Opinion ID: 2393810
Heading Depth: 2
Heading Rank: 1

Heading: regulatory taking claim

Text: The Just Compensation Clause of the Fifth Amendment provides that private property [shall not] be taken for public use, without just compensation. This prohibition has been incorporated through the Fourteenth Amendment to apply to the individual states. Williamson Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 175 n. 1, 105 S.Ct. 3108, 3110-11 n. 1, 87 L.Ed.2d 126 (1985); Chicago, B. & Q.R. Co. v. Chicago, 166 U.S. 226, 241, 17 S.Ct. 581, 586, 41 L.Ed. 979 (1897). Similarly, article I, section 17 of the Texas Constitution provides, in pertinent part, that no person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made.... Takings can be classified as either physical or regulatory takings. Physical takings occur when the government authorizes an unwarranted physical occupation of an individual's property. See Yee v. City of Escondido, 503 U.S. 519, 522, 112 S.Ct. 1522, 1526, 118 L.Ed.2d 153 (1992). The Mayhews do not claim that the Town has physically taken their property. Rather, the Mayhews allege that the denial of their planned development constitutes a regulatory taking. Zoning decisions are vested in the discretion of municipal authorities; courts should not assume the role of a super zoning board. Goss v. City of Little Rock, 90 F.3d 306, 308 (8th Cir.1996); Burns v. City of Des Peres, 534 F.2d 103, 108 (8th Cir.), cert. denied, 429 U.S. 861, 97 S.Ct. 164, 50 L.Ed.2d 139 (1976). However, despite the discretion afforded to municipal authorities, zoning decisions must comply with constitutional limitations. As a general rule, the application of a general zoning law to a particular property constitutes a regulatory taking if the ordinance does not substantially advance legitimate state interests or it denies an owner all economically viable use of his land. Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980). See also Dolan v. City of Tigard, 512 U.S. 374, 385, 114 S.Ct. 2309, 2316-17, 129 L.Ed.2d 304 (1994); Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1016, 112 S.Ct. 2886, 2893-94, 120 L.Ed.2d 798 (1992); Nollan v. California Coastal Comm'n, 483 U.S. 825, 834, 107 S.Ct. 3141, 3147, 97 L.Ed.2d 677 (1987); Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 485, 107 S.Ct. 1232, 1241-42, 94 L.Ed.2d 472 (1987). The Mayhews allege, and the district court found, that the denial of the Mayhews' planned development did not substantially advance legitimate state interests and amounted to a taking because all economically viable use of their property was denied. We first analyze whether the Town's actions substantially advance legitimate governmental interests before determining whether the Town's actions denied the Mayhews all economically viable use of their property.
A property regulation must substantially advance a legitimate governmental interest to pass constitutional muster. See, e.g., Dolan, 512 U.S. at 385, 114 S.Ct. at 2316-17; Nollan, 483 U.S. at 834, 107 S.Ct. at 3147. See also City of College Station, 680 S.W.2d at 805 (property regulation must be substantially related to a legitimate goal); Hunt, 462 S.W.2d at 539 (same); Watkins, 275 S.W.2d at 481 (same); Lombardo, 73 S.W.2d at 485 (same). While it is clear that a zoning ordinance that does not substantially advance a legitimate state interest constitutes a taking, the standards for determining what constitutes a legitimate state interest or what relation between a regulation and the state interest satisfies the substantially advance requirement in a regulatory takings case has not been clarified by the United States Supreme Court. See, e.g., Nollan, 483 U.S. at 834, 107 S.Ct. at 3147. The Supreme Court has, however, indicated that a broad range of governmental purposes and regulations will satisfy these requirements. Id. at 834-35, 107 S.Ct. at 3147-48. Specifically, the Supreme Court has noted that the following state interests are legitimate state interests: protecting residents from the ill effects of urbanization; Agins, 447 U.S. at 261, 100 S.Ct. at 2141-42; enhancing the quality of life; Penn Central Transp. Co. v. New York City, 438 U.S. 104, 129, 98 S.Ct. 2646, 2661-62, 57 L.Ed.2d 631 (1978); and protecting a beach system for recreation, tourism, and public health; Keystone, 480 U.S. at 488, 107 S.Ct. at 1243-44; Esposito v. South Carolina Coastal Council, 939 F.2d 165, 169 (4th Cir.1991), cert. denied, 505 U.S. 1219, 112 S.Ct. 3027, 120 L.Ed.2d 898 (1992). In Agins, the City of Tiburon adopted a zoning ordinance governing development of open space land that limited the plaintiffs to building between one and five single-family residences on the five acres of land which they had previously purchased for residential development. 447 U.S. at 257, 100 S.Ct. at 2139-40. The Court held that protecting the residents of Tiburon from the ill effects of urbanization by precluding the conversion of open-space land to urban uses was a legitimate government purpose. Id. at 261, 100 S.Ct. at 2141-42. Cf. Penn Central Transp. Co., 438 U.S. at 129, 98 S.Ct. at 2661-62 (preservation of desirable aesthetic features); Village of Belle Terre v. Boraas, 416 U.S. 1, 9, 94 S.Ct. 1536, 1541, 39 L.Ed.2d 797 (1974); Berman v. Parker, 348 U.S. 26, 32-33, 75 S.Ct. 98, 102-03, 99 L.Ed. 27 (1954); Village of Euclid v. Ambler Realty Co., 272 U.S. 365, 394-95, 47 S.Ct. 114, 120-21, 71 L.Ed. 303 (1926); see also Christensen v. Yolo County Bd. of Supervisors, 995 F.2d 161, 165 (9th Cir.1993)(preservation of agricultural uses of land a legitimate state interest); Smithfield Concerned Citizens for Fair Zoning v. Town of Smithfield, 907 F.2d 239, 244-45 (1st Cir.1990)(controlling both the rate and character of community growth a legitimate government purpose); Pompa Construction Corp. v. City of Saratoga Springs, 706 F.2d 418, 422 (2d Cir.1983)(discouraging conversion of open-space land to urban uses a legitimate state interest). Such zoning ordinances benefit the public by serving the city's interest in assuring careful and orderly development of residential property with provision for open-space areas. Agins, 447 U.S. at 262, 100 S.Ct. at 2142. The substantial advancement requirement examines the nexus between the effect of the ordinance and the legitimate state interest it is supposed to advance. See Yee v. City of Escondido, 503 U.S. 519, 530, 112 S.Ct. 1522, 1529-30, 118 L.Ed.2d 153 (1992); see also generally Nollan, 483 U.S. at 837, 107 S.Ct. at 3148-49; Esposito, 939 F.2d at 169. This requirement is not, however, equivalent to the rational basis standard applied to due process and equal protection claims. Nollan, 483 U.S. at 834 n. 3, 107 S.Ct. at 3147 n. 3. The standard requires that the ordinance substantially advance the legitimate state interest sought to be achieved rather than merely analyzing whether the government could rationally have decided that the measure achieved a legitimate objective. Id. The Town's denial of the Mayhews' planned development application passes constitutional muster under this standard. In making this determination, we do not review the wisdom of the Town's decision. See Smithfield Concerned Citizens, 907 F.2d at 245. Rather, we are concerned only with whether the decision satisfies constitutional standards. The Mayhews allege that the real reason behind the denial of their development application was to have their property serve as borrowed open space for the residents of the Town who primarily live on less than one-acre lots. In support of this contention, the Mayhews presented evidence negating some of the reasons given by the planning and zoning commission for the denial of their development application. For instance, the Mayhews presented evidence establishing, and the district court found, that sanitary sewer facilities would not be a problem for the Mayhews' planned development because the local sewage plant was operating in full compliance with EPA guidelines and had enough capacity to serve the additional residences contemplated in the Mayhews' planned development. But the Town's planning and zoning commission came forth with a number of separate reasons for the denial of the Mayhews' application, several of which substantially advance legitimate state interests. The Town denied the development application in part because of the impact the development would have on the overall character of the community and the unique character and lifestyle of the Town which is different from that of adjoining municipalities where there is a proliferation of multi-family and single-family homes on small lots. Under the Supreme Court's decision in Agins, concern for such urbanization effects is clearly a legitimate state interest. We also conclude that the denial of the Mayhews' development application substantially advances the Town's legitimate concern for protecting the community from the ill effects of urbanization. The Mayhews requested a planned development with 3,600 units in a Town with a population of only approximately 2,000 residents. Photographs in the record show that the Town is uniquely rural and suburban, with undivided two lane roads, clusters of trees, lakes and ponds, and houses on large lots. This community would change drastically if a large planned development with at least three residences per acre was built. The Mayhews' planned development would result in an estimated population increase of between 10,000 and 15,000 persons, more than quadrupling the population of the Town. Simply put, the Town has a substantial interest in preserving the rate and character of community growth, and its action in denying the Mayhews' planned development furthers those interests.
Our conclusion that the Town's action substantially advances a legitimate state interest does not end the takings inquiry, however. A compensable regulatory taking can also occur when governmental agencies impose restrictions that either (1) deny landowners of all economically viable use of their property, or (2) unreasonably interfere with landowners' rights to use and enjoy their property. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015-19 & n. 8, 112 S.Ct. 2886, 2893-95 & n. 8, 120 L.Ed.2d 798 (1992); see also Taub v. City of Deer Park, 882 S.W.2d 824, 826 (Tex.1994), cert. denied, 513 U.S. 1112, 115 S.Ct. 904, 130 L.Ed.2d 787 (1995); City of Austin v. Teague, 570 S.W.2d 389, 393 (Tex.1978). A restriction denies the landowner all economically viable use of the property or totally destroys the value of the property if the restriction renders the property valueless. See, e.g., Dolan v. City of Tigard, 512 U.S. 374, 385, 114 S.Ct. 2309, 2316-17, 129 L.Ed.2d 304 (1994); Lucas, 505 U.S. at 1015-16, 1020, 112 S.Ct. at 2893-94; Taub, 882 S.W.2d at 826; City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 806 (Tex. 1984); Teague, 570 S.W.2d at 393. Determining whether all economically viable use of a property has been denied entails a relatively simple analysis of whether value remains in the property after the governmental action. In contrast, determining whether the government has unreasonably interfered with a landowner's right to use and enjoy property requires a consideration of two factors: the economic impact of the regulation and the extent to which the regulation interferes with distinct investment-backed expectations. See Lucas, 505 U.S. at 1019 n. 8, 112 S.Ct. at 2895 n. 8; Penn Central, 438 U.S. at 124, 98 S.Ct. at 2659. The first factor, the economic impact of the regulation, merely compares the value that has been taken from the property with the value that remains in the property. Keystone, 480 U.S. at 497, 107 S.Ct. at 1248. The loss of anticipated gains or potential future profits is not usually considered in analyzing this factor. Andrus v. Allard, 444 U.S. 51, 66, 100 S.Ct. 318, 327, 62 L.Ed.2d 210 (1979); see also Moore v. City of Costa Mesa, 886 F.2d 260, 263 (9th Cir.1989), cert. denied, 496 U.S. 906, 110 S.Ct. 2588, 110 L.Ed.2d 269 (1990). The second factor is the investment-backed expectation of the landowner. The existing and permitted uses of the property constitute the primary expectation of the landowner that is affected by regulation. Penn Central, 438 U.S. at 136, 98 S.Ct. at 2665; see also Lucas, 505 U.S. at 1017 n. 7, 112 S.Ct. at 2894 n. 7 (owner's reasonable expectations shaped by uses permitted by state law); Esposito v. South Carolina Coastal Council, 939 F.2d 165, 170 (4th Cir.1991), cert. denied, 505 U.S. 1219, 112 S.Ct. 3027, 120 L.Ed.2d 898 (1992)(the courts have traditionally looked to the existing use of property as a basis for determining the extent of interference with the owner's `primary expectation concerning the use of the parcel.') (quoting Penn Central, 438 U.S. at 136, 98 S.Ct. at 2665). Knowledge of existing zoning is to be considered in determining whether the regulation interferes with investment-backed expectations. See Pompa Construction Corp. v. City of Saratoga Springs, 706 F.2d 418, 424-25 (2d Cir.1983). The Town urges that its rejection of the Mayhews' application did not unconstitutionally deprive them of their property. The Town first contends that the district court found that the Mayhews' property retained a value of at least $2.4 million following the denial of the planned development application; thus, according to the Town, the property's value was not totally destroyed. The Town next urges that the denial of the development request did not unreasonably interfere with the Mayhews' property rights because the Mayhews had no right to have their property up-zoned for a greater density of development. In other words, the Town asserts that the Mayhews had no reasonable investment-backed expectation to lose. The Town also maintains that the Mayhews were not singled out unfairly through the denial of the planned development proposal. Instead, the Town claims that the zoning applied evenly to all property owners in the Town and the Town denied applications other than just the Mayhews' proposal. [4] The Mayhews counter, however, that this is not the typical denial of an up-zoning application. The Mayhews point out that the district court found that the only economically viable use of this property was to construct 3,600 residential units. The district court also found that agriculture was not an economically viable use of the property. Finally, the district court found that, with one-acre zoning, it would take a minimum of 150 years before the Mayhews could completely develop their property. Accordingly, the district court found that no reasonable investor would purchase the Mayhews' property. We first must consider the effect of these fact-findings relied on by the Mayhews. As discussed previously, the ultimate determination of whether the facts are sufficient to constitute a taking is a question of law, but we depend on the district court to resolve disputed facts regarding the extent of the governmental intrusion on the property. Under substantive law, a regulatory taking occurs when governmental regulations deprive the owner of all economically viable use of the property or totally destroy the property's value. Dolan, 512 U.S. at 385, 114 S.Ct. at 2316-17; Lucas, 505 U.S. at 1015-16, 112 S.Ct. at 2893; Taub, 882 S.W.2d at 826. Some courts have made an alternative pronouncement that a taking occurs when the government does not allow any use of the property that is sufficiently desirable to permit the property owner to sell the property. See, e.g., Del Monte Dunes at Monterey, Ltd. v. City of Monterey, 95 F.3d 1422, 1433 (9th Cir.1996), petition for cert. filed, 66 U.S.L.W. 3509 (U.S. Jan. 26, 1998) (No. 97-1235); Park Ave. Tower Assoc. v. City of New York, 746 F.2d 135, 139 (2d Cir.1984), cert. denied, 470 U.S. 1087, 105 S.Ct. 1854, 85 L.Ed.2d 151 (1985). The district court's findings that there was no economically viable use of the property and that no reasonable investor would purchase the property purport to decide the ultimate legal issue of whether a taking has occurred. This, however, involves a question of law, and we therefore owe no deference to the trial court's findings in this regard. We will instead focus on the district court's underlying factual determinations regarding the extent of the governmental intrusion and the diminution in the property's value in determining whether the Town has taken the Mayhews' property without just compensation. The relevant factual findings demonstrate that the Town has not totally destroyed all value of the property by denying the Mayhews' planned development proposal. In Lucas, the Supreme Court clarified that a taking occurs when the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good, that is, to leave his property economically idle. Lucas, 505 U.S. at 1019, 112 S.Ct. at 2895 (emphasis in original). Because the trial court found that Lucas's property was rendered completely and wholly valueless by the regulations at issue, the Supreme Court concluded that a taking had occurred. Id. at 1019-20, 112 S.Ct. at 2895-96. In contrast, the district court in this case determined that, even after the denial of the Mayhews' planned development proposal, the property retained a value of $2.4 million. In such a situation, the governmental regulation has not entirely destroyed the property's value. Even if the governmental regulation has not entirely destroyed the property's value, a taking can occur if the regulation has a severe enough economic impact and the regulation interferes with distinct investment-backed expectations. See Lucas, 505 U.S. at 1019 n. 8, 112 S.Ct. at 2895 n. 8 (takings are to be measured by the economic impact of the regulation on the claimant and ... the extent to which the regulation has interfered with distinct investment-backed expectations); Penn Central, 438 U.S. at 124, 98 S.Ct. at 2659 (same); see also Taub, 882 S.W.2d at 826 (sufficiently severe economic impact can constitute a taking). The reasonable investment-backed expectation of the claimant is critical to this analysis because it distinguishes this concept from those situations in which the landowner's property has been totally destroyed. Because we conclude that the Mayhews had no reasonable investment-backed expectation to build 3,600 units on their property, we hold that the Town has not unreasonably interfered with their right to use and enjoy their property by denying their planned development proposal. When the Mayhews first began purchasing their property, the Town did not have a zoning ordinance in place. It is undisputed that the Mayhews originally purchased their property for ranching, not for development. They then used their property for ranching for nearly four decades. Historical uses of the property are critically important when determining the reasonable investment-backed expectation of the landowner. See Esposito, 939 F.2d at 170 (the courts have traditionally looked to the existing use of property as a basis for determining the extent of interference with the owner's `primary expectation concerning the use of the parcel.')(quoting Penn Central, 438 U.S. at 136, 98 S.Ct. at 2665). After four decades of ranching their property in a Town with a population of no more than 2,000 people, the Mayhews did not have a reasonable investment-backed expectation that they could pursue an intensive development of 3,600 units that would more than quadruple the Town's population. The Mayhews' subsequent purchases of property in 1985 and 1986 were for purposes of development. However, at this time, the Town's zoning ordinances had restricted development to one unit per acre for the preceding twelve years. The existing zoning of the property at the time it was acquired is to be considered in determining whether the regulation interferes with investment-backed expectations. See Pompa Construction Corp., 706 F.2d at 424-25. We do not believe that the Mayhews had a reasonable investment-backed expectation to build 3,600 units on their 1,200 acres when the Town's zoning ordinances had for twelve years limited development to one unit per acre. Accordingly, we render judgment against the Mayhews on their regulatory takings claims. The Town's denial of the planned development substantially advanced legitimate state interests and did not totally destroy the value of the Mayhews' property or unreasonably interfere with their rights to use and enjoy their property.