Supreme Court Observations: Koontz v. St. Johns River Water Mngt. District

Horde_RockyClausen_HansGuest Commentary

by G. Wilson (Rocky) Horde III and Hans Clausen, Thompson Hine LLP

Can land-use regulators exact cash from developers to pay for off-site environmental mitigation as a precondition to issuing building permits without triggering the just-compensation requirement of the Takings Clause? Today, the U.S. Supreme Court answered this question in Koontz v. St. Johns River Water Management District. In a 5-4 decision, the Court held that the government’s demand for property, including cash, from developers as a precondition for land-use permits must bear an essential nexus and a rough proportionality with the prospective burden imposed by the development. This holding expands the scope of the Takings Clause, restricts the power of regulators to require the satisfaction of preconditions before permits will issue, and provides important protections to developers.

The case was filed by Coy Koontz, who purchased a 14.9-acre lot in 1972 when no environmental laws prevented development. Florida later enacted numerous environmental statutes to protect wetlands. These laws placed all but 1.4 acres of Koontz’s lot within a protected zone and established a legal presumption that any land use within the zone would be harmful. In 1994, Koontz applied for development permits, seeking to develop only 3.7 acres of his more than 14-acre lot. The St. Johns River Water Management District (District) initially suggested a long list of environmental mitigation options to Koontz, which included reducing his proposed development to only 1 acre or expending his own money to improve 50 acres of wetlands outside his property under a variety of scenarios. Koontz agreed to dedicate the remainder of his land for conservation, but he refused to do anything more. Ultimately, the District denied Koontz’s application solely because he refused to pay for off-site mitigation. Koontz won in a Florida trial court and at the intermediate appellate level, but lost in the Florida Supreme Court.

The U.S. Supreme Court reversed the Florida Supreme Court, holding that the “essential nexus” and “rough proportionality” requirements articulated in the landmark precedents Nollan v. California Coastal Comm. and Dolan v. City of Tigard apply when the government denies the permit for failure to comply with a precondition and no property has actually been taken. (Nollan and Dolan concerned exactions after the permit was issued.) Justice Alito, writing for the majority, concluded that extortionate demands for property in the land-use permit context violate the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation. Whether the government approves the permit with an extortionate condition to be satisfied after the permit has issued, or denies the permit because an extortionate precondition was not satisfied, makes no difference. The Court also held that it doesn’t matter whether the government attempts to exact real property or cash (or other personal property), because drawing this distinction would allow the government to evade the constitutional limitations of Nollan and Dolan. Cash exactions, Justice Alito concluded, “are functionally equivalent to other types of land use exactions.”

Joining Justice Alito in the majority were Chief Justice John Roberts and Justices Scalia, Kennedy and Thomas. Justice Kagan filed a dissent, joined by Justices Ginsburg, Breyer and Sotomayor.

3 thoughts on “Supreme Court Observations: Koontz v. St. Johns River Water Mngt. District

  1. John Ryskamp

    To me, Koontz pretty clearly raises the level of scrutiny for property in the context of permitting. Prior to Koontz, property enjoyed only minimum scrutiny. But here, even Kagan grants that Koontz has raised the level of scrutiny for property, at least in the context of permitting. However, asshe also points out in her dissent, that’s just the beginning of it. Note that the Court found that the “command” was not a tax. If you consider the specificity of the purpose of a tax from dedicated to general, you will find that the purpose of the District’s “command” pretty close to general welfare. Down the line, this will permit a challenge to the federal income tax. It will allow a litigant to use discovery to find out what in FACT is the purpose of Federal taxation, income and otherwise. People will be surprised to find out that Federal taxation, including income taxation, is dedicated taxation. As you know, Congress can tax and spend, but not legislate, for the general welfare. If Federal taxation is considered more dedicated than the District’s purpose in Koontz, it will likely be thrown out. General welfare is usually not considered litigable, but Koontz is laying the groundwork for a challenge.

    To show you how this might go, here is an application of Koontz to the Federal income tax:

    The essence of Koontz v. St. Johns River Water Management District (No. 11-1447, June 25, 2013) is as follows:

    “when the government commands the relinquishment of funds linked to a specific, identifiable property interest such as a bank account or parcel of real property, a ‘per se [takings] approach’ is the proper mode of analysis under the Court’s precedent. Brown v. Legal Foundation of Wash. , 538 U. S. 216, 235 (2003).” Koontz at 17.

    The Court does not limit the ruling to land use, or even to permitting, simply stating that the case is when the government “commands the relinquishment of funds linked to a specific, identifiable property interest.” The Court, at 17, note 2, explicitly states that this test applies outside the permitting process and is generally applicable with respect to property: “The unconstitutional conditions analysis requires us to set aside petitioner’s permit application, not his owner­ship of a particular parcel of real property.” Emphasis in original. The dissent says, of the legal effect of the Court’s holding, that it subjects “the government’s demand to heightened scrutiny: The government may condition a land-use permit on the relin­quishment of real property only if it shows a “nexus” and “rough proportionality” between the demand made and “the impact of the proposed development.” Dissent at 4. Since the holding is with respect to property, where the government “commands the relinquishment of funds linked to a specific, identifiable property interest,” a level of scrutiny above minimum scrutiny, applies. This raises the level of scrutiny for property. Under Koontz, the command of current individual income “tax” rates are not taxation, they are an unconstitutional condition. Specifically, where the government commands a relinquishment of funds linked explicitly to income, the burden falls on it to show a nexus. The threshold showing is that the command is taxation. As the Supreme Court points out:

    “When the District asks permit applicants to fund offsite mitigation work, its policy is never to require any particular offsite project, and it did not do so here. In­stead, the District said that it “would also favorably con­sider” alternatives to its suggested offsite mitigation projects if petitioner proposed something “equivalent.” Koontz at 4.

    The Court did not consider that to be taxation and therefore pass the threshold—it considered that to be an impermissible evasion. As the Court states:

    The fulcrum this case turns on is the direct link between the government’s demand and a [specific, identifiable property interest]….Because of that direct link, [there is a] that the government may use its substantial power and discretion…to pursue governmental ends that lack an essential nexus and rough proportionality….Koontz at 16-17.

    The individual income “tax” rates are a command of the relinquishment of funds linked explicitly to income, which is a specific, identifiable property interest. They are imposed under the policy that specific, identifiable property interests enjoy only minimum scrutiny. That violates the Koontz standard that commands of the relinquishment of income have met heightened scrutiny. Therefore, individual income “tax” rates violate Fifth Amendment Due Process. The individual income taxation rates are an unconstitutional condition.

    John Ryskamp

      1. John Ryskamp

        By the way, Koontz also is grounds for challenging Obamacare:

        Pro-property rights rulings are used very well by property rights groups, because property rights groups hate the West Coast Hotel/Carolene Products scrutiny regime with its levels of scrutiny. So, when they actually do win won, they can’t follow up on their victory because they refuse to become conversant with the levels of scrutiny.

        For example, Kagan grants that Koontz raises the level of scrutiny for property. To what level? Must policy regarding property now substantially advance an important government purpose (intermediate scrutiny)? Must it be narrowly tailored to achieve a compelling government purpose (strict scrutiny)?

        I notice that not one property rights advocate has said that Koontz raises the level of scrutiny to strict scrutiny. But certainly ALL future property cases should be argued on that basis. You force the Court either to grant it, or you force the Court to articulate the level of scrutiny.

        What is more, property rights advocates so loathe the scrutiny regime that they will not analogize their victories to other fact situations, thereby denying themselves further victories. Example? Koontz raises the level of scrutiny for property in the context of permitting.


        What are prongs of the factual test for property, enunciated in Koontz, which other facts meet?


        What are the prongs of the factual test for permitting, enunciated in Koontz, which other facts meet?

        Why haven’t property rights advocates followed up with this?

        Furthermore, Koontz shifts the burden of proof: post-Koontz, government must show by compelling evidence that a tax is not a dedicated tax. Koontz vastly narrows the factual scope for general welfare taxes. Why haven’t property rights advocates followed up on that?

        The property rights bar shoots itself in the foot when, in its hatred for the tools of the scrutiny regime, it persistently refuses to use those tools to defeat the scrutiny regime. That’s very stupid and ignorant.

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