Supreme Court helps landowners to develop their property

A new decision from the U.S. Supreme Court will strengthen the hands of many landowners who are battling with local authorities over development of their property.

The decision makes it harder for municipalities to demand financial concessions from owners in return for land-use approvals.

The case involved Coy Koontz, who owned 15 acres of land near Orlando, Florida. Much of the property was wetlands, and as a result, in order to develop it, Coontz had to negotiate with the local water management district.

Coontz proposed what seemed like a reasonable deal: He would develop 3.7 acres along the northern edge of the property, and in return he would agree never to develop the remainder. He offered to give the district an “easement” allowing it to prevent any future development on the remaining acreage.

But the district wasn’t satisfied. In addition to limiting Coontz to the 3.7 acres, it also wanted him to pay to make improvements to ditches and culverts on 50 acres of other, unrelated wetlands that the district owned several miles away.

Instead of giving in, Coontz took the case to court. And the Supreme Court sided with Coontz, saying the district’s demand that he pay for the ditches and culverts was illegal if it’s wasn’t reasonably related to the effects of Coontz’s own project.

Eminent domain

The U.S. Constitution says that the government has a right of “eminent domain,” which means that it can take people’s property for public use, such as a new highway. However, it has to pay for it; it can’t simply grab it for free.

What’s not so clear is what happens if the government demands property in return for granting a license or permit, such as a building permit. Can the government do that without paying for it?

Yes and no. The government definitely has the right to regulate people’s land, and to limit the use of the land for purposes such as zoning, public safety, or environmental protection. The government also has the right make a building permit depend on the landowner’s being willing to accept responsibility for the effects of the building. For instance, if someone is creating a housing development, he or she might have to dedicate some land for municipal services that will be required by the development.

On the other hand, a government can’t hold a landowner hostage, and use a request for a building permit as an excuse to extort property simply to satisfy its own greed.

In the past, the Supreme Court has said that if the government wants a landowner to give up property as a condition of getting a building permit, it has to show that its request is related in some way to the development and is proportional to the development’s actual effects. Anything more than that constitutes a “land grab,” which the government can’t do unless it uses the eminent domain process and pays for the property.

For instance, back in 1987, a California family wanted to tear down their beachfront bungalow and build a larger home. The local government said they couldn’t do so unless they began allowing the public to have access to their private beach. But the Supreme Court sided with the family, saying that forcing them to allow the public onto their land simply wasn’t “proportional” to the effects of replacing an old home with a newer and larger one.

Several years later, the Supreme Court sided with the owners of an electrical supply store in Oregon that wanted to expand the store and pave its parking lot. The local government said the owners could do so, but only if they gave up some of their land and built a public bike path. But the Supreme Court said that building a bike path was out of all proportion to the minor improvements the store owners had proposed to make.

What had never been clear, though, was to what extent a local government could demand money – not just real estate – in return for a permit. In Coontz’s case, the government wasn’t asking for any more land than Coontz had proposed giving up, but it was demanding additional money to finance another project nearby. Did it have a right to do that?

According to the new Supreme Court decision, demands for money and property have to be treated the same. Even though the water district wanted money, it still had to obey the Constitution and it could only ask for funds that were related to Coontz’s proposed development and proportional to the effect of that development. If the district’s request went too far, then it was illegal.

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