In a 22-page opinion a 5-4 majority of the U.S. Supreme Court issued a ruling championing property rights.
Called Koontz v. St. Johns River Water Management District, it was another Supreme Court win for the Pacific Legal Foundation, an organization that has argued and won more cases before the Supreme Court than any one nonprofit organization.
The issue began in Florida where the late Coy Koontz sought to develop 3.7 acres of 13.9 acres of commercially zoned property near Orlando. Koontz offered to dedicate the remaining 11 acres as a conservation easement. Instead the water management district told him he could either develop 1 acre, using a retaining wall instead of sloping it down to the remainder of the land or he could paya contractor $150,000 to perform upgrades on the district’s property miles away from his land.
The Supreme Court called that extortion.
“Extortionate demands for property in the land-use context runs afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation,” the court said in its syllabus of the decision.
The Supreme Court’s decision built upon previous decisions in two cases: Nollan v. California Coastal Commission and Dolan v. City of Tigard.
“Those cases held that the government may not condition the approval of a land-use permit on the owner’s relinquishment of a portion of his property unless there is a nexus and rough proportionality between the government’s demand and the effects of the proposed land use,” the syllabus stated.
“The standard set out in Nolan and Dolan reflects the danger of governmental coercion in this context while accommodating the government’s legitimate need to offset the public costs of development through land-use exactions,” the syllabus stated.
This came to the U.S. Supreme Court because the Florida Supreme Court did its usual off-key song and dance around the Constitution. The Florida Supreme Court thought it could get around Nollan and Dolan because, according to the U.S. Supreme Court, the Florida court ”thought it significant in this case that, unlike Nollan and Dolan, the district did not approve the petitioners application on the condition that he accede to the district’s demands; instead, the district denied the application because he refused to make concessions.”
However, the U.S. Supreme Court said, “We have said in a variety of contexts that ‘the government may not deny a benefit to a person because he exercises a constitutional right.’”
What’s more the U.S. Supreme Court added in a number of cases that “reflect 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.”
The U.S. court recognized that “land-use permits applicants are especially vulnerable to the type of coercion that the unconstitutional conditions doctrine prohibits because the government often has broad discretion to deny a permit that is worth far more than the property it would like to take.”
“Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation, and the unconstitutional conditions doctrine prohibits them.”
The court, however, recognized that the permitting process may impose costs on the public that can be offset by land dedication such as land for a wider road to accommodate increased traffic from the proposal.
The court warned, however, “The principles that undergird our decisions in Nollan and Dolan do not change depending on whether the government approves a permit on the condition that the applicant turn over his property or denies a permit because the applicant refuses to do so.”
Finally the St. Johns River Water Management District tried to claim that its demand that Koontz give it $150,000 was within its power to tax.
“But the district exaggerates both the extent to which that problem is unique to the land-use permitting context and the practical difficulty of distinguishing between the power to tax and the power to take by eminent domain. …this court had repeatedly found takings where the government, by confiscating financial obligations, achieved a result that could have been obtained through taxation.”
In other words, that was a pretty silly argument that the district could set property tax rates arbitrarily one person at a time.
This marks back-to-back victories for the Pacific Legal Foundation, which recently won a Supreme Court ruling, in Sackett v. EPA that property owners have a right to challenge federal “wetlands compliance orders” in court.
PFL Principal Attorney Paul J. Beard II argued Koontz case before the high court in January.
“The ruling is a powerful victory for everybody’s constitutional property rights, from coast to coast,” said Beard. “The Koontz family was challenging demands that were wildly excessive and had no connection to their land-use proposal. Today, the court recognized that the Koontz family was the victim of an unconstitutional taking. The court’s message was clear: Government can’t turn the land-use permitting process into an extortion machine.”
“The court has recognized that money is a form of property, and the Constitution prohibits grabbing money from property owners the same way it prohibits grabbing land without compensation,” Beard said.
The Supreme Court’s Koontz ruling is a shot across the bow of local government. Be careful about your demands.