Overshadowed by the overturning of the Defense of Marriage Act, this week the Supreme Court also handed down a big land-use decision in Koontz v. St. Johns River Water Management District, ruling that the District’s denial of Koontz’s application to build a shopping center upon three acres of wetlands constituted an unconstitutional “taking” when the permit for development was denied after Koontz declined to reduce the size of the development or fund wetlands restoration projects, conditions under which the District had indicated it would be willing to approve the development of the land which Koontz owned.
From the majority opinion:

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. As in other unconstitutional conditions cases in which someone refuses to cede a constitutional right in the face of coercive pressure, the impermissible denial of a governmental benefit is a constitutionally cognizable injury.

From the dissenting opinion:

Our core disagreement concerns the second question the Court addresses. The majority extends Nollan and Dolan to cases in which the government conditions a permit not on the transfer of real property, but instead on the payment or expenditure of money. That runs roughshod over Eastern Enterprises v. Apfel, 524 U. S. 498 (1998), which held that the government may impose ordinary financial obligations without triggering the Takings Clause’s protections. The boundaries of the majority’s new rule are uncertain. But it threatens to subject a vast array of land-use regulations, applied daily in States and localities throughout the country, to heightened constitutional scrutiny.

And from a number of wondering readers, to which you’re welcome to provide a well reasoned opinon of your own:

Are there any parallels in terms of potential unconstitutional “takings” in San Francisco with respect to condo conversions, Below Market Rate (BMR) requirements for private developers, or the denial of a Chipotle?


14 thoughts on “Unconstitutional Takings Closer To Home(s)?”
  1. I’m no law talking guy, but could the owner of the Home space sue the city for the difference in rent he lost from not being allowed to rent to Chipolte?

  2. Does this apply to existing land use regulations/restrictions such as mandatory setbacks or height restrictions?
    Are those now ‘takings’ since they limit the income/value potential of the property?

  3. @wc1
    They could sue before the ruling, as you can sue for just about anything. The real question is could they win (I believe the owners are a group of siblings, most likely inheritors of the estate), which is still quite an unknown. This case may, or may not, affect the outcome.
    In my, completely unfounded and uneducated, opinion this case does not affect formula retail. One could make an argument that the government was effectively trying to extort the owner, to paraphrase, the government was saying: “you can build your building if you give us something of value”. Whereas formula retail is saying “You cannot rent to business that meet the following criteria of XYZ”
    Personally I don’t think those are related concepts.

  4. Also, this will be interesting to watch as developers sue the crap out of local governments and give NIMBYs the finger since very few are going to have the deep pockets to fight the developers who want to build as big and cheap as possible.

  5. On the other hand I DO think it would apply to developer fees, and possibly BMR requirements, although I do not think it would apply to condo conversions as that’s not really a zoning or permitting issue in my mind.
    I do expect a number of lawsuits to be filed based on this ruling. I think only time will tell what the final impact will be.

  6. It’s probably far-fetched but I wonder if rent control could be considered a taking. After all, local governments that apply these rules are basically forcing the landlords to accept a lower value for their property. Providing affordable housing with OPM in my opinion IS a taking. The government should fund rent subsidy with the taxpayer’s money.

  7. “On the other hand I DO think it would apply to developer fees, and possibly BMR requirements, although I”
    I think think there’s only a case there if someone owned the property before the rules were enacted. If you bought the property knowing the existing land restrictions, then you knew what you could do with it going into the deal. And the market value of the property reflects those restrictions. Nothing has been taken from you.
    On the other hand, if you buy a plot that is zoned for an apartment building and later the city says that you need to contribute to the BMR fund if you want to build on it, that does look like a taking. Because even if you don’t build the market value of the land is reduced since anyone else building on it will need to pay into the BMR fund.

  8. I doubt it will impact rent control. The Supreme Court has a nearly 100 year history of upholding rent control, or declining to hear cases about it.
    I doubt they will change course and say this ruling overrides more direct rulings upholding rent control. I wish it were otherwise, but there you go.

  9. ^ Same for rent control.
    Only people who owned property when rent control was enacted had anything taken from them.
    Nothing has been taken buying property you know is rent controlled since you knew the rules when you bought the property.

  10. This ruling will not affect much. Most major entitlements in SF are discretionary actions. And no, Chipotle would not win such case and that has nothing to do with this decision. Denial of chipotle had nothing to do with the City trying to extract anything out of them, which is what the case was about. The use is a discretionary conditional use, and it was deemed not an appropriate use. That is the bread and butter of land use law and it’s not going to change. The basic power of zoning is to decide what is and is not an appropriate land use, and this decision had nothing to do with that. And no, height limits and setbacks and such are also not relevant to this. The decision basically said that the burden is on the government to demonstrate how the proposed conditions of approval specifically mitigate or are appropriate to the project proposal. Whereas before the courts showed high deference to local government to show any reasonable relationship, now the burden of proof is higher. That’s it. The core of this case is not that the basic mitigation requirements of the zoning/environmental requirements were inappropriate, but that the government agency told him he needed to arbitrarily provide more than the rules called for. While I disagree with the opinion overall, the Florida water district did not play it well and essentially arbitrarily asked for a pot of money from this one particular developer in exchange for a permit. That’s a no-no. Had the district actually done a full nexus study and created a mitigation fee that was well-reasoned and backed by some analysis and applied equally and broadly to all permit applicants, this case never would have happened.

  11. Agree that this ruling is not a major setback, at least for how SF runs its extortion racket (lol). But other less policy heavy cities oughta start hiring the planning/econ/transit wonks now.
    So, in fact, the ruling could have the positive consequence of forcing all municipalities to improve their research, nexus studies, data gathering, all to the benefit of clearly and precisely naming the costs associated with providing infrastructure (“I built it myself”-not!) mitigating environmental impacts (“what climate change”) and extracting fees from developers that are traceable to actual larger societal needs. That is the stuff that will stand up in court and which this ruling is saying is needed.

  12. In San Francisco it may not mean much because no one in this town sues the city except a) Muni and b) SFPD.
    That’s because this city’s huge run-amok $7.5 billion bureaucracy is known for finding ways to retaliate against people who stand up to “city family” as city hall lifers so ‘wink-wink-nod-nod’ like to refer to one another.
    But its totally plausible that a lot of what the city extracts from businesses is unconstitutional.

  13. I totally agree with intheknow for the most part, but two things may change how development is handled:
    -first, a taking can occur even if someone is denied a discretionary permit. Previously, takings occurred only if a permit was approved and the government exaction (e.g., impact fee, easement) did not have rough proportionality and rationale nexus test with the impacts of the project. The majority stated that not all exaction options have to meet this test, but at least one does.
    -second, it is important to note that the facts in this case were highly in dispute. The dissent stated that nothing was in fact “taken” because the District was not requiring the developer to do one of these two options as a prerequisite to approving the permit (even though they didn’t meet the above-mentioned test). In fact, the District encouraged the developer to think of other options. Given the developer refused, the District denied the preliminary phase in the permit because the developer did not mitigate the impacts of the development (i.e., on wetlands). The dissent stated this could have detrimental impacts in the land use process because government agencies instead of negotiating and offering options to the developer for mitigating effects should simply deny the permit, instead of facing risk of litigation.

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