Supreme Court Decides Takings Case

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In the Supreme Court’s last week in session at the end of June the major opinions of the term are issued.  This year was no exception.  The Court issued rulings in two same-sex marriage cases, struck down Section 4 of the Voting Rights Act, and issued a ruling regarding affirmative action in universities.  While it largely went unnoticed, the Supreme Court also issued its third ruling of the term involving takings.  The State and Local Legal Center (SLLC) filed an amicus brief in this case which NLC signed onto.

In Koontz v. St. Johns River Water Management District the Supreme Court held 5-4 that there must be a “nexus” and “rough proportionality” between the government’s conditions for issuing a land-use permit and the effects of the proposed development even when the government denies the permit and even when the demand is for money.

In a New York Times Op-Ed SLLC brief writer John Echeverria writes that this case “creates a perverse incentive for municipal governments to reject applications from developers rather than attempt to negotiate project designs that might advance both public and private goals — and it makes it hard for communities to get property owners to pay to mitigate any environmental damage they may cause.”

Mr. Koontz sought permits to develop a portion of wetlands that he owned.  St. Johns River Water Management District told Koontz he could proceed with the development if he would reduce its impact or, alternatively, pay for improvements on District-owned property several miles away.  Koontz refused, was denied a permit, and sued, claiming his property was taken without just compensation.

In two previous Supreme Court cases, Nollan and Dolan, the Court held that the government may condition approval of a permit on the dedication of property to the public as long as there is a “nexus” and “rough proportionality” between the property demanded and the social cost of the applicant’s proposal.  The Florida Supreme Court did not apply Nollan and Dolan for two reasons.  First, the District had denied the application because Koontz refused to make a concession rather than issuing the permit subject to conditions, and so had not “taken” anything.  Second, the District requested money instead of an interest in land.

The Supreme Court reversed the Florida Supreme Court and applied Nollan and Dolan to both permit denials and demands for money.  All nine Justices agreed that Nollan and Dolan should apply whether or not the permit is ultimately issued.   According to the Court, Nollan and Dolan reflect the reality that the government may abuse the permitting process to coerce people into giving up land by denying a permit worth far more than the property the government wants to take.  At the same time, land uses can impose social costs that land dedications can offset.  Five Justices agreed that Nollan and Dolan should apply to monetary conditions to avoid the government demanding “extortionate” amounts of money in exchange for a permit.  The dissenting Justices were sympathetic to the argument in the SLLC’s amicus brief that there is no principled way to distinguish between demands for money in the land use context and taxes.