It’s the last week of the U.S. Supreme Court’s term, so the big 5-4 decisions are out. Tuesday the big decision was Koontz v. St. Johns River, a takings case. This completes the trilogy of takings cases in front of the Court this term; the others are Horne v. Department of Agriculture and Arkansas Game & Fish v. U.S. All three decisions favor the property owner, but not in radical ways.
Focusing on Koontz, the questions presented there related to the application of the unconstitutional conditions (or exactions) principle as applied in the takings context, per two predecessor decisions: Nollan v. California Coastal Commission, 483 U.S. 825 and Dolan v. City of Tigard, 512 U.SA. 374.
Nollan and Dolan stand for the proposition that if government imposes, as a condition for granting a permit, that a property owner give something up, it must show a nexus between what it’s asking for and a legitimate government interest, with rough proportionality between the size of what it wants and that interest. So, for example, if as a condition for a subdivision approval a permitting authority wants an easement over the property, under Nollan and Dolan there needs to be a legitimate reason for the easement (e.g., to get fire trucks onto the property), and the easement has to be limited, roughly, to what the government needs to fulfill that interest (e.g., you don’t need an easement over an entire piece of property to get the fire trucks there).
The question addressed in Koontz was whether what the government demanded had to be a property interest, or whether the Nollan-Dolan test applies to monetary, as well as property conditions: if instead of asking for an easement, if the government conditions a permit on a cash payment, does the Nollan-Dolan test apply? The answer matters because the Nollan-Dolan test has more teeth in it than the ad hoc test that would otherwise apply. In this 5-4 decision, the Court found that Nollan-Dolan applies to monetary exactions.
The bottom line, from a property owner’s perspective, is that this decision could curb agencies from imposing conditions on permits that don’t have a logical relationship to the impact of the development. This is the takeaway from the decision - there may be more room now to complain about a condition imposed by a permitting body than before, if the condition is sufficiently draconian that it smacks of extortion instead of regulation.