Huge Supreme Court Win for Property Owners

Huge Supreme Court Win for Property Owners
July 5, 2013

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)
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Property owners who need permits to develop vacant land or improve existing structures now have important protections from abusive federal, state, and local governments, thanks to a recent ruling of the U.S. Supreme Court.

In what may be one of the most important rulings of the recently completed session of the U.S. Supreme Court, the justices in Koontz v. St. Johns River Water Management District declared demands for money, land or other concessions may be subject to heightened judicial review.

“All of us, whether we own a vacant piece of land or want to improve a home or a business, stand to benefit tremendously from this decision,” said Paul Beard, an attorney with the Pacific Legal Foundation, who argued the case on behalf of the family of Coy Koontz, Jr. of Orange County, Florida.

No More ‘Willy-Nilly’ Demands

“Now, governments have got to demonstrate a connection – a very close connection – between what they’re asking for in money or fees and the impact of your project. Whereas before, there really was no federal standard, and governments could sort of willy-nilly impose whatever they wanted and expect to get deference from the courts,” he said.

The case actually had its genesis nearly 20 years ago, when Coy Koontz, Sr. – now deceased – tried to develop less than four acres of a 15-acre parcel of land he owned. The land had no wetlands or endangered plants or animals on it. Even though Koontz agreed to put the remaining acreage in a conservation easement so that it never could be developed, the St. John’s River Water Management District demanded Koontz spend $150,000 to fix up government-owned land several miles away from his property.

The demand clearly had nothing to do with Koontz’s proposed development, and Koontz sued. He won in the Florida trial and appellate courts but lost at the state supreme court. In the interim Koontz died, but his family continued the legal fight.

End to ‘Extortionate’ Payments

Beard described the water management district’s demands as “extortionate,” and the district itself virtually admitted as much in a pre-trial stipulation that “the exact project [he] proposed would have been permitted” if Koontz had paid for improvements to the agency’s other land miles away.

In arguments before the Supreme Court justices last January, an attorney for the water management district argued the agency had the power to demand virtually anything it liked.

Justice Samuel Alito, writing for the 5-4 majority, ruled that monetary exactions such as those demanded of the Koontz family are subject to heightened scrutiny under the Constitution and must have some relation to the impact of the development.

“It forces governments to prove what they’re asking for is really mitigation and not simply extortion,” Beard said.

Unanimous on Permitting Methods

The second part of the ruling had unanimous support from the justices. Permitting agencies traditionally have issued permits with conditions, which then could be challenged. Many permitting agencies in recent years have been trying to get around even the weak judicial scrutiny that had been in place by denying permits unless a property owner first acquiesces to demands.

“They argued, the agencies did, this is a different scenario that shouldn’t be subject to any scrutiny at all because, after all, there is no permit that has been issued, so what is there to be challenged?” Beard said. None of the justices bought that argument.

The 5-4 split resulted from concerns over monetary demands. Beard said the liberal justices feared “this kind of a ruling would open the floodgates to challenges” to taxes and fees and other government impositions.

“We don’t think that’s the case,” Beard said. "We think this applies only in the context of land-use exactions where a property owner has been targeted.”

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)