TAKINGS A PRIMER Kelly A. Casillas, Legal Counsel Community Technical Assistance Program Montana Department of Commerce

Transcription

1 TAKINGS A PRIMER Kelly A. Casillas, Legal Counsel Community Technical Assistance Program Montana Department of Commerce

2 Outline of Regulatory Takings Law I. Short History of Takings II. Categorical Per Se Takings A. Physical Takings B. Loss of All Economically Viable Use III. Penn Central Multi Factor Inquiry A. Rejection of Agins Test B. Character of the Harm C. Reasonable Investment Backed Expectations D. Diminution in Value IV. Exactions A. Nexus B. Rough Proportionality V. Other Considerations A. Ripeness B. Exhaustion C. Waiver D. Fees E. Temporary Takings F. Judicial Takings VI. Application of the Rules ues

3 Just Compensation Clause of the Fifth Amendment of the U.S. Constitution:... nor shall private property be taken for public use, without just compensation. Article II, Section 29 of the Montana Constitution contains a similar clause: Private property shall not be taken or damaged for public use without just compensation to the full extent of the loss having been first made to or paid into court for the owner.

4 Thelegal analysis of a regulatory takings claim under either the federal or Montana constitutional takings clauses is thesame. (Buhmann v. State of Montana (2008 MT 465); McElwain v. Co. of Flathead,, 248 Mont. 231 (1991); Snell v. City of Hamilton,, 2007 Mont. Dist. LEXIS 132 (Mont. Dist. 2007) ( Montana takings law conforms to federal takings law. ).)

5 So, when is there a taking? The general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking. Justice Holmes, Pennsylvania Coal v. Mahon,, 260 U.S. 393, 415 (1922) The rub, of course, has been and remains how to discern how far is too far. In answering that question, we must remain cognizant that government regulation by definition involves the adjustment of rights for the public good, [citation omitted], and that Government hardly could go on if to some extentvalues incident to property could not be diminished without paying for every such change in the general law, [citation omitted]. Lingle v. Chevron,, 544 U.S. 528, (2005)

6 I. Short History of Regulatory Takings 1922 Pennsylvania Coal v. Mahon Coal mining was causing subsidence of surface property, PA passed Kohler Act requiring mining companies to leave pillars for support. Coal company sued for taking of property the pillars that consist of minable coal Supreme Court (Justice Holmes) held that the regulation went too far defined the property as the coal pillars and regulation took it all by prohibiting the company frommining mining it.

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8 Short History, cont Euclid v. Ambler Realty Village of Euclid, facing spreading industrial i development from Cleveland, enacted zoning that separated land uses and proscribed areas in the village for each Owners of property restricted to residential under the ordinance sued the city for violation of due process and equal protection, claiming the zoning reduced the value of the property p Supreme Court (Justice Sutherland) upheld the zoning ordinance, finding it a valid exercise of the police power

9 Short History, cont Penn Central v. New York City Owner of Grand Central Station sought permit to build skyscraper office building on top of the historic terminal Required to obtain permission from city s Landmarks Preservation Commission i for alterations to terminal; city denied approval Owner allowed to transfer development rights to other properties within the historic district available for development

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11 Short History, cont Penn Central v. New York City Supreme Court (Justice Brennan) rejected conceptual severance theory used in Penn Coal for parcel as as a whole theory the denominator parcel was the entirety of the property p owned by the company, not just the air space above the terminal it sought to develop: Taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been entirely abrogated. In deciding whether a particular governmental action has effected a taking, this Court focuses on the nature and extent of the interference with rights in the parcel as a whole here, thecity tax block designated as the "landmark site."

12 Short History, cont Penn Central v. New York City, cont. Court sets forth multi prong test for determining if regulation works a taking of private property. Courts must balance: 1) State s interest in the regulation 2) Extent of the diminution in the property s value as a result of the regulation 3) The character of the harm (physical?) 4) The distinct, investment backed expectations of the property owner Regulatory takings claims are to be determined after undertaking an ad hoc, factual inquiry on a case by by case basis

13 Short History, cont Agins v. Tiburon Owners purchased five acres of unimproved land for residential development overlooking SF Bay After purchase, City amended zoning laws that potentially reduced development potential of the property

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15 Short History, cont Agins v. Tiburon Supreme Court (Justice Powell) expands on/clarifies balancing test from Penn Central: The application of a general zoning law to particular property effects a taking if the ordinance does not substantially advance legitimate state interests,, [citation omitted] or denies an owner economically viable use of his land [citing Penn Central].

16 II. Categorical Per Se Takings A. Physical Takings Loretto v. Teleprompter Manhattan,, 458 U.S. 419, 421 (1982) New York law required landlady to permit cable companies to install cable facilities upon her property. Supreme Court (Justice Marshall) held this regulation constituted a per se taking, no ad hoc analysis required: Permanent physical occupation of an owner's property p authorized by government constitutes a taking of property for which just compensation is due under the Fifth and Fourteenth Amendments of the Constitution.

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18 Categorical Per Se Takings, cont. Loretto, cont. The landowner's right to exclude is "one of the most essential sticks in the bundle of rights that are commonly characterized as property." Limited application Tahoe Sierra Pres. Council v. Tahoe Reg'l Planning Agency,, 535 U.S. 302, 323 (2002): [P]hysical appropriations are relatively rare, easily identified, and usually represent a greater affront to individual id property rights. ih

19 Categorical Per Se Takings, cont. B. Loss of All Economically Viable Use Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1019 (U.S. 1992) South Carolina law prohibited development of certain beachfront properties, including two lots owned by Lucas in an area already occupied by residential structures Supreme Court (Justice Scalia) held regulation rendered property p valueless, noting denial of economically viable use test from Penn Central and Agins. Court finds second category of per se takings, no ad hoc analysis required: When the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle, he has suffered a taking.

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21 Categorical Per Se Takings, cont. Lucas, cont. Court did acknowledge exceptions to the exception : 1) Background principles of state property law inuring in the title (stick in the bundle that never belonged to the owner) 2) Activities that are nuisance under common law 3) Emergency action Court emphasizes this rule limited to the extraordinary circumstance when no productive oreconomically beneficial use of land is permitted, otherwise the balancing test under Penn Central applies Dissent by Justice Blackmun: Today the Court launches a missile to kill a mouse. Unsuccessfully argued that recreational uses remaining on property were adequate to withstand total takings.

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23 Categorical Per Se Takings, cont. Buhmann v. State of Montana (2008 MT 465) Companion case to Kafka (discussed infra) Discussion re categorical taking (Lucas) analysis available for real property only? Court says doesn t need to be addressed because not total diminution in value Same regulatory taking analysis as Kafka

24 III. Penn Central Multi Factor Inquiry A. Rejection of Agins prong Lingle v. Chevron U.S.A. USA Inc., 544 U.S. US 528 (2005) On occasion, a would be doctrinal rule or test finds its way into our case law through simple repetition of a phrase however fortuitously coined. A quarter century ago, in Agins,, the Court declared that government regulation of private property "effects a taking tki if [such regulation] lti ]d does not substantially bt till advance legitimate state interests " Through reiteration in a half dozen or so decisions since Agins,, this language has been ensconced in our Fifth Amendment takings jurisprudence. (Citing cases.) This case requires us to decide whether the "substantially advances" formula announced in Agins isanappropriate appropriate test for determining whether a regulation effects a Fifth Amendment taking. We conclude that it is not. (Justice O Connor)

25 Penn Central Multi Factor Inquiry, cont. B. Character of the Harm Loretto is this a physical takings? Clarified (Justice Stevens) in Tahoe Sierra: longstanding distinction between acquisitions of property for public use, on the one hand, and regulations prohibiting private uses, on the other, makesit inappropriate to treat cases involving physical takings as controlling precedents for the evaluation of a claim that there has been a regulatory taking, and vice versa. Sometimes used as soft substantive due process discussion whatis the purpose of the regulation?

26 Penn Central Multi Factor Inquiry, cont. C. Distinct Investment Backed Expectations Palazzolo v. Rhode Island (2001) 1959 Owner s company purchased waterfront t land designated as coastal wetlands under Rhode Island law, did not seriously pursue attempts to develop it 1971 RH law restricted development of coastal wetlands 1978 title to property passed to owner as sole shareholder

27 Penn Central Multi Factor Inquiry, cont. Palazzolo,, cont. Supreme Court (Justice Kennedy) explains expectations for the development denied by agency must be reasonable in light of: the sophistication of the owner, their experience in development, the regulations in effect when the owner purchased the property, and other similar factors Purchase after regulations in place no longer a bar to takings claim

28 Penn Central Multi Factor Inquiry, cont. D. Diminution in Value Cases discussed demonstrate that even under Penn Central,, a property owner must show a near total devaluation in the parcel as a whole in order to establish a successful takings claim. Village of Euclid (diminution i i of more than 75 percent not a taking) Hadacheck v. Sebastian,, 239 U.S. 394, 405 (1915) (reduction of value of more than 90 percent not a taking)

29 Penn Central Multi Factor Inquiry, cont. Diminution in Value, cont. William C. Haas & Co. v. City and County of San Francisco, 605 F.2d 1117, 1120 (9th Circ. 1979) (95 percent reduction in value of property not a taking) tki McElwain, 248 Mont. 231 (1991) (two thirds thirds reduction in value of property not itself sufficient to constitute takings in light of surrounding circumstances) Outlier Knight v. City of Billings,, 197 Mont. 165, 173 (1982) (20 30% reduction in value of the properties sufficient to constitute takings) (but issues of physical takingsinvolved) involved)

30 Penn Central Multi Factor Inquiry, cont. Kafka v. Montana Dept. of FWP (2008 MT 460) Initiative No. 143 banned the charging a fee for hunting alternative livestock (elk farms) Purpose of initiative was to promote Montana s hunting heritage and protect wild game populations from the spread of disease and hybridization Court held initiative did not take the plaintiffs property: Government issued licenses were not private property; a claim for lost goodwill and going concern value cannot be brought under the Takings Clause; No diminution in plaintiffs real property values; economic impact on personal property (elk) was severe, but the expectations and character factors weighed against the claims.

31 Penn Central Multi Factor Inquiry, cont. See also Roe v. City of Missoula (2009 MT 417) Landowners denied subdivision exemption to relocate a lot line on their property in order to create an additional buildable lot Court held no taking claim because landowners never possessed a right to obtain an exemption from subdivision review in the first place.

32 Penn Central Multi Factor Inquiry, cont. Guggenheim v. City of Goleta, 582 F3d 996 (9th Cir., September 28, 2009); awaiting en banc opinion. City s mobile home rent control ordinance resulted in a facial taking under a Penn Central analysis: Character favored the claimants because the ordinance singled out relatively l few mobile home park owners to bear the public burden of providing affordable housing Diminution although claimantsearned a reasonable return on their original investment, they suffered a severe adverse economic impact because they were not able to reap the windfallthey would enjoy if restriction were lifted Expectations neutral, despite the fact that the claimants purchased the mobile home park knowing of the rent regulations in place and paid a price for the mobile home park that reflected the effects of the restrictions

33 IV. Exactions Specific subset of takings law where Supreme Court has recognized the need for a heightened scrutiny of governmental action against a property owner. The term exaction refers to the concept of the government exacting concessions from property owners as a condition for approving a development permit, when the government otherwise has the discretion to deny the permit. Lingle v. Chevron

34 Exactions, cont. Heightened test only applies in exactions: City of Monterey v. Del Monte Dunes,, 526 U.S. 687 (1999) McClung v. City of Sumner,, 545 F.3d 803 (9th Cir., Sept. 25, 2008) taking claim against a city based on a condition imposed on all new developments requiring that property owners install 12 inch storm drains; Nollan/Dolan tests do not apply to generally applicable development conditions thatdo not require an owner to relinquish rights in real property Not deciding wither Penn Central or Nollan/Dolan would apply to a legislatively imposed exaction designed to advance a wholly unrelated interest

35 Exactions, cont. A. Nexus Test Nollan v. California Coastal Commission,, 483 U.S. US 825, 827 (1987) Beachfront property lying between two county parks, with small cottage and seawall all on property Sought approval from Coastal Commission to replace cottage with single family residence Coastal Commission conditioned approval of land use permit on dedication of lateral beach easement between seawall and mean high tide line (standard practice of all permit approvals)

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38 Nexus Test Nollan, cont. Exactions, cont. Commission defended the condition: o The proposed new house would increase blockage of the view of the ocean o The house would contribute to the development of a 'wall' of residential structures that would prevent the public psychologically... from realizing a stretch of coastline exists nearby that they have every right to visit. " o The house wouldincrease privateuse ofthe shorefront o The effects of construction of the house, along with other area development, would cumulatively "burden the public's ability to traverse to and along the shorefront."

39 Nexus Test Nollan, cont. Supreme Court (Justice Scalia) sets forth new hih heightened scrutiny standard of review for exactions: Unless the permit condition serves the samegovernmental purpose as the development ban, the building restriction is not a valid regulation of land use but "an out and out plan of extortion." Court recognizes the Commission s authority to prohibit construction of the house in order to protect the public's viewof the beach, and thatsuch authority include[s] the power to condition construction upon some concession by the owner, even a concession of property rights, that serves the same end. The condition imposed by the Commission here dedication of a lateral beach easement for access by the public failed to further the end advanced d as the justification for the prohibition impacts to views of the beach and increased private use of the beach.

40 Exactions, cont. B. Rough Proportionality Test Dolan v. City of Tigard,, 512 U.S. US 374, 383 (1994) Owner of plumbing and hardware store sought permit from city to expand business; property located along Fanno Creek City conditioned approval of land use permit on dedication of portions of her property p for flood control and extension of city s bikeway path

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43 Rough Proportionality Test Dolan, cont. City defended df ddth the nexus for the conditions: o o o o customers and employees of the site could utilize the pathway for their hi transportation and recreational needs creation of a convenient, safe pathway system in the city "could offset someof of the traffic demand on [nearby] streets and lessen the increase in traffic congestion as a result of the expansion the required floodplain dedication would be reasonably related to the increase in the impervious surfaces at the site the anticipated increased storm water flow from the site to the creek and drainage basin would add to the need for public management of the stream channel and floodplain for drainage purposes

44 Rough Proportionality Test Dolan, cont. Supreme Court (Chief Justice Rehnquist) agrees with City that requisite nexus exists between the conditions imposed and the types of impacts expected from the development But Court sets additional requirement for required degree of connection between the exactions imposed and the projected impacts of development: No precise mathematical calculation is required, but the city must make some sort of individualized determination thatthe the required dedication isrelated both innature nature and extent to the impact of the proposed development. We think a term such as rough proportionality best encapsulates lt what ht we hold ldt to be the requirement of the Fifth Amendment.

45 A. Ripeness V. Other Considerations The government entity must have made a final decision regarding the application of the regulations to the property at issue. Williamson County Reg'l Planning Comm'n v. Hamilton Bank,, 473 US U.S. 172, 185 (U.S. 1985) The courts must know the nature and extent of permitted development before deciding if the regulations are unconstitutional. MacDonald, Sommer and Frates v. County of Yolo,, 477 U.S. 340 (1986) So long as there is left open the possibility that some development will be permitted, the case is not probably not ripe for a takings claim. li (Del lm Monte Dunes) )

46 Other Considerations, cont. B. Exhaustion did the applicant follow the administrative process for appealing decisions made against him? C. Res Judicata if in federal court, did the applicant lose its state court takings claim, or fail to raise it? San Remo Hotel (545 U.S. 323 (2005)); Adam Bros. Farming, Inc. v. County of Santa Barbara,, 604 F.3d 1142 (9th Cir., May 14, 2010 D. Waiver did the applicant (or predecessors) waive his claim by accepting the benefits of the permit? E. Fees as Exactions some lower courts have held and there is ongoing academic discussion about whether fees are exactions subject to Nollan/Dolan heightened scrutiny

47 Other Considerations, cont. F. Temporary Takings Once a court finds that a regulation is a taking, the government must py pay for the taking from the date the regulation first effected the taking to the date the government entity rescinds or otherwise amends the regulation. First English Evangelical Lutheran Church v. County of Los Angeles,, 482 U.S. 304, 321 (1987) Mere fluctuations in value during the process of governmental decisionmaking, absent extraordinary delay, are incidents of ownership. They cannot be considered as a taking inthe constitutional sense. Tahoe Sierra o This includes normal delays in obtaining building permits, changes in zoning ordinances, variances, and the like. First English; also North Pacifica LLC v. City of Pacifica, 9th Circuit (2008) (due process claim after Lingle) Moratoria are not per se temporary takings. Tahoe Sierra

48 Other Considerations, cont. E. Judicial Takings Stop the Beach Renourishment v. FL Dept. of Environmental Protection (USSC, June 17, 2010) Takings challenge to the Florida Beach and Shoreline Preservation Act, tax payer funded construction of sand buffers along portions of the Florida coast Florida Supreme Court rejected the claim, describing the nature and scope of littoral owners' property interests under established Florida law (remember Lucas) Plurality opinion Florida Supreme Court applied settled Florida law regarding the nature of private property rights in coastal lands, so did not change Florida rules of property law Underlying legal question unanswered does a court ruling that changes property rules constitute a taking?

49 Judicial Takings, cont. PPL Montana v. State of Montana Writ of Certiorari Granted 7/14/11 / Did the MSC err in concluding that riverbeds occupied by dams are the property of the State of Montana because they were navigable for title purposes p at the time Montana became a State? In Stop the Beach,, Chief Justice Roberts and Justices Scalia, Thomas, and Alito, concluded that if a court declares that what was once an established right of private property p no longer exists, it has taken that property in violation of the Takings Clause. Justices Kennedy and Sotomayor, agreed that if a future case presented a situation where principles p such as due process were inadequate to protect property owners, then the question whether a judicial decision can effect a taking would be properly presented.

50 VI. Application of the Cases 1) Is it a permanent physical invasion of the property? If yes, it s a taking. If no, 2) Does the regulation deprive the owner of all economically viable use? If yes, it s a taking. If no, 3) Are you requiring exactions for approval of a permit, when you otherwise have the authority to deny it? If yes, can you establish the nexus between the impacts of the development and the conditions imposed, and are those conditions roughly proportional in nature and extent to the impacts of the development? Ifno no,

51 Application of the Cases, cont. 4) Penn Central balancing. Can you show that the proposed development will not result in a substantial diminution in value (look to remaining economic use, what was paid for property), and that the proposed development is not supported by reasonable investment backed expectations (what regulations were in place when purchased, what is the development experience of the owner, what due diligence was done, what attempts has owner made to minimize conflict with the regulation?) 5) Have you provided a process for the applicant to obtain a variance, or suggest alternatives to development, without ih foreclosing any possibility of some development? 6) QUESTIONS???? DISCUSSION????

52 MONTANA COMMUNITY TECHNICAL ASSISTANCE PROGRAM Community Development Division Montana Department of Commerce 301 S. Park Avenue P.O. Box Helena, MT Phone: Fax: E mail: jgrebenc@mt.gov