SCOTUS Defends Property Rights Against “Unconstitutional Conditions”

While most of the media is focused on the Supreme Court's rulings on voters’ rights and affirmative action, yesterday in a 5-4 vote, the U.S. Supreme Court (“SCOTUS”) issued its opinion in Koonz v. St. Johns River Water Management District, No. 11-1447, slip op., 570 U.S. ___ (2013).  Koontz, a victory for the property owner, is an important property rights case affecting the government’s ability to impose monetary conditions on the approval of land use permits. 

The case arose when Coy Koontz sought permits to build on approximately four of his nearly 15 acres in Florida, much of which Florida classified as wetlands.  Koontz needed special permits from Florida’s water management district (“WMD”) in order to build, which could include conditions to mitigate the impact on the wetlands.  When Mr. Koontz applied, he offered to give the WMD a conservation easement over the remaining 11 acres of his property to restrict their development.  The WMD, rejecting his offer, gave him two options: (i) reduce the size of his development to one acre and give the WMD a conservation easement over the remaining 14 acres; or (ii) pay the costs of construction improvements, including replacing drainage culverts and filling ditches, to the WMD’s off-site wetlands several miles from Koontz’s property.  The WMD denied his permit when Koontz refused these options.

The Koontz case raises two important legal issues under the so-called “unconstitutional conditions” corner of regulatory takings law: 1) whether the Nollan/Dolan standard, which requires that government-imposed project conditions have a nexus to and rough proportionality with the projected effects of a proposed project, applies to project denials as well as project approvals; and 2) if the Nollan/Dolan test applies to monetary exactions as well as government’s compelled dedications of real property.

Koontz answered two questions.  First, the Supreme Court held the Nollan and Dolan analysis applies whether the government approves a permit with the unconstitutional condition or denies the permit because an applicant refuses to accept the unconstitutional condition.  This holding gives landowners bargaining power, because property owners do not need to accept “extortionist” conditions before they can challenge their validity and seek just compensation.  Second, the Supreme Court held that “‘monetary exactions’ must satisfy the nexus and rough proportionality requirements of Nollan and Dolan.”  In this sense, monetary exactions from landowners are treated no differently than conditions requiring a landowner to give the government an interest in their land.  Unless the requirement to pay money has a nexus with property and is roughly proportional to the development’s expected impacts, the requirement will be found unconstitutional.

To view the entire case go to https://www.supremecourt.gov/opinions/12pdf/11-1447_6j37.pdf