No Permit for You! -- How Denying a Permit Could be a Taking

On June 25, 2013, the Supreme Court of the United States (SCOTUS) overturned a Florida Supreme Court decision in, Koontz v. St. Johns River Water Management District.  The majority opinion (Alito, Roberts, Scalia, Kennedy, and Thomas) held that the St. Johns River Water Management District's (District) demand for property from a land-use permit applicant must satisfy the requirements of Nollan and Dolan (1) even when the government denies the permit and (2) even when its demand is for money.

The minority opinion (Kagan, Ginsburg, Breyer, and Sotomayor) agreed with the majority opinion as to the first point.  However, the minority disagreed as to the second point: monetary exactions are a taking.  In their opinion, "the government may impose ordinary financial obligations without triggering the Takings Clause’s protections."  The minority goes on to sketch an outline for evaluating the merits of the case based on the requirements of Nollan and Dolan; however, the majority left that to the Florida courts on remand.

As with most SCOTUS decisions, time will tell how this decision affects real life situations.  But at least one thing seems clear, landowners may seek judicial remedy for takings sooner rather than waiting for the issuance of a permit.  Despite the worries of some government regulators, this decision should not change how it regulates land use.  In any land use entitlement proceeding, if government does its homework and provides a reasoned Nollan/Dolan analysis, there should not be a need to resort to judicial intervention.

Although SCOTUS did not get to the merits of the case (i.e., whether the District did indeed effect a taking), the facts do not appear to be favorable to the District.  Koontz decided to develop the 3.7-acre northern section of his property.  His proposal included raising the elevation of the northernmost section of his land to make it suitable for a building, grading the land from the southern edge of the building site, and installing a dry-bed pond for retaining and gradually releasing stormwater runoff from the building and its parking lot. To mitigate the environmental effects of his proposal, Koontz offered to foreclose any possible future development of the approximately 11-acre southern section of his land by deeding to the government a conservation easement on that portion of his property.

The District proposed two alternate conditions:

1. That Koontz reduces the size of his development to 1 acre and deed a conservation easement on the remaining 13.9 acres to the government to mitigate environmental effects of his proposal.  In addition, Koontz would be required to install a costly subsurface stormwater management system and install retaining walls; or
2. Build as originally planned on 3.7 acres, deed the remainder of his property as conservation easement to the government, and pay to replace culverts on one parcel or fill in ditches on another.  These improvements were offsite and not owned by Koontz.

It is difficult to imagine how the District's proposed exactions did not go beyond what is roughly proportional to the impacts caused by Koontz's proposal.