By Justin Allsop | Law Clerk, Rose Law Group
While the mainstream media have been practically frothing at the mouth over other Supreme Court decisions this term, a major victory for private property rights in Takings Clause jurisprudence went largely unnoticed. Regardless, developers and property owners alike have reason to celebrate as the Supreme Court stood firm against an expansion of governmental power regarding land use requirements in the case of Koontz v. St. Johns River Water Management District.
Koontz was a landowner holding about 15 acres outside of Orlando in an area considered to be wetlands and under the regulation of the St. Johns River Water Management District (the “District”). Koontz had plans to develop a small portion of his land, 3.7 acres, but was required to file for permits with the District pursuant to their land use regulations. Part of the permit application with the District requires ta developer of land propose methods to alleviate any environmental impacts that would result from the ensuing development. To that end, Koontz proposed to deed about three-fourths of his land to the District as a conservation easement. The District instead suggested he develop on only one acre, then deed the remaining undeveloped land, and also provide money to the District to pay for improvements to other District property. Koontz refused, and his permit was denied. Koontz thus brought suit alleging a taking by the District.
The Fifth Amendment of the U.S. Constitution provides any government taking of private property be balanced with just compensation to the property owner.
Although the legal history of Takings Clause issues is fairly diverse and complex, in general a taking has only been held to occur when property is actually taken or rendered useless. This case presented a new spin by involving property that hadn’t been “taken” in the literal sense. Here the land had actually been encumbered by the denial of the permit, which effectively prevented any development thus diminishing the value of the property.
Recognizing this conundrum, Justice Alito wrote for the majority opinion stating “[i]t makes no difference that no property was actually taken in this case. Extortionate demands for property in the land-use permitting context run afoul of the Takings Clause, not because they take property but because they impermissibly burden the right not to have property taken without just compensation.” Elaborating further, Alito said, “[b]y conditioning a building permit on the owner’s deeding over a public right-of- way, for example, the government can pressure an owner into voluntarily giving up property for which the Fifth Amendment would otherwise require just compensation. So long as the building permit is more valuable than any just compensation the owner could hope to receive for the right-of-way, the owner is likely to accede to the government’s demand, no matter how unreasonable. Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation.” It is against this backdrop of government coercion that the case was analyzed.
The federal doctrine that the courts will use, and that the Supreme Court used here, for examining when land use regulations have gone too far is to make sure the regulation has a sufficient nexus to the proposed development and that the costs of the regulation are “roughly proportional” to the expected environmental harm of the development. Justice Alito clarified that the doctrine stems from the concern
that “the government may use its substantial power and discretion in land-use permitting to pursue governmental ends that lack an essential nexus and rough proportionality to the effects of the proposed new use of the specific property at issue.” However, that doctrine had only been applied to exactions of property or property easements in exchange for a development permit. At issue in the Koontz case was the demand for money. The Supreme Court decided that that was an irrelevant distinction since land use regulators often grant options for a developer to provide “in lieu of” fees rather than easements. Justice Alito went on to say that in essence those fees are “functionally equivalent to other types of land use exactions.” As a result the doctrine of nexus and proportionality apply to exactions of money.
But what does this all mean for developers going forward? First and foremost it means there are stronger protections from overzealous regulators and their potentially burdensome impositions. Next, it means governments will be forced to reconsider their requirements for developers lest they run afoul of this holding and subject themselves to legal actions. Perhaps most importantly though, it is a judicial reassertion of the Fifth Amendment’s Takings Clause and the protection of property rights – rights critical to the functioning of a strong economy and critical to the value and development possibilities of land.
Read full opinion here:
