In Cementing Koontz's Legacy, the Florida Supreme Court Shows Why Taxpayers Will Foot an Enormous Bill for Government's Mistakes

Recently, the Florida Supreme Court refused to hear the Koontz case yet again. Too bad for taxpayers that it took the Court eighteen months to make a decision.

Recall that, in the long Koontz saga, in 1994, the government agreed to issue a permit to fill wetlands if the landowner paid to improve government culverts miles away. The landowner refused and sued when the government denied the permit. A decade ago, in 2006, the trial court found a taking and awarded $477,000 in just compensation.

The Florida Supreme Court said the landowner could only challenge the unreasonable permit demand after giving in to it. The U.S. Supreme Court, though, ruled for landowners (1) that the Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction, and (2) that the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work. Koontz v. St. Johns River Water Mgmt. Dist., 133 S.Ct. 2586 (2013). 

Not long afterwards, in late 2013, the Florida Supreme Court punted the case back to the appellate court for further proceedings. The 5th DCA made short work of the remand:

Because our decision in Koontz IV is entirely consistent with the decision of the United States Supreme Court, we adopt and reaffirm Koontz IV in its entirety and affirm the judgment below. We deny Appellant's request to reopen the briefing. The constitutional issues decided by the United States Supreme Court were fully briefed here, and that Court's holding does not set forth a new legal construct with which we must re-analyze these issues. To the extent that Appellant seeks to brief the state law issues left open by the Supreme Court, we conclude that those issues were either disposed of in Koontz I or Koontz IV, or they were not preserved and presented in those proceedings. 

Yet again, in June 2014, the government asked the Florida Supreme Court to review the case. Over a year and a half later, the Florida Supreme Court has finally concluded this long saga, and the Koontz family will now return to the trial court to collect their just compensation. 

Which leads us to the difficult part for taxpayers: once the government made a bad decision, it doubled down for over twenty years. Now, taxpayers will be stuck not only with the bill for those bad decisions, but also the bill for the Koontz family's attorneys to prove that and the interest for the past two decades.

Why Exactions Law Should Bring Property Rights Advocates Cheer in the New Year

When even progressive scholars throw their hands up in the air over the strength of an area of property rights law, you know it's time for those of us who believe in strong property rights to take note. Professor Timothy Mulvaney at Texas A&M has done just that in his latest paper, forthcoming in the Harvard Environmental Law Review, "Legislative Exactions and Progressive Property." 

In it, Prof. Mulvaney covers the debate of whether the stringent judicial review of exactions provided to administrative exactions also applies to legislative exactions. The debate here is over what the government can demand from a landowner before approving a discretionary permit. In three important cases - Nollan, Dolan, and Koontz - the U.S. Supreme Court has held that the government must show that the demand is related to the harms that will be caused by the landowner's activities and that the demand is roughly proportionate to the ills the government seeks to remedy. 

The Supreme Court has explained that these rules apply no matter whether the government ultimately approves or denies a permit application and no matter whether the government demands money, road building, or anything else. Compared to other areas of property rights law, the Supreme Court has been remarkably clear that the landowners must be protected from such "unconstitutional conditions" by government. Governments, though, dislike such strict rules, and some have argued that these rules only apply to "administrative" demands, such as those by an executive or bureaucrat, and not to "legislative" demands, such as an ordinance that makes demands from everyone. As others have argued better than I can, the Takings Clause  and the Due Process Clauses of the Constitution do not distinguish between the branches of government in protecting landowners. 

In his article, Prof. Mulvaney essentially asks: should proponents of "progressive property" (read: fans of weak personal property rights) support making such a distinction for its practical consequences? He concludes:

Scholarly debate continues on the question of whether the heightened scrutiny of the Supreme Court’s decisions in Nollan and Dolan should be applicable in takings cases involving exactions that result from generally applicable legislation. Proponents of progressive conceptions of property have strong first-order reasons to support immunizing legislative exactions from such heightened scrutiny, reasons that are grounded in the checks and balances of democratic government, the likelihood of reciprocal advantages stemming from legislation, and an aversion to judicial usurpation of the legislative process. However, this Article raises the possibility that distinguishing between legislative and administrative exactions could produce two secondary effects that ultimately prove detrimental to progressive property’s aims. 

First, pressing the idea that administrative exactions are significantly more likely to abuse property owners than legislative exactions necessarily risks marginalizing case-by-case administration across the board, which could lead courts to incorporate the heightened scrutiny of Nollan and Dolan in takings cases involving administrative acts unrelated to exactions. Second, formally recognizing the legislative-administrative distinction could prompt governmental entities to shy away from administrative actions in favor of broad, unbending legislative measures to avoid heightened scrutiny, and deserting case-by-case administration can come with weighty social costs, given that it is administration that at least in certain instances can better respond to varied and unpredictable development impacts and invariably focuses attention on the affected parties’ human stories. 

It follows that both remaining options in the wake of Nollan, Dolan, and Koontz—subjecting legislative exactions to either a deferential level of takings scrutiny or the heightened standard to which administrative exactions currently are subject—pose significant complications for proponents of progressive conceptions of property. In the end, then, perhaps progressive property scholars might concentrate more readily on evaluating and advocating for other potential boundary principles in exaction takings law, or, even more dramatically, reinvigorate the long dormant and admittedly uphill battle to reverse Nollan and Dolan in their entirety.

That is, Constitutional questions aside, even proponents of weak personal property rights should be wary of making a distinction between administrative and legislative exactions. Why? Exactly because the Supreme Court has extended such clear, strong protections to administrative exactions. Those proponents would do better to focus their attention elsewhere, says Prof. Mulvaney.

Take heart, fans of private property rights: progress is being made. And that should bring you cheer in this New Year.

Opportunity Lost? Can Condemnation Blight be a Taking or a Substantive Due Process Violation?

Take note, property rights mavens: a takings claim is a separate and distinct claim from a substantive due process claim, and it's a mistake to treat them as coextensive. Fresh out of the Third District Court of Appeals is Teitelbaum v. South Florida Water Management District, No. 3D14-963 (Sep. 30, 2015), which focuses on condemnation blight and its relationship to inverse condemnation claims, but which may be more useful for its teachings on framing a property rights case.

A large group of plaintiffs sued the District for depressing the value of their properties that were long zoned as agriculture in order to pursue environmental goals related to the nearby Everglades. The District had bought up as much land as it could in the area, and when it could not acquire their properties, it passed a condemnation resolution. It did not make any attempts to actually acquire the properties, though. Slip Op. at 4. The plaintiffs further alleged that the District had prevented Miami-Dade County from rezoning the properties and that the District's acquisition of property in the area in a "checkerboard" fashion prevented the plaintiffs from developing their properties. Slip Op. at 5.

Because there was no physical taking and the plaintiffs had not applied for a development permit to test what could be permitted, the plaintiffs were stuck asserting a novel claim:

Likely recognizing that the Water District’s conduct would not constitute a taking under the traditional takings formulations, the Plaintiffs have not argued their claims under any ... well-established standards. Rather, the Plaintiffs urge this Court to recognize a new cause of action and adopt a new category of governmental activity that will result in a per se taking: condemnation blight. Under the Plaintiffs’ proposed formulation for a condemnation blight claim, a constitutional taking would occur when: (1) the government makes an official, publicly-announced declaration of its intent to condemn the property that goes beyond mere planning; (2) the government engages in some postannouncement unreasonable conduct, such as protracted delay in actual condemnation proceedings or interference with the property owner’s rights; and (3) the property suffers impairment of value or the property owner’s use and enjoyment of the property is disrupted. We decline to adopt this proposed standard as a per se taking.

Slip Op. at 10.

The Court's opinion isn't terribly surprising. In Florida, condemnation blight is about value: it precludes the government from depressing the value of a property before it subjects it to a de jure or de facto taking by calculating the property's value before it was depressed.Earlier this year, the court had held that condemnation blight does not itself give rise to a taking, although condemnation blight may be considered when the property is valued for the government's liability. On rehearing, the court withdrew that opinion and reissued one that held the same thing, with some further embellishment, explaining.

The interesting part about the opinion is in the court addressing the plaintiffs' focus on the District's "unreasonable" conduct rather than on the effect on their property." The court held that this "perspective confuses the aim of the Takings Clause, as the cases uniformly analyze the effect of the governmental actions and regulations on the property to determine whether they are so onerous as to constitute an ouster." Slip Op. 11.

Attentive readers of this blog might think this sounds more like a Substantive Due Process argument, since it focuses on the government's means rather than on its ends. And you would be right. However, the court declined to take that issue up on rehearing, deeming it to have been abandoned:

One of the appellants’ primary arguments in their motion for rehearing is that this Court should have analyzed their Due Process Clause claims as a distinct cause of action separate and apart from their Takings Clause claims under the authority of Tampa-Hillsborough County Expressway Authority v. A.G.W.S. Corp., 640 So. 2d 54, 57-58 (Fla. 1994). While there is an interplay between these two constitutional clauses and many takings claims are analyzed coextensively with due process claims, the appellants are correct that these claims can be pled as distinct causes of action when the allegations involve governmental actions or regulations on private property. Id. The alleged unreasonableness of the Water District’s actions, while irrelevant for a takings analysis, would certainly have been germane to the Plaintiffs’ substantive due process claim, and their argument would likely require further consideration had it been raised prior to the Plaintiffs’ motion for rehearing. In this case, however, the trial court treated both causes of action as coextensive and made no separate findings or rulings regarding the Plaintiffs’ due process claim. The appellants did not challenge that aspect of the trial court’s decision below, did not brief or argue that issue before this court—indeed, they did not even independently cite the A.G.W.S. decision in their initial or reply brief—and now raise this point of error for the first time in their motion for rehearing. As such, the appellants have waived that issue ... and we do not comment on the merits of that claim.

Slip Op. at 11-12. Too bad. We could have used some more guidance here in Florida on Substantive Due Process challenges to the government's unreasonable actions to prevent development. 

Lesson learned: figure out whether you're challenging the government's means or its ends early on in a property rights challenge.

Takings of Personal Property: The Importance of Framing A Case

Suppose a local government suddenly bans the production and sale of widgets because public opinion is that the widgets contribute to obesity. Although the land where the widget factory is located could be used for other purposes, the widgets are now worthless because they can’t be sold. And the widget maker has lost a great deal of the capital that was invested in the widget factory and equipment. Does the widget maker have an inverse condemnation claim? It may depend on whether his taking claim is framed as one for tangible or personal property, and not of real property. A claim that the real property had been taken would not likely be successful, since in this hypothetical, it could be used for other purposes.

Most readers will recall that there are physical takings and regulatory takings. Regulatory takings can be complete takings of all economically beneficial uses of a property—or they can be less, in which case courts use a balancing test to determine whether there has been a taking. Most of us in the environmental and land use arena are at least familiar with these concepts when it comes to real property. But what about tangible property?

As recent decisions from the U.S. Supreme Court and Florida courts make clear, tangible or personal property is also protected by the Fifth and Fourteenth Amendments. In Horne v. Department of Agriculture, 576 U.S. _, No. 14-275 (2015), which was decided earlier this year and has been bouncing around the courts for years, the U.S. Supreme Court examined a federal regulation requiring raisin farmers to set aside a percentage of each year’s crop for the government’s benefit—without payment. The Supreme Court held this to be a taking, tracing back the law of personal property takings back to the Magna Carta. Further, it held that because the taking was physical (as opposed to merely a regulatory burden), there was a per se taking, without regard to whether any claimed public benefit or the economic impact on the owner.

Florida's First District Court of Appeal has agreed in a case involving Florida’s oft-ridiculed “pregnant pig” constitutional amendment that banned the use of gestation crates in 2002. State v. Basford, 119 So. 3d 478, 480 (Fla. 1st DCA 2013). There, a farmer who had made substantial improvements to his property and based his pork business on use of the crates brought an inverse condemnation suit against the state. Explaining that “real property, tangible property, and intangible property may be the subject of a takings claim,” the court emphasized that the farmer had not alleged a taking of real property. Id. at 483. Rather, he claimed that the constitutional amendment had taken all economically viable use of his business assets—which included barns, animal crates, a feed mill, and lab equipment. Id. at 481, 483.

In a colorful concurrence, Judge Wolf saw this taking as just as if the government decided, in lieu of seizing a tractor, that it would allow a farmer to keep the tractor but forbid the owner from turning it on. Id. at 484. This explanation should give property owners some cheer, since it hints that, as in Horne, complete restrictions in use of personal property should be compared to physical takings. And it gives the attorney a simple framework for thinking about these kinds of problems.

Both these cases are instances of a takings case being successfully (and creatively) framed. In Horne, there was no way to frame a real property takings claim, and in Basford, the court itself recognized that a real property takings claim would not have had much of a chance of success. Inverse condemnation claims are almost always tricky, so why make a case any more difficult than it needs to be? It seems that Ben Franklin would agree that, as for others, for property rights attorneys, an ounce of prevention is worth a pound of cure.

Do Macroeconomic and Microeconomic Factors Matter in the Takings Analysis of Economically Beneficial Use?

Nope, according to Florida's Fifth District Court of Appeals. Ocean Palm Golf P'ship v. Flagler Beach, Case No. 5D12-4274 (May 30, 2014). Here's an excerpt:

We agree with Ocean Palm Golf that the government's refusal to act can constitute a total taking under some circumstances. See, e.g., Tollius v. City of Miami, 96 So.2d 122 (Fla.1957) (holding that the denial of property owner's request to rezone lots from residential to commercial was an abuse of discretion because the character of the area had changed greatly, rendering single-family residential use unsuitable); Kugel v. City of Miami, 206 So.2d 282 (Fla. 3d DCA 1968) (concluding that denial of rezoning request from residential to less restrictive zone constituted a taking of the property where what had been quiet residential area was now surrounded by tall buildings and parking lots). However, as the City correctly points out, the cases holding that a taking has occurred when the government refuses a request to change zoning, even though the character of the land surrounding the affected land has changed dramatically, are distinguishable from this case because, here, the character of the property surrounding the golf course parcel has remained largely the same for decades—it has long been used for single- and multifamily residences. Ocean Palm Golf replies that the changed circumstance on which it is relying is not a change to the surrounding properties, but rather is the change in market and demographic factors: the fact that golf courses across the country are no longer profitable due to the over-construction of golf courses, the aging golf population, and the increased expense involved in operating the golf course. We deem this to be a faulty argument, as it is based on Ocean Palm Golf's failed economic expectations. In effect, Ocean Palm Golf's position is that if a landowner buys a piece of property and the economy later takes a downturn, resulting in the frustration of the landowner's expectations, then the government must act as a guarantor for the landowner's investment after it becomes unprofitable due to, not the zoning regulations, but outside market forces. This is not the purpose of eminent domain law.

Id. at 16-17. I'll leave analysis for others, since the law firm of yours truly was on the case.

Koontz Wins on Exactions Again - Probably for Good

I'm a bit later to the game than usual on this one. On April 30, Florida's 5th DCA handed the Koontz family another big win in St. Johns River Water Management District v. Koontz, Case No. 5D06-1116 (Fla. 5th DCA Apr. 30, 2014). After the U.S. Supreme Court's landmark ruling last year, many speculated that there were a great many questions left open about exactions law, at least under state law. The 5th DCA disagreed:

Because our decision in Koontz IV is entirely consistent with the decision of the United States Supreme Court, we adopt and reaffirm Koontz IV in its entirety and affirm the judgment below. We deny Appellant’s request to reopen the briefing. The constitutional issues decided by the United States Supreme Court were fully briefed here, and that Court’s holding does not set forth a new legal construct with which we must re-analyze these issues. To the extent that Appellant seeks to brief the state law issues left open by the Supreme Court, we conclude that those issues were either disposed of in Koontz I or Koontz IV, or they were not preserved and presented in those proceedings.

This is good news for property owners in Florida. As the Pacific Legal Foundation writes:

The Court of Appeal’s decision is an important win, not just for the Koontz family, but for all Floridians who face extortionate demands in the permitting process. Under the Court of Appeal’s interpretation of the relevant Florida statute, property owners can be compensated for the lost use of their land during the entire period the land-use agency engages in its extortionate practice.

Both my fellow bloggers, Gideon Kanner and Robert Thomas, think the St. Johns Water Management District will seek review in the Florida Supreme Court. 

Maybe - but don't bet on it. Why? The Florida Supreme Court probably doesn't have jurisdiction to hear the case. The Florida Supreme Court has extremely limited jurisdiction compared to many other state high courts. Article V, section 3(b) of the Florida Constitution lays out its jurisdiction. None of the mandatory review provisions apply, and only two of the discretionary review provisions might apply:

(b) JURISDICTION.—The supreme court:
(3) May review any decision of a district court of appeal that expressly declares valid a state statute, or that expressly construes a provision of the state or federal constitution, or that expressly affects a class of constitutional or state officers, or that expressly and directly conflicts with a decision of another district court of appeal or of the supreme court on the same question of law.
(4) May review any decision of a district court of appeal that passes upon a question certified by it to be of great public importance, or that is certified by it to be in direct conflict with a decision of another district court of appeal.

As for article V, section 3(b)(3), there is no declaration a state statute is valid, there is no class of officers expressly affected, and no other district court of appeal has ruled on this issue in a way that directly conflicts with the 5th DCA's opinion. The only potential "in" for the St. Johns Water Management District would be to argue that the 5th DCA "expressly construes a provision of the state or federal constitution." But that's not really what the 5th DCA did, its re-adoption of St. Johns River Water Mgmt. Dist. v. Koontz, 5 So. 3d 8 (Fla. 5th DCA 2009) [Koontz IV] notwithstanding. Here, the 5th DCA is just saying that all issues have been disposed of previously, and to the extent they weren't, they haven't been preserved. You don't get Florida Supreme Court review for that.

As for article V, section 3(b)(4), it's almost impossible to imagine the 5th DCA granting a motion by the St. Johns Water Management District like it did five years ago in Koontz IV. There, the court had wrestled with what it believed was an undecided questions of state and federal law. Here, on the other hand, the court writes "Because our decision in Koontz IV is entirely consistent with the decision of the United States Supreme Court, we adopt and reaffirm Koontz IV in its entirety and affirm the judgment below." And again, no other district court of appeal has ruled on this issue in a way that directly conflicts with the 5th DCA's opinion.

Is there a chance of a rehearing? Sure, there's always a chance, but I certainly wouldn't want to be the attorney who files a motion for rehearing in a case that the 5th DCA thinks is this open-and-shut. If I were the Koontz family, I'd feel pretty good right now. And as a property owner in Florida, I feel a little bit better.

The Aftermath of Koontz - An Update and Review of New Scholarship

What's going on with Koontz, you might be wondering? Koontz v. St. Johns River Water Mgmt. Dist., 133 S. Ct. 2586 (2013). For readers just joining us, this was the exactions case where the U.S. Supreme Court ruled for landowners (1) that the Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction, and (2) that the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work.

For one, scholars are starting to crank out some interesting work on the case and its future effects:

• In Two Steps Forward for the 'Poor Relation' of Constitutional Law: Koontz, Arkansas Game & Fish, and the Future of the Takings Clause, Prof. Ilya Somin at George Mason describes how Koontz helped property rights enjoy a "modest revival" in the last term of the U.S. Supreme Court.
• In Koontz: The Very Worst Takings Decision Ever?, Professor Echeverria at Vermont, who has never seen a takings decision that he found supportable, discusses why he finds nothing redeeming in Koontz. Exaggerate much?
• In Fees, Expenditures, and the Takings Clause, Professor Pidot at Denver undertakes a rather strained analysis to find that Koontz's application of the Nollan-Dolan exactions test should only extend those monetary exactions "that require a permit applicant to pay money to the government"(which he calls a fee), but not to "those that require a permit applicant to engage in activities that cost money, but do not transfer money to the government" (which he calls an expenditure). He worries "that much of federal environmental law could become subject to" the Nollan-Dolan exactions test. Even if he is right, which I doubt, is there anything really that wrong with requiring that a permit regulation requiring the expenditure of money to be reasonably related to the purpose of the permit and be roughly proportionate the social harm of the permit?
• In Exactions Creep, Professors Fennell and Penalver at Chicago present a thoughtful analysis presenting the U.S. Supreme Court's exactions jurisprudence as the Court's attempt to deal with the problem of protecting property from the state with the power of the state. They argue - as I did in my amicus brief supporting the property owners in Koontz - that the Due Process Clause is the best way to balance the concerns of the government with property owners' rights.
• In Nollan and Dolan and Koontz – Oh My! The Exactions Trilogy Requires Developers to Cover the Full Social Costs of Their Projects, But No More, Christina Martin at the Pacific Legal Foundation, argues just what I have been saying since I first read Koontz: "Koontz, like Nollan and Dolan, recognizes that government may legitimately require landowners to carry their own weight, mitigating their development plans so that they do not impose costs on their community. But government cannot use the permitting process to coerce landowners into giving up more. That simple rule will not end land-use planning or permit negotiations."

Which brings us to the next update. Recall that the U.S. Supreme Court punted Koontz back to the Florida Supreme Court. Well, the Florida Supreme Court just punted the case back to the lower appellate court for further proceedings. The docket shows:

In light of the decision of the United States Supreme Court in Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013), this case is hereby remanded to the Fifth District Court of Appeal for further proceedings consistent with that decision.

Looks like the Koontz's long battle continues.

Early Roundup of Koontz Commentary

Earlier today, I wrote about the win for landowners in Koontz v. St. Johns River Water Mgmt. Dist., No. 11-447 (June 25, 2013). On reading the opinion, my favorite line so far:

Extortionate demands for property in the land use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation. As in other unconstitutional conditions cases in which someone refuses to cede a constitutional right in the face of coercive pressure, the impermissible denial of a governmental benefit is a constitutionally cognizable injury.

Here's a roundup of commentary thus far:

• Paul Beard with the Pacific Legal Foundation (who argued the landowner's case) offers a great plain-language summary of the decision.
• Brian Hodges at the Pacific Legal Foundation offers more musings on the case.
• Robert Thomas, as always, has a good initial analysis of the high points of the case. His take? The Court was "right on the money," and it's "growing weary of silly procedural arguments." 
• Legal Planet writes that while the effects of the decision on governments may not be clear, "[w]hat is clear is that property owners have achieved a clean sweep in the three Takings Clause cases decided by the Supreme Court this Term."
• Eric Giunta, for Sunshine State News, grudgingly reports that Koontz continues to soldier on after 20 long years.
• Daniel Fisher at Forbes points out that the unconstitutional conditions doctrine cuts both ways, since the Court pointed to precedent that most conservatives don't care for.
• Tejinder Singh at SCOTUSblog probably has a good point: "The decision has the potential to significantly expand property-owners’ ability to challenge local land use regulations and fees, though it is not clear that this expansion will result in a significant number of successful challenges.
• Prof. Rick Hills (NYU) doesn't care much for the opinion:

So how will the federal courts eventually exit this quagmire? The answer might be remedial equivocation. Nollan-Dolan has so far mostly been a dead letter in zoning litigation, because the remedy in lower courts has usually (although not universally) been restoration of the pre-exaction status quo in which the developer is unconditionally denied the desired permission to build. (See Goss v. City of Little Rock, (8th Cir. 1996), for an example of how this remedy guts the right, or read Mark Fenster's Failed Exactions). Such a remedy means that developers will rarely sue, and the ones that do sue get nothing for their troubles. Koontz did nothing to disturb this remedial equivocation, declaring that "[b]ecause petitioner brought his claim pursuant to a state law cause of action,the Court has no occasion to discuss what remedies might be available for a Nollan/Dolan unconstitutional conditions violation either here or in other cases" (Slip op. at 11). 

This may be the most important sentence in the opinion -- a hint at the SCOTUS's "exit strategy" when developers start challenging plazas, parks, playgrounds, and the like. San Remo Hotel v. San Francisco severely limits developers' power to bring a federal takings claim in federal court: If state courts can continue to define the Nollan-Dolan remedy as invalidation of the illegal condition and denial of the zoning permission, then Koontz will be a practical dead letter. And a good thing, too, if one cares about federalism and believes, as I do, that Nollan-Dolan was always a quixotic expedition to control land-use decisions far too numerous and fact-specific to be amenable to federal judicial policing.

• But Prof. Ilya Somin (George Mason) begs to disagree: "Overall, Koontz is the most important victory for property rights in the Supreme Court for a long time." That's because "Koontz addresses two major issues that previous Supreme Court cases had not covered: Whether the requirements of Nollan and Dolanapply when the government denies a permit, as opposed to issuing it with attached conditions, and whether those requirements apply to cases where the burden imposed by the government is an obligation to finance off-site “mitigation” as opposed to requiring the property owner to allow a physical invasion of his land. The Supreme Court majority answered “yes” to both questions. I think they got both of them right."

U.S. Supreme Court Says Government Demands for Property Must Satisfy Exactions Law, Even Where Permit is Denied and Where Demands are for Money

In an important win for landowners everywhere, the U.S. Supreme Court has ruled for landowners in the exactions case I've been writing about for quite some time. Koontz v. St. Johns River Water Mgmt. Dist., No. 11-447 (June 25, 2013). Recall that this is the case where Koontz asked the Court to establish (1) that the Nollan-Dolan exactions test applies even where a permit is denied because an applicant rejects an exaction, and (2) that the Nollan-Dolan exactions test applies to exactions other than real property, such as where a permit applicant is required to pay for work. My colleague Dave Smolker and I submitted an amicus brief in support of the property owners in this case.

The Court agreed with Koontz on both points, overturning the decision of the Florida Supreme Court. I'll post some analysis once I've had time to digest the opinion. In the meantime, here are some excerpts. On the first question:

The principles that undergird our decisions in Nollan and Dolan do not change depending on whether the government approves a permit on the condition that the applicant turn over property or denies a permit because the applicant refuses to do so. We have often concluded that denials of governmental benefits were impermissible under the unconstitutional conditions doctrine. See, e.g., Perry, 408 U. S., at 597 (explaining that the government “may not deny a benefit to a person on a basis that infringes his constitutionally protected interests” (emphasis added)); Memorial Hospital, 415 U. S. 250 (finding unconstitutional condition where government denied healthcare benefits). In so holding, we have recognized that regardless of whether the government ultimately succeeds in pressuring someone into forfeiting a constitutional right,the unconstitutional conditions doctrine forbids burdening the Constitution’s enumerated rights by coercively withholding benefits from those who exercise them. 

A contrary rule would be especially untenable in this case because it would enable the government to evade the limitations of Nollan and Dolan simply by phrasing its demands for property as conditions precedent to permit approval. Under the Florida Supreme Court’s approach, a government order stating that a permit is “approved if ”the owner turns over property would be subject to Nollan and Dolan, but an identical order that uses the words “denied until” would not. Our unconstitutional conditions cases have long refused to attach significance to the distinction between conditions precedent and conditions subsequent. See Frost & Frost Trucking Co. v. Railroad Comm’n of Cal., 271 U. S. 583, 592–593 (1926) (invalidating regulation that required the petitioner to give up a constitutional right “as a condition precedent to the enjoyment of a privilege”); Southern Pacific Co. v. Denton, 146 U. S. 202, 207 (1892) (invalidating statute “requiring the corporation, as a condition precedent to obtaining a per- mit to do business within the State, to surrender a right and privilege secured to it by the Constitution”). See also Flower Mound, 135 S. W. 3d, at 639 (“The government cannot sidestep constitutional protections merely by rephrasing its decision from ‘only if’ to ‘not unless’”). To do so here would effectively render Nollan and Dolan a dead letter.

On the second question:

Respondent’s argument rests on a mistaken premise. Unlike the financial obligation in Eastern Enterprises, the demand for money at issue here did “operate upon . . . an identified property interest” by directing the owner of a particular piece of property to make a monetary payment. Id., at 540 (opinion of KENNEDY, J.). In this case, unlike Eastern Enterprises, the monetary obligation burdened petitioner’s ownership of a specific parcel of land. In that sense, this case bears resemblance to our cases holding that the government must pay just compensation when it takes a lien—a right to receive money that is secured by a particular piece of property. See Armstrong v. United States, 364 U. S. 40, 44–49 (1960); Louisville Joint Stock Land Bank v. Radford, 295 U. S. 555, 601–602 (1935); United States v. Security Industrial Bank, 459 U. S. 70, 77–78 (1982); see also Palm Beach Cty. v. Cove Club Investors Ltd., 734 So. 2d 379, 383–384 (1999) (the right to receive income from land is an interest in real property under Florida law). The fulcrum this case turns on is the specific parcel of real property.2 Because of that direct link, this case implicates the central concern of Nollan and Dolan: the risk that the government may use its substantial power and discretion in land-use permitting to pursue governmental ends that lack an essential nexus and rough proportionality to the effects of the proposed new use of the specific property at issue, thereby diminishing without justification the value of the property. 

In this case, moreover, petitioner does not ask us to hold that the government can commit a regulatory taking by directing someone to spend money. As a result, we need not apply Penn Central’s “essentially ad hoc, factual inquiry],” 438 U. S., at 124, at all, much less extend that“already difficult and uncertain rule” to the “vast category of cases” in which someone believes that a regulation is too costly. Eastern Enterprises, 524 U. S., at 542 (opinion of KENNEDY, J.). Instead, petitioner’s claim rests on the more limited proposition that when the government commands the relinquishment of funds linked to a specific,identifiable property interest such as a bank account or parcel of real property, a “per se [takings] approach” is the proper mode of analysis under the Court’s precedent. Brown v. Legal Foundation of Wash., 538 U. S. 216, 235 (2003).

Defending against Enforcement Actions with the Takings Clause: Good News for Agriculture and Property Owners in U.S. Supreme Court

What's that, you say? The U.S. Supreme Court has just decided a second Takings Clause case this term, unanimously--and in the property owner's favor?

Indeed. In today's opinion by Justice Thomas, the Supreme Court again ruled favorably for property owners. Horne v. U.S. Department of Agriculture, No. 12-236 (June 10, 2013). Recall that this is the case where raisin producers raised the Takings Clause as a defense to the  imposition of fines for a New Deal agricultural marketing law. In response, the government argued that the raisin producers can try their hand at bringing a separate lawsuit but cannot use it as a weapon against government enforcement. The Ninth Circuit bought the government's argument, but the U.S. Supreme Court did not.

While carefully noting that it was not ruling on the merits of the raisin producers' takings claim, the Supreme Court held that a "takings-based defense may be raised by a handler in the context of an enforcement proceeding initiated by the USDA under §608c(14)." Slip Op. at 14. The practical result of this holding is that the raisin producers will get to assert their takings defense below. So, their saga continues, but as in a case decided last year, Sackett v. EPA, the good news is that landowners continue to open the door to judicial review of abusive government processes. That is, the takings clause has been strengthened as a weapon for the property owner to use when the government brings enforcement actions against the property owner.

There's no media coverage of the case yet, but I'll update you when it becomes available. In the meantime, to catch up on the background of this case, see my archives. Stay tuned. We're still waiting on a decision in Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012), which has some theoretical similarities to Horne. Here's hoping property owners go three-for-three at the U.S. Supreme Court this term.

First Quarter 2013: Recent Florida Environmental and Land Use Case Law

The Florida Bar's Environmental and Land Use Law Section has posted its column on the environmental and land use cases in Florida that you need to know about for the first quarter of 2013. This is the column that I formerly coauthored. There are a number of interesting cases this quarter:

• Galleon Bay Corp. v. Bd. of County Comm’rs, No. 3D11-1296, 2012 WL 6027768 (Fla. 3d DCA Dec. 5, 2012). As I discussed in an early post, "in determining whether a landowner’s investment-backed expectations are met in an inverse condemnation case, trial courts should not factor commonly owned but separately platted subdivisions in the analysis."

• Bd. of Supervisors v. Fla. Dep’t of Transp., 103 So. 3d 218 (Fla. 4th DCA 2012). I also covered this case previously. In an inverse condemnation proceeding, attorneys’ fees must be awarded based on all work relating to the suit. This includes work performed before the date a suit is filed. 

• Bischoff v. Walker, No. 5D11-2194, 2012 WL 6213271 (Fla. 5th DCA Dec. 14, 2012). "Where a deed references a property boundary defined by a natural monument, such as a canal or lake, Florida law follows the general rule that a rebuttable presumption exists in favor of finding the boundary at the centerline of the monument, absent evidence of contrary intent."

• Jass Properties, LLC v. N. Lauderdale, 101 So. 3d 400 (Fla. 4th DCA 2012). "Florida law does not expressly prohibit a municipality from declining to contract with tenants for utility services and instead restricting service agreements to property owners."

• Clark v. Bluewater Key RV Ownership Park, No. 3D11-884, 2012 WL 6602657 (Fla. 3d DCA Dec. 19, 2012). "An association of property owners at a recreational vehicle park is not subject to regulations of homeowners’ associations under chapter 720, Florida Statutes, where the park prohibits any permanent or semi-permanent structures intended or used as permanent living quarters."

• Florida Attorney General Opinion 12-32 (2012). "A proposed county ordinance that would condition acceptance of an application for rezoning on the consent of a specified number of property owners may be an illegal delegation of legislative power." 

My archives have about two years' worth of analysis and these summaries on the new environmental and land use cases, for those who are interested.

Your Raisins or Your Life: Recapping the Horne Oral Argument before the U.S. Supreme Court

Last week, the U.S. Supreme Court heard oral arguments in this term's third property rights case, which could have important implications for a variety of agriculture interests. Horne v. U.S. Department of Agriculture, No. 12-236 (argued Mar. 20, 2013). This is the case where raisin producers raised the Takings Clause as a defense to the government's imposition of fines for a New-Deal-era agricultural marketing law. The government, on the other hand, has argued that the raisin producers can try their hand at bringing a separate lawsuit but cannot use it as a weapon against government enforcement.

Lyle Denniston at SCOTUSblog recaps the strange and lively arguments:

A portentous constitutional issue hung in the air Wednesday as the Supreme Court examined government seizures of private property, and everybody seemed to want to have it decided. But it was almost totally lost in a fog raised by a perplexing array of minutiae about how the government tries to push up the price of raisins. The cloud was so thick that even a highly respected professor and former judge misspoke twice in describing his clients’ role.

***

In one of the points Wednesday when a bit of clarity seemed within reach, Justice Stephen G. Breyer (who often asks questions with multiple layers of complexity) suggested simply that the raisin program is either constitutional or it’s not, and “it rather seems to me that it is not a right fit for the Court of Claims. Am I wrong about that?”

The Wall Street Journal gets the implications right for the average Joe:

Taxpayers are wary of government programs that confiscate private property—witness outrage over the 2005 Supreme Court Kelo decision that let government take homes via eminent domain for private use. Now the High Court is considering another program that orders citizens to surrender their assets—or else.

U.S. raisin farmers have been required for nearly 80 years to turn over a share of their crops to the federal government every year, often at below-market prices. Last week the Supreme Court heard oral argument on whether, in the words of Justice Elena Kagan, this annual raisin heist is "a taking, or just the world's most outdated law." 

*** 

For small businesses, these routine confiscations are a special burden because so few can afford to defend their property rights. Similar federal marketing orders cover produce including apricots, avocados, kiwis and olives. The effect is to impose a tax on farmers. 

As Justice Antonin Scalia put it, so it's "your raisins or your life, right? . . . you don't have to pay the penalty if you give us the raisins." No, Mr. Palmore explained. "They have to give the raisins . . . It's not a choice." Which is why the Justices should find these takings to be unconstitutional.

Seems like The Onion picked a good case to parody, doesn't it?

Those who like to read the tea leaves would do best by checking out Robert Thomas's blow-by-blow analysis of the arguments. His prediction?

We're predicting a narrow ruling from the Court vacating the Ninth Circuit's amended opinion, holding that the issue is not "jurisdictional," and sending the case back to the Ninth Circuit for further consideration of the Hornes' request for en banc review. The multiple concessions from USDA's counsel are probably going to be too much to overcome, and a narrow remand would allow the Court to resolve the case without getting too far into the weeds about "handlers" and "producers," issues that no Justice seemed ready to tackle, and without getting into the merits of the takings issue.

In his preview of the Horne case, Robert Thomas did a good job of connecting Horne to a case that's near and dear to this author's heart, Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). I've written about the Koontz case many times, and as my readers know, I co-authored an amicus brief in support of the landowner-petitioner in that case. As I've discussed before, Horne, like Koontz, raises a fundamental question about the Takings Clause: does it have any power to prevent unconstitutional threats? Or must a property owner roll over to the government's extortion and only then go to court?

What are the Timing Requirements of a Bert Harris Act Claim? New Decision Reinforces Need for Florida Supreme Court Review

Under a recent decision about the Bert Harris Act, property owners in some parts of the state will receive stronger protections than in others. Wendler v. St. Augustine, 5D12-2563, 2013 WL 1007290 (Fla. 5th DCA 2013). The case muddies the waters for the timeline of when a claim under the Act must be presented to a government entity before a lawsuit is filed. A local news outlet reports the background:

Between 1998 and 2006, the Wendlers purchased eight parcels in St. Augustine; including seven structures built between 1910 and 1930 located in a National Register of Historic Places District. The parcels are subject to city ordinance, section 28-89, City of St Augustine Municipal Code, which regulates the demolition or relocation of certain historic structures—the Wendlers say that they were aware of the ordinance at the time they purchased the property.

But, in 2002, the City revised the ordinance by expanding the list of regulated structures to include homes at least 50 years old. The amendment also extended the waiting period for a demolition permit from six months to one year. In 2005, the City again amended the ordinance, authorizing the City’s Historic Architectural Review Board to deny demolition or relocation requests indefinitely for three types of structures, including those considered “contributing property to a National Register of Historic Places District”. On December 5, 2007, St Augustine’s Historic Architectural Review Board first applied the twice-amended ordinance to the Wendler property and denied the demolition permits.

In a press release I received by email from the Coalition for Property Rights, the attorney representing the property owners explains in more detail:

In 2007, the Wendlers applied for “Certificates of Demolition” regarding seven buildings located on their private property. The buildings, originally built between 1910 and 1930, have been used as apartments rented primarily to Flagler College students. With the passage of time, the buildings have become uneconomic due to the extraordinary costs of upkeep and Flagler College’s recent construction of student dormitories 

The Wendlers wanted to demolish or relocate the old buildings to make way for a new Henry Flagler-styled hotel they wished to develop at the gateway of the City along King Street. The City denied the Wendlers’ request on historic preservation grounds, on a general finding that removal of buildings would be detrimental to the historic and architectural character of the City. 

This was surprising given that the City had earlier approved the demolition of houses next door for Flagler College’s construction of lighted tennis courts and also designated the King Street “entry corridor” as “blighted” and in need of redevelopment by private enterprise. The City showed little concern that the Wendlers were losing money on their property when left with the present use of the old buildings as apartments. For the public good, the City expected the Wendlers to continue with their economic hardship as part of historic preservation. 

To understand the case, one has to look through the City’s smokescreen to really see what is going on. Of 162 applications for demolition made in a 10-year period, the City of St. Augustine denied only 7 of those applications indefinitely – those 7 applications were the ones made by the Wendlers. Incredible as it may sound, the City argued that the Wendlers should have known that their applications would be denied when the City approved all of the other 152 applications. 

The trial court judge threw out the Wendler's suit, reasoning they had not presented their claim in a timely manner to the local government before suing. The 5th DCA reversed, with two important holdings concerning when a suit is properly brought under the Bert Harris Act. 

First, the 5th DCA upheld Citrus County v. Halls River Development, Inc., 8 So.3d 413 (Fla. 5th DCA 2009). That case held that the impact of governmental regulations can sometimes be determined when a government simply adopts the changes to its laws and regulations, rather than when they are specifically applied to the property owner. The 5th DCA implied that its decision conflicts with the 1st DCA, which has held to the contrary that “until an actual development plan is submitted, a court cannot determine whether the government action has ‘inordinately burdened’ property." M & H Profit, Inc. v. Panama City, 28 So. 3d 71, 76 (Fla. 1st DCA 2009). This holding probably only applies to the pre-2011 Bert Harris Act. In 2011, it was amended to provide that a law or regulation is only applied upon enactment if notice is provided to affected property owners.

Second, the 5th DCA held that the statute of limitations for filing a Bert Harris Act claim in court is within 4 years of the government’s act. Section 70.001(11), it held, is a pre-suit condition merely requiring that a claim be presented to a local government within 1 year of its act. The court also agreed with Russo Assocs., Inc. v. Dania Beach Code Enforcement Bd., 920 So. 2d 716 (Fla. 4th DCA 2006), that the law's tolling provision for other legal relief applies to both the pre-suit notice condition and to the filing of the claim in court. The 5th DCA implied that its decision conflicts with the 2d DCA, which held to the contrary that the Bert Harris Act "provides that the action must be filed within one year of the application of the ordinance to the subject property." Turkali v. Safety Harbor, 93 So.3d 493, 494 (Fla. 2d DCA 2012). I posted previously on the Turkali decision. This holding is important because it applies to cases both before and after the 2011 amendments to the Bert Harris Act.

With the 5th DCA recognizing that its decision conflicts with two other district courts of appeal, I wouldn't be surprised to see this one show up at the Florida Supreme Court. Until then, the safe thing to do is the present claims to government entities within 1 year of the government's action, period.

A Jargon-Free Property Rights Update for Forest Landowners

Thanks to the Southeastern Wood Producers Association for inviting me to give its membership a "Forestry and Property Rights Legal Update" in the latest edition of its newsletter, Out of the Woods. It's excerpted below:

Forestry and Property Rights Legal Update

In recent months, there have been several legal developments that property owners and those involved in forestry should know about. Having some familiarity with these legal issues can be an important service to the landowners that members of this Association work with.

You’ve probably heard about the forest roads lawsuit, Decker v. NEDC, argued before the U.S. Supreme Court in early December. At stake is whether logging roads and ditches need federal stormwater permits. Since the 1970s, EPA has agreed they do not with its “Silvicultural Rule.” When environmentalists sued in Oregon, a federal court ruled that EPA was incorrect. Last year, Congress blocked EPA from developing the new permit while the case was on appeal.

The case before the Supreme Court looked strong. EPA, however, complicated things by issuing a new rule intended to replace the faulty Silvicultural Rule on the eve of the case being heard. While the new rule helps the forestry community by generally not requiring permits for logging roads and ditches, the Supreme Court seemed concerned about this new development. The Supreme Court should rule by July. For now, it has asked the parties for further information about EPA’s new rule. The only real solution here is congressional action, so talk to your U.S. representative and senators about this issue.

Two important property rights cases have not been in the news quite as much. One case, Koontz v. St. Johns River Water Management District, questions bargaining practices that governments use for land-related permits. There, the government agreed to issue a permit to fill wetlands if the landowner paid to improve government culverts miles away. The landowner refused and sued when the government denied the permit. The Florida Supreme Court said the landowner could only challenge the unreasonable permit demand after giving in to it.

The outcome of Koontz will be important to all landowners—even average homeowners and agricultural landowners. The growth in government at all levels means that every landowner in the country is now subject to a complex permitting regime. Imagine a local government that requires you to buy $25,000 in new library books in order to get a permit to build a new deck. Or a state agency that requires a timberlands owner in the Panhandle to build a nature walk in South Florida to get a permit to build a logging road. The Supreme Court is being asked to decide how far these outrageous requests can go. I was fortunate to be involved in this case. I watched the oral arguments in Washington, D.C. in January and am cautiously optimistic that the Justices will support the landowner.

The other recent property rights case before the Supreme Court has already been decided—and it was a big win for landowners and forestry. In Arkansas Game and Fish Commission v. United States, the Supreme Court held that a landowner could be compensated where the federal government’s temporary flooding of the property destroyed millions of dollars of standing timber.

From the beginning of the Republic, governments have tried to get out of paying compensation for property they take by arguing it was for the public good. The Supreme Court once again rejected this argument. The Constitution, it said, requires the government to pay landowners for damages to property, no matter whether the government had a good reason for its actions or not.

We must be our own advocates for property rights and the sound environmental practices used in forestry. As these cases illustrate, we must remain diligent in working to protect our property rights and livelihoods. The next time you talk to a landowner, tell them about these recent developments. Remind them about the legal struggles that our industry faced and is still facing out West because our laws prioritize the Northern Spotted Owl above people. It could happen here if we are not mindful.

Jacob T. Cremer is an attorney at Bricklemyer Smolker, P.A., in Tampa. His practice focuses on property rights, environmental, and land use law. He grew up in a family that has been involved in forestry in Florida for many generations. Follow the developments on these cases and others at his blog, The Florida Land Environment.

The Constitutional Issues at Stake in Koontz, Simplified

Many thanks to the newsletter for the Constitutional Law Committee of the American Bar Association's Section of Environment, Energy, and Resources, which recently published my article about Koontz v. St Johns River Water Management District, No. 11-1447 (argued Jan. 15, 2012). I sought to provide another plain-language summary of the case, although more to a legal audience than my last summary. Here it is:

U.S. Supreme Court Hears Important Florida Exactions Case

These days, Florida is a hotbed of property rights litigation. Three years ago, Florida was defending its beach renourishment program before the U.S. Supreme Court. Stop the Beach Renourishment, Inc. v. Fla. Dep't of Envtl. Prot., 130 S. Ct. 2592 (2010). That case broke new ground when a plurality of justices acknowledged that a court can take property, just as the legislative and executive branches can.

Now that the U.S. Supreme Court has heard Koontz v. St. Johns River Water Management District, No. 11-1447 (cert. granted Oct. 5, 2012, argued Jan. 15, 2013), environmental attorneys, constitutional scholars, and land use planners are wondering if Florida will again be on the forefront of takings law. This could be the most important decision in the world of environmental and land use permitting in years. It could draw into question common bargaining practices by governments when requesting conditions in exchange for development permits.

In the development approval process, governments commonly require a dedication of real property to mitigate adverse impacts. But what if the request is for cash or for services? What if the request is unreasonable, and the landowner cannot use the property?

Background

The Takings Clause of the Fifth Amendment to the U.S. Constitution ensures that private property cannot “be taken for public use, without just compensation.” The Takings Clause was intended to bar government from forcing individuals from bearing public burdens alone. Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 548 (2005). Early cases focused on physical invasions of property. As the regulatory state grew in the twentieth century, the U.S. Supreme Court began to recognize that government regulation of private property can sometimes be so onerous that it is tantamount to the government appropriating the property. Id. An exaction is a government requirement to donate something in exchange for the right to develop property. Oftentimes, this is a requirement to dedicate real property. Generally, the government cannot force landowners to give up the right to exclude others from property in return for the ability to develop it. It can, however, require mitigation of adverse development impacts. The U.S. Supreme Court has given some limited guidance on how to determine whether an exaction passes constitutional muster:

1. There must be an “essential nexus” between the exaction and the interest that the exaction is advancing. Nollan v. Cal. Coastal Com., 483 U.S. 825, 837 (1987).
2. There must be a “rough proportionality” in both nature and extent between the exaction and the impact of the proposed development. Dolan v. Tigard, 512 U.S. 374, 391 (2005).

Nollan and Dolan both addressed exactions of easements for public access. The U.S. Supreme Court left open whether the Nollan-Dolan test applied to exactions not involving real property, such as exactions for money or other personal property. Courts have differed on this question, leading to confusion among landowners, planners, regulators, and government officials.

The Koontz Cases

In St. Johns River Water Management District v. Koontz, 77 So. 3d 1220 (Fla. 2011), the Florida Supreme Court declined to recognize an exaction under U.S. Supreme Court precedent. Koontz  had owned his property since 1972. He been trying to develop his property since 1994, when he had applied to the District for a permit to develop his property. All but 1.4 acres of the 14.2-acre property were in a Riparian Habitat Protection Zone. Koontz only wanted to develop 3.7 acres of the property, but he would have to fill 3.4 acres of wetlands to do so.

The District agreed to grant the permit on two conditions. First, the District required that Koontz deed the remainder of his property into a conservation area, which he agreed to do. Second, the District required that Koontz perform offsite mitigation several miles by replacing culverts and plugging drainage canals on District-owned properties seven miles from his property, which Koontz refused.

When the District then denied the permit, Koontz sued in state court, arguing that the District’s offsite mitigation condition was an unconstitutional exaction because it violated the Nollan-Dolan test. The case bounced around between the trial court and the intermediate appellate court for years, producing some important takings jurisprudence in Florida. Ultimately, the trial court found that the District had taken Koontz’s property through an unconstitutional exaction because the condition was not related to the impacts of his project. The intermediate appellate court affirmed.

The Florida Supreme Court reversed, holding there was no taking. The court explained that the Nollan-Dolan test only applied to exactions of real property, where a permit was actually issued imposing the onerous exaction. The court acknowledged a line of cases applying the Nollan-Dolan test beyond real property exactions, but it held that these cases went beyond the U.S. Supreme Court’s decisions. The court also pointed to Monterev v. Del Monte Dunes at Monterev, Ltd., 526 U.S. 687 (1999), and Lingle v.Chevron U.S.A., Inc., 544 U.S. 528 (2005), to support its conclusion that the Nollan-Dollan only applies when the government actually issues the permit that is sought because only then is the owner’s property interest subject to dedication.

Finally, even though the court denied the property owner’s claim, it expressed a public policy concern for other developers and landowners. It worried that “agencies will opt to simply deny permits outright without discussion or negotiation rather than risk the crushing costs of litigation. Property owners will have no opportunity to amend their applications or discuss mitigation options because the regulatory entity will be unwilling to subject itself to potential liability. Land development in certain areas of Florida would come to a standstill. We decline to approve a rule of law that would place Florida land-use regulation in such an unduly restrictive position.” Koontz, 77 So. 3d at 1231.

Consequently, the Florida Supreme Court held there was no taking because (1) no permit was ever issued, (2) the exaction did not demand real property, and (3) public policy precluded expansion

The U.S. Supreme Court Hears Koontz

On October 5, 2012, the U.S. Supreme Court granted certiorari, and it heard oral arguments on January 15, 2013. Koontz asks the Court to establish:

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 even where a permit is denied because an applicant rejects an exaction.

Koontz argues that the Court does not have to stretch far to make such a ruling, as it has held in other contexts that government may not withhold discretionary benefits on the condition that the beneficiary surrender a constitutional right. Koontz also argues that both of these issues need to be settled by the Court because the law on these issues has developed such a split across the country that courts facing the issue are having to choose a side, necessitating clear guidance from the Court.

The District, on the other hand, argues that the Court does not have jurisdiction because of Koontz only brought state law claims in state courts (not federal claims). Echoing the Florida Supreme Court, the District also argues it did not exact or take anything because it never issued a permit or collected an exaction.

Early on, there were reasons to think that this case would be an important case for planners and land use lawyers to watch. First, the Pacific Legal Foundation, which is representing Koontz, has shown a knack for litigating environmental and property rights cases before the U.S. Supreme Court, having participated in more than half a dozen landmark decisions. Indeed, it argued and won Nollan, and in March of this year, it won Sackett v. EPA, 566 U.S. __ (2012), which gave property owners the right to take EPA to court over a compliance order dealing with wetlands. Second, this case is positioned well as a vehicle for the Court’s property-rights advocates, as it seems to present the review of a clean issue of law, rather than a messy fact-specific or jurisdictional fight. Justices Scalia, Kennedy, and Thomas have shown an interest in the past in the timing of permit conditions. See Lambert v. San Francisco, 529 U.S. 1045, 1048 (2000) (dissenting from denial of certiorari).

Reading the tea leaves of oral arguments at the Supreme Court is always a dangerous business. That said, I and others have made several observations. First, Justice Scalia, who the landowner almost certainly needs to win a majority, seemed critical of whether anything had actually been taken. Second, while a majority of the Justices appeared at least somewhat sympathetic to the landowner’s plight, there was little agreement amongst them in terms of whether there was a constitutional harm and, if so, what the remedy to it should be. Finally, the reach of the unconstitutional conditions doctrine, which Nollan, Dolan, and Lingle indicate is the origin of exactions law, took center stage. This notoriously murky doctrine stands for the proposition that [a]cts generally lawful may become unlawful when done to accomplish an unlawful end, and a constitutional power cannot be used by way of condition to attain an unconstitutional result.” Frost v. R.R. Comm'n of Cal., 271 U.S. 583, 598-99 (1926). The Supreme Court has traditionally struggled with appropriate breadth of this doctrine, and they appear to be struggling with it in this case, as well.

Jacob T. Cremer is an attorney at Bricklemyer Smolker, P.A., in Tampa, Florida. His practice focuses on property rights, environmental, and land use law. He assisted counsel of record before the U.S. Supreme Court for the landowner-petitioners in Stop the Beach Renourishment, Inc. v. Fla. Dep't of Envtl. Prot., 130 S. Ct. 2592 (2010). He co-authored an amicus brief in support of the landowner-petitioner in Koontz and attended oral arguments. Follow the developments on this case and others at his blog, The Florida Land Environment, www.jacobtcremer.com.

Ripeness for Takings Challenges in Florida Just Got Trickier

As if takings law weren't convoluted enough, it looks like a split has developed within Florida intermediate appellate courts over when takings challenges are ripe for review. For non-takings-geeks, that means that Florida courts now disagree about when you can ask a court to consider whether the government has taken your property without just compensation.

In Alachua Land Investors, LLC v. Gainesville, - So. 3d -, 2013 WL 363376 (Fla. 1st DCA Jan. 31, 2013), the 1st DCA put up a huge roadblock for plaintiffs pursuing takings claims. A developer made one plat application that was rejected by the local government, which apparently made some overtures that it might possibly, one day, you know, maybe consider other development proposals. Instead of negotiating further with the government, the developer sued for a taking.

The trial court held that the claim was not ripe for litigation, and the 1st DCA agreed. The court explained that the developer needed to prove: "(1) the regulation denies substantially all economically beneficial or productive use of the land; (2) alternative uses were applied for and conclusively denied by the regulatory body; and (3) at least one meaningful application has been filed under the existing regulations."

The government argued that the developer's application was not meaningful, and that the government's decision was not final. As for the meaningfulness of the application, the court strangely says that because the developer didn't explore the full range of government discretion, the application wasn't meaningful:

Given the existing zoning regulations, ALI's request to construct a sewer pipe through the conservation area and across the creek was bound to fail. The petition was not a meaningful application, for it denied the City an opportunity to exercise its full discretion in determining how ALI can implement the development plans for Phases Two and Three. See Palazzolo, 533 U.S. at 620–21. ALI premised its proposal on a prohibited use in the conservation area that was self imposed as a result of the negotiated settlement. The City is simply enforcing the terms of the landowner's settlement agreement, which were incorporated into the Master Plan and the zoning regulations. 

ALI took an inflexible, all-or-nothing approach in seeking approval of Petition 76SUB. The plat application presented no alternative design plan, nor did ALI seek to revise the application after the City's vote. “Land use planning is not an all-or-nothing proposition.” MacDonald, Sommer & Frates, 477 U.S. at 347 (noting that “[a] governmental entity is not required to permit a landowner to develop property to [the] full extent he might desire or be charged with an unconstitutional taking of the property”). Good faith and reasonableness are integral elements of any meaningful application. See Good v. United States, 39 Fed. Cl. 81, 102–03 (Ct.Fed.Cl.1997) (“By requiring developers to make a good faith effort to satisfy permitting agency concerns after an initial denial, ripeness doctrine reflects the reality that land development often involves a process of negotiation between the permitting agency and developer.”), aff'd, 189 F.3d at 1355. Rather than address any alternatives for achieving its ultimate residential development goals, ALI focuses unreasonably on the proposal to run the sewer pipe through the conservation area and across the creek. In construing the issue so narrowly, ALI effectively removes any discretion on the part of the City to consider other options for ALI to complete Phases Two and Three. The trial court found that the parties originally had discussed viable alternatives to running the sewer line through the conservation area, and that such alternatives were available, even if more costly. After the City's denial of the petition, however, ALI immediately filed suit rather than propose any revisions or seek any changes.

The 1st DCA then goes on to question the finality of the denial because the government might approve the plat the next time around:

Similarly, the City Commission's vote denying Petition 76SUB lacked the requisite finality to render this case ripe for review on the merits. As in Tinnerman, the question of what the City Commission would have done if ALI had proposed any alternatives remains open. At the City Commission hearing, a representative of the City (Ms. Massey) opined that what ALI was proposing in its plat design application is inconsistent with the land uses allowed in the Master Plan. To change it, ALI would have to submit a plan development  amendment. Commissioner Lowe voiced similar concerns about whether the application is consistent with the Master Plan. Commissioner Donovan opined that ALI seemed to have developmental rights if it “would only develop a plan” acknowledging certain requirements. Donovan agreed with other commissioners to “give [ALI] a second chance.” Commissioner Henry expressed discomfort with completely voting down the plat application, suggesting instead that ALI consult with the City to determine what was needed “to make this work” and allow ALI to come back with a feasible plan. Commissioner Bryant urged ALI to continue working with the City in seeking to resolve the land-use issues. Mayor Hanrahan addressed possible redesign options upon the City's disapproval of Petition 76SUB, so that ALI could return to the City for reconsideration without the usual, prolonged delays 

The clear message of a majority of the City's ultimate land-use decision-makers was that they wanted to reach a  mutually agreeable resolution of ALI's ultimate development plans. It is also noteworthy that the developers of the Blues Creek subdivision have enjoyed a successful, long-term working relationship with the City. See Lost Tree Vill. Corp., 838 So.2d at 573 (recognizing the relevance of the working relationship between the landowner and the governmental entity in determining whether a decision is final and whether the submission of an additional application would be futile). Historically, the City Commission had granted final approval of every other Blues Creek plat approval petition (regarding other units and phases) that ALI submitted. Given these circumstances, the record belies ALI's argument that the City's vote on Petition 76SUB was a definitive, final decision on a meaningful application for purposes of the ripeness inquiry. See Tinnerman, 641 So.2d at 525 (“[T]he ripeness requirement of a final decision requires more than procedural finality because it includes an opportunity for government to change its mind.”). Additionally, where its options were not fully exercised, ALI has not demonstrated that the futility doctrine applies here. See McKee v. Tallahassee, 664 So.2d 333, 334 (Fla. 1st DCA 1995) (concluding that the city's decision was not “final,” the futility doctrine did not apply, and the “taking” claim was not ripe, where the municipal board denied a variance from development restrictions, but city officials repeatedly assured the landowner that a properly drafted, meaningful application for a variance, with a required development plan, would receive a positive review).

Compare that to the clear language in Koontz v. St. Johns River Water Mgmt. Dist., 720 So. 2d 560, 562 (Fla. 5th DCA 1998) [aside - yep, you guessed it, this was a precursor to the Koontz case being considered right now by the U.S. Supreme Court].

It is St. Johns' position that since there was a chance that a modified application might be approved, there was no final agency action. To be more precise, the District argued that since it had indicated that it would have granted the application if the owner had agreed to the off-site improvements, the owner should be required to make additional filings making other concessions until the District finally approves the permits before the owner is permitted to pursue a regulatory taking. We disagree. Koontz made a specific application to the District for permits that would permit him to develop a fraction of his property. His position, in effect, was that the application he filed and the concessions he was willing to make to the District in order for it to issue the permits (his giving up over two-thirds of his property to the District) was all that he could do and still retain an economic use of his property. The District turned him down. It made a final decision on the only application before it. One of the members of the District observed: “If they got a lawyer they ought to get him, get on with him.” There is no requirement that an owner turned down in his effort to develop his property must continue to submit offers until the governing body finally approves one before he can go to court. n.2 If the governing body finally turns down an application and the owner does not desire to make any further concessions in order to possibly obtain an approval, the issue is ripe. The owner in this case drew a line in the sand and told the District: “I can go no further.” Whether the owner can now convince the court that there has, in fact, been a taking is the issue properly before the trial court. 

n.2. But in Williamson, the applicant had not applied, and been turned down, for a variance that could have substantially affected the use of his property. Here, there was no other procedure left to the applicant to realize the economic feasibility of his project. The owner's only hope was for the District to change its mind on its conditions for approving the grant of the permits. St. Johns suggests that Koontz should have been required to submit another application offering to give the District two-thirds of his property and do the off-site improvements to one of the parcels owned by the District. And if the District still rejected the plan, he should have been required to submit yet another application agreeing to give two thirds of his property and possibly do the off-site improvements on the District's property but perhaps capping the cost to a particular amount. Such a requirement would eventually discourage the owner so that he might just go away. Here, the District turned down the owner's final submission. The issue is ripe.

The Koontz position seems much sounder: just let the landowner into court, where she can try to prove up her case, and the court can balance whether anything was taken. This court really seems to be conflating the merits of the development application--and the case--with ripeness. They're related, but not in the way this court describes. Note that I'm not saying that the developer should win here. The facts aren't especially good for the developer, since it seems that the developer may have negotiated away its rights to develop in the way it wanted to. But that doesn't change the fact that it's now unclear what is a final, meaningful application to develop land in Florida.

In Florida, where decisions of District Courts of Appeal conflict, the Florida Supreme Court has discretionary jurisdiction to hear the case. The Florida Supreme Court, however, only accepts a very small percentage of these cases. Consequently, property owners in the 1st DCA's jurisdiction (roughly the North Florida, including the Panhandle) may be stuck with a decision that frustrates their efforts to get into court on takings claims.

Florida's 4th DCA Explains that Attorney's Fees and Costs for Work Leading up to Successful Takings Suit is Recoverable

This is a simple case, but a good one to be aware of. 

In Board of Supervisors of St. John's Water Control District v. Florida Department of Transportation,  - So. 3d -, 2012 WL 5933012 (Fla. 4th DCA Nov. 28, 2012), the parties agreed that the District was entitled to attorney's fees and costs because it was successful in an inverse condemnation lawsuit. The circuit court ruled, however, that the District was not entitled to its fees and costs in a prior lawsuit, in which it was determined that the District actually owned the property in question. The appellate court reversed, explaining: 

Under Florida law, a property owner awarded fees under the lodestar method is entitled to its reasonable attorneys' fees for all work relating to a condemnation suit, including work performed before the date suit is actually filed. See Volusia Cnty. v. Pickens, 435 So. 2d 247, 248 (Fla. 5th DCA 1983) (an inverse condemnation plaintiff was "entitled to recover a reasonable amount for all costs and attorney's fees reasonably and necessarily expended in connection with the investigation, research, preparation and presentation of the case" despite the defendant's argument that the plaintiff's entitlement to attorney's fees was limited to a certain date range); State Dep't of Trans. v. Grice Elecs., Inc., 356 So. 2d 7, 7 (Fla. 1st DCA 1977) (the trial court did not err when it awarded "compensation to appellee's attorneys for work performed before suit was filed but after condemnation was imminent").

That is, it takes work to get to the point of filing a taking claim, and a prevailing landowner should be compensated for that. Makes sense to me.