No.

11-1447 In the

Supreme Court of the United States

COY A. KOONTZ, JR., Petitioner, v. ST. JOHNS RIVER WATER MANAGEMENT DISTRICT, Respondent.

On Writ of Certiorari to the Supreme Court of the State of Florida

PETITIONERS BRIEF ON THE MERITS

BRIAN T. HODGES Pacific Legal Foundation 10940 NE 33rd Place, Suite 210 Bellevue, WA 98004 Telephone: (425) 576-0484 Facsimile: (425) 576-9565 E-mail: bth@pacificlegal.org MICHAEL D. JONES Michael D. Jones and Associates, P.A. 30 Windsormere Way Suite 200 Oviedo, FL 32765 Telephone: (407) 359-9914 PAUL J. BEARD II Counsel of Record Pacific Legal Foundation 930 G Street Sacramento, CA 95814 Telephone: (916) 419-7111 Facsimile: (916) 419-7747 E-mail: pjb@pacificlegal.org CHRISTOPHER V. CARLYLE The Carlyle Appellate Law Firm 1950 Laurel Manor Drive, Suite 130 The Villages, FL 32162 Telephone: (352) 259-8852

Counsel for Petitioner

i QUESTIONS PRESENTED For over eleven years, a Florida land-use agency refused to issue any of the permits necessary for Coy A. Koontz, Sr., to develop his commercial property. The reason was because Koontz would not accede to a permit condition requiring him to dedicate his money and labor to make improvements to 50 acres of government-owned property located miles away from the projecta condition that was determined to be wholly unrelated to any impacts caused by Koontzs proposed development. A Florida trial court ruled that the agencys refusal to issue the permits was invalid and effected a taking of Koontzs property. After the appellate court affirmed, the Florida Supreme Court reversed, holding that, as a matter of federal takings law, a landowner cannot state a claim for violation of the Takings Clause under Nollan v. California Coastal Commission, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 374 (1994), where (1) permit approval is withheld based on a landowners objection to an excessive exaction, and (2) the exaction demands dedication of personal property to the public. The questions presented are: 1. Whether the government violates the Takings Clause when it refuses to issue a land-use permit on the sole basis that the permit applicant did not accede to a permit condition that, if applied, would violate the essential nexus and rough proportionality tests set out in Nollan and Dolan;1 and
1

Pursuant to Rule 24.1 of this Court, Mr. Koontz has altered the phrasing of the introductory paragraph and of the first Question (continued...)

ii 2. Whether the nexus and proportionality tests set out in Nollan and Dolan apply to a land-use exaction that takes the form of a government demand that a permit applicant dedicate money, services, labor, or any other type of personal property to a public use.

(...continued) Presented to more accurately reflect the procedural posture of this case.

iii TABLE OF CONTENTS Page QUESTIONS PRESENTED. . . . . . . . . . . . . . . . . . . . i TABLE OF AUTHORITIES. . . . . . . . . . . . . . . . . . . vi OPINIONS BELOW. . . . . . . . . . . . . . . . . . . . . . . . . . 1 JURISDICTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 CONSTITUTIONAL PROVISIONS AT ISSUE. . . . 2 STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . 2 A. Mr. Koontz Applies for Permits To Make Lawful Use of a Small Area of His Property. . . . . . . . . . . . . . . . . . . . . . . . . 3 B. The District Denies Mr. Koontzs Permit Applications After He Refuses the Districts Demand To Finance Improvements to District-Owned Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 C. Mr. Koontz Sues and Prevails in the Trial and Appellate Courts, Which Hold That the Districts PublicImprovements Exaction Is an Unconstitutional Condition. . . . . . . . . . . . . 7 D. The Florida Supreme Court Reverses, Declaring That the Districts PublicImprovements Exaction Is Not Subject to Constitutional Scrutiny. . . . . . . . . . . . . 10 SUMMARY OF ARGUMENT.. . . . . . . . . . . . . . . . . 11 ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

iv TABLE OF CONTENTSContinued Page I. NOLLAN AND DOLAN APPLY TO THE DISTRICTS PERMIT EXACTION REQUIRING MR. KOONTZ TO FINANCE COSTLY IMPROVEMENTS TO THE DISTRICTS LAND. . . . . . . . . . . . . . 15 A. The Takings Clause Requires Nollan and Dolan Review of Government Attempts To Confiscate Property in the Land-Use Permit Context. . . . . . . . . . 15 B. Applying Nollan and Dolan with Equal Force to All Government Attempts To Confiscate Property in the Permit Process Reflects Important Constitutional Values. . . . . . . . . . . . . . . . 24 II. THE DISTRICTS PERMIT EXACTION CANNOT ESCAPE THE NOLLAN AND DOLAN LIMITATIONS BASED ON ARBITRARY FACTORS LIKE THE TIMING OF THE EXACTIONS IMPOSITION OR THE PROPERTY SOUGHT TO BE CONFISCATED. . . . . . . . . 29 A. Nollan and Dolan Apply Whenever the Government Conditions the Issuance of a Permit on the Applicants Compliance with a Permit Exaction. . . . . . . . . . . . . . . . . . . 29 1. Nollan, Dolan, and This Case All Involved Challenges to Permit Exactions Imposed Prior to Permit Issuance. . . . . . . . . . . 30

v TABLE OF CONTENTSContinued Page 2. The Unconstitutional Conditions Doctrine Applies to All Permit Exactions, Regardless of When They Are Imposed in the Permit Process. . . . . . . . . . . . . . . . . . . 33 B. Nollan and Dolan Apply to All Permit Exactions, Regardless of the Form of the Property Interest the Government Seeks To Confiscate. . . . . . . . . . . . . . . . . . 39 CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

vi TABLE OF AUTHORITIES Page Cases Armstrong v. United States, 364 U.S. 40 (1960).. . . . . . . . . . . . . . . . . . 16, 42, 44 Brown v. Legal Found. of Washington, 538 U.S. 216 (2003).. . . . . . . . . . . . . . . . . . . . 16, 40 City of Monterey v. Del Monte Dunes, 526 U.S. 687 (1999).. . . . . . . . . . . . . . . . . . . . 10, 42 Dolan v. City of Tigard, 854 P.2d 437 (Ore. 1993). . . . . . . . . . . . . . . passim Dolan v. City of Tigard, 20 Or. LUBA 411, 1991 Ore. Land Use Bd. App. LEXIS 316 (1991). . . . . . . . . . . . . . 21, 31 Ehrlich v. City of Culver City, 15 Cal. App. 4th 1737 (Cal. Ct. App. 1993), vacated and remanded, 512 U.S. 1231 (1994). . . . . . . . . . 40-41 Ehrlich v. City of Culver City, 911 P.2d 429 (Cal. 1996) . . . . . . . . . . . . . . . . . . . 41 First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987).. . . . . . . . . . . . . . . . . . . . . . . 28 Frost & Frost Trucking Co. v. R.R. Commn, 271 U.S. 583 (1926).. . . . . . . . . . . . . . . . . . . . . . . 33 Goss v. City of Little Rock, 151 F.3d 861 (8th Cir. 1998).. . . . . . . . . . . . . . . . 35

vii TABLE OF AUTHORITIESContinued Page Jacobsville Developers East, LLC v. Warrick County, 905 N.E.2d 1034 (Ind. Ct. App. 2009). . . . . . . . . 36 Lambert v. City & Cnty. of San Francisco, 529 U.S. 1045 (2000).. . . . . . . . . . 14, 23, 36-38, 42 Lingle v. Chevron U.S.A., Inc., 544 U.S. 528 (2005) . . . . . . . . . . . . . . 10, 19, 23, 33 LTV Steel Co. v. Shalala (In re Chateaugay Corp.), 53 F.3d 478, cert. denied, 516 U.S. 913 (1995).. . . . . . . . . . . . . . . . . . . . . . . 17 Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992).. . . . . . . . . . . . . . . . . . . 16, 22 Lynch v. United States, 292 U.S. 571 (1934). . . . . . 16 Marshall v. Barlows, Inc., 436 U.S. 307 (1978).. . . . . . . . . . . . . . . . . . . . . . . 18 McKain v. Toledo City Plan Commn, 270 N.E.2d 370 (Ohio Ct. App. 1971).. . . . . . . . . 35 Miami Herald Pub. Co., Div. of Knight Newspapers, Inc. v. Tornillo, 418 U.S. 241 (1974).. . . . . . . . . . . . . . . . . . . . . . . 18 Nollan v. California Coastal Commission, 483 U.S. 825 (1987).. . . . . . . . . . . . . . . . . . . passim

viii TABLE OF AUTHORITIESContinued Page Nollan v. California Coastal Commission, 483 U.S. 825 (No. 86-133), 1986 U.S. S. Ct. Briefs LEXIS 1382.. . . . . . . . . . 31 Parks v. Watson, 716 F.2d 646 (9th Cir. 1983).. . . . . . . . . . . . . . . . 34 Perry v. Sindermann, 408 U.S. 593 (1972).. . . . . . . . . . . . . . . . . . . . . . . 33 Phillips v. Wash. Legal Found., 524 U.S. 156 (1998).. . . . . . . . . . . . . . . . . . . . . . . 16 Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984).. . . . . . . . . . . . . . . . . . . . . . . 16 Rutan v. Republican Party, 497 U.S. 62 (1990).. . . . . . . . . . . . . . . . . . . . . . . . 18 Sallie Mae v. Riley, 104 F.3d 397 (D.C. Cir.), cert. denied, 522 U.S. 913 (1997).. . . . . . . . . . . . . . . . . . . . . . . 17 San Remo Hotel v. City & County of San Francisco, 41 P.3d 87 (Cal. 2002).. . . . . . . . . . . . . . . . . . . . . 41 Sherbert v. Verner, 374 U.S. 398 (1963).. . . . . . . . . . . . . . . . . . . . . . . 33 Speiser v. Randall, 357 U.S. 513 (1958).. . . . . . . . . . . . . . . . . . . . 33-34 St. Johns River Water Mgmt. Dist. v. Koontz, 77 So. 3d 1220, No. SC09-713, 2012 Fla. LEXIS 1 (Fla. Jan. 4, 2011) . . . . . . . . . 1

ix TABLE OF AUTHORITIESContinued Page St. Johns River Water Mgmt. Dist. v. Koontz, 5 So. 3d 8 (Fla. Ct. App. 2009) . . . . . . . . . 1 Teague v. Lane, 489 U.S. 288 (1989). . . . . . . . . . . . 37 Town of Flower Mound v. Stafford Estates L.P., 135 S.W.3d 620 (Tex. 2004). . . . . . . . . . . . . . . . . 41 United States v. Pink, 315 U.S. 203 (1942). . . . . . . 31 Vill. of Norwood v. Baker, 172 U.S. 269 (1898).. . . . . . . . . . . . . . . . . . . . . . . 16 Webbs Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980). . . . . . . . . . . . . 16 William J. Jones Ins. Trust v. Ft. Smith, 731 F. Supp. 912 (W.D. Ark. 1990). . . . . . . . . . . 36 Constitution U.S. Const. amend. V. . . . . . . . . . . . . . . . . . . . . . 2, 16 amend. XIV 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Statutes 28 U.S.C. 1257(a). . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Fla. Stat. 373.617(2) . . . . . . . . . . . . . . . . . . . . . . . . 9 373.617(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Miscellaneous Ball, Carlos A. & Reynolds, Laurie, Exactions and Burden Distribution in Takings Law, 47 Wm. & Mary L. Rev. 1513 (2006). . . . . . . . . . 42

x TABLE OF AUTHORITIESContinued Page Brad, Charles, Calling for a New Analytical Framework for Monetary Development Exactions: The Substantial Excess Test, 22 T.M. Cooley L. Rev. 1 (2005) . . . . . . . . . . . . . 26 Burling, James & Owen, Graham, The Implications of Lingle on Inclusionary Zoning and Other Legislative and Monetary Exactions, 28 Stan. Envtl. L.J. 397 (2009) . . . . . . . . . . . . . . 18 Carlson, Anne E. & Pollack, Daniel, Takings on the Ground: How the Supreme Courts Takings Jurisprudence Affects Local Land Use Decisions, 35 U.C. Davis L. Rev. 103, (2001) . . . . . . . . . . . . 27 Fischel, William A., Exploring the Kozinski Paradox: Why Is More Efficient Regulation a Taking of Property?, 67 Chi.-Kent L. Rev. 865 (1991) . . . . . . . . . . 26, 43 Garnett, Nicole Stelle, Unsubsidizing Suburbia, 90 Minn. L. Rev. 459 (2005) . . . . . . . . . . . . . . . . 26 Needleman, Jane C., Exaction: Exploring Exactly When Nollan and Dolan Should Be Triggered, 28 Cardozo L. Rev. 1563 (2006). . . . . . . . . . . . . . 43

xi TABLE OF AUTHORITIESContinued Page Rosenberg, Ronald H., The Changing Culture of American Land Use Regulation: Paying for Growth with Impact Fees, 59 SMU L. Rev. 177 (2006) . . . . . . . . . . . . . . . . . 26 Sullivan, Kathleen M., Unconstitutional Conditions, 102 Harv. L. Rev. 1415 (1989) .. . . . . . . . . . . 17, 32

1 OPINIONS BELOW The opinion of the Florida Supreme Court is reported at St. Johns River Water Mgmt. Dist. v. Koontz, 77 So. 3d 1220 (Fla. 2011), and is reproduced in Petitioners Appendix to the Petition for Writ of Certiorari (Pet. Cert. App.) at A. The Florida Supreme Courts decision denying rehearing and/or clarification is reported at No. SC09-713, 2012 Fla. LEXIS 1 (Fla. Jan. 4, 2011). The opinion of the District Court of Appeal of the State of Florida, 5 So. 3d 8 (Fla. Ct. App. 2009), is reproduced in Pet. Cert. App. at B. The opinion of the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida, is not published, but is reproduced in Pet. Cert. App. at D.

JURISDICTION This Court has jurisdiction under 28 U.S.C. 1257(a). Mr. Koontz filed a lawsuit in the Florida state courts challenging a permit denial under state law, on the grounds that the denial resulted from refusal to accede to an unlawful permit condition. Mr. Koontz prevailed in the Florida trial and appellate courts, which held that the permit condition was unconstitutional under this Courts decisions in Nollan and Dolan interpreting the Fifth Amendments Takings Clause, applied to the states via the Fourteenth Amendment. The Florida Supreme Court reversed in an opinion dated November 3, 2011. The Florida Supreme Courts decision became final on January 4, 2012, when the court denied Mr. Koontzs motion for reconsideration and/or clarification. The Court granted certiorari on October 5, 2012.

CONSTITUTIONAL PROVISIONS AT ISSUE The Takings Clause of the United States Constitution provides that private property [shall not] be taken for public use, without just compensation. U.S. Const. amend. V. The Fourteenth Amendment to the United States Constitution provides, in relevant part, that no state shall deprive any person of life, liberty, or property, without due process of law. U.S. Const. amend. XIV, 1.

STATEMENT OF THE CASE Eighteen years ago, Coy Koontz, Sr.,2 embarked on a struggle against an environmental agency to develop a small portion of his lot, located at a busy intersection of two major highways in Orange County, Florida. J.A. 187 (map of property). When he applied for permits from Respondent St. Johns River Water Management District, the District demanded that he give up 75% of his land to the State and perform costly off-site improvements to government-owned property. Pet. Cert. App. A-6. When Mr. Koontz rejected the Districts deal, the District outright denied him his permits and, along with it, his ability to use his land. Pet. Cert. App. D-4; J.A. 70-71. Believing that no
2

Coy Koontz, Sr., was Petitioner Coy Koontz, Jr.s, father. In 2000, Mr. Koontz, Sr., died. His son, Coy Koontz, Jr., became the personal representative of the estate and the Plaintiff/Petitioner in this action.

3 property owner should have to submit to excessive government demands just to make lawful use of his property, Mr. Koontz sued. And thus began this 18-year old legal battle. A. Mr. Koontz Applies for Permits To Make Lawful Use of a Small Area of His Property When Mr. Koontz purchased his vacant 14.9-acre lot in 1972, land-use laws permitted him to make full use of his property. Pet. Cert. App. A-5 & n.2.; J.A. 2728. But over the years, state and local regulations whittled away at his ability to do so. For example, in 1985, the State enacted an environmental statute and implementing regulations to control the use of private property containing wetlands and uplands suitable for fish and wildlife habitat. J.A. 27, 67. As a consequence of those laws, all but 1.4 acres of Mr. Koontzs property suddenly were swept into a Riparian Habitat Protection Zone overseen by the District. Pet. Cert. App. A-5. Floridas inclusion of portions of Mr. Koontzs land in the Riparian Habitat Protection Zone did not mean the land contained riparian habitat. Instead, the designation created a legal presumption that any use of land within the zone was harmful to such habitat, therefore requiring affected landowners to obtain environmental permits from the District. J.A. 33. Thus, Mr. Koontz not only had to comply with routine land-use regulations, like zoning laws, but also strict environmental regulations enforced by the District. In 1994, Mr. Koontz submitted applications to the District for permits to develop 3.7 acres within the Riparian Habitat Protection Zone. Pet. Cert. App. A-

4 5A-6; Pet. Cert. App. D-4. But given its location at the intersection of two highways, the project site had little, if any, habitat that needed protection. Pet. Cert. App. D-3. Any wetlands that may have once existed on the project site had been drained by a ditch that the State ran across Mr. Koontzs land. J.A. 116, 137. When experts inspected the property, the only standing water on the project site lay in ruts along an easement road owned by the State, and used and maintained by a power company. J.A. 117-18, 142-43. Residential and commercial development, road construction, and other government projects already had seriously degraded the proposed site from its original condition and rendered it inhospitable to animal habitat. Pet. Cert. App. D-3; see also J.A. 101-02, 111-19, 137-39 (describing conditions in project area). Indeed, the only wildlife found on the project site was common, nonthreatened species typically found in developed areas, such as raccoons, birds, and opossums. J.A. 105-06, 139-41. And on some areas of the project site that had been designated by the District as wetlands, homeless shelters and campfires were found. J.A. 118, 143-44. Nevertheless, as required by District regulations, Mr. Koontz included in his permit applications mitigation for the presumed disturbance to riparian habitat. Pet. Cert. App. A-6; Pet. Cert. App. D-4; J.A. 29-30, 107. Specifically, he offered to place the remaining eleven acres of his property into a conservation easement. Id. Mr. Koontz thought that giving away about 75% of his property to the District would be more than enough to satisfy it. J.A. 29-30, 107, 119-20; see also J.A. 111, 119, 139 (expert conclusions that conservation area was sufficient to mitigate any impacts; additional mitigation was

5 unnecessary and excessive). mistaken. But he was sorely

B. The District Denies Mr. Koontzs Permit Applications After He Refuses the Districts Demand To Finance Improvements to District-Owned Property The morning of the hearing on his applications before the Districts Governing Board, Mr. Koontz was dealt a surprise by the Districts staff. J.A. 103, 10809. The staff told him they would recommend denial of the permit applications unless, in addition to the eleven-acre dedication, he agreed to finance the restoration and enhancement of at least 50 acres of wetlands on District-owned property located miles away, by replacing culverts or plugging ditches, and building a new road. J.A. 26, 103-04, 109. In other words, to obtain the permits he needed to use his property, Mr. Koontz would have to agree to dedicate his money to unrelated public improvements on the Districts land. Pet. Cert. App. A-6; Pet. Cert. App. D4; J.A. 70-71, 122-23. At no time did District staff ever demonstrate how Mr. Koontzs projectlocated on a relatively small corner of his propertycould justify imposition of either the land grab or the requirement that he finance off-site public improvements. Instead, the District explained that, because the property was located within its Riparian Habitat Protection Zone, any use was presumed to be harmful. J.A. 33. The Districts staff admitted that they had disregarded several experts who concluded that the project area was degraded and fractured, had not performed any surveys of the project site to determine the presence of

6 riparian habitat, and had no evidence to refute Mr. Koontzs contrary studies. J.A. 146. Eager to avoid any delays and difficulties in obtaining the permits he needed to use his property, Mr. Koontz agreed to the eleven-acre dedication of land. J.A. 29-30. But the requirement that he finance work on the Districts property was the straw that broke the camels back. J.A. 29-30, 107. To give away most of his land and to finance costly improvements to the Districts land miles away were too much for Mr. Koontz to bear and raised serious concerns about the continued economic feasibility of his modest project. J.A. 29-30, 34-35, 100, 105. Adding insult to injury, the District explained that it had discounted the mitigation value of the eleven-acre dedication because it (wrongly) believed that Mr. Koontz had already lost that [portion of his land] due to regulationits no fun, but thats the facts of life. J.A. 39, 107. At the hearing before the Districts Governing Board, Mr. Koontz refused to acquiesce to the second exaction. Pet. Cert. App. D-4. Consequently, the Board denied his permit applications. Id; J.A. 70-71. As the District readily concedes, the denials were based exclusively on the fact that [Mr. Koontz] would not provide additional mitigation to offset impacts from the proposed projecti.e., restoration and enhancement of the Districts property. J.A. 70. Importantly, if Mr. Koontz had acceded to this condition, the exact project [he] proposed would have been permitted. J.A. 71. Without the permits, Mr. Koontz could not use his property. Pet. Cert. App. A-5 - 6. Unless he agreed to finance the improvements to the Districts lands, the

7 District would hold his property hostage. J.A. 70-71. The District would not budge, with one Board member even telling Mr. Koontz that, if he did not want to comply with its demand, he should just get on with it and file a lawsuit. J.A. 40. Faced with the Districts unsavory ultimatumyour money or your land!Mr. Koontz did just that and sued. C. Mr. Koontz Sues and Prevails in the Trial and Appellate Courts, Which Hold That the Districts PublicImprovements Exaction Is an Unconstitutional Condition In late 1994, Mr. Koontz filed an action against the District in Florida state court for damages under state law. J.A. 4-65 (the operative complaint). His claim ultimately was tried in 2002 on the question of whether the off-site mitigation required by the District was an unreasonable exercise of police power constituting a taking without just compensation, under section 373.617(b) of the Florida Statutes. Pet. Cert. App. B 19 n.3. The trial court entered judgment for Mr. Koontz, reserving jurisdiction to award monetary damages authorized by section 373.617(b) until after the District responded to the judgment. Pet. Cert. App. D-11. The court relied on two of this Courts federal takings precedentsNollan v. California Coastal Commission and Dolan v. City of Tigardto conclude that the Districts exaction requiring off-site public improvement s on g ov ernment land was unconstitutional under the Takings Clause of the Fifth Amendment to the United States Constitution, as applied to the states via the Fourteenth Amendment.

8 Pet. Cert. App. D-5 - 6, 10 - 11; Pet. Cert. App. B-19 n.3; J.A. 95. Nollan and Dolan are takings tests applied in the unique context of land-use permitting to ensure that government agencies do not unconstitutionally condition the issuance of permits on applicants waiver of constitutionally protected rightsnamely, the right to compensation for confiscated property. In Nollan, this Court held that a land-use agency could demand uncompensated dedication of an easement over a permit applicants property, but only if the easement bore an essential nexus to the impact of the applicants proposed use for the property. Nollan, 483 U.S. at 837. In Dolan, the Court held that, in addition to an essential nexus, there must also be rough proportionality between the permit exaction and the impact of the proposed use. Dolan, 512 U.S. at 391. Applying Nollan and Dolan, the trial court in this case found that the District did not prove the necessary relationship between the condition of off-site mitigation and the effect of development. Pet. Cert. App. D-11. The court explained that the District failed to show either an [essential] nexus between the required off-site mitigation and the requested development of the tract[] as required in Nollan, or rough proportionality to the impact of site development, as required in Dolan. Id. Accordingly, the trial court concluded that the Districts denial of the Koontz permit application . . . was invalid as an unreasonable exercise of police power. Id. at 10-11. In light of the judgment, the District had three choices under state law: (1) agree to issue the permits, (2) agree to pay damages, or (3) agree to modify its

9 decision to avoid the unreasonable exercise of police power. Fla. Stat. 373.617(3). The District chose to approve Mr. Koontzs permit applications without the unlawful exaction. Pet. Cert. App. A-7. The trial court ordered the District to issue the permits by June 2004, but the District delayed issuing the permits until December 2005over eleven years after it denied the permit applications. Pet. Cert. App. A-7; J.A. 183. As provided in the Florida statute under which Mr. Koontz maintained his claim, the trial court subsequently awarded Mr. Koontz damages resulting from the Districts unlawful denial of the permit applications. Pet. Cert. App. C-2 (making award of damages); see also Fla. Stat. 373.617(2) (providing for monetary damages and other relief for an unreasonable exercise of the states police power constituting a taking without just compensation). On appeal, the District did not dispute the trial courts factual findings that no essential nexus or rough proportionality connection existed between the Districts exaction and the impact of Mr. Koontzs project. Pet. Cert. App. B-6 (The District makes no challenge to the evidentiary foundation for [the trial courts factual findings.). Instead, the District argued that Mr. Koontz had no cause of action under section 373.617(2), because Nollan and Dolan were inapplicable to the challenged exaction. Pet. Cert. App. B-6B-7, n.3. First, the District argued that Nollan and Dolan do not apply to exactions imposed prior to permit issuance, but only to those exactions attached to the issuance of a permit. Pet. Cert. App. B-6. The District claimed that, because it issued no permits until after the trial court invalidated the condition, it never imposed an exaction, making Nollan and Dolan review unavailable to Mr. Koontz to begin with. Pet.

10 Cert. App. B-6. Second, the District argued that Nollan and Dolan apply only to real-property exactions, not to monetary exactions. Pet. Cert. App. B-9. The appellate court rejected the Districts arguments. It held that Nollan and Dolan apply to all property exactions, including monetary ones, that are imposed prior to permit issuance. Pet. Cert. App. B8B-10. Because the District did not dispute that, if Nollan and Dolan applied, its permit exaction would fail the essential nexus and rough proportionality tests (Pet. Cert. App. B-6), the court upheld the trial courts judgment of liability against the District. Pet. Cert. App. B-10. D. The Florida Supreme Court Reverses, Declaring That the Districts Public-Improvements Exaction Is Not Subject to Constitutional Scrutiny The Florida Supreme Court reversed. First, the court held that Nollan and Dolan do not apply to monetary exactions, like the one imposed by the District. Misconstruing City of Monterey v. Del Monte Dunes, 526 U.S. 687 (1999), and Lingle v. Chevron U.S.A., Inc., 544 U.S. 528 (2005), the court held that this Court must have intended for Nollan and Dolan to be strictly limited to their facts. Pet. Cert. App. A15A-16. The court did not try to reconcile its cramped reading of Nollan and Dolan with the underlying logic and purpose of those precedents. Second, the court held that Nollan and Dolan did not apply to the Districts exaction, because the District did not issue [the] permits and nothing was ever taken from Mr. Koontz. Pet. Cert. App. A-21 (original

11 emphasis omitted). The court assumed that, in Nollan and Dolan, the land-use agencies had issued permits after actually taking the exacted property. The court did not consider that, in both Nollan and Dolan, the agencies actually had imposed the exactions prior to issuance of the permits and that no property had ever changed hands from the owners to the agenciesfacts that mirror exactly what happened here. The Florida Supreme Court reversed the court of appeals opinion affirming the judgment in Mr. Koontzs favor and his damages award. Pet. Cert. App. A-21.

SUMMARY OF ARGUMENT The Districts demand that Mr. Koontz finance improvements to its property as a condition of permit approvalin addition to giving up almost 75% of his landwas an exaction implicating the Takings Clause and, therefore, triggering review under Nollan and Dolan. The District forced Mr. Koontz to choose between two fundamental constitutional rights: (1) the right to make lawful use of his property and (2) the right under the Takings Clause to compensation for the substantial cost incurred making unrelated public improvements. When Mr. Koontz would not agree to waive his right to compensation for the cost incurred making the off-site improvements, the District denied his permit applications. The Districts attempt to bargain its way around the Takings Clauses requirement that property taken for a public use be compensated is precisely the kind of government dealmaking the unconstitutional conditions doctrine, as applied in Nollan and Dolan, is meant to check.

12 The doctrine has long been a staple of this Courts jurisprudence. In its most basic formulation, the doctrine provides that government may not grant an individual a benefit or permit to exercise a constitutional right on the condition that he surrender another constitutional right. The doctrine has shielded countless Americans who seek a government benefit or permit from government deals that would strip them of their constitutionally protected rights, including the right to free speech, the right to free exercise of religion, and the right to be free from unreasonable searches. In 1987, this Court expressly recognized the doctrines applicability in the land-use context in Nollan and, subsequently, in Dolan. While the Takings Clause generally prohibits uncompensated takings, the Court in Nollan recognized a narrow exception to that general rule: In the land-use context, the government has the discretion to exact propertywithout having to pay for itas a condition of permit approval. But the Court went on to place a vital limitation on that exception. Only those exactions that bear an essential nexus to the alleged adverse impact of the proposed land use are authorized; as the unconstitutional conditions doctrine teaches, any other exaction is merely an unlawful attempt to skirt the Takings Clauses prohibition on uncompensated takings and therefore is an unconstitutional condition. Later, in Dolan, the Court refined the essential nexus test, requiring that any permit exaction must also be roughly proportional to the alleged adverse impact of the proposed land use. The discretion and the limitations go hand-in-hand: The Takings Clause does not allow the government unbridled power to confiscate property of any kind,

13 whenever and however it wants, simply because it holds the power to issue land-use permits. While rooted in the Takings Clause, Nollan and Dolan rely on the unconstitutional conditions doctrine to smoke out attempts by government agencies to circumvent that Clauses requirement that compensation be paid for property takings. Nothing in that doctrine, the Takings Clause, Nollan, or Dolan recognizes a relevant distinction among the types of permit exaction subject to the essential nexus and rough proportionality limitations. Government demands for real or personal propertyboth categories protected by the Takings Clauseare subject to the same limitations. Nor does application of the limitations depend upon when in the permit process the exaction is imposed. A decision to deny a permit application based on refusal to accede to an unlawful exaction and a decision to approve a permit application subject to acceptance of an unlawful exaction are substantively identical: In both cases, no permit issues unless and until the permit applicant agrees to waive his right to compensation for the confiscated property. The Florida Supreme Courts decision to the contrary fails to take into account the logic of Nollan and Dolan. Uncompensated takings in the land-use context are permissible only because such takings are limited by the essential nexus and rough proportionality tests in Nollan and Dolan. If those limitations do not apply, neither does the exception to the Takings Clauses prohibition against uncompensated takings recognized in those precedents. In other words, the Takings Clause does not countenance a totally unlimited power to confiscate

14 property in the permit process. Thus, if Nollan and Dolan do not apply to the Districts exaction of Mr. Koontzs money, then the District must accept the Takings Clauses default rule prohibiting government from confiscating permit applicants property. The Florida Supreme Courts decision confining the essential nexus and rough proportionality limitations to the narrow facts of those cases ignores the interdependence between the limitations and the extraordinary power that the government has to exact property from permit applicants. The decision also leaves Floridians with little to no protection against government attempts to cloak[] within the permit process an out-and-out plan of extortion. Lambert v. City & Cnty. of San Francisco, 529 U.S. 1045, 1048 (2000) (Scalia, Kennedy, and Thomas, JJ., dissenting from denial of certiorari) (internal citations omitted). Naked, uncompensated confiscations of land are uncommon, because of the obvious application of Nollan and Dolan. Instead, land-use authorities increasingly have resorted to confiscating property other than interests in real propertymost often, money, in the form of either financing of public projects (as in Mr. Koontzs case) or payment of fees in-lieu of a land dedication. Yet the constitutional injury is the same: The property owner is required, as a permit condition, to waive his right to compensation for the confiscation. If the Florida Supreme Courts decision stands, that constitutional right will rarely have a remedy. The Florida Supreme Court based its decision in large part on its desire to preserve the freedom and flexibility of land-use agencies like the District to make deals with permit applicants. It did so, but at too

15 high a cost to the constitutional rights of those applicants. The decision of the Florida Supreme Court should be reversed.

ARGUMENT I NOLLAN AND DOLAN APPLY TO THE DISTRICTS PERMIT EXACTION REQUIRING MR. KOONTZ TO FINANCE COSTLY IMPROVEMENTS TO THE DISTRICTS LAND A. The Takings Clause Requires Nollan and Dolan Review of Government Attempts To Confiscate Property in the Land-Use Permit Context The District conditioned Mr. Koontzs permit approval on his agreement to finance improvements to government-owned property. Pet. Cert. App. A-6. In other words, the District wanted Mr. Koontz to dedicate a sum of his money to a public use, without having to compensate him for the substantial cost incurred making those unrelated improvements. When Mr. Koontz refused, the District denied him his permits. Pet. Cert. App. D-4; J.A. 70-71. In essence, the District presented Mr. Koontz with the choice to exercise either of two rightsbut not both: (1) his constitutional right to make lawful use of his property or (2) his constitutional right to compensation for the cost incurred financing improvements. The Takings Clause protects both.

16 The Takings Clause protects the right to exercise[] . . . dominion over, and possess, use, and dispose of, ones property. Phillips v. Wash. Legal Found., 524 U.S. 156, 170 (1998) (The Takings Clause protects interest earned on client funds.); Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) (regulation denying landowner all economically beneficial use of his property violated Takings Clause). The Clause also guarantees compensation if property is taken for a public use; put differently, it prohibits uncompensated takings. U.S. Const. amend. V; see also Brown v. Legal Found. of Washington, 538 U.S. 216, 235 (2003) (The Fifth Amendment . . . proscribes taking without just compensation. (citation omitted)). Property under the Takings Clause comprises both tangible (e.g., real-property interests, personal property, money) and intangible property (e.g., intellectual property). See, e.g., Phillips, 524 U.S. at 170 (accrued interest); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1003 (1984) (trade secrets); Webbs Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 162 (1980) (money); Armstrong v. United States, 364 U.S. 40, 44-46 (1960) (materialmens liens); Lynch v. United States, 292 U.S. 571 (1934) (contracts); Vill. of Norwood v. Baker, 172 U.S. 269, 279 (1898) (money). Moreover, this Courts precedents establish that, in the land-use permit context, property rights are entitled to as much protection from government abuse as any other constitutionally protected right. Dolan, 512 U.S. at 392 (We see no reason why the Takings Clause of the Fifth Amendment, as much a part of the Bill of Rights as the First Amendment or Fourth Amendment, should be relegated to the status of a poor relation in these comparable circumstances.).

17 If the District had approached Mr. Koontz outside the permit contextand directly seized his money to finance the public improvements, the Districts action would have been unconstitutional, because it would have violated the Takings Clauses prohibition against uncompensated takings of property. See, e.g., Sallie Mae v. Riley, 104 F.3d 397, 402 (D.C. Cir. 1997) (applying takings analysis to straightforward mandates of cash payment to the government), cert. denied, 522 U.S. 913 (1997); LTV Steel Co. v. Shalala (In re Chateaugay Corp.), 53 F.3d 478, 493 (2nd Cir. 1995) (applying takings analysis to government act requiring direct transfers of money to the government), cert. denied, 516 U.S. 913 (1995). The fact that the Districts attempted confiscation took the form of a permit exaction did not, as the Florida Supreme Court held, immunize it from judicial scrutiny under the Takings Clauses compensation guarantee. As the doctrine of unconstitutional conditions teaches, if the District had discretion via the permit process to confiscate property from Mr. Koontz, the Takings Clause imposed discernible limitations on that discretion. The unconstitutional conditions doctrine is a well-settled principle of constitutional law. Dolan, 512 U.S. at 395. The doctrine holds that government may not grant a benefit on the condition that the beneficiary surrender a constitutional right, even if the government may withhold that benefit altogether. Kathleen M. Sullivan, Unconstitutional Conditions, 102 Harv. L. Rev. 1415, 1415 (1989). The doctrines purpose is to identif[y] a characteristic technique by which government appears not to, but in fact does burden [constitutionally preferred] liberties, triggering a demand for especially strong justification by the

18 state. Id. at 1419. If a constitutional provision prohibits a government act, then, under the doctrine, government cannot employ schemes for skirting that prohibition. Simply put, the doctrine recognizes that what a constitutional provision precludes the government from commanding directly, it also precludes the government from accomplishing indirectly. See, e.g., Rutan v. Republican Party, 497 U.S. 62, 77-78 (1990). The unconstitutional conditions doctrine has been invoked in almost every area of constitutional law, including takings law in the landuse context. James Burling & Graham Owen, The Implications of Lingle on Inclusionary Zoning and other Legislative and Monetary Exactions, 28 Stan. Envtl. L.J. 397, 407 (2009) (The unconstitutional conditions doctrine has been invoked in a wide range of cases in which government has traded with people for their right to free speech, their right to freedom of religion, their right to be free from unreasonable searches, their right to equal protection, and their right to due process of law.); see also Rutan, 497 U.S. at 78 (Under our sustained precedent, conditioning hiring decisions on political belief and association plainly constitutes an unconstitutional condition, unless the government has a vital interest in doing so.); Marshall v. Barlows, Inc., 436 U.S. 307, 315 (1978) (holding that a business owner could not be compelled to choose between a warrantless search of his business and shutting down the business, and granting declaratory and injunctive relief); Miami Herald Pub. Co., Div. of Knight Newspapers, Inc. v. Tornillo, 418 U.S. 241, 255 (1974) (holding a Florida statute unconstitutional as an abridgement of freedom of the press because it forced a newspaper to incur

19 additional costs by adding more material to an issue or to remove material it desired to print). In 1987 and 1994, this Court decided Nollan and Dolan, respectivelyprecedents involving a special application of the doctrine of unconstitutional conditions, Lingle, 544 U.S. at 547 (internal quotation marks omitted). Together, these cases held that the Takings Clause allows the government to confiscate property as a condition of permit issuance, but only under strict limitations. Nollan, 483 U.S. at 837 (Commission can take an easement in the Nollans property, if the exaction bears an essential nexus to the impact of their house); Dolan, 512 U.S. at 391 (City can take land from Dolan, if exaction is roughly proportional to impact of the project). Permit exactions that violate these limitations are, in light of the doctrines teachings, unconstitutional conditions. See, e.g., Dolan, 512 U.S. at 385 (describing unconstitutional conditions in land-use context). In Nollan, the owners of beachfront property, Pat and Marilyn Nollan, applied to the California Coastal Commission for a land-use permit to replace their bungalow with a single-family home. The Commission approved the permit application subject to various conditions. Nollan, 483 U.S. at 828. One condition was that the Nollans dedicate a public-access easement across their private beach. Id. The Commission justified the easement exaction on the grounds that the new house would increase blockage of the view of the ocean, thus contributing to the development of a wall of residential structures that would prevent the public psychologically . . . from realizing a stretch of coastline exists nearby that they have every right to

20 visit, and would increase private use of the shorefront. Id. at 828-29 (quoting Commission). The Nollans rejected the exaction and never made the required dedication; consequently, the Commission did not issue them the permit to remodel. Id. at 828.; Part II.A.1, infra (demonstrating that the Commission approved the Nollans permit application with conditions, but did not issue them a permit). The Nollans filed a writ of mandate under state law to invalidate the permit exaction on the grounds that, if the exaction were consummated, it would effect an uncompensated taking. Id. at 828. The Nollans argued that the exaction represented an unlawful attempt by the Commission to take property without compensation, and was therefore unconstitutional under the Takings Clause, because the exaction bore no connection to the impact of their new home. Id. at 829. This Court agreed, holding that the Commissions easement exaction lacked an essential nexus to the social evil that the Nollans project allegedly caused. Id. at 837. The Court found that because the Nollans home had no adverse impact on existing public access, there was no reason why it should have to provide public access by dedicating an easement to the State. Id. at 838-39. Without a constitutionally sufficient connection, the easement exaction was not a valid regulation of land use but an out-and-out plan of extortion. Id. at 837 (citations omitted). Seven years later, this Court defined how close a fit there should be between a permit exaction and the impact of a proposed land use. In Dolan, 512 U.S. 374, Florence Dolan applied to the City of Tigard for a

21 building permit to expand her store. The City approved the permit application, subject to the condition that she dedicate some of her land for flood-control and traffic improvements. Id. at 377. Ms. Dolan refused to agree to the exactions, did not dedicate any of her land to the City, and consequently did not receive a building permit. Id. at 380-82; see also Dolan v. City of Tigard, 20 Or. LUBA 411, 413, 1991 Ore. Land use Bd. App. LEXIS 316, at *4 (1991) (describing how permit issuance was conditioned on satisfaction of exactions). She sued the City, alleging that the exactions were unconstitutional under the Takings Clause. Dolan, 512 U.S. at 382-3. This Court concluded that while the City had established an essential nexus between the exactions and the impact of the expansion, it did not establish a close enough nexus to pass constitutional muster. Id. at 394-95. The Court held that, beyond an essential nexus, there must be rough proportionality specifically, some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development. Id. at 391. The basic holding in Nollan and Dolan consists of two interrelated propositions. First, in the permit context, the Takings Clause allows government to take property by permit exaction. Second, the Takings Clause puts a limit on the exaction power: authorized confiscations are allowed only if the exaction bears an essential nexus and rough proportionality to the adverse impact of the owners proposed use of his land. Nollan, 483 U.S. at 837; Dolan, 512 U.S. at 391. Conversely, where an insufficient connection exists between the exaction and the adverse impact, the

22 Takings Clause treats the imposition of the exaction as an attempt by the government to skirt, via the permit process, the Clauses prohibition against uncompensated takings. In that case, the exaction is an unconstitutional condition in violation of the Takings Clause. Nollan, 483 U.S. at 837; Dolan, 512 U.S. at 387. As Nollan and Dolan show, the need to protect against unconstitutional conditions is especially pronounced in the land-use permit process. A permit exaction that would confiscate property adversely affects, not just one, but two constitutional rights: (1) the right to make reasonable use of ones land, and (2) the right to be compensated for the exacted property. Nollan, 483 U.S. at 833 n.2 (a permit to build upon ones land is a right, subject to legitimate regulation, not a government benefit). It is one thing to impose burdensome conditions on a benefit to which there is no right in the first place; it is quite another thing to impose the same conditions on the exercise of constitutionally protected rights, like the right to make reasonable use of ones land. This right is extinguishedremoved from the owners bundle of sticksany time the government issues an ultimatum demanding an excessive exaction as a condition that must be satisfied before issuance of a permit. Lucas, 505 U.S. at 1014. The Court derived the Nollan and Dolan limitations from the requirements of the Takings Clause. An exaction that fails the essential nexus and rough proportionality tests is an unconstitutional condition, because it unlawfully requires the property owner to waive the right to compensation for a taking. Dolan, 512 U.S. at 385. As the doctrine of

23 unconstitutional conditions instructs, government may not require a person to give up a constitutional righthere the right to receive just compensation when property is taken for a public usein exchange for a discretionary benefit conferred by the government where the benefit sought has little or no relationship to the property. Id.; see also Lingle, 544 U.S. at 530 (Nollan and Dolan involve a special application of the unconstitutional conditions doctrine.). As Dolans formulation of the doctrine suggests, the doctrine makes no distinction among the kinds of property that government might attempt to confiscate in the permit process, and sees no relevance in the precise timing of the attempted confiscation. Consistent with the logic and purpose of the unconstitutional conditions doctrine, [t]he object of the Courts holding in Nollan and Dolan [is] to protect against the States cloaking within the permit process an out-and-out plan of extortion. Lambert, 529 U.S. at 1048 (Scalia, Kennedy, and Thomas, JJ., dissenting from denial of certiorari) (internal citations omitted). That is exactly what the District sought to do in this casei.e., cloak within the processing of Mr. Koontzs permit applications a plan of extortion. The Districts message to Mr. Koontz was unequivocal: No permit will issue unless and until you give us eleven acres of your land and finance significant improvements to our land located miles away. The District wanted his land and his moneyor it would deny him the right to make lawful use of a small portion of his lot. This is precisely the kind of negotiating over constitutional rights that the unconstitutional conditions doctrinevia Nollan and Dolanwas intended to check. And, since the District

24 never challenged the trial courts factual finding that no connection existed between the off-site-improvement demand and the impact of his project, it is precisely the kind of uncompensated taking of property that the Takings Clause prohibits. Pet. Cert. App. B-6 (The District makes no challenge to the evidentiary foundation for [the trial courts] factual findings.). The limitations in Nollan and Dolan readily can and should be applied to the Districts permit exaction. B. Applying Nollan and Dolan with Equal Force to All Government Attempts To Confiscate Property in the Permit Process Reflects Important Constitutional Values Exempting the Districts permit exaction from review under the essential nexus and rough proportionality limitations in Nollan and Dolan produces unintended adverse consequences particularly for the District and other land-use agencies. As discussed earlier, the basic holding in both Nollan and Dolan consists of two inextricable propositions: (1) in the land-use context, an uncompensated exaction of property is allowed, but (2) only on the condition that the exaction bears an essential nexus and rough proportionality to the impact of the proposed use. Given the inseparability of these propositions, to say that the limitations do not apply to a particular permit exaction is to say that the entire holding is inapplicableincluding that part of the holding that allows uncompensated takings in the first place. The limitations make constitutionally possible the provision of some flexibility to land-use agencies to demand property in the permit context. If the District rejects any limitations on its power to

25 confiscate property in the permit process, it also must forfeit the flexibility to impose permit exactions that Nollan and Dolan provide land-use agencies, and accept the general prohibition against uncompensated takings that existed prior to Nollan. Even if the holding in Nollan and Dolan could be parsed to give the District unbridled power to confiscate property in the permit process, the potential for government abuse of permit applicants would be limitless. As the Nollan Court observed, [o]ne would expect that a regime in which this kind of leveraging of the police power is allowed would produce stringent land-use regulation which the State then waives to accomplish other purposes, leading to lesser realization of the land-use goals purportedly sought to be served than would result from more lenient (but nontradeable) development restrictions. Nollan, 483 U.S. at 837 n.5. In a world with no unconstitutional conditions doctrine, the government could prohibit a property owners use unless and until he paid a handsome sum into its coffers; that is the world the Florida Supreme Court endorsed in this case, when it upheld as constitutional the Districts decision to withhold permits until Mr. Koontz agreed to finance improvements to its land. A Florida permit applicant now faces the prospect that each of the multiple landuse and environmental agencies with permit jurisdiction will require him to dedicate money to a public project or finance burdensome improvements to public propertywith no end in sight. J.A. 76 (citing other land-use permitting authorities with jurisdiction over the property). In the wake of Nollan and Dolan, unlawful confiscations of real-property interests may have

26 become rarer. But in jurisdictions like Florida, where the limitations in Nollan and Dolan are applied only to exactions of real-property interests, other kinds of permit exactionsespecially monetary exactions have proliferated, because they escape meaningful judicial review. William A. Fischel, Exploring the Kozinski Paradox: Why Is More Efficient Regulation a Taking of Property?, 67 Chi.-Kent L. Rev. 865, 881 (1991) (The author collected evidence that many communities were using land use exactions to finance local expenditures that were only distantly related to the project that occasioned the exaction.); Ronald H. Rosenberg, The Changing Culture of American Land Use Regulation: Paying for Growth with Impact Fees, 59 SMU L. Rev. 177, 262 (2006) (All evidence points to the rapid spread of land development impact fees throughout the nation making it a prevalent means of funding new growth.); Nicole Stelle Garnett, Unsubsidizing Suburbia, 90 Minn. L. Rev. 459, 480 (2005) (book review) (Over the past three decades, increasing numbers of local governments . . . have turned to new methods of financing public works projects, especially land use exactions and impact fees.). And, because tax increases are so politically unpopular, many states have turned to permit applicants for money and financing of public projects. Brad Charles, Comment, Calling for a New Analytical Framework for Monetary Development Exactions: The Substantial Excess Test, 22 T.M. Cooley L. Rev. 1, 2 (2005) ([T]o deal with the cost of growth created by new development, about half of the states enacted an impact-fee statute, a type of development exaction, to give local governments authority to exact fees from developers for any type of development . . . .); Rosenberg, supra, at 262 (Residents now urge their

27 elected officials to adopt impact fees when the locality has not yet done so. Without having to face the opposition of future residents who do not currently live or vote in the locality, [municipalities] find impact fees an irresistible policy option.). The District may argue, as the Florida Supreme Court concluded (Pet. Cert. App. A-19A-21), that applying Nollan and Dolan to permit exactions like the one at issue here would eliminate the freedom and flexibility of the government and bring development to a standstill. Not so. In those jurisdictions where Nollan and Dolan apply to all permit exactionsregardless of the timing of their imposition or the form of the property being demandedneither the regulation of land use nor development has come to a grinding halt. Anne E. Carlson & Daniel Pollack, Takings on the Ground: How the Supreme Courts Takings Jurisprudence Affects Local Land Use Decisions, 35 U.C. Davis L. Rev. 103, 104, 142-43 (2001) (reporting findings from empirical studies about the impact of Nollan and Dolan on planners ability to impose exactions, including the finding that a very large percentage of municipal planners view the Supreme Court takings precedents favorably). This is not surprising. Nollan and Dolan do not ban permit exactions; rather, they serve as a constitutional check against exactions that are unrelated or disproportionate to the impact of an applicants use of his property. Id. at 105, 142-43 (a majority of land-use planners reported that Nollan and Dolan do not encroach on their planning discretion; the decisions provide good planning practices). Land-use agencies remain free to impose those permit exactions

28 that can survive Nollan and Dolan scrutiny. Id. at 120-25. Even if it were a well-founded concern, flexibility cannot be an excuse for overriding applicants constitutional rights to make reasonable use of land and to be compensated for confiscated property. As this Court observed in Dolan: A strong public desire to improve the public condition [will not] warrant achieving the desire by a shorter cut than the constitutional way of paying for the change. Dolan, 512 U.S. 374, 396 (internal citation omitted). In First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987), this Court considered the question of whether adherence to the Constitution might unduly reduce the flexibility of land-use agencies in the permit process. The Court made clear that the convenience of government must yield to constitutional demands: We realize that even our present holding will undoubtedly lessen to some extent the freedom and flexibility of land-use planners and governing bodies of municipal corporations when enacting land-use regulations. But such consequences necessarily flow from any decision upholding a claim of constitutional right; many of the provisions of the Constitution are designed to limit the flexibility and freedom of governmental authorities, and the Just Compensation Clause of the Fifth Amendment is one of them. Id. at 321.

29 The Court struck just the right balance in Nollan and Dolan, where it construed the Takings Clause as allowing land-use agencies to confiscate property in the permit process under limited circumstances. Those cases provide just the right amount of flexibility to those agencies, while preserving the rights of applicants. Adopting different standards for the different kinds of property confiscations that government may attempt to carry out in the permit process would ignore the doctrinal foundations of Nollan and Dolan, and be unworkable in its uncertainty and unpredictability. Importantly, it would undermine the constitutional rights protected by the Takings Clause of the Fifth Amendmentas much a part of the Bill of Rights as the First Amendment or Fourth Amendment. II THE DISTRICTS PERMIT EXACTION CANNOT ESCAPE THE NOLLAN AND DOLAN LIMITATIONS BASED ON ARBITRARY FACTORS LIKE THE TIMING OF THE EXACTIONS IMPOSITION OR THE PROPERTY SOUGHT TO BE CONFISCATED A. Nollan and Dolan Apply Whenever the Government Conditions the Issuance of a Permit on the Applicants Compliance with a Permit Exaction The Florida Supreme Court held that Nollan and Dolan apply to permit exactions only when the government actually issues the permit sought. Pet. Cert. App. A-19. The court based its holding on the

30 erroneous assumption that, in both Nollan and Dolan, the regulatory entities issued the permits sought with the objected-to exactions imposed. Pet. Cert. App. A18. The courts decision is based on a mistaken assumption about those precedents, and is contrary to the unconstitutional conditions doctrine. 1. Nollan, Dolan, and This Case All Involved Challenges to Permit Exactions Imposed Prior to Permit Issuance Like the District, the land-use agencies in Nollan and Dolan did not issue any permits to the applicants. In Nollan, the California Coastal Commission issued a Notice of Intent to Issue Permitin effect, an approval of the permit application, which stated that the Commission would issue the Nollans a coastal development permit only if they first dedicated an easement to the public.3 Nollan, 483 U.S. at 828. The permit decision stated, in relevant part: Prior to the issuance of the Coastal Development Permit, the applicants shall record, in a form and manner approved by the Executive Director, a deed restriction acknowledging the right of the public to pass and repass across the subject properties in an area bounded by the mean high tide line at one end, to the toe of the revetment at the other.

Like many land-use agencies, the California Coastal Commission first decides to approve a permit application before actually issuing the permit. The approval sets forth the conditions that the applicant must satisfy before issuance of the permit.

31 Brief of Appellants at 5, Nollan, 483 U.S. 825 (No. 86133), 1986 U.S. S Ct. Briefs LEXIS 1382, **10 (quoting Joint Appendix at 34, Nollan, 483 U.S. 825 (No. 86133)); see also United States v. Pink, 315 U.S. 203, 216 (1942) (recognizing the propriety of tak[ing] judicial notice of the record in this Court in another case). The Nollans challenged the constitutionality of the exaction without recording the deed. Nollan, 483 U.S. at 828-29. Thus, no property changed hands, and no permit was issued prior to this Courts review of the permit exactionjust as in Mr. Koontzs case. Id. The same thing is true of Dolan. There, the city considered two land use applications: an application for a building permit and an application for a variance. Dolan v. City of Tigard, 854 P.2d 437, 438-39 (Ore. 1993). The city approved an agency recommendation that it deny the variance and that it condition issuance of the building permit upon Ms. Dolan first dedicating flood-plain and bicycle-path easements to the city: [Prior to the issuance of building permits t]he applicant shall dedicate to the City as greenway all portions of the site that fall within the 100-year floodplain [of Fanno Creek] (i.e. all portions of property below elevation 150.0) and all property 15 feet above (to the east of) the 150.0 foot floodplain boundary. Dolan, 20 Or. LUBA at 413, 1991 Ore. Land Use Bd. App. LEXIS 316, at *4 (emphasis added) (brackets in original). Like the Nollans and Mr. Koontz, Ms. Dolan challenged the constitutionality of the conditions without dedicating any property to the city and without an issued permit.

32 It is certainly true that Mr. Koontzs challenge to the Districts exaction comes to this Court after denial of his permit applications, while the Nollans and Ms. Dolans challenges came to the Court after approval of their permit applications. But that is a distinction without a difference. In all three cases, the government required the permit applicant to dedicate property to public use before it would issue the permits. J.A. 70-71; Nollan, 483 U.S. at 828; Dolan, 512 U.S. at 379. Though it may have taken different forms, the constitutionally relevant threat was substantively identical in Nollan, Dolan, and this case: Accept our permit exactions, or we will not issue you a permit. Nollan and Dolan make clear that the relevant inquiry focuses on the substance of the governments actionspecifically, whether the government has demanded that the permit applicant give up a constitutional right. The nexus and proportionality tests in Nollan and Dolan are intended to limit the governments ability to make such demands. Nollan, 483 U.S. at 827; Dolan, 512 U.S. at 377. And the constitutional violation occurs at the moment the government makes the unlawful demand of the permit applicant. Nollan, 483 U.S. at 837; Dolan, 512 U.S. at 390; see also Sullivan, supra, at 1421-22 (The unconstitutional conditions doctrine is violated when government offers a benefit on condition that the recipient perform or forego [sic] an activity that a preferred constitutional right normally protects from government interference.).

33 2. The Unconstitutional Conditions Doctrine Applies to All Permit Exactions, Regardless of When They Are Imposed in the Permit Process That Nollan and Dolan apply where a permit is denied specifically because of the applicants refusal to accede to an excessive exaction is consistent with the unconstitutional conditions doctrine. Lingle, 544 U.S. at 547. The doctrine never has been limited to conditions attached to government approvals. Sherbert v. Verner, 374 U.S. 398, 404-06 (1963) (denial of unemployment benefits held unconstitutional where government required person to violate a cardinal principle of her religious faith); Speiser v. Randall, 357 U.S. 513, 526 (1958) (denial of tax exemption for applicants refusal to take loyalty oath violated unconstitutional conditions doctrine); Frost & Frost Trucking Co. v. R.R. Commn, 271 U.S. 583, 590, 593-94 (1926) (decision prohibiting use of public highways unless private carrier assumed the duties and burdens of a common carrier violated the unconstitutional conditions doctrine). In Perry v. Sindermann, 408 U.S. 593 (1972), a state college denied a teacher re-employment after he publically criticized the colleges policies. The teacher sued on grounds that the denial of employment violated his First Amendment speech rights. The college argued that, because the teacher had no right to re-employment, he had no viable claim under the First Amendment. The Court disagreed with the college, holding:

34 For at least a quarter-century, this Court has made clear that even though a person has no right to a valuable governmental benefit and even though the government may deny him the benefit for any number of reasons, there are some reasons upon which the government may not rely. It may not deny a benefit to a person on a basis that infringes his constitutionally protected interestsespecially, his interest in freedom of speech. For if the government could deny a benefit to a person because of his constitutionally protected speech or associations, his exercise of those freedoms would in effect be penalized and inhibited. This would allow the government to produce a result which [it] could not command directly. Such interference with constitutional rights is impermissible. Id. at 597 (emphasis added) (quoting Speiser, 357 U.S. at 526). Even prior to this Courts decisions in Nollan and Dolan, the lower courts commonly invalidated conditions whose rejection resulted in permit denials under the unconstitutional conditions doctrine. In Parks v. Watson, 716 F.2d 646 (9th Cir. 1983), for example, the city demanded that landowners dedicate a portion of their land containing valuable geothermal wells as a condition of approval of a land-use permit necessary for the owners to build apartments on their land. Id. at 649-50 (cited by Dolan, 512 U.S. at 391, and Nollan, 483 U.S. at 839). The owners objected to the dedication and the city denied the application. Watson, 716 F.2d at 649-50.

35 The city claimed that the unconstitutional conditions doctrine did not apply where a permit application was denied and, therefore, no property had been taken. Id. at 650. The Ninth Circuit rejected the citys argument as specious, noting that this Court had never drawn a distinction between a decision approving and a decision denying an application. Id. at 651-52. By demanding a dedication as a condition of approval, the city had forced the landowners to choose between using their property and giving up their right to be compensated for the geothermal wells. Id. In short, the city was manipulating its permitting authority to exert leverage on the owners to compel a dedication of the geothermal wells without compensation. Id. The Ninth Circuit explained that, [w]hile governmental entities may negotiate agreements aggressively, the government must stop short of imposing unconstitutional conditions. Id. Applying the doctrine, the court held that the city was prohibited from denying the permit on the basis that the owners would not dedicate property to the public. Id. at 654; see also McKain v. Toledo City Plan Commn, 270 N.E.2d 370, 374 (Ohio Ct. App. 1971) (denial of a permit based on failure to dedicate property that was not sufficiently related to the proposed development amounted to a confiscation of private property) (cited by Dolan, 512 U.S. 390 n.7 )). Since Nollan, lower courts have continued to apply the unconstitutional conditions doctrine where a permitting agency denies a land-use application based solely on a landowners objection to an excessive exaction. In Goss v. City of Little Rock, 151 F.3d 861 (8th Cir. 1998), the city denied a re-zoning application because the landowner had objected to its demand that

36 he dedicate 22% of his land for the expansion of a highwaya condition that violated the essential nexus and rough proportionality limitations. Id. at 862. On appeal, the Eighth Circuit rejected the citys argument that Nollan and Dolan did not apply to permit denials, explaining that the distinction between a permit approval and a permit denial was a mere technicality where the landowners objection to an unlawful exaction provided the sole basis for the citys decision. Id. at 864 n.2. Indianas court of appeals arrived at the same conclusion in Jacobsville Developers East, LLC v. Warrick County, 905 N.E.2d 1034 (Ind. Ct. App. 2009). There, the court held that, where a permit application is denied on the basis that the landowner would not accede to a condition, the owner has a cause of action for an excessive exaction; the owner does not have a cause of action for a general regulatory taking. Id. at 1040-41; see also William J. Jones Ins. Trust v. Ft. Smith, 731 F. Supp. 912, 914 (W.D. Ark. 1990) (enjoining city from demanding dedication of an easement as a precondition for permit approval where the easement violated the nexus rule). Besides the Florida Supreme Court, the only lower court that has expressly refused to apply the essential nexus and rough proportionality limitations to exactions imposed prior to a permit denial is the California Court of Appeal. Lambert v. City & County of San Francisco, 57 Cal. App. 4th 1172 (Cal. Ct. App. 1997). In Lambert, owners of a hotel applied for a permit from the city to convert residential rooms into tourist rooms. The city denied the permit after they refused the citys demand to pay $600,000 in mitigation for the lost residential units. Id. at 1182

37 ([I]t is somewhat disturbing that San Franciscos concerns about congestion, parking and preservation of a neighborhood might have been overcome by payment of significant sum of money . . . .); id. (Strankman, P.J., dissenting) ([T]he [city] sought money from [the owners] as a condition to receiving the requested zoning permit and denied the permit when [they] failed to pay the Citys price.). The owners sued the city, challenging the constitutionality of the mitigation requirement under Nollan and Dolan. Id. at 1176. The trial and appellate courts ruled against the owners, on the same grounds that the Florida Supreme Court did in this case: Even though the citys permit denial may have been motivated by the owners refusal to submit to its $600,000 demand, the courts concluded that, technically, no exaction had been imposed and no property taken, since the permit had been denied. Id. at 1182. This Court denied the owners petition for writ of certiorari, and the denial generated a three-Justice dissent. Lambert v. City & County of San Francisco, 529 U.S. 1045 (2000) (Scalia, J., dissenting from denial of cert.). While the denial of certiorari imports no expression of opinion upon the merits of the case, the dissent is instructive. Teague v. Lane, 489 U.S. 288, 296 (1989). Joined by Justices Kennedy and Thomas, Justice Scalia rejected the distinction between permit denials and permit approvals, as a basis for applying Nollan and Dolan: [T]he courts refusal to apply Nollan and Dolan might rest on the distinction that it drew between the grant of a permit subject to

38 an unlawful condition and the denial of a permit when an unconstitutional condition is not met. From one standpoint, of course, such a distinction makes no sense. The object of the Courts holding in Nollan and Dolan was to protect against the States cloaking within the permit process an out-and-out plan of extortion. There is no apparent reason why the phrasing of an extortionate demand as a condition precedent rather than as a condition subsequent should make a difference. Lambert, 529 U.S. at 1048 (citations omitted). If a land-use agency imposes an exaction as a condition of obtaining permit approval, it still should have to establish the exactions relationship to the impact of the proposed project. As the dissenting Justices in Lambert observed: When there is uncontested evidence of a demand for money or other propertyand still assuming that denial of a permit because of failure to meet such a demand constitutes a takingit should be up to the permitting authority to establish either (1) that the demand met the requirements of Nollan and Dolan, or (2) that denial would have ensued even if the demand had been met. Id. at 1047-48. The circumstances in Lambert mirror this case. There was uncontested evidence of a demand that Mr. Koontz dedicate his money to a public usespecifically, that he finance public improvements.

39 Pet. Cert. App. A-6; Pet. Cert. App. D-4. And there was uncontested evidence that the Districts permit denial was based solely on Mr. Koontzs refusal to accede to that demand. J.A. 70-71. On these facts, the Districts exaction required review under the unconstitutional conditions doctrine, as applied in Nollan and Dolan. B. Nollan and Dolan Apply to All Permit Exactions, Regardless of the Form of the Property Interest the Government Seeks To Confiscate The Florida Supreme Court held that Nollan and Dolan did not apply to the Districts monetary exaction requiring Mr. Koontz to finance improvements to its lands. Pet. Cert. App. A-19. According to the court, those precedents apply only to exactions of interests in real property. Id. The courts holding ignores this Courts Takings Clause jurisprudence, and the logic and purpose of the unconstitutional conditions doctrine. As discussed in Part I, the Takings Clause broadly protects private property, not just interests in real property. Under Nollan and Dolan, the Takings Clause allows some uncompensated exactions of property in the permit process, but only if the exaction bears an essential nexus and rough proportionality to the adverse impact of the proposed land use. Since the Takings Clause makes no distinction among the different kinds of property that government may exact in the permit process, there is no reason why the limitations in Nollan and Dolan also should not apply with equal force to all property, both real and personal. The limitations must apply to whatever property the government exacts as a condition of issuing a permit.

40 Certainly, there is nothing in the language of Nollan or Dolan to the contrary. Neither decision confines the essential nexus and rough proportionality limitations to land dedications. And with good reason. The central question in Nollana question that goes to the heart of the unconstitutional conditions doctrinewas whether the Commission could do indirectly, through the permit process, what it could not do directly outside the permit process. Nollan, 483 U.S. at 834. If the Nollans had not applied for a permit, could the Commission simply have demanded that they waive their right to compensation for confiscation of an interest in their land? Id. at 831. The same question arises in all cases involving confiscations of propertyregardless of the propertys particular form. Here, the question is: If Mr. Koontz had not been applying for a permit, could the District have demanded that he waive his right to compensation for the cost of making forced improvements to the Districts property? Only the unconstitutional conditions doctrine can answer the questionand the answer is: no. See, e.g., id. at 834 ([R]equiring uncompensated conveyance of the easement outright would violate the Fourteenth Amendment, as applied to the Takings Clause); Brown, 538 U.S. at 235 (analogizing for purposes of the Takings Clause the governments confiscation of ones money interest in a bank accountthe private property of the owner of the principalto the taking of land). Furthermore, the Florida courts conclusion that Nollan and Dolan apply only to real property exactions cannot be squared with this Courts grant of certiorari and remand in Ehrlich v. City of Culver City, 15 Cal.

41 App. 4th 1737, 1743 (Cal. Ct. App. 1993), vacated and remanded, 512 U.S. 1231 (1994). In Ehrlich, the owner of a private tennis club and recreational facility applied to Culver City for an amendment to a general plan, a zoning change, and amendment of the specific plan to allow replacement of the tennis club and recreational facility with a condominium complex. Id. The City approved the application conditioned upon the payment of certain monetary exactions, including a $280,000 fee to pay a portion of the cost of replacing the lost recreational facilities. Id. The California appellate court rejected the property owners challenge, holding that monetary exactions are not subject to heightened scrutiny under Nollan. Id. This Court granted certiorari, vacated the lower courts judgment, and remanded the case for consideration under Dolan. Ehrlich, 512 U.S. at 1231. On remand, the California Supreme Court held that the nexus and proportionality tests apply equally to exactions of real and personal property. Ehrlich v. City of Culver City, 911 P.2d 429, 444 (Cal. 1996) ([I]t matters little whether the local land use permit authority demands the actual conveyance of property or the payment of a monetary exaction.); see also San Remo Hotel v. City & County of San Francisco, 41 P.3d 87, 102 (Cal. 2002) (Though the members of this court disagreed on various parts of the analysis, we unanimously held that this ad hoc monetary exaction was subject to Nollan/Dolan scrutiny.); Town of Flower Mound v. Stafford Estates L.P., 135 S.W.3d 620, 635 (Tex. 2004) (holding that there is no reason why [monetary] exactions should be analyzed differently than dedications in determining whether there has been a taking).

42 Finally, applying Nollan and Dolan to all exactions of property, including Mr. Koontzs monetary exaction, serves the purpose behind those decisions. Exactions requiring the dedication of a property owners money to a public use trigger the same concerns that this Court sought to address in Nollan and Dolan. Again, the purpose of the limitations set forth in Nollan and Dolan is to root out government attempts to circumvent the Takings Clause under cover of the permitting process. Lambert, 529 U.S. at 1048 (Scalia, Kennedy, and Thomas, JJ., dissenting) (quoting Nollan, 483 U.S. at 837). And it is to protect the property owner from being singled out to bear public burdens which, in all fairness and justice, should be borne by the public as a whole. Armstrong, 364 U.S. at 49. As with a compelled dedication of land, governments can just as easily use a monetary exaction to force a property owner to bear burdens that the public as a whole should shoulder. Del Monte Dunes, 526 U.S. at 704 (the essential nexus and rough proportionality limitations apply to required dedications or exactions). The form of an exaction offers no clues about the risk of abusive leveraging by government in the permitting process. Carlos A. Ball & Laurie Reynolds, Exactions and Burden Distribution in Takings Law, 47 Wm. & Mary L. Rev. 1513, 1569 (2006) ([W]e do not believe that the land-monetary distinction serves as an effective proxy for the likelihood that the government overreached in imposing an exaction.). [B]oth types of exactions raise the possibility that the government may improperly leverage its police power in order to receive

43 benefits from the owner without paying compensation. Id. Monetary exactions pose an even greater threat of government abuse if they are not made subject to heightened scrutiny. Jane C. Needleman, Note, Exaction: Exploring Exactly When Nollan and Dolan Should Be Triggered, 28 Cardozo L. Rev. 1563, 1582 (2006). Absent adequate judicial oversight, and given the fungibility of money, governments can exact fees from a property owner to finance a wide variety of public projects that benefit the entire communityeven projects wholly unrelated to the impact of the proposed development. Fischel, supra, at 881 (reporting evidence that many communities were using land use exactions to finance local expenditures that were only distantly related to the project that occasioned the exaction). For example, assume a government agency wants a conservation easement over a permit applicants land, and that a permit exaction of such an easement would have no relationship whatsoever to the impact of the applicants project. If the agency is in a jurisdiction (like Florida) that narrowly applies the limitations in Nollan and Dolan only to real property exactions, then the agency will avoid the constitutional consequences of confiscating the easement by permit exaction. Instead, it will confiscate from the applicant a sum of money equal to the cost of condemning the easement by eminent domain, knowing that such a monetary exaction will escape the heightened scrutiny of Nollan and Dolan. Though the form of the exaction may differ, the applicant suffers the same constitutional injury: forced waiver of compensation for confiscated property.

44 The Florida Supreme Court erred when it held that the unconstitutional conditions doctrine applies only to required dedications of real property. The doctrine applies in all cases in which government demands the waiver of a constitutional right, including the right to compensation. Applying the doctrine in this way will ensure that the promise of the Takings Clausethat permit applicants will not be forced to bear public burdens which, in all fairness and justice, should be borne by the public as a wholewill be realized. Armstrong, 364 U.S. at 49.

CONCLUSION This case is controlled by Nollan and Dolan. These precedents construe the Takings Clause as allowing permitting agencies, like the District, some flexibility in land-use and environmental regulationbut no more than the Clause allows. The District was able to confiscate property as a condition of issuing Mr. Koontzs permits, but only if its demand bore an essential nexus and rough proportionality to the impact of his use for the land. Contrary to the Florida Supreme Courts decision, the District was not entitled to unfettered power to confiscate anything it wanted from Mr. Koontz, simply because its take it or leave it demand occurred prior to permit issuance, or because the target of its demand was Mr. Koontzs money, as opposed to an interest in his land. Such details are constitutionally irrelevant: The District denied him his permits because he refused to accede to its requirement that he finance unrelated, public improvements. This is not flexibility; it is extortiona constitutional transgression that, in the absence of

45 Nollan and Dolan review, goes undetected and escapes legal redress. For these reasons, the decision of the Florida Supreme Court should be reversed. DATED: November, 2012. Respectfully submitted,
BRIAN T. HODGES Pacific Legal Foundation 10940 NE 33rd Place, Suite 210 Bellevue, WA 98004 Telephone: (425) 576-0484 Facsimile: (425) 576-9565 E-mail: bth@pacificlegal.org MICHAEL D. JONES Michael D. Jones and Associates, P.A. 30 Windsormere Way Suite 200 Oviedo, FL 32765 Telephone: (407) 359-9914 PAUL J. BEARD II Counsel of Record Pacific Legal Foundation 930 G Street Sacramento, CA 95814 Telephone: (916) 419-7111 Facsimile: (916) 419-7747 E-mail: pjb@pacificlegal.org CHRISTOPHER V. CARLYLE The Carlyle Appellate Law Firm 1950 Laurel Manor Drive, Suite 130 The Villages, FL 32162 Telephone: (352) 259-8852

Counsel for Petitioner