U.S. Supreme Court

A 'powerful victory' for landowners? SCOTUS rules for property owner denied a building permit

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The U.S. Supreme Court has ruled on behalf of a Florida property owner denied a building permit because he refused to pay for drainage improvements on government land.

Justice Samuel A. Alito Jr. wrote the majority opinion (PDF) that found for Coy Koontz, Jr., who is representing the estate of his father, Coy Koontz Sr., who originally sought the building permit. Alito said “extortionate demands” by government may be compensated, even when a permit is denied (rather than approved subject to conditions) and even when the demand is for money (rather than an easement).

Alito allowed Koontz to pursue his claim on remand, without expressing a view on its merits.

Alito cited two Supreme Court precedents that allow a Fifth Amendment right to compensation for property taken by the government when owners apply for land use permits: Nollan v. California Coastal Commission, and Dolan v. City of Tigard. Those cases bar government from requiring a land owner to give up a property interest as a condition of obtaining a permit when there is no nexus and no proportionality to the effects of the proposed land use.

In Koontz’s case, a Florida water management district “believes it circumvented” those cases by denying the permit after Koontz refused its demands, rather than approving the application subject to conditions, Alito said. But the precedent “cannot be evaded in this way,” he said.

“Extortionate demands for property in the land-use permitting context run afoul of the takings clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation,” Alito wrote.

Nor does it matter that the water management district sought money rather than land rights, Alito said. “Respondent and the dissent argue that if monetary exactions are made subject to scrutiny under Nollan and Dolan, then there will be no principled way of distinguishing impermissible land-use exactions from property taxes,” Alito wrote. “We think they exaggerate both the extent to which that problem is unique to the land-use permitting context and the practical difficulty of distinguishing between the power to tax and the power to take by eminent domain.”

Pacific Legal Foundation lawyer Paul Beard II represented Kootz Jr. in the Supreme Court. “Today’s ruling says the Fifth Amendment protects landowners from government extortion, whether the extortion is for money or any other form of property,” Beard said in a statement. “The ruling is a powerful victory for everybody’s constitutional property rights, from coast to coast. The court’s message is clear: Government can’t turn the land-use permitting process into an extortion machine.”

Justice Elena Kagan wrote a dissenting opinion joined by Justices Ruth Bader Ginsburg, Stephen G. Breyer and Sonia Sotomayor. Kagan said she agreed that a property owner may be entitled to compensation when a permit is denied. But she disagreed that Nollan and Dolan should be extended to situations when a permit is conditioned on the payment of money.

Prior coverage:

ABAJournal.com: “‘Taking what?’ Scalia objection could mean loss for developer objecting to government ‘shakedown’ ”

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