In 1987 the U.S. Supreme Court ruled against a California regulatory agency for trying to force homeowners to grant the government a right-of-way over their land in exchange for a necessary building permit. This requirement, the Court held in Nollan v. California Coastal Commission, was "not a valid regulation of land use but 'an out-and-out plan of extortion.'"
Several years later, in the case of Dolan v. City of Tigard (1994), the Supreme Court nullified a similar regulatory shakedown from Oregon. In that case, local officials told a business owner she would not be allowed to expand her store unless she also handed over part of the property to the city for a totally unrelated public use. Thankfully, the Supreme Court put a stop to the scam. "Government may not require a person to give up a constitutional right—here the right to receive just compensation for a public use," Chief Justice William Rehnquist held for the majority, "in exchange for a discretionary benefit conferred by the government where the benefit has little or no relationship to the property."
Taken together, these two decisions stand for the rule that when land-use agencies impose conditions on the issuance of a permit, those conditions must bear a close relationship to the intended use of the property and its expected impact on the environment. In legal terms, Nollan requires an "essential nexus" between permit conditions and property use while Dolan requires a "rough proportionality" between the two.
Or at least that's what the Supreme Court has had to say about it. The St. Johns River Water Management District of Florida has a different view of the matter. In a case dating back to 1994, that agency refused to permit the commercial development of a small piece of property located in Orange County, Florida, unless the owner first agrees to transfer the title to 75 percent of the lot to the government for conservation purposes and also fund costly and unrelated improvements to 50 acres of public land located between 4.5 and 7 miles away. The owner, Coy Koontz Sr. (now deceased), agreed to the first condition but balked at the second. Had Koontz agreed to fund the uncompensated upkeep of state land, the agency admits, "the exact project [he] proposed would have been permitted."
But Koontz refused to pay what he saw as an extortionate demand and instead brought suit, charging the Florida regulators with violating Nollan and Dolan while also dodging the Takings Clause of the 5th Amendment, which requires the government to pay just compensation when it takes private property for a public use.
After years of litigation, the Supreme Court is finally scheduled to hear Koontz v. St. Johns River Water Management District next month, with Coy Koontz Jr. carrying on his father's legal battle.
For its part, the District argues that Nollan and Dolan do not apply to its actions because those cases each featured a government agency extracting physical property in exchange for a permit, rather than money, labor, or services. But that argument conveniently ignores the fact that the Constitution protects the right to both real and personal property.
Similarly, the District argues that the Takings Clause does not apply because no permit was ever issued, meaning the agency never had the chance to take any property from Koontz in the first place. But that doesn't matter. In Nollan, the California Coastal Commission also never issued a permit. The agency only issued a Notice of Intent to Issue Permit, which stated that the applicants had to first agree to the public right-of-way on their land before a coastal development permit would be granted. In other words, what matters here is not the exact timing of the permit process, but rather the unconstitutional nature of the state's demands.
Predictably, the District also employs the last refuge of every overreaching government agency: the need for maximum flexibility when crafting and enforcing regulations. Yet as the Pacific Legal Foundation, the public interest law firm representing Koontz, notes in the brief it submitted to the Supreme Court, "the District denied him his permits because he refused to accede to its requirement that he finance unrelated, public improvements. That is not flexibility; it is extortion."
Indeed, unless the Supreme Court is prepared to scrap Nollan and Dolan entirely and grant land-use agencies free rein to impose whatever onerous and expensive permit conditions they deem fit, this is an open-and-shut case of government malfeasance. A state agency placed an illegitimate and disproportionate burden on a property owner who simply wanted to put his land to a lawful use. The only party that should be forced to pay is the St. Johns River Water Management District.