When Are “Monetary Exactions” as a Condition of a Land Use Permit Constitutional?

November 26, 2013

My first post regarding Koontz v. St. Johns River Water Management Dist., ____ U.S. ____, 133 S.Ct. 2586, 186 L.Ed.2d 697 (2013), focuses on the first issue addressed by the Court:  the point at which an unconstitutional condition of a land use permit constitutes a taking and the effect of the manner in which the condition is imposed.  This post centers on the second issue addressed by the Court:  whether or not the essential nexus and rough proportionality requirements of Nollan and Dolan apply where a condition of granting a land use permit is strictly monetary in nature.

Koontz was asked to give money to fund off-site improvements as a condition of being granted a land use permit.  This differed from the situations in Nollan v. California Coastal Comm’n, 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677 (1987), and Dolan v. City of Tigard, 512 U.S. 374, 114 S.Ct. 2309, 129 L.Ed.2d 304 (1994) (the cases that establish the standards for a constitutional land use permit condition), as in those cases the permits were conditioned upon the applicants granting property rights to the local governments.

The Florida Supreme Court concluded the Nollan/Dolan requirements did not apply where “monetary exactions” were imposed, and in a 5-4 decision with a robust dissent, the U.S. Supreme Court reversed the Florida Supreme Court’s decision.  The majority concluded a government cannot avoid the Nollan/Dolan requirements by simply asking the applicant to spend money on public lands as a condition of permit approval.  It reasoned that to conclude otherwise would allow a government to escape the limitations of Nollan and Dolan.  If the limitations did not apply, a government that wanted an easement could give the owner the choice of granting the easement or making a payment equal to the easement’s value without a taking occurring.  For that reason (and others the Court outlined), the Court held that monetary exactions must also comply with the essential nexus and rough proportionality requirements of Nollan and Dolan.

The dissenting justices were more concerned that applying the Nollan/Dolan requirements to monetary exactions would lead to a challenge of other types of obligations that require property owners to pay money, such as property taxes or use fees.  While the Court attempts to differentiate the various types of monetary obligations, thereby limiting its holding in Koontz to offsetting payments relating to land use permits, landowners may attempt to use this decision to dispute other monetary commitments.

Because it is common for governmental entities to have wetland mitigation programs or to condition land use permitting approval upon payment for certain impacts of a development, this decision has garnered a lot of debate and comment.  In the future, exactions will be more closely scrutinized to make certain they reflect the true impact of the development and are not overreaching.

It will be interesting to see what, if any, effect the Koontz decision has on other monetary obligations above and beyond its consequence to land use permit applications.  Will it be as if predicted by the majority and have no effect, or will it open up a whole new set of issues, as envisioned by the dissent?