Tuesday, April 1, 2014

Eminent Domain: Evaluating Land Grabs In Koontz And Hillcrest

By Lisa Lee

In March 2014, the Eleventh Circuit Court of Appeals will hear oral arguments concerning Pasco County’s alleged “land grab” in Hillcrest Property, LLP v. Pasco County. In Hillcrest, Pasco County passed an ordinance requiring only development permit-seeking landowners to deed a portion of land to Pasco County for future roadway development without compensation. On the other hand, for non-permit-seeking landowners, Pasco County offered just compensation for the landowner’s property. Furthermore, permit-seeking landowners demanding compensation or seeking relief from the requirements solely bore the burden of proof before a review committee appointed by Pasco County.

Because the petitioner failed to assert a federal takings claim, the U.S. District Court, Middle District of Florida, evaluated Hillcrest under a substantive due process analysis. The court looked to Nollan v. California Coastal Commission, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994) (“Nollan/Dolan”), the two United States Supreme Court cases requiring development exactions to: (i) have an “essential nexus” between the permit condition and the legitimate state interest; and (ii) maintain a “rough proportionality” between the permit condition and the proposed development impacts. From Nollan/Dolan, the court reasoned that the Takings Clause affirmed “a right in the citizen that private property cannot be taken for public use without just compensation.”

Ultimately, the court held that the ordinance failed rational basis review. Hillcrest found that Pasco County exploited its police power to avoid paying just compensation to only permit-seeking landowners. Furthermore, under the ordinance’s procedures, the landowner bore the burden of proving a lack of the Nollan/Dolan requirements. Essentially, the landowner must undergo inverse condemnation proceedings, which “is not on equal footing with an owner whose land is ‘taken’ through formal condemnation proceedings.”

Nollan/Dolan’s application to development permit grants may have been affirmed by Koontz v. St. Johns River Water Management District, 133 S. Ct. 2586 (2013). In Koontz, a landowner similarly sought a development permit to build on his property and offered to deed a conservation easement to the district to offset the proposed development’s environmental impact.  The district refused and made further demands, which were rejected by the landowner.  Subsequently, the landowner filed suit in state court, claiming that the district’s refusal to grant a development permit amounted to an unconstitutional taking. 

The United States Supreme Court held that a government agency’s demand for property from a development permit applicant must satisfy the Nollan/Dolan requirements, even when it denies the permit. The court failed to distinguish between the approval or the denial of a permit, noting that the government would be able to simply evade the limitations with mere rephrasing of the conditions required for permit approval. Also, the government failed to give at least one plausible alternative to the dedication of land.

Koontz suggests that unreasonable demands for property in exchange for development permits are considered takings if they fail to meet the Nollan/Dolan standards for exactions. The Eleventh Circuit may find Koontz persuasive as it, too, applies Nollan/Dolan to development permit grants.