COMMENT THE HARRIS ACT: WHAT RELIEF FROM GOV- ERNMENT REGULATION DOES IT PROVIDE FOR PRIVATE PROPERTY OWNERS?

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1 COMMENT THE HARRIS ACT: WHAT RELIEF FROM GOV- ERNMENT REGULATION DOES IT PROVIDE FOR PRIVATE PROPERTY OWNERS? Vivien J. Monaco * TABLE OF CONTENTS I. INTRODUCTION II. THE HYPOTHETICAL III. HISTORICAL OVERVIEW A. Florida Equitable Estoppel Cases B. Fifth Amendment Rights Summary: As Defined by Federal Courts Regulations as Takings: Fact-Specific, Multi-Factor Analysis Governmental Purpose: Prevention of Public Harm Temporary Regulatory Taking The Nexus Test Categorical Taking The Rough Proportionality Test Federal Takings Cases in Florida * B.S., University of Texas at Austin, 1979; J.D., Stetson University College of Law expected 1997; Executive Editor, Stetson Law Review. I would like to thank my fellow editors and colleagues on the Stetson Law Review, along with Chief Assistant Pinellas County Attorney James Bennett, for their invaluable help and advice. I owe special thanks to Professor James J. Brown, whose insistence on rigorous scholarship pushed me to do more than I thought I could do. Finally, I dedicate this Comment to my husband, Larry King, and to my parents, Frank and Frances Monaco, for the boundless love and support they have given me.

2 862 Stetson Law Review [Vol. XXVI C. Florida Takings Cases IV. HISTORICAL DEVELOPMENT OF THE HARRIS ACT V. JANE DOE'S REMEDIES A. Remedies Under Equitable Estoppel B. Remedies Under Inverse Condemnation C. Remedies Under the Harris Act VI. CONCLUSION I. INTRODUCTION What can a Florida real property owner do when a state or local government regulation makes it substantially more difficult, or perhaps impossible, to use her property in a way she had long planned? What relief does the property owner have when a regulation substantially reduces the current market value of her land, and perhaps totally eliminates any economically viable or profit-making use? When she seeks legal advice, what remedy does her attorney advise her to pursue? Possible traditional common-law remedies include a regulatory takings claim 1 or an equitable estoppel claim, 2 both of which this Comment will discuss. Now, however, there exists another remedy for the property owner whose land has been unduly burdened by state and local government regulation, the Harris Act. 3 In response to pressure from property rights advocates, the Florida Legislature enacted the Harris Act on May 18, Legislators realized that state or local laws could restrict or limit private real property owners' rights at a level below the threshold of a taking under the Florida or United States Constitutions. 5 In response to that concern, legislators designed the Harris Act to provide relief or compensation to those whose property rights are restricted to a de- 1. See infra notes and accompanying text for a discussion of regulatory takings under federal and Florida case law. 2. See infra notes and accompanying text for a discussion of equitable estoppel in Florida case law. 3. FLA. STAT (1995). 4. See Bert J. Harris, Jr., Private Property Rights Protection Act, 1995 Fla. Laws ch [hereinafter the Harris Act]. 5. See FLA. STAT (1) (stating the legislative intent).

3 1997] The Harris Act 863 gree that amounts to an inordinate burden. 6 This Comment will discuss the remedies available under the Harris Act and compare them with remedies available under existing takings and equitable estoppel case law. To facilitate this discussion, the Comment will examine the remedies available to a hypothetical landowner. This Comment will apply the Harris Act provisions to a set of facts based upon a fictional parcel owner. II. THE HYPOTHETICAL 7 Jane Doe was Vice President in charge of the Florida division of a multi-use subdivision developer, and had worked for the company for twenty years. The development company was located in Virginia, and developed projects throughout the south. In 1991, the company decided to withdraw from the Florida market and concentrate its efforts on development in the mid south. Ms. Doe supervised completion of the projects that were under construction at the time, and, at the direction of the company, sold the remaining land it owned. Ms. Doe wanted to remain in Florida, so she took early retirement in January 1994, and the company supervised the remaining wrap-up of Florida operations from its Virginia headquarters. Ms. Doe, who desired to start her own development company, started looking for suitable property in early By July 1994, Ms. Doe had begun negotiations with the owner, the YY Ranch, a 162-acre parcel of land located in ABC County. The ranch is located on County Road xx, which road leads from an exit on U.S. Interstate Highway 75 (IH 75), west to the northern fringes of the metropolitan area surrounding ABC City, a moderatesize city on Florida's west coast and the county seat. 8 The population, growing steadily, caused suburban development to head east on County Road xx; developments are comprised primarily of subdivisions of entry-level single-family homes, apartments, and supporting retail development. The area includes some smaller communities 6. See id. 7. This Comment will use the facts of this hypothetical to explore the remedies available to a landowner whose land value has substantially decreased due to government regulation. 8. This location is not patterned after any particular community, but is designed to approximate conditions that may be found in growing areas of Florida.

4 864 Stetson Law Review [Vol. XXVI of homes in price ranges suitable for move-up homes or first homes for young families with incomes somewhat higher than average. Although development tapers off about a mile and a half west of the ranch, recent trends suggest a continuation of growth eastward along County Road xx. Developers have purchased several tracts between this eastern edge of the development and the subject property. Two other developers had looked at the parcel for which Ms. Doe was negotiating, but neither had made an offer. Because of the interest in the land, Ms. Doe had to pay $100 more per acre than she had originally hoped, but her research indicated she still should be able to make a profit of between $1 million and $1.5 million from a multi-use development. The land was zoned agricultural, and the current owner had thirty acres devoted to citrus groves. The owner had raised cattle on the remaining acreage, but had allowed that acreage to remain fallow for the previous five years because he was semi-retired. Wanting to completely retire from farming, the owner was now interested in selling. The land to the east of the property was zoned agricultural, except for narrow strips of land bordering each side of IH 75, which strips are zoned commercial. The county comprehensive plan, looking three to five years in the future, had delineated the area stretching from the western edge of the existing subdivisions to within one quarter mile of the interstate for residential and retail development. However, zoning in this planning area was being held as agricultural until development moved closer. The YY Ranch is located in this planning area. County water and sewer lines are in place one half mile west of the YY Ranch, and the county has planned for eastward expansion of these lines because of the eastward trend of development. Ms. Doe offered to purchase the property contingent upon obtaining the zoning designation necessary for a multi-use development consisting primarily of entry-level single-family homes with a retail strip shopping center anchored by a supermarket on the County Road xx frontage, and a 250-unit apartment complex located behind the shopping center. Because the YY Ranch was in an area the ABC County comprehensive land use plan had already designated for this type of development three to five years in the future, and the new zoning designation was comparable with the zoning in the developments west of the subject property, ABC County Com-

5 1997] The Harris Act 865 mission granted the zoning designation change. Ms. Doe purchased the property in December 1994 for $3750 per acre, which totaled $607,500. Ms. Doe spent more than $300,000 in engineering and design costs in 1995, and the preliminary plat and development plan was scheduled to be complete and ready to submit for approval in March During this time, Ms. Doe consulted with various county and state agencies, obtaining information and advice from them to help insure against delays in getting her plans approved once she had submitted them. Two new county commissioners were elected in November During their campaign, they argued against the continued eastward development along County Road xx and other arteries leading from the city to IH 75, and proposed zoning changes that would encourage development closer to the city center, particularly by filling those undeveloped and underdeveloped areas around the city suburbs and between the major arteries leading to the interstate. In December 1995, the new County Commission proposed changing the zoning designation along the less-developed eastern section of County Road xx, and after a sixty-day period for public comment, the Commission voted to rezone the area in which Ms. Doe's property is located. Ms. Doe participated in the public comment period and argued against the change, as did several others who owned property near the YY Ranch. The new zoning designation reduces density from 4 residential units per acre to a maximum of 2.5 residential units per acre and allows some retail use on the County Road xx frontage. The zoning does not permit multi-family development, so Ms. Doe cannot build the 250-unit apartment complex. The density reduction will bring her proposed number of single-family homes from 500 down to 340. While a development of 750 residential units would support the planned shopping center, a development of 340 residential units would be only marginally successful under ideal circumstances. The reduced density means the single family home lots must be larger and the development costs per lot will be higher; therefore, the only feasible development would be an upscale subdivision of roomier, more expensive homes. Ms. Doe does not believe such executive-type homes would be appropriate in that location, because the area west of her property is known as an area of starter home subdivisions for young families. Even if the executive homes

6 866 Stetson Law Review [Vol. XXVI did sell, Ms. Doe does not anticipate being able to make a profit of more than $500,000, with $250,000 being a more realistic figure. The new zoning designation still allows development of retail shopping along the County Road xx frontage, but the lower projected population in the area resulting from the reduced residential density will not economically support a retail center. Not only will an upscale development be riskier, it will substantially reduce Ms. Doe's projected profits, thus providing a lower rate of return on what has become a much riskier investment. The zoning designation also allows limited office development, with strict height and density limitations. At present, because YY Ranch is just beyond the fringes of the eastward development, there is little demand for office space. Finally, the designation allows for limited agricultural use, like the former owner's citrus farming. It is important to note that Ms. Doe had substantial development experience in the State of Florida. Ms. Doe, who held a Florida Real Estate Broker's License, had been Vice President in charge of a development company's Florida division for ten years. In that capacity, Ms. Doe had been responsible for identifying land parcels suitable for multi-use development and submitting them for approval by the company's development committee, of which she was a member. Once approved, Ms. Doe was responsible for negotiating the land purchase. After the company purchased the land, Ms. Doe monitored development in the area and recommended to the committee when the development process should begin. Once the committee approved a tentative schedule, Ms. Doe was responsible for supervising the planning and design process as well as the development and permit approval process. The development construction division of the company took over from there, but reported to Ms. Doe who had the power to veto decisions of the construction division. Despite her substantial development experience, Ms. Doe now finds herself with a considerable investment in a parcel that she may not be able to profitably develop, and she needs legal advice. Because Ms. Doe seems to have acted in reliance on the ABC County Commission's zoning change, she could sue the County to enjoin enforcement of the new zoning designation under a theory of equitable estoppel. Alternatively, Ms. Doe could file an inverse condemnation claim against the County, alleging a regulatory taking under United States and Florida constitutional law. Now, however, Ms. Doe may also submit a claim to the ABC County Commission under

7 1997] The Harris Act 867 the Harris Act. But how will Ms. Doe's claim be treated under the Harris Act? How will the outcome differ from what she could expect to receive by proceeding under equitable estoppel or inverse condemnation theories? III. HISTORICAL OVERVIEW Before the legislature passed the Harris Act, Florida landowners had two judicial remedies available when their properties' value or usefulness was destroyed or severely diminished by government regulation. 9 A property owner could proceed against the governmental entity under the doctrine of equitable estoppel to enjoin the government from revoking a permit or attempting to apply a new regulation. This doctrine applies when a property owner, in good faith reliance on an act or omission of a government entity with respect to government regulations, has made a substantial change in position or incurred substantial expenses. 10 Alternatively, if a regulation directly caused a substantial diminution in value, one which reached the level of a taking, the landowner could file an inverse condemnation claim under the United States Constitution 11 or the Florida Constitution. 12 A. Florida Equitable Estoppel Cases 9. See Kent Wetherell, Comment, Private Property Rights Legislation: The Midnight Version and Beyond, 22 FLA. ST. U. L. REV. 525, (1994) (discussing Florida takings jurisprudence); see also Robert Rhodes & Cathy Sellers, Vested Rights: Establishing Predictability in a Changing Regulatory System, 20 STETSON L. REV. 475, (1991) (discussing equitable estoppel in Florida). 10. See Hollywood Beach Hotel Co. v. City of Hollywood, 329 So. 2d 10, (Fla. 1976) (holding City was estopped from reversing rezoning on which developer had substantially relied in incurring expenses of almost $200,000); Franklin County v. Leisure Properties, Ltd., 430 So. 2d 475, 479 (Fla. 1st Dist. Ct. App. 1983) (holding County was estopped from denying building permit to developer who had spent $800,000 constructing a water system for multi-family development in reliance on county ordinance allowing multi-family housing); Town of Largo v. Imperial Homes Corp., 309 So. 2d 571 (Fla. 2d Dist. Ct. App. 1975) (holding Town was estopped from changing zoning when developer, in reliance on multi-family rezoning, incurred $379,000 in architectural and development expenses). 11. See U.S. CONST. amend. V. 12. See FLA. CONST. art. X, 6.

8 868 Stetson Law Review [Vol. XXVI In certain, very specific circumstances, when a regulation has the potential for substantially reducing the use or value of one's real estate, a Florida property owner may be able to obtain judicial relief through pleadings of equitable estoppel. 13 The doctrine of equitable estoppel applies when a property owner, in good faith reliance upon some act or omission of a governmental entity, substantially changes his or her position or incurs such extensive obligations or expenses that it would be unjust and inequitable to destroy the right acquired by the property owner. 14 Another term often associated with an affirmative claim of equitable estoppel is vested rights. 15 The doctrine of vested rights is often used interchangeably with the doctrine of equitable estoppel in Florida cases. 16 While equitable estoppel is grounded in equity, vested rights is based on common law and constitutional law, and focuses on whether a property owner has obtained real property rights that the government cannot take through regulation. 17 This section will refer to the two doctrines interchangeably. The good faith element of equitable estoppel requires compliance with the law and that both parties have a mutual understanding of [the] relevant facts. 18 Furthermore, estoppel may not be justified if the property owner has good reason to believe there may be a change in the official mind. 19 A governmental act or omission includes rezoning. 20 Finally, for equitable estoppel to apply, a property owner must make a substantial change in position or incur exten- 13. See Rhodes & Sellers, supra note 9, at (discussing application of the equitable estoppel doctrine). 14. See Robert M. Rhodes & Cathy M. Sellers, Equitable Estoppel and Vested Rights in Land Use, in FLORIDA ENVIRONMENTAL AND LAND USE LAW 8-1, 8-4 (Fla. Bar 1994) (citing Hollywood Beach Hotel Co., 329 So. 2d at 15). 15. See id. at See id. 17. See id. 18. Rhodes & Sellers, supra note 9, at Id. In Miami Shores Village v. William North Brockway Post, 24 So. 2d 33, 36 (Fla. 1945), the court found the red flag of an impending election and possible change of elected officials, which could change the voting pattern, may be enough to disprove good faith reliance. Thus, the red flag should serve as a warning not to proceed in reliance on the original government act. See Rhodes & Sellers, supra note 9, at 479. However, in Sakolsky v. City of Coral Gables, 151 So. 2d 433, 435 (Fla. 1963), the court stepped back from the red flag doctrine, and granted equitable relief despite the fact that the official mind could change after an election and political controversy regarding zoning. 20. See Rhodes & Sellers, supra note 9, at 482.

9 1997] The Harris Act 869 sive expenses or debts in reliance on the government's acts or omissions. 21 In Town of Largo v. Imperial Homes Corp., 22 Imperial Homes Corporation (Imperial) contracted to buy the twenty-five-acre Trotter Tract, contingent on obtaining zoning that expressly permitted multi-family construction. 23 The land had been zoned UZ (unzoned), allowing unrestricted development, and the Largo Town Commission (the Commission) unanimously approved rezoning to allow multi-family development without restrictions on height or density. 24 Imperial then purchased the property, and when an adjoining sixteen-acre parcel, the Campbell Tract, became available the next year, upon assurance from the appropriate Town officials that the zoning allowed multi-family development, Imperial also purchased that tract. 25 After Imperial submitted a detailed master plan, the Commission and the Zoning Board met to consider recommendations on rezoning submitted by a professional planner who had been hired by the Town to prepare recommendations for rezoning. 26 Although the planner recommended zoning to allow thirty-nine units per acre for Imperial's property, Imperial agreed to limit its development to twenty-four units per acre and agreed to use the Campbell Tract only for recreational purposes. 27 The majority of the Zoning Board and the Commission then voted for R-39 (thirty-nine units per acre) zoning, despite objections to the project raised by several residents at a previous Commission meeting. However, after public hearings on the proposed zoning ordinance, the Commission voted to zone Imperial's land R-2.5, the most restrictive zoning at 2.5 units per acre. 28 By this time, Imperial had incurred $379,000 in architectural and development expenses. 29 Imperial sued the Town; the trial court found for Imperial under the doctrine of equitable estoppel, enjoined 21. See id. at So. 2d 571 (Fla. 2d Dist. Ct. App. 1975). 23. See id. at See id. at See id. 26. See id. 27. See Imperial Homes, 309 So. 2d at See id. 29. See id. at 573.

10 870 Stetson Law Review [Vol. XXVI the Town from enforcing the single-family zoning on Imperial's land, and ordered the Town to rezone the property to allow construction of the proposed multi-family high-rise buildings. 30 The Town of Largo appealed. 31 The Second District Court of Appeal affirmed, finding that the Town was estopped from changing the zoning to single-family. 32 The Town maintained that equitable estoppel in a zoning case applies only if the property owner has either obtained a building permit or made physical changes in the land in reliance on the existing zoning. 33 The court rejected the Town's argument and stated that while either or both instances will likely occur in an equitable estoppel case, neither is a condition precedent. 34 The Town conceded that while Imperial had demonstrated some good faith reliance, the publication of the notice of public hearings on the recommendation put Imperial on notice that zoning might be changed. 35 The court accepted that might have been the case had the planner's mission been to reduce zoning density; however, the planner was hired primarily to update and revise the zoning ordinance. 36 Additionally, the court found that despite the public protest, Imperial had the right to continue relying on the official mind of the Commission to allow the zoning Imperial needed for its project. 37 In Jane Doe's case, she had neither obtained a building permit nor made physical changes to the property. However, like Imperial, she had made substantial development expenditures. 38 Furthermore, despite the ABC County campaign for county commissioners, 30. See id. at See id. at See Imperial Homes, 309 So. 2d at Id. at See id. 35. See id. 36. See id. 37. See Imperial Homes, 309 So. 2d at The court also discussed the trial court's conclusion that single-family zoning for Imperial's property was unreasonable. See id. at 574. The court agreed with the Town and found that the reasonableness of the zoning was fairly debatable, because of its finding regarding equitable estoppel. See id. The court went on to state that its opinion should not be construed as an impediment to local governments' exercise of zoning authority, provided this is accomplished in the interest of the public health, safety and welfare and in a way as not to mislead innocent parties who in good faith rely to their detriment upon the acts of their governing bodies. Id. 38. See supra Part II, The Hypothetical.

11 1997] The Harris Act 871 which ABC may argue put Ms. Doe on notice that her zoning might be changed, 39 under Imperial Homes, she had a right to continue relying on the official mind. 40 In Hollywood Beach Hotel Co. v. City of Hollywood, 41 the Hollywood City Commission (the Commission) rezoned the Hollywood Beach Hotel Company's (the Company) 105-acre tract of land to allow multiple-family development so the Company could develop a 6000-unit complete community. 42 The Company spent nine or ten months preparing for construction at a cost of almost $200,000 before it applied for and obtained a building permit. 43 The following month, the Commission voted to petition the Zoning Board to rezone the Company's property, leaving only one third of the property with multiple family zoning. 44 The Zoning Board denied the petition to rezone, and the Commission voted to appeal this decision to the Zoning Board of Appeals, the membership of which solely consisted of the Commission members. 45 In the meantime, the Company filed suit for a permanent injunction, accompanied by a request for a temporary injunction, to prevent the city from rezoning the property. 46 The Commission tabled the appeal to the Zoning Board of Appeals several times during the litigation, and, in response to a request to extend the building permit, voted to extend it indefinitely until the litigation was over. 47 After the City exhausted its appeals on a motion to dismiss the Company's suit, the City filed its answer to the Company's complaint, and on the same day, acting as the Zoning Board of Appeals, the Commission affirmed the denial of the petition to rezone. 48 Then, acting as the Commission, and without prior notice to the Company, the Commission rescinded the motion 39. See supra note 17 for a brief discussion of the red flag doctrine. 40. See Imperial Homes, 309 So. 2d at So. 2d 10 (Fla. 1976). 42. See id. at See id. The month before the permit was issued, two newly elected commissioners, who had publicly opposed the rezoning, and the one commissioner from the previous Commission who had voted against the rezoning, passed a motion requesting the Zoning Board reevaluate the rezoning. See id. This request did not allege any change in circumstances to support the rezoning. See id. 44. See Hollywood Beach Hotel Co., 329 So. 2d at See id. at See id. 47. See id. at See id.

12 872 Stetson Law Review [Vol. XXVI to extend the building permit until litigation had ended and gave the Company ninety days to begin building under the permit. 49 The City then began negotiating to purchase the property as the litigation was proceeding. 50 Even though there had been a verbal agreement to purchase the property, the Commission voted not to purchase the property, and then requested new zoning from the Zoning Board, which approved a rezoning plan. 51 The trial court found for the Company, and enjoined the City from enforcing the density and zoning restrictions. 52 The Fourth District Court of Appeal reversed, finding that the Company elected not to begin building during the ninety-day extension of the permit, and had surrendered the building permit. 53 The trial court had found the Company's choice not to build to be based upon unstable financial conditions created by the City's delays, and had found that the Company did not surrender the building permit. 54 The Florida Supreme Court found that the Fourth District erred in reevaluating the trial evidence and in substituting its judgment for that of the trial court. 55 The Supreme Court disagreed with the appellate court's holding that the Company relinquished its vested property right 56 in continuation of the multiple family zoning. 57 The court found that the only circumstance that led to the new rezoning was a political climate, which in turn led to a Commission comprised of members entirely different than the Commission that originally voted on the multiple-family zoning. 58 The court further found that the City, by using delay tactics, sought to prevent the Company from 49. See Hollywood Beach Hotel Co., 329 So. 2d at See id. 51. See id. at See id. 53. See Hollywood Beach Hotel Co., 283 So. 2d 867, 870 (Fla. 4th Dist. Ct. App. 1973). 54. See Hollywood Beach Hotel Co., 329 So. 2d at See id. 56. The Fourth District Court of Appeal held that the Company had relied in good faith on the City's actions in rezoning the property to multiple family, and based on that reliance, had incurred substantial expense, nearing $200,000. See Hollywood Beach Hotel Co., 283 So. 2d at 870. Thus, the City was estopped from changing the zoning. See id. However, the Fourth District held that when the Company elected not to proceed... and voluntarily surrender[ed] [its] building permit to the city, the Company forfeited its vested right to the favorable zoning. See id. 57. See Hollywood Beach Hotel Co., 329 So. 2d at See id.

13 1997] The Harris Act 873 proceeding with the development and that the City was likely aware the building market and the economy were deteriorating. 59 By affirming the denial of rezoning and mandating that the Company begin construction within ninety days, the Commission lift[ed] the... [Company] out of limbo but [cast] them into the depths of the inferno. 60 The Florida Supreme Court reversed the appellate court and reinstated the injunction against enforcement of the rezoning and the expiration of the building permit. 61 The court's finding that the change in the political climate was the only circumstance that led to the City of Hollywood's new multiple-family zoning is applicable to Ms. Doe's situation. The fact that the new ABC County Commissioners' campaigns were opposed to continued eastward development along County Road xx 62 leads to the conclusion the change in zoning designation of Ms. Doe's property resulted from the change in the political climate. Under both Hollywood Beach Hotel and Imperial Homes, Ms. Doe has a right to rely on the official mind, which supported the initial rezoning of the property prior to Ms. Doe's purchase. Equitable estoppel may also apply to the preparation of or amendment to a comprehensive land use plan, as it did in Franklin County v. Leisure Properties, Ltd. 63 In 1974, while Franklin County was in the middle of preparing its land use plan, Leisure Properties (Leisure) bought approximately 3000 acres on St. George Island and submitted a request for a Development of Regional Impact (DRI) the following year. 64 After lengthy negotiations, Franklin County (the County) approved the DRI the next year, subject to thirty conditions. 65 Because of these restrictions, Leisure did not proceed under this DRI. 66 During the time of the DRI negotiations, the County was preparing its land use plan, and Leisure requested that the plan 59. See id. at Id. at See id. at 18. The trial court had also ordered the return of the permit fee, finding the City's retention of the fee was a forfeiture. See id. at The Fourth District reversed the trial court's order that the City return the fee, 283 So. 2d at 871, and the supreme court affirmed, 329 So. 2d at See supra Part II, The Hypothetical So. 2d 475, 477 (Fla. 1st Dist. Ct. App. 1983). 64. See id. 65. See id. 66. See id.

14 874 Stetson Law Review [Vol. XXVI allow multi-family construction on St. George Island. 67 Eventually, an ordinance was passed allowing multi-family housing in C-3 Tourist Commercial zoning areas, of which Leisure's property was a part. 68 Before the County enacted this ordinance, Leisure requested permission to install a water system designed to serve multi-family and single-family housing at a cost of at least $800, Leisure then sold sixteen lots to Roger Newton, who, after revising his plans to comply with the building code, obtained a building permit to build forty-eight multi-family units on the sixteen lots. 70 Following this, the Franklin County Commission (the County Commission) requested its attorney draft an ordinance prohibiting the development of more condominiums on St. George Island. 71 Shortly thereafter, Leisure sought approval of development plans for two parts of its property. One plan was nearly identical to Newton's, while another was for a typical condominium development. 72 Two weeks later, the County Commission notified Leisure that no more multi-family development would be allowed in the areas zoned commercial. 73 In a separate but subsequently related transaction, Leisure had previously agreed to sell a tract known as Unit 4, which the County wanted to be publicly owned, to Musgrave Development, Inc. (Musgrave). 74 In an attempt to satisfy the county, Leisure worked out a deal in which Musgrave rescinded the Unit 4 contract in exchange for Leisure's commercial lots, after which Leisure sold Unit 4 to the Trust for Public Lands. 75 Then, Musgrave submitted plans for a building permit, but before the application could be considered by the Planning Commission, the County Commission adopted a oneyear moratorium on multi-family building permits. 76 Leisure and Musgrave sued the County, and the trial court granted summary judgment for Leisure and Musgrave on four of the 67. See id. 68. See Leisure Properties, Ltd., 430 So. 2d at 477. C-3 Tourist Commercial zoning allowed multi-family construction as a permitted use. See id. 69. See id. 70. See id. 71. See id. 72. See id. at See Leisure Properties, Ltd., 430 So. 2d at See id. at See id. at See id.

15 1997] The Harris Act 875 six counts, which included a declaration that Leisure and Musgrave had vested rights to use their property for multi-family development and a ruling that the County was equitably estopped from enforcing the moratorium or from rezoning their property to prohibit multifamily construction. 77 The County appealed and the First District Court of Appeal found that since Leisure presented evidence that it invested $800,000 in the water system in reliance on the County's actions, which evidence supported its estoppel claim, and since the County had not presented rebuttal evidence, summary judgment for Leisure should be affirmed. 78 The court found, however, that [a] successor in interest must show his own entitlement to the benefit of an estoppel and may not make such a showing by merely purchasing property, and therefore reversed the summary judgment for Musgrave. 79 Now, returning to the Hypothetical, even though the initial rezoning of the YY Ranch property was approved before Ms. Doe completed the purchase, she purchased the property in reliance on the ABC County Commission's action of changing the zoning, 80 thus satisfying the requirement that she show [her] own entitlement to the benefit of an estoppel. 81 Furthermore, Ms. Doe incurred substantial development costs in reliance on the rezoning. Specifically, Ms. Doe can show she has spent more than $900,000 in reliance on the Commission's actions, 82 similar to Leisure's $800,000 expenditure. 83 B. Fifth Amendment Rights Summary: As Defined by 77. See id. The other counts, which are not addressed here, included a claim of denial of equal protection to Musgrave, a request that the court invalidate the moratorium ordinances, and a request that the court invalidate the ordinance eliminating multi-family development as a permissible use in the C-3 Tourist Commercial Zone. See id. The First District Court of Appeal reversed the trial court's finding of denial of equal protection to Musgrave and the trial court's finding that the moratorium was unauthorized under state law. See id. at The First District affirmed the trial court's invalidation of the ordinance barring condominium development because its enactment was not in compliance with Florida law. See id. at See Leisure Properties, Ltd., 430 So. 2d at Id. at See supra Part II, The Hypothetical. 81. Leisure Properties, Ltd., 430 So. 2d at See supra Part II, The Hypothetical. 83. See Leisure Properties, Ltd., 430 So. 2d at 479.

16 876 Stetson Law Review [Vol. XXVI Federal Courts 1. Regulations as Takings: Fact-Specific, Multi-Factor Analysis Government may acquire private property by eminent domain, provided it pays the landowner for the property. 84 A governmental entity, under its police power, may also create regulations for the public good, which regulations may result in a diminution of value of one or more parcels. 85 The Fifth Amendment to the United States Constitution states, in part, nor shall any person... be deprived of... property without due process of law; nor shall private property be taken for public use, without just compensation. 86 This constitutional protection was most clearly enunciated by Justice Holmes, who wrote, 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. 87 That language is from Pennsylvania Coal Co. v. Mahon, 88 which involved a Pennsylvania statute prohibiting coal mining in a way that would cause subsidence under a residence. 89 For years prior to the enactment of this police power statute, the mining company had been contracting for the right to remove the coal, if in exchange for the consideration, the owners (including their successors) waived their rights to subsidence damages. 90 The United States Supreme Court found that the statute, in destroying the commercial feasibility of mining, unconstitutionally appropriated Pennsylvania Coal's property right in mining the coal. 91 Since then, the economic consequence of a governmental regulation is a factor to consider in determining whether a taking has occurred. The Pennsylvania Coal holding is somewhat limited because the Court based its decision on the contract rights held by Pennsylvania Coal. 92 However, the case was a landmark because the 84. See Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). 85. See id. at U.S. CONST. amend. V. 87. Pennsylvania Coal, 260 U.S. at U.S. 393 (1922). 89. See id. at See id. See infra note 104 for an explanation of subsidence. 91. See id. at See id. at Pennsylvania Coal had owned the property on which the home was built. See id. at 412. When it sold the land, it expressly reserved in the deed the right to remove all the coal beneath the surface. See id. Additionally, the grantee, in

17 1997] The Harris Act 877 Court recognized government regulation could rise to the level of a taking. 93 Having recognized that a regulation could go so far as to constitute a taking, the Supreme Court's next significant holding in this area established a three-part balancing test to decide whether a regulatory taking occurred in Penn Central Transportation Co. v. City of New York. 94 The Court used the balancing test to determine whether the Landmarks Preservation Commission's (Commission) action in refusing a development permit for a high-rise office building above Penn Central Station constituted a taking. 95 The three factors the Court considered were: the economic impact on Penn Central, the extent to which the Commission's actions interfered with Penn Central's investment-backed expectations and the characterization of the Commission's actions. 96 Because the law did not interfere with what must be regarded as Penn Central's primary expectation concerning the use of the parcel, it did not interfere with Penn Central's investment-backed expectations. 97 The Commission's actions also did not interfere with Penn Central's current use of the property, as a railroad terminal with concessions and upstairs office space; thus, the Court found the law permitted Penn Central a `reasonable return' on its investment. 98 The Court further found that in characterizing the Commission's actions, its restrictions on architecturally significant structures were substantially related to the promotion of the general welfare. 99 In this case, preservation of the historical architecture promoted the general welfare by con- taking the land, waived all risks and all rights to claims for damages arising out of the coal mining. See id. 93. See Pennsylvania Coal, 260 U.S. at U.S. 104 (1978). 95. See id. at 124. Penn Central claimed the City of New York had effected a Fifth Amendment taking of its property. The Commission denied Penn Central permission to build a high-rise office tower atop Penn Central's Grand Central Terminal because the Commission had designated the terminal a landmark. See id. at See id. In discussing the characterization of the government action, the Court stated that a finding of a taking was more likely when the action was a physical invasion by government. See id. at 124. The Commission's permit refusal was based on New York City's Landmarks Preservation Law. See id. at Penn Central, 438 U.S. at Id. at Id. at 138. Additionally, the Court found that Penn Central had not been denied all of the development rights to the airspace above the terminal, because those development rights were transferable to other sites Penn Central owned within the vicinity, one or two of which were suitable for office buildings. See id. at 137.

18 878 Stetson Law Review [Vol. XXVI tributing to the economy and by improving the quality of life in the city as a whole. 100 In its application of the three-part balancing test, the Court found no taking occurred Governmental Purpose: Prevention of Public Harm The Supreme Court next examined the purpose underlying government regulation when considering a regulatory takings claim. In Keystone Bituminous Coal Ass'n v. DeBenedictis, 102 the Court held no taking occurred when a state statute prohibiting certain coal mining was designed to protect the public welfare, and when the statute did not prevent Keystone Bituminous from profitably pursuing its business. 103 At issue was a Pennsylvania statute which prohibited mining that caused subsidence damage. 104 The subsidence prohibition applied to publicly owned or noncommercial publicly used buildings (such as hospitals and churches), to buildings used for human habitation, and to cemeteries. 105 In finding the statute did not create a taking, the Court distinguished Keystone Bituminous from Pennsylvania Coal by explaining that this Pennsylvania statute was designed to protect the public welfare, while the statute in Pennsylvania Coal was designed to protect private property interests. 106 The Court further distinguished the two cases by noting that in Pennsylvania Coal, the Subsidence Act made it impossible for petitioners to profitably engage in their business, while the record in Keystone Bituminous did not support such a finding. 107 Additionally, the record indicated that prior to the statute, Keystone Bituminous could profitably mine only about seventy-five percent of its underground coal; thus, the Court found that the additional small 100. Id. at See id. at U.S. 470 (1987) See id. at See id. at Subsidence occurs when coal mining lowers the strata overlying a coal mine, including the surface land. See id. at 474. The subsidence can cause substantial structural damage to buildings and frequently causes sinkholes. See id. at It also can detrimentally affect farming by making it impossible to plow fields, and can cause loss of groundwater and surface ponds. See id. at See Keystone Bituminous, 480 U.S. at See id. at See id.

19 1997] The Harris Act 879 percentage required to comply with the statute had not materially affected Keystone Bituminous' investment-backed expectations Temporary Regulatory Taking The next major step in Supreme Court takings jurisprudence occurred in First English Evangelical Lutheran Church v. Los Angeles County, 109 in which the California Court of Appeal held that damages were not available as redress for a temporary regulatory taking. 110 The Supreme Court disagreed, and held that when government action has already denied the property owner all use of the property, invalidation of the ordinance without payment of fair value for the use of the property during this period of time would be a constitutionally insufficient remedy. 111 Thus, if a government regulation acts as a temporary taking, the enacting governmental entity may be liable for money damages for the loss of use during the time period the regulation prevented the owner from using his or her property. 4. The Nexus Test The second major Supreme Court regulatory takings case decided in 1987 was Nollan v. California Coastal Commission. 112 In Nollan, the Court held that a permit condition must bear some relationship to alleviating the public harm the permitted activity would produce. 113 The Nollans submitted a request to the California Coastal Commission (the Commission) for a building permit to de Id. at U.S. 304 (1987) See id. at 312. The California Court of Appeal held that First English Evangelical Lutheran Church (the Church) could not claim damages in inverse condemnation for a regulatory taking because the proper challenge to an ordinance depriving the Church of the use of its land is declaratory relief or mandamus. See id. at 309. According to the California Court of Appeal's reasoning, the Church could not recover damages until the ordinance was declared unconstitutional, and damages would be available only for the time period following that declaration, during which the county tried to enforce the ordinance. See id. at 312. The California Court of Appeal followed the state supreme court's decision in Agins v. City of Tiburon, 598 P.2d 25 (Cal. 1979), aff'd on other grounds, 447 U.S. 255 (1980) (holding a landowner could not sue in inverse condemnation for a regulatory taking) First English, 482 U.S. at U.S. 825 (1987) See id. at

20 880 Stetson Law Review [Vol. XXVI molish an existing bungalow that had fallen into disrepair and to replace it with a three-bedroom house in keeping with the neighborhood. 114 The Commission granted the permit subject to the condition that the Nollans grant a public access easement across their property. 115 The Court noted that a land use regulation is not a taking if it substantially advances legitimate state interests and does not prohibit all economically viable use of... [the] land. 116 However, the Court found there was no nexus between the harm allegedly caused by the building of the house, obstruction of the view, and the Commission's requirement that the public be allowed lateral access across the Nollans' property to get from one public beach to another. 117 Because the permit condition did nothing to alleviate the burden the house construction would create, the Court found it was not a valid exercise[ ] of its [the Commission's] land-use power. 118 The Court held that the access requirement was a taking, and if the Commission wanted the easement the State would have to pay for it. 119 In summary of the Supreme Court development of regulatory takings to this point, the Court first established in Pennsylvania Coal that regulation affecting land could, depending on the facts of the particular case, constitute a taking. 120 The Court then reiterated that a takings analysis is an ad hoc, factual inquir[y], and used a three-part balancing test in Penn Central, which test considered the economic impact on the landowner, the owner's investment-backed expectations, and the characterization of the government's action. 121 Keystone Bituminous also used a multi-factor analysis and stressed the importance of the character of a government action, finding that protection of the public welfare was a valid exercise of the state's po See id. at See id. The Commission found that the new house would contribute to blocking the view of the ocean, and that such blockage, along with other development would burden the public's ability to traverse to and along the shorefront. Id. at 829 (quoting from the appellate record). The Supreme Court noted that if California had required the Nollans to make a public access easement across their property, instead of making it a condition to obtain a building permit, there would have been no question that a taking had occurred. See id. at Id. at See id. at Nollan, 438 U.S. at See id. at See 260 U.S. at See 438 U.S. at 124.

21 1997] The Harris Act 881 lice power. 122 The Court then determined in First English that government regulation of land, which restricted use temporarily, could constitute a temporary taking requiring just compensation. 123 In Nollan, the Court formulated a test requiring a nexus between the effect of a regulation and the public interest the regulation is supposed to serve. 124 In a takings analysis of Ms. Doe's circumstances, under Pennsylvania Coal, the rezoning might constitute a taking depending on the particular facts of her situation. Under the Penn Central threepart test, a court would first consider the economic impact of the rezoning. In Ms. Doe's case, the economic impact is substantial, but not total; her anticipated profit would be reduced from as much as $1.5 million to $500,000 or less. Next, the court would look at Ms. Doe's investment-backed expectations. 125 Ms. Doe could present the information and calculations she originally used in deciding to purchase the property to illustrate her expectations, backed by her investment in both the purchase of the land and the development costs she has already incurred. Furthermore, Ms. Doe's substantial development experience will bolster her claim that her expectations were reasonable. Finally, the court would consider the characterization of the ABC County Commission's action. Here, Ms. Doe can argue that the purpose of the rezoning was not to protect public welfare, but was politically motivated. However, ABC County can counter that concentrating new development closer to the City center and its services is a legitimate protection of public welfare. ABC County can also probably show a nexus between the effect of its rezoning and the public interest (the concentration of development and prevention of the excessive costs of urban sprawl) the rezoning is supposed to serve. 5. Categorical Taking In 1992, the Supreme Court, restating rules from previous takings cases, described as a categorical taking a regulation that deprived a landowner of all economically beneficial uses of the 122. See 480 U.S. at See 482 U.S. at See 483 U.S. at Penn Central, 438 U.S. at 124; see also supra Part II, The Hypothetical.

22 882 Stetson Law Review [Vol. XXVI land. 126 The Court found that when a regulation deprives the landowner of all economically productive or beneficial uses, a taking has occurred, and the governmental entity must pay the landowner just compensation. 127 Previously, the Court stated in dicta that a regulation that denies an owner all economically viable use of his land effects a taking. 128 However, none of the regulations the Court examined in these precedent cases deprived the owner of all economically viable uses. 129 In Lucas v. South Carolina Coastal Commission, 130 the state supreme court held that even when a regulation deprives an owner of all economically viable use of his property, if the regulation is designed to prevent public harm, it does not constitute a taking. 131 The majority opinion of the United States Supreme Court maintained, however, that unless the government purpose is grounded in already-existing state nuisance law or property law, a government action causing a landowner loss of all economically beneficial use of his property is a compensable total taking See Lucas v. South Carolina Coastal Council, 505 U.S (1992). Lucas purchased two beachfront lots in 1986 with the intention of building single-family homes. See id. at In 1988, South Carolina enacted the Beachfront Management Act, which prohibited occupiable improvements on the seaward side of a baseline. See id. The major portions of both Lucas' lots were seaward of this baseline, thus denying him the right to build on his lots. See id. at Lucas sued claiming the Beachfront Management Act's prohibition of construction on his lots constituted a compensable taking of his property under the Fifth Amendment. See id. at The trial court found for Lucas, and ordered the South Carolina Coastal Council to pay just compensation, but the South Carolina Supreme Court reversed. See id. at Id. at See Nollan, 483 U.S. at 834; Keystone Bituminous, 480 U.S. at 495; Agins, 447 U.S. at See, e.g., Agins v. City of Tiburon, 447 U.S. 260, 261 (1980). The ordinance in Agins allowed between one and five residences on the property. See id. The landowners had not applied for a permit, so there was no way of knowing how the ordinance would restrict the economic use of their land. See id.; see also Keystone Bituminous, 480 U.S. at Keystone Bituminous never alleged the statute prevented it from profitably mining any of its bituminous coal mines. See id S.E.2d 895 (S.C. 1991), rev'd, 505 U.S (1992) See id. at Lucas did not challenge the validity of the legislative findings. See id. at Thus, the trial court found he conceded that the South Carolina beach and dune system was a valuable public resource and that limiting construction in the beach and dune areas was necessary to prevent great public harm. See id. at 898. Since Lucas did not contest the legislative findings, the South Carolina Supreme Court found that it was bound by those findings. See id U.S. at