Give and Take in Governmental Permitting

Understanding exactions and recognizing prohibited governmental exactions

Give and take in governmental permitting: understanding exactions and recognizing prohibited governmental exactions By Katie Edwards-Walpole, Esq. & Keith L. Williams, Esq. Imagine that you are trying to develop a piece of vacant land into an apartment complex to meet the community’s dire need for affordable, quality housing for teachers, first responders and our workforce. By the time the permits to begin construction are issued, you have already invested money in the property, hired engineers and architects, developed and revised site plans, met with county and city administrators, submitted applications and plans to manage storm water, performed traffic studies and insured that there is capacity in the public schools to meet the number of new students this housing development is expected to generate. You began in earnest, thinking that you could develop this property according to its highest and best use while meeting a vital community need for workforce housing. You have sustained the public hearings where neighbors voice their opposition to your project, preferring to keep the status quo rather than seeing your vision and appreciating why your project is different. From start to finish, it’s taken you years to reach the many milestones needed to bring this project to fruition and get that site plan approved and building permit issued. You’ve invested way more than initially intended on professionals, attorneys, permit application fees, mitigation fees and impact fees. You just want to get the building permit issued, begin construction, get the certificate of occupancy issued…and alas, begin renting out those apartments! At this point, you are oh so close to reaching any one of these milestones. That’s when this little thing known as the prohibited exaction creeps in, most often, before you even recognize it for what it is. So what is a prohibited exaction? Florida law it defines a “any condition imposed by a governmental entity on a property owner’s proposed use of real property that lacks an essential nexus to a legitimate public purpose and is not roughly proportionate to the impacts of the proposed use that the governmental entity seeks to avoid, minimize, or mitigate.” In most instances, the exaction or “condition imposed” is either a privately-owned real property interest that must be granted or deeded to the local government (i.e. a right-of way strip or conservation easement for drainage) or a payment of money to or provision of in-kind services for the benefit of local government (i.e. paving roads, purchasing offsite lands, or building new schools)—or both--all in exchange for getting granted a permit to develop one’s property. This exaction language, taken directly from the Bert J. Harris Private Property Rights Protection Act (also known as Chapter 70, Florida Statutes), tracks the majority opinions in the U.S. Supreme Court cases of Nollan v. California Coastal Commission, 483 U.S. 825 (1987), Dolan v. City of Tigard, 512 U.S. 374 (1994), City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 US 687 (1999), Lingle v. Chevron U.S.A., Inc., 544 US 528 (2005) and Kootnz v. St. John’s River Water Management District, 570 U.S. 595 (2013). In these cases, the US Supreme Court confirmed repeatedly over time that extortionate land use exactions or demands of this type by government are unconstitutional takings that violate of the 5th Amendment. The law set forth here is that the government must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development was reaffirmed by the 11th Circuit as recently as February 13, 2019, in Hillcrest Property LLP v. Pasco County, 915 F.3d 1292 (11th Cir. 2019). A determination by the court that a government has taken property as a prohibited exaction results in an unconstitutional taking of property for which compensation is owed to the owner. As a matter of substantive due process, extortionate exaction demands create unconstitutional violations of the 14th Amendment by government and damages are proper even where the permit application is denied or withdrawn before the exaction is made.

That being said, not all exactions are bad or even prohibited. Cities and counties may use their home rule zoning and regulatory powers to regulate and control the impacts that development may cause so long as they make an individualized determination that the exaction has an essential nexus to the nature of the impact and is proportional to its extent. These come in the form of development or permit conditions or impact fees. We deal with exactions so frequently that they are a part of the development process. An approval may require the developer to build roads and drainage systems, make a cash payments to the city or county, and dedicate a portion of the land for public uses like a park. Sounds reasonable and fair enough, right? Remember, you’re so close- after so many years and so much capital invested- to getting your final approvals when the city or county proposes to issue the permit if you will just fund a newly conceived half-million dollar study on citywide hurricane preparedness or climate change resiliency. Or contribute $750,000 towards the purchase of a new fire engine for the wetlands you were required to conserve. Or dedicate 3 acres of the 7 acre development site for use as a new, pet friendly water park introduced during the campaign of the most recently elected commissioner. If you decline, your permit will be denied. All of that time and money- and now more delays and plan revisions- begin adding up. You’re racking up some serious monetary damages. Can the government do this? Well, in circumstances where the hurricane study, the fire engine, or the pet friendly water park are integral to offsetting the impact of the proposed new development and are not coercive misapplications of governmental power designed to evade the Constitution (meaning the local government made an individualized determination that these exactions have an essential nexus to the nature of the impact and are proportional to that extent), the answer is yes. For instance, in Highland-in-the-Woods v. Polk County, a 2017 case from Florida’s 2nd DCA, the court determined that conditioning development permission on the applicant installing water re-use lines and dedicating land for that purpose to the county was not an illegal exaction, even where the reclaimed water was not available for 2 years after installation of the reclaimed water lines. However, in many circumstances, the local government is not making its decision based on an essential nexus to the impact from new or changed activity nor is it being roughly proportional in its demands from applicants. For instance, in the recent 4th Florida DCA appellate opinion in Ocean Concrete, Inc. v. Indian River Board of County Commissioners, Indian River County Commissioners voted to downzone Ocean’s property by changing the uses allowed within light industrial zoning —where Ocean could and was planning to build a concrete batch plant as a matter of right when it purchased the property in 2004—and removing that use after several development applications were denied or delayed in late 2007 based on protests from nearby residents in the municipality of Sebastian. Ocean sued Indian River County under the Bert Harris Act, for regulatory taking, and for violation of substantive and procedural due process. Ocean lost at trial and ultimately prevailed on appeal, but lost the property to foreclosure during the lengthy application, trial, and appellate process which lasted until 2018. Florida Statute 70.45 recognizes that this scenario can and does happen, and state lawmakers amended the Harris Act in 2015 to strengthen Florida’s protection of private property rights by codifying a legal cause of action and remedy to avoid the imposition of prohibited exactions. This law should be familiar to every property owner and governmental planner and attorney alike. How we balance the government’s home rule powers with the property owner’s constitutional right to be free from unconstitutional demands that are akin to a taking of private property without just compensation? If you reach this stage in the land use permitting process and remember this article, you may have a remedy in state law to continue with your project but challenge the imposition of a prohibited exaction by a government entity. Seek the counsel of a land use attorney to help you understand your rights and remedies under Florida Law.

Katie Edwards-Walpole is an Attorney at Saul Ewing Arnstein & Lehr LLP with offices in Okeechobee and Fort Lauderdale. She is also a former State Representative who passed legislation in 2015 that strengthened the Bert J. Harris, Jr. Private Property Rights Protection Act to include a cause of action to recover damages for landowners where local and state governmental entities impose conditions that rise to the level of prohibited, and therefore unconstitutional, exactions. Katie can be reached at Katie.Edwards@saul.com. Keith Williams is an Attorney at Saul Ewing Arnstein & Lehr, LLP with offices in West Palm Beach and Ft. Lauderdale. He has extensive experience working in the area of property rights, eminent domain, land use, riparian rights, and environmental matters in state and federal court. Keith can be reached at keith@klwilliamsfirm.com