By Cori M. Badgley and Nathan Jones

In Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, a developer asserted that a temporary regulatory taking occurred when the County of Santa Cruz (“County”) improperly and unlawfully delayed granting a ministerial permit for electricity. After extensively analyzing the various regulatory takings tests, the Court of Appeal, Sixth Appellate District, held that no regulatory taking had occurred.

The Shaws, plaintiffs, acquired 74 acres of undeveloped property in Santa Cruz in 1985. They then began restoring the property’s native plant life and establish a seed bank. In 1995, the Shaws applied for a well permit, which Santa Cruz County officially granted in 1999. Subsequently, the Shaws applied for a ministerial Level 1[1] permit to connect 400 amps of electrical power to the property to power the well. The County Planning Department denied the application, in spite of the fact that it was a ministerial and not a discretionary permit. Plaintiffs brought suit alleging that the County Code required the County to grant the permit, and by not granting the permit, the County had violated various statutory and constitutional principles, including the California Takings Clause. The trial court heard the issues separately, and directed the County that it must issue the permit. However, in a later trial, the trial court held that no regulatory taking had occurred.

In spite of acquiring the electrical permit in 2005 as mandated by the trial court, plaintiffs appealed the regulatory takings claim, among others. Plaintiffs alleged a temporary taking based on three theories: the refusal and delay in granting the permit took away any economically viable use of the property (Lucas v. South Carolina Coastal Council (1992) 505 U.S. 1003); the County’s actions amounted to a regulatory taking under the factor-based Penn Central test (Penn Central Transp. Co. v. New York City (1978) 438 U.S. 104); and the County delayed granting the permit for illegitimate, arbitrary reasons under the Landgate case (Landgate, Inc. v. California Coastal Commission (1998) 17 Cal.4th 1006[2]).

The appellate court found against the plaintiffs on all theories. In its analysis, the court of appeal focused on the fact that the majority of the delay in having the case heard or having the permit granted was caused by plaintiffs’ inaction. Additionally, the County relied on three reasonable factors in denying the permit: 1) “concern about the requested amperage and the need for it based on the asserted use of the vacant property;” 2) “the request was not in conformance with an internal department policy memo;” and 3) Santa Cruz County Code section 13.10.611(c)(2), restricting electricity provision to accessory structures. In light of these factors, the County informed plaintiffs that they could apply for a discretionary Level 5 permit instead.

The appellate court found that the County’s objective reasoning in denying the permit, although faulty, was reasonable and related to the legitimate purpose of curtailing the building of illegal dwellings and structures. Further, plaintiffs failed to show that the denial of the permit in any way removed plaintiffs’ economically viable use of the property or that the denial led to any amount of physical invasion. In fact, the denial had no effect on plaintiffs’ restoration project, and plaintiffs had not yet begun the process of developing the property. Therefore, the court of appeal held that the County’s delay in granting the electrical permit did not amount to a temporary regulatory taking. Although plaintiffs ultimately acquired the desired permit, they failed to receive monetary compensation for the time lost.

Cori Badgley is an associate at Abbott & Kindermann, LLP, and Nathan Jones is a former law clerk for the firm. 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, nor 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.

[1] The County has seven levels of permit processing, which becomes more rigorous the higher the level of permit.

[2] Landgate follows the “substantially advances” test that was denounced by the U.S. Supreme Court in Lingle v. Chevron U.S.A., Inc. (2005) 544 U.S. 528. It is still unclear whether under the California Takings Clause, the test in Landgate and its predecessors still applies. However, since the court held that there was no regulatory taking under any theory, the court did not address whether Landgate is still valid.