In addition to the regular updates on recent developments in planning and zoning in the Midwest we are making available fact sheets to address some common issues in planning and zoning.
These can be accessed by clicking on “Fact Sheets” on the bar to the left of the page. Over the next few weeks we will be adding more information and improving the organization.
Please let us know what you think and how we can improve!
The Iowa Government Finance Initiative (IGFI) Annual Fiscal Conditions report, for the Fiscal Year Ending 2016 for all 945 cities and 99 counties in Iowa have just been released. The reports provide an alternate perspective on local government finances and trends. The information in these reports will help local elected and appointed officials during their budgetary and planning processes.
These reports can be a valuable resource to communities in Iowa to keep tabs on economic, demographic, and fiscal changes taking place and to plan for the future. This is the fifth year of publication for these reports. While there have been some changes to the way data is presented, the information remains the same. These reports can be accessed on the Iowa Government Finance Initiative website.
IGFI is the public finance outreach wing of ISU Extension and Outreach. It provides resources and works with Iowa governments on a host of issues including finance and community economic development. The team working on county reports this year consists of Biswa Das, Cindy Kendall, Bailey Hanson, Liesl Eathington, May Beth Sprouse, Sandra Oberbroeckling, and Sandra Burke.
Questions on the report can be sent to Biswa Das at bdas@iastate.edu.
by Eric Christianson
Walters v. Colford
Nebraska Supreme Court, July 28, 2017
The Adamy subdivision was platted and dedicated in 1976. It contains 14 lots created from a 16.5 acre section of Daniel Adamy’s much larger property. When the founding documents were filed with the Butler County register of deeds, the plat and dedication included restrictive covenants. These covenants, among other things, limited the structures on the lots to one single-family, two-story house and one two- or three-car garage.
In 2013, the Colfords purchased 5 acres of property from Adamy adjacent to the pre-existing subdivision. When Adamy sold the property to the Colfords, the property was not subject to any restrictive covenants. After the sale, Adamy and Colford negotiated and agreed to new restrictions, which were different from those in place on the Adamy subdivision.
The Colfords constructed a large metal building on the property to store building materials to build a house on the property. Residents of the Adamy subdivision brought suit against the Colfords claiming that they had violated the subdivisions restrictive covenants.
They argue that the Colford property is subject to the subdivision’s covenant restrictions through the doctrine of implied reciprocal negative servitudes. This doctrine allows for restrictive covenants (i. e. reciprocal negative servitudes) to be applied to a specific piece of property in certain cases, even if the covenant was not recorded on that property. This principle has generally been used by the courts to apply covenant restrictions when all parties understood there to be a covenant in place, but it was not properly recorded.
The Court summarized the six factors that must be present for an implied restrictive negative servitude:
(1) There is a common grantor of property who has a general plan or scheme of development for the property; (2) the common grantor conveys a significant number of parcels or lots in the development subject to servitudes (restrictive covenants) designed to mutually benefit the properties in the development and advance the plan of development; (3) it can be reasonably inferred, based on the common grantor’s conduct, representations, and implied representations, that the grantor intended the property against which the servitude is implied to be subject to the same servitudes imposed on all of the properties within the plan of development; (4) the property owner against whom the restriction is enforced has actual or constructive notice of the implied servitude; (5) the party seeking to enforce the restriction possesses an interest in property in the development that is subject to the servitude and has reasonably relied upon the representations or implied representations of the common grantor that other properties within the general scheme of development will be subject to the servitude; and (6) injustice can be avoided only by implying the servitude.
In this case, the Court found that the Colfords are not subject to the restrictive covenants in force in the Adamy subdivision. There is a common grantor of the property, and the property is adjacent to a number of properties subject to covenants; however, the grantor’s conduct did not indicate that he intended the property to be subject to the same covenant. In fact, he had negotiated a different set of restrictions to apply to the land. Further, although the Colfords were aware that a covenant was in place on the adjacent properties, they never had any reason to believe they would be subject to the same covenant. Finally, the residents of the subdivision have no reasonable expectation that adjacent property outside the subdivision will be restricted in the same way that their properties are.
The purpose of the doctrine of implied reciprocal negative servitudes is not to guarantee that additional land can be made to comply with restrictive covenants. Instead the doctrine has long functioned to remedy a procedural error by the conveyor of the property:
The doctrine of implied reciprocal negative servitudes functions as a gap-filler […] Where a property owner purchases a lot from a developer that is subject to a restrictive covenant in the individual lot deed, but where the developer subsequently conveys a lot within the development without a restriction in the deed, the doctrine steps in to fill the gap. It fills the gap in order to protect the other property owners’ reasonable expectations that all of the lots within the plan of development will be similarly restricted.
The Court explains further that this doctrine may be less commonly applied in the future. Today developers generally place restrictions on an entire development at once through executing and recording a declaration of restrictions. That was the case with the Adamy Subdivision. It is rarer today for properties to be restricted on a deed-by-deed bases as they are sold. This leaves less room for errors to be corrected or gaps to be filled.
by Eric Christianson
Havlak v. Village of Twin Oaks
Federal 8th Circuit Court of Appeals, July 26, 2017
The Village of Twin Oaks in St. Louis County, Missouri (population approximately 400) is home to an 11 acre park with walking trails, a lake, waterfall, gazebo, and a “Claude Monet-style” bridge. This picturesque park offers a number of good backdrops for photographs. Especially after renovations and upgrades in 2011, the park became an extremely popular location for commercial photography. Sometimes as many as eight photographers and their subjects were competing for locations in the park at the same time. The large numbers of wedding parties began to dominate park facilities including using the restrooms as dressing rooms. Some photographers had subjects pose in dangerous areas or even set up outdoor studios for, “shooting multiple subjects in an assembly-line fashion.”
To limit the disruption caused by this activity to other users of the park, the local Board of Trustees erected signs notifying photographers of the previously existing ordinance prohibiting all commercial activity (including photography) in the park. They also asked the county police officer who enforces the village’s ordinances to remind commercial photographers of the ordinance and ask them to leave. Josephine Havlak a local professional photographer filed a lawsuit against the city claiming that the ordinance was a violation of her First Amendment right of free speech. She claims that commercial portraiture conveys, “an expressive message in a manner similar to the work of American portrait painter John Singer Sargent.”
In response to the lawsuit, the Board of Trustees amended its park ordinance to create a permit process for the commercial use of park facilities. The permit costs $100 and its issuance is based on five factors including: (1) risk of damage or injury, (2) disruption of the public’s use of the park, (3) crowding due to anticipated attendees, (4) the nature of the requested activity, and (5) the time and duration requested for commercial purposes. The Board members expressed that this permitting process helped to balance the interest of commercial photographers with other park users. The permitting fee helps to fund the administration of the permit, including especially the increased burden that commercial users place on police officers. Havlak, however, was not satisfied with the permitting process and, although she has never applied for a commercial permit, amended her lawsuit to request that the permitting process be struck down as an overbroad violation of the First Amendment. The district court denied Havlak’s request, and she appealed to the Federal 8th Circuit Court of Appeals.
Courts generally permit content-neutral restrictions that place “time, place, or manner” restrictions on protected speech, but any sort of prior restraint like a required permit does draw the court’s scrutiny. A previous decision by the 8th Circuit stated that: “Any permit scheme controlling the time, place, and manner of speech must not be based on the content of the message, must be narrowly tailored to serve a significant governmental interest, and must leave open ample alternatives for communication.” The permitting process must also contain “narrow, objective, and definite standards” The court used these elements to analyze the ordinance.
Content Neutrality Any restriction on speech that regulates content is subject to a higher level of scrutiny. The factors used to determine whether a permit will be issued by the Village of Twin Oaks do not include the content of any commercial speech. Nevertheless, Havlak claims that the higher burden on commercial photographers, restricts her message of “family, peace, tranquility, and love.” The court did not find any evidence that the Village showed any intent to discriminate against these or any other values.
Narrowly Tailored In restricting speech, courts require that laws be “narrowly tailored” to serve a significant government interest. In this case, the government interest is clearly to reduce congestion and maintain park safety. Havlak argued that the law was not narrowly tailored in four ways: (1) it applies to groups of all sizes no matter how small (2) it does not focus solely on areas with a history of congestion (3) the application period (2 days for small groups, 14 days for larger groups) could chill artistic expression, and (4) the administration fee is too high. In all four cases the court found that the law was in fact narrowly tailored to advance government interests.
Ample Alternatives Restrictions on the time place and manner of protected speech are generally allowed as long as ample alternatives are present. Havlek argued that this park is so unique that no alternative venue could possibly exist. The court pointed out that the natural attributes of the park exist throughout the St. Louis Metro Area and that Havlak had not even used this park before she knew of the ordinance despite doing hundreds of photo shoots a year.
Licensing Discretion When regulating protected speech a law must contain “narrow, objective, and definite standards” to guide the licensing authority. This is to prevent the government from having too much discretion to discriminate against speech they find objectionable. Havlak argued that the ordinance is “impermissibly vague” and that the Village has unconstitutionally broad discretion to approve or deny permits. Here too the court sided with the Village finding that the factors used to determine whether a permit would be issued are sufficiently specific to guide the issuance of permits.
In the end, the court concluded that the Village of Twin Oaks’ permitting process survives constitutional scrutiny. Despite this permitting process, Havlak remains free to express her message of family, peace, tranquility, and love.
by Eric Christianson
Suppose a landowner owns two adjacent parcels, which she purchased at two different points in time. One parcel is 20 acres that consists almost entirely of wetlands. The second parcel, immediately to the west, is 50 acres of rolling, developable land.
Years after she purchased both parcels the state enacts a law that effectively prohibits filling, dredging, developing, or otherwise modifying wetlands. The landowner sues the state, claiming a taking of “all viable use” of her property.
What is her “property”? The landowner will claim that her property for purposes of her takings claim is only the parcel made up of the 20 acres of now-unbuildable wetlands. The state will argue that her property is both parcels taken together, which means the landowner continues to have “viable use” 50 of her 70 total acres.
Who is right? Courts have long struggled with developing rules for determining the appropriate “denominator parcel” for analyzing taking claims. In Murr v Wisconsin (see the full case brief from last week below) the Supreme Court dealt with precisely this question. And while not offering any clear rules, the court does seem to give local governments the benefit of the doubt in this determination.
A key element in arguing a regulatory takings claim successfully is that the owners show that they have been deprived of, “all or nearly all economically beneficial use of their land” by the offending regulation. This is often determined by comparing the value of the property before the law in question went into effect to its value under the effects of the new law.
Defining the property more narrowly usually gives the landowner the upper hand. Focusing only on the effected parcel makes the loss more severe relative to its value. However, when considered with the entirety of a property owner’s holdings, the deprivation may be less significant relative to the the full value of the land. This is often called the “denominator problem” in takings analysis. Courts need to determine which value to divide the loss by to see if a law has resulted in a loss of all economically viable use.
One complicating factor is the existence of merger provisions in state and local law which under certain circumstances automatically merge adjoining parcels held under common ownership. Such merger provisions have been features of local zoning ordinances for a long time. Towns began enacting them in the 1920s. They were very common by the 1960s, because local governments and state courts recognized that they represent an attractive middle ground between two unattractive extremes: (1) entirely prohibiting the development of substandard lots, which would be a hardship to their owners, and (2) allowing the development of all substandard lots, which would be a hardship to neighbors and restrict the ability of a community to pass regulations.
Whether the inclusion of a merger provision in local law is enough to determine the relevant parcel was one of the most important aspects of Murr v. Wisconson. In this case, the Supreme Court adopted a three-part test to help guide lower courts in making this determination. It also gives local governments some idea what the extent of their power is in setting land use regulations.
This new test directs courts to take into account: (1) state and local law, (2) the physical characteristics of the land, and (3) the prospective value of the land. This case does not give us any bright line rules, but it appears that merger clauses will determine the relevant parcel in most cases. Kennedy’s argument in adding physical characteristics and prospective value to the equation is his attempt to avoid “gamesmanship” by states to avoid paying for regulatory takings. States do not have total power to determine what property rights are.
In returning to our example above, while we do not have a clear answer as to how a court would rule, we do have some idea how a court should reason. (1) What does state and local law say about these two parcels? Are they entirely separate? Or, is there some provision in state law which treats them as merged? (2) How do these two parcels fit together? Are they simply touching along a short edge or do they form a cohesive whole? (3) Finally what is the financial impact of the regulation on the parcels? Are the 20 acres of wetland a total loss or can they serve some economic purpose? Perhaps the wetland is an attractive amenity raising the value of a future housing development on the other 50 acres. Clearly our simple example does not have enough detail for us to answer all these questions.
The second and third factors have to do with the inherent qualities of the land and the local property market, but local governments do have control over the first. In Murr the Court gave significant weight to the existence of a merger provision local law.
In the end, this decision preserves the right of local governments to set minimum lot sizes and avoid further subdivision even where lot lines may appear on a plat map. This is overall a win for local and state governments. However, Kennedy finishes up the opinion of the court by reflecting that much like the analysis of regulatory takings itself, determining the relevant parcel “cannot be solved by any simple test.” If recent takings fights have taught us anything, where there is ambiguity, there will be litigation. Stay tuned.
by Eric Christianson
United States Supreme Court, June 23, 2017
In the 1960s, the Murr family purchased two adjoining lots along the St. Croix River in Wisconsin. Lot F, was purchased in 1960 and used to build a vacation cabin. The other, Lot E, was purchased in 1963 and was primarily held as an investment. Originally the properties were held separately. Lot F was owned by the family plumbing company, and Lot E was owned by the family directly. In 1994 and 1995, the ownership of the two parcels was transferred from the parents, who purchased the lots, to their children. In 2004 the children began to attempt to sell Lot E to fund improvements to the cabin on Lot F; however, they were prevented from selling Lot E separately due to intervening changes in state and local land use laws. Both of these lots are now considered substandard as building sites, and a state law passed in 1976 considers adjoining substandard lots in common ownership to be effectively merged.
According to Wisconsin law in the area where these properties are located, a parcel must have at least one acre of buildable land to be developed or subdivided. Although both of these parcels are approximately 1.25 acres, the topography of the bluffs running through the lots as well as the steep river bank leaves only 0.98 acres of buildable land between the two. Wisconsin law does allow substandard lots to be developed through a grandfather clause, but does not allow them to be further subdivided. Despite the fact that they appear to be two separate lots on the plat map and have been taxed separately, they are effectively merged. The property owners are therefore barred by state and local law from “subdividing” the larger effective parcel and selling either lot independently.
The Murr family sought a variance from the St Croix County Board of adjustment to allow for separate sale of the lots. The Board denied the request, and the family appealed, alleging that the land use regulations deprived them of all economically beneficial use of Lot E. As the case moved through the Wisconsin court system, the argument for regulatory takings hinged largely on the “denominator problem.” This meant that the courts had do determine whether the parcels should be considered as a whole or if the takings analysis should be applied to Lot E alone. In this case, this decision would be determinative as the loss to Lot E is fairly significant, more than 90% of its value, while the loss to the two parcels taken together is fairly minor, less than 10% of the total value.
In a 5-3 decision written by Justice Kennedy (Justice Gorsuch took no part in this case) the court upheld the rulings of the lower courts that the two lots had been effectively merged and that the law as applied did not constitute a regulatory taking. In doing so, the court adopts a new multi factor test to determine the relevant parcel for a takings claim.
The Court continues to rely on the “Penn Central Test” in determining if government action goes too far and constitutes a regulatory taking. Unless regulations deprive property owners of all economically beneficial use of land, there are no hard and fast rules. Instead, courts are asked to reconcile the individual’s right to private property ownership and the government’s power to adjust rights for the public good. Courts have generally relied on a three-part test first established in Penn Central (1) the economic impact of the regulation (2) the extent to which the regulation has interfered with distinct investment-backed expectations, and (3) the character of the governmental action.
In this case as in Penn Central itself, before applying the three pronged “Penn Central Test”, the court must establish the relevant parcel. Because the test relies on the value of the property before and after application of a regulation, defining the parcel itself can be key to the the ultimate decision. In this case the state of Wisconsin and the local governments asked the court to defer to state law in determining the relevant parcel. The state argued that the court should take the state at its word that the two parcels are now one. The Murr family disagreed and preferred the lot lines as drawn on the plat maps.
The Court has never been entirely clear about how to determine the parcel to be used for analysis, but there are some principles to be drawn from previous decisions. Historically the court has not allowed petitioners to segment the most effected part of their property to allow them to claim a total loss of value in that particular segment. On the other hand, although property law has its foundations in state law, states have not been granted complete authority to define property rights.
This decision does not offer us a simple answer of how to determine the parcel in question for a takings claim. Instead, Kennedy offers up yet another multi-factor test considering: (1) state and local law, (2) the physical characteristics of the land, and (3) the prospective value of the land.
Under this new test, Lots E and F are considered effectively merged. (1) State law considers adjoining parcels to be merged if held in common ownership. The Murr family brought these two parcels into common ownership in 1995 well after the local law that merged them went into effect in 1976. (2) The physical characteristics of these lots support their treatment as a single parcel. The lots are contiguous along their longest edge and their rough terrain makes it reasonable to expect their use may be limited. (3) Even if Lot E cannot be sold independently it still contributes value to the parcel as a whole. A new larger cabin could be built anywhere on the two lots and the property has more privacy and recreational space than other substandard lots.
Chief Justice Roberts dissented joined by Thomas and Alito; however, they did not dispute the outcome, only the reasoning. Roberts would have preferred a much clearer ruling which takes state law as determinative of the relevant parcel in “all but the most exceptional circumstances.” Justice Thomas also filed a separate dissent stating his desire to “take a fresh look at our regulatory takings jurisprudence” in a way that could be better grounded in the original meaning of the constitution.
Later this week we will upload another post with more analysis of the implications of this decision for practitioners.
The link to registration for the Spring 2017 Introduction to Planning and Zoning workshops can now be found by going to the “Intro to Planning and Zoning Workshops” link on the left side of the screen.
Reminder that the dates and locations are:
April 18 – Waterloo – Waterloo Center for the Arts, 225 Commercial Street
April 24 – Johnston – Hilton Garden Inn, 8600 North Park Drive
May 2 – Dubuque – Hotel Julien, 200 Main Street
May 8 – Fairfield – Fairfield Arts and Convention Center, 200 North Main Street
May 10 – Fort Dodge – Iowa Central Community College, One Triton Circle
May 15 – Davenport – **River’s Edge at 700 W River Drive **NOTE CHANGE OF LOCATION**
May 16 – Council Bluffs – Hilton Garden Inn – 2702 Mid America Drive
Thank you for your patience!
The dates and locations for the Spring 2017 Introduction to Planning and Zoning workshops are:
April 18 – Waterloo – Waterloo Center for the Arts, 225 Commercial Street
April 24 – Johnston – Hilton Garden Inn, 8600 North Park Drive
May 2 – Dubuque – Hotel Julien, 200 Main Street
May 8 – Fairfield – Fairfield Arts and Convention Center, 200 North Main Street
May 10 – Fort Dodge – Iowa Central Community College, One Triton Circle
May 15 – Davenport – **River’s Edge at 700 W River Drive **NOTE CHANGE OF LOCATION**
May 16 – Council Bluffs – Hilton Garden Inn – 2702 Mid America Drive
The link to registration will soon be found by following the “Intro to Planning and Zoning Workshops” link to the left.
The National Constitution Center has listed Murr v. Wisconsin as one of the ten most important US Supreme Court cases to be decided in 2017. If you attended the Planning Law session at the APA-Iowa Annual Conference in Burlington you heard me discuss the nuances of the “parcel as a whole” rule as it pertains to this case. The National Constitution Center gives its take on what the case is about here (you’ll need to scroll about halfway down the page).
Constitutional law and history geeks will want to explore the Center’s website generally. A lot of fascinating reading.
