Property rights win only minor victory in court case

June 28, 2013

By Wayne Lusvardi

As the July 4 holiday approaches, America celebrates independence from the tyrannical taxation and subjugation of Great Britain in the 1770s.  But property owners in California have no more property rights even after a new U.S. Supreme Court case has apparently expanded the right to just compensation to “non-takings” of property.

The case is Koontz vs. St. Johns River Management District. A statement by Pacific Legal Foundation Principal Attorney Paul J. Beard II, who argued on behalf of Coy Koontz at the U.S. Supreme Court, explained the case:

“Today’s ruling says the Fifth Amendment protects landowners from government extortion, whether the extortion is for money or any other form of property….

“The court has recognized that money is a form of property, and the Constitution prohibits grabbing money from property owners the same way it prohibits grabbing land without compensation.

“The Koontz family sought permission to develop a few acres in Central Florida, and they were told they must spend up to $150,000 to improve the government’s property, miles away from the Koontz family’s land. This demand was far in excess of any impact that their land use proposal would create.  They fought this injustice in the courts for nearly two decades, and today they have won a landmark decision, for themselves and all property owners.  Their victory protects all permit applicants from government extortion.  Everyone who values constitutional property rights owes the Koontz family a debt of gratitude for this historic victory.”

However, New York University law professor Rick Hills described the decision using the metaphor of a land war that bogs down an army so long that it cannot achieve victory.  According to Hills, local overregulation, taxation and extortions of property owners remain unchecked after the Koontz case and other so-called landmark property rights cases.

The Koontz Case

In the case, landowner Koontz wanted to develop a portion of his Florida wetlands property.  The local Water Management District refused to approve his project until he made certain concessions, such as improving public lands elsewhere.  Koontz felt the conditions so excessive that it made it impossible for him to develop his property.

No land was physically “taken” from him that would require just compensation to be paid, as required by the Fifth Amendment to the U.S. Constitution.  Rather, regulations and fees were added as a condition of any development.  Where such conditions are unconnected to the reasonable impacts of development, it is called a “regulatory taking” in the law.

For instance, if a new proposed shopping center development will create excess traffic impacts necessitating widening the street, it is reasonable and proportionate to require a developer to dedicate land and pay street widening costs.  This is called a legal “exaction.”

However, it would be unreasonable and disproportionate to require a shopping center developer to improve streets elsewhere in town that should be maintained from a city’s road funds. That is often called municipal “extortion.”

But in the Koontz case, nothing was actually taken, nor was there any impact directly connected to the development of the Koontz property.  Instead, burdens were added unconnected to any impacts.  These burdens included buying or improving wetlands elsewhere or paying “in lieu” fees for government to enhance offsite wetlands.

In some cases, such conditions can be nothing more than shakedowns to collect fees that can be “money laundered” into city coffers to pay pensions or other costs of local government unconnected at all to their stated purpose.

As Hill aptly said, “The problem is not merely distinguishing taxes from takings but also distinguishing all other routine conditions on land-use permits (such as obligations to pay affordable housing, finance public plazas, bank wetlands, hire local folks for construction jobs, improve subway stops, etc.) that are the routine currency of conditional map amendments, conditional use permits, variances, Planned Unit Development (PUD) approvals, and the like.”

Why no property rights: No enforcement or legitimacy

The reason that there are no effective property rights at the local level, according to Hills, is that there is no state or local property rights court system to enforce such rights.   According to Hills, federal courts lack the funding, manpower and electoral legitimacy to pull off such an “act of imperialism” over local land use authorities.

Judges lack legitimacy to overrule municipal government land use decisions because they have to get elected.  And the greatest influence on local community power structures is real estate development interests.  The U.S. Supreme Court keeps issuing decisions in favor of property rights, but there is no enforcement mechanism.

That is the situation of property rights in California, especially for small landowners who do not have the resources to fight city halls. In California, one person’s claim of “expropriation” is another’s “property right” which politicians have given away to voters to maintain themselves in power.

Hill points out, however, that in Pennsylvania and Washington, state courts are more aggressive in policing local land use regulation.

The only possible, albeit unlikely, solution to restore private property rights in California, according to Hills, is to establish a federal court that could directly rule in local land use decisions.  This, however, would violate the long established principle of federalism, whereby states have rights to make and adjudicate their own laws.

Koontz Case is “Dead Letter”

Contrary to all the media reports of a property rights victory, Hills calls the Koontz case a “dead letter,” meaning a law or court decision still formally in effect but no longer valid or enforced.

Private property rights in California on July 4, 2013 mostly exist only on paper as long as the media continue to cast a blind eye to its ineffectiveness.  As long-time California eminent domain attorney Gideon Kanner writes on his blog, “Gideon’s Trumpet,” in reaction to the Koontz case:

“Which brings us to a perplexing question: why are liberal judges who profess a devotion to a ‘living constitution’ that protects people from an overreaching government, so fiercely committed to a kleptocratic mode of governance in which anything that tends to plunder private wealth, including modest wealth of ordinary people, is deemed such a great public good? If you figure that one out, please do let us know.”