Takings & Inverse Condemnation

In Murr v. Wisconsin, U.S., 137 S.Ct. 1933 (2017), the U.S. Supreme Court established a multi-factored test to determine what is the proper unit of property against which to assess whether a challenged governmental action constitutes a regulatory taking for which just compensation is owed under the U.S. Constitution. Because the test for a regulatory taking involves a comparison of the value that has been taken from the property with the value that remains in the property, the multi-factored test defines “the unit of property ‘whose value is to furnish the denominator of the fraction.’”

In Murr, Petitioners owned two adjacent lots–Lot E and Lot F–along the lower portion of a river in Wisconsin that is protected under local state and federal law. State and local regulations prevented the use or sale of adjacent lots as separate building sites unless they have at least one acre of land suitable for development. Both lots were over one acre in size, but each had less than one acre suitable for development due to their topography. The unification of the lots under the Petitioners’ common ownership implicated the rules barring their separate sale or development. Petitioners considered selling Lot E as part of an improvement plan for the lots, and sought variances from the existing regulations from a local agency. However, that agency denied the variance request and the state courts affirmed on the ground that the regulations effectively merged the lots for sale or development purposes.

Petitioners filed suit in state court against the State of Wisconsin on the ground that the merger regulations were a taking under the U.S. Constitution because the regulations deprived Petitioners of all, or practically all of the use of Lot E since the lot cannot be sold or developed as a separate lot under the regulations. The trial court granted summary judgment to the State on the ground that Petitioners had other options to enjoy and use their properties. The trial court also found that Petitioners had not been deprived of all economic value of their property because the decrease in market value of the unified lots was less than 10 percent. The Wisconsin Court of Appeals affirmed summary judgment. The U.S. Supreme Court granted certiorari and affirmed.

Writing for the 5-3 majority, Justice Kennedy described the key legal question in the case as follows:

What is the proper unit of property against which to assess the effect of the challenged governmental action? Put another way, “[b]ecause our test for regulatory taking requires us to compare the value that has been taken from the property with the value that remains in the property, one of the critical questions is determining how to define the unit of property ‘whose value is to furnish the denominator of the fraction.’” [Citations omitted.]

The majority rejected each of the formalistic rules advocated by the State and Petitioners because “the question of the proper parcel in regulatory takings cases cannot be solved by any simple test.” Justice Kennedy stated that no single consideration can supply the exclusive test for determining the denominator. That is because of the competing constitutional principles underlying the Takings Clause. Justice Kennedy explained:

A central dynamic of the Court’s regulatory takings jurisprudence, then, is its flexibility. This has been and remains a means to reconcile two competing objectives central to regulatory takings doctrine. One is the individual’s right to retain the interests and exercise the freedoms at the core of private property ownership. Property rights are necessary to preserve freedom, for property ownership empowers persons to shape and to plan their own destiny in a world where governments are always eager to do so for them.

The other persisting interest is the government’s well-established power to “adjus[t] rights for the public good.” In adjudicating regulatory takings cases a proper balancing of these principles requires a careful inquiry informed by the specifics of the case. In all instances, the analysis must be driven “by the purpose of the Takings Clause, which is to prevent the government from ‘forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.’”.

In light of those countervailing public policies, Justice Kennedy stated that courts must consider a number of factors in making the “denominator” determination:

[W]hether reasonable expectations about property ownership would lead a landowner to anticipate that his holdings would be treated as one parcel, or, instead, as separate tracts. The inquiry is objective, and the reasonable expectations at issue derive from background customs and the whole of our legal tradition.

The majority held that the factors to be considered in such an analysis are the following.

First, courts should give substantial weight to the treatment of the land, in particular how it is bounded or divided, under state and local law. This factor recognizes that “reasonable expectations of an acquirer of land must acknowledge legitimate restrictions affecting his or her subsequent use and dispensation of the property.” Therefore, a reasonable restriction that predates a landowner’s acquisition can be one of the objective factors that most landowners would reasonably consider in forming fair expectations about their property.

Second, courts must look to the physical characteristics of the landowner’s property. Such characteristics include the physical relationship of any distinguishable tracts, the parcel’s topography, and the surrounding human and ecological environment. For example, the property’s location in an area that is subject to, or likely to become subject to, environmental or other regulation is a relevant consideration.

Third, courts should assess the value of the property under the challenged regulation, with special attention to the effect of burdened land on the value of other holdings. Though a use restriction may decrease the market value of the property, the effect may be tempered if the regulated land adds value to the remaining property, such as by increasing privacy, expanding recreational space, or preserving surrounding natural beauty.

Applying that multifactor standard, the majority held in this case that Petitioners’ property should be evaluated as a single parcel consisting of Lots E and F together. The Court reasoned that (1) The treatment of the property under state law indicates petitioners’ property should be treated as one when considering the effects of the restrictions; (2) the physical characteristics of the property support its treatment as a unified parcel; (3) the prospective value that Lot E brings to Lot F supports considering the two as one parcel for purposes of determining if there is a regulatory taking; and (4) the special relationship of the lots is shown by their combined valuation. Therefore, the Court held that the Wisconsin Court of Appeals was correct in analyzing petitioners’ property as a single unit.

The Court further held that, by considering Petitioners’ property as a whole, the state court was correct to conclude that petitioners cannot establish a compensable taking in these circumstances. Petitioners had not been deprived of all economically beneficial or productive use of their property (Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)), and they failed to establish that they suffered a taking under the more general test of Penn Central Trans. Co. v. New York City (1978) 438 U.S. 104.

In dissent, Chief Justice Roberts advocated sticking with “our traditional approach,” under which “[s]tate law defines the boundaries of distinct parcels of land, and those boundaries should determine the ‘private property’ at issue in regulatory takings cases.” Justice Roberts complained that the majority decision “knocks the definition of ‘private property’ loose from its foundation on stable state law rules and throws it into the maelstrom of multiple factors that come into play at the second step of the takings analysis.” In short, the dissent believed that the new framework established by the majority “compromises the Takings Clause as a barrier between individuals and the press of the public interest.”

Glen Hansen is a Senior Counsel at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc., at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

 

In 2016, U.S. Supreme Court Justice Clarence Thomas issued this warning about legislative exactions: “Until we decide this issue, property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively.” He stated there are “compelling reasons for resolving this conflict at the earliest practicable opportunity.” Abbott & Kindermann Inc.’s Senior Counsel, Glen Hansen, proposes a resolution to that conflict in his recently-published article, Let’s Be Reasonable: Why Neither Nollan/Dolan nor Penn Central Should Govern Generally-Applied Legislative Exactions After Koontz, 34 Pace Envtl. L. Rev. 237 (2017).

In that article, Mr. Hansen explains why the level of constitutional scrutiny that was developed by the U.S. Supreme Court in Nollan v. California Coastal Commission, and Dolan v. City of Tigard, should not apply to legislatively imposed exactions, provided that such exactions satisfy two key criteria: (1) The exaction is generally-applied; and (2) the exaction is applied based on a set legislative formula without any meaningful administrative discretion in that application. He argues that legislative exactions that fail to meet those two criteria should be governed by the Nollan/Dolan standard of review in the same manner as the ad hoc adjudicative exaction in Koontz v. St. Johns River Water Management District. Mr. Hansen then argues that legislative exactions that satisfy those two criteria also should not be governed by the ad hoc factored analysis in Penn Central Transportation Co. v. New York City. Instead, Mr. Hansen argues, a “reasonable relationship” test should be applied to legislative exactions that satisfy those two criteria.

The issue addressed in the article is timely and in need of resolution by the courts. In early 2016, Supreme Court Justice Clarence Thomas explained: “For at least two decades, however, lower courts have divided over whether the Nollan/Dolan test applies in cases where the alleged taking arises from a legislatively imposed condition rather than an administrative one. That division shows no signs of abating.” Justice Elena Kagan similarly opined that, following the Koontz decision, there is now a “cloud on every decision by every local government” that requires a person seeking a permit to pay or spend money. Mr. Hansen’s article offers a practical resolution of that constitutional conflict based on the majority and dissenting opinions in Koontz, as well as the various rationales presented in lower court decisions that have squarely addressed the issue.

Mr. Hansen’s article can be found online at http://digitalcommons.pace.edu/cgi/viewcontent.cgi?article=1803&context=pelr .

Glen Hansen is Senior Counsel at Abbott & Kindermann, Inc. For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, Inc. at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, Inc., or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

Class Description

Stay up-to-date on recent developments in California law affecting land use, planning and environmental compliance. Experts from the field provide succinct and practical analysis on recent case law and significant legislative and administrative changes that took effect this year.

Topics Include:

  • General plans, specific plans and zoning
  • The Subdivision Map Act
  • CEQA
  • Changes to redevelopment in California
  • Affordable housing
  • Regional land use planning and implementation of SB 375
  • Takings, exactions and dedications
  • New air quality guidelines
  • Land use litigation
  • Delta Stewardship Council’s Delta Plan
  • Adapting to sea level rise

Schedule:

March 1, 2017 – Wednesday, 9:00 a.m. to 4:30 p.m.

Sacramento: Sutter Square Galleria, 2901 K Street.

Instructors:

Cecily Talbert Barclay, Matthew Gray, and William Abbott

For more info, or to enroll visit: https://extension.ucdavis.edu/section/annual-land-use-law-review-and-update

 

Boxer v. City of Beverly Hills (2016) 246 Cal.App.4th 1212

By Glen C. Hansen

In Boxer v. City of Beverly Hills (2016) 246 Cal.App.4th 1212, the Court of Appeal for the Second Appellate District held that the trial court properly sustained the City of Beverly Hills’ (“City”) demurrer to an inverse condemnation cause of action brought against the City by homeowners whose views of the Los Angeles Basin and surrounding hills, including the Hollywood sign, were blocked by the City’s planting and maintaining of coastal redwoods on a City park adjacent to the homeowners’ property. In an inverse condemnation action, the property owner must establish the first element that the public entity has “taken or damaged” his or her property, before the second element of just compensation is addressed. Property is “taken or damaged” within the meaning of article I, section 19 of the California Constitution when: (1) the property has been physically invaded in a tangible manner; (2) no physical invasion has occurred, but the property has been physically damaged; or (3) an intangible intrusion onto the property has occurred which has caused no damage to the property but places a burden on the property that is direct, substantial, and peculiar to the property itself.  In this case, the plaintiffs failed to establish any one of those three alternatives.

Plaintiffs did not allege that either the trees or anything associated with the trees physically invaded their property. Thus, plaintiffs failed to allege any physical intrusion, occupation, or invasion of their property or any physical damage to their property. Also, plaintiffs failed to show any “intangible intrusion” onto their property. When the conduct of a public entity results in an “intangible intrusion” onto the plaintiff’s property that does not physically damage the property, the plaintiff must allege that the intrusion has resulted in a burden on the property that is direct, substantial, and peculiar to the property itself. Here, plaintiffs argued that an “intangible intrusion” existed because the trees unobstructed their view of Los Angeles and its surrounding hillsides and prominent landmarks. However, under California law, plaintiffs had no right to an unobstructed view over adjoining property. The visual impairment from the City’s trees could not, itself, constitute an unconstitutional taking. Plaintiffs’ alternative argument regarding diminution in the value of their property from the obstructed view was also unavailing, because that argument failed to establish the first element of a compensable taking or damaging of their property. Diminution in value is a component of the second element of just compensation, which is not considered until after the first element of a “taking or damage” has already been proved. Accordingly, plaintiffs failed to allege an inverse condemnation cause of action, and the demurrer was properly sustained by the trial court.

Glen Hansen is Senior Counsel at Abbott & Kindermann, LLP.  For questions relating to this article or any other California land use, real estate, environmental and/or planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.

The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, or the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.

 

Reserve your seat for one of four seminars taking place in early 2016.

In January and February 2016 Abbott & Kindermann, LLP will present its 15th annual educational program for clients and colleagues interested in current land use, environmental, and real estate issues affecting commercial and residential development, agriculture, real estate transactions, easements, mining and the construction materials production industry.  

A summary of 2015 case law and legislative updates includes the following hot topics for 2016:

  • Air Quality and Climate Change: including CEQA Guidelines and Mandatory Reporting
  • Mining
  • Updating Land Use Entitlements
  • Endangered Species
  • Water Quality and Wetlands
  • Water Rights and Supply
  • Cultural Resources
  • Renewable Energy
  • Environmental Enforcement
  • Hazardous Substance Control and Cleanup
  • Timber Resources
  • CEQA:  Exemptions, Baseline, Greenhouse Gases and Climate Change
  • CEQA Litigation
  • Real Estate Acquisition and Development

Abbott & Kindermann, LLP will present its annual program at four locations: Redding, Modesto, Sacramento and Napa.  Details for the seminars are below.  We hope you can join us and we look forward to seeing you there.

Modesto Conference  (To Register for the Modesto Location Click Here)

  • Date: Friday, January 22, 2016
  • Location: Double Tree Hotel Modesto, 1150 Ninth Street
  • Registration: 12:30 p.m. – 1:00 p.m.
  • Program: 1:00 p.m. – 4:00 p.m.

Sacramento Conference  (To Register for the Sacramento Location Click Here)

  • Date: Friday, February 5, 2016
  • Location: Sacramento Hilton Arden West, 2200 Harvard Street
  • Registration: 8:30 a.m. – 9:00 a.m. with continental breakfast
  • Program: 9:00 a.m. – 12:00 noon

Redding Conference  (To Register for the Redding Location Click Here)

  • Date: Tuesday, February 9, 2016
  • Location: Hilton Garden Inn Redding, 5050 Bechelli Lane
  • Registration: 12:30 p.m. – 1:00 p.m.
  • Program: 1:00 p.m. – 4:00 p.m.

Napa Conference  (To Register for the Napa Location Click Here)

  • Date: Thursday, February 11, 2016
  • Location: Embassy Suites, 1075 California Boulevard
  • Registration: 12:30 p.m. – 1:00 p.m.
  • Program: 1:00 p.m. – 4:00 p.m.

The registration fee for the program is $80.00. Please register early to reserve your seat. Select the links above to see registration details for each location, as they differ. MCLE and AICP CM credits are available (approval pending).

Please call (916) 456-9595 with any questions.

 

By William W. Abbott

Coppinger v. Rawlins (August 14, 2015, E060664) ___ Cal.App.4th ___.

County acceptance of a roadway dedication on a map does not assure acceptance of the roadway into the County maintained highway system.

In 1980, Robinson filed a parcel map, creating two numbered lots and 3 lettered lots: A, B and C. By certificate on the map, the County accepted the dedication offer on Lot A into the County maintained road system, and accepted Lots B and C on behalf of the public, but not into the County maintained system, specifying that acceptance would require a separate resolution by the Board of Supervisors.

Continue Reading Accepting Roadway Dedications On Behalf Of The Public As Compared To Accepting Roads Into The Publically Maintained Road System. Words Matter.

By Glen C. Hansen

In Honchariw v. County of Stanislaus (2015) 237 Cal.App.4th 388, the Court of Appeal for the Fifth Appellate District held that a landowner’s inverse condemnation claim for damages against the County of Stanislaus caused by an unconstitutional temporary taking was time-barred under Government Code section 66499.37. The owner previously had filed a successful petition for writ of mandate challenging the disapproval of a subdivision application, which resulted in the County’s reconsideration of the application and eventual approval of the project. However, the owner’s subsequent claim for compensation damages was time-barred under section 66499.37 because the mandamus proceeding had not established that there had been a compensable taking.

Continue Reading Do You Seek Compensation For An Unconstitutional Taking? Then Plead That With The Mandamus Action To Avoid The Potential Statute Of Limitations Bar!

By Glen C. Hansen

In Lockaway Storage v. County of Alameda (2013) 216 Cal.App.4th 161, the Court of Appeal for the First Appellate District affirmed a trial court judgment that found that the County of Alameda was liable for $989,640.96 in damages for a temporary taking of plaintiff’s property, where the county stopped work on plaintiff’s project in light of a growth control initiative, even though the project fell within an exemption in the initiative and county officials failed to even consider such exemption, and where the county’s action in stopping the project constituted an unreasonable change from the County’s prior representations made to the property owner.

Continue Reading County’s Unreasonable Change In Position To Stop Project Results In $1 Million Temporary Takings Award.

By Glen C. Hansen

For nearly twenty years, Fifth Amendment takings challenges to adjudicative land-use exactions and permit conditions have been governed by the dual Supreme Court cases of Nollan v. California Coastal Commission, 483 U.S. 825 (1987),and Dolan v. City of Tigard, 512 U.S. 374 (1994). In Nollan, the Court held that a government could, without paying the compensation, demand the easement as a condition for granting a development permit the government was entitled to deny, provided that the exaction would substantially advance the same government interest that would furnish a valid ground for denial of the permit. The Court further refined that requirement in Dolan, holding that an adjudicative exaction requiring dedication of private property must also be “‘roughly proportional’ . . . both in nature and extent to the impact of the proposed development.” However, Nollan and Dolan involved the dedication of real property interests. In Koontz v. St. Johns River Water Management District, ___ U.S. ___, 2013 U.S. Lexis 4918 (2013), the Court held in a 5-4 decision that “the government’s demand for property from a land-use permit applicant must satisfy the requirements of Nollan and Dolan even when the government denies the permit and even when its demand is for money.” 

Continue Reading The U.S. Supreme Court’s Nollan/Dolan Jurisprudence Is Catching Up With The California Supreme Court in Ehrlich v. Culver City

By William W. Abbott

In California Building Industry Assn. v. City of San Jose (June 6, 2013, H038563) ___ Cal.App.4th ___, the City of San Jose adopted an inclusionary ordinance, requiring that new residential projects include units affordable to specified income ranges. Alternatively, the ordinance permitted the developer to pay an in lieu fee or dedicate land. The California Building Industry Association (“CBIA”) filed suit, challenging the validity of the ordinance on its face on the basis that the ordinance lacked any nexus to the deleterious effects of new residential development. CBIA did not allege that a compensable takings had occurred, but rather argued that the City lacked sufficient justification for the ordinance. The trial court agreed with CBIA and invalidated the ordinance. The City appealed.

Continue Reading Appellate Court Reverses Trial Court Invalidation Of Local Inclusionary Ordinance; Remanded For Further Review