NAHB Takes Fight for Property Owners to U.S. Supreme Court

Home builders are in the crosshairs as cash-strapped local governments that have seen their budgets decimated during the economic downturn look for ways to shift infrastructure costs to the private sector.

For years, local governments have pursued arrangements with developers to extract certain concessions in exchange for the opportunity to develop. For example, a locality may ask a developer to improve the street in anticipation of the increased traffic that a development may bring.

In many cases, it's a fair request. However, some local governments seem all too willing to stretch the boundaries to the limit – and now the courts are backing them.

A recent ruling by the Florida Supreme Court would effectively allow local governments to force builders to provide community services or pay for improvements on public lands miles away from their property before they can receive a permit to develop their own private property. Following an appeal, the case now moves to the highest court in the land.

Taking the Lead

Leading the fight on behalf of property owners and acting to ensure that the interests of NAHB members are appropriately represented, NAHB on Nov. 28 filed an amicus (friend of the court) brief with the U.S. Supreme Court in Koontz v. St. Johns River Water Management District, a landmark case with major implications for land developers nationwide.

NAHB has been joined by more than a dozen other prominent real estate and business organizations, including the U.S. Chamber of Commerce, the National Mining Association, the American Farm Bureau Federation and the Real Estate Roundtable.

The filing in support of Koontz and the rights of all property owners details how the defendant has overstepped its bounds.

“No matter how well intentioned the government may be, the Constitution was not designed to make government’s life easier at the expense of private citizens,” the brief said. “Plainly, there must be some limit on the ability of government agencies to impose conditions on the issuance of permits. Otherwise, no citizen’s rights as to anything would be secure.”

Background

Coy A. Koontz owned 14.2 acres of vacant land in Central Florida and wanted to improve 3.7 acres of the property. In exchange for the opportunity to develop, Koontz offered to dedicate the remainder of his property – more than 75% of his land – to the state for conservation.

The government rejected the proposal and pressed Koontz for more, demanding that Koontz also enhance 50 acres of government-owned wetlands – more than four miles away from Koontz's property – by replacing culverts and filling in some ditches. The government never demonstrated how the off-site improvements to government-owned land relate to the alleged impact of Koontz’s dredge-and-fill activities on his own property.

But when Koontz refused the district’s demand, his permit applications were denied outright. The district told Koontz it would not issue permits for his property until he agreed to the district’s off-site work conditions.

Koontz sued on the ground that the government was taking his land without just compensation.

Unfortunately, the Florida Supreme Court ruled that the district's demand was not a "taking" in this case. The court also ruled that it was legal for the government to refuse to issue the permit until Koontz agreed to make the improvements.

What’s at Stake

If the U.S. Supreme Court allows the Florida Supreme Court’s decision to stand, it could be opening the door to allow any municipality in America to force any home owner who requests a permit to remodel their home to perform expensive, unnecessary and unrelated improvements before receiving permission to upgrade their own house.

In today’s tough economy, localities struggling to make ends meet and balance their budgets can be expected to continue to try to shift infrastructure and service costs to the private sector. If the Florida Supreme Court’s decision is upheld, that shift will be expedited by putting the burden back on developers (both legally and financially) and by forcing developers to accept invalid exactions before having their day in court.

NAHB will keep its members apprised as this case proceeds. The Supreme Court is expected to deliver its decision by June 30.

NAHB Legal Resources

NAHB’s proactive litigation efforts have forced governmental bodies and agencies at the state and federal levels to scale back or entirely eliminate efforts to limit or stop development on countless parcels nationwide.

NAHB provides a myriad of legal resources for both members and state and local association staff. While the NAHB staff counsel cannot replace your local attorney, NAHB can offer legal research, litigation funding, and/or litigation strategy, depending on the situation and the issues involved. See the Legal Services for details.

The NAHB Legal Research Program also provides free legal research assistance and information on building industry-related issues to all members. More information can be found here.