No property interest exists, when no building permit application has been filed

by Victoria Heldt

American Central City, Inc., v. Joint Antelope Valley Authority
(Nebraska Supreme Court, June 17, 2011)

Edward Patterson, the owner and sole shareholder of American Central City, Inc. (ACC), owned three properties and claimed a compensable property interest in properties owned by Edward and Dorothy Schwartzkopf, which are located in the same neighborhood.  Patterson based his claim of interest on an option to purchase the Schwartzkopf’s property on the condition that he obtain a building permit.  He planned to construct a building that would sit both on his property and on theirs.  All of these properties were condemned as a part of the Antelope Valley project, which was designed to provide Lincoln with flood control, transportation improvements, and community revitalization.   Patterson claimed he was not properly compensated after the condemnation of the properties and that his substantive due process rights were affected during the trial process.

Patterson argued that he had a compensable property interest in a building permit he wanted to obtain because he spent considerable time and money planning and designing the building.  He claimed that city officials falsely informed him that it would not be possible to build underground parking or place underground telecommunications on the property, and that this information prevented him from going forward with this plans and affected his substantive due process rights.  The Court noted that the granting of a building permit does not give a property owner the right to build or a property interest in the permit.  The Court further recognized that Patterson never actually filed for the permit.  In light of this, it concluded that that the law does not recognize a property interest in a permit that was  never filed.

Patterson also claimed an interest in the Schwartzkopf properties because of the 1995 option to purchase.  Once Patterson failed to obtain a permit, both parties signed a release agreement excusing them from performance.  Then in 2004, the property was sold to JAVA.  Patterson claimed he still had an oral agreement to buy the property even after the release was signed in 1995.  The Court found that he had no compensable interest in the property because the oral agreement would not stand up in court.  The sale of land is subject to the statute of frauds and must be in writing.  Patterson further argued that his case falls under one of the exceptions to the statute of frauds (partial performance) since he incurred expenses and invested time in the planning and designing of the building.  The Court found that any oral agreement Patterson had was with the Schwartzkopf’s, and cannot be enforced against JAVA.

Patterson further argued that the government engaged in inverse condemnation, which means that the government took property without proper compensation or proper condemnation proceedings.  He claimed the government prevented him from putting his property to the “highest and best use” by preventing him from obtaining a building permit and that this qualified as inverse condemnation.  Without the building permit, he could not purchase the Schwartzkopf properties in order to develop his properties as planned.  The Court noted that this claim rested partially on the belief that he had a property interest in the building permit and the Schwartzkopf properties, but as stated earlier he did not.  Additionally, it found that Patterson did not submit sufficient facts to establish that the government acted to prevent him from developing the land.

The Court dismissed all of Patterson’s claims and affirmed the decision of the district court.

Nebraska Supreme Court addresses standing to challenge annexation, and Open Meetings Act issues

by Melanie Thwing

Schauer v. Grooms
(Nebraska Supreme Court, August 6, 2010)

Curt and Susan Schauer live just outside of Ord in Valley County, Nebraska. In 2005 the City decided to recruit a developer to build and operate an ethanol plant on undeveloped land. Eventually, Redevelopment Area #3 (located 4 miles outside of the City’s border, and 1/8th of a mile from the Schauer’s farm) was chosen as a potential plant site.  Redevelopment Area #3 was declared blighted, then the city annexed the land to make TIF financing available for the project. 

After Val-E Ethanol was selected to construct and operate the plant numerous city council meetings were held. These meetings spanned from February to November 2005, from the time the land was blighted, a plan adopted, a financing agreement was decided and the land annexed.  These meetings were publicly noticed, consistent with Nebraska’s Open Meetings Act; however, on June 1, 2005 a dinner and tour of a similar ethanol facility were hosted by the Valley County Economic Development Board hosted without public notice.  Invitations were sent to numerous county residents including Schauers (who did not attend). Three of five city council members, and the mayor, were in attendance. (The city council consists of five people, overseen by the mayor who provides the deciding vote if there is a tie). The council members and the mayor were split into separate groups to tour – one group watched a video explaining the ethanol-making process while the other toured the plant. At the dinner the members of the council and the mayor discussed no information relating to the proposal.

Four months after the city council approved the annexation, the Schauers filed an action to void the annexation and to claim a violation of Nebraska’s Open Meetings Act. Summary judgment for the City was granted, and the Schauers appealed. 

The Nebraska Supreme Court first investigated whether the Schauers had standing to challenge the annexation.  The Court reviewed previous caselaw on the rights of landowners to challenge municipal annexations.  “This Court has never held that a neighboring landowner, who neither owns a property interest in the annexed territory nor will be subjected to new zoning regulations as a result of annexation has standing to challenge the annexation of someone else’s land….” Further, the Court noted that standing has never been conferred in an annexation challenge “simply because of proximity.”  The Court concluded that the Schauers did not have standing to challenge the annexation.

The Court did find the Schauers, as citizens of Valley County, had standing to bring a claim for violation of the Open Meetings Act.  The Schaurs first argued that because the City described Redevelopment Area #3 as “within the City” in various documents prior to annexation of the land it was misleading to the public. The Court disagreed, finding the contents of the notice reasonable.  The notices described the exact location of the property and included a map of the vicinity.

Next, the Schauers contended that the minutes of the city council meetings failed to identify an established method of notice, which they claim violated the Open Meeting Act. The Court also dismissed this claim.  It had been the long standing history to post agendas at the township library, the County courthouse, and city hall, as well as being made available at the city clerk’s office. The Open Meetings Act simply requires the public body to choose a method of notice, and that the method chosen be recorded in the minutes. In this case, the city clerk was able to establish through testimony that a consistent method of notification had been utilized.

The Schauers finally alleged that the tour and dinner on June 1, 2005 constituted a meeting, that public notice of the meeting was not provided, and it therefore violated the Open Meetings Act.  The Court again disagreed.  Under §84-1410 of the Open Meetings Act no informal meetings can be used for the purpose of circumventing meeting requirements. This however, does not apply to any chance meetings, or travel of members of the public body where no action is taken on matters they supervise.  The Court found that no policy decisions were made or discussed during the tour and dinner.  The separation of city council members into smaller groups was not done to circumvent the Open Meetings Act; rather, the small groups were acquiring information that was later commented on by the public in an officially-recognized meeting of the council. The Court stated that the Open Meetings Act, “does not require policymakers to remain ignorant of the issues they must decide until the moment the public is invited to comment on a proposed policy.” One purpose of the Open Meetings Act is to balance the public’s right to be heard and the public’s “need for information to conduct business.”

The Court then observed that there were never more than two city council members together at the same time during the evening.  The Court noted that the presence of the mayor was immaterial, as the mayor is not a member of the city council.  “The fact that a statute gives a certain official the right to cast the deciding vote in case of a tie…does not, of itself, make that official a member of that body for the purposes of ascertaining a quorum or majority….”  

The decision of the district court was affirmed.

Legislation moving Nebraska State Fair to Grand Island was not unconstitutional special legislation

NOTE:  With the start of fall classes the BLUZ welcomes its newest student contributor, Melanie Thwing.  Melanie’s bio appears under “contributors.”  My hazing ritual required her to write a case brief for a case involving my alma mater.  Her sucessful result follows:

by Melanie Thwing

Yant v. City of Grand Island
(Nebraska Supreme Court, May 28, 2010)

The location of the Nebraska State Fair has been set by statute since 1901. Until 2009, Neb. Rev. Stat. § 2-101(3) provided in part**:

“The state fair shall be held at or near the city of Lincoln, in Lancaster County, under the direction and supervision of the Nebraska State Fair Board, upon the site and tract of land selected and now owned by the state for that purpose and known as the Nebraska State Fairgrounds.”

In 2003 at the annual meeting the State Fair Board it was announced that the state fair and the location that housed it were in a financial crisis. The Nebraska State Legislature ordered two studies to determine if any new models for conducting the state fair would help alleviate the problem. One of the options discussed in these studies was relocating the state fair completely. Then, in 2008, L.B. 1116 was brought to the Nebraska Legislature.  It proposed moving the state fair to Fonner Park in Grand Island.  L.B. 1116 was debated at public hearings of the Agriculture Committee, where individuals were allowed to present testimony both for and against the bill.  The bill was also debated on the floor of the legislature.

L.B. 1116 passed.  It permanently moved the state fair grounds to Grand Island, allotted preparation tasks of the site to Hall County Livestock Improvement Association (HCLIA), directed the State Fair Board and the Nebraska Board of Regents to cooperate in turning the current State Fair grounds over to the University of Nebraska.

In 2008 Roger Yant, Brian Von Seggem, and Jerry Christensen filed suit in Lancaster County District Court for declaratory judgment on the basis that L.B. 1116 was unconstitutional because it (1) created special legislation in violation of Nebraska Constitution, Article III, §18, and it (2) it created an improper delegation of authority to spend public tax dollars to HCLIA and the State Fair Board. The District Court denied the request, and the petitioners appealed to the Nebraska Supreme Court.

Article III, § 18, provides that the Legislature cannot pass any special laws that would grant privileges to specific corporations or associations. The Nebraska Supreme Court struck down petitioners’ claim because legislative classification can be valid if it is “…based upon some reason of public policy, some substantial difference of situation or circumstance….” The Nebraska Supreme Court pointed out that the site of the state fair had been in statute since 1901, the State Fair is something of interest to the entire state, and incidental benefits to HCLIA and the University of Nebraska of the relocation do not automatically qualify that statute unconstitutional if it is enacted for public purpose.

The Nebraska Supreme Court also dismissed petitioners’ claims with regard to the improper delegation of authority.  “It is a well-established principle that the Legislature may delegate to an administrative agency the power to make rules and regulations to implement the policy of a statute, and in particular, we have said that delegation of legislative power is most commonly indicated where the relations to be regulated are highly technical or where regulation requires a course of continuous decision.  The Court found the grant of authority under L.B. 1116 to be sufficiently specific in addressing expenditures for carrying out the move and improving the facilities at Fonner Park.  The Nebraska Supreme Court affirmed the decision of the District Court.

**Neb. Rev. Stat. 2-101, as amended by L.B. 1116 can be found here.

Nebraska CA: actual usage, not physical capacity controls scope of legal nonconforming use

by Allison Arends and Gary Taylor

Thieman v. Cedar Valley Feeding Company Inc.
(Nebraska Court of Appeals, February 23, 2010)

Boone County, Nebraska adopted a zoning ordinance in 1999 that classifies livestock feeding operations in terms of the number of animal units in the operation, and contains setback requirements.  Cedar Valley Feeding Company operated a livestock operation in Boone County on the date the zoning ordinance was adopted.  The ordinance differentiated between livestock feeding operations of 5,000 or fewer animal units and those with more, in how they regulated various aspects of the operations.  On a questionnaire distributed by the Boone County zoning administrator in 2000, Cedar Valley indicated they had 5,000 cattle on the property at the time the ordinance was adopted.  In 2008 Cedar Valley applied for a conditional use permit for the sole purpose of constructing waste facilities to “maintain the present animal capacity of such operations that existed on September 13, 1999, the date of enactment of the Boone County Zoning regulations.”  The owners of Cedar Valley put forth that the actual capacity of the facilities on that date was 7,500 cattle, and that the facilities were not being used to full capacity at the time they had 5,000 cattle.  Ted Thieman, a nearby landowner in Boone County, filed a complaint against Cedar Valley Feeding Company requesting that the company be enjoined from feeding 7,500 head of cattle.  Cedar Valley argued that because their feeding operation’s physical capacity was greater than 5,000 animal units prior the regulation’s enactment, the operation was grandfathered at 7,500 cattle.

The Nebraska Court of Appeals framed the issue as “whether the scope of a nonconforming use is dictated by the physical capacity of the premises or the actual number of cattle confined.”  The court observed that the “Rules and Definitions” section of the Boone County ordinance defined the term “enlargement” as “the expansion of a building, structure or use in volume, size, area, height, length, width, depth, capacity, ground coverage, or in number.” (emphasis added).  The court concluded that when read in the context of zoning regulations that specifically limit the permissible number of animals that may be kept on the premises of a particular livestock feeding operation, this provision prevents the addition of livestock beyond the number on the premises when the zoning regulations went into effect.  In other words, under the specific language of the regulations, actual usage controls.

In addition to Cedar Valley’s responses to the zoning administrator’s questionnaire, data from the Nebraska Department of Environmental Quality inspection indicated that Cedar Valley had 5,000 total animal units on its property on May 19, 1999.  Three additional documents provided evidence indicating Cedar Valley had  5,000 cattle on their property.  The court found persuasive the numerous documents providing evidence that Cedar Valley consistently operated their feeding company with 5,000 cattle more persuasive. Therefore, the court found that Cedar Valley’s legal nonconforming use of the property was limited to the confinement of 5,000 cattle.

Land condemnation for deceleration lane not for “economic development” purposes

by Allison Arends

John V. Haltom v. City of Omaha
(Nebraska Court of Appeals, January 26, 2010)

The City of Omaha, in an attempt to install a deceleration lane for traffic that would access a new retail development, negotiated with John Haltom and another property owner to obtain a strip of land. When the negotiations failed, the City filed a petition to condemn Haltom’s property. Haltom and the other property owner were awarded a total of $55,300 from the “Report of Appraisers”. Haltom filed a complaint  arguing that Neb. Rev. Stat. 76-710.04 prohibited the City from exercising it’s eminent domain powers to acquire land for the purpose of economic development. The City filed a motion for partial summary judgment in response. At the summary judgment hearing the city engineer provided an affidavit in which he explained that his recommendation for the installment of the deceleration lane was primarily for purposes of traffic control and safety. The district court granted the City’s motion for summary judgment. Haltom appealed.

The court first addressed the issue of whether Haltom’s appeal was moot since his property had already been condemned and the deceleration lane had been built. However, because (1) the lane was determined to be a public issue (2) municipal authorities desiring to condemn property rely upon authoritative adjudication for future proceedings and (3) condemnation proceedings are replicated and identical in most cases, this case was found not moot under the public exception rule.

In his appeal, Haltom argued that the district court erred in determining that the City did not condemn his property for economic purposes. Furthermore, Haltom specifically argues the City directly violated statute 76-710.04 because the deceleration will (1) provide vehicles access to the retailer and (2) ultimately cause the expansion of the City’s property and sales tax bases through providing the retailer’s customers easier access to the retailer’s parking lot therefore exercising eminent domain for the purpose of economic development.

In response to Haltom’s claim the court cited the plain language of the statute, specifically noting section 76-710.04(1) which prohibits the use of eminent domain powers where taking is, “primarily for an economic development purpose.” Using this section the court found four reasons to reject Haltom’s argument. First, the City did not take the property for the use by a commercial for-profit enterprise. Second, the City’s acquisition of the land did not serve the primary purpose of increasing tax revenue or tax base. Third, the City’s acquisition of the land did not serve primarily for increasing employment. Finally, the use of the property cannot be understood as primarily related to “general economic conditions”. The court acknowledged that the City’s use of eminent domain may have resulted in incidental and indirect benefits to the retailer, but those benefits do not constitute a violation of statue 76-701.04 since it was not the City’s primary concern in the construction of the deceleration lane.

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