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REGULATORY TAKINGS: PAST, PRESENT, AND FUTURE

2002 Minnesota Association of City Attorneys Educational Conference and Annual Meeting. REGULATORY TAKINGS: PAST, PRESENT, AND FUTURE. Timothy J. Dowling Chief Counsel Community Rights Counsel. Community Rights Counsel. Nonprofit public interest law firm

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REGULATORY TAKINGS: PAST, PRESENT, AND FUTURE

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  1. 2002 Minnesota Association of City AttorneysEducational Conference and Annual Meeting REGULATORY TAKINGS:PAST, PRESENT, AND FUTURE Timothy J. Dowling Chief Counsel Community Rights Counsel

  2. Community Rights Counsel • Nonprofit public interest law firm • Assists towns and other local governments in defending land use controls and other community protections • Emphasis on takings cases • Close working relationship with the International Municipal Lawyers Association

  3. Community Rights Counsel Cases • Mamaroneck, NY open space protections • Lake Tahoe planning moratoria • Washington, DC historic preservation laws • Anchorage, AK fair housing laws • San Francisco Tenant Protections • Riverside, CA fire safety protections • Pennsylvania & Ohio bans on harmful coal mining • Rhode Island wetland protections • Las Vegas Airport Safety Protections

  4. TAKINGS LITIGATION HANDBOOK: Defending Takings Challenges to Land Use Regulations To order the Takings Litigation Handbook, contact American Legal Publishing at 1-800-445-5588 or www.amlegal.com.

  5. Takings Litigation Handbook: Defending Takings Challenges to Land Use Regulations • The first ever “soup to nuts” Handbook for defending land use regulations from takings challenges. • Explains the procedural and substantive defenses that should enable the local government to prevail in takings cases. • Offers advice for the development of a proper record, obtaining insurance coverage and filing preliminary motions.

  6. Bad News for Local Governments • Many takings lawsuits • Expensive and time-consuming to defend • Many landowner victories in the U.S. Supreme Court

  7. Good News for Local Governments • Delete sample documenticons and replace with working document icons as follows: • From Insert Menu, select Object... • Click “Create from File” • Locate File name in “File” box • Make sure “Display as Icon” is checked • Click OK • Select icon • From Slide Show Menu, Select “Action Settings” • Click “Object Action” and select “Edit” • Click OK • Local governments win the vast majority of takings cases • Landowner wins in U.S. Supreme Court are narrow • Very strong arguments against an expansive interpretation of the Takings Clause

  8. Today’s Topics • Five Themes for Litigating Takings Cases • Three Categories of Takings Claims • Ten Cutting-Edge Issues • RLUIPA • Palazzolo v. Rhode Island • Tahoe Moratorium Case

  9. Five Themes for Litigating Regulatory Takings Cases 1. Narrow Text and Original Meaning 2. Judicial Respect for our Federal System 3. Judicial Deference to the Policymaking Branches 4. Avoiding Unduly Harsh Fiscal Impacts 5. The Government as Guardian of Property Rights and Property Values

  10. THE TAKINGS CLAUSE “Nor shall private property be taken for public use, without just compensation.” Minnesota Rule for Gov’t Enterprise Function McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) (airport zoning: taking based on substantial and measurable decline in market value)

  11. Three Categories ofInverse Condemnation Claims • Delete sample documenticons and replace with working document icons as follows: • From Insert Menu, select Object... • Click “Create from File” • Locate File name in “File” box • Make sure “Display as Icon” is checked • Click OK • Select icon • From Slide Show Menu, Select “Action Settings” • Click “Object Action” and select “Edit” • Click OK 1. Physical Occupation Cases 2. Pure Regulatory Takings Cases 3. Dedications and Exactions

  12. Loretto v. Teleprompter Manhattan CATV Corp. (1981)

  13. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) • A government-compelled permanent physical occupation of private property is a per se taking • Per se rule is “very narrow” • A continuous right of access is permanent, even if the actual invasion is intermittent

  14. Lucas v. South Carolina Coastal Council(1992)

  15. Lucas v. South Carolina Coastal Council,505 U.S. 1003 (1992) • Regulation that denies all economically viable use of land is a per se taking • Avoid per se liability if regulation is justified by “background principles of law”

  16. Penn Central Transportation Company v. New York City (1978)

  17. Penn Central Transp. Co. v. New York City,438 U.S. 104 (1978) • Multifactor Test: • Character of the government action • Economic impact • Reasonable, investment-backed expectations

  18. Nollan v. California Coastal Commission (1987)

  19. Nollan v. California Coastal Commission (1987)

  20. Nollan v. California Coastal Commission, 483 U.S. 825 (1987) • Compelled dedication must bear a “logical nexus” to the problem or concern posed by the proposed development. • The Nollan dedication failed because enhanced beach-side access is not logically related to the loss of the view from the highway.

  21. Dolan v. City of Tigard (1994)Picture #1

  22. Dolan v. City of Tigard (1994)Picture #2

  23. Dolan v. City of Tigard, 512 U.S. 374 (1994) • Dedication requirement must be “roughly proportional” to the harm anticipated from the proposed development • Precise mathematical calculation is not required • Must make some effort to quantify findings to support the dedication • Kottschade v. City of Rochester, 537 N.W. 2d 301 (Minn. Ct. App. 1995)

  24. Under Dolan, local governments must be prepared to demonstrated that: 1. The proposed development exacerbates or creates the need for a public service; 2. The dedication demanded will benefit the proposed development or help address the need; and 3. The dedication demanded is “roughly proportional” to the harm.

  25. Top Ten Issues for Local Governments to Win in Regulatory Takings Cases Procedural Issues 1. Takings cases against local governments generally must be filed in state court. Williamson County Reg’l Planning Comm’n v. Hamilton Bank (U.S. 1985). Issue preclusion prevents re-litigation of the same issues in federal court.

  26. Compensation Ripeness: • Carpenter Outdoor Advertising, Co. v. City of Fenton, 251 F.3d 686 (8th Cir. 2001) • Kottschade v. City of Rochester, Civil No. 01-898 ADM/AJB (D. Minn. Jan. 22, 2002) Finality Ripeness: • Wheeler v. City of Wayzata, 533 N.W. 2d 405 (Minn. 1995) • Hunkins v. city of Minneapolis, 508 N.W. 2d 542 (Minn. Ctr. App. 1994)

  27. Top Ten Continued... Procedural Issues 2. There is no right in state court to have a jury decide the question of liability.

  28. Top Ten Continued... Defining the Lucas Box 3. A per se taking under Lucas occurs only where land is rendered valueless. 4. Reasonable planning moratoria and permit delays are not Lucas takings. • Woodbury Place Partners v. City of Woodbury, 492 N.W. 2d 258 (Minn. Ct. App. 1993) • Nuisance Abatement: Zeman v. City of Minneapolis, 552 N.W. 2d 548 (Minn. 1996); City of Minneapolis v. Fisher, 504 N.W. 2d 520 (Minn. Ct. App. 1993) • Statutes and regulations may act as “background principles” that defeat takings claims. • Palazzolo v. Rhode Island • Outdoor Graphics, Inc. v. City of Burlington, 103 F.3d 690 (8th Cir. 1996) (billboard ordinance)

  29. Top Ten Continued... Winning Under Penn Central 6. Clear rules define the “parcel as a whole” for takings analysis and prevent segmentation into affected and non-affected portions. • The finding of a taking under Penn Central requires a very dramatic (greater than 90 percent) diminution in value. • Animas Valley Sand & Gravel, Inc. v. Board of County Comm'rs, 2001 WL 1598634, No. 00SC151 (Colo. Dec. 17, 2001) (a taking under Penn Central occurs only where regulation leaves a landowner with "slightly greater than de minimis" value) 8. There is no generalized means-end theory of takings liability. The question of whether a land-use law advances a legitimate state interest is a due process inquiry.

  30. Top Ten Continued... Properly Limiting the Nollan and Dolan Tests 9. The essential nexus/rough proportionality test of Dolan/Nollan applies only to required dedications, not impact fees and other development conditions. 10. The essential nexus/rough proportionality test ofDolan/Nollan does not apply to so-called “unsuccessful exactions.” • Goss v. City of Little Rock, 151 F. 3d 861 (8th Cir. 1998)

  31. Religious Land Use and Institutionalized Persons Act • Originally passed as the Religious Freedom Restoration Act (RFRA) of 1993. • City of Boerne v. Flores, 521 U.S. 507 (1997) struck down RFRA for exceeding Congress’s enforcement powers under the Fourteenth Amendment. • RLUIPA passed in 2000 to reinstate strict scrutiny for government actions that burden exercise of religion.

  32. RLUIPA (cont.) • General Rule: “No government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person” unless it “is in furtherance of a compelling governmental interest” in the “least restrictive means” possible. • Rooted in Congress’s Spending power and the Commerce Clause • Shifts Burden of Proof to Government

  33. RLUIPA Case Law • Constitutionality upheld in Mayweathers v. Terhune, 2001 WL 804140 (E.D. Cal. 2001) • Relaxed exhaustion and ripeness requirements in Murphy v. Zoning Comm’n for the Town of New Milford, 148 F. Supp.2d 173 (D. Conn. 2001). • Fear of arrest was precisely the type of chilling effect on religious practices Congress intended to trigger RLUIPA. Murphy v. Zoning Comm’n.

  34. RLUIPA Case Law (cont.) Substantial Burden Further Defined: • Aesthetic harm of 150-ft. pole on golf course adjacent to church was not a substantial burden on congregation’s religious exercise. Omnipoint Communications v. City of White Plains, 202 F.R.D. 402 (S.D. N.Y. 2001). • National Park Service’s ban on selling t-shirts on National Mall in Washington, DC was not substantial burden on vocation to spread the gospel. Henderson v. Kennedy, 265 F.3d 1072 (D.C. Cir. 2001). • Importance of Religious Practice also a factor. Henderson v. Kennedy.

  35. RLUIPA’s Affect on Zoning • Chicago changed zoning laws to avoid RLUIPA liability. C.L.U.B. v. City of Chicago, 157 F. Supp.2d 903 (N.D. Ill 2001). • Churches sued under RLUIPA’s discrimination provision because clubs and recreation centers were uses of right in certain areas where churches were not. • Chicago required special use permits of other “church-like uses” and suit failed.

  36. Palazzolo Coastal Wetlands

  37. Palazzolo Coastal Wetlands

  38. Palazzolo Coastal Wetlands

  39. Palazzolo v. Rhode Island121 S. Ct. 2448 (June 28, 2001) • 5-4 win for landowner • “Movement” case handled by Pacific Legal Foundation in the Supreme Court • Mush – raises more questions than it answers

  40. Palazzolo: Six Opinions Justice Kennedy (Majority) -- joined by Chief Justice Rehnquist and Justices O’Connor, Scalia, and Thomas Justice O’Connor (Concurrence) Justice Scalia (Concurrence) Justice Stevens (Dissent) Justice Ginsberg (Dissent) Justice Breyer (Dissent)

  41. Four Factual Wrinkles in Palazzolo 1. The Nature of the Takings Claim: Subdivision vs. Beach Club Proposal? 2. The Number of Houses that May be Built: One or Several? 3. Palazzolo’s Acquisition Date: 1978 or 1959? 4. The Trial Court’s Nuisance Finding

  42. Summary of Palazzolo Rulings • Case is ripe • Claim is not barred simply because Palazzolo acquired the land after the rules were issued • No per se take under Lucas because the landretained significant value

  43. The Palazzolo Ripeness Ruling • Reaffirms basic ripeness rule: court must know the extent of permitted development • “[A] landowner may not establish a taking before a land-use authority has the opportunity, using its own reasonable procedures, to decide and explain the reach of a challenged regulation.” • State law may impose additional ripeness rules -- beyond federal ripeness rules -- to control damage awards based on hypothetical uses.

  44. The Palazzolo “Notice Rule” Ruling • Post-enactment acquisition is not an absolute bar to a takings challenge to a statute or regulation • Fairness concerns • “Background principles” include statutes and rulesderived from a State’s legal tradition

  45. Palazzolo: Expectations Analysis • Pre-existing statutes and rules are still relevant to the Penn Central test • O’Connor concurrence plus four dissenters • No other Justice joined Scalia’s view to the contrary

  46. Palazzolo: The Lucas Per Se Rule Issue • $200,000 in value (6.4% of claimed value) defeats a Lucas per se claim; a 93.6% value loss is not enough to trigger the Lucas per se rule • “Token interest” does not defeat a Lucas claim • Palazzolo describes Lucas test both in terms of “use” and “value”

  47. Palazzolo: Concluding Observations 1. Both sides claim victory 2. The Court may have muddled the parcel-as-a -whole rule 3. No discussion of the value of wetlands 4. More charged rhetoric from Justice Scalia 5. More rhetorical flourish from the Court in favor of takings claimants

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