The Supreme Court Just Handed Real Estate Developers a Huge Win


The Supreme Court handed down a decision Tuesday morning that’s gotten considerably less attention than this term’s blockbuster battles over same-sex marriage and voting rights. But Koontz v. St. Johns River Water Management District will likely prove a historic property-rights ruling, with far-reaching implications for the leverage local land-use agencies may use to extract concessions from property owners and developers for the common and environmental good.

The question lurking behind the case – how much and what can the public ask for when a private property owner’s actions cause wider harm or societal burdens? – has the potential for much broader impact than the technical details of one Florida man’s property dispute would suggest. And the 5-4 ruling surprised court-watchers who felt the government made a convincing case at oral arguments in January. In a majority opinion written by Justice Samuel Alito, the court sided with the property owner.

“It’s a very important decision that seriously undermines the authority of local communities across the country,” says John Echeverria, a legal scholar at the University of Vermont Law School who has written extensively on “takings” law. The two factions of the Supreme Court, on the other hand, disagree over whether this ruling will “work a revolution in land-use law.”

The case revolves around a 14.9-acre property – primarily wetlands – east of Orlando purchased by Coy Koontz, Sr., in 1972. In the 1990s, he sought a permit from the local water management district to develop 3.7 acres of the land, dredging and filling it in to construct a building, a parking lot, and a retention pond. Under Florida law designed to protect the state’s dwindling wetlands, anyone who wants to dredge or fill wetlands must get a special permit. And the land-use agencies that issue those permits can require property owners to offset any environmental damage to get one.

In this case, Koontz offered to permanently conserve the rest of his land from development in exchange for the permit to develop the 3.7 acres. The St. Johns River Water Management District argued that his offer was insufficient. The agency proposed instead that he develop only one acre and conserve the rest, or that he pay for contractors who would make improvements to other government-owned wetlands within the same watershed but several miles away. Koontz turned down both options and sued instead. In the 11 years this case has been winding through the legal system, Koontz died. The property owner is now his son, Coy Koontz, Jr.

The legal issue at play here comes from the Fifth Amendment – the Just Compensation Clause that states “…nor shall private property be taken for public use, without just compensation.” There is a long and complicated legal history sketching out what constitutes a government “taking” of private property, and when public agencies must compensate property owners for that taking. In Koontz, the central question was whether or not the St. Johns River Water Management District violated Koontz’ property rights by denying him a permit when he wouldn’t agree to the District’s conditions to develop his land. Continue reading

The Government’s Raisin Brand

The Supreme Court’s recent decision in a case challenging the Federal government’s regulation of the price of raisins as a takings did not establish any constitutional principles, but may make it easier to bring takings cases in the future by eliminating some of the procedural roadblocks usually employed by government in such cases. Stay tuned for the ruling on the merits in this case.

                                     -Jack Freund


Additional Sources:

A Modest But Potentially Significant Supreme Court Victory for Property Rights–  The Volokh Conspiracy, 6/10/13

The Government’s Raisin BrandThe Wall Street Journal, 6/10/13


Santa Monica Rent Board Raises Registration Fee, Says Landlords Have to Pay





By Jason Islas
Staff Writer

June 17, 2013 — For the first time since Santa Monica’s Rent Control law passed more than 30 years ago, landlords won’t be able to recoup all of the registration fees they pay to the Rent Board each year.

Facing a half-a-million dollar deficit next year, the Rent Board voted unanimously Thursday to raise the annual registration fee from $156 per unit to $174.96, or $14.58 per month per unit.

The Board also unanimously agreed that landlords can pass through $13 a month of that fee to tenants, leaving the landlords to shoulder about $1.58 a month for every unit they own.

“What we’re trying to do here is to eliminate a deficit,” said Rent Board member Todd Flora. “This amount seems very well thought out.”

Staff claims increasing the fee for the city’s 26,350 billable controlled units would yield $4,610,196, covering the amount it needs to break even.

“With anticipated revenue from interest income and miscellaneous administrative charges, the budget would achieve near-perfect balance,” officials said.

Originally, staff proposed revising the statute to allow landlords to recoup only 50 percent of the registration fees but changed the proposed formula after threats of litigation.

“At its last regular meeting, a public speaker told the Board that landlords would sue if they were required to bear any portion of the registration fee,” staff said.

Some landlord representatives claimed that changing the amount landlords could recoup would violate the City Charter.

Still, staff maintains that the Board has a right to regulate how much of the registration fee landlords can pass on to their tenants.

“That the Board has allowed landlords to recoup 100 percent of paid registration fees does not change the fact that registration fees are landlords’ responsibility to pay,” staff said.

“Nor would reducing the amount or proportion of fees that landlords may recoup from their tenants by means of a pass through constitute the ‘imposition’ of a new fee on landlords.”

Staff argued that landlords have benefited from having a Rent Board that assures fair arbitration in landlord-tenant disputes.

Landlords have argued that the board – which mostly handles rent decrease petitions – disproportionately benefits tenants.

Registration fees account for roughly 85 percent of the Rent Control Agency’s $4.5 million budget and the 12 percent increase in the fees comes more than a month after the Board voted unanimously to limit the amount landlords could raise fees on rent controlled units to one percent or no more than $17.

Source: Santa Monica Lookout

King of My Castle? Yeah, Right.

Scot James’ description of the enervating effects of rent control on the supply of housing in San Francisco (New York Times, June 7, 2011) applies equally to New York City and the few other localities that impose burdensome and overly restrictive housing and rent regulations.

Thousands of apartments in New York City are vacant because the liabilities of renting to tenants outweigh the potential economic gains. Just take a look, for example, at the apartments that sit vacant above many commercial strips in Manhattan and the outer boroughs. The commercial rents pay the real estate taxes on the property and the owners are fearful of renting the apartments and having to comply with the requirements of more than two dozen City and State agencies that regulate rental properties.

Many more thousands of apartments sit vacant in purely residential buildings because their owners, having lived through at least one horrific episode in the City’s Housing Courts, are just waiting for that perfect tenant to show up or cannot even figure out what rent they are legally entitled to charge.

Elected officials prod the regulatory agencies to keep tightening the noose around residential property owners’ necks not realizing that their well-intentioned efforts are hurting the constituencies they seek to protect , as evidenced by the today’s public hearing on proposed State housing regulations which pander to the tenant lobby by exacerbating the burdens on owners.

       – Jack Freund




SAN FRANCISCO — VISITORS have forever left their hearts in San Francisco. But leaving the rest of your body here isn’t so easy: there’s no place to live.

The City by the Bay is going through one of its worst housing shortages in memory. With typical high demand intensified by a regional boom in tech jobs, apartment open houses are mob scenes of desperate applicants clutching their credit reports. The citywide median rental price for a one-bedroom is $2,764 a month, but jumps to $3,500 in trendy areas.

One reason for the shortage? Me.

I’ve recently joined the ranks of San Francisco landlords who have decided that it’s better to keep an apartment empty than to lease it to tenants. Together, we have left vacant about 10,600 rental units. That’s about five percent of the city’s total — or enough space to house up to 30,000 people in a city that barely tops 800,000. Continue reading