Tuesday, June 25, 2013
A sharply divided Supreme Court (5-4) today ruled in Koontz v. St. Johns River Water Management District that a government's demand for a monetary exaction from a property owner as a condition of receiving a development permit is subject to the unconstitutional conditions doctrine in Nollan v. California Coastal Comm'n and Dolan v. City of Tigard and the Takings Clause.
The ruling means that a local government cannot require a property owner to pay money in exchange for a building permit unless there is a "nexus" and "rough proportionality" between the government's demand and the effects of the proposed land use. This is an expansion of the Nollan/Dolan doctrine that creates likely heightened judicial scrutiny of local land-use regulations and fees. Although it's not clear exactly how far this expansion extends--and whether these claims, like Koontz's, would ever be successful--the ruling restricts local governments in the way they create conditions for land-use permits and is therefore a likely victory for property owners.
Nollan and Dolan say that when the government demands a property exaction in exchange for a land-use permit, there must be a "nexus" and "rough proportionality" between the exaction and the proposed land use. If there's no "nexus" and "rough proportionality," then the condition is a government taking, and, under the Takings Clause, the government owes just compensation. The cases represent a version of the unconstitutional conditions doctrine, because they're designed to protect against the government exacting unreasonable conditions in exchange for land-use permits, without paying just compensation for those unreasonable exactions, in violation of the Takings Clause. ("Nexus" and "rough proportionality" protect against government coercion of a property owner, by imposing unreasonable government exactions, unrelated to the property development.)
Those cases were relevant here, because Koontz sought to develop his land in Florida, but the District said it wouldn't grant a permit until Koontz (1) deeded to the District a conservation easement on his property or (2) hired contractors to make imrpovements to District-owned wetlands several miles away.
The Court ruled that Nollan/Dolan applied to both conditions. The Court ruled 5-4 that the Nollan/Dolan rule applied to monetary exactions (the second alternative condition), because, the Court said, monetary exactions implicate the central concern of those cases: the risk that the government might use its power in land-use permitting exact an unreasonable sum of money from a property owner that doesn't have anything to do with the proposed development. Justice Alito wrote for the Court, joined by Chief Justice Roberts and Justices Scalia, Kennedy, and Thomas.
The dissent argued that this holding "runs roughshod over Eastern Enterprises v. Apfel" and "threatens to subject a vast array of land-use regulations, applied daily in States and localities throughout the country, to heightened constitutional scrutiny." Justice Kagan wrote the dissent, joined by Justices Ginsburg, Breyer, and Sotomayor.
(The dissent also argued that the case could be disposed of around Nollan/Dolan, because (1) "the District never demanded that Koontz give up anything (including money) as a condition for granting him a permit" and (2) "no actual taking occurred," leaving Koontz just a state-law basis for monetary damages, but the dissenters "cannot see how, and so would spare the Florida courts.")
All nine Justices agreed, however, that the Nollan/Dolan rule applied to the first alternative condition. The question here was whether that rule applied where, as here, the government demands a condition before it approves a permit (rather than denying a permit for failure to meet the condition). All nine said yes. But because the government didn't take anything--it simply declined to grant a permit until a condition was satisfied--the property owner cannot get just compensation (although he might be entitled to monetary relief under state law).
The Court remanded the case to the Florida Supreme Court for a determination whether Koontz is entitled to any monetary relief under state law. If the dissent is right, this is a futile effort.