Takings clause of Minnesota Constitution provides greater landowner protections than U.S. Constitution

by Melanie Thwing

DeCook v. Rochester International Airport Zoning Board
(Minnesota Supreme Court, March 30, 2011)

“Where land use regulations, such as the airport zoning ordinance here, are designed to benefit a specific public or governmental enterprise, there must be compensation to landowners whose property has suffered a substantial and measurable decline in market value as a result of the regulations” McShane v. City of Faribault. 292 N.W.2d at 258-59

Leon and Judith DeCook purchased 240 acres of land for $159,600 just north of the Rochester International Airport in Minnesota in 1989. 19 acres of this land fell within Safety Zone A (the most restrictive zone) for the airport. Ordinance No. 3 which allowed for agriculture, commercial or industrial sites controlled this land. No dwellings were allowed in the zone as well as any use that brought more than 10 people to any acre or more than 50 people to a commercial industrial site.

Then in 2002 the Board enacted Ordinance No. 4 which allowed for fewer land uses in Safety Zone A than previously allowed. Ordinance No. 4 also brought another 28 acres of the DeCook’s land into the zone.

In 2005 the DeCooks filed an action in district court arguing that there was a substantial decline in market value of the property that benefited a public or governmental enterprise. They argued this constituted “a constitutional compensable taking under the principles of McShane v. City of Faribault.” Summary judgment was granted for the Board and the DeCooks’ appealed to the Minnesota Court of Appeals.  The Court of Appeals held that the DeCooks’ must be compensated if their property had a substantial decline in value and remanded to the district court. A jury found that the property diminished in value by $170,000; however, the district court found that the diminution did not constitute a compensable taking as a matter of law. The court sited that the ordinance did not affect the “primary use” of the DeCook property.

The DeCooks appealed and the Court of Appeals reversed and remanded in favor of the DeCooks. The Airport Zoning Board sought review with the Minnesota Supreme Court. The DeCooks argued that the ruling in McShane controls regulatory taking claims from airport safety-zone ordinances. The Board argued that a more flexible ruling from Penn Central should control the case.  The Minnesota Supreme Court determined that the language in Minn. Const. art. I, § 13, which states that, ‘[p]rivate property shall not be taken, destroyed or damaged for public use without just compensation [emphasis added],” is broader than the takings clause in the United States Constitution’s, and because of  this McShane controls.

McShane found that whenever a governmental enterprise is benefited and there is a substantial decline in market value there must be compensation to land owners. Whether that diminution is substantial is a question of law. In this case the Supreme Court found that the $170,000 is substantial, in that the damages exceed the purchase price of the 240-acre parcel before the enactment of Ordinance No. 4, which ultimately caused the diminution.

A regulatory taking did occur under the Minnesota Constitution. The Court of Appeals decision was affirmed and the case is remanded to the district court for judgment in favor of the DeCooks.

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.

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