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Supreme Court Issues Significant Victory for Real Estate Developers

Late last month, the U.S. Supreme Court issued an important land-use decision that was a significant victory for property owners and real estate developers. In Koontz v. St. John’s River Water Management District, a local Florida water management district conditioned its approval of a wetlands development permit on the landowner/developer’s making a financial payment towards improvements to offsite county wetlands. The landowner/developer refused to make the payment in exchange for the permit, and the agency denied his application. After several years of litigation, the case finally reached the U.S. Supreme Court. The Court decided in favor of the landowner/developer. In doing so, the Court expanded the rights of property owners by limiting the ability of state and municipal regulatory agencies to exact funds from applicants seeking land-use permits.

Following this decision, whenever a municipality demands land, money, or the construction of improvements in exchange for a land-use permit, any such exaction will be subject to a dual test requiring a “nexus” and “rough proportionality” between the government’s demands and the development’s impacts. This two-prong test had previously applied only to agency demands for property or property rights. The Koontz case expands this analysis to cover demands for the payment of money.

Although this case is an important victory for landowners, its ultimate ramifications are unclear. The case may very well limit municipalities from exacting concessions from developers, but it may also ultimately result in more permit denials in situations previously resolved by negotiations between developers and regulatory authorities.

We will keep you updated as to any new developments.