An exaction is a concept in real property law where a condition for development is imposed on a parcel of land that requires part of the land to be dedicated to public use.[1] Exactions are similar to impact fees, which are direct payments to local governments instead of conditions on development.[2]
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The Supreme Court of the United States has identified several criteria for identifying when an exaction becomes a taking that requires compensation under the Fifth Amendment.[3]
In Nollan v. California Coastal Commission, the court ruled that an exaction is legitimate if it shares an "essential nexus" with the reasons that would allow rejection of the permit altogether. In Nollan the court required compensation for a public easement over the dry sand area of the beach as a condition for development, because they found that the easement was not closely related enough to fighting the psychological barrier to beach access that the development would present.[4]
In Dolan v. City of Tigard, the court added that an exaction is legitimate only if the burdens imposed on the permit applicant are roughly proportional to the benefits provided to the public. In Dolan, the court required compensation for an exaction that required a public greenway and bike path, because a private greenway would have been sufficient and the City of Tigard was not specific enough about the benefits of the bike path.[5]