The city planning commission granted conditional approval, dependent on Dolan dedicating land to a public greenway along an adjacent creek, and developing a pedestrian and bicycle pathway in order to relieve traffic congestion.

The decision was appealed to the Oregon State Land Use Board of Appeals (LUBA), alleging that the land dedication requirements were not related to the proposed development, and thus constituted an uncompensated taking of her property, which is disallowed by the Fifth Amendment.

A two-prong test was applied: Whether or not there is an "essential nexus" between the permit conditions and legitimate state interest, and whether or not the degree of the exactions required by the permit condition bears the required relationship to the projected impact of the proposed extra development.

However, the Court ruled that the City failed to make an individualized determination that the required dedications are related, in both nature and extent, to the proposed impact.

Further, the Court held that the requirement for a public greenway (as opposed to a private one, to which Dolan would retain other rights of property owners, such as the right of exclusive access), was excessive, and that the City failed to meet its burden of establishing that the proposed pathway was necessary to offset the increased traffic which would be caused by the proposed expansion.