[1] The rationale for imposing the exaction is to offset the costs, defined broadly in economic terms, of the development to the municipality.
[2] Exactions are similar to impact fees, which are direct payments to local governments instead of conditions on development.
[4] 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.
In Sheetz v. County of El Dorado, the Supreme Court of the United States expanded exactions to apply to both adjudicative and legislative actions.