

to her property as a condition of obtaining a development

permit ” may constitute a compensable taking. Lingle v.

Chevron U.S.A., Inc., 544 U.S. 528, 546-47 (2005).

In Nollan, this Court ruled that the forced dedication

of an easement as a condition on a permit is constitutionally

permissible only if the forced dedication would advance

the same interest as the outright denial of the permit.

Otherwise, the imposition of the condition would be

tantamount to a “‘plan of extortion’” of an interest in

property from the owner. Nollan, 483 U.S. at 837 (quoting

J.E.D. Assoc’s. v. Atkinson, 432 A.2d 12, 14-15 (N.H.

1981)). No law or regulation of general application ever

was at issue.

In Dolan, this Court addressed the required

relationship necessary for a government to demand a

property interest as a condition of the granting of a

permit needed to redevelop a specific site with enlarged

and new facilities. See 512 U.S. at 384. The City of Tigard

approved the permit on the condition that Dolan dedicate

a greenway and a pedestrian/bicycle pathway. This Court

held that the city had failed to demonstrate the existence

of “rough proportionality” between the amount of the

required dedication and the impact of the proposed

development. Id. at 395-96.

In Koontz, this Court addressed when an alternative

monetary exaction imposed as a part of regulatory action

may constitute a compensable taking under the Takings

Clause. The Court initially explained that the Takings

Clause applies to the government’s appropriation of

14

specific interests in real or intellectual property and does

not apply to the government’s imposition of property taxes,

user fees, and other such taxes and regulations. Koontz,

570 U.S. at 613-15. Koontz had applied to the St. John’s

River Water Management District (the “District”) for

permits to develop the northern 3.7 acres of his 14.9-acre

property. The District approved the permit subject to

Koontz accepting one of two conditions:

(1) reduce the size of his development to one acre and

dedicate a conservation easement to the District for the

remaining 13.9 acres that would prevent development of

the property in the future; or

(2) develop the 3.7 acres as proposed, dedicate a

conservation easement for the remaining 11.2 acres of

the property, and hire contractors to make improvements

to District owned land several miles away by replacing

culverts on a parcel or filling in ditches on another parcel.

Koontz challenged the conditions, arguing that the

District had failed to establish its compliance with the

Nollan/Dolan rough proportionality test. The Florida

Supreme Court had ruled that Koontz’s Nollan/Dolan

claim failed because the second condition imposed

by the District allowed him to pay money for offsite

improvements in lieu of conveying an easement to the

District and because it had also ruled that monetary

exactions are not subject to the Nollan/Dolan test. This

Court rejected the Florida Supreme Court’s argument,

explaining “that if we accepted this argument it would

be very easy for land-use permitting officials to evade

the limitations of Nollan and Dolan . . . . [A] permitting

authority wishing to exact an easement could simply give

15

the owner a choice of either surrendering an easement or

making a payment equal to the easement’s value. Such socalled ‘in lieu’ fees are utterly commonplace.” Id. at 612.

Thus, this Court ruled, the monetary exactions imposed

on Koontz “in lieu” of dedicating an easement over the

2.7 acre portion of his property must satisfy the Nollan/

Dolan rough proportionality test.

This Court emphasized that the Nollan/Dolan test

under the Takings Clause does not apply to taxation by a

government: “It is beyond dispute that ‘[t]axes and user

fees . . . are not takings.’” Id. at 615 (alterations in original)

(quoting Brown v. Legal Found. of Wash., 538 U.S. 216,

243 n.2 (2003) (Scalia, J., dissenting)). Further, this Court

stated that “[t]his case therefore does not affect the ability

of governments to impose property taxes, user fees or

similar laws and regulations that may impose financial

burdens on property owners.” Id. This is so, the Court

explained, because the Takings Clause does not apply to

government imposed financial obligations that “‘d[o] not

operate upon or alter an identified property interest.’”

Id. at 613 (alteration in original) (quoting E. Enters. v.

Apfel, 524 U.S. 498, 540 (1998) (Kennedy, J. concurring)).

Rather, the Takings Clause applies to a government

action that constitutes appropriation of, or is tantamount

to an appropriation of, “‘a specific interest in physical or

intellectual property.’” Id. (quoting E. Enters., 524 U.S.

498, 554-56) (Breyer, J. dissenting)).

In Koontz, the District had demanded the acquisition

of an easement over 2.7 acres of Koontz’s property unless

Koontz agreed to pay for offsite mitigation. This demand

for property or money by the government required

application of the Nollan/Dolan test under the Takings

16

Clause because the government sought to acquire a

specific easement in Koontz’s property:

In this case, moreover, petitioner does not ask

us to hold that the government can commit

a regulatory taking by directing someone to

spend money. . . . . Instead, petitioner’s claim

rests on the more limited proposition that when

the government commands the relinquishment

of funds linked to a specific, identifiable

property interest such as a bank account or

parcel of real property, a “per se [takings]

approach” is the proper mode of analysis under

the Court’s precedent.

Id. at 614.

This Court also noted in Koontz that the Florida

legislature had not granted the power to the District

to impose a tax for offsite mitigation, and a conclusion

that the required payment of mitigation costs was a

tax would have rendered the monetary exaction invalid

under Florida law. Therefore, the District denied that the

payment of mitigation costs was a tax and sought to defend

the demand for money as a substitute for the required

dedication of a conservation easement over the 2.7 acres

in the land use regulation process. This Court stated:

If respondent had argued that its demand

for money was a tax, it would have effectively

conceded that its denial of petitioner’s permit

was improper under Florida law. Far from

making that concession, respondent has

maintained throughout this litigation that it

17

considered petitioner’s money to be a substitute

for his deeding to the public a conservation

easement on a larger parcel of land.

Id. at 617.

Finally, this Court emphasized in Koontz that it had

long recognized that “‘the power of taxation should not be

confused with the power of eminent domain,’ [and] we have

had little trouble distinguishing between the two.’” Id.

The Court of Appeals of Maryland discussed at length

this Court’s analysis in Koontz that the Takings Clause (1)

applies only to an action by the government that constitutes

(or is tantamount to) an appropriation of a specific property

interest, and (2) does not apply to taxation. The court then

ruled that the County’s impact fees constitute taxes. It

explained that the impact fees are taxes because they

are legislatively enacted charges of general application

throughout the County, and the amount of the charge was

set on a general basis for various classes of properties.

Pet’r App. at A-26 to -29. The Court of Appeals’ ruling

that the County’s impact fees were taxes was consistent

with its earlier decision in Eastern Diversified Properties,

Inc. v. Montgomery County, 570 A.2d 850 (Md. 1990).

There, Eastern Diversified challenged a transportation

impact fee imposed by Montgomery County on grounds

that the fee was a tax that was not authorized by the

Maryland General Assembly. The Montgomery County

Impact fee was analytically indistinguishable from the

impact fees imposed by the County in the present case.

Montgomery County had imposed the impact fee to

finance the construction of roads. The fee was collected

from building permit applicants, and it was calculated to

18

be each applicant’s proportional share of the cost of road

facilities in their district of the County constructed to

serve new development. The use of the fees was restricted

to road construction in the district from which they were

collected. Id. at 851-52.

The Maryland court ruled that Montgomery County’s

impact fee was a tax because its primary purpose was to

raise revenue for a public purpose, the construction of

roads. The Court initially explained:

We have recognized a distinction between

the imposition of fees as a necessary part of a

regulatory measure and the imposition of a tax

for revenue purposes…. In evaluation whether

a development impact fee is a regulatory

charge or a tax, “the purpose of the enactment

governs rather than the legislative label.”…. In

Theatrical Corp. v. Brennan, supra, 24 A.2d

911[, 913-14 (1942)], we set forth the criteria for

determining whether a governmental charge

is a fee (regulatory measure) or a tax (revenue

measure as follows:

“[W]hether a particular Act is primarily a

revenue measure or a regulatory measure

is important, because different rules of

construction apply. A regulatory measure may

produce revenue, but in such a case the amount

must be reasonable and have some definite

relation to the purpose of the Act. A revenue

measure, on the other hand, may also provide

for regulation, but if the raising of revenue is

the primary purpose, the amount of the tax is

not reviewable by the courts…”

19

Id. at 854 (internal and parallel citations omitted).

Further, the court explained:

“The Supreme Court has defined a ‘tax’ as an

enforced contribution to provide for the support

of [the] government. United States v. La

Franca, 282 U.S. 568, 572 (1931). Courts have

generally defined taxes as ‘taking money from

the taxpayer for public purposes.’ Puglisi v.

United States 564 F.2d 403, 408 (Ct. Cl. 1977).”

Id. (alteration in original) (parallel cites omitted) (quoting

United States v. Maryland, 471 F. Supp. 1030, 1036 (D.

Md. 1979)). The Court of Appeals then ruled that the

primary purpose of the Montgomery County impact fee

was to raise revenue for public road projects:

We think that the characteristics of the

development impact fee scheme as set forth

in ch. 49A are indicative of a tax rather that

a regulatory fee. Indeed, the revenue raising

objective of the development impact fee scheme

is evident in § 49A-2(f) which states:

“Imposing a development impact fee that

requires new development in certain impact fee

areas to pay their pro rata share of the costs

of impact highway improvements necessitated

by such new development in conjunction with

other public funds is a reasonable method of

raising the funds to build such improvements

in a timely manner.”

20

Section 49A-2(g) states that funds collected

from the imposition of development impact fees

“will fund, in part, the improvements necessary

to increase the transportation system capacity

in the impact fee areas thereby allowing

development to proceed.

Id. at 854-55; accord Weaver v. Prince George’s Cty.,

379 A.2d 399, 404 (1977) (“[W]here a tax is levied by the

Legislature without assessment and is measured by the

extent to which a privilege is exercised by a taxpayer

without regard to the nature or value of his assets, it is

an excise.”).

The Maryland court’s conclusion that the County’s

impact fees constituted taxes was consistent with this

Court’s definition of taxation and with the decision of the

lower federal courts. Plaintiffs do not dispute the Court

of Appeals’ determination that the fees are a tax, and

for good reason. In National Cable Television Ass’n v.

United States, 415 U.S. 336 (1974), this Court explained:

“Taxation is a legislative function, and Congress, which

is the sole organ for levying taxes, may act arbitrarily

and disregard benefits bestowed by the Government on a

taxpayer and go solely on ability to pay based on property

or income.” Id. at 340-41 (internal footnote omitted).

Taxation, therefore, may properly be levied on property

in the form of assessments. The federal circuit courts

of appeals have consistently affirmed fees that satisfy

the definition of taxation as a measure enacted for the

primary purpose of collecting revenue for government

and public uses. In Home Builders Ass’n of Mississippi

v. City of Madison, 143 F.3d 1006, 1011-12 (5th Cir. 1998),

the Fifth Circuit ruled that an impact fee enacted by the

21

City of Madison, Mississippi, for the primary purpose of

raising revenue was a tax, not a regulatory fee. See also

Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130, 134 (4th

Cir. 2000) (“To determine whether a particular charge is

a ‘fee’ or a ‘tax,’ the general inquiry is to assess whether

the charge is for revenue raising purposes, making it a

‘tax,’ or for regulatory or punitive purposes, making it a

‘fee.’” (citing Collins Holding Corp. v. Jasper Cty., 123

F.3d 797, 800 (4th Cir. 1997))).

Plaintiffs argue in their Petition that the Court of

Appeals created an unsupportable distinction between

legislative and adjudicative exactions under which

legislative exactions are not subject to the Nollan/

Dolan test, but adjudicative exactions are. Plaintiffs

misunderstand the Maryland court’s opinion. The court did

not draw a distinction between legislative and adjudicative

exactions. Rather, it drew a distinction between (1)

taxation by the government, as opposed to (2) government

actions that are (or are tantamount to) an appropriation

of a specific interest in real or intellectual property from

a permit applicant. The Maryland court followed this

Court’s analysis in Koontz carefully and ruled that the

County’s impact fees did not affect an appropriation of

a specific property interest as a condition for granting

a permit. Rather, the impact fees constituted general

monetary charges imposed throughout the County on

persons seeking building permits in which the amount of

the charges was uniform for various classes of residential

and commercial property. In short, the Maryland court

found that the County’s impact fees are not subject to the

Nollan/Dolan test because they are taxes. The Petition’s

failure to address this fact implicitly signals that the Court

of Appeals’ analysis faithfully adheres to and applies the

teachings of Nollan/Dolan and Koontz.

22

The legislative/adjudicative distinction Plaintiffs

seek to attribute to the Maryland court is not only based

on an incorrect reading of the Maryland court’s opinion

and an erroneous application of this Court’s analysis

in Koontz, but it is also analytically flawed. Under the

Court of Appeals’ analysis, it is entirely conceivable that a

legislative enactment could effect a taking when it deprives

property owners of use and enjoyment of their property.

If, for example, in the time of war, Congress enacted a

law that required all owners of commercial piers able to

accommodate certain Navy ships to relinquish the piers to

the Navy, this legislative act would implicate the Takings

Clause, and, indeed, would constitute an uncompensated

taking of the piers. Cf. United States v. Pewee Coal Co.,

341 U.S. 114, 116-17 (1951) (ruling that an Executive Order

directing the Secretary of the Interior to take possession

of privately owned and operated coal mines constituted a

taking and that the government was required to pay just

compensation).

It is true, as this Court recognized in Lingle v. Chevron

U.S.A., Inc., 544 U.S. 528, 546-47 (1960), that regulatory

actions that require dedication of a specific property

interests in the land use process as a permit condition

are frequently adjudicative actions. An adjudicative action

requiring the dedication must be analyzed under the

Takings Clause. On the other hand, taxation is invariably

imposed by the legislature by enacting laws requiring

the payment of the money to the government by all

affected property owners as a result of the ownership of,

or a certain use of, physical or intellectual property. That

taxation is imposed by the government by legislation does

not mean that legislation actions can never effect a taking.

If legislation authorizes the appropriation or confiscation

23

of a specific interest in real or intellectual property, it can

constitute a taking.

Plaintiffs also incorrectly state that the Court of

Appeals’ decision in the present case was inconsistent with

its prior decision in Howard County v. JJM, Inc., 482 A.2d

908 (Md. 1984). In JJM, a county had enacted a subdivision

regulation that required that, if a state highway was

planned to cross the property of a subdivision applicant,

the applicant must reserve the land required for the

highway. Pursuant to this regulation, the county sought to

compel JJM to reserve land for a state highway. Id. at 90809. Anticipating this Court’s decisions that established

the Nollan/Dolan test, the Court of Appeals ruled that a

property owner could not be compelled in the subdivision

process to relinquish an interest in property unless it was

shown to be reasonably related to the burden caused by

the subdivision. Because the need for the highway was not

reasonably related to the subdivision, the county could not

compel the reservation or dedication of a right-of-way for

the road without paying just compensation. Id. at 917-21.

Similarly, Plaintiffs greatly exaggerate the purported

split among the federal circuit courts of appeals and

state courts as to the actual issue at hand. Nearly all of

Plaintiffs’ cited cases applying the Nollan/Dolan test do

not address the question. See Pet. at 30-32 (citing City of

Portsmouth v. Schlesinger, 57 F.3d 12, 16 (1st Cir. 1995);

N. Ill. Home Builders Ass’n, Inc. v. Cty. of Du Page,

649 N.E.2d 384, 397 (Ill. 1995); Curtis v. Town of South

Thomaston, 708 A.2d 657, 660 (Me. 1998); Manocherion

v. Lenox Hill Hosp., 643 N.E.2d 479, 483 (N.Y. 1994);

Town of Flower Mound v. Stafford Estates Ltd. P’ship,

135 S.W. 3d 620, 641 (Tex. 2004); Trimen Dev. Co. v. King

24

Cty., 877 P.2d 187, 194 (Wash. 1994)). Not one of the above

cases holds that taxes are subject to the Nollan/Dolan

test; many do not even address the question of whether

the fees at issue were taxes. In its decision below, the

Court of Appeals rejected Plaintiffs’ argument that a

“majority” of states support their position, concluding that

only one jurisdiction, Ohio, has required taxes to satisfy

the Nollan/Dolan test, which was “waver-thin support”

for a supposedly majority rule. See Pet’r App. at A-16 to

-29 (discussing Home Builders Ass’n of Dayton & Miami

Valley v. City of Beavercreek, 729 N.E.2d 349, 355-56 (Ohio

2000) (applying the rough proportionality test to taxes

based upon prior Ohio case law)).

In sum, this case is simply the wrong vehicle for

this Court to decide whether a “legislative-adjudicative”

distinction is proper under Nollan and Dolan.

Accordingly, issuance of a writ of certiorari in this

case in inappropriate because the Maryland Court of

Appeals correctly followed this Court’s analysis in Koontz

in finding that the Nollan/Dolan test does not apply to

taxation. The Maryland court found that the County’s

fees constitute taxes, and the Maryland General Assembly

specifically authorized the imposition of the taxes.

II. The Petitioners Failed to Create An Appropriate

Record on Which This Court Should Consider the

Federal Constitutional Claim They seek to Assert

in This Case.

This Court also should decline to address the federal

constitutional question raised by Plaintiffs because

Plaintiffs have failed to develop an adequate factual basis

25

for review by this Court. Plaintiffs did not assert in their

complaint that the County’s Impact Fee Ordinance violated

the Takings Clause of the United States Constitution.

Further, Plaintiffs did not have standing to challenge the

amount of impact fees imposed by the County and failed

to articulate a meaningful argument that the amount of

the fees was inconsistent with the Nollan/Dolan test.

Rather, Plaintiffs are current owners of properties on

which impact fees were paid in FYs 1997-2003, and they

sought, pursuant to Code § 17-11-210(b), refunds of fees

not expended or encumbered within six FYs after the

FY of collection. In certifying the class, the trial court

certified a class of the current owners of properties on

which impact fees were paid in FYs 1997-2003 that had

not been expended or encumbered in a timely manner.

Plaintiffs contended that, under the Nollan/Dolan rough

proportionality test, impact fees could not be expended on

temporary classrooms, and therefore, could not be counted

in determining whether impact fees were available for

refund under Code § 17-11-201(b). As both the trial

court and the Court of Appeals ruled, Plaintiffs failed to

present an analytical basis for their argument that the

Nollan/Dolan test prohibited fees from being expended

on temporary classrooms. Further, the trial court found

that, even if consideration of all expenditures of fees on

temporary classrooms were excluded from the Code § 1711-210(b) calculation, Plaintiffs still would not be entitled

to refunds. Plaintiffs, therefore, request that this Court

address the scope of the Nollan/Dolan test in a vacuum

and as an advisory opinion. Plaintiffs did not create an

adequate record before the state courts that would merit

consideration by this Court of the federal constitutional

issue that they seek to pose.

26

CONCLUSION

For the foregoing reasons, Respondent respectfully

prays that the Petition for a Writ of Certiorari be denied.

Respectfully submitted,

Mitchell Y. Mirviss

Counsel of Record

Kurt J. Fischer

Christine E. White

Venable LLP

750 East Pratt Street, Suite 900

Baltimore, Maryland 21202

(410) 244-7400

mymirviss@venable.com

Nancy McCutchan Duden

County Attorney

Hamilton F. T yler

Deputy County Attorney

A nne A rundel County

Office Of Law

2660 Riva Road, 4th Floor

Annapolis, Maryland 21401

(410) 222-7888

August 9, 2018

Counsel for Respondent