US Supreme Court Protects Landowners from "Extortionate" Demands by the Government in Land-Use Permitting Decisions, Including Permit Denials

In a 5-4 decision authored by Justice Alito, and joined by Chief Justice Roberts and Justices Scalia, Thomas and Kennedy, the US Supreme Court in Koontz v. St. Johns River Water Management District broadened the protections afforded to landowners against unconstitutional conditions imposed by the government in land-use permitting decisions. In prior decisions in Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994), the Court prevented the government from conditioning a land-use permit on the owner’s relinquishment of a portion of his property unless there is a “nexus” and “rough proportionality” between the government’s demand and the effects of the proposed land use. In Koontz, the Court held that the Nollan/Dolan standard applies to circumstances where the government denies a land-use permit because the permit applicant does not acquiesce to its demands and where the government’s demand involves a monetary exaction. All of these cases involve application of the unconstitutional conditions doctrine which protects the Fifth Amendment right to just compensation.

Koontz involved a landowner’s proposal to develop a 3.7-acre property near Orlando, Florida. Because the proposed development had the potential to impact water resource of the state, the landowner was required to obtain a Management and Storage of Surface Water (MSSW) permit from the St. Johns River Water Management District (“District”), one of five water management districts authorized under Florida law to regulate “construction that connects to, draws water from, drains water into, or is placed in or across the waters in the state.” In evaluating the permit application, Florida law requires that any resulting environmental damage be offset by creating, enhancing or preserving wetlands elsewhere.

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