A Look at Koontz V. St. Johns River Water Management District

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

A Look at Koontz v. St. Johns River Water Management District

Michael T. Kamprath^*

I. Introduction

Exactions are an everyday reality in land development. Exactions can take the form of land rights such as an easement, the payment of money, or the promise to do something. "A development exaction occurs when a local governing body conditions the grant of a development permit on the developer [or landowners] agreeing to dedicate land, pay money, or provide materials or services."¹ It is a quid pro quo whereby the public receives something in exchange for government authorization to use land in a way that has been restricted.² The Supreme Court addressed exactions as they relate to land interests (specifically easements) in Nollan v. California Coastal Commission³ and Dolan v. City of Tigard.⁴ It recently extended these holdings in Koontz v. St. John's River Water Management District.⁵

In Nollan, the Court announced that there must be an "essential nexus" between the exaction and the permitted activity.⁶ In Dolan, the Court held that there also must be "rough proportionality" between the exaction and the impact of the permitted activity.⁷Dolan stated that without the "essential nexus/rough proportionality," the exaction would be an unconstitutional condition.⁸ The doctrine of unconstitutional conditions provides that "the government may not require a person to give up a constitutional right—here the right to receive just compensation when property is taken for a public use—in exchange for a discretionary benefit conferred by the government where the benefit has little or no relationship to the property."⁹Koontz resolved an issue that remained undecided following the Nollan and Dollan decisions, namely whether unconstitutional conditions are limited to exactions involving the dedication of land or whether they extend to monetary or exactions involving other property.¹⁰ The unanimous Supreme Court agreed that when a government denies a permit, the government's demand for property from a land-use permit applicant must satisfy the requirements of Nollan and Dolan.¹¹ A divided Supreme Court by a 5-4 decision determined that when the demand is for money, it also must satisfy Nollan and Dolan.

II. Background Law

The Fifth Amendment prohibits taking private property for public use without just compensation.¹² It is not a prohibition on taking private property, "but instead places a condition on the exercise of that power."¹³ The Fifth Amendment does not create a per se limitation on government interference with property rights but secures compensation when government interference crosses the threshold to amount to a taking.¹⁴

Moving beyond traditional notions of eminent domain into regulatory takings, there is a continuum of land use regulations from the least onerous (regulations requiring you to mow your yard) to the most (regulations prohibiting any use of your property) and at some point along that continuum the threshold is crossed that amounts to a taking. If the government regulation causes a permanent physical occupation of real property, then the government has made a per se taking.¹⁵ Likewise, if government regulation "deprives the land of all economically beneficial use," then there also is a per se taking unless the regulation achieves the same result that the state's nuisance common law would have achieved. For example, if the regulation prohibits a property owner from filling in a privately-owned lake, causing the neighbors to be inundated by flood, this would not be a regulatory taking because the same result would be achieved under common law principles of property and nuisance law.

Other regulations of land can amount to a taking when they go "too far."¹⁶ The question remains how to determine when such regulations go "too far." Penn Central outlined factors for the courts to consider including: the economic impact of the regulation on the claimant; the extent to which the regulation has interfered with distinct investment-backed expectations; and the character of the government action such as whether it causes a physical invasion of the property.¹⁷ Regulation of land can also implicate due process concerns and property owners can use the Due Process clause to challenge land use decisions.¹⁸

In Koontz, the Court addresses how exactions fit on this spectrum. Ultimately, by finding that a per se taking is implicated by demands for landowners to make improvements to nearby public lands in exchange for a development permit, the Supreme Court has clearly drawn a distinction between the Penn Central ad hoc inquiry and the Nollan/Dolan, and now Koontz, unconstitutional conditions framework and applied heightened scrutiny to the review of land use exactions. The majority in Koontz rejected Penn Central as a framework for examining conditions imposed in exchange for land use permits and thus determined that all conditions imposed in exchange for land use permits will be subject to heightened scrutiny.¹⁹

Three other decisions of the Court bear noting. In Agins v. City of Tiburon,²⁰ the Court held that government regulation of private property "effects a taking if [the regulation] does not substantially advance legitimate state interests."²¹ While Koontz relied on Agins at the trial court level, the Supreme Court receded from the Agins holding in Lin-gle and determined that the "substantially advances" test is not a valid takings test under the Fifth Amendment.²² In Lingle, the court noted in dicta that its decision did not impact the Nollan/Dolan formula.²³Agins was never mentioned in Koontz nor was Lingle mentioned by the majority.

III. The Facts of the Koontz Case

The underlying facts at issue in Koontz are relatively straightforward. Surprisingly, however, some key facts (particularly, the conditions imposed by the water district on Koontz) were in dispute at oral argument before the Supreme Court and appeared unresolved in the opinion. The trial court summed up the background as follows:

The subject property is located south of State Road 50, immediately east of the eastern extension of the East-West Expressway in Orange County. The original plaintiff, Coy Koontz, has owned the subject property since 1972. In 1987, a portion of the original acreage adjacent to Highway 50 was condemned, leaving Mr. Koontz with 14.2 acres. There is a 100-foot wide transmission line easement of Florida Power Corporation running parallel to and about 300 feet south of Highway 50, that is kept cleared and mowed by Florida Power. . . .
All but approximately 1.4 acres of the tract lies within a Riparian Habitat Protection Zone (RHPZ) of the Econlockhatchee River Hydrological Basin and is subject to jurisdiction of the St. Johns River Water Management District. In 1994, Koontz sought approval from [St. Johns] for a 3.7 acre development area adjacent to Highway 50, of which 3.4 acres were wetlands and .3 acres were uplands.²⁴

In 1994, Koontz requested permits from the St. John's Water Management District so that he could develop his property. The permit requested would have allowed him to develop a greater portion of his property than was allowed under the current regulations governing the development of wetlands.²⁵

EXHIBIT²⁶

Specifically, the permits Koontz sought would have allowed him to dredge 3.75 acres of wetlands.²⁷ Koontz proposed mitigating the impact of the development by dedicating his development rights on the remaining 11 acres of the parcel in a conversation easement.²⁸ His proposed mitigation yielded a mitigation ratio of 3:1 for preserved to destroyed wetlands.²⁹ However, the policy of the state preferred creation or enhancement of wetlands rather than preservation.³⁰ Furthermore, the state had established minimum guideline ratios for wetlands preservation, wetlands creation and wetlands enhancement of 10:1, 1:1 to 5:1 and 4:1 to 20:1 respectively that the District used.³¹

Based on these guidelines, the District staff advised that the mitigation was not sufficient and suggested a number of options for both on-site and off-site mitigation including:

1. On Site: Using a subsurface storm water management system;
2. On Site: Eliminating the filling of side slope areas and using stem walls instead;
3. On Site: Reduce the scale of the project to 1 acre and preserve the remainder of the land by conservation easement or deed restriction;
4. Off Site: improve wetland function on the Hal Scott Preserve by replacing 15 culverts or eliminating a ditch system;
5. Off Site: plugging or eliminating the ditch system on the Deme-tree Property; or
6. Off Site: combining proposed on site mitigation with additional off-site mitigation anywhere within the 50 acre basin.³²

Koontz rejected the suggestions, applied for a permit, and the District denied the permit.³³

Koontz's brief on the merits acknowledged only one option given by the District as a condition for permitting—to make off-site improvements; Koontz did not address the proposed on-site conditions. The Koontz Court majority opinion stated that the District presented two options to Koontz: (1) to reduce the development to one acre and deed a conservation easement across the remaining property or (2) to keep the development at 3.7 acres, deed the remaining land as conservation easement, and provide off-site mitigation which the District did not specify but did provide projects that would suffice.³⁴

This statement differs from the conditions described by the District's brief. It recites a menu of options that could have been combined to achieve sufficient mitigation and notes that the off-site mitigation was in lieu of, not in addition to, Koontz's on-site mitigation.³⁵ Likewise, the dissent acknowledges that there remained a disagreement in the Court as to the District's exact demands.³⁶ This uncertainly regarding what the District actually demanded, even as the case was being considered by the Supreme Court, highlights one of the flaws in applying the Supreme Court's...