RECENT DEVELOPMENTS IN TAKINGS JURISPRUDENCE
Presented by
Timothy
J. Dowling, Chief Counsel
Community Rights
Counsel
International Municipal Lawyers
Association
Mid-Year Seminar
April 11-13
Washington, DC
[Links to court opinions
supplied by webmaster. These opinions are located on
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content]
This paper summarizes
recent significant developments in takings jurisprudence.
It begins by analyzing City of Monterey v. Del Monte
Dunes at Monterey, Ltd. (No. 97-1235), the takings
case currently pending before the U.S. Supreme Court. (Click here for current news on the Del
Monte Dunes case, including briefs and a transcript of
the oral argument. Click here for "Six Lessons for
Municipal Lawyers: City of Monterey
v. Del Monte Dunes at Monterey, Ltd.")
Although it is possible that the Supreme Court will
dispose of City of Monterey on procedural
grounds, it is more likely that the case will be the
first since 1994 in which the High Court addresses
substantive takings issues in the context of land use
controls. The paper then discusses Eastern
Enterprises v. Apfel, 118 S. Ct. 2131 (1998).
Although Eastern Enterprises is not a land use
case, it reflects doctrinal developments that might well
affect future takings challenges to municipal land use
decisions. The paper then reviews several significant
lower court rulings on issues critical to takings
jurisprudence.
I. SUPREME COURT
TAKINGS CASES
1. CITY OF MONTEREY
v. DEL MONTE DUNES AT MONTEREY, LTD., No. 97-1235
(pending in the U.S. Supreme Court)
Status: The U.S. Supreme Court
heard oral argument in the case on October 7, 1998, and
has not yet issued a decision. The case has been pending
longer than any other case this Term, and longer than any
major takings case in recent memory.
Summary of the Issues: The issues
before the Court are: (1) whether a jury may be used in
an inverse condemnation proceeding under 42
U.S.C. § 1983; (2) whether a jury may be allowed to
second-guess the reasonableness of a municipal land use
decision; and (3) whether the "rough
proportionality" test established in Dolan v.
City of Tigard, 512
U.S. 374 (1994), applies to a land use permit denial.
The United States as amicus curiae requested the Court to
consider the larger issue of whether there should be any
means-end inquiry in evaluating whether a permit denial
constitutes a compensable taking. The U.S. amicus brief
asks the Court to abandon the first prong of the
two-prong takings test articulated in Agins v. City
of Tiburon, 447
U.S. 225 (1980), under which a compensable taking
occurs where government action fails to substantially
advance a legitimate state interest. According to the
United States, this means-end inquiry should be conducted
under the Due Process Clause, not the Takings Clause.
The Facts: The case involves a
37.6-acre parcel of environmentally sensitive, oceanfront
property in Monterey, California, within an area known as
Del Monte Beach. The sand dunes on the property are among
the largest and best preserved in central California. In
1981 the previous owner, Ponderosa Homes, applied for a
permit from the City of Monterey to build a 344-unit
residential complex on the property. After denying
several development proposals, in 1984 the City Council
approved a plan for 190 units, subject to the requirement
that Ponderosa Homes satisfy 15 conditions within 18
months. These conditions included a requirement that the
developer adequately mitigate harm to the environment
caused by the development.
In late 1984, Del Monte Dunes at
Monterey, Ltd., bought the property for $3.7 million,
with full knowledge that development of the site was
subject to the 15 conditions. Del Monte's purchase price
presumably reflected the risk that the City ultimately
might reject the proposal. Del Monte pursued final
approval of the permit application by seeking to meet the
15 conditions.
In June 1986, the City denied the permit
for the 190-unit proposal. The City Council listed six
reasons for the denial, including the significant harm to
the environment expected from the development. The City
was especially concerned about harm to the property's
native flora, buckwheat, which is the natural habitat of
the Smith's Blue Butterfly, a species listed as
endangered under the federal Endangered Species Act.
Regulatory agencies, environmental experts, and others
advised the City that Del Monte's habitat restoration
plan would not adequately mitigate the environmental
impact of the proposed development.
In 1991, while the litigation was
pending, the State of California purchased the property
for $4.5 million, $800,000 more than Del Monte paid for
the site in 1984. The $4.5 million purchase price was
based on an appraisal that assumed that the highest and
best use of the property is residential development of up
to 150 units.
The Lawsuit: Del Monte filed suit
in federal district court under 42 U.S.C. § 1983,
alleging that the permit denial constitutes a compensable
taking and violates the Equal Protection and Due Process
Clauses of the Fourteenth Amendment. The district court
dismissed the claims, ruling that Del Monte should pursue
less intensive development before being allowed to sue
the City. In 1990, however, the Ninth Circuit reinstated
the claims. Viewing the evidence in the light most
favorable to Del Monte, the appeals court concluded that
further permit applications would be futile. Del
Monte Dunes v. City of Monterey, 920
F.2d 1496 (9th Cir. 1990).
The litigation proceeded to trial. The
court ruled for the City on the due process claim,
concluding that the permit denial was "not arbitrary
and irrational, but was for valid purposes." The
trial record shows that regulatory agencies and many
others advised the City that Del Monte's habitat
restoration plan would not adequately mitigate the
environmental harm from the development. Del Monte
presented contrary evidence. The court found that the
evidence before the City thus was "in
conflict," and it concluded that the City's
resolution of the conflicting evidence was reasonable.
The court specifically found that the City was "not
attempting to forestall all reasonable development."
It also found that city staff and the planning commission
spent "exhaustive time and energy" on the
proposal and that they engaged in "a sincere
effort" to work with Del Monte.
The court sent the takings and equal
protection claims to the jury, instructing them to rule
for Del Monte on the takings claim if the permit denial
either (1) deprived Del Monte of all economically viable
use of the property, or (2) did not substantially advance
a legitimate public purpose. The jury ruled for Del Monte
on both the takings and equal protection claims and
awarded $1,450,000. On the takings claim, the jury did
not specify which theory of liability it accepted (denial
of viable use or failure to adequately advance a
legitimate purpose).
The Ninth Circuit affirmed. Del Monte
Dunes v. City of Monterey, 95
F.3d 1422 (9th Cir. 1996). The appeals court ruled
that the trial court properly submitted the takings claim
to the jury, holding that 42
U.S.C. § 1983 provides for a jury trial in an
inverse condemnation proceeding. In so ruling, it
rejected the analysis in New Port Largo, Inc. v.
Monroe County, 95
F.3d 1084 (11th Cir. 1996), cert. denied,
117 S. Ct. 2514 (1997), which holds that there is no
right to a jury trial in regulatory takings cases. The
Ninth Circuit further ruled that although both theories
of takings liability (denial of economically viable use
and failure to substantially advance a legitimate
purpose) present mixed questions of law and fact, the
issues are sufficiently fact-bound to justify submission
to a jury. The appeals court further held that a
reasonable jury could have found for Del Monte on both
theories of takings liability. Relying on Dolan v.
City of Tigard, 512 U.S. 374 (1994), the Ninth
Circuit ruled that even if the City had a legitimate
interest in denying the permit, the denial "must be
'roughly proportional' to furthering that interest."
95 F.2d at 1429-30. Noting that Del Monte had presented
evidence questioning each of the reasons specified by the
City for denying the permit, the appeals court ruled that
" [t]he jury was entitled to credit Del Monte's
experts and discredit the City's testimony." Id.
at 1431. Finally, the appeals court ruled that a
reasonable juror could have found that the permit denial
deprived Del Monte of economically viable use of the
property, rejecting the City's argument that the sale of
the property to the State for $4.5 million established
viable use. Because the appeals court affirmed the jury
award on the takings claim, it did not consider issues
relating to the equal protection claim.
In March 1998, the Supreme Court granted
certiorari. It heard oral argument on October 7, 1998,
the first week of argument for the October 1998 Term.
Significance of the Case: There
are four significant issues before the Supreme Court,
three raised by the petition for certiorari and one
raised by the United States and other amici in support of
the City.
First, the Supreme Court will decide
whether the district court erred in sending the takings
claim to the jury under 42
U.S.C. § 1983. Bear in mind that a property owner
who challenges state or local government action as a
taking generally must seek compensation in state court
before proceeding to federal court. See Williamson
County Regional Planning Comm'n v. Hamilton Bank,
473 U.S. 172 (1985). Most state courts do not use
juries in inverse condemnation cases. If the Supreme
Court rules that § 1983 requires a jury, however,
takings claimants in state court will be entitled to a
jury trial whenever they include a § 1983 takings claim
in their complaint. Thus, resolution of this issue could
greatly change the procedures used to resolve takings
challenges to local government action. On the other hand,
the Supreme Court could resolve the issue without
triggering sweeping changes by ruling that use of a jury
here was not reversible error (and leaving open the
question of whether § 1983 requires a jury).
Second, the Supreme Court likely will
decide whether liability for an alleged taking may be
based on a standard that allows the jury (or a court) to
reweigh the evidence considered by the municipality and
second-guess the reasonableness of the government's
decision. The city argued it was entitled to judgment on
the takings claim as a matter of law, in part because the
district court rejected the substantive due process claim
by concluding that the city acted reasonably in denying
the permit. The Ninth Circuit rejected this argument
because it concluded the jury could have discredited the
evidence offered by the city, credited the evidence
offered by Del Monte, and concluded the City acted
unreasonably. The Ninth Circuit thus used a standard of
review that essentially allowed the jury to reweigh the
conflicting evidence before the government. It seems
unlikely that the Supreme Court will uphold this approach
because it would make it difficult, if not impossible,
for government officials to predict whether a particular
land use decision will give rise to takings liability.
Under this theory, virtually every government decision to
restrict land use might be subject to second-guessing by
a jury or court.
Third, the Supreme Court probably will
decide that the Dolan "rough
proportionality" standard does not apply to permit
denials and other actions that do not involve a
government-compelled dedication of property to the
public. Dolan itself is clear that the rough
proportionality standard is limited to compelled
dedications (512 U.S. at 384-85) , and it is unlikely
that the Supreme Court will endorse the Ninth Circuit's
extension of Dolan to permit denials and similar
restrictions on land use.
Fourth, the United States has asked the
Court to rule that an inquiry into the reasonableness of
a land use restriction (other than a compelled dedication
of property under Dolan) should take place under
the Due Process Clause, not the Takings Clause. The
United States essentially is asking the Court to abandon
its assertion in Agins v. City of Tiburon, 447
U.S. 255 (1980), that land use controls effect a
taking where they do not substantially advance a
legitimate state interest. At oral argument in Del
Monte Dunes, the Chief Justice expressed some
skepticism as to whether this issue is properly before
the Court. If the Court decides the issue, it could
provide much needed clarity to takings jurisprudence.
Although the Supreme Court frequently has stated that a
taking occurs where a land use restriction does not
substantially advance a legitimate state interest, it has
never applied this test to find a compensable taking.
Strong arguments exist that a means-end inquiry has no
place in takings jurisprudence. Indeed, the text of the
Takings Clause suggests that compensation is limited to
takings of private property for public use. The
United States argues that the appropriate remedy for
government action that does adequately advance a public
purpose is invalidation under the Due Process Clause, not
compensation.
Oral Argument: The oral argument
included extensive discussion of whether the City acted
in "bad faith" in denying the various permit
applications. Justice Scalia stressed that with the
City's encouragement, the property owners submitted
several successive development proposals, each of which
required considerable time and expense to prepare, and
each of which the City ultimately rejected. The
discussion of bad faith at the argument was rather
surprising because the district court expressly found
that the City proceeded in a good faith effort to work
with the owners to find a viable development plan. The
focus on bad faith at the argument complicates any
attempt to predict the outcome of the case.
2. EASTERN ENTERPRISES v. APFEL,
118 S. Ct. 2131 (1998)
In Eastern Enterprises, a
plurality of the Court (Chief Justice Rehnquist, and
Justices O'Connor, Scalia, and Thomas) concluded that the
federal Coal Industry Health Retiree Benefit Act effected
a taking as applied to the claimant because it imposed a
severe, disproportionate and extremely retroactive
financial burden. Justice Kennedy concurred in the
result, concluding that the statute violated the Due
Process Clause. The case's primary significance for
municipal attorneys is that five Justices stated that the
Takings Clause does not apply to government action that
simply imposes a financial obligation upon the claimant.
118 S. Ct. at 2 154-58 (Kennedy, J., concurring in the
judgment and dissenting in part); id. at 2161-64
(Breyer, Stevens, Souter, and Ginsburg, JJ., dissenting).
According to these five Justices, the Takings Clause
reaches restrictions that alter or operate on an
identifiable property interest. They believe a
requirement to make a general monetary expenditure should
be analyzed under the Due Process Clause. This conclusion
provides a basis for municipal attorneys to argue that
the Takings Clause does not apply to impact fees and
other compelled monetary expenditures in the land use
context.
The same five Justices also intimated
that a takings challenge to land use restrictions should
not turn on whether the restriction sufficiently advances
a legitimate state interest (one of the issues the Court
might address in City of Monterey (see above)).
They suggested that such a means-end inquiry should occur
under the Due Process Clause and should not give rise to
takings liability. 118 S. Ct. at 2154-58 (Kennedy, J.)
(means-end analysis "is in uneasy tension with our
basic understanding of the Takings Clause;" issues
concerning "the legitimacy of Congress'
judgment" should be analyzed under the Due Process
Clause); id. at 2161-64 (Breyer, Stevens,
Souter, and Ginsburg, JJ., dissenting) ("at the
heart of the [Takings] Clause lies a concern, not with
preventing arbitrary or unfair government action, but
with providing compensation for legitimate government
action that takes 'private property' to serve the
'public' good.").
Justice Kennedy's concurrence in Eastern
Enterprises is of particular interest to municipal
attorneys. After noting that the Takings Clause applies
to the States, he chastised the plurality's more
expansive reading of the Clause because it would
"throw one of the most difficult and litigated areas
of law into confusion, subjecting States and
municipalities to the potential of new and unforeseen
claims in vast amounts." 118 S. Ct. at 2155. Because
Justice Kennedy often serves as a swing vote in takings
cases, his expression of concern for State and local
governments is heartening.
II. LOWER COURT
TREATMENT OF THE MEANS-END INQUIRY AND AGENCY AUTHORITY
TO ACT
As noted above, in Agins v. City of
Tiburon, 447 U.S. 255 (1980), the Supreme Court
stated that a land use restriction constitutes a taking
if it fails to advance a legitimate state interest. To
support this proposition, Agins does not cite
takings precedent, but rather Nectow v. Cambridge,
277 U.S. 183 (1928), a case brought under the Due Process
Clause. The Supreme Court has never found a compensable
taking solely because a land use restriction failed
sufficiently to advance a legitimate state interest. A
full eight years after Agins, the Claims Court
stated that "no court has ever found that a taking
has occurred solely because a legitimate state interest
was not substantially advanced." Loveladies
Harbor, Inc. v. United States, 15 Cl. Ct. 381, 390
(1988). Moreover, the Supreme Court has made clear that
the Takings Clause "is designed not to limit the
governmental interference with property rights per se,
but rather to secure compensation in the event of
otherwise proper interference amounting to a
taking." First English Evangelical Lutheran
Church v. County of Los Angeles, 482 U.S. 304,
314-15 (1987). Thus, notwithstanding Agins, a
significant issue exists concerning whether government
action may result in a compensable taking solely because
it fails to advance a state interest, and whether
mistaken or unauthorized government action may give rise
to a compensable taking. Three recent lower court rulings
address these issues.
1. SANTA MONICA BEACH, LTD. v.
SUPERIOR COURT, 81 Cal. Rptr. 2d 93 (Jan. 4, 1999)
(petition for certiorari filed March 22, 1999)
The plaintiffs brought a takings
challenge to a rent control ordinance, arguing that it
does not substantially advance the state's interest in
providing affordable housing. By a vote of 4-3, the
California Supreme Court ordered that the challenge be
dismissed. The majority ruled that heightened means-end
scrutiny under Nollan and Dolan should
be confined to physical exactions, and that otherwise
courts should apply a deferential standard of
arbitrariness under the Takings Clause to determine
whether government action sufficiently advances a
legitimate state interest. Two Justices (one in the
majority, one in the dissent) wrote separately to urge
the U.S. Supreme Court to clarify the role of the
means-end inquiry in takings jurisprudence. It remains to
be seen whether the U.S. Supreme Court will clarify this
area in City of Monterey (discussed above) or by
granting certiorari in Santa Monica.
2. LANDGATE, INC. v. CALIFORNIA
COASTAL COMMISSION, 953 P.2d 1188 (Cal.), cert.
denied, 119 S. Ct. 179 (1998)
After the coastal commission refused to
approve a development project due to its lot line
configuration, the property owner successfully challenged
the commission's authority over this issue, and the
commission ultimately issued the permit. The owner then
sued for a temporary taking, arguing it should receive
compensation for damages suffered during the commission's
unauthorized delay in issuing the permit. The trial and
appeals courts ruled for the owner. In a 4-3 ruling, the
California Supreme Court reversed, holding that
resolution of a threshold issue like agency authority is
part of the normal decision-making process, and errors
made during that process do not result in a compensable
temporary taking. The court left open the larger issue of
whether agency action that exceeds statutory authority
may ever constitute a compensable taking.
3. MILLER & SON PAVING, INC. v.
PLUMSTEAD TOWNSHIP, 717 A.2d 483 (Pa. 1998), cert
denied, 119 S. Ct. 903 (1999)
The township passed an ordinance that
prohibited mining, but the ordinance was invalidated as
inconsistent with state law. The plaintiffs brought a
temporary takings claim to recover compensation for the
damages they allegedly suffered while the ordinance was
in effect. The Pennsylvania Supreme Court rejected the
claim, ruling that the ordinance did not deprive the
owner of all economically viable use of the property,
even temporarily. The court ruled that the invalidity of
an ordinance does not automatically give rise to a
temporary taking during the time the ordinance is in
effect.
III. LUCAS'S
"BACKGROUND PRINCIPLES"
In Lucas v. South Carolina Coastal
Council, 505
U.S. 1003 (1992), the Court the Court held that a
taking occurs where government action completely deprives
an owner of all economically viable use and value of
land, unless the government shows that the restraint can
be justified by reference to the "background
principles" of law that inhere in the owner's title
and thus limit the nature of the property interest. A key
issue facing the lower courts after Lucas
concerns the scope of these background principles.
Developers and others have argued that background
principles should be limited to state nuisance law.
Recent rulings show, however, that lower courts have been
receptive to a relatively broad application of background
principles to defeat takings claims.
1. WOOTEN v. SOUTH CAROLINA COASTAL
COUNCIL, Opinion
No. 24878, 1999 S.C. Lexis 7 (S.C., Jan. 18, 1999)
In this case, the lot owner applied for a
permit to build a bulkhead and place fill material on the
lot, which would allow the owner to erect a house and
control erosion. The coastal council denied the permit,
exercising its authority under the state's 1977 Coastal
Zone Management Act. Reversing a ruling by the lower
court, the South Carolina Supreme Court found no taking.
Because the owner acquired the property in 1988, eleven
years after the statute was enacted, the court ruled that
the statute limited the property interest and precluded
the takings claim. In so ruling, the court relied on Grant
v. South Carolina Coastal Council, 319 S.C. 348, 461
S.E.2d 388 (1995), which rejected a similar takings
challenge to a permit denial regarding property acquired
in 1987.
Wooten continues the trend
established by other lower courts. E.g. Kim v. City
of New York, 681 N.E. 2d 312 (N.Y.) (pre-existing
city charter and common law requirement to maintain
lateral support for public highways is a background
principle that defeats a takings challenge to the city's
placement of support fill on the owner's property), cert.
denied, 118 S. Ct. 50 (1997); Gazza v. New York
Dep't of Envtl. Conservation, 679 N.E.2d 1035 (N.Y.)
(pre-existing state wetland protection statute
constitutes a background principle that defeats a takings
challenge to land use restrictions under that statute), cert.
denied, 118 S. Ct. 58 (1997); Basile v. Town of
Southampton, 678 N.E.2d 489 (N.Y.) (same), cert.
denied, 118 S. Ct. 264 (1997); Anello v. Zoning
Bd. of Appeals of the Village of Dobbs Ferry, 678
N.E.2d 870 (N.Y.) (pre-existing steep slope ordinance
constitutes a background principle that defeats a takings
challenge to requirements imposed under the ordinance), cert.
denied, 118 S. Ct. 2 (1997); City of Virginia
Beach v. Bell, 255 Va. 395, 498 S.E.2d 414 (1998)
(pre-existing dune protection ordinance constitutes a
background principle that defeats a takings challenge to
dune protections), cert. denied, 119 S. Ct. 73
(1998); Hunziker v. Iowa, 519 N.W.2d 367 (Iowa
1994) (pre-existing state statute that protects
archaeological resources constitutes a background
principle that defeats a takings challenge to a restraint
on development imposed under the statute), cert.
denied, 514 U.S. 1003 (1995); Stevens v. City of
Cannon Beach, 317 Ore. 131, 854 P.2d 449 (1993)
(doctrine of custom constitutes a background principle
that precludes a takings challenge to denial of
permission to build a beachfront seawall), cert.
denied, 510 U.S. 1207 (1994).
2. CITY OF MIAMI v. KESHBRO, 717
So. 2d 601 (Fla. App. 1998) (application for leave to
appeal granted)
In this case, the appeals court reversed
the trial court's ruling that a taking occurred where the
City of Miami ordered a motel to close for six months
under a nuisance abatement statute after finding that
drug and prostitution activity at the motel constituted a
public nuisance. The appeals court reached this result
notwithstanding City of St. Petersburg v. Bowen,
675 So. 2d 626 (Fla. Ct. App.), rev. denied, 680
So. 2d 421 (Fla. 1996), cert. denied, 520 U.S.
1110 (1997), which found a taking on similar facts. The Keshbro
court distinguished Bowen by emphasizing that
the record in Keshbro showed that the
prostitution and drug activities were "inextricably
intertwined" with the use of the motel as a motel
and could only be eliminated by closing the motel, a
finding that was lacking in Bowen. The Florida
Supreme Court has agreed to hear the case.
IV. THE RELEVANT
PARCEL
Regulatory takings analysis generally
requires a comparison of the reduction in value of the
property caused by the challenged government action with
the value that remains after the government action. Keystone
Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470,
497 (1987). Accordingly, "one of the critical
questions is determining how to define the unit of
property 'whose value is to furnish the denominator of
the fraction.'" Id. (citation omitted).
Courts consistently have held that the denominator
consists of the "parcel as a whole." E.g.
Concrete Pipe & Products of California, Inc. v.
Construction Laborers Pension Trust, 508 U.S. 602,
604 (1993) ("a claimant's parcel of property
[sh]ould not first be divided into what was taken and
what was left for the purpose of demonstrating the taking
of the former to be complete and hence
compensable"); Penn Central Transp. Co. v. New
York City, 438 U.S. 104, 130-31 (1978) (takings
analysis must focus on the "parcel as a
whole."). Three recent lower court rulings shed
light on how to define the relevant parcel for takings
analysis.
1. K & K CONSTRUCTION v.
DEPARTMENT OF NATURAL RESOURCES, 575 N.W.2d 531
(Mich.), cert. denied, 119 S. Ct. 60 (1998)
The Michigan Supreme Court reversed and
remanded an appeals court ruling that a wetlands permit
denial constituted a compensable taking. Key to the
Supreme Court's ruling was its conclusion that the lower
courts erred in defining the relevant parcel. The High
Court ruled that notwithstanding differences in zoning,
the parcel as a whole for takings analysis included at
least three contiguous parcels that the claimant
purchased as a unit and treated as a unified whole in its
comprehensi v e development plan. The case shows that
courts generally will define the relevant parcel to
include all property the owner has treated as an
integrated whole for purposes of development. Owners
generally are not allowed to treat property as an
integrated whole for development purposes but then
segregate the property into smaller parcels for takings
analysis.
2. PALM BEACH ISLES ASSOCIATES v.
UNITED STATES, 42 Fed. Cl. 340
(1998)
The U.S. Court of Federal Claims rejected
a takings challenge to the denial of a permit to fill
about 50 acres of submerged land. The court ruled that
the federal navigational servitude defeated the claim
with respect to most of the property. With respect to the
rest of the property, the court concluded that the
relevant parcel included the entire 312 acres originally
purchased by the owner, 261 acres of which the owner had
sold for development. The court so held because the owner
sold the 261 acres after the challenged regulatory
structure had been imposed. The court expressed concern
about property owners manipulating their holdings to
enhance the likelihood of prevailing on a takings claim,
stating: "The takings clause of the Constitution
should not be construed to provide a windfall to
claimants in light of the known regulatory permitting
requirements or the selling off of valuable portions of a
parcel by the plaintiffs and their retention of only
those acres subject to regulation."
3. DISTRICT INTOWN PROPERTIES LTD. v.
DISTRICT OF COLUMBIA, 23 F. Supp. 2d 30 (D.D.C.
1998)
The district court rejected a takings
challenge to the denial of permission to build eight
townhouses on landscaped lawns adjacent to the claimant's
apartment building. The apartment building and lawns were
designed in the 1920s to achieve the greatest possible
integration of living space and open space. The court
ruled that the relevant parcel includes the entire
parcel, not just the undeveloped open space, because the
property is contiguous, it was assessed as a single
parcel for taxes, the owner purchased all the property
together, and the property was landscaped and maintained
as an integrated whole. The court also stressed that for
more than twenty-five years, the owner had no
investment-backed expectation of building on the open
space. Having defined the relevant parcel as the entire
property, the court found no taking, concluding that the
permit denial did not interfere with the owner's
investment-backed expectations nor deprive it of a
reasonable return on the property. The case is on appeal
to the D.C. Circuit.
V. PLANNING
MORATORIA AND TRANSFERABLE DEVELOPMENT RIGHTS
1. SUITUM v. TAHOE REGIONAL PLANNING
AGENCY, CV-N-91-040 (D. Nev., Dec. 9, 1998)
Mrs. Suitum brought a takings challenge
to the denial of permission to build a home on her
undeveloped half-acre lot, which she purchased in 1972
for $4500. The planning agency denied the permit to help
protect Lake Tahoe, one of the world's most pristine
lakes whose water quality has been jeopardized by
thoughtless development. The agency estimates that if the
permit had been granted, the lot would be worth about
$52,500 as of the date of the alleged taking. The agency
estimates that the lot now is worth about $15,000. To
mitigate the adverse impact of the permit denial, the
agency gave Mrs. Suitum transferable development rights
(TDRs) estimated to be worth from $30,000 to $43,500.
In 1997, the U.S. Supreme Court reversed
a lower court ruling that the case is unripe, holding
that Mrs. Suitum need not attempt to sell her TDRs to
ripen her takings claim. The Suitum Court left
open the issue of whether TDRs may be used to defeat a
takings claim, but a three-Justice concurrence states
that TDRs are relevant only to the amount of just
compensation, not to whether a taking has occurred.
On remand from the Supreme Court, the
district court denied the agency's motion for summary
judgment, ruling that the value of TDRs is irrelevant to
the issue of whether a taking has occurred (essentially
adopting the position of the concurrence in Suitum).
This ruling appears to conflict with the treatment of
TDRs in Penn Central Transp. Co. v. New York City,
438 U.S. 104 (1978), where the Supreme Court relied in
part on TDRs to reject the property owners' contention
that they had been deprived of economically viable use of
the property. Id. at 137. The role of TDRs in
takings analysis surely will continue to be litigated.
2. TAHOE-SIERRA PRESERVATION COUNCIL,
INC. v. TAHOE REGIONAL PLANNING AGENCY,
CV-N-84-257-ERC (D. Nev., Jan. 15, 1998)
In this case, the court found a taking
where 449 landowners in the Lake Tahoe basin challenged
temporary land use restrictions imposed to allow
preparation of a comprehensive regional development plan.
The court expressly departed from rulings by several
other courts that have held that a reasonable, temporary
restriction designed to allow for comprehensive planning
is not a per se taking. E.g., Santa Fe
Village Venture v. City of Albuquerque, 914 F. Supp.
478, 483 (D.N.M. 1995); Zilber v. Town of Moraga,
692 F. Supp. 1195, 1206-07 (N.D. Cal. 1988); First
English Evangelical Lutheran Church v. County of Los
Angeles, 210 Cal. App. 3d 1353, 258 Cal. Rptr. 893,
906 (Cal. Ct. App. 1989), rev. denied, (Aug. 25,
1989), cert. denied, 493 U.S. 1056 (1990).
VI. AMORTIZATION
PROVISIONS
1. BOARD OF ZONING APPEALS v. LEISZ,
702 N.E.2d 1026 (Ind. 1998)
In Leisz, the Indiana Supreme
Court abandoned fifteen-year-old precedent and ruled that
elimination of nonconforming uses through an amortization
provision is not per se unconstitutional. The Leisz
court noted that at least three federal circuits and 24
states have upheld reasonable amortization provisions.
Reversing a lower court finding of a taking, the Indiana
Supreme Court rejected a takings challenge to a zoning
ordinance that provides for forfeiture of a prior
nonconforming use if the use is not registered. This
ruling reflects the modern trend to uphold reasonable
amortization provisions.
2. ADAMS OUTDOOR ADVERTISING v. CITY
OF EAST LANSING, 232 Mich. App. 587 (1998)
(application for leave to appeal pending)
In a case adhering to the small minority
view and bucking the modern trend, the Michigan Court of
Appeals ruled that a municipal billboard ordinance
effects a taking even though the City provided a 12-year
amortization period for non-conforming signs. The city's
application for leave to appeal to the Michigan Supreme
Court is pending.
VII. SEX, TOBACCO,
HOGS, AND THE TAKINGS CLAUSE
Takings claimants are becoming more
imaginative in their use of the Takings Clause to
challenge community protections. The following cases
exemplify this trend. Although many takings cases do not
involve restrictions on land use, these rulings often
establish or clarify important jurisprudential principles
that implicate municipal land use controls.
1. THOMAS v.
ANCHORAGE EQUAL RIGHTS COMM'N, 165 F.3d 692 (9th
Cir. 1999)
In Thomas, the U.S. Court of
Appeals for the Ninth Circuit invalidated municipal and
state nondiscrimination laws by applying a new-found
constitutional "right" to choose tenants under
the Free Exercise Clause of the First Amendment. At issue
in Thomas are fair housing laws enacted by the
Municipality of Anchorage and State of Alaska that
prohibit discrimination on the basis of marital status,
including discrimination against unmarried couples. The
plaintiffs are landlords who claim that renting to
unmarried couples violates the landlords' religious
beliefs because it "facilitates sin." A divided
panel of the Ninth Circuit agreed and invalidated the
laws as applied to the plaintiffs and all similarly
situated landlords.
The panel used a circuitous route to
reach its takings analysis. The U.S. Supreme Court has
held that the Free Exercise Clause does not relieve
anyone of the obligation to comply with neutral laws of
general applicability. See Employment Division v.
Smith, 494 U.S. 872, 879-81 (1990). The Thomas
court concluded that the Anchorage and Alaska
nondiscrimination laws are neutral and generally
applicable. In many courts, that determination would have
ended the analysis. In an express departure from rulings
by the First, Sixth, and D.C. Circuits, however, the Thomas
panel held that the landlords could bolster their free
exercise claim by asserting a "colorable"--but
not necessarily viable--claim under another
constitutional provision. This "hybrid rights"
theory essentially allows free exercise claimants to
merge two losing claims into a new hybrid right. Once the
free exercise claim is thus "hybridized," under
the panel's theory, the government mu st show that any
substantial burden on religious beliefs caused by the
challenged law is justified by a compelling state
interest.
The panel used the Takings Clause to
hybridize the free exercise claim. It recognized that the
landlords do not have a per se takings claim, i.e.,
a categorical takings claim that turns on a single
factor. Under Yee v. City of Escondido, 503 U.S.
519, 531 (1992), property owners who "voluntarily
open their property to occupation by others . . . cannot
assert a per se right to compensation based on
their inability to exclude particular individuals."
The panel instead applied the three-factor analysis for
noncategorical takings claims under Penn Central
Transp. Co. v. New York City, 438 U.S. 104 (1978).
It correctly determi ned that the nondiscrimination laws
neither interfere with the landlords' investment-backed
expectations nor cause them economic harm. The panel
nevertheless found a colorable takings claim based solely
on the third Penn Central factor--the character
of the government action--stating that the laws authorize
a physical invasion of the property. Yet Yee
rejects the notion that restrictions on the ability to
choose tenants constitute a government-authorized
physical invasion. 503 U.S. at 528. While purporting to
follow Yee, the panel appears to have
disregarded its central holding. Prior to Thomas,
no reported decision had ever found a noncategorical
taking in the absence of interference with the owner's
expectations and economic harm. The panel also used the
Free Speech Clause of the First Amendment as an
alternative vehicle to hybridize the free exercise
claims. It then concluded there is no compelling state
interest to support the challenged laws.
As noted by Judge Hawkins in dissent, the
panel's ruling threatens more than just marital status
protections. Landlords, restaurateurs, store owners, and
other operators of public accommodations could try to use
Thomas to justify discrimination against
divorced persons, unwed mothers, women who do not wear
veils, and anyone else who does not meet the property
owner's personal religious criteria. Not surprisingly,
the case has attracted significant amicus participation,
including briefs supporting Anchorage and Alaska filed on
behalf of many state and local governments, the National
Fair Housing Alliance, and other national and regional
organizations. Presidential candidate Gary Bauer's Family
Research Council and similar groups have weighed in on
behalf of the landlords. Anchorage and Alaska have filed
rehearing petitions, and the Ninth Circuit recently asked
the landlords to submit a response.
2. PHILIP MORRIS, INC. v. HARSHBARGER,
159 F.3d 670 (1st Cir. 1998)
In a surprising ruling, the First Circuit
upheld a preliminary injunction issued by the district
court enjoining enforcement of a state law that requires
tobacco companies to provide state health officials
information regarding cigarette ingredients on a
brand-by-brand basis. The law permits public disclosure
of the information where the Attorney General determines
that disclosure will not result in a taking. The appeals
court ruled that the tobacco companies demonstrated a
fair chance of success on their claim that the law would
effect a taking.
3. BORMANN
v. BOARD OF SUPERVISORS, 584 N.W.2d 309 (Iowa
1998), cert. denied, 119 S. Ct. 1096 (1999)
The Iowa Supreme Court struck down a
state right-to-farm law, ruling that the law effected a
taking because it provided certain farmers with immunity
from private nuisance actions and thus took a
"nuisance easement" from owners of property
near the farms. Right-to-farm laws are very common, and
they are becoming increasingly controversial as
neighboring homeowners seek relief from large commercial
hog farms and other agricultural activities that impair
the use and enjoyment of their homes. The Bormann
ruling is ironic because the American Farm Bureau, a
strong proponent of right-to-farm laws, also champions an
aggressive use of the Taking Clause and takings
legislation that would make it easier to challenge state
and local laws. The Iowa Supreme Court's use of the
Takings Clause to invalidate a right-to-farm law shows
that you should be careful what you ask for, because you
just might get it.
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