Justice Alito’s majority opinion last week in Koontz v. St. Johns River Water Mgmt. Dist., No. 11-1447, 2013 U.S. LEXIS 4918 (U.S., June 25, 2013), shifted the topography of takings law for the first time in nearly two decades. While the Supreme Court’s takings jurisprudence has been stagnant since the watershed cases of Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), the Koontz case has significantly expanded the application of these cases’ “essential nexus” test.
In Koontz the Plaintiff wished to develop four of his 15 acres of designated wetlands. The state agency responsible for permitting the development required that the undeveloped acres of Plaintiff’s property be placed in a conservation easement and that the Plaintiff do $150,000 of mitigation to off-site wetlands. While the plaintiff was ok with the conservation easement, he objected to the off-site mitigation and his wetland permit was denied as a result.
The issues in the case were whether Nollan’s “essential nexus” test applies:
- when the permit is denied (as opposed to approved with conditions precedent), and
- with monetary exactions (as opposed to land exactions)
The majority opinion reversed the Florida Supreme Court in answering yes to both of these questions and remanded the case to be tried within the context of the Nollan “essential nexus” test.
Private property advocates have celebrated the Koontz decision; the four liberal Justice’s dissent expressed concern that the monetary exaction holding will cause more landowners to challenge fees and taxes associated with land use permitting to the detriment of municipal government legal resources; and environmentalists have called the opinion a blow to sustainable development. However, the cheers of property rights advocates may be short-lived as municipalities and regulatory agencies learn to carefully dance around the landmines that trigger Nollan’s heightened scrutiny. The off-shoot of this regulatory dance is that landowners are likely to face more outright permit denials and fewer conditional approvals where regulatory agencies work with applicants toward a permit’s approval. When conditions are imposed upon applicants’ land use permits, agencies will take a more conservative look at what mitigation measures are available. While the “essential nexus” remains a workable and by most accounts reasonable test to consider permissible mitigation measures and permit conditions, Koontz’s expanded applicability of the test will have a chilling effect on the use of innovative land use practices, such as Transfer Development Rights (“TDRs”), that comprise smart growth and encourage sustainable development. This is because city and regulatory agencies are likely to shy away from litigious land use proceedings and choose a course of action where their decision would not be subject to heightened “essential nexus” scrutiny.
 The “essential nexus” test requires that there is a nexus between the condition imposed by the agency and the impact of the landowner’s proposed land use.
 Nollan held that an “essential nexus” must exist between exactions on land in the form of a public easement and the proposed land use.
 Without conditions precedent to permit approvals, there can be no conditions to constitute an unconstitutional taking.