Supreme Court Delivers Big Win for Landowners!

SCOTUSDCViewpoint

By: Paul Beard II

Mr. Beard will be speaking in Newbury Park, CA on 10/3/13. Stay tuned for details.

In June, the United States Supreme Court decided a case that stands to benefit all property owners across the country who find themselves in the land-use permit process.  In Koontz v. St. Johns River Water Management District, property owner Coy Koontz, Sr., sought to commercially develop 3.7 acres of a 15-acre lot in Orlando, Florida.  Unfortunately for him, his lot – and surrounding properties – were designated as presumptively “wetlands.” That did not mean that a given property actually had wetlands.  Rather, it meant that a property owner would have to either prove that it did not or offer mitigation for wetlands lost to a project. 

The 3.7 acres that Koontz sought to develop did not contain wetlands, but other areas of his property did.  He applied for “wetland” permits from the Florida agency, St Johns River Water Management District.  As a condition of permit approval, the District demanded that Koontz put the remaining 11 acres outside the project site into a conservation easement that could never be developed.  It also demanded that he finance improvements to some 50-acres of State-owned lands located miles away, by repairing canals, filling in ditches, and building a road.  Because Koontz sought only to develop 3.7 acres of the land, he agreed to the first condition.  But he could not agree to the second – especially given that his project would have no impact on wetlands.  When he refused to pony up the money for the off-site work – estimated to be up to $150,000 –  the District denied his permits. 

Koontz sued in a Florida court to have the off-site condition stricken from the permit under a key United States Supreme Court ruling called Nollan v. California Coastal Commission.  In that case, the Coastal Commission approved a permit for a remodel, but on the condition that property owner Pat Nollan first dedicate a public-access easement across his private beach to the State.  He sued to have the easement condition struck from the permit, arguing that the Commission was illegally using the permit process to take an interest in his land without payment of just compensation, in plain violation of the Constitution. The Supreme Court agreed, holding that a permitting agency must show an “essential nexus” between such a permit condition and the impact of a given project; absent that connection, the condition is unconstitutional – or, in the Court’s own words – “extortion.” 

Since Nollan was decided in 1987, permitting agencies have tried to limit its scope and application.  For example, they have argued that Nollan applies only to permit conditions involving interests in land – not to any other kind of property, like money.  They also have argued that Nollan applies only to conditions attached to a permit approval – not to conditions that lead to permit denial.  This is precisely what the District argued in Koontz.  While the Florida trial and appeal courts sided with Koontz, the Florida Supreme Court sided with the District, holding that Nollan applies neither to monetary exactions (like the off-site condition) nor to conditions leading to permit denial (as was the case here).  So Koontz took his case to the United States Supreme Court.

In a 5-4 decision, the Supreme Court said that, because one’s money is his property protected by the Constitution, Nollan must apply to monetary exactions and other conditions imposing a financial obligation on a property owner to pay for some public project.  It also said that it doesn’t matter whether the condition comes before, or is attached to, a permit approval.  Extortion is extortion, and courts are required to carefully review all such permit conditions to verify that the permitting agency has shown the requisite connection between each condition and the impact of a given project.

The decision is a huge win for property owners everywhere, as government now will be forced to justify – to a very exacting standard – a wide variety of monetary exactions, from impact fees to financial obligations like the one imposed on Koontz in this case.

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BeardPaulII

Paul Beard II is is a Principal Attorney in Pacific Legal Foundation’s Property Rights Group. As head of PLF’s Coastal Land Rights Project, he oversees litigation against coastal land-use agencies that violate landowners’ private property rights, especially the California Coastal Commission. His cases on behalf of property owners include challenges to unconstitutional conditions on land-use permits and the unlawful assertion of jurisdiction by land-use agencies over private property and its development.  Beyond his litigation duties, Mr. Beard also manages PLF’s Florida and Hawaii offices, overseeing those offices’ administrative and litigation activities.

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