Rezoning in compliance with court order not a taking

by Melanie Thwing

Bettendorf v. St. Croix County
(Federal 7th Circuit Court of Appeals, January 20, 2011)

John Bettendorf owns property in St. Croix County, WI. Although the property was originally zoned agricultural-residential in 1972 he began to run a carpet business out of his basement. Then in 1974 he began to run an excavating company from the property. In 1984 Bettendorf applied to the County to re-zone a portion of his land to commercial.  The the application was approved with the stipulation that the rezoning was not transferable to any subsequent landowner, and upon such a transfer, or Bettendorf’s death,  the zoning classification of the property will revert to agricultural-residential. Bettendorf used the property in a commercial manner after the ordinance was enacted, but fully knowing that the language of the permit would not allow him to regain any commercial investment when he went to sell the property Bettendorf petitioned to make the re-zoning permanent. In 2004, Bettendorf filed an action in the Circuit Court for St. Croix County seeking a declaratory judgment that the conditional language was void and should be stricken from the ordinance. The circuit court found in favor of Bettendorf, but on appeal the Wisconsin Court of Appeals held the ordinance void in its entirety. In July 2007, the circuit court entered a revised judgment and order rescinding the commercial zoning of the disputed parcel in accordance with the Court of Appeals’ decision. The County complied with the order by rescinding the commercial zoning designation.  Bettendorf then sued in federal court.

Bettendorf argued that the County’s rescission of the commercial zoning designation following the court’s decision constituted a taking. He also argued that he was not given appropriate substantive and procedural due process protections. The Federal 7th Circuit observes that to prove a regulatory taking the government action must deprive the landowner of “all or substantially all practical uses of the property.” Bettendorf argued that the court did not adequately consider his anticipated and distinct investment opportunities. The court disagreed, stating that Bettendorf made improvements to his property with full knowledge that the commercial zoning classification was not going to be permanent.  When he began litigation he fully assumed the risk that the scope of the ordinance could be reinterpreted. Bettendorf still maintains full use of his property for agricultural and residential purposes, which simply restores the land to its original use.

Bettendorf argued he was “denied the protection of the substantive legal standards that would have been applied to a change in zoning….” The court found this argument to be without merit. The County’s decision to remove the commercial zoning designation was simply in accordance with the Court of Appeals decision. Therefore it could not be “conscious-shocking or arbitrary,” the showing needed to prove a substantive due process claim. 

As for Bettendorf’s procedural due process claim, Bettendorf was afforded the the opportunity to avail himself of due process protections through the state court system, yet he chose to bypass the state court appeals process. This seriously “undermines his argument that the state court process was deficient.” The Seventh Circuit ruled for the County on all claims.

Issues of fact exist in takings claims over airport regulations

by Melanie Thwing

Interstate Companies, Inc v. City of Bloomington
(Minnesota Court of Appeals, November 9, 2010)

The Galarneau’s own two separate properties in Bloomington, Minnesota. These properties are leased to Interstate, Inc. and are used for office space, service repairs and other various things. These properties are located next to the Minnesota-St. Paul International Airport, and close to the Mall of America and the light rail line.

The airport itself has specific areas zoned as “safety zones,” which regulate buildings and building height to insure the safety of the airport as well as individuals. Originally the Galarneau’s buildings were zoned in Safety Zone C, which is not as restrictive as others. However, in 2004 construction of a new airport runway was proposed and the Joint Airport Zoning Board adopted a new zoning ordinance. This ordinance re-assigned the Galarneau’s property to Safety Zone B, which is more restrictive. Further, the buildings currently occupied by Interstate, Inc now fall only 2,500 feet from the completed runway, which causes disruptions in business operations.

The true effect of the new zoning ordinance was felt in 2005, after the appellants sought to build a hotel on their property. The permit was denied because the new structure would violate height restrictions. The Galarneau’s brought two issues to the district court: 1.) Whether the zoning amendment to reclassify the property to Safety Zone B was regulatory taking, 2.) Whether the Minnesota Airport Commission’s (MAC) use of its property amounted to an inverse condemnation or a taking through deprivation of practical enjoyment of the Galarneau’s property.  The district court granted summary judgment in favor of MAC, and the Galarneau’s appealed to the Minnesota Court of Appeals

Under the first issue, both the United States and Minnesota Constitutions explicitly state that no private property can be taken without just compensation. Further, the Minnesota Constitution specifies property cannot be taken, destroyed or damaged without compensation. Precedent in Penn Central states the Court must look at the economic impact of the zoning ordinance for the individuals.  Following the Penn Central precedent, under  McShane v. City of Fairbault the Minnesota needs to examine if there was a substantial decline in market value because of an ordinance to benefit, “a specific public or governmental enterprise.” If so, then compensation is required. Although at the district court hearing a market study was presented which showed a significant lose in market value, the district court rejected it.

Further, under Penn Central the court must look at the investment-backed expectations of the Galarneaus. This would be the primary expectation of Galarneaus regarding the use of their property when the property was first purchased. The Galarneaus argue that because of the high level of residential and industrial use when the property was bought they expected to develop along these same lines. The Court of Appeals states that there was a reasonably different expectation when the property was located in the original safety zone.

Finally under Penn Central the court must decide whether the new regulations place a burden on only a few landowners. McShane explains that enterprise regulations are placed specifically for the government enterprise, which gives benefit to the general public, but burdens on a few individuals. If, in fact, the burden is falling on a few landowners the Supreme Court of Minnesota held that the public has then essentially acquired a free easement. The Court of Appeals ultimately found that there was a large decline in market values,

Considering the questions raised under the Penn Central analysis, the Court of Appeals found the district court’s summary judgment inappropriate.

On the second claim, the appellants argue that the district court erred in finding that MAC’s use of the property could not be a taking through deprivation of practical enjoyment. For this claim to hold true, there must be a substantial invasion of property rights and measurable lowering of market value. The district court held that the appellants failed to prove substantial invasion, even though they turned in records of noise, disruption to telephone calls, and employee fears from low flying air-crafts. According to the Court of Appeals it was inappropriate for the district court to grant summary judgment on this issue because disputed questions of fact existed. 

The Court of Appeals reversed the district court’ summary judgment on both claims, and remanded the case back to the district court.

City failed to show special benefits conferred on abutting landowners when assessing for street improvements

by Melainie Thwing and Gary Taylor 

Hubbard v. City of Pierre
(South Dakota Supreme Court, June 30, 2010) 

In 2007 the City of Pierre, South Dakota began an improvement project on the street Wade and Lisa Hubbard live on. This project was primarily to replace water mains, but also included replacing sewer mains, resurfacing streets, and replacing curb, gutter, and driveway portions that had been installed between 1930 and 2006. In February of 2007 the City proposed a resolution to issue special assessments at a set rate per linear foot cost of reconstructed curb and gutter, and at a set rate per square foot cost for reconstructed driveway approaches.  The Hubbards, Ben Orsbon, and several other petitioners appeared at the Commission meeting that month and argued that the special assessment was an unconstitutional taking of private property, but the resolution later passed. 

After the assessments were filed in November 2007, the petitioners (with counsel present) again contested the assessment citing the Fifth Amendment of the U.S. Constitution, and the South Dakota Constitution Article VI § 2 which states, “[p]rivate property shall not be taken for public use, or damaged, without just compensation which will be determined according to legal procedure established by the legislature.” The petitioners argued that the amount of the special assessments levied exceeded the benefits provided to the abutting landowners.  They claimed that the replacement of curb, gutter and driveway approaches provided no benefits to the abutting landowners.  Alternatively, petitioners argued that the city should have calculated the special assessments according to South Dakota Codified Law (SDCL) 9-45-32 which provides that the assessment should be levied, “according to the benefits determined by the governing body,” rather than SDCL 9-45-30 which provides that, “the rate of assessment per front foot,” is the proper way to levy special assessments.  Nevertheless, the City still approved the assessments, and the petitioners filed for a permanent injunction with the circuit court.  The circuit court determined that under either statute a showing of benefits conferred is required, and that the assessments were unconstitutional under the South Dakota and U.S. Constitutions.  The city then appealed to the South Dakota Supreme Court. 

The Supreme Court stated the framework for the constitutional analysis:   

If a local public improvement confers a special benefit on private property, a special assessment can be constitutionally imposed if the assessment does not exceed the benefit received. A public improvement is considered local if it benefits adjacent property, as distinguished from benefits diffused throughout the municipality….Determining whether a project confers special benefits requires a finding that the assessed property receives a benefit above and beyond or differing from the benefit enjoyed by the general public.
During the circuit court hearing Hubbard testified that his home is in a three-block historic neighborhood, and that the curb that was replaced was an older style curb with square corners, was still in good shape, and that, in fact, the new curb provided less, rather than more protection against stormwater damage.  Thus, no property value was added.  Orsbon, who was an AICP-certified planner with a masters degree in planning and over twenty years experience in the field, stated that because a gutter and curb already existed, were in good condition, and could have lasted thirty more years, the replacement of the gutter and curb added no benefits to his property. An assessor testified that no property value was added with the replacements.  On the other hand, the city’s engineer testified that the curb and gutter were failing in several places along the streets in question, and that all properties benefitted from replacement of existing curb and gutter with a uniform design. 
The circuit court found that the city engineer’s testimony that all properties benefitted from the uniform design showed that the benefits provided to the petitioners were, in fact, no different than those provided to the general public.  It concluded that the general public, and not specific property owners, were the beneficiaries of a uniform design.  The circuit court noted that its decision was based on “strong, direct, clear, and positive proof” from the petitioners.  The Supreme Court found no evidence of a “clear mistake” in the ruling of the circuit court and, therefore, affirmed the lower court’s decision in favor of petitioners.   

US Supreme Court falls short of declaring that “judicial takings” are possible

by Gary Taylor

Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection
(United States Supreme Court, June 17, 2010)

In Florida, with respect to littoral (shorefront) property owners, the state owns the land permanently submerged under water as well as the the land between the low-tide line and the mean high-water line.  At common law in Florida, the littoral property owners own up to the mean high-water line.  Also, littoral owners have “special rights” with regard to the water and the land between low- and high-water line, generally likened to easements.  These “special rights” include the right of access and use of the water, the right to use the water for certain purposes, the right to an unobstructed view of the water, and the right to receive “accretions” and “relictions” to the littoral property. “Accretions” are additions of sand, sediment, or other deposits to waterfront land, while “relictions” are lands once covered by water that become dry when the water permanently recedes.  In order for the littoral property owner to receive these accretions and relictions (i.e., to alter their property line) they must occur gradually and imperceptibly over time.  A sudden change (such as through a hurricane or a specific man-made event) is an “avulsion,” and the property boundary remains the mean high-water line as it existed before the avulsive event.

In 1961, Florida enacted the Beach and Shore Preservation Act (BSPA) to restore and maintain critically eroded beaches within the state. The BSPA allows a municipality to apply to the State for funding and permits to restore an eroded beach, generally by dumping sand on the previously eroded portion of the land.  The BSPA provides that once a project is undertaken, an erosion-control line is established, usually at the current mean high-water line, and sand is added is added seaward of the erosion-control line.  As a consequence of the renourishment under the BSPA, the erosion-control line replaces the mean high-water line as the boundary between the littoral property and state-controlled land.  The establishment of the erosion-control line in effect extinguishes the littoral right of property to accretions and relictions.

In 2003, two counties received permits under BSPA from the Florida Department of Environmental Protection for the funding and permits necessary to restore beaches affecting, among others, Stop the Beach Renourishment, Inc. (SBR), a nonprofit corporation whose members are Florida beachfront property owners whose property eroded due to several hurricanes.  SBR challenged the issuance of the permit and the constitutionality of the BSPA.   The Florida Court of Appeals held that the BSPA eliminated two of the Petitioner’s members’ littoral rights, namely the right to receive accretions and relictions and the right to have their property come into contact with the water, and that therefore the BSPA resulted in an unconstitutional taking.  The Florida Supreme Court reversed, finding among other things that right to accretions and relictions is a “future contingent interest” and not a vested property right, and that there is no littoral right to contact with the water, other than the right of access which the BPSA does not affect.  SBR appealed, and the case reached the U.S. Supreme Court.

The questions relevant to planning were (1) whether a judicial opinion can result in an unconstitutional taking (a “judicial taking”), and if so (2) whether the Florida Supreme Court effected a judicial taking by reversing longstanding holdings that littoral rights are property rights under Florida law. 

The U.S. Supreme Court held 8-0 that the Florida Supreme Court did not take property without just compensation in violation of the Fifth and Fourteenth Amendments. The Court held that there could be no taking unless property owners could show that they had rights to future exposed land and to contact with the water superior to Florida’s right to fill in its submerged land. The Court drew from Florida property law principles that (1) the state, as owner of submerged land adjacent to beachfront property, has the right to fill that land and (2) the exposure of land previously submerged belongs to the state even if it interrupts the beachfront property owners’ contact with the water.

However, Justice Scalia, with three other members of the Court including Chief Justice John G. Roberts and Justices Clarence Thomas and Samuel A. Alito, also opined that a court could be determined to have effected a “judicial taking” in violation of the Takings Clause if that court declares that what was once an established right of private property no longer exists. “If a legislature or a court declares that what was once an established right of private property no longer exists, it has taken that property, no less than if the State had physically appropriated it or destroyed its value by regulation.”  Justice Scalia observed that the Takings Clause, unlike other provisions in the U.S. Constitution, is not addressed to the action of a specific branch or branches.  It is concerned simply with the act, and not with the governmental actor (“nor shall private property be taken”). There is no textual justification for saying that the existence or the scope of a State’s power to expropriate private property without just compensation varies according to the branch of government effecting the expropriation.  It would be absurd to allow a State to do by judicial decree what the Takings Clause forbids it to do by legislative fiat.   

 Because only four Justices signed on to this part of the opinion, the concept of a “judicial taking” is not (yet) a principle of Constitutional law.





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