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Supreme Court Backs Land Owners on Conditions Tied to Permit Approvals

Supreme Court Backs Land Owners on Conditions Tied to Permit Approvals
In a major victory for NAHB's members and property rights advocates, the U.S. Supreme Court on June 25 issued an opinion that gives property owners ammunition to fight certain concessions that are often required as a condition for approving a permit to develop a piece of land. This excellent outcome overturns a Florida Supreme Court ruling that would have given governments expanded power to force unreasonable exactions upon developers, and your national association's involvement helped make it happen.

NAHB Involvement

Leading the fight on behalf of property owners and acting to ensure that the interests of NAHB members were appropriately represented, NAHB headed a coalition of 16 prominent real estate and business organizations in filing an amicus brief with the Supreme Court in which we explained why it is neither necessary nor fair for governments to extort money from property owners who wish to use their land. This meant that through NAHB efforts, organizations representing more than 70% of the U.S. GDP weighed in on the case. Our influence also went beyond the amicus, because out of 38 cases that the Supreme Court cited in its Koontz decision, 10 of those were cases in which NAHB was involved. This kind of participation is what it takes to establish positive legal precedent, and it's further proof of the value proposition of your NAHB membership.

The Ruling

Since the late 1980s, a permit condition has not been considered constitutional unless it has a “nexus” to a governmental purpose and it is “roughly proportional” to the impacts of the project. This is known as the Nollan/Dolan test, named after two Supreme Court cases. The test protects property owners from over-zealous land use permitting officials, but until now there were two outstanding questions about it — namely, 1) does it apply even if the permit is denied, and 2) does it apply if the government’s condition is a payment of money? In both instances, the Supreme Court answered in the affirmative. So in the first scenario, if a property owner refuses to agree to outrageous conditions in a permit and the government subsequently denies that permit, the government cannot later argue that there was no constitutional violation because the permit was never granted. The Supreme Court also ruled that the Nollan/Dolan test applies equally whether the government demands that the land owner give up real property or money as a condition of obtaining a permit. Tellingly, the court used a form of the word "extortion" five times to describe the manner in which governments demand property from developers before granting approvals.


This landmark Supreme Court decision effectively denies the government the ability to force unreasonable exactions upon developers in exchange for a permit approval, and it means that federal, state, and local regulators will need to exercise more caution to ensure that permitting demands - including monetary demands - are proportionate to the project at hand. The bottom line is that this is an outstanding victory that will help our members for years to come. NAHB's legal team has put together a quick synopsis of the case and distributed it to HBA executive officers so that they can help spread the good news.

NAHB Issues Action Alert on Labor Shortages

With immigration reform legislation now moving through Congress, NAHB sent out a Supreme Court Backs Land Owners on Conditions Tied to Permit Approvals to all NAHB members on June 24 urging everyone's help in contacting federal lawmakers. The Border Security, Economic Opportunity and Immigration Modernization Act (S. 744), passed by the Senate on June 27, addresses many elements advocated by the home building community, including enhancements to the protection and security of our nation’s borders, a workable employment verification system that honors the direct employer-employee relationship and the current “knowing” liability standard, and a responsible solution to bring the current undocumented population out of the shadows with an opportunity to earn legal status. However, NAHB remains concerned that the new W Visa program in S.744 unfairly discriminates against the housing industry during a critical juncture in its recovery, and we are pushing for much-needed changes to the final legislation (a bill now pending in the House more appropriately addresses this issue). Equipped with NAHB-provided talking points, our members have been reaching out to lawmakers to alert them about labor shortages that have harmed their businesses and slowed the housing recovery by causing delays in new-home completions and even cancelled projects. These delays and production bottlenecks are increasing the cost of building a home, which in turn is raising costs for home buyers. To fix our labor shortages, Congress must create a program that would allow more immigrants to legally enter the construction workforce when we can’t find American workers to fill the jobs that are needed.

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  • Joanne Loftus
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