by Elizabeth Garvin, AICP, Denver, Colorado
Welcome to The Western Planner Legal Corner. This new column, sponsored by the Rocky Mountain Land Use Institute at the University of Denver’s Sturm College of Law, will explore legal issues that are relevant to communities and planners in the West. Elizabeth Garvin, 1 a lawyer and planner in Denver, will be our columnist and over the course of this coming year she will work with legal experts from across our network to examine topics ranging from water conservation to urban food production to zombie subdivisions. To start the column, we will take an early look at how the U.S. Supreme Court’s recent ruling in Koontz v. St. Johns River Water Management District 2 may affect your local development permit process.
Background, facts, and holding
Coy Koontz, Sr. sought to develop a 3.7-acre section of a 14.9-acre family-owned property in Orlando, Florida. Most of the property was classified as wetlands, but the proposed development parcel in the northern section of the property drained sufficiently to be made suitable for construction. The St. Johns River Water Management District (“District”) held jurisdiction over wetland permitting for the Koontz property, and a permit was required for this application. As part of his development proposal, Koontz offered to dedicate a conservation easement to the District over his remaining 11 acres of property.
The District thought the 11-acre easement was inadequate and proposed instead either: (1) reduction of the development footprint to one acre accompanied by an extensive stormwater management system and a 13.9-acre easement, or (2) development of the 3.7-acre parcel accompanied by developer-funded improvements to approximately 50 acres of District-owned wetlands. Koontz refused both options and filed suit.
Two Florida lower courts found in favor of Koontz, but the Florida Supreme Court reversed and upheld the District’s actions, finding that: (1) the application was not approved with a requirement to meet the conditions but denied for refusing to make the requested concessions; and (2) the District’s demand for money (developer-funded improvements) instead of property did not trigger the exaction requirements established in the Nollan and Dolan decisions, discussed in the next section. The U.S. Supreme Court disagreed, and held that a governmental demand for property based on a land use permit application must always satisfy Nollan and Dolan – even when the permit is denied and even when the request is for money instead of land.3
The exaction cases
The Koontz case is the third in a long-term series of Supreme Court cases addressing exactions. In general, an exaction is a condition placed on a development permit application that requires the applicant to dedicate real property, such as an easement, to the public in order to obtain the permit. The first case, Nollan v. California Coastal Comm’n, 438 U.S. 825 (1987) upheld the authority of a government to require an exaction as a condition for granting a development application provided there is an “essential nexus” between the adverse impact of the development and the exaction – the exaction must advance the same objective for which it was imposed. In application, this means that a local government could not request a dedication of additional park space to off-set an anticipated traffic problem caused by a new development.
The second exaction case, Dolan v. City of Tigard, 512 U.S. 374 (1994), further specified that the proposed exaction must also be “roughly proportional” in nature and extent to the impact of the development. To meet this requirement, a local government that is requesting additional right-of-way to address an anticipated traffic problem must limit the property request to roughly the amount needed to address the problem created by the development from which it is taken; the request may not be sized to rectify all of the additional, existing traffic problems contributed by the previously approved developments in that area.
In Koontz, the Court expanded the application of the Nollan/Dolan exaction requirements in both timing and scope. First, the Court unanimously held that if the condition is a demand for property, regardless of how the condition is applied or even if the condition is refused, it must be structured to meet Nollan (essential nexus) and Dolan (rough proportionality).
This holding is directed at the approach used by some governments and districts to request extensive and potentially overreaching permit conditions but then deny the permit (and eliminate the potential lawsuit) if the applicant declines the condition as Mr. Koontz did. According to Koontz, it does not matter when the condition is applied in the process4 or whether the application is approved or denied, the exaction must meet Nollan and Dolan.5
Second, and in a 5-4 split decision, the Court also held that monetary exactions related to land-use permit issuance “turn on [ ] the direct link between the government’s demand and the specific parcel of property,”6 and therefore must also meet the nexus and rough proportionality requirements. This approach has been considered and specifically refused in a number of jurisdictions following Dolan, and the dissent argued that this will cause confusion in distinguishing land-use exactions from taxes, an issue that will be considered and played-out in the cases that follow Koontz.7
At this point, legal commentators are all over the map in interpreting the long-term meaning of Koontz for local government. While we wait for the lower courts to set a course, there are a few takeaways from the decision for local governments to consider:
- The Court was unanimous in its holding (and lecture) about unconstitutional conditions. Local governments and districts with permitting authority need to consider and should document both nexus and rough proportionality when establishing exactions as permit conditions.
- “Individualized,” “special,” “administrative” and “ad hoc” conditions may have greater potential for long-term challenges than do more broadly-considered, legislative approaches to establishing exactions as development conditions. Where possible, consider establishing a more uniform, up-front methodology and standardized approach to requesting exactions rather than creating something new for each application.
- Put it in writing – many jurisdictions overlook the importance of making “findings” with development permit decisions and miss the opportunity to make a record of why a specific decision was made and, as necessary, how individual conditions meet legal and planning requirements. Findings can both help clarify the reasons for making a decision and lend support to a jurisdiction that ends up in litigation later.
Elizabeth Garvin, AICP, is an attorney with Spencer Fane & Grimshaw. She serves on the Regional Board for the Rocky Mountain Land Use Institute.
- The materials in this column do not constitute legal advice, do not necessarily reflect the opinions of the RMLUI, and nothing provided herein should be used as a substitute for advice of local counsel. This column is not intended to act as a solicitation or advertisement.
- 570 U.S. ___, 133 S. Ct. 2586 (2013.)
- 133 S.Ct. 2589-90.
- “Our unconstitutional conditions cases have long refused to attach significance to the distinction between conditions precedent and conditions subsequent.” 133 S. Ct. at 2596.
- “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.” Id.
- 133 S.Ct. at 2600.
- This type of confusion does not seem to have caused significant problems in California, however, where the Nollan/Dolan requirements have been applied to some monetary exactions for the past 18 years and which approach may provide a roadmap for future application of the Koontz requirements. Ehrlich v. Culver City, 911 P.2d 429 (Cal. 1996). Texas also appears to have taken Nollan/Dolan beyond the dedication of real property in Town of Flower Mound v. Stafford Estates Ltd. Partnership, 135 S.W.3d 620 (Tex. 2004).
Published in the February/March 2014 Issue