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United States Supreme Court Issues Significant Land-Use Decision

on Monday, 12 August 2013 in Dirt Alert: David C. Levy, Editor

Despite lack of media attention, a recent decision of the United States Supreme Court poses historic impact on land use permitting across the United States. The U.S. Supreme Court recently handed property owners and developers a significant win, ruling that a Florida government agency violated a landowner’s constitutional rights by demanding money or a conservation easement in return for permits to develop his property.


The case involves 14.9 acres of undeveloped wetland property near Orlando, Florida. In 1994, the property owner, Coy Koontz, applied to the St. Johns River Water Management District for permits to dredge and develop the land. In exchange for permits, Koontz offered to limit his development to 3.7 acres of the property, while permanently conserving the remaining 11.2 acres from development. The District rejected Koontz’s proposal as inadequate and told Koontz it would deny his permit unless he agreed to either: (1) reduce the planned development to one acre and give the District a larger 13.9 acre conservation easement; or (2) maintain the proposal, but pay for improvements to separate unrelated land owned by the District. Koontz rejected both options and sued the District.


Koontz sought monetary damages under Florida law for what he claimed was the District’s unreasonable exercise of state police power constituting a taking. Koontz argued the District’s requirements violated the standards established in two U.S. Supreme Court cases related to a government agency’s ability to impair property interests with land-use regulations, Nollan v. California Coastal Commission and Dolan v. City of Tigard.


Otherwise known as the Nollan-Dolan standard, government agencies may only demand mitigation conditions that give the agency an interest in the land when it can show a “nexus” and “rough proportionality” between its demand and the effects of the proposed land use.


Koontz argued the Nollan-Dolan standard applied to the District’s demand for payment of money as well as the District’s denial of his permit when he refused to accede to the District’s demands, and such, constituted a taking.


The Florida Circuit Court granted the District’s motion to dismiss, but the Florida District Court of Appeal reversed. On remand, the State Circuit Court held the District’s actions unlawful and the Florida Circuit Court affirmed. The Florida Supreme Court reversed.


The Florida Supreme Court held that Koontz’s takings claim was not an appropriate response to the District’s conduct. It also held that Nollan-Dolan only applies to the approval of a permit, not a denial, and does not apply to a demand for payment—only burdens on the property.


The U.S. Supreme Court reversed the Florida Supreme Court. In a five-to-four decision, the Supreme Court confirmed that both demands for money and denial of a permit until the applicant accedes are unconstitutional conditions. The Supreme Court explained that Nollan-Dolan established that the Fifth Amendment protects property owners from takings that occur in connection with applications for land-use permits. The Supreme Court held that a government agency may choose whether and how an owner must mitigate the impacts of a proposed development, but it “may not leverage its legitimate interest in mitigation to pursue governmental ends that lack an essential nexus and rough proportionality to those impacts.” As such, the Supreme Court held that Nollan-Dolan applies regardless of whether the agency approves a permit conditioned on the owner’s submission to its demands or denies a permit because the owner refuses to do so.


Justice Kagen, joined by Justices Ginsburg, Breyer, and Sotomeyer, dissented. The dissenters agreed with the majority decision on the determination that Nollan-Dolan applies to both denials and approvals of permits. They disagreed, however, that it applies to demands for payment. The dissent reasoned that the District never demanded anything from Koontz, so Nollan-Dolan did not apply and, had there been a demand, Koontz never acceded, so a taking did not occur. The dissent warned that the majority’s decision “threatens to subject a vast array of land-use regulations, applied daily in states and localities throughout the county, to heightened constitutional scrutiny.”


Overall, Koontz broadens developers and property owners’ rights to bring constitutional challenges to
land-use decisions and requirements. As such, the ruling may prevent permitting agencies from abusing power or making unreasonable demands by forcing the agencies to prove that denials or obligations imposed on a permit bear a nexus and rough proportionality to the impact of the proposed use of the land.

Read the Full Newsletter: Dirt Alert August 12, 2013

Amy L. Lawrenson

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