Currently Reading

Supreme Court rules against authorities that 'extort' land owners seeking permits


Supreme Court rules against authorities that 'extort' land owners seeking permits

The decision overturns a Florida Supreme Court ruling that would have given governments expanded power to force unreasonable exactions upon developers

By National Association of Home Builders August 26, 2013
NAHB_Supreme Court ruling_land owners seeking permits
This article first appeared in the PB August 2013 issue of Pro Builder.

In a major victory for property-rights advocates, the U.S. Supreme Court on June 25 issued an opinion that gives property owners a strong argument with which to fight certain concessions that are often required as a condition for approving a permit to develop a piece of land. The decision overturns a Florida Supreme Court ruling that would have given governments expanded power to force unreasonable exactions upon developers. The National Association of Home Builders' (NAHB) involvement helped make it happen.

The case was Koontz v. St. Johns River Water Management District, a landmark case with major implications for land developers nationwide.
Since the late 1980s, a permit condition was not considered constitutional unless it has a "nexus" to a governmental purpose, and it was "roughly proportional" to the impacts of the project. This is known as the Nollan/Dolan test, named after two Supreme Court cases. The test protects property owners from overzealous land-use permitting officials, but until now there were two outstanding questions about it: 
1) Does it apply even if the permit is denied? 
2) Does it apply if the government's condition is a payment of money?

The Court's Decision

In both instances, the Supreme Court answered in the affirmative. In the first scenario, if a property owner refuses to agree to outrageous conditions in åa permit and the government subsequently denies that permit, the government cannot later argue that because the permit was never granted, there was no constitutional violation. The Supreme Court also ruled that the Nollan/Dolan test applies equally whether the government demands the land owner give up real property or money as a condition of obtaining a permit. Tellingly, the court used a form of the word "extortion" five times to describe the manner in which governments demand property from developers before granting approvals.
This landmark decision effectively denies the government the ability to force unreasonable exactions upon developers in exchange for a permit approval, and it means that federal, state, and local regulators will need to exercise more caution to ensure that permitting demands—including monetary demands—are proportionate to the project at hand.
Leading the fight on behalf of property owners, NAHB headed a coalition of 16 prominent real estate and business organizations in filing an amicus brief that explained why it is neither necessary nor fair for governments to extort money from property owners who wish to use their land.

Related Stories

Education + Training

Fresh Ideas From Ivory Innovations’ Hack-A-House Student Competition

The 2023 Hack-A-House student competition hosted by Ivory Innovations kicks off this Friday 

Education + Training

Texas High School Introduces Construction Booster Club

High school trade students in Seguin, Texas, are getting tools and classroom resources with the help of a new Construction Trades Booster Club

Off-Site Construction

Explore Off-Site Solutions at the 2023 Building Systems Housing Summit

Want to learn more about off-site construction? Register for the 2023 NAHB Building Systems Housing Summit to hear from industry pros


Top Articles


More in Category

COVID-19 may be easing its grip on the U.S. after a disastrous two years, but lingering supply chain disruptions have builders holding onto their pandemic business tactics

An archive of NHQA-winning companies that represent home building's best in Total Quality Management

Don’t let the current hype about single-family B2R communities obscure the need to create long-term sustainability and asset value


Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.

Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.