Planning and Takings in the Aftermath of Koontz - American Bar

43 Pages·2013·0.25 MB·English

2013 Annual Meeting

Planning and Takings in the Aftermath of Koontz

Moderator:

Darius W. Dynkowski, Ackerman Ackerman & Dynkowski, Bloomfield Hills, MI

Speakers:

Paul J. Beard II, Pacific Legal Foundation, Sacramento, CA (argued for
Petitioner)
Paul Wolfson, WilmerHale, Washington, DC (argued for Respondent)
Professor David Callies, University of Hawaii, William S. Richardson School of
Law, Honolulu, HI
Steven J. Eagle, George Mason University School of Law, Arlington, VA

August 9, 2013
Grand Hyatt
San Francisco, CA
SPEAKERS

Paul James Beard, II
Pacific Legal Foundation
930 G St
Sacramento, CA 95814-1802
Phone: [phone]
[email protected]

Darius W. Dynkowski
Ackerman Dynkowski & Acherman
100 W Long Lake Rd Ste 210
Bloomfield Hills, MI 48304-2774
Phone: [phone]
[email protected]

Steven J. Eagle
George Mason Univ. School of Law
3301 Fairfax Dr. Ste 201
Arlington, VA 22201-4426
Phone: [phone]
[email protected]

Paul R. Wolfson
WilmerHale
1875 Pennsylvania Ave NW
Washington, DC 20006-3642
Phone: [phone]
Fax: [phone]
[email protected]
American Bar Association
Section of State and Local Government Law
2013 Annual Meeting
Planning and Takings in the Aftermath of
Koontz v. St. Johns River Water Management District
Paul J. Beard II
Principal Attorney
Pacific Legal Foundation
August 8-11, 2013
Moscone Center West
San Francisco, CA
Synopsis of the Case
Coy Koontz, Sr., sought to develop about 3.7 acres of his 15-acre commercial lot in Orlando,
Florida. The area surrounding his vacant lot was well-developed, and the project site had no
viable wetlands or endangered/threatened species. Nevertheless, because the lot was in a zone
that presumptively labeled it wetlands, he had to obtain permits from St. Johns River Water
Management District (a state agency).
At his permits hearing, the District demanded that he first agree to (1) place the remaining
portion of his lot into a conservation easement and (2) finance wetlands-related improvements to
ditches to District-owned land located miles away. The District justified its demands on the
project’s alleged impacts to wetlands and wildlife, but made no showing and presented no
evidence of such impacts.
Koontz reluctantly agreed to the conservation easement requirement. But he refused to pay for
the off-site improvements. Because of his refusal to submit to the second demand, the District
simply denied his permit applications.
Koontz sued the District in state court, alleging (among other things) that the District’s demands
bore no connection or proportionality to the impact of his project, and therefore imposed an
unconstitutional burden on Koontz’s right to just compensation under the Takings Clause,
pursuant to Nollan v. California Coastal Commission and Dolan v. City of Tigard. In Nollan, a
state agency approved a permit to remodel a home, on the condition that the owner give up a
public-access easement. The United States Supreme Court held that such an exaction was
unconstitutional under the Takings Clause, because it lacked an “essential nexus” to the impact
of the project: Because the owner’s remodel project had no impact on existing public access, the
agency’s demand was nothing more than an “out-and-out plan of extortion.” Several years later,
in Dolan, the Court refined the Nollan test, holding that an exaction also must be “roughly
proportional” to the impact of the proposed use of the land. Like in Nollan, in Dolan, an agency
approved a permit on the condition that the owner give up interests in her land.
The trial court ruled in Koontz’s favor, forcing the District to issue the permits without the
offending exaction. The trial court also awarded Koontz damages under Florida law for the
temporary taking of Koontz’s property during the period when the District unlawfully withheld
permits. The Florida court of appeals affirmed. But the Florida Supreme Court reversed,
holding that Nollan/Dolan did not apply and therefore Koontz had no claim.
First, the court held that Nollan/Dolan apply only to exactions of interests in real property—not,
as in this case, to monetary exactions. Second, the court ruled that Nollan/Dolan apply only
where a permit has issued with conditions. Because permits in this case had been denied, nothing
had ever been “taken” from Koontz, and therefore Koontz could not state a claim for a “taking”
even under Nollan and Dolan. The court failed to recognize that in both Nollan and Dolan, the
plaintiffs never obtained permits for their projects; instead, the plaintiffs received contingent
approvals with conditions—which, substantively, is no different than a permit denial for refusal
to submit to conditions.
The Questions Presented
1. Whether the government violates the Takings Clause when it refuses to issue a land-use permit
on the sole basis that the permit applicant did not accede to a permit condition that, if applied,
would violate the essential nexus and rough proportionality tests set out in Nollan and Dolan.
2. Whether the nexus and proportionality tests set out in Nollan and Dolan apply to a land-use
exaction that takes the form of a government demand that a permit applicant dedicate money,
services, labor, or any other type of personal property to a public use.
Holdings
1. The United States Supreme Court unanimously held that both conditions precedent and
conditions subsequent to permit approval are subject to Nollan/Dolan scrutiny.
2. In the land-use permitting context, where the unconstitutional conditions doctrine is in play,
money is “property” protected by the Takings Clause. Therefore, monetary exactions are subject
to Nollan/Dolan scrutiny in the same way that exactions of real property interests are.
Summary: Permitting agencies will have to demonstrate that monetary exactions, like exactions
of real property interests, bear an essential nexus and rough proportionality to the impact of the
applicant’s proposed use of land.
American Bar Association
Section of State and Local Government Law

2013 Annual Meeting

Koontz v. St. Johns River Water Management District:
Sic Semper Nexus and Proportionality

David L. Callies, FAICP
Benjamin Kudo Professor of Law
William S. Richardson School of Law
University of Hawaii at Manoa
Land Development Conditions After
Koontz v. St. Johns River Water Management District:
Sic Semper Nexus and Proportionality
By
David L. Callies, FAICP
Benjamin Kudo Professor of Law
William S. Richardson School of Law
University of Hawaii at Manoa

I. Introduction: A Summary of the Court’s Holding
On June 25, 2013, the United States Supreme Court rendered its long-anticipated decision
in Koontz v. St. Johns River Water Management District, ___U.S. ___ (2013). Writing for a
five-Justice majority, Associate Justice Alito held (1) that a government’s demand for money or
land from a land use permit applicant must satisfy the nexus and proportionality requirements of
the Court’s previous Nollan/Dolan requirements even when it denies the permit, and (2) the
government’s demand for property from a land use permit applicant must satisfy these
Nollan/Dolan requirements even if the demand is for money—like impact fees, in-lieu fees, and
other money exactions—rather than a dedication of an interest in real property, like an easement.
In holding that monetary exactions must satisfy the nexus and proportionality requirements of
Nollan and Dolan, the court explained the required direct link between the government’s demand
and a specific parcel of real property: the property interest is the landowner’s parcel for which
government development permission is sought, not the character of the exaction as an interest in
real property, as many have urged and some lower courts have held. In this case,
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. . . the monetary obligation burdened the petitioner’s ownership of a specific
parcel of land. . . . The fulcrum this case turns on is the direct link between the
government’s demand and a specific parcel of real property. Because of that
direct link, this case implicates the central concern of Nollan and Dolan: the risk
that the government may use its substantial power and discretion in land-use
permitting to pursue governmental ends that lack an essential nexus and rough
proportionality to the effects of the proposed new use of the specific property at
issue, thereby diminishing without justification the value of the property.

Koontz, slip op. at 16-17.
II. The Background: What the Constitution Requires and the Lower Court Splits
The Fifth Amendment to the United States Constitution ensures that private property shall not be
taken for public use unless just compensation is paid. U.S. CONST. amend. V. The Takings
Clause does not specify the precise types of governmental action that qualify as a taking, but the
Supreme Court of the United States has identified three types of actions that qualify. These
actions include physical invasions, over-regulation, and land use exactions. This paper will
focus on the last type of governmental action. See Loretto v. Teleprompter Manhattan CATV
Corp., 458 U.S 419 (1982) (physical invasions); Penn Cent. Transp. Co. v. N.Y.C., 438 U.S. 104
(1978) (over-regulation); Nollan v. Cal. Coastal Comm’n, 483 U.S. 825 (1987) (land use
exactions); see also Dolan v. City of Tigard, 512 U.S. 374 (1994). In Nollan v. California
Coastal Commission, the Court held that land use exactions require an “essential nexus” between
the nature of the condition and a public need generated by the proposed development. 483 U.S.
at 837. The Court again considered the constitutionality of land use exactions in Dolan v. City of
Tigard, adding an additional requirement that there be “rough proportionality” between the
exaction and the harms caused by the regulated activity. 512 U.S. at 391.
After the Court articulated the heightened scrutiny of the Nollan/Dolan standard for
exactions, courts have struggled with the application. Does the standard apply to all types of
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exactions or only to land based exactions? Two cases, Erhlich and Lingle, have dealt with the
subject matter of exactions but neither developed a bright line application. In Erhlich, the Court
remanded a monetary exaction claim for further consideration in light of the recent Dolan
decision. Ehrlich v. City of Culver City, 114 S.Ct. 2731 (1994). In Lingle, the Court, in dicta,
gave an overview of all regulatory takings analyses and could be read to imply that the
Nollan/Dolan test would apply to land based exactions only. Lingle v. Chevron U.S.A., Inc., 544
U.S. 528 (2005). Other courts have since used both of these cases to go either way on this
exactions question.
A. The Nollan/Dolan standard does not apply to monetary exactions.
Even before Lingle, monetary exactions had been treated by some courts as different
from real property exactions. See Clajon Prod. Corp. v. Petera, 70 F.3d 1566, 1578 (10th Cir.
1995) (declining to apply Dolan to fees imposed on landowners as a condition of exercising their
property right to hunt on their own land because no physical occupation is involved);
Commercial Builders of N. Cal. v. City of Sacramento, 941 F.2d 872, 875-76 (9th Cir. 1991)
(declining to extend holding in Nollan to purely monetary exaction); Commonwealth Edison Co.
v. United States, 271 F.3d 1327, 1340 (Fed. Cir. 2001) (“Requiring money to be spent is not a
taking of property”); McCarthy v. Leawood, 894 P.2d 836 (Kan. 1995) (concluding that nothing
in Dolan supports making the critical leap from property dedications to impact fees). "Unlike real
or personal property, money is fungible." United States v. Sperry Corp., 493 U.S. 52, 62 n.9
(1989).
For some of these courts, Lingle enforced the distinction between the traditional Takings
Clause real property dedications and the mere imposition of the obligation to pay money. The
Ninth Circuit has held that monetary exactions, which are imposed legislatively and advance a
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related interest to the new development, are not analyzed under the Nollan/Dolan standard.
McClung v. City of Sumner, 548 F.3d 1219, 1225 (9th Cir. 2008). The Court declined to
determine the appropriateness of using the Nollan/Dolan standard for monetary exactions, which
are adjudicatively imposed. Id. at n.3. The lack of a physical invasion of land is generally the
focal point of courts’ reasoning for not using the heightened standard. See Kamaole Pointe Dev.
LP v. County of Maui, 573 F. Supp. 2d 1354, 1370 (D. Haw. 2008) (declining to apply the
Nollan/Dolan standard where there is no physical invasion of land); Ramsey Winch, Inc. v.
Henry, 555 F.3d 1199, 1209 (10th Cir. 2009) (“A per se taking in the constitutional sense
requires a permanent physical occupation or invasion, not simply a restriction on the use of
private property”); Iowa Assur. Corp. v. City of Indianola, 650 F.3d 1094, 1098-1099 (8th Cir.
2011) (declining to apply the takings test articulated in Nollan because there was no dedication
of land); Conklin Dev. v. City of Spokane Valley, 448 Fed. Appx. 687, 689 (9th Cir. 2011)
(unpublished; requiring a per se physical taking to apply Nollan/Dolan). In West Linn Corporate
Park, L.L.C. v. City of West Linn, 240 P.3d 29 (Or. 2010), cert denied, 132 S. Ct. 578 (2011),
the Supreme Court of Oregon reasoned that because the City could not use its power of eminent
domain to compel the off-site mitigation or monetary exaction, the Nollan/Dolan standard was
not applicable. Id. at 86-87. In the unpublished companion case in the Ninth Circuit, the court
there came to the same conclusion based on the fact that there was no dedication of real property
but only the obligation for the property owner to use its own money, which the court
characterized as personal property. West Linn Corporate Park L.L.C. v. City of West Linn, 428
Fed. Appx. 700, 702 (9th Cir. 2011).
Perhaps the strongest case for not applying Nollan/Dolan after Lingle comes from the
recent federal circuit court decision in Alto Eldorado Partnership LLC v. County of Santa Fe,
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