On June 25, 2013, the Supreme Court of the United States rendered a major property rights decision. In Koontz v. St. Johns River Water Management District, the Court held that the imposition of “coercive monetary exactions” by government agencies as a condition of obtaining land use development permits and approvals is subject to the protections of the Takings Clause of the United States Constitution. The Court reversed a decision of the Florida Supreme Court that a land development agency could deny a permit to a property owner who refused to spend a substantial amount of money to improve off site public property that was unrelated to the subject property.
The Court held that for a government agency to impose a monetary exaction on a property owner as a condition to obtaining a permit, the exaction must have a nexus to and be roughly proportional to any negative impacts resulting from the project – a standard mandated by the prior Supreme Court decisions Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994). These are precisely the same requirements as when an agency seeks to impose a land dedication as a condition to obtaining a permit. If the agency cannot show such nexus and rough proportionality, the monetary exaction is an unconstitutional taking in violation of the Fifth Amendment.
Significantly, the Court also rejected the government’s assertion that there is a difference between a government agency approving a permit subject to a property owner agreeing to an exaction, and a government agency denying a permit because a property owner refused to agree to the exaction. Both of those actions trigger the requirements of Nollan and Dolan in exactly the same way.
Daniel L. Schmutter is member of Hartman & Winnicki, P.C. and practices in the firm’s Litigation Department. Mr. Schmutter was the lead attorney on an amicus curiae brief submitted on the prevailing side in the Koontz case on behalf of New York think tank The Land Use Institute. He can be contacted at firstname.lastname@example.org.