The U.S. Supreme Court’s decision last week in Koontz v. St. Johns River Water Management District expands the holdings of Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994) to provide more extensive protections to property owners faced with government-imposed land use conditions.  Nollan and Dolan hold that government exactions must have a sufficient nexus and be roughly proportional to the effects of the property owner’s proposed use of the property to meet constitutional requirements under the Takings Clause.  Koontz extends those protections to apply in situations where the government denies a permit request and the government’s demand is for money.  This decision is being hailed as a significant victory for property owners; however, many questions regarding its practical impacts remain unanswered.

In 1994, Coy Koontz, Sr. sought a permit from the St. Johns River Water Management District (“District”) to develop 3.7 acres of his 14.9 acre tract of land.  The District informed Koontz it would approve his permit if he met one of two conditions:  1) develop only one acre on his parcel and deed the remainder to the District in the form of a conservation easement or 2) develop the project as proposed but fund improvements to off-site wetlands.  Koontz refused to meet either condition and the permit was denied.  Koontz then brought suit in state court.

After the trial court granted Koontz relief, deciding that the District’s conditions failed to meet the constitutional requirements of Nollan and Dolan, the Florida Supreme Court reversed, holding that the protections of Nollan and Dolan do not apply when the government denies an applicant’s permit or when the government’s demand is for money.  The U.S. Supreme Court, in turn, addressed these two questions, rendering a five to four decision in favor of the property owner.  The Court held that neither the fact that the government denied the permit nor that it made a demand for money is sufficient to justify dismissal of a violation of the claims for constitutional nexus and rough proportionality requirements. 

While the Koontz decision expands the protections available to property owners, it does not reach several questions that are likely to prove important in practice.  For instance, the Court made no determination regarding the merits of Koontz’ claim that the proposed conditions lacked a sufficient nexus or rough proportionality.  In addition, it did not address the remedies available to the wronged property owner.  Some commenters have said that the Supreme Court’s opinion overrules some parts of the California Supreme Court’s decision in Ehrlich v. City of Culver City, 12 Cal. 4th 854 (1996), while others have stated that Ehrlich may be consistent with the Koontz opinion, so we expect that this question may be raised regarding pending development project applications in California where public agencies had previously followed Ehrlich in determining the nature and amount of fees and exactions.

On July 11, 2013, Latham & Watkins will hold a webcast to discuss the implications of Koontz featuring environmental attorneys Chris Garrett, Laura Godfrey, and Daniel Brunton.  This panel will examine the Koontz case generally and address several issues left open by the Court’s decision, including its effect on California law, such as the Ehrlich decision and the Mitigation Fee Act; its application to legislative acts and zoning decisions; and the procedures and remedies for lawsuits predicated on permit denials.