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Supreme Court's Koontz Ruling a Victory for Landowners

July 03, 2013

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U.S. Supreme Court Determines Exaction Of Off Site Payments In Return For Development Permit Approval Is A Taking Even If No Property Is Taken—Koontz v. St. Johns River Water Management District, Case No. 11-144, June 25, 2013.

On June 25, 2013, the United States Supreme Court ruled by a 5 to 4 decision that the exaction of concessions by a landowner that involved the payment of monies for environmental improvements at a site miles away was a taking of property without compensation, even though the property was not taken and the landowner's permit was denied.

Plaintiff Koontz owned 14.7 acres of land in the St. Johns River Management District (District). Koontz proposed to develop only 3.7 acres of the land and would dedicate an 11 acre conservation easement. The District told Koontz that he must reduce the size of his development to one acre and reconfigure his development. In the alternative, Koontz could develop the 3.7 acres and dedicate the conservation easement, but he must agree to hire contractors to make improvements on District owned property several miles away.

After the district denied Koontz's permit, Koontz filed suit in state court, alleging a taking of his property without just compensation. The Florida Circuit Court determined that the mitigation demanded by the District lacked both a nexus and rough proportionality to the environmental impact of the proposed development under the U.S. Supreme Court decisions in Nollan v. California Coastal Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994). The Florida Supreme Court reversed, distinguishing Nollan and Dolan on the grounds that the District had denied the application, that there was no concession in real property, only a demand for money.

The U.S. Supreme Court reversed. First, the Court observed that "the government may not deny a benefit to a person because he exercises a constitutional right." Reagan v. Taxation With Representation of Washington, 461 U.S. 540, 545 (1983). The court noted an overarching principle, known as the unconstitutional conditions doctrine, "that vindicates the Constitution's enumerated rights by preventing the government from coercing people into giving them up."Koontz, Slip Opinion at p. 7. The Court then determined that "Nollan and Dolan 'involve a special application' of this doctrine. Denials of a benefit cannot be conditioned on unconstitutional conditions. Not applying Nollan and Dolan to this case would have created a situation where a conditional approval would be subject to Nollan and Dolan, but a conditional denial would not. Nor would the Court allow a distinction because "no property of any kind was ever taken." The Court stated that "the impermissible denial of a governmental benefit is a constitutionally cognizable injury." The Court then decided that an exaction that demands money and not real property can be a taking. The Court held that where a monetary exaction is linked to a specific, identifiable property interest, a "per se takings approach" is the proper mode of analysis under the Court's precedent.

We now know that the California Supreme Court was correct in Ehrlich v. City of Culver City (1996) 12 Cal.4th 854, when it held monetary exactions can be a taking. And we have further guidance that denials of a permit based on monetary exactions, even where property is not taken, can violate the Takings Clause. What is unknown is whether the analysis applied to the monetary exaction in the San Remo Hotel v. City and County of San Francisco (2002) 27 Cal.4th 643, case will withstand scrutiny under Koontz.

For more information, please contact:

Michael Van Zandt

415-995-5001 Direct Phone
415-995-3566 Fax

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