The United States Supreme Court previously ruled that if a government entity conditions “the approval of a land-use permit on the landowner’s relinquishment of a portion of his property without a nexus and rough proportionalitybetween the government’s demand and the effects of the proposed land use,” it constitutes an unconstitutional condition akin to a taking. On June 25, 2013 the United States Supreme Court significantly expanded this protection against the misuse of the power of land-use regulation in its decision in Koontz v. St. Johns River Water Management District.

In Koontz, the Supreme Court held that the sufficient nexus and rough proportionality requirements apply even if the landowner’s rejection of a demand results in the government’s denial of the permit and regardless of whether the government’s demand is for a property right or monetary expenditure.

This case arose when Koontz applied for permission to develop Florida wetlands property, and instead of conditionally approving his permit, the Water Management District refused to approve construction of his proposed development unless he met certain demands, including (1) reducing the size of the development, (2) deeding the remaining land to the District for conservation and (3) paying for improvements to other wetlands owned by the District. Believing the demands to be excessive, Koontz filed suit alleging an “unreasonable exercise of the state’s police power constituting a taking without just compensation.”

Ruling in favor of Koontz, the practical effect of the Supreme Court’s decision is that the government may not circumvent the nexus and proportionality requirements by couching unconstitutional conditions in terms of preliminary demands or by requiring monetary extractions in lieu of the relinquishment of property rights. It does not matter whether the government approves a permit with conditions the landowner must meet or denies a permit because the landowner refuses to meet certain demands. Additionally, it does not matter whether the government demands the relinquishment of a portion of the landowner’s real property or a form of monetary payment. In granting land-use permission the government must always establish a sufficient nexus and proportionality between its conditions or demands and the effects of the proposed land use; otherwise the government’s action is unconstitutional.