Monday, November 26, 2012

Exactions Update: Property Owner Files Brief Arguing Florida Decision Allows Extortionate Leveraging of Police Power

The property owner has filed its opening merits brief in the exactions case before the U.S. Supreme Court.  Koontz v. St Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012). Recall that the property owner has argued that the Florida Supreme Court disregarded significant constitutional protections, while asking the Court to establish that (1) the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work; and (2) the Nollan-Dolan exactions test applies where a permit is denied because an applicant rejects an exaction.

The summary in the property owner's brief is worth a quick read. It does a good job of pointing out the significant exposure property owners in Florida now have to extortionate leveraging of the police power by governments:
The District’s demand that Mr. Koontz finance improvements to its property as a condition of permit approval—in addition to giving up almost 75% of his land—was an exaction implicating the Takings Clause and, therefore, triggering review under Nollan and Dolan. The District forced Mr. Koontz to choose between two fundamental constitutional rights: (1) the right to make lawful use of his property and (2) the right under the Takings Clause to compensation for the substantial cost incurred making unrelated public improvements. When Mr. Koontz would not agree to waive his right to compensation for the cost incurred making the off-site improvements, the District denied his permit applications. The District’s attempt to bargain its way around the Takings Clause’s requirement that property taken for a public use be compensated is precisely the kind of government “dealmaking” the unconstitutional conditions doctrine, as applied in Nollan and Dolan, is meant to check. 
The doctrine has long been a staple of this Court’s jurisprudence. In its most basic formulation, the doctrine provides that government may not grant an individual a benefit or permit to exercise a constitutional right on the condition that he surrender another constitutional right. The doctrine has shielded countless Americans who seek a government benefit or permit from government “deals” that would strip them of their constitutionally protected rights, including the right to free speech, the right to free exercise of religion, and the right to be free from unreasonable searches. In 1987, this Court expressly recognized the doctrine’s applicability in the land-use context in Nollan and, subsequently, in Dolan
While the Takings Clause generally prohibits uncompensated takings, the Court in Nollan recognized a narrow exception to that general rule: In the land-use context, the government has the discretion to exact property—without having to pay for it—as a condition of permit approval. But the Court went on to place a vital limitation on that exception. Only those exactions that bear an “essential nexus” to the alleged adverse impact of the proposed land use are authorized; as the unconstitutional conditions doctrine teaches, any other exaction is merely an unlawful attempt to skirt the Takings Clause’s prohibition on uncompensated takings and therefore is an unconstitutional condition. Later, in Dolan, the Court refined the “essential nexus” test, requiring that any permit exaction must also be “roughly proportional” to the alleged adverse impact of the proposed land use. The discretion and the limitations go hand-in-hand: The Takings Clause does not allow the government unbridled power to confiscate property of any kind, whenever and however it wants, simply because it holds the power to issue land-use permits. 
While rooted in the Takings Clause, Nollan and Dolan rely on the unconstitutional conditions doctrine to smoke out attempts by government agencies to circumvent that Clause’s requirement that compensation be paid for property takings. Nothing in that doctrine, the Takings Clause, Nollan, or Dolan recognizes a relevant distinction among the types of permit exaction subject to the “essential nexus” and “rough proportionality” limitations. Government demands for real or personal property—both categories protected by the Takings Clause—are subject to the same limitations. Nor does application of the limitations depend upon when in the permit process the exaction is imposed. A decision to deny a permit application based on refusal to accede to an unlawful exaction and a decision to approve a permit application subject to acceptance of an unlawful exaction are substantively identical: In both cases, no permit issues unless and until the permit applicant agrees to waive his right to compensation for the confiscated property. 
The Florida Supreme Court’s decision to the contrary fails to take into account the logic of Nollan and Dolan. Uncompensated takings in the land-use context are permissible only because such takings are limited by the “essential nexus” and “rough proportionality” tests in Nollan and Dolan. If those limitations do not apply, neither does the exception to the Takings Clause’s prohibition against uncompensated takings recognized in those precedents. In other words, the Takings Clause does not countenance a totally unlimited power to confiscate property in the permit process. Thus, if Nollan and Dolan do not apply to the District’s exaction of Mr. Koontz’s money, then the District must accept the Takings Clause’s default rule prohibiting government from confiscating permit applicants’ property. The Florida Supreme Court’s decision confining the “essential nexus” and “rough proportionality” limitations to the narrow facts of those cases ignores the interdependence between the limitations and the extraordinary power that the government has to exact property from permit applicants. The decision also leaves Floridians with little to no protection against government attempts to “cloak[] within the permit process ‘an out-and-out plan of extortion.” Lambert v. City & Cnty. of San Francisco, 529 U.S. 1045, 1048 (2000) (Scalia, Kennedy, and Thomas, JJ., dissenting from denial of certiorari) (internal citations omitted). Naked, uncompensated confiscations of land are uncommon, because of the obvious application of Nollan and Dolan. Instead, land-use authorities increasingly have resorted to confiscating property other than interests in real property—most often, money, in the form of either financing of public projects (as in Mr. Koontz’s case) or payment of fees in-lieu of a land dedication. Yet the constitutional injury is the same: The property owner is required, as a permit condition, to waive his right to compensation for the confiscation. If the Florida Supreme Court’s decision stands, that constitutional right will rarely have a remedy. 
The Florida Supreme Court based its decision in large part on its desire to preserve the freedom and flexibility of land-use agencies like the District to make “deals” with permit applicants. It did so, but at too high a cost to the constitutional rights of those applicants. The decision of the Florida Supreme Court should be reversed.
Amicus briefs in support of the property owner are due on Wednesday. The District's brief in response is due next month, and the property owner's reply brief is be due on January 8. The case is set to be heard on January 15, 2013. For more information in the meantime, check out my posts on the case's background.