How Local Governments Can Resolve Koontz's Prohibitions on Ad Hoc Land Use Restrictions

• Library: At the Cutting Edge: Land Use Law from The Urban Lawyer (ABA) (2014 Ed.)

How Local Governments Can Resolve Koontz's Prohibitions on Ad Hoc Land Use Restrictions

Robert H. Freilich^*

Neil M. Popowitz^**

I. Introduction

IN ORDER TO SATISFY THE U.S. SUPREME COURT'S recent pronouncements in the highly contested five to four decision in Koontz v. St. Johns River Water Management District,¹ local, state, and federal governments must devise non-flexible legal, environmental, infrastructure and planning solutions or they are in dire jeopardy of failing the "unconstitutional conditions" rule as expanded by Koontz. Koontz applies to discretionary environmental review acts, planned unit developments, mixed use development, new urbanism form-based zoning, overlay and floating zones or conditional use permits, and government-required conditional ad hoc mitigation, and regardless of how these government actions are accomplished (whether by approving applications with conditions, or denying applications based on the failure to agree to a conditional exaction). Koontz essentially prohibits ad hoc, non-legislative conditioning of applications for development approval that do not meet the "nexus" and "rough proportionality" tests of Nol-lan v. California Coastal Commission² and Dolan v. City of Tigard³ regardless of (1) whether by monetary exaction or dedication of land; (2) whether the application is approved with such conditions or denied for failure to agree to such conditions; or (3) for infrastructure or mitigation of environmental harm.

II. The Koontz Decision

At issue in Koontz were various Florida regulations restricting a landowner s ability to develop land designated as wetlands.⁴ Koontz sought to develop 3.7 acres of a 14.9 acre tract east of Orlando, and was first required to obtain a permit from the St. Johns River Management District ("District") to develop a portion of his property.⁵ The regulations allowed the District to impose "reasonable conditions . . . necessary to assure" his proposed development would "not be harmful to the water resources of the district."⁶ Within the application, Koontz proposed mitigating the development s environmental impacts by dedicating to the District an 11 acre conservation easement over a portion of the acreage.⁷

The District, which had statutory land use approval powers, denied Koontz s application, concurrently stipulating that it would approve the permit if Koontz volunteered (1) to provide a smaller number of development units coupled with dedication of a larger easement covering all of the wetlands;⁸ or (2) to proceed with his proposed development, and in addition, hire contractors to make improvements to off-site wetlands, on District-owned land, to mitigate the environmental impact of his proposal.⁹ The District advised Koontz it would consider alternative off-site improvement projects if Koontz made such suggestions.¹⁰

Koontz rejected these conditions precedent as unconstitutionally onerous, and thereafter sued the District, alleging a physical title-taking of the property under Nollan¹¹ and Dolan¹² as reiterated in Lingle.¹³ Because the property was not restricted from all¹⁴ or substantially all use and value¹⁵ a Penn Central regulatory economic taking was not viable.¹⁶

The trial court ruled in Koontz's favor, reasoning that the District's demands did not meet the Nollan and Dolan standards of nexus and rough proportionality between the government s demand and the effects of the proposed land use.¹⁷ The Florida Supreme Court reversed, holding that Nollan and Dolan did not apply because the District denied the application rather than conditionally approving the application, and because a request for a monetary exaction is not covered by the Nollan/Dolan doctrines, which the court viewed as limited to conditions requiring dedication of land.¹⁸

The U.S. Supreme Court reversed. First, it held that Nollan and Dolan apply to development exactions regardless of whether the government grants a land use permit subject to a condition or denies a permit because the landowner refuses to accept the condition.¹⁹ On this point the Court was unanimous because all Justices agreed that conditioning a benefit on the applicant's agreement to sacrifice rights protected by the U.S. Constitution is unconstitutional.²⁰ "Extortionate demands for property in the land-use permitting context run afoul of the Takings Clause not because they take property but because they im-permissibly burden the right not to have property taken without just compensation."²¹ To hold otherwise, the Court held, would allow governments to circumvent Nollan and Dolan by phrasing all permit requirements in terms of conditions precedent, rather than conditions subsequent.²²

The majority also held that "monetary exactions," fall within the reach of the Takings Clause and "must satisfy the nexus and rough proportionality requirements of Nollan and Dolan."²³ The Court reasoned that the District s demand was directly linked to Koontz s ownership of a specific piece of property, and threatened to burden his ownership rights associated with the specific parcel.²⁴ The presence of this "direct link" was the basis for the Court's decision that Nollan and Dolan were implicated.²⁵ Therefore, the benefit from the off-site improvements Koontz would have to pay for must be roughly proportionate to the environmental impact of his proposed development, and must also have a nexus to those negative impacts. The Court ultimately remanded the case for these questions of nexus and proportionality to be addressed.²⁶

The Koontz dissenters' position is that "a requirement that a person pay money to repair public wetlands is not a taking."²⁷ The dissenting justices expressed concerns that the majority opinion diminishes the flexibility governments possess in order to regulate land use within their jurisdictions. They emphasized that "the flexibility of state and local governments to take the most routine actions to enhance their communities will diminish accordingly."²⁸ The concern of state and local governments' "flexibility" in regulating land use was first recognized by the Court in 1987 when it stated: "We realize that even our present holding will undoubtedly lessen to some extent the freedom and flexibility of land-use planners and governing bodies of municipal corporations . . . ."²⁹ The Koontz dissenters emphasized that the "new rule now casts a cloud on every decision by every local government to require a person seeking a permit to pay or spend money."³⁰

After Koontz, numerous forms of local, state, and federal land use regulations are now within the reach of the Takings Clause. Various regulatory schemes governing private land use rights now must meet strict constitutional requirements, which previously only applied to physical or regulatory takings, or conditionally granted permits. To protect the validity of these regulatory schemes, legislatures must minimize—or eliminate—regulations that permit decision makers to rely on an ad hoc processes to condition land use permit applications. The concerns associated with these same ad hoc governmental processes was a primary focus of the life and work of Richard F. Babcock,³¹ and a review of his work may suggest solutions to the new challenges governments face after Koontz.

III. The Zoning Game

Babcock contributed significantly to zoning law with the publication of his classic land use book, "The Zoning Game" in 1966.³² Babcock's distinctly light satirical prose,³³ coupled with extraordinary insight, enlisted and inspired a new generation of outstanding land use lawyers, including John Banta, Fred Bosselman,³⁴ David Callies, John Costonis, Chris Dirksen, Wendy Larson, Charles Siemon³⁵ and Nancy Stroud, all of whom have at one time or another been major players in land use law. Moreover, his forty-seven year-old prescriptions provide helpful support to available solutions for reversing 21st Century reliance on flexible, ad hoc conditional zoning.³⁶

By nature of his evolving public and private land use law practice, Babcock was immersed in the suburbs of Chicago. Babcock described Chicago as a chaotic³⁷ wilderness of 1,100 local governments without a regional focus, plan, or vision created by the massive outflow of whites seeking to avoid the perceived deterioration and decline of the City of Chicago through its urban renewal program.³⁸ This led to Chicago's increasingly African-American public schools and high-rise public housing populations in the 1950s and 60s.³⁹

In 1966, the year Babcock published "The Zoning Game," zoning itself was celebrating its 40th anniversary of constitutional coronation by the U.S. Supreme Court.⁴⁰ As a land use attorney with an extensive public-private land use practice, Babcock was able to portray the exclusionary, flexible, and arbitrary nature of growing suburbs' use of zoning through down to earth observations instead of the garb of academically clothed scholarship.⁴¹ He observed the zoning system used to enforce exclusionary policies, as it was shaped by legislators, city officials, judges, land use attorneys, and planners.⁴² The result was an arbitrary, capricious, and discriminatory land use process sanctioning the unbridled use of flexible zoning devices, left intact by indifferent judicial decisions granting extreme deference to local enactments and development approvals.⁴³

A major influence on Babcock's thinking was an important article by Richard Cutler, entitled Legal and Illegal Means for Controlling Community Growth on the Urban Fringe, which appeared in the Wisconsin Law Review in 1961.⁴⁴ Cutler documented that suburban cities and counties were trying to limit growth in ways that were discriminatory and false in intent.⁴⁵ He outlined the techniques municipalities were utilizing to achieve these improper ends.⁴⁶ One technique was zoning huge agricultural and industrial areas for "holding zones" without reference to availability of capital facilities or the protection of environmentally sensitive and agricultural lands...