by Gary Taylor
Iowa Assurance Corporation v. City of Indianola
(Federal 8th Circuit Court of Appeals, August 16, 2011)
Vinton Watson races figure eight cars, and owns seven to eight cars at any one time. In March 2006 Watson began leasing a shop and adjacent parking lot from Ron Inman to store his cars. Inman’s property is located in Indianola and is zoned for commercial use. The shop that Watson leases consists of half of one building and amounts to “a little over 900 square feet.” The parking lot included in the lease is located immediately adjacent of the building and is twenty-seven by thirty-four-feet. Watson can store up to three cars in the shop, although it is difficult to store more than two cars when repairing vehicles inside the shop. Additionally, Watson stores up to three cars in the parking lot, although cars are not always stored there.
Neighbors have complained to the Indianola city council on numerous occasions about the appearance and noise of Watson’s cars. As a result, the city council passed an ordinance in 2007, amended in 2009, requiring figure eight cars and other race cars to be inclosed by a fence in all outdoor areas where two or more vehicles are present. Watson sued the city, specifically alleging that the ordinance creates an uncompensated regulatory taking by requiring him to install a fence and by reducing the overall value of the property. The suit was brought in state court but the city had the case removed to federal court. The Federal District Court for the Southern District of Iowa found in favor of the city and Watson appealed.
The 8th Circuit noted that regulatory takings claims come in four types:
The first type is a regulation which requires an owner to suffer a permanent physical invasion of her property. The second type is a regulation that completely deprive[s] an owner of all economically beneficial use of her property. The third type is a governmental requirement that, without sufficient justification, requires an owner to dedicate a portion of his property in exchange for a building permit. The fourth type is any other regulation which, after considering its economic impact upon the plaintiff and its essential character, is functionally equivalent to the classic taking in which government directly appropriates private property or ousts the owner from his domain.
Watson claimed that the city’s action violated the first and third types: physical invasions and land-use exactions. The Court rejected both of Watson’s claims. It rejected the physical invasion claim because the ordinance does not require Watson to permit either the city or any third party to enter his property to install a fence, and consequently does not erode his right to exclude others from his property. It rejected the land use exaction claim because in those cases the government is demanding that a landowner dedicate an easement allowing public access to her property as a condition of obtaining a development permit, or other type of license. The Indianola ordinance does not require Watson to dedicate any portion of his property to either the City’s or the public’s use as a condition of anything.