On June 25, 2013, the U.S. Supreme Court ruled in favor of a property owner who had sued the St. John River Water Management District (the District) claiming that its actions in denying a permit were unconstitutional takings of his property. In its ruling, the Court further refined its takings jurisprudence in a way favorable to property right holders.
Coy Koontz, Jr., had applied for a permit from the District to impact wetlands located on his property. The District had denied Koontz’s permit after he would not agree to (i) either reduce his project size and grant a perpetual conservation easement over the remainder of property, or (ii) provide funds to support wetlands restoration work on a nearby District-owned wetlands site. Koontz challenged the denial under a Florida takings statute, and the Florida Supreme Court ruled that there was no taking because (i) there was a permit denial versus coerced permit acceptance with concessions, and (ii) the demand was for money rather than being a demand for a property interest.
The law has been long settled that governments cannot coerce people into giving up their constitutional rights. This is called the “unconstitutional conditions” doctrine. In the land use concept, this doctrine has been ruled on by the U.S. Supreme Court in its Nollan/Dolan takings cases, in which the Court held that to be constitutional, government-required property dedications must have a nexus to and rough proportionality with the effects of a proposed project. In the Koontz case, the Court ruled that (i) both permit denials and monetary extractions were subject to analysis under the Nollan/Dolan takings test and (ii) government actions could not evade their constitutional responsibilities by artful manipulations of permit process designed to avoid Nollan/Dolan takings review. The result of the case is that permitting and land use officials may now be unwilling to accept or negotiate permit or land use approval conditions that benefit the community and may be acceptable to a property owner without concrete connections between project impacts and the approval conditions. In addition, the validity of permit or land use conditions involving impacts fees or other payment obligations may now face more frequent Nollan/Dolan challenges.
It is important to note that the U.S. Supreme Court did not address the underlying substance of the case (i.e., did a takings occur and what is the remedy?). The Court expressly stated that these questions would have to be determined on remand to the Florida courts. We anticipate that similar takings claims will now be heard on their substantive merits more quickly, allowing takings litigation to be a more credible threat in the permitting and land use context because the two potential jurisdictional defenses described above have been removed.