Land Use Law Update

Is that zoning change a taking: Legal and practical responses for plannersAPA Minnesota State Planning ConferenceSt. Cloud, MinnesotaSeptember 30, 2011

Jean Coleman, Attorney/PlannerCR Planning, Inc.jcoleman@crplanning.com

19/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferencePlanners are good guys. Right?We want the best for our communityWe try to balance community goals with private property owners rightsWe write zoning ordinances so the development process isPredictableConsistentFair2011 APA MN Conference9/30/2011Jean Coleman, jcoleman@crplanning.com2So why do we so often get accused of taking peoples property rights?4When you own land, you have rights, but the community also has rights

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Federal Takings ClauseU.S. Constitution Fifth Amendment

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; .nor shall private property be taken for public use, without just compensation. 69/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferenceFederal Takings ClauseU.S. Constitution Fifth Amendment

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; .nor shall private property be taken for public use, without just compensation. 79/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferenceStraight up eminent domainGovernment takes title or an easementPublic use of the propertyRoadwaysTrailsParksPublic buildingsGovernment pays landowner fair market priceNot so straight up eminent domainGovernment takes private land and gives it to another private entity to developPublic benefit is higher tax revenues or a better useKelo v. City of New London, 545 U.S. 469 (2005) Held that New London's economic development plan qualified as a public useNot a takingPost Kelo legislative changesMinnesota Legislature responded by passing Laws of Minnesota 2006, chapter 214"eminent domain may only be used for a public use or public purposeClarifies that "public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health, do not by themselves constitute a public use or public purpose" A Minnesota twistRemoval of nonconforming uses2006 change - Minn. Stat. 117.184. Local government must compensate the owner of a nonconforming use if the local government requires its removal as a condition of granting a permit, license, or other approval for a use, structure, development, or activity. Does not apply if the permit, license, or approval is for construction that cannot be done unless the nonconforming use is removed

But a regulation doesnt take property for a public use? Does it?The case that started it allPennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) State law said you cant mine coal so as to cause a persons home to fall downUSSC case established regulatory takings doctrineHolding - a mere restriction by government on the use of land, in the absence of any physical occupation or appropriation of land, can trigger a Fifth Amendment right to compensation. If a regulation "goes too far" it is a taking

The case that started it allPennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) State law said you cant mine coal so as to cause a persons home to fall downThis USSC case established the regulatory takings doctrineHolding - a mere restriction by government on the use of land, in the absence of any physical occupation or appropriation of land, can trigger a Fifth Amendment right to compensation. If a regulation "goes too far" it is a takingThe easy takings casesWhen the loss of use or loss of value is totalCategorical taking compensation is required when a regulation requires a physical invasion of the property Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)Per se taking - regulation denies the owner of all economically viable use of the property Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)

But what if the loss of use or value is not total?Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978) Grand Central Terminal designated an historic landmarkNYC denied application for 55-story office buildingUSSC denied the takings claimEstablished a balancing test Balance the interest of the state in regulating against the private lossHow do we know if it goes too far?Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978) Applied when there is less than total loss of valueThree part balancing testthe character of the regulation is there a legitimate state interestthe economic impact on the landownerthe extent of interference with investment-backed expectations Does the regulation further a valid public interest?Stop, could be a TakingNOYESDoes the alleged taking affect the entire parcel?Stop, could be a TakingYESNODoes the alleged taking severely reduce the value?YESProbably not a takingNODoes the regulation interfere with reasonable investment backed expectations?Probably not a takingNOStop, could be a TakingYESRule of thumb regulatory takings flow chartCan a moratoria get us in trouble?Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg. Planning Agency, 535 U.S. 302 (2002) USSC held that a temporary regulation that denies all economically viable use of property is not a per se takingSince not per se, then the Court applies the Penn Central factors to determine if the regulation amounts to a compensable takingWe need to be able to do our jobUSSC held that a landowner has the right to a reasonable use over a reasonable period of time, and the mere loss of the present right to use land is not a taking

Moratoria are an essential tool of successful development and a rule that required compensation for any deprivation of all economic use, no matter how brief in time, might lead to hasty decision makingExactions Exaction - a government requirement that a landowner dedicate land or a property interest as a condition for granting a permitDolan - permit to expand a store conditioned on the dedication of a portion of the property for a greenway pedestrian/ bicycle path Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) Nollan - permit to build a larger residence on beachfront property conditioned on dedication of an easement for public to cross a strip of property Nollan v. California Coastal Commn, 483 U.S. 825, 831-832 (1987)

Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) (permit to expand a store and parking lot conditioned on the dedication of a portion of the property for a greenway pedestrian/ bicycle path held a taking); Nollan v. California Coastal Commn, 483 U.S. 825, 831-832 (1987) (permit to build a larger residence on beachfront property conditioned on dedication of an easement for public to cross a strip of property between owners seawall and the mean hide tide mark held a taking); see also Collis v. City of Bloomington, 310 Minn. 5, 246 N.W.2d 19 (1976) (cited in Dolan); Kottshade v. City of Rochester, 357 N.W.2d 301, 307-308 (Minn. App. 1995) (citing Dolan analysis); Minn. Stat. 462.358, subds. 2b and 2c (amended in 2004 to incorporate terms used in Dolan).

2011 APA MN Conference9/30/2011Jean Coleman, jcoleman@crplanning.com22Exactions USSC held an exaction may be a taking unless:There is an essential nexus between a legitimate government interest and the condition exactedAnd there is a rough proportionality between the planned development and the required dedication.No precise mathematical calculation is required, but the city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development. DolanDolan v. City of Tigard, 512 U.S. 374, 391 (1994) (permit to expand a store and parking lot conditioned on the dedication of a portion of the property for a greenway pedestrian/ bicycle path held a taking); Nollan v. California Coastal Commn, 483 U.S. 825, 831-832 (1987) (permit to build a larger residence on beachfront property conditioned on dedication of an easement for public to cross a strip of property between owners seawall and the mean hide tide mark held a taking); see also Collis v. City of Bloomington, 310 Minn. 5, 246 N.W.2d 19 (1976) (cited in Dolan); Kottshade v. City of Rochester, 357 N.W.2d 301, 307-308 (Minn. App. 1995) (citing Dolan analysis); Minn. Stat. 462.358, subds. 2b and 2c (amended in 2004 to incorporate terms used in Dolan).

2011 APA MN Conference9/30/2011Jean Coleman, jcoleman@crplanning.com23Exactions In 2004 Minnesota amended statute to incorporate the essential nexus and rough proportionality terms used in DolanFor municipal park and utility dedicationsMinn. Stat. 462.358, subds. 2b and 2cMinnesota Takings ClauseMinnesota Constitution, Article l, Section 13

Private property shall not be taken, destroyed or damaged for public use without just compensation therefor, first paid or secured.

259/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferenceA Minnesota perspectiveVery few regulatory takings cases reviewed by MN Supreme Court under Minnesota Constitutional takings clauseA regulation that diminishes property value alone does not constitute a takingMinnesotas uses a government enterprise or arbitration testA Minnesota perspectiveIt may be a regulatory taking if the regulation Benefits a government enterprise such as an airportAnd it results in a substantial diminution in valueMcShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980)

It may be a regulatory taking if the regulationArbitrates between competing usesAnd it deprives the property of all reasonable uses Concept Properties, LLP v. City of Minnetrista, 694 N.W.2d 804, 823 (Minn. App. 2005 rev. denied) Concept properties (comprehensive planning objective [is] to balance many public interests and to promote the Citys particular land-use goals and rural values), rev. denied (Minn. July 19, 2005).

2011 APA MN Conference9/30/2011Jean Coleman, jcoleman@crplanning.com27MN Government Enterprise caseDeCook v. Rochester International Airport Joint Zoning Board, 2011 WL 1135459 (Minn. 3/30/2011)Disagreement about whether state or federal takings clause should be applied Disagreement about what test to apply to determine if the regulation resulted in a takingThe Minnesota Supreme Court found that an airport zoning ordinance which diminished the value of nearby property located in a runway safety zone by as much as 6 percent was a compensable regulatory taking, because the regulation benefitted a specific public or governmental purpose and caused the owners to suffer a substantial and measurable decline in the market value of their property.

In 1989, the DeCooks purchased 240 acres of land to the north of the Rochester International Airport for $159,600 and established the Oak Summit Golf Course. At the time, only 19 acres of the DeCooks land were subject to the land-use regulations in the airports Safety Zone A, a fan-shaped approach area extending out from the end of the airports runways. Permitted uses in Safety Zone A at the time included agricultural, commercial and industrial uses of at least 20 acres in size; dwellings, churches, trailer courts, campgrounds and any use that brought more than 10 people to any one acre or more than 50 people to a commercial or industrial site were prohibited. The course itself was not located within airport Safety Zone A at the time.

However, in 2002, the board increased the size of Safety Zone A to include 28 additional acres of the DeCooks land and tightened restrictions on the use of land in the zone. The new regulations prohibited all buildings, temporary structures, exposed transmission lines, or other similar above-ground land use structural hazards, as well as any use which would create, attract, or bring together an assembly of persons thereon. The DeCooks brought suit against the airport zoning board in 2005, alleging that the zoning change substantially diminished their property value and constituted a compensable regulatory taking.

Central to this appeal was a disagreement over which law should apply the takings clause in the U.S. Constitution or the takings clause in the Minnesota Constitutionas well as what precedent to apply. Under the Minnesota Constitution, just compensation is required where private property is taken, destroyed or damaged for public use, rather than simply taken for public use under the U.S. Constitution.Defendants argued the Supreme Courts analysis in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978) was controlling and that the court should apply to the DeCook case only Penn Centrals three balancing factors: the economic impact of the regulation on the claimant; the extent to which the regulation interfered with distinct investment-backed expectations; and the character of the governmental action. While Minnesota has used the Penn Central test in past regulatory takings cases, the court noted it was not the only test and declined to apply that test where a regulatory action would be considered a taking under the Minnesota Constitution, but not under the federal takings clause, because of damage to property value caused by a regulation.

Plaintiffs asserted that McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) was controlling in takings cases arising from airport safety-zone ordinances. In McShane, the court held that when land use regulations, such as airport zoning ordinances, benefit a specific public or governmental purpose, compensation is owed to landowners who suffer a substantial and measurable decline in market value as a result of the regulations. The court agreed with the plaintiffs that the broader takings clause in the Minnesota Constitution, which takes into account damage caused by regulations, and precedent set in McShane should apply to in this case.

At trial, a jury had found the airport zoning regulation decreased the DeCooks property value by $170,000, which amounted to a decline of between 3.5 percent and 6 percent of the total market value, depending on whether the $2.77 million starting value set by the Boards appraiser or the $4.8 million starting value asserted by Mr. DeCook was used. The parties agreed on the amount of diminution in value, but disagreed over whether that amount was substantial enough to satisfy the McShane test. The Minnesota Supreme Court concluded the $170,000 decrease in value was substantial as a matter of law, noting the diminution in value caused by the regulatory change exceeded the original purchase price of the entire 240 acres, and that a compensable regulatory taking under the Minnesota Constitution had occurred. The case was remanded to the district court to enter judgment in favor of the DeCooks.

289/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferenceAirport Zoning240 acre propertyIn 1989 when purchased only 19 acres were subject to airport safety zone A2002, zone A extended and permitted land uses restrictedJury in the trial court found a reduction in value of $170,0003.5-6% of market value

The Minnesota Supreme Court found that an airport zoning ordinance which diminished the value of nearby property located in a runway safety zone by as much as 6 percent was a compensable regulatory taking, because the regulation benefitted a specific public or governmental purpose and caused the owners to suffer a substantial and measurable decline in the market value of their property.In 1989, the DeCooks purchased 240 acres of land to the north of the Rochester International Airport for $159,600 and established the Oak Summit Golf Course. At the time, only 19 acres of the DeCooks land were subject to the land-use regulations in the airports Safety Zone A, a fan-shaped approach area extending out from the end of the airports runways. Permitted uses in Safety Zone A at the time included agricultural, commercial and industrial uses of at least 20 acres in size; dwellings, churches, trailer courts, campgrounds and any use that brought more than 10 people to any one acre or more than 50 people to a commercial or industrial site were prohibited. The course itself was not located within airport Safety Zone A at the time.However, in 2002, the board increased the size of Safety Zone A to include 28 additional acres of the DeCooks land and tightened restrictions on the use of land in the zone. The new regulations prohibited all buildings, temporary structures, exposed transmission lines, or other similar above-ground land use structural hazards, as well as any use which would create, attract, or bring together an assembly of persons thereon. The DeCooks brought suit against the airport zoning board in 2005, alleging that the zoning change substantially diminished their property value and constituted a compensable regulatory taking.Central to this appeal was a disagreement over which law should apply the takings clause in the U.S. Constitution or the takings clause in the Minnesota Constitutionas well as what precedent to apply. Under the Minnesota Constitution, just compensation is required where private property is taken, destroyed or damaged for public use, rather than simply taken for public use under the U.S. Constitution.Defendants argued the Supreme Courts analysis in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978) was controlling and that the court should apply to the DeCook case only Penn Centrals three balancing factors: the economic impact of the regulation on the claimant; the extent to which the regulation interfered with distinct investment-backed expectations; and the character of the governmental action. While Minnesota has used the Penn Central test in past regulatory takings cases, the court noted it was not the only test and declined to apply that test where a regulatory action would be considered a taking under the Minnesota Constitution, but not under the federal takings clause, because of damage to property value caused by a regulation.Plaintiffs asserted that McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) was controlling in takings cases arising from airport safety-zone ordinances. In McShane, the court held that when land use regulations, such as airport zoning ordinances, benefit a specific public or governmental purpose, compensation is owed to landowners who suffer a substantial and measurable decline in market value as a result of the regulations. The court agreed with the plaintiffs that the broader takings clause in the Minnesota Constitution, which takes into account damage caused by regulations, and precedent set in McShane should apply to in this case.At trial, a jury had found the airport zoning regulation decreased the DeCooks property value by $170,000, which amounted to a decline of between 3.5 percent and 6 percent of the total market value, depending on whether the $2.77 million starting value set by the Boards appraiser or the $4.8 million starting value asserted by Mr. DeCook was used. The parties agreed on the amount of diminution in value, but disagreed over whether that amount was substantial enough to satisfy the McShane test. The Minnesota Supreme Court concluded the $170,000 decrease in value was substantial as a matter of law, noting the diminution in value caused by the regulatory change exceeded the original purchase price of the entire 240 acres, and that a compensable regulatory taking under the Minnesota Constitution had occurred. The case was remanded to the district court to enter judgment in favor of the DeCooks.DeCook v. Rochester International Airport Joint Zoning Board, 2011 WL 1135459 (Minn. 3/30/2011)

299/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferenceAirport ZoningThe MN Supreme Court held that the controlling law was that of McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980)Because it arose from an airport safety zone ordinance and airports are government enterprises The broader MN constitutional takings clause governed covers damage caused by regulationHeld that when a land use regulation benefited a specific governmental purpose then compensation is owed if the there is a substantial and measurable decline in market value3.5-6% decline in value was substantial

The Minnesota Supreme Court found that an airport zoning ordinance which diminished the value of nearby property located in a runway safety zone by as much as 6 percent was a compensable regulatory taking, because the regulation benefitted a specific public or governmental purpose and caused the owners to suffer a substantial and measurable decline in the market value of their property.

Central to this appeal was a disagreement over which law should apply the takings clause in the U.S. Constitution or the takings clause in the Minnesota Constitutionas well as what precedent to apply. Under the Minnesota Constitution, just compensation is required where private property is taken, destroyed or damaged for public use, rather than simply taken for public use under the U.S. Constitution.Defendants argued the Supreme Courts analysis in Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978) was controlling and that the court should apply to the DeCook case only Penn Centrals three balancing factors: the economic impact of the regulation on the claimant; the extent to which the regulation interfered with distinct investment-backed expectations; and the character of the governmental action. While Minnesota has used the Penn Central test in past regulatory takings cases, the court noted it was not the only test and declined to apply that test where a regulatory action would be considered a taking under the Minnesota Constitution, but not under the federal takings clause, because of damage to property value caused by a regulation.

Plaintiffs asserted that McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) was controlling in takings cases arising from airport safety-zone ordinances. In McShane, the court held that when land use regulations, such as airport zoning ordinances, benefit a specific public or governmental purpose, compensation is owed to landowners who suffer a substantial and measurable decline in market value as a result of the regulations. The court agreed with the plaintiffs that the broader takings clause in the Minnesota Constitution, which takes into account damage caused by regulations, and precedent set in McShane should apply to in this case.

At trial, a jury had found the airport zoning regulation decreased the DeCooks property value by $170,000, which amounted to a decline of between 3.5 percent and 6 percent of the total market value, depending on whether the $2.77 million starting value set by the Boards appraiser or the $4.8 million starting value asserted by Mr. DeCook was used. The parties agreed on the amount of diminution in value, but disagreed over whether that amount was substantial enough to satisfy the McShane test. The Minnesota Supreme Court concluded the $170,000 decrease in value was substantial as a matter of law, noting the diminution in value caused by the regulatory change exceeded the original purchase price of the entire 240 acres, and that a compensable regulatory taking under the Minnesota Constitution had occurred. The case was remanded to the district court to enter judgment in favor of the DeCooks.DeCook v. Rochester International Airport Joint Zoning Board, 2011 WL 1135459 (Minn. 3/30/2011)

309/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferenceWhat does this mean to me?Very few Minnesota regulatory takings casesDeCook is Being interpreted as a narrowly applying to airport zoning only because it is clearly a government enterpriseLandowners may be emboldened Dont change your perspective on regulatory takings based on this one case319/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN ConferenceI feel a chillSomeone stands up a tells me that I cant stop them from doing what they want on their landWhen accused - RememberFirst, take a deep breathIn general, a regulation that diminishes property value alone does not constitute a takingVery, very, very few regulatory takings cases are successfulWhen accused - RespondNo, it is not a takingThe community can, within reasonable bounds, put limits on how you use your propertyThis is a community decision, it is not me arbitrarily saying you cant do what you want

Map source: www.fda.govU.S. Supreme CourtU.S. Federal Court of Appeals8th Circuit includes MinnesotaSupreme Court of MNMN Court of AppealsDistrict (Trial) CourtsFinal local land use decisionCounty CUP or SubdivisionState Courts-Each state has a court system that exist independently from the federal courts. State court systems have trial courts at the bottom level and appellate courts at the top.

Federal Courts of AppealWhen land use cases are appealed from state supreme courts, they go to a federal court of appeals. Courts of appeals do not use juries or witnesses. No new evidence is submitted in an appealed case; appellate courts base their decisions on a review of lower-court records. Between four and twenty six judges sit on each court of appeals, and each case is usually heard by a panel of three judges. Courts of appeals offer the best hope of reversal for many appellants, since the Supreme Court hears so few cases. Fewer than 1 percent of the cases heard by federal appeals courts are later reviewed by the Supreme Court.

U.S. Supreme CourtEach year, about 4,500 cases are requested for review by the Supreme Court. Less than 200 cases are actually decided by the Court each year. There are three ways for a case to make its way to the US Supreme Court. 1) There are cases in which the US Supreme Court has original jurisdiction (heard there first). Cases in which a state is a party and cases dealing with diplomatic personnel, like ambassadors, are the two examples. 2) Those cases appealed from lower federal courts can be heard at the Supreme Court. Some laws obligate (or force) the Supreme Court to hear them. But most come up for review on the writ of certiorari, a discretionary writ that the court grants or refuses at its own discretion. The writ is granted if four of the justices want it to be heard. 3) The US Supreme Court reviews appeals from state supreme courts that present substantial "federal questions," usually where a constitutional right has been denied in the state courts. In both civil and criminal law, the Supreme Court is the final court of appeal.

State courtMunicipal decisions are controlled by Chapter 426 of the Minnesota Statutes. The decisions of counties are governed by Chapter 394. These statutory provisions provide different rules for the appeal of denials by municipalities and counties.462.361, subd. 1

359/30/2011Jean Coleman, jcoleman@crplanning.com2011 APA MN Conference