October 8, 2012

PLF’s new U.S. Supreme Court case will affect every homeowner

By Brian T. Hodges Senior Attorney

Often, the issues decided by the U.S. Supreme Court seem so esoteric that it is unclear how its decision will impact ordinary people.  That is not the case with PLF’s new U.S. Supreme Court case, Koontz v. St. John’s River Water Management District.

Koontz concerns an issue that is eventually faced by every homeowner.  Nowadays, just about everything you do with your home or yard requires a government approval (i.e., a “permit”)—building a deck, removing a tree, remodeling, etc.  And nearly every time a homeowner applies for a permit, the government attaches a condition to it.  Some conditions are reasonable and to be expected, such as conditions requiring you to clean up your mess or repair things you damage.  But what if the government conditioned approval of a new deck on you dedicating your yard as a public park, or paying the government $25,000 for new library books?  What does a park or library books have to do with your deck?

PLF asked that question 25 years ago in the case, Nollan v. California Coastal Commission.  There, a California state agency required that the homeowners dedicate a third of their beachfront property to the public in order to receive permit approvals to tear down a dilapidated bungalow and build a new house.  The Court struck down the condition, holding that the condition bore no relationship, or “nexus,” to the permit application.  It was “not a valid regulation of land use,” the Court wrote, “but an out-and-out plan of extortion.”

Several years later, in Dolan v. City of Tigard, a case in which PLF participated as a friend of the court, the Supreme Court refined the rule set out in Nollan to require that a development condition be both related and “roughly proportional” to the impact of the proposed development.  In that case, the City of Tigard imposed conditions on Florence Dolan’s permit to expand her plumbing and electrical supply store that required her to dedicate some of her land for flood-control and traffic improvements.  Even though the city could show a connection between both conditions and the impact of Ms. Dolan’s proposed expansion, the Court invalidated both conditions because the city had made no attempt to show that the scope of the dedications were proportional to any of the identified impacts.

Together, the tests established in Nollan and Dolan assured that the government did not abuse its superior position in the permit process by requiring landowners to give up excessive benefits as the “price” of obtaining permit approvals.  But, over the years, lower courts have narrowed the nexus and proportionality tests to the point of absurdity.  Under some of the more radical decisions, the nexus and proportionality test have been so altered that rules intended to protect against government abuse of the permit process now provide a roadmap for extortion.  Take, for example the lower court’s decision in Koontz.  There, the Florida Supreme Court held that Nollan and Dolan will never apply where (1) permit approval is withheld based on a landowner’s objection to an excessive exaction, and (2) the exaction demands dedication of personal property to the public.

Operating under the lower court’s decision in Koontz, a permitting agency could avoid constitutional liability by couching its demands as a condition requiring a dedication of money, labor, or other personal property, and imposing the demand as conditions precedent to permit approval.  In this way, the agency would be able to force landowners into “agreeing” to otherwise unconstitutional conditions in order to secure the permit approvals necessary to make use of one’s property.

Such a formulation of takings law is repugnant to the most basic concept of fairness, and finds no support in the U.S. Supreme Court’s case law.  Indeed, in its most recent case discussing the nexus and proportionality tests, Lingle v. Chevron U.S.A. Inc., the Court emphasized that the tests are essential to assure that the government does not “require a person to give up the constitutional right … to receive just compensation when property is taken for a public use—in exchange for a discretionary benefit [that] has little or no relationship to the property.”  The Koontz case will determine whether the constitutional safeguard established in Nollan and Dolan will have any practical effect for homeowners across the nation.

Legal commentators from both sides of the debate are already weighing in on the issues at play in this important property rights case.  (See here and here).

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St. Johns River Water Management District v. Koontz

Coy A. Koontz sought to develop commercial land, most of which lies within a riparian habitat protection zone in Orange County, Florida. He applied for a dredge and fill permit with the St. Johns Water Management District, which  agreed to grant the permit only on the condition that he place a conservation easement over his land, and perform mitigation off-site by replacing culverts and plugging certain drainage canals on distant District-owned properties. When Koontz refused to perform the off-site mitigation, St. Johns denied the permit. PLF successfully represented Koontz before the U.S. Supreme Court, which held that a land-use agency cannot condition a permit on the payment of a mitigation fee to be used to pay for facilities that have no connection to the impacts of the permitted development.

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