American College of Real Estate Lawyers 1999 Spring Meeting The Breakers Palm Beach, Florida. Short Subjects. Takings

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1 American College of Real Estate Lawyers 1999 Spring Meeting The Breakers Palm Beach, Florida Short Subjects Takings I The Latest Buzz in The Land Development Cocktail Parties "Smart Growth," "Urban Sprawl," "New Urbanism" "The Village Districts" by Gurdon H. Buck HART /20/00 2:36 PM

2 The Latest Buzz in The Land Development Cocktail Parties "Smart Growth," "Urban Sprawl," "New Urbanism" "The Village Districts" by Gurdon H. Buck This truly is a movement. In the 1998 election, more than 200 communities discussed - -and the vast majority adopted - - measures to manage sprawl and enhance local livability Today, I am proud to make the first big step in this effort by launching our new Livability Agenda for the 21 st century - - to help communities have the tools and resources they need to preserve green space, ease traffic congestion, promote regional cooperation, improve schools, and enhance economic competitiveness. In the State of the Union Message, President Clinton urged: Vice President Albert Gore, Speech to AIA January 11, A proposal pushed by Vice President Gore to limit urban and suburban sprawl. Clinton requested more than $18 billion in tax incentives and grants to states to promote smart growth programs that build urban parks, protect farmland and build mass transit. USA Today Jan. 20, 1999, 3A, byline: Mimi Hall Sprawl is caused by affluence and population growth, and which of these, exactly, do we propose to prohibit? Gregg Easterbrook Suburban Myth, Mar. 15, 1999 The New Republic, 21 As the Millenium dawns you will be hearing more and more about the latest catch phrases: "Urban Sprawl," "Smart Growth," "New Urbanism" Livable Communities "Village District Zones" and "Development Agreements." All of these terms are old wine in new bottles. The concepts of growth management go back to the attempt by New York, in the early 1900s to keep the loft sweatshops out of the tony residential areas of Fifth Avenue, when Edward Bassett created the first modern zoning ordinance. However, traditional zoning is not effective as a growth management tool. It has been warped and twisted to act on behalf of management of urban and suburban growth in many guises and forms. Traditional zoning placed land uses in certain areas on the zoning map, and builders and developers simply went to the zoning enforcement agency and received building

3 permits as of right for the buildings permitted where they were mapped. The zoning map, as it attempted to satisfy the immediate demands of individual parcel owners, zoned for far more overall development than was actually desired, the infrastructure would support, or sensitive environmental areas demanded. Thus growth management strategies have been adopted at local levels, like Petaluma s point system for new development based on the immediate availability of the municipal infrastructure, or mandating sequencing of development as infrastructure as provided in Florida. Or there can be statewide plans like that of Oregon which establishes "urban growth boundaries" outside of which urban and suburban development is discouraged and agricultural uses are encouraged. When the growth management proposal involves moratoria and timing, or restricts, temporarily or permanently the development, a takings problem is created. When it does not make enough land available for market demand of those types of housing serving persons who are traditionally discriminated against, there is an exclusionary result and equal protection or civil rights issues can be raised. The classic case describing growth management is under Golden v. Planning Bd. of the Town of Ramapo. 1 Under that case, to implement a growth management program of development in areas radiating from available infrastructure, a developer was required to obtain a certain number of "points," depending on the nearby availability of certain municipal capital improvements and infrastructure. The court, in an appeal that facially attacked the whole ordinance, held that this method was enabled by the Zoning Enabling Act, and was constitutional in that there were methods for variances and amelioration of the restrictions. However, the court reserved the right to review specific applications of the ordinance to specific sites. In spite of the detailed planning base and system, the program has been abandoned in the town of Ramapo for some time. The other bookend is the case Construction Industry Assn. of Sonoma County v. City of Petaluma. 2 There the federal court upheld a growth management program that contained an annual quota on residential development. The court found that the program did not violate substantive due process, even if the quota would limit supply to below market demand and cause a housing shortfall. The court found that this effect would not occur in Petaluma itself, and would increase the supply of lower income housing in the urban area. The city has the right to determine its own self-interest under the police power lawfully delegated to it by the state N.E.2d 291 (N.Y.), appeal dismissed, 409 U.S (1972); David J. Oliveiri, Annotation, Validity of Zoning Ordinance Deferring Rsidential Development until Establishment of Public Services in Area, 63 A.L.R.3d 1184(1998) F.2d 897 (9 th Cir.1975), cert. denied, 424 U.S. 934 (1976)

4 "Smart Growth" involves urban boundaries like in Oregon, aesthetic and environmental controls requiring "new villages" (that can raise a child), or mandatory clustering and setting aside of agricultural zones. Seaside, the town designed by Andres Duany and his wife, Elizabeth Plater-Zyberk, and featured in the movie The Truman Show, Celebration, the Walt Disney Enterprises development near Orlando on the Disney holdings, and documented by College member Wayne Hyatt, or the project The Kentlands in southern Maryland, and documented by College member Roger Winston, are held up as not only commercially very successful examples, but something that should be mandated by planning authorities. Smart Growth was advocated by President Clinton in his State of the Union speech, and Vice President Gore has been advocating it in many speeches around the country. It is evocative. For, as the attached article by Duane Desiderio states, "Who can be in favor of dumb growth?" However, Smart Growth, in the eyes of many environmentalists and "not in my back yard" opponents to development has come to mean "no growth". Of course, such positions will spawn court challenges. In a New Jersey appellate court decision last year, Timed Growth Controls in a zoning ordinance were held to be a prohibited moratorium. 3 The controls involved limitations on development of up to fifteen years. What distinguished this case from Ramapo and Petaluma, however, is that it involved a statute that prohibited moratoria or interim zoning ordinances. 4 "Urban Sprawl" has also gained a pejorative cachet. Who can possibly be in favor of it? Its control has been typified by the Oregon Urban Growth Boundaries, which analyzed the areas surrounding urban concentrations, and at the point where agricultural and non-urban uses were economically more viable than development, drew boundaries, outside of which development would be severely restricted and inside of which development would be enhanced. The restriction of development has been pointed to by every semi-suburban citizenry that wishes to retain its rural character, but the enhancement of development opportunities within the boundary has often been ignored. As the movement for Transferable Development Rights found a dozen years ago, one could easily find a politically encouraged transfer zone where development would be restricted, and with the development rights sold to developers in a receiving zone, the receiving zones were politically hard to find. Thus, except in intensely urban areas like New York where floor area can be transferred from building to building, this fad has not caught on with any popularity. "New Urbanism" and the "Village Renewal" are part of a number of building aesthetic movements that seem to have real legs, not as planning or zoning techniques but because of economic success. Seaside, Celebration, and The Kentlands have all demonstrated significant marketing success and property value appreciation over their competitors. These developments are characterized by nostalgic housing designs with verandas, alleys, picket fences, narrow streets 3 Toll Bros. v. West Windsor Twp., 712 A.2d 266 (N.J. Super. Ct. App. Div. 1998), certif. denied, 1998 N.J. LEXIS 1848 (Nov. 17, 1998). 4 Id. at

5 with neighborhood parks, and a grid-like street pattern that calms traffic and makes the neighborhood pedestrian friendly. The New Urbanism is beginning to appear in zoning ordinances, not as merely enabling ordinances, but as requirements for compliance with historic or themed aesthetic design parameters. Many of these ordinances are investing the zoning commissions or historic control boards with rather arbitrary powers to deny a building design that the board members think is ugly. There will be substantive due process issues that will arise, as these issues reach the courts. Some of the ordinances actually contemplate the protection of "viewscapes" where the views of pastures and ridge tops are deemed to be an essential part of the aesthetic of a village, and development is prohibited. There is an obvious takings issue. Development Agreements, where conditions of zoning or other land use approval are imposed by the zoning authority at the agreement of the developer, in exchange for relaxation of standards or density bonuses and a vested right to the continuation of the plan which can be brought to the bank, will be seen more and more. In these cases, the restrictions are generally imposed on a consensual basis and the affected land owner has agreed. The conditions usually impose protections on neighboring landowners and environmentally sensitive areas by buffering, open space or development limitations in the vicinity. Thus the neighbor and the environmentalist buy in as well. Development agreements are popular in California and Florida, and with modifications in Illinois. In many other states, design controlled zoning results in similar ad hoc zoning decisions where "zoning in accordance with a comprehensive plan" as Edward Bassett contemplated it, would never have allowed it. However, these conditional zoning decisions are not coupled with vested rights in the approved plan. However, as my former land use and property professor, Jan Krasnowiecki, used to say, this was not comprehensive planning, it was the ultimate in "ad hoc-ery": zoning by negotiation rather than by plan. Thus zoning will follow the market that will purchase environmental preservation and aesthetic pleasure. It is hard to argue with Mother Nature and Adam Smith when they work together.