July 3, 2013

Supreme Court Decision Gives Landowners Leverage When Facing Development Requirements


By Scott Anders

Summer 2013

Lost in the hype surrounding recent Supreme Court decisions was the case involving governmental takings in the land use context — Koontz v. St. Johns Water Management District, WL 3184628 (June 25, 2013).

The major take away from this decision is that landowners now hold more leverage in fighting unreasonable development requirements, especially offsite development or payment in lieu of property dedication. Additionally, the decision means that governments need to be cautious about the offsite improvements they seek as a condition of land use decisions. You should not read this decision as a blanket change to government requirements — land use issues tend to be very specific to the particular land and its characteristics.

In Koontz v. St. Johns Water Management District, the landowner, who had property near Orlando, Florida, sought to build on approximately three acres of a 14-acre parcel comprised mostly of wetlands. The wetlands that comprised the building site had been degraded by neighboring commercial developments. As part of the development, the landowner proposed providing the government with the use and preservation of the remaining 11 acres through a conservation easement. The district imposed additional conditions of approval that are the subject of this case.

The Supreme Court ruled that the landowner's rights were violated by a land use condition of approval requiring mitigation projects on government-owned land several miles from the landowner's property. The Supreme Court also ruled that requiring a monetary payment for offsite improvements must meet the test of having the "essential nexus" and "rough proportionality" to the impacts of the proposed development as set out in the Nollan andDolan cases of 1987 and 1994, respectively.

Nollan v. California Coastal Com., 483 US 825, 107 S Ct 3141, 97 L Ed2d 677 (1987), established the "essential nexus test." In this case, the Nollans applied for a permit to replace their beachfront house with one that was much larger. The Coastal Commission approved their permit, with a condition of approval requiring dedication of an access easement across the beach frontage of the property. The Court said that requiring such an easement was a "physical invasion" of the property and that requiring the easement as a condition of approval was a taking under the Fifth Amendment. The requirement of the easement across the beachfront of the property did not have the "essential nexus" to the Coastal Commission's stated purpose which was to mitigate the negative impact of the larger house on the view of the beach from the street.

In Dolan v. City of Tigard, 512 US 374, 114 S Ct 2309, 129 L Ed2d 304 (1994), argued at the Supreme Court by the firm's own Tim Ramis, the "rough proportionality test" was established. In Dolan, the City of Tigard required a bicycle path and greenway as conditions of approval to expand the Dolans' hardware store. The Court found no sufficient demonstration that the bike path or the greenway were related to the impacts caused by the expansion of the hardware store and that the City had not sufficiently shown that a bike path would mitigate the increased traffic as a result of expanding the store. The Court said, "We think a term such as "rough proportionality" best encapsulates what we hold to be the requirement of the Fifth Amendment. No precise mathematical calculation is required, but the city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development." The Court stated that the government had the burden of demonstrating "rough proportionality."

While many commentators had expressed that the rulings of Nollan and Dolan were being limited, it now appears that the Supreme Court is actually strengthening the need for governments to demonstrate an essential nexus and rough proportionality between the impacts of a development and the exactions that governments require to mitigate those impacts.

The recent Koontz v. St. Johns Water Management District case also strengthened the unconstitutional conditions doctrine, which says that if a government requires funding of an offsite project that does not meet the Nollan and Dolan tests of nexus and rough proportionality to development impacts, then the government will pay for its improper exactions.

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