U.S. Supreme Court Decision on Land-Use Exactions Impacts Developers, Government

Bilzin Sumberg Baena Price & Axelrod LLP
Stanley B. Price

January 29, 2014

If you have ever filed a zoning application and been subjected at the public hearing to a version of the game show “Let’s Make a Deal,” you may find of interest a June 2013 decision by the U.S. Supreme Court that addresses government-imposed conditions on the issuance of development permits.

Relying upon fairly recent rulings in the Dolan and Nollan cases, the Supreme Court in Koontz v. St. John’s River Water Management District determined that monetary exactions, sought by governmental agencies through the zoning and permitting process, could ripen into a taking of property in violation of the United States Constitution.

Exaction Must Be Rationally Related And Roughly Proportionate To Impact

The Court, expanding on its previous taking jurisprudence, pronounced that any exaction sought by a governmental agency, including cash exactions, will be subject to whether the exaction is rationally related to the impact caused by the development approval and is roughly proportionately consistent with the impact.

Justice Alito, writing for the Court majority, stated in pertinent part:

The First is that land use permit applicants are especially vulnerable to the type of coercion that the unconstitutional conditions doctrine prohibits because the government often has broad discretion to deny a permit that is worth far more than property it would like to take… Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation, and the unconstitutional conditions doctrine prohibits them.

In Koontz, the applicant for an environmental permit refused to accept the conditions demanded by the agency, which included payment of money for off-site remediation and accordingly the permit was never issued. The Court held that:

Our precedents thus enable permitting authorities to insist that applicants bear the full costs of their proposals while still forbidding the government from engaging in ‘out-and-out… extortion’ that would thwart the Fifth Amendment right to just compensation.

Balancing Private and Governmental Interests

The nature of the consequences of this decision will be felt in the years to come. Hopefully, a rational of balancing private property rights and governmental public interest requirements will result in a more equitable decision making process.

This article is being provided for informational purposes only and not for the purposes of providing legal advice or creating an attorney-client relationship. You should contact an attorney to obtain advice with respect to any particular issue or problem you may have. In addition, the opinions expressed herein are the opinions of Mr. Price and may not reflect the opinions of Synergy Environmental, Inc., Bilzin , Sumberg, Baena, Price & Axelrod LLP or either of those firms’ clients.


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