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Supreme Court Rules for Property Owner

The Supreme Court of the United States has considered whether a property owner could claim an unconstitutional taking when a water district denied his permit to develop the property because he did not follow their suggestions for permit approval.

Coy Koontz, Jr. (“Owner”) owned a 14.9 acre undeveloped property that was bordered on one side by a major highway, on another by a large ditch and power lines.  Most of the property was categorized as wetlands, but the northern portion of the property drained well.

In 1994, the Owner submitted a plan to the St. Johns River Water Management District (“District”) to develop the 3.7 acre northern section of the property, proposing to give the District a conservation easement over the remainder of the property.  Florida requires that all development projects receive a permit, and entities like the District can impose conditions on the project to assure that the project will not be harmful to water resources.  In addition, the District can also ask the applicant to fund an offsite project to mitigate any harms resulting from the applicant’s project, although it will not require the applicant to undertake any offsite work.

The District responded to the Owner, stating that it would approve the development plan only if he agreed to one of two options.  The first option would allow the Owner to develop one acre of his property, deeding the remainder to the District via a conservation easement.  The second option would allow the Owner to proceed with his proposed development plan if he agreed to hire contractors to make improvements to District-owned land several miles away.  Because the Owner rejected both options, the District denied his request for a permit.

The Owner believed that the District’s requirements for approval were excessive in light of the possible environmental impact of his proposed development.  He filed a lawsuit claiming that the District’s actions amounted to a taking without just compensation.  The lower courts found that the District’s actions had amounted to a taking because their proposed remedy lacked a connection to the potential impact of the Owner’s development.  The Florida Supreme Court reversed, finding that the District did not approve the Owner’s application on the condition that he take actions mandated by the District; instead, the application was denied because he refused to make concessions to the District’s requests.  The state high court also determined that there is a difference when the government only requires the payment of money, as opposed to requiring the transfer of land.  The Owner appealed.

The Supreme Court of the United States reversed the Florida Supreme Court and sent the case back to the lower courts for further proceedings.  The Court first stated that it was irrelevant that no property was actually taken by the District; instead, there is judicial doctrine which states that the government may not deny a benefit when a person exercises his/her individual rights.

In earlier cases, the Court has found that the Fifth Amendment “Takings Clause” in the U.S. Constitution protects property owners from exorbitant demands by the government when property owners are seeking permits for property development.  The Court has created a test to evaluate conditions imposed by the government to determine if there is a “nexus” of  “rough proportionality” between the property demands as a condition of approval and the potential social costs of the proposed development. Thus, the government can require an owner to pay for the impact of his/her project, but can’t make demands beyond remedies for the identified harms.
First, the Court looked at the Florida Supreme Court’s determination that because no land was taken from the Owner, the Owner was not entitled to compensation.  The Court found that it is possible that a land owner could receive compensation for a permit denial when excessive conditions burdening a constitutional right are imposed. Since the Owner had made his claims under state law, the Court sent the case back to the state courts for a determination whether Florida law entitled the Owner to compensation for these potential constitutional violations.

Second, the Court looked at whether the Takings Clause was not triggered when the District only required the Owner to pay money for offsite projects, rather than give up any land.  The Court rejected this argument, finding that it was irrelevant that no actual property was being taken by the government; instead, the proper analysis is whether the demands made by the government are in proportion to potential harms arising from the proposed development.  The Court also found that exempting monetary demands from the Takings Clause could create a loophole to circumvent the Fifth Amendment protections. Thus, the case was sent back to the state courts to determine whether a taking had occurred requiring the Owner to compensation from the District.

Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586 (U.S. 2013).

Editor’s Note:  NAR filed an amicus curiae  brief in support of the Owner advocating a position similar to that which the Court adopted.