The Parcel as a Whole: A Presumptive Structural Approach for Determining When the Government Has Gone Too Far

"The DENOMINATOR is the number which shows into how many parts a thing has been divided .... The NUMERATOR is the number which shows how many parts, expressed by the denominator, are taken."1 I. INTRODUCTION In 1968, the owners of the Grand Central Terminal in New York City submitted a proposal to build a high-rise over their existing property.2 The City of New York, under a historic preservation regulation, refused to let the property owners continue with construction because of fears that the plan would destroy the historic architecture of the building. As a result, the building owners brought an inverse condemnation suit.3 In determining how to analyze the significance of the city's regulation on the owners' property, the Supreme Court stated that "[i]n deciding whether a particular governmental action has effected a taking, this Court focuses . . . [on] the parcel as a whole."4 In the past thirty years, this statement, requiring courts to focus on the "parcel as a whole," has developed into what courts and commentators have termed the "denominator problem."5 The Court's takings jurisprudence attempts to determine whether a government regulation results in a taking by looking at its effect on the "parcel as a whole," but, it might be unclear "into how many parts [the] thing has been divided."6 Should a court consider the effect of the regulation compared to all of the owner's property, all neighboring properties, all properties used for a similar use, or only the property affected by the regulation? If the court only looks to the portion of the property affected by the regulation, the effect on the parcel as a whole will be quite large. If the court looks to all of the owner's property in aggregate, then the effect on the parcel as a whole might be quite small. In short, the more inclusive the definition of the "parcel" denominator, the smaller the impact on the entire parcel, and the less likely a property owner will be able to succeed on a takings claim; conversely, the more restrictive the definition of the "parcel" denominator, the more likely a property owner will be able to receive compensation for government action that affects the value of the property. The aim of this Comment is to analyze the approaches to the relevant parcel problem and determine the best test for addressing the issue under the current legal regime. The discussion in this piece will focus on horizontal divisions of property-the horizontal parcel as a whole; i.e., the metes and bounds division of property into discrete lots as opposed to divisions of three-dimensional or abstract property rights such as air rights, subsurface rights, temporal rights, water rights, etc. This piece is not a criticism of Supreme Court jurisprudence regarding the denominator problem, but is a practical evaluation and recommendation based on existing law. By taking this approach, this Comment hopes to provide courts and practitioners with guidance in choosing a method for approaching the denominator issue. Specifically, this Comment proposes that courts should adopt a test in line with the Massachusetts Supreme Court in Giovanella v. Conservation Commission of Ashland7 with slight modifications. Under this proposed rule, courts would apply a presumption based on contiguous, commonly-owned property; this presumption could only be rebutted by clear and convincing evidence that it upsets the property owner's reasonable expectations, which are approximated by a number of equitable factors. Although this approach is not without its own problems, it best comports with the results of prior Supreme Court precedent and the policies behind the Supreme Court rule, and gives some clarity and predictability for litigants, while providing flexibility to account for unjust circumstances. Part II provides a background regarding the framework of the Supreme Court's regulatory takings jurisprudence and then analyzes what limited guidance the Court has given on how to apply the relevant parcel rule. …