"The last time the Supreme Court addressed this was in Eastern Enterprises v. Apfel in 1998. It involved a federal mandate on companies engaged in coal mining to help pay for the health care of miners. Five justices said a government mandate to pay money is not within the scope of the takings clause, although it might raise due process questions. The Koontz case invites the court to re-examine that issue."
Extortion or preservation
Cities and other local government bodies throughout the country are using the permitting process "as a way of extorting money and favors from people who want to do anything with their property, from those doing large developments but also those who want just to put a driveway in their home," said Dana Berliner of the Institute for Justice, an amicus supporting Koontz. "Anything that requires a permit can be an occasion for getting money or other benefit for the government without it having to pay for it."
If Nollan and Dolan apply, she said, many permit fees will survive. "It just means cities can no longer impose crazy, unrelated requirements in the way they have been, like contribute $25,000 to our art fund. Our brief focuses on some of those requirements. One person who wanted to make sandwiches in his small store was required to put in new windows in the store and there was no pretense it had anything to do with making sandwiches or anything."
The federal appellate courts are divided over whether there has to be a relationship between the proposed development and what is being demanded, she said, adding, "That split is not going to get resolved on its own."
Kendall, of the Constitutional Accountability Center, said he has seen no empirical evidence of a national problem with local governments imposing unreasonable conditions on permit approvals.
"The denial of a permit is certainly a triggering mechanism for a takings claim," he said. "The question is just whether that claim is viable. It's viable only if the denial is the functional equivalence of expropriation of property. It's a difficult test to meet, but if [Koontz] can show he is left with no or limited property value then he has at least a claim under Penn Central or Lucas [v. South Carolina Coastal Council]." Kendall, however, doubts that Koontz can meet that particular test because the district was willing to approve some development of his property."
A decision for Koontz, he added, would be bad for everyone involved. "It would significantly hinder the negotiation process that most often results in agreement between developers and government officials. It would result in more denials of permits because government officials would be hindered in securing conditions on development that makes sense for the community. It would throw a monkey wrench in the entire process of negotiation of development permits."
Marcia Coyle writes for The National Law Journal, a Daily Report affiliate.