Title: The Current Status of "Takings" Issue
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Title: The Current Status of "Takings" Issue
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Spatial Coverage: North America -- United States of America -- Florida
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Abstract: The Current Status of "Takings" Issue By Theodore C. Taub
General Note: Box 7, Folder 3 ( Vail Conference 1988 - 1988 ), Item 70
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THE CURRENT STATUS OF THE "TAKINGS" ISSUE


by

Theodore C. Taub

During its last term, the United States Supreme Court issued three significant land
use decisions involving the "taking" issue, each having the potential to radically affect
the way that local governments make their land use decisions. These three decisions
have resulted in one case which commentators state will bolster the power of states to
significantly regulate land use and reduce the vulnerability of state and local
governments to attacks on land use regulation based on the "taking" clause. The other
two cases have been viewed as major victories for land developers and property owners.

First, in Keystone Bituminous Coal Association v. DeBenedictus, 55 U.S.L.W. 4326
(U.S. Mar. 10, 1987), the Court upheld a coal mining subsidence regulation which
prevented coal companies from mining more than 50% of their coal under specified
structures, finding that it did not constitute a taking without just compensation.

Next, in First English Evangelical Lutheran Church of Glendale v. County of Los
Angeles, 55 U.S.L.W. 4781 (U.S. June 9, 1987), the Court at long last found an inverse
condemnation case ripe for adjudication, holding that the Fifth Amendment's Just
Compensation Clause, applied to the states by the Fourteenth Amendment, requires a
local government to pay for a temporary taking when a regulation denies a landowner all
use of his property.

Finally, the Court was confronted with an exactions case in Nollan v. California
Coastal Commission, 55 U.S.L.W. 5145 (U.S. June 26, 1987). In this case, the Court held
that a state's attempt to condition a development permit on the dedication of an
easement by a property owner constituted a taking requiring compensation because there
existed no direct nexus between the condition imposed and the purpose for obtaining an
easement for access along the beach. According to Justice Scalia, speaking for the
Court, if a permit condition restriction, such as this access condition, is not related to a
specific, justifiable public purpose, "the building restriction is not a valid regulation of
land use but an 'out-and-out plan of extortion.' "

The Nollan decision is significant for several reasons. In this case, the Supreme
Court finally clarified a vague area of takings jurisprudence developer exactions. The
Court recognized that in order for an exaction to-be upheld under a takings analysis,
there must be a substantial causal relationship between the exaction imposed by the
government and the needs or burdens generated by the new development. Thus, a
development condition will be found unconstitutional if it "utterly fails to further the end
advanced" or the alleged goal of the government in imposing the exaction.

Second, the Court has sent a signal to all states, especially California, that no
longer should they expect courts to uphold an exaction based upon an indirect
relationship between the exaction and the public burden created by a development. In
order to be valid, an exaction must have a direct relationship to the furtherance of a
government's goal and provide a property owner a "quid pro quo" for the benefits granted
relative to the burdens imposed.









Nollan also sets a standard for reviewing an exaction under the takings clause. The
Court indicated that it will look beyond the expert data employed by a local government
to substantiate the goals of its exaction. The Court recognized that "the Fifth
Amendment's property clause [is] more than a pleading requirement, and compliance with
it (is] more than an exercise in cleverness and imagination." Thus, the Court will review
an exaction which is based on the granting of a property right in return for the lifting of
a development impediment by a local government with much greater scrutiny than it
would under the traditional, deferential rational basis test. An exaction based on a
conveyance of land is required to substantially advance a legitimate government interest
and cannot deny an owner the economically viable use of his land. The Court recognized
that when a developer must grant a local government his land in exchange for a permit,
there is a "heightened risk" that the actual underlying reason for such government action
is to avoid paying just compensation instead of legally obtaining the land by exercising its
eminent domain power.

Most importantly, Nollan, along with the Court's First English decision, reaffirms
the Supreme Court's role as defender of private property rights. Accordingly, the Court
will not choose to uphold a government's regulation or application thereof when it
contravenes the principle of fundamental fairness embodied in the Fifth and Fourteenth
Amendments.

In First English the Court at long last decided the issue of whether the Fifth
Amendment's Just Compensation Clause, applied to the states by the Fourteenth
Amendment, requires the government to pay for a temporary taking. In First English, a
church owned a campground which it used as a retreat center and recreational area for
handicapped children. The land was located in a canyon and in 1978 a major flood
destroyed the campground facilities. In response to the flooding, the County of Los
Angeles passed a temporary ordinance which set aside the campground as part of a flood
control area. The ordinance provided that:

[a] person shall not construct, reconstruct, place or enlarge any
building or structure, any portion of which is, or will be, located
within the outer boundary lines of the interim flood protection
area located in Mill Creek Canyon....

The ordinance was passed as an emergency measure and became effective immediately.

In response, the Church filed an inverse condemnation suit in a California trial
court, claiming that the Stati owed it compensation or unconstitutionally taking its land
without just compensation. In the interim, the temporary ordinance became permanent
when the area which included the campground was formally redesignated as a flood
protection district.

The trial court granted a motion by the County to dismiss the claim based on the
California Supreme Court's Agins v. Tiburon, 24 Cal. 3d 266, 598 P.2d 25 (1979), aff'd on
other grounds, 447 U.S. 255 (1980), decision. Agins held that invalidation of the
ordinance was the only remedy for a regulatory taking. The Church alleged a regulatory
taking and sought damages. On appeal, the California Court of Appeal affirmed the trial
court, rejecting the argument by the Church that states cannot limit the constitutional
remedy for taking to nonmonetary relief. The California Supreme Court denied review
and the United States Supreme Court accepted jurisdiction.









Chief Justice Rehnquist, speaking for the Court, reiterated Justice Holmes' famous
' opinion in Pennsylvania Coal v. Mahon, 260 U.S. 393 (1922), wherein he stated that "the
general rule at least is, that while property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking." The Court recognized that
temporary takings which deny a landowner all use of his property were no different than
a permanent taking which requires just compensation under the Constitution. The Court
further noted that where a court determines that a taking has occurred, the condemning
government has the option of amending its regulation, withdrawing the invalid regulation
or exercising eminent domain; however, in a ease where the government's actions have
already worked a taking, as the County had done to the Church's property, no subsequent
action by the government may relieve it of its obligation to pay the landowner
compensation for the period of time during which the taking was effective. The majority
concluded its opinion by noting that its holding would lessen the flexibility of land use
planners and governments when enacting land use regulations. The Court stated,
however, that such a consequence was necessary and, citing Justice Holmes, stated that
"a strong public desire to improve the public condition is not enough to warrant achieving
the desire by a shorter cut than the constitutional way of paying for the change."

In his dissent Justice Stevens stated that the majority decision was a "loose cannon"
which would result in a great deal of unproductive litigation. He further suggested that
the decision would have a significant "chilling" impact on land use regulation by causing
local land use officials to avoid enacting important legislation for fear of later beipg
challenged and having to pay damages.

It appears that First English may offer an aggrieved developer the opportunity to
S seek a damage remedy when a local government abuses its land use control power. An
example of a scenario which may offer a damages remedy for a temporary taking can be
illustrated by the Florida Future Road Reservation Statute Fla. Stat. 336.02 (1986). This
statute authorizes counties to reserve future rights-of-way for a five year period (with
an optional extension of five additional years) when a county's legislative body approves a
future road reservation map at a public hearing. Most importantly, once the map has
been adopted, a landowner whose property has been designated as reserved on the map is
precluded from building on his land and no development permits may be issued for any
renovation or new construction. In addition, the landowner must also calculate his
building and zoning setbacks from the "new" right-of-way line set forth on the map. The
statute does not require the county to pay Just compensation to any affected landowner
for reserving their land. it does, however, allow an aggrieved landowner the right to
contest this reservation or temporary taking if he alleges that the regulation of his
property is unreasonable or arbitrary and that it dedies him a "substantial portion of the
beneficial use" of his property. If the landowner's challenge is upheld by the county (who
reserved the land in the first place), the county then has 180 days to either appeal the
ruling or condemn the reserved property and pay him just compensation.

In view of First English, a developer whose land is reserved as future right-of-way
may be able to successfully argue that the reservation statute "as applied" effects a
complete taking (albeit temporarily) of his property without just compensation. The
reservation of his land along with the county's refusal to issue any development permits
leaves him with no economically viable use of the "reserved" land. Thus, under First
English, the developer may be entitled to just compensation from the time the county
adopted its reservation map to the time the ordinance is either stricken or his property is
formally condemned.










On July 8, 1987, the New Jersey Supreme Court, in a unanimous opinion, decided
New Jersey Builders Association, et al. v. Mayor and Township Committee of Bernards
Township, (No. A-55, Sept. Term 1986). The court held invalid (retrospectively) an
ordinance requiring new developers to pay their pro rata share of the Township's long-
term road improvement plan on the basis that it exceeded the authority conferred upon
municipalities by a New Jersey state statute. The statute permitted municipalities to
require developers to pay their share of "reasonable and necessary" off-site
improvements. The court discussed impact fee cases from around the country, referred
to some "linkage" programs and concluded that the exaction imposed by Bernards
Township was not authorized by the State's enabling legislation. The court approvingly
noted one of its 1970 decisions wherein it emphasized the fundamental principle that a
"subdivision may be compelled only to assume a cost 'which bears a rational nexus to the
needs created by, and benefits conferred upon, the subdivision ***.'"

The Nollan Court held that the access easement condition imposed upon the Nollans
by the California Coastal Commission was unconstitutional since it had no direct nexus
to a specific, justifiable purpose. The Court stated that if the State of California would
have required the Nollans to dedicate an easement across their property instead of
conditioning their building permit on the Nollans agreeing to do so, a definite taking
would have occurred. Citing prior takings decisions, Justice Scalia stated that "the right
to exclude others is 'one of the most essential sticks in the bundle of rights that are
commonly characterized as property.' It did not matter that California's action in
Nollan did not constitute a permanent physical occupation of their property. The access
easement was a permanent and continuous right to pass over their property; thus, it was
tantamount to a permanent invasion. Therefore, Justice Scalia concluded, the access
easement condition constituted a compensable taking since it took away the Nollans'
essential right to exclude.

The Court discussed the California Constitution's prohibition against any individual
preventing access to navigable water when it is necessary for a public purpose. It
indicated that in Nollan the access easement sought by the Commission would not
provide access to the water as specified in the state constitution, but would only provide
access alone the water. The majority felt that the state constitution's relevance in this
case was "highly questionable" because the access being sought was along and not to the
beach. Finding that the California Court of Appeal did not base its argument on the
state constitution's prohibition against blocking access and that the Commission failed to
make this argument to the California appellate court, the Court found that resolving the
issue would be improper and dismissed it as moot.

Citing the Penn Central Transportation v. New York City, 438 U.S. 104 (1978), and
Agins cases, Justice Scalia reaffirmed the Court's long standing rule that a land use
regulation does not rise to the level of a taking if it "substantially advances legitimate
state interests" and "does not deny an owner economically viable use of his land." He
noted, however, that the Court's takings cases up to now had failed to elaborate on the
standards for determining exactly what constituted a legitimate state interest or exactly
what type of connection was needed between the regulation and the state interest in
order to meet its "substantial advancement" requirement.



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For the purpose of his analysis Justice Scalia assumed that the Commission's
arguments in support of imposing the access condition, I.e., protecting the public's ability
to see the beach, assisting the public in overcoming the "psychological barrier" to using
the beach caused by shorefront development and preventing congestion on the public
beaches, were legitimate state interests. He further noted that, in seeking to accomplish
these goals, the Commission would "unquestionably" be allowed to deny the development
permit if the Nollans' house (either standing alone or because of the cumulative impact it
would create in conjunction with other such homes) would "substantially impede" the
State's enunciated goals. He cautioned, however, that denial of the permit would only be
allowed if it did not interfere with the Nollans' property to such an extent that it would
constitute a taking of their land.

The Court then addressed the Commission's argument that a permit condition which
serves the same police power goal as a refusal to issue a permit does not constitute a
taking if the refusal to issue the permit did not constitute a taking itself. Justice Scalia
agreed with the Commission's logic, stating that if, for example, the Commission had
conditioned the issuance of the Nollans' permit on one of its stated goals, such as
protecting the public's ability to view the beach by imposing a height or width limitation
or restricting the building of fences, the condition would be constitutional. He noted,
however, that a condition's constitutionality "disappears" when a condition that is
substituted for an outright ban on a development fails to further the goal advanced by
the government as justification for the ban. The lack of nexus between the aeps
condition and the original purpose of the condition changed the Commission's original
purpose for obtaining an easement to obtaining an easement to serve a legitimate
purpose, but without paying just compensation. Summarizing his argument, Justice
Scalia stated that "unless the permit condition serves the same governmental purpose as
the development ban, the building restriction is not a valid regulation of land use but 'an
out-and-out plan of extortion.'"

Finding that there was no justifiable nexus between access and the burden created
by the Nollans' construction that would substantially advance the Commission's goals, the
Court found that the permit condition could not be viewed as a proper exercise of land
use power for any of the reasons the Commission had argued. In support of this
conclusion, Justice Scalia stated that his finding of a lack of nexus between the
Commission's access easement condition and the burden created by the Nollans'
construction was consistent with the findings of all state courts that had dealt with the
exaction issue, with the exception of California.

The majority then took issue with Justice Brinnan's dissent, strongly disagreeing
with his argument that the Commission would have little difficulty in demonstrating the
"specific connection" between access conditions and burdens new development places on
access if, in the future, it utilized the agency's expertise to support its access
conditions. According to Justiee Brennan, using expertise to justify beach access
requirements would protect the Commission's coastal access program and defeat any
further takings challenges. In response, Justice Sealia noted that the "Fifth
Amendment's property clause [was] more than an exercise in cleverness and
imagination," implying that it would require more than expertise to support government
action when a conveyance of property is a required condition for "the lifting of a land use
restriction." Justice Scalia indicated that if the Court was in the future confronted with
a similar issue, it would be extremely diligent in determining that the condition imposed









substantially advances a state Interest since there is a "heightened risk" that the
4 s government's purpose in conditioning a land development permit on a property
conveyance is to avoid paying compensation under the government's eminent domain
power.

Concluding his analysis, Justice Sealia stated that the Commission's justification
for seeking the access easement was unrelated to its land use regulation power. The
Commission's goal, he indicated, was:

simply an expression ... that the public interest will be served
by a continuous strip of publicly accessible beach along the
coast. The Commission may well be right that it is a good idea,
but that does not establish that the Nollans (and other coastal
residents) alone can be compelled to contribute to its realization.

He further observed that if California desired further beach access it may properly take
the land by eminent domain.

In State of Florida, etc. v. Mid-Florida Growers, etc., et al., 505 So.2d 592 (Fla. 2nd
DCA 1987), decided on April 10, 1987, Florida came as close as it has ever come (the
Florida Supreme Court has yet to deal with the Second District's certification) to holding
that a regulatory taking entitles the property owner to just compensation. Although the
court certified the matter to the Florida Supreme Court, the intermediate appellate
court's opinion presents a clear but unusual setting within which to analyze the
regulatory taking just compensation question. As framed by the court:

SThe issue on this appeal is whether the State of Florida, pursuant
to its police power, has the constitutional authority to destroy
healthy, but "suspect" citrus plants without compensating nursery
owners. Id. at 592-93.

In short, due to the discovery of the spread of citrus canker in Florida in 1984,
Florida's Department of Agriculture proceeded to eradicate (burn) substantial amounts of
citrus trees. Certain nursery owners sued seeking just compensation based upon inverse
condemnation. The trial court held that a taking had occurred.

After noting the distinction between the police power and eminent domain, the court
held that although the sovereignn may exercise itp police power without making just
compensation for the property taken" a "valid exercise of the police power does not
preclude an inverse condemnation suit." The court noted the difficulty in determining
"when the valid exercise of police power stops and an impermissible encroachment on
private property rights begins." The court said that no formula accepted by all had been
found and that each ease must be decided on its particular facts. It also recounted a list
of factors, approved by Florida's Supreme Court, used in past takings analyses.

Unlike Florida's First and Fifth District Courts of Appeal, the Second District
concluded that the state's valid exercise of the police power in this case "resulted in a
taking." Id. at 595.



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The court concluded:


When the state, in the exercise of its police power,
destroys diseased cattle, decayed fruit or diseased trees, the
constitutional requirement of "just compensation" clearly does
not compel the state to reimburse the owner for the property
destroyed. Such property is incapable of any lawful use, it is
valueless, and it is a source of public danger. "A legislative
provision for compensation in such cases is a mere bounty." State
Plant Board v. Smith, 110 So.2d 401 (Fla. 1959).

Different is the situation, however, where healthy cattle,
fruit or trees are destroyed to protect public health, safety or
welfare. While the general principle is that no compensation is
required when there is a valid exercise of the police power, the
general principle is not without exception. Whether a particular
restriction will be rendered invalid by the government's failure to
pay for any losses proximately caused by it depends largely "upon
the particular circumstances in that ease." Penn; Smith.

We hold that while the state validly exercised its police
powers in destroying the citrus trees, a taking occurred when the
healthy trees were destroyed. The nursery owners must be
compensated. As the United States Supreme Court stated in
Penn Central, citing to Armstrong v. United States, 364 U.S. 40,
49, 80 S.Ct. 1563, 1569, LEd.2d (1960), "the Fifth Amendment's
guarantee ... is designed to bar Government from forcing some
people alone to bear public burdens which, in all fairness and
justice, should be borne by the public as a whole". Penn Central,
438 U.S. at 123, 98 S.Ct. at 2659. Id. 596-96.

In conclusion, it should be pointed out that the foregoing is by no means an
exhaustive treatment of takings jurisprudence. For example, it must be emphasized,
notwithstanding First English and Nollan, that because of the United States Supreme
Court's preceding cases, starting with -AOs one seeking damages for alleged over-
regulation of his property must still establish that the case is ripe for decision and that a
taking has occurred. Moreover, although one may now have an expanded remedy for a
regulatory taking, he may be limited to establishing his right to that remedy only in a
state court. In other words,'although the federal judiciary has now determined that the
Constitution entitles one to damages for the period during which a regulation deprives
the owner of all use of his property and that an exaction may constitute a taking if the
exaction is not related to a specific, justifiable public purpose, the attempt to obtain
that remedy must be exhausted on the state level before a federal court will decide the
controversy. That may limit, instead of expand, the number of future takings eases that
may be finally resolved on the federal level.

Exactions, impact fees, linkage, regulatory takings, a need for new infrastructure
and to maintain what we have obviously the development process is on a continuum of
becoming more complex. Government is hungry and the hunt for the wherewithal to get
the job done means that the solutions will neither be simple nor easy. Were Shakespeare


~









alive, instead of venting his wrath on the lawyers, he might suggest the first thing we do
is "kill" the developers. In spite of a few bad apples in the barrel, the developers who
build the offices we work in, the shopping centers we buy our goods from, the apartments
and single-family residences we live in and the myriad of other manifestations of man's
creative genius, are frequently thought of by those who use their productivity almost as
badly as Shakespeare thought of the lawyers.

The problem in allowing or fostering an easy-mark mentality is that even those
members of the development community who have contributed to sound growth
management are being required to shoulder an inordinate share of the burden to provide
benefits enjoyed by all. The have/have not mindset, mixed with a sort of minimally
acceptable socialism in a free society, must be kept in cheek by the tests laid down in
First English, Nollan and the impact fee eases requiring a rational nexus. The distinction
between a "tax to be paid by all, and a "fee", to be paid by a distinct segment of our
fellow taxpayers, must be maintained if there is to be any true balance of competing
interests and fundamental fairness in the overall system of who pays. Justice Holmes'
admonitions in 1922 are more important today than ever. Expediency and requiring that
the Constitution be properly construed are mutually exclusive.

Property rights should not be sacrificed on an altar of governmental expediency or
lack of political fortitude. In Florida, instead of increasing the sales tax on goods or
mandating increased ad valorem taxes, the 1987 Legislature imposed a sales tax (the rate
itself was left at 5 percent) on services for the first time. For example, development
related services including construction contracts and architectural fees are now
taxable. The selecting or excluding of those services targeted to bear the additional
burden is, in the opinion of many, inconsistent with an equitable "fair share" approach to
paying for growth. Whether "payment" for growth is via linkage in Boston, the use of Mr.
Nollan's beach property in California or an impact fee in Tampa, a property right is
involved. Although it may be politically palatable to raise revenue in such a manner, it
appears to be symptomatic of government's easy mark approach.

It is fitting that during the Bicentennial of the most enduring Constitution in the
world, we are observing a return to government judicially forced to be more circumspect
in equitably imposing the burden to pay for the infrastructure needed and used by all.
Short cuts, particularly those that avoid the requirements of the United States
Constitution, will not be tolerated any more in 1987 than Justice Holmes warned against
in 1922. Local and state governments have an obligation to raise revenue to provide for
the needs of their constituents. They just need to do so with a clearer view of the just
compensation, equal protection and due process clauses.




Mr. Taub is the managing partner of Taub & Williams, P.A., Tampa, Florida. He is a
member of the American College of Real Estate Lawyers and past chairman of the Real
Property Litigation Committee of the ABA's Real Property, Probate and Trust Law
Section.



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