On June 25, 2013, the U.S. Supreme Court decided Koontz v. St. Johns River Water Management Dist., No. 11-1447, holding that when a government agency demands a property right or cash payment as a condition precedent to granting a land-use permit, the government's demand must have a nexus and rough proportionality with the effects of the proposed land use, even if the landowner's rejection of the demand leads to denial of the permit.
Coy Koontz purchased property in Florida that included wetlands. When he sought a permit to develop a portion of the property, he proposed mitigating the environmental effects by deeding a large conservation easement to the local water management district. The district rejected the proposal, requiring either (1) a smaller development and larger easement or (2) a cash payment to the district to make improvements in wetlands several miles away if Koontz built the development in its originally proposed size. Deeming these demands too onerous, Koontz sued, alleging a taking.
The state trial court ruled in Koontz's favor, reasoning that the district's demands did not meet the standards of nexus and rough proportionality between the government's demand and the effects of the proposed land use, as required by Nollan v. California Coastal Commission and Dolan v. City of Tigard. The Florida Supreme Court reversed, holding that Nollan and Dolan did not govern because the district denied the permit and because a request for cash payment is not covered by the Nollan/Dolan doctrine.
The U.S. Supreme Court reversed. First, it held that Nollan and Dolan apply regardless of whether the government grants a land-use permit subject to a condition or whether it denies a permit because the landowner refuses to accept the condition. On this point, the Court was unanimous. The unconstitutional conditions doctrine precludes a government agency from effectively withholding a benefit, even one that is gratuitous, by conditioning benefit on the applicant's agreement to sacrifice rights protected by the U.S. Constitution. To hold otherwise would allow governments to circumvent Nollan and Dolan by phrasing all permit requirements in terms of conditions precedent. "Extortionate demands for property in the land use permitting context run 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."
Second, the Court also held that the government's demand for offsetting payments in the context of a land-use permit also invokes the protections of Nollan and Dolan, again reasoning that any other result would weaken those precedents. On this point, the Court's decision was 5-4. According to the majority, the government's demand for payment was directly linked to Koontz's specific parcel of real estate, invoking the central concerns of Nollan and Dolan. The majority rejected the dissent's concerns that applying these precedents to monetary exactions would implicate property taxes and undermine sensible land-use regulation.
The Court reversed the Florida Supreme Court's judgment and remanded for further proceedings.
Justice Alito delivered the opinion of the Court, in which Chief Justice Roberts and Justices Scalia, Kennedy, and Thomas joined. Justice Kagan filed a dissenting opinion, in which Justices Ginsburg, Breyer, and Sotomayor joined.