Justices blast property 'shakedown' by government

In a 5-4 decision, the U.S. Supreme Court today called a halt to a government "shakedown" procedure in Florida that required a landowner to pay up to $150,000 to be allowed to develop several acres of ground.

"Extortionate demands for property in the land-use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation," the opinion said. "It is settled that the unconstitutional conditions doctrine applies even when the government threatens to withhold a gratuitous benefit."

In the Florida case, a water district demanded a property owner pay up to $150,000 to develop land originally purchased by his father.

The case was argued by the Pacific Legal Foundation on behalf of the Koontz family.

The nonprofit legal group had said it wanted the Supreme Court "to make it clear that the Constitution forbids any kind of shakedown in the permitting process: money grabs (such as the Koontz family was hit with) are just as unconstitutional as land grabs."

PLF principal attorney Paul J. Beard II said Tuesday, "Today's ruling says the Fifth Amendment protects landowners from government extortion, whether the extortion is for money or any other form of property.

"The ruling is a powerful victory for everybody’s constitutional property rights, from coast to coast," Beard continued. "The Koontz family was challenging permit demands that were wildly excessive and had no connection to their land use proposal. Today, the court recognized that the Koontz family was the victim of an unconstitutional taking. The court's message is clear: Government can't turn the land use permitting process into an extortion machine.

"The ruling underscores that homeowners and other property owners who seek permits to make reasonable use of their property cannot be forced to surrender their rights," Beard stated. "Regulators can’t hold permit applicants hostage with unjustified demands for land or other concessions – including, as in this case, unjustified demands for money.

"The court has recognized that money is a form of property, and the Constitution prohibits grabbing money from property owners the same way it prohibits grabbing land without compensation," Beard said.

Earlier he explained the case is historic because of the impact it can have on local government agencies that make demands of citizens and property owners in order for them to exercise their rights.

The opinion, delivered by Justice Samuel Alito, said the court already had decided that "a unit of government may not condition the approval of a land-use permit on the owner's relinquishment of a portion of his property unless there is a 'nexus' and 'rough proportionality' between the government's demand and the effects of the proposed land use."

"In this case, the St. Johns River Water Management District … believes that it circumvented [those precedents] because of the way in which it structured its handling of a permit application submitted by Coy Koontz, Sr., whose estate is represented in this court by Coy Koontz, Jr. The district did not approve his application on the condition that he surrender an interest in his land. Instead, the district, after suggesting that he could obtain approval by signing over such an interest, denied his application because he refused to yield."

The opinion noted that the owners volunteered to give up development on 11 acres to obtain permission to develop about 3.7 acres.

"The district considered the 11-acre conservation easement to be inadequate, and it informed petitioner that it would approve construction only if he agreed to one of two concessions. First, the district proposed that petition reduce the size of his development to 1 acre and deed to the district a conservation easement on the remaining 13.9 acres. … In the alternative, the district told petitioner that he could proceed with the development as proposed, building on 3.7 acres and deeding a conservation easement to the government on the remainder of the property, if he also agreed to hire contractors to make improvements to district-owned land several miles away. Specifically, petitioner could pay to replace culverts on one parcel or fill in ditches on another," the court said.

The opinion continued: "We have said in a variety of contexts that 'the government may not deny a benefit to a person because he exercises a constitutional right. … By conditioning a building permit on the owners' deeding over a public right-of-way, for example, the government can pressure an owner into voluntarily giving up property for which the Fifth Amendment would otherwise require just compensation. … Extortionate demands of this sort frustrate the Fifth Amendment right to just compensation, and the unconstitutional conditions doctrine prohibits them."

The Supreme Court ordered the case returned to the Florida court system for further review. It noted that Florida law allows plaintiffs "to recover damages for unconstitutional conditions claims predicated on the Takings Clause."

The liberal wing of the Court dissented in the 5-4 decision, with Justice Elena Kagan writing for the minority that the denial by the government of permission for a landowner to use his land takes "nothing."

She described the majority opinion as "unwise" and denied that the water district demanded "anything in exchange for a permit."

"No property changed hands … Koontz therefore cannot claim just compensation under the Fifth Amendment," she claimed.

Further, she wrote: "The district never made a demand or set a condition – not to cede an identifiable property interest, not to undertake a particular mitigation project, not even to write a check to the government. Instead, the district suggested to Koontz several non-exclusive ways to make his application conform to state law."

In a previous statement, Beard said the decision should make clear that government "cannot abuse its land use permitting powers by shaking people down."

"It can't arm-twist a homeowner or other landowner who is seeking a land use permit," he said. "Government can't arm-twist that person into giving up land or money or rights, when the government's demand has no connection to the person's property or the land use proposal that is being considered."

The dispute centers on the permits a Florida landowner needed to develop a small part of a 14-acre parcel and the conditions set by the local water district. The land was bought originally by the late Coy A. Koontz Sr. in the St. Johns River Water Management District in Orange County, Fla. He bought the 14.9-acre parcel in 1972, and the government later applied a "Riparian Habitat Protection Zone" designation to the land.

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But when the family wanted to develop 3.7 acres of the land for commercial use, as it lies at the intersection of two highways, the district said he could do that only if they agreed to make an estimated $150,000 in cash payments for "costly improvements" to unconnected water district property miles away.

The record shows that the development permits were denied solely because the owner "refused to spend any additional funds to finance restoration and enhancement of district property miles away from, and unrelated to, his proposed development."

The family already had agreed to donate the 11 acres where no development was planned.

The Koontz family won the court battle, now handled by Coy and his wife, Linda, at the district court and appellate court levels, but the rulings were reversed by the Florida Supreme Court.

Beard explained the government "shakedown" not only threatened them "with the confiscation of an outrageous sum of money, but also deprived them of the legitimate use of their own private property."

"We have stressed to the Supreme Court that what happened to the Koontzes is a classic case of unconstitutional regulatory abuse, and it should not happen to any property owner, anywhere. In fact, the Supreme Court has already said this, clearly, 26 years ago, in the Pacific Legal Foundation case of Nollan vs. California Coastal Commission. That famous case said that the Fifth Amendment doesn't permit land use regulators to engage in extortion against property owners. The government cannot use the permitting process to extract conditions and concessions from the property owner that are not related to the impact of the land use proposal," he said.

"The Constitution prohibits government shakedowns against property owners who are seeking permits to use their land, and that prohibition doesn't come with an asterisk. It applies to all shakedowns. It applies just as much when the coercion takes the form of an opportunistic demand for money or other unjustified concessions, as when the extortion is in the form of a land grab."

Ultimately, the family had to sell the property on which they were paying taxes but were denied permission to use. But the fight continued because of the principle, PLF said.

Coy Koontz Jr. explained the priorities his father held before he died in 2000.

"The youngest of eight children, my dad, Coy Koontz Sr., was born in a holler in the mountains of West Virginia to a poor family. Life was a struggle and Coy left school in the 10th grade to work to help support the family," he said. "During World War II, he enlisted in the Army and served in Papua, New Guinea. He married during the war and came home to a wife and son. He worked various jobs as his family grew to four children, three daughters and a son."

He moved to the Orlando area in the 1960s and borrowed $10,000 to buy land and develop a small subdivision.

"Coy was a self-made man, with little formal education, who succeeded in spite of adversity. He was colorful, full of tall tales, dumb like a fox, and believed in the legal system. He didn't think it was possible to 'have the state steal his property,' – his words," Coy Koontz Jr. said.

"My family and I have pursued this case in order to defend our property rights, but not just our rights – everyone's property rights, all across the country," he said. "What the St. John's River Water Management District did to my family was to issue a demand that amounted to stealing property, for lack of a better term."