Real Estate Developer Rights When Cities Demand Too Much
Land use & zoning attorneys, Stanley B. Price and Anthony De Yurre, discuss what real estate developer's rights are when the government demands too much, and where the line should be drawn according to both statute and case law.
Transcript:
ANTHONY DE YURRE
Welcome to Land Development in the 305, a podcast featuring news, observations, and analysis on the redeveloping and reshaping of the Miami skyline. My name is Anthony De Yurre, I’m a partner in Bilzin Sumberg’s Land Development and Government Relations Practice Group, and I have with me today, my partner and chair of our department, Stanley B. Price. On my side, I focus most of my day on transit-oriented development, large scale mixed-use projects, and P3 development with government infrastructure. Stan, why don’t you tell us a little bit about yourself and your practice?
STANLEY B. PRICE
Thank you, Anthony. I have practiced for 45 years as a zoning attorney, and I had the privilege of being an assistant county attorney for ten years in charge of zoning in Miami-Dade County. I’ve been in private practice since 1981, and as you indicated, my practice is almost exclusive land development regulations, planning, and governmental law.
ANTHONY DE YURRE
So today, Stan, we’re very glad to have you here with us. We’re going to talk about a very important case in Florida. The decision of Koontz v. Saint Johns River Water Management District is a 2013 case that essentially requires municipalities to follow the constitutional rule of law and reigns in some aggressive requirements that were made on behalf of property owners in order to try to move forward with a particular project they had. Tell us a little bit about your view on the significance of the Koontz case.
STANLEY B. PRICE
The Koontz case is a seminal case in that it provides protection to property owners and the bane of every zoning attorney is standing in front of a public hearing and asking the local government to respond to exaction requests, money for a park, money for a school program, and the like. That practice used to be "legalized extortion", but the Koontz case has changed that procedure, and the Supreme Court has recognized a constitutional condition -- a principle which applies to Koontz. I think it’s important to understand the background of Koontz and it goes back to the taking jurisprudence of Penn Central Railroad in the 1970s where the Supreme Court indicated that as long as government takes property and gives you an equal compensation in that case in terms of transferred development rights, there is no governmental taking. We fast forward many years later to the Nollan case out of California. The Nollan case was a situation where a property owner was remodeling a house along the ocean in California, and the California Coastal Commission required him, as a condition of getting the permit to remodel his home, to grant a public easement through his property to the beach for the use of the general public. The Supreme Court rejected that concept. They said this is nothing more than an appropriation of private property and found that to be a regulatory taking. A few years later, in the Dolan case, the Dolan case involves the construction of a store, and as part of the condition of approval, the local government required the property owner to build a bike path and other improvements which bore no reasonable relationship to the project. The Court held and has become the framework of the Koontz case that before a government can impose a burden on a property owner, there has to be a rational nexus between what is being asked for and the request must be in conformity with the impact caused by the property. Fast forward to 2013 and the Koontz case, which was authored by Justice Alito. Justice Alito seemed to get in the head of every zoning attorney who practiced in the United States, and he recognized that a zoning hearing is nothing but "authorized extortion". And he used those terms in the case and indicated that it is inappropriate for a government, exact donations from a private property owner, which have no conceptual reality to what is the impact is. The property owner owned a 13-acre parcel of property. It was designated wetlands under the local plan. The property owner came forward with a plan to development uplands three-and-a-half acres which were not wetlands by definition and the state agency said well if you want to develop that, we only want you to develop one acre, or if you develop the three-and-a-half acres we want you to give us $150,000, so we can nourish wetlands several miles from the property.
ANTHONY DE YURRE
Stan, that is literally the definition of extortion. Which is why I think the court uses such strong language, and we're all thankful they did. And what is also interesting is that you know when you talk about constitutional rights what we see in the news nowadays, we will talk about you know First Amendment rights, religious freedom rights, things of that nature. But people just seem to gloss over the fact that this country was founded on property rights, and that is really one of the biggest issues that we deal with on a daily basis, upholding constitutional property rights. I guess it just does not get the same headline attention that the other constitutional protections do, but without that and particularly the Koontz case, you know, it really goes to the heart and fabric of what ownership in the United States is all about.
STANLEY B. PRICE
When the Koontz case was decided, I was going through a zoning process in a town in Northeast Dade to build a religious facility, and the city manager came to me and said: "I want you to donate $100,000 for town beautification and I want you to pave a roadway several blocks from your synagogue." And my client was obviously very upset. I was very upset. We waited. The Koontz case came out. I brought the Koontz case to a meeting, and I said, do you want to be the picture in the dictionary for the Koontz case. They dropped their demands immediately, and we were able to develop the property.
ANTHONY DE YURRE
And you know what is interesting about that is that really is a great anecdote about the importance of constantly staying on top of all the latest case law that comes out. Whether it is our local jurisdiction here in Miami-Dade County, at the State of Florida level, at a federal level, and even at the Supreme Court level, you know? I think that of the almost 20 members of our department each mention an anecdote about a matter we had at hand that was pressing and because we specifically monitored case laws that came out, just like you did in this instance with the Koontz case, we were able to win the day and really, you have to practice this type of law, you have to do land development, you have to do zoning, it has to be focused, and you cannot be a jack-of-all-trades, so to speak. You really have to be focused in that particular field and stay at the cutting-edge and the tip of the spear with the case law.
STANLEY B. PRICE
What has occurred as a result of Koontz is that generally United States Supreme Court cases, while they are important on a national basis, usually don't filter down to local governments. But in this instance, the Koontz case formed the foundation of the state legislature in Florida forming and creating section 70.45 of the Florida statutes which basically provides a cause of action for a property owner who feels that they have been aggrieved by an illegal exaction, which is defined as an exaction which has no correlation to the impact caused by the development. The statute is a very clean statute. It puts the burden of proof on the government, not on the property owner.
ANTHONY DE YURRE
Incredibly important.
STANLEY B. PRICE
Yes.
STANLEY B. PRICE
To show that there is a reasonable proportionality. The statute awards attorney’s fees for the prevailing party, which is very important. And what it does, it creates a cause of action that basically provides that you have rights that you did not have before. Generally, zoning decisions are handled by a petition for a certiorari. This creates a de novo action you can take if you are at a hearing, and you are concerned that these conditions will be egregious to your client. You could wait until after the hearing. You do not have to object at the hearing. And then you avail yourself by this statute. Now, what is important about this statute is that…
ANTHONY DE YURRE
Before you continue, I just want to jump in on something you noted, which is the fact that you get statutory attorney’s fees for this. And in the State of Florida, unless you have a contractual right to attorney’s fees or a statutory right to attorney’s fees, you are not awarded attorney’s fees for causes of action in the State of Florida. But even more so, it is important in the case where you are dealing with litigation with a government entity because remember, the government entity really has an unlimited resource of attorneys at their disposal. They really have very deep pockets with tax dollars, and so ultimately that is something that I think both of us have had experience with, and when a client looks at that and says, you know when I go up against the government, the problem is I have a finite amount of dollars, am I ever going to get that back because the expense might be significant in this case.
STANLEY B. PRICE
-- and the way to developers, of course, by unnecessary litigation. What is interesting about section 70.45 is that there is - the government has tried to wave their liability by having applicants sign a waiver beforehand that they will not seek damages.
ANTHONY DE YURRE
Yeah, sure, of course.
STANLEY B. PRICE
This specifically indicates in the statute it cannot be waived. You can sign every contact you want, but it can't be waived. Number two it requires you to file an action no earlier than 60 days but no later than 180 days, to make your claim. The government has the ability to respond, they must respond, and what they say cannot be used against them at a later time except as to attorney’s fees. And the government has the burden of showing that the unconstitutional condition basically is in proportion to the impact of the development.
ANTHONY DE YURRE
So we have 2013 Koontz comes out. Then we have the Florida statue. Where are we right now in more recent case law? Because obviously, this goes back again, as you mentioned, in Penn Central, Nollan, Dolan, then we have Koontz. Now we have the Florida statues. Tell us where we are today. In particular, I think it would be helpful to talk about the city of Venice and mandarin development as well.
STANLEY B. PRICE
The City of Venice case is an interesting case in that the cause of action accrued prior to the effective date of the Florida statute 70.45. So the rules of procedure were somewhat different, and a clever municipal attorney had the applicants sign a waiver of liability to say that this was an annexation case. This was not a zoning case. And he said if you want to be in next to our jurisdiction, you have to make a list of 15 things. One of which was to make what they call an extraordinary monetary contribution to the local government. The Court struck down that extraordinary contribution as an unconstitutional condition, and in addition, the Court held that you could not waive -- a party cannot waive a constitutional right in writing and must -- and it cannot be foreclosed from bringing such an action. A somewhat similar case was decided shortly thereafter in Manatee County. It really wasn’t a decision, but the property owner was asked to dedicate property far in excess of what the impact of his project would be, and the property owner filed an action, once again a pre 70.45 action -- and many land-use cases take several years to go through the court system -- and the county -- the judge in the Manatee County case refused to grant summary judgment to the local government. And in fact, wrote in his order what the county was doing here was an unconstitutional condition because the proportionality test of Nollan and Dolan was not met. The parties subsequently settled this case, and the settlement is interesting in that Judge Hall, who was the judge in this case, wrote a 45-page opinion indicating that the property rights were trampled in a good way. What does this mean to our practice and the like? Number one, applicants for zoning hearings no longer have to be a punching bag and get up and play Let’s Make a Deal. You want door number one, door number two, or door number three? Those days are over. However, you still see the local government attempting to do this on a regular basis. Sophisticated local attorneys, municipal attorneys know the Koontz case and know about 70.45. Unfortunately, several jurisdictions do not know that. I had a case earlier today, which I had been on a conference call.
ANTHONY DE YURRE
I heard you through the wall, by the way.
STANLEY B. PRICE
Right.
ANTHONY DE YURRE
It was an interesting conversation.
STANLEY B. PRICE
I talk loud. This indicates that this government is going to be sued under the Civil Rights Act and under the equitable estoppel principles were withdrawing a building permit for no basis whatsoever. Koontz is a tremendous weapon for a municipal attorney, a zoning attorney to know how far your client can be pushed and when you can push back. And I urge everyone to look at the statute and the decision of the Supreme Court, and it will make you feel good that Justice Alito may have been one time a zoning attorney.
ANTHONY DE YURRE
Well, Stan, I really appreciate your insight and walking us through the importance of Koontz and the pertinent Florida statutes. I think that we can’t forget that the constitutional right to this country was founded on really are those that pertain to property and it applies to everyone in this country from the largest developer on down to the apartment complex owner or the owner of the smallest condo unit and a micro-unit perhaps. It really defends people equally. Thank you all again for joining us on our podcast. Stan Price, again, chair of our department, thank you very much for your time in this podcast. Thank you for listening to us, and if you want more on this and other land development related topics, you can visit us at Bilzin.com and also subscribe to our new Miami blog at Newmiamiblog.com. We publish all the latest case law and other decisions that are pertinent to land use, zoning, and development in Miami-Dade County and as well as the State of Florida. Thank you.
STANLEY B. PRICE
Thank you, Anthony.
ANTHONY DE YURRE
Thank you, Stan.
