Several recent U.S. Supreme Court decisions have gained a great deal of attention, but one that did not gain as much attention will have a great impact on developers in California. In Koontz v. St. Johns River Water Management District, the Court considered a state of Florida demand that a property owner either dedicate most of his land or pay a fee to preserve land elsewhere. The applicant rejected both proposed conditions. The underlying issue was how to apply the general constitutional standard that conditions imposed on development must mitigate impacts of the development.
The Court made two holdings that will directly affect the way courts in California have considered development projects.
First, Florida argued that nothing illegal had occurred because, after the applicant rejected both alternative conditions, the permit had been denied. The Court rejected that theory, noting that Florida’s argument would allow the government to make illegal demands without consequence simply by rejecting permits.
Second, the Court held that a fee could be a taking and is therefore subject to the same standards as other conditions. The second issue may be more important in California. For instance, some cities now only charge a fee for inclusionary housing, arguing that a fee is always legal. The Koontz case, however, makes it clear that a fee must be justified by a “nexus” the same as any dedication.
This entire area of law, of course, is subject to many complexities — even Koontz sent procedural issues back to the Florida courts — so we strongly encourage you to seek counsel if you believe your project is being subjected to improper conditions. Richard Schulman of HechtSolberg has successfully challenged both development conditions and development fees in court, and both Mr. Schulman and Neil Hyytinen of HechtSolberg have had a great deal of success negotiating development terms with agencies.