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U.S. Supreme Court Upholds Takings Claim for Land Use Applicant

In an opinion announced Tuesday, the U.S. Supreme Court found that a landowner had a valid takings claim based upon the government’s refusal to grant a land use permit unless the applicant made a disproportionate cash payment to the permitting agency.

In Koontz v. St. Johns River, the Supreme Court held that the government cannot condition the approval of a land use permit upon the applicant agreeing to disproportionate demands for payment. Such demands on the part of the government constitute an improper taking in violation of the Fifth Amendment protection against the government taking property without just compensation. Takings cases are notoriously difficult for landowners to win, which is why many in legal circles have already declared this case to be a big win for landowners seeking to vindicate their property rights.

In Koontz, the petitioner owned a 15-acre parcel of undeveloped land just east of Orlando. In 1994, the owner decided to develop the northern 3.7-acre section of the property and therefore sought the necessary permits. In order to minimize the environmental effects of the development on neighboring, the petitioner agreed to forgo additional development on the remaining 11 acres. The permitting agency felt that mitigation measure was inadequate, and instead offered two options. First, petitioner had to agree to reduce the size of the development to 1 acre, and give the permitting agency a conservation easement over the remaining 14 acres.

Second, petitioner could proceed with the 3.7-acre development if he granted the river management district the conservation easement over the remainder of the property, and if he agreed to pay for contractors to make improvements to state-owned land miles away. Believing these demands to be excessive, the petitioner sued in state court. After the Florida Supreme Court reversed his victory in the lower state courts, the landowner appealed to the Supreme Court, arguing that the actions of the state constituted a taking without just compensation.

The Supreme Court first held that land use permit 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 property it would like to take. By conditioning a building permit on the owner’s deeding over a public right-of-way, for example, the government can pressure an owner into voluntarily giving up property for which the Fifth Amendment would otherwise require just compensation.”

“So long as the building permit is more valuable than any just compensation the owner could hope to receive for the right-of-way, the owner is likely to accede to the government’s demand, no matter how unreasonable. Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation, and the unconstitutional conditions doctrine prohibits them.”

Second, the Court held that while it is reasonable for a government to require an applicant to take actions that offset any harm or costs a development might incur to the public, Supreme Court requires that such mitigation measures be roughly proportional to the planned development. “The government may choose whether and how a permit applicant is required to mitigate the impacts of a proposed development, but it may not leverage its legitimate interest in mitigation to pursue governmental ends that lack an essential nexus and rough proportionality to those impacts.” This is true, the Court held, regardless of whether the government approves the permit on the condition that the applicant turn over the requested property, or denies the permit because the applicant refuses to do so.

Most notably, the Court held that disproportionate or exorbitant demands from the government “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. As in other unconstitutional conditions cases in which someone refuses to cede a constitutional right in the face of coercive pressure, the impermissible denial of a governmental benefit is a constitutionally cognizable injury.”

Additionally, the demand that the petitioner give the government money to pay for contractors to alter government property “did operate upon . . . an identified property interest by directing the owner of a particular piece of property to make a monetary payment. In this case…the monetary obligation burdened petitioner’s ownership of a specific parcel of land. In that sense, this case bears resemblance to our cases holding that the government must pay just compensation when it takes a lien—a right to receive money that is secured by a particular piece of property.”

The attorneys of Dalton Tomich, plc, have extensive experience in federal and state courts on a host of land use, permit, and takings issues. The decision announced in Koontz this week is likely a win for land owners who seek permits from their local governments. In the coming days and weeks, we will continue to evaluate this case and its impact on our clients and their property. If you believe you have been treated with respect to your application for a land use permit, please do not hesitate to contact us.

For the full opinion in Koontz v. St. Johns River, click here.

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