The Peninsula Industrial Pros

Your Commercial Real Estate Source in the San Francisco Bay Area

Property Rights Upheld for Developers/Investors

A few days ago the Supreme Court decided on  Koontz v. St. John’s River Water Management District, which effectively will allow developers and investors to sue local governments for illegally withholding land-use applications.  In many instances, we have seen local governments ask developers and others to build a park, or fix a road in order to get their application and project approved.  Under the guise of public betterment many projects were stalled, essentially extorting land developers who would rather build a park than carry the significant holding costs.

This is a broad win for not only developers, but for the rights of all property owners.

Here’s the recent L.A. Times article:

Supreme Court ruling bolsters private property rights

 The decision expands the ability of property owners to claim that requirements attached to land-use permits amount to improper ‘taking’ under the Constitution.

June 26, 2013|By Jim Puzzanghera, Los Angeles Times

WASHINGTON — In a decision bolstering private property rights, the Supreme Court ruled that a Florida landowner could sue a local government agency for denying him a building permit because he refused to pay for improvements on public property several miles away.

The 5-4 decision expanded the ability of property owners to claim that government requirements attached to land-use permits amount to an improper “taking” under the Constitution. The 5th Amendment says private property can not be taken for public use without “just compensation.”

“The ruling is a powerful victory for everybody’s constitutional property rights, from coast to coast,” said Paul J. Beard II, principal attorney for the Pacific Legal Foundation, a property rights group that represented the landowner in the case.

“Regulators can’t hold permit applicants hostage with unjustified demands for land or other concessions — including, as in this case, unjustified demands for money,” Beard said.

Writing for the majority, Justice Samuel A. Alito Jr. said “extortionate demands” from government agencies in exchange for granting a permit application “frustrate the Fifth Amendment right to just compensation” and are prohibited by court precedents.

Those precedents, including a landmark 1987 case involving the California Coastal Commission, had applied to instances in which landowners were required to give up some of their property in exchange for building or other land-use permits.

In the Florida case of Koontz vs. St. John’s Water Management District, the court said a government demand for money also could constitute a taking of property. And the court said a landowner could make that argument even if nothing were taken because the permit was denied.

Coy Koontz Sr. had sued the water district after battling over permits for a 15-acre, mostly wetlands parcel he bought near Orlando in 1972.

In 1994, Koontz applied for permits to build on about four acres of the land and offered to dedicate the rest of the property as protected wetlands. The district wanted him either to reduce the size of his development or pay for improvements to district-owned land several miles away.

Koontz refused, and the permit was denied. He sued and won in the state District Court in Orlando, but the Florida Supreme Court reversed the decision because the permit was denied and the water management district had not taken any of Koontz’s property.

On Tuesday, the Supreme Court sent the case back to the lower court. Alito was joined in the decision by Chief Justice John G. Roberts Jr. and Justices Antonin Scalia, Anthony M. Kennedy and Clarence Thomas.

In a strongly worded dissent, Justice Elena Kagan warned that the decision “threatens to subject a vast array of land-use regulations, applied daily in states and localities throughout the country, to heightened constitutional scrutiny.”

“I would not embark on so unwise an adventure,” she said.

The Obama administration had urged the court not to expand property owner rights in the case. The attorneys general of California, New York, Illinois and 17 other states, along with the District of Columbia and Puerto Rico, also urged the court not to side with Koontz because expanding the so-called takings clause would lead to increased litigation over land-use decisions.

“The risk of such litigation will place those governments in the uncomfortable position of having to choose between denying otherwise beneficial projects and permitting development to proceed without mitigating its impacts,” the states said.

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This entry was posted on June 28, 2013 by in Knowledge Center, National and tagged , , , .
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