Yesterday the federal Supreme Court issued a landmark decision regarding the authority of municipalities to require “monetary exactions” during the building permit process. The Court also held that the federal Takings Clause analysis applies to court review of a building permit denial, if an “unconstitutional condition” existed during the permit process. See Koontz v. St. Johns River Water Management District, http://www.supremecourt.gov/opinions/12pdf/11-1447_6j37.pdf (“Koontz”). The decision was decided by a majority of the Court, led by Justice Alito, in a 5/4 decision. The majority of the Court held that:
- During the building permit process, “monetary exactions” required by a municipality of the developer may “amount to a per se taking similar to the taking of an easement or a lien,” id. at 18, and must pass the federal takings analysis under Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994) (“Nollan-Dolan test”). The Court clarified that “monetary exactions” do not include taxes, though may include “land use permitting fees.”
- A municipal requirement that a building permit applicant reserve or set aside a portion of its property as part of the project—e.g., as a conservation easement for wetland mitigation—must also pass the Nollan-Dolan test. If it does not pass the federal Takings Clause analysis, then even a permit denial may be unconstitutional. Importantly, the Court stated that “so long as a permitting authority offers the landowner at least one alternative that would satisfy Nollan and Dolan, the landowner has not been subjected to an unconstitutional condition.” But the Court found that this requirement had not been met in this case.
The facts of the case are informative. A developer applied to his local Florida water management district to build on 3.7 acres of his 14.9 acre property. The property had wetlands on it, and the buildable portion had the most wetlands. The developer proposed to construct a building, parking lot, and stormwater catchment pond on the 3.7 acres and, to meet wetland mitigation requirements, deed the rest of the property to the District as a conservation easement.
The District rejected the developer’s proposal and “suggested” that the permit could be approved if the developer: (1) reduced the building footprint to 1 acre by eliminating the aboveground stormwater catchment pond and installing a stormwater management system underground, then deeded the rest of the property as a conservation easement; or (2) developed the 3.7 acres as proposed, and also paid for improvements to District wetlands at another location, i.e., funded offsite wetland mitigation.
The developer declined the District’s offers, and the District denied his building permit. In the above holding, the Court concluded that both of the District’s proposals—an increased dedication for a conservation easement and a “monetary exaction” for offsite wetland mitigation—ran afoul of the federal Takings Clause.