U.S. Supreme Court Rules in Favor of Development Industry, Reins in Local Governments

In July of 2013, after almost 10 years of litigation, the U.S. Supreme Court ruled in favor of a Florida landowner, in his lawsuit objecting to the overreach of a Florida water management district for mitigation in his attempt to dredge and fill a small portion of his land.

The decision in Koontz v. St. Johns River Water Management District has certainly created some anxiety and uncertainty among local governments regarding their continued ability to impose conditions and fees on land use approvals. Though uncertainty still exists, the Koontz decision did resolve an important issue. It told us that the Nollan “essential nexus” and the Dolan “rough proportionality” tests apply to a government’s demand for real property or money from a land use permit applicant, even when the permit is denied and no conditions are attached.
Background of the Case                                                                                

In an effort to protect wetlands, Florida law requires a property owner to obtain a special permit to dredge or fill any wetlands, and allows for local government agencies to require property owners to offset any environmental damage that their actions may cause.

Coy Koontz, Sr. was the owner of a 14.9-acre property primarily composed of wetlands just outside Orlando, Florida. In 1994, Mr. Koontz applied for a permit with the St. Johns River Water Management District (District) to develop 3.7 acres of his 14.9-acre property. In exchange for permission to dredge and fill this 3.7-acre portion of his property, he offered to permanently preserve the approximately 11 acres remaining by deeding a conservation easement on that portion of his land to the District. However, the District deemed this offer insufficient and informed Mr. Koontz that they would only approve his permit if he agreed to one of two alternative proposals: 1) reduce the size of his development to 1 acre and deed the remaining 13.9 acres to the District as a conservation easement; or 2) proceed with his original development plans for the 3.7 acre portion of his property and agree to hire contractors to improve District owned property a few miles away. The improvements would encompass approximately 50 acres of District-owned property.

Mr. Koontz deemed both alternatives excessive, and sued under Florida law that provides monetary damages for government actions that represent an “unreasonable exercise of the state’s police power constituting a taking without just compensation”. The Florida District Court affirmed Mr. Koontz’ claim, utilizing the Nollan/Dolan test. However, the Florida Supreme Court reversed the District Court decision, ruling that the protections of Nollan/Dolan do not apply when the government denies a permit or when the government’s demand is for money as opposed to an easement or some other property interest. The U.S. Supreme Court – in a 5-4 decision – overturned the Florida Supreme Court, ruling in favor of the property owner, Koontz.