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Water Log 29.1, May, 2009

Florida Municipality Subject to Takings Claim for Permit Denial after Applicant Refuses Conditions

St. Johns River Management District v. Koontz, 2009 Fla. App. LEXIS 91(Fla. Dist. Ct. App. 5th Dist. Jan. 9, 2009).

Moses R. DeWitt, J.D. Candidate 2010, Florida State University School of Law
Tim M. Mulvaney, J.D.

In a matter apparently headed to the Florida Supreme Court,1 a divided Florida Court of Appeals panel held that a water district is subject to a takings claim under the U.S. Supreme Court’s decisions in Nollan and Dolan. In this case set in Monroe County, FL, a landowner refused to accept off-site mitigation conditions of a wetlands development permit and the water district therefore denied the permit application in total.

Background
Coy Koontz’s property is comprised predominantly of wetlands, which lie within a “Riparian Habitat Protection Zone” of the Econlockhatchee River Hydrological Basin. Riparian Habitat Protection Zones are areas of high biodiversity that are important for soil conservation and play a significant role in the functioning of aquatic ecosystems. In light of this environmental significance, the Zones are subject to the jurisdiction of the St. Johns River Water Management District (“St. Johns”).

Koontz requested a permit from St. Johns to dredge a greater portion of the wetlands on his property than allowed by the existing environmental regulations in order to create a commercial development. St. Johns agreed to approve Koontz’s development application if Koontz would offset the impacts of the development by deed restricting the remaining portion of his property for conservation purposes and performing offsite mitigation by either replacing culverts four and one-half miles southeast of his property or plugging certain drainage canals on other pro­ perty some seven miles away.2 Alternatively, St. Johns proposed that Koontz reduce his development to one acre and convert the remaining acreage into a conservation area, with no off-site mitigation requirements.

Koontz agreed to deed restrict any remaining portion of his property for conservation purposes after construction of his proposed commercial development, but refused to reduce the size of his development or to perform, or pay for, any offsite mitigation costs.3 Consequently, St. Johns denied Koontz’s permit request. Thereafter, Koontz filed suit, alleging that St. Johns had affected a taking of his property.

Trial Court
The trial court ruled in favor of Koontz, holding that St. Johns had affected a taking of his property.4 In reaching this ruling, the trial court applied the constitutional standards set forth in the United States Supreme Court’s landmark decisions in Nollan v. California Coastal Commission5 and Dolan v. City of Tigard.6

In Nollan, the Supreme Court held that the government could condition the issuance of a permit if there exists an “essential nexus” between the condition imposed and the purpose of the regulatory restrictions on the property. In Dolan seven years later, the Court added the requirement that there also must be “rough proportionality” between the extent of the condition and the impact of the proposed development.

In implicitly asserting that a condition requiring Koontz to deed restrict the remaining portion of his property after construction of his proposed commercial development was enough to offset the environmental impacts of that development, the trial court found “that the off-site mitigation imposed by [St. Johns] had no essential nexus to the development restrictions already in place on the Koontz property and was not roughly proportional to the relief requested by Mr. Koontz.”7

Without contesting the evidentiary foundation for the trial court’s findings that the proposed conditions did not meet the Nollan and Dolan tests, St. Johns appealed the trial court’s decision. St. Johns contended that the lower court never had subject matter jurisdiction to review Koontz’s takings claim because his allegation was a challenge to the merits of a permit denial, which is the subject of administrative not judicial review, as nothing was exacted from Koontz that could constitute a taking.

Appellate Decision
The appellate division asserted that St. Johns' argument, “although couched in terms of jurisdiction,” actually addresses whether an exaction claim is cognizable when the land owner refuses to agree to an improper request from the government resulting in the denial of the permit. In citing U.S. Supreme Court Justice Antonin Scalia’s dissent from the denial of certiorari in Lambert v. City & County of San Francisco,8 the appellate court found that “[t]here is no apparent reason why the phrasing of an extortion demand as a condition precedent rather than as a condition subsequent should make a difference.”9 Reliant upon Justice Scalia’s rationale, the Florida appellate court upheld the trial court’s decision, asserting that any condition precedent that does not comply with Nollan and Dolan amounts to an unconstitutional exaction rising to a taking and is thus proper for a circuit court to address under Florida Statutes A7373.617(2).

In a lengthy dissent, Judge Griffin contended that the Nollan and Dolan tests are applicable only where conditions are actually imposed, not where the development application is denied based on the owner’s refusal to accept the conditions, in accord with the U.S. Supreme Court’s recent opinion in Lingle v. Chevron, USA, Inc.10 In Lingle, the court declared that challenges that government actions do not substantially ad­ vance a state purpose do not sound in takings law, but rather substantive due process, under which Koontz did not contest St. Johns’ condition demand. Under the dissent’s rationale, once the government denied his application, Koontz had the same development rights that he had before he began the permitting process, and thus lost nothing that could be taken.

Judge Griffin contended that the majority’s conclusion will result in discouraging governments, which are generally risk averse, from proposing impact offsets from developers that could improve societal welfare in lieu of outright denials, in light of the significant financial exposure if a court concludes after-the-fact that the government has asked for too much under the Nollan and Dolan tests. Rather, governments are more likely to deny the permit and defend it against a challenge under the traditional regulatory takings balancing approach set forth in the U.S. Supreme Court’s 1978 opinion in Penn Central Transp. Co. v. New York City.11

In granting St. Johns’ Motion for Certification, the Florida Court of Appeals certified the following question to the Florida Supreme Court: “Where a landowner concedes that permit denial did not deprive him of all or substantially all economically viable use of the property, does Article X, Section 6(a) of the Florida Constitution recognize an exaction taking under the holdings of Nollan and Dolan where, instead of a compelled dedication of real property to public use, the exaction is a condition for permit approval that the circuit court finds unreasonable?” Stay tuned to future editions of Water Log for updates on the Florida high court’s review.

Endnotes:
1.    See St. Johns River Water Mgmt. Dist. v. Koontz, 2009 Fla. App. LEXIS 2267 (Fla. Dist. Ct. App. 5th Dist. Mar. 20, 2009) (granting Motion of Certification to Florida Supreme Court).
2.    See St. Johns River Water Mgmt. Dist. v. Koontz, 2009 Fla. App. LEXIS 91, *5 (Fla. Dist. Ct. App. 5th Dist. Jan. 9, 2009).
3.    Id. at *2.
4.    Id. at *5.
5.    483 U.S. 825 (1987).
6.    512 U.S. 374 (1994).
7.    St. Johns, 2009 Fla. App. LEXIS 91 at *6.
8.    529 U.S. 1045 (2000) (J. Scalia, dissenting denial of certiorari).
9.   St. Johns, 2009 Fla. App. LEXIS 91 at *9, n. 3.
10. 544 U.S. 528 (2005).
11. 438 U.S. 104 (1978).

Recommended citation: Moses R. DeWitt, Timothy M. Mulvaney, Florida Municipality Subject to Takings Claim for Permit Denial after Applicant Refuses Conditions, 29:1 Water Log 2 (2009).

University of Mississippi