The Takings Doctrine and Limits on Local Authority – Koontz v. St. Johns River Water Management District

In Koontz v. St. Johns River Water Management District (U.S. Supreme Court No. 11-1447, June 25, 2013), the United States Supreme Court overruled the lower courts and extending the “takings” doctrine under the 5th Amendment to the U.S. Constitution to a broad range of local land use decisions.  As a result of the decision, local governments now must justify both the nature and extent of any condition placed on a local land use decision that requires the applicant to either dedicate property for or spend money on public improvements, regardless of whether the local government approves the development. Background – Exactions under Nollan, Dolan and the City of West Linn

The 5th Amendment prohibits taking private real property for public use without compensating the property owner.  In Nollan v. California Coastal Comm’n, the Supreme Court reviewed a decision in which the Coastal Commission required the property owner to dedicate a public access easement to the beach in return for a permit for residential construction on the property.  The Supreme Court held that that was not a reasonable “nexus” between the public’s need for access to the beach and the property owner’s right to the residential permit – therefore, the condition violated the 5th Amendment.  In Dolan v. City of Tigard, the Supreme Court held that a local condition that required the dedication of a pedestrian easement along a stream as a condition of approving a permit to expand a lighting store was disproportionate to the impact of the development.  Because the condition was not “roughly proportionate” to the impact of the development, the Court held it violated the 5th Amendment.

For a number of years, the question in land use circles was whether Nollan and Dolan applied to any condition of approval or just those that require the property owner to dedicate an interest in the property.  That question was answered in Oregon in West Linn Corporate Park v. City of West Linn, in which the city required the developer to make improvements to an intersection the city already owned.  The developer argued the cost of the improvements was not roughly proportionate to the impacts of the development; the city argued that Dolan did not apply because the condition did not require the property owner to dedicate any property.  The Oregon Supreme Court and the U.S. Ninth Circuit Court of Appeals agreed with the city, focusing on the 5th Amendment’s prohibition against taking real property, not fungible property such as money.  This decision was consistent with earlier Oregon decisions such as Tualatin Hills Park and Recreation District v. Oregon Homebuilders, in which Justice Schuman wrote: “Applying that command to the appropriation of money through fees or taxes yields an incoherent result: Government can take money, but only if it pays for it—that is, only if it gives the money back.”

The Decision

In Koontz, a Florida property owner applied to develop three acres of a 15-acre property that was substantially constrained by wetlands.  The Water District agreed, but only if the property owner mitigated impact to the wetlands by improving other wetlands located nearby that the District already owned.  Alternatively, the property owner could limit the development to one acre and dedicate the remainder to the Water District.  The property owner rejected both alternatives and the Water District denied the permit.  The owner then sued, arguing that the proposed conditions violated the 5th Amendment.

The Florida Supreme Court rejected Koontz’s claims.  First, it held that because the permit was denied, no property was ever taken.  Second, it held that a requirement to spend money on off-site mitigation did not violate the 5th Amendment, which only applies to taking real property and money is not real property.  The U.S. Supreme Court rejected both conclusions and held that the decision to deny the permit violated the 5th Amendment.

With respect to denying a permit, the Court said that it doesn’t matter whether the local government approves or denies the permit.  “The principles that undergird 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.”  On the question of whether a requirement to spend money falls under the 5th Amendment, the court found that it does.  The Court found that the requirement to spend money burdens the ownership of the land in the same way as a lien against the property.   “[We] hold that so-called ‘monetary exactions’ must satisfy the nexus and rough proportionality requirements of Nollan and Dolan.”

The Impact

The decision in Koontz returns a city to the days before the West Linn case clarified city obligations under Dolan.  For years after Dolan was decided in 1994, Oregon cities questioned whether its’ rough proportionality requirement applied to conditions of approval that did not require the dedication of private property, but routinely did the analysis analysis out of caution.    In the abstract, returning to this practice may not be overly difficult, but Koontz also places the b burden on the city to demonstrate that a condition of approval is roughly proportionate to the impact of the development; it is not the applicant’s burden to demonstrate that it is not.  Moreover, it is not at all clear how a city should apply Nollan and Dolan when it denies a permit, but the answer will undoubtedly involve very carefully drafted findings.

Preserving Senior Housing vs. the Fair Housing Act

According to the Pew Research Center, since January 1, 2011 more than 10,000 Baby Boomers reach the age of 65 every single day.  According to various studies, the number of Americans over age 65 is expected to reach 71.5 million by 2030- twice their number in the year 2000.  Because of this trend, many local governments are beginning to think about how to plan for an aging population.

The City of Yucaipa, California recently ran into a tough legal question in its quest to plan for an aging population.  The City passed a zoning ordinance “prohibiting any mobile home park currently operating as senior housing from converting to all-age housing.”  In response to the ordinance, four mobile home park owners sued the City claiming that the law violated the Fair Housing Act and the Fair Housing Act Amendments of 1988 (collectively the “FHAA”).  The City argued that an exemption to the FHAA for senior housing enacted in the Housing for Older Persons Act of 1995 (“HOPA”) permitted the ordinance.

The City successfully defended the ordinance before the federal district court, but the mobile home park owners appealed the decision to the Ninth Circuit Court of Appeals.  The primary question before the Ninth Circuit was whether the senior exemption in the HOPA applied to situations where the City intended to protect senior housing or whether it applied only when the housing provider intended to provide senior housing.  The court concluded that the FHAA, as amended by HOPA, is silent on the issue, but that regulations issued by the Department of Housing and Urban Development permit the intent to be the City's intent and accordingly upheld the City ordinance.  In the court’s view, “as long as the decision to provide senior housing is intentional, whether that intent belongs to a city or a housing provider is irrelevant.”

The Court specifically stated, however, that its decision was limited to ordinances that applied to existing senior housing and that a different question may be presented if the ordinance required mobile home parks that did not already operate as senior housing to do so.

A copy of the Ninth Circuit’s opinion is available here

New ADA Title II Rules Now Effective

To ensure compliance with the Americans with Disability Act (ADA), as of March 15, 2012, all newly constructed or altered public facilities must comply with the requirements of the 2010 Standards for Accessible Design adopted in July 2010 by the U.S. Department of Justice. The new regulations include design standards that entities covered by Title II or III are subject to when undertaking new construction or alterations.  While the new rules went into effect on March 15, 2011, the Department gave Title II and III covered entities an additional year before the new design standards were required.

Local governments are covered by Title II of the ADA.  Title II prohibits refusing to allow a person with a disability to participate in a local government service, program, or activity simply because the person has a disability.  What do these new rules mean for public entities?  All newly constructed or altered facilities or facilities undergoing architectural changes to achieve program accessibility must comply with the new standards linked above.  If elements in existing facilities already comply with corresponding elements in the 1991 Standards or the Uniform Federal Accessibility Standards (UFAS) previously in effect, and those facilities are not being altered, then entities are not required to make changes to those elements to bring them into compliance with the 2010 Standards.

Other changes to Title II which took effect on March 15, 2011 and which affect local governments include: new ticketing requirements for events at covered facilities, service animal definitions, auxiliary aid requirements, and additional requirements for allowing power-driven mobility devices used by disabled individuals.  More information on these changes can be found here.

Can Dollars and Cents Mitigate Development Impacts?

Elegant is not a word one generally associates with land use law. For instance, in attempting to mitigate the effects a given project has on neighbors and other stakeholders, many planning commissions have spent many a late (late) night attempting to divine whether a given project is “timely” or “reasonably compatible” with neighboring uses. Typically, conditions of approval are slathered on what was originally proposed and, more often than not, these conditions go a Texas-mile further than the applicant ever expected and not nearly far enough for those impacted by the development. Basically, everyone leaves unsatisfied. What if the subjective process of balancing these competing interests were jettisoned in favor of a simpler, bottom-line approach to mitigating the impacts of development? A recent article in the Economist newspaper asks this question. It is an interesting read and we would love to hear your thoughts on it. Could it be done, and if so, should it? Send us your thoughts in the "Contact Us" form in the bar to the left.

Cell Tower Leases

Government entities are often approached by wireless communication companies searching for a site to build communication facilities.  Towards that end, below are some issues to keep in mind during cell tower lease negotiations. 1.      Term – Many wireless companies are looking for long term leases that average about 25 years.  Typically, this is in the form of 4 five year terms with automatic renewal clauses with little to no control on the part of the Landowner in terminating the lease.  A better approach is to negotiate a 10-15 year lease with an option to terminate after the first or second extension term.

2.      Rent Escalation – Some companies might suggest a term escalation (i.e. 5% increase every 5 years, etc).  The better option is to negotiate a yearly rent increase around 3%.

3.      Co-Location – Landowners should ensure there are lease provisions allowing for additional rent if other carriers co-locate (i.e. install antennas) on the site.  This additional rent can be in the form of co-location fees or ground space rental for the equipment required to co-locate.

4.      Equipment – Landowners should also require exact drawings of the equipment allowed on the site.  Any additional equipment should require written consent from the landowner.  This is particularly important for governmental entities who are concerned with site aesthetics.

5.      Bankruptcy Affirmation Clauses – It is also prudent for landowners to require a bankruptcy affirmation clause, particularly when renting to smaller, start-up carriers.  These clauses ensure that when a wireless company files for bankruptcy they are required to affirm the lease.  This offers some protection if the company abandons the site in the event of a bankruptcy.

6.      Easements – Carriers might ask for easements to access or build on the property.  Instead of granting easements, if possible, allow a right of access or license to access the property.

7.      Design – Encourage the carrier to use more aesthetically pleasing designs and retain final design approval.  The more integrated the design is with the existing structure or site, the better.

8.      Location – Remember, the carrier has chosen this site for a reason - because it is advantageous for them and there is a need for coverage.  Do not hesitate to negotiate with the carrier for higher rents!  Yearly rents can run from $700-$2000 a month.