Regulatory Takings After Koontz
Coy Koontz never built anything on the land that put his name on a Supreme Court docket. He owned 14.9 acres in central Florida, most of it wetlands, and applied to develop 3.7 of them. The water management district offered two ways to get a permit: shrink the project to one acre and deed the remaining 13.9 into conservation, or keep the 3.7 acres and pay to restore wetlands miles away, either by replacing culverts four and a half miles off or plugging drainage canals seven miles off. Koontz agreed to the conservation deed and refused both mitigation options. The district denied the permit outright, and the case that reached the Supreme Court in 2013 was not about a condition he had accepted. It was about a permit he never got at all.
That fact pattern is why Koontz mattered beyond its own four corners: it forced the Court to decide whether Nollan and Dolan's essential-nexus and rough-proportionality requirements reach a demand for money or off-site work, not just a demand for an easement across the applicant's own parcel, and whether they reach an outright denial, not just a conditioned approval. The majority said yes to both, over Justice Kagan's warning that money is fungible in a way a strip of land is not, and that treating a monetary condition like a physical exaction risked turning routine permit fees into constitutional litigation.
Coy Koontz did not live to see any of that reasoning. He sued in 1994 and died in 2000, and his son carried the case forward in his name through the Florida courts, the Supreme Court, and three more years of proceedings on remand over how much the family was actually owed for a permit denied more than two decades earlier. The water management district finally paid the estate six hundred thousand dollars in March 2016, twenty two years after the lawsuit began and sixteen years after the man who filed it had died.
What Koontz did not settle, and would not be settled for another decade, was narrower and in practice more consequential: does any of this reach a fee schedule a legislature writes once for an entire class of development, rather than a condition an individual permit reviewer negotiates project by project? California's own courts answered that question years before the Supreme Court did. San Jose's inclusionary housing ordinance required developers of twenty or more units to sell fifteen percent of them below market rate, a flat citywide rule untethered to any individual project's measured impact on the local housing market. The California Supreme Court upheld it in California Building Industry Association v. City of San Jose, 61 Cal. 4th 435 (2015), by holding that the ordinance was not an exaction subject to heightened scrutiny at all, only an ordinary land-use regulation adopted under the police power, valid so long as the city could show a reasonable relationship to a legitimate public purpose, a far more forgiving standard than anything Nollan or Dolan requires. San Jose's own ordinance gave developers several ways to comply, building the affordable units on site, building them somewhere else in the city, dedicating land, or paying an in-lieu fee, with a lower affordability percentage rewarding the on-site option. That menu of choices was itself part of why the majority treated the requirement as an ordinary condition on the general right to build rather than as a demand for any specific piece of property or dollar figure the way Nollan, Dolan and Koontz all involved.
Builders asked the Supreme Court to review that reasoning, and the Court denied certiorari in 2016. Justice Thomas wrote alone to flag what he called a real question the denial left open: whether Nollan and Dolan's protections should turn on the government's choice to act through legislation instead of an individualized permit condition, when the underlying demand on the property owner can be identical either way. He thought the issue deserved resolution in a future case. It took eight more years to get one, during which inclusionary housing ordinances kept spreading to hundreds of cities and counties well beyond California, each one built on the same premise CBIA had blessed: that a generally applicable affordability requirement is regulation, not exaction, and therefore never has to clear Nollan and Dolan's tighter standard in the first place.
Sheetz v. County of El Dorado is that case, and its holding is unanimous and unambiguous on the specific point Thomas raised: a legislature's own fee schedule gets the same Nollan and Dolan scrutiny an individual administrator's condition would get. Nothing in the Takings Clause cares which branch of local government wrote the demand down.
Sheetz left at least two threads hanging, not one. The Court's own opinion reserved a question of its own: whether a permit condition imposed on an entire class of properties has to be tailored with the same individualized specificity Nollan and Dolan require of a condition aimed at a single development. Justice Kavanaugh's concurrence, joined by Justices Kagan and Jackson, underscored that the majority had left that question open; Justice Gorsuch, writing separately, argued nothing in the Court's own reasoning supports treating a broad, class-wide condition any less rigorously than an individual one. Sotomayor wrote separately, joined only by Jackson, to raise a more basic question the majority never reached at all: whether Nollan and Dolan's heightened scrutiny should apply in the first place to a demand that would not have counted as a compensable taking had the government imposed the identical demand outside the permitting process altogether, through an ordinary tax or a straightforward land-use regulation.
California's inclusionary housing cases supply a live candidate for that second, more basic question, not the first. San Jose's ordinance never singles out any one project's impact; it is structured as a general condition of building at all, of the kind zoning ordinances impose all the time without anyone calling them exactions, which is exactly the premise CBIA rested on when it treated the ordinance as regulation rather than exaction in the first place. Sheetz forecloses treating that ordinance differently merely because a legislature wrote it into an ordinance rather than a reviewer writing it into one applicant's permit. It says nothing about whether the ordinance was ever the kind of demand Nollan and Dolan's heightened scrutiny reaches to begin with, which is exactly the question Sotomayor's concurrence flagged and the majority left untouched.
The next takings case to reach the Court on this doctrine will not be about who imposed the condition, since Sheetz closed that door completely. It will be about whether a flat, project-blind set-aside requirement is the kind of demand Nollan and Dolan were built to police at all, or whether it belongs in the much larger category of ordinary land-use regulation that has never needed that kind of individualized justification. San Jose's ordinance, or one built the same way, is the test case Sheetz never reached, and with hundreds of similar ordinances now on the books nationwide, a circuit or state supreme court is going to have to decide that question long before the Court ever agrees to hear it again.