Koontz v. St. Johns River Water Management District, U.S. Supreme Court, No. 1447

By Jeff Gould, General Counsel
The Saint Consulting Group

In a decision that could affect a wide range of land use regulations, the U.S. Supreme Court ruled that a Florida property owner was unfairly required to compensate for the proposed destruction of some wetlands on his land by paying to restore wetlands somewhere else.

The case involves a mostly wet 15-acre parcel owned by the estate of Coy Koontz, an Orlando developer who sought permits in 1993-94 to prepare his land for commercial development by filling in wetlands that drain to the Econlockhatchee River.

Koontz sued the St. Johns River Water Management District when it said he could obtain a permit to fill the wetlands if he paid to have wetlands restored elsewhere in Orange County.

In a 5-4 ruling the U.S. Supreme Court ruled that Koontz could pursue a property rights claim against the water management district. The legal issue was whether the agency’s action constituted a “taking” subject to compensation, under the takings clause of the Fifth Amendment of the U.S. Constitution. The justices said the condition contained in the district’s permit offer was not tied directly enough to the planned loss of wetlands on Koontz’s property.

The Court said a government may not condition a land-use permit on an owner giving up the use of some property absent a “nexus” and “rough proportionality” between the demand and the effect of the proposed land use. So long as the building permit is more valuable than any just compensation the owner could hope to receive, the owner is likely to accede to the government’s demand, no matter how unreasonable. The Court opined that extortionate demands of this sort frustrate the Fifth Amendment right to just compensation and the unconstitutional conditions doctrine prohibits them.

The decision ended a nearly two-decades battle over the development of the property. After Florida designated much of the parcel as protected wetlands, Koontz proposed to develop about a quarter of it and dedicate the rest for conservation, only to have local officials insist that he pay money to protect wetlands elsewhere.

Speaking for the court’s majority, Justice Samuel Alito said: “Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation.”  The dissenting members of the Court said the decision threatens to subject a vast array of land-use regulations applied daily in states and localities throughout the country to heightened constitutional scrutiny, and we should not embark on so unwise an adventure.

Many state and federal courts had applied earlier case authority requiring a nexus or rational relationship before exacting a fee for the right to develop as narrowly limited to the taking of real property, and this heightened constitutional test did not apply if the exaction was only for money. The Supreme Court is now saying that distinction is without legal merit.

 

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