Court Opinion

ID: 9384917
Source: CourtListenerOpinion
Date Created: 2023-04-05 15:07:04.185103+00
Date Added: 2024-06-11T17:17:57.594774
License: Public Domain

THE STATE OF SOUTH CAROLINA
                         In The Supreme Court

            Braden's Folly, LLC, Respondent,

            v.

            City of Folly Beach, Appellant.

            Appellate Case No. 2022-000020

                       Appeal from Charleston County
                    Roger M. Young Sr., Circuit Court Judge

                            Opinion No. 28148
                 Heard November 15, 2022 – Filed April 5, 2023

                       REVERSED AND REMANDED

            Danny Calvert Crowe, of Crowe LaFave, LLC, of
            Columbia; and Joseph C. Wilson IV, of Joseph C. Wilson
            Law Firm LLC, of Folly Beach, both for Appellant.

            Keith M. Babcock, Ariail Elizabeth King, and Joseph B.
            Berry, all of Lewis Babcock LLP, of Columbia, for
            Respondent.

JUSTICE KITTREDGE: Respondent Braden's Folly, LLC owns two small,
contiguous, developed coastal properties on the northeast end of Folly Beach. The
City of Folly Beach amended an ordinance to require certain contiguous properties
under common ownership—like those owned by Braden's Folly—to be merged
into a single, larger property. The ordinance did not impact the existing uses of
Braden's Folly's contiguous lots. Nevertheless, Braden's Folly challenged the
merger ordinance, claiming it had planned to sell one of the developed properties,
and that the merger ordinance interfered with its investment-backed expectation
under the Penn Central test. See generally Penn Cent. Transp. Co. v. City of N.Y.,
438 U.S. 104, 124 (1978) (stating in regulatory takings cases, courts must examine
the economic impact of the regulation on the property owner's investment-backed
expectations, as well as the character of the government action). Folly Beach
denied the claim of an unconstitutional regulatory taking. Pursuant to cross-
motions for summary judgment, the circuit court agreed with Braden's Folly,
finding the merger ordinance effected an as-applied taking of Braden's Folly's
beachfront property. Folly Beach appeals from the grant of summary judgment in
favor of Braden's Folly. We reverse.

Underlying our application of the Penn Central factors is the distinct fragility of
Folly Beach's coastline, which is subject to such extreme erosion that the General
Assembly exempted Folly Beach from parts of the South Carolina Beachfront
Management Act.1 This exemption gave the city the authority to act in the State's
stead in protecting the beach there. As we will describe more fully below, one of
Braden's Folly's properties is contributing to worsening erosion rates on Folly
Beach and, along with similarly situated properties, is threatening the existence of
the entire beach in that area of the state.
Turning to the Penn Central test, we hold two of the three factors—the economic
impact of the merger ordinance on Braden's Folly and the character of the
governmental action—weigh in favor of finding the merger ordinance did not
amount to a taking of Braden's Folly's properties. We find the remaining factor—
the extent to which the merger ordinance interfered with Braden's Folly
investment-backed expectations—does not weigh in favor of either party.
Accordingly, we hold Braden's Folly has not suffered a taking under the Penn
Central test. We therefore reverse and remand to the circuit court for entry of
judgment in favor of Folly Beach.

                                         I.

1
    S.C. Code Ann. §§ 48-39-250 to -360 (2008 & Supp. 2022).
                                          A.

In the 1890s, the United States Army Corps of Engineers (ACOE) constructed
jetties in Charleston's harbor in order to protect the oceanic shipping channels.
Following construction of the jetties, the sand migration in the area was disrupted,
and the erosion rate in Folly Beach increased exponentially as sand left the area
and was not replaced.2

In response to the high rate of yearly erosion, Folly Beach began engaging in
periodic beach renourishment, in which millions of cubic yards of sand would be
brought to the area to build the beach vertically upwards by five feet or more.
Each renourishment project was funded largely (85%) by the federal
government—specifically, the ACOE—in recognition of the fact that the federal
government caused much of the erosion by constructing the Charleston jetties. 3

2
  After the jetties were built, Folly Beach's yearly rate of erosion increased to nine
feet per year. In comparison, other coastal areas in the state experience less than
two feet of erosion per year. Chester W. Jackson Jr., Mapping Coastal Erosion
Hazards Along Sheltered Coastlines in South Carolina 1849 to 2015, Dep't of
Health & Env't Control vi (2017), https://scdhec.gov/sites/default/files/docs/
HomeAndEnvironment/Docs/Jackson_SCShorelineReport122017.pdf.
3
    As one witness for Folly Beach explained:
        Section 111 of the 1968 River and Harbor Act[, 33 U.S.C. § 426i
        (2018),] provides authority for the [ACOE] to develop and construct
        projects for prevention or mitigation of damages caused by Federal
        navigation work, such as jetties. In 1987, Folly[ Beach]'s Section 111
        study determined that approximately 57[%] of the erosion of Folly
        Beach was due to the construction and continued operation of the
        Charleston Harbor Federal navigation project. As a result of this
        determination, the cost sharing percentages were adjusted from the
        standard 65% federal and 35% local to 85[%] federal and 15[%] non-
        federal (City of Folly Beach).
(Footnote omitted.)
Nonetheless, the ACOE refused to renourish privately owned property. Therefore,
in the early 1990s, Folly Beach secured perpetual easements from all of the
oceanfront property owners. In granting the easements, the property owners
permanently gave up their right to build oceanward of the perpetual easement line
running through their properties.
Around that same time, in recognition of the quickly changing beachfront, the
General Assembly exempted Folly Beach from part of the requirements of the
South Carolina Beachfront Management Act. See S.C. Code Ann. § 48-39-290(E).
Folly Beach's unique treatment under the Beachfront Management Act extends to
three notable areas. First, the South Carolina Department of Health and
Environmental Control (DHEC) is typically tasked with redrawing the baseline4
every seven to ten years based on updated erosion rates. See S.C. Code Ann.
§ 48-39-285. However, in Folly Beach, the baseline was set in 1993 and is not
subject to change regardless of any erosion or accretion, no matter how extreme.
Second, the State typically strictly regulates any development in the beach area
between the baseline and the setback line. 5 However, there is no setback line
established in Folly Beach, so the city has the sole discretion to allow all types of
development right up to the baseline with no oversight from the State. Finally, in a
similar vein, the Beachfront Management Act prohibits oceanfront property
owners from building new erosion control structures—or from repairing existing
structures damaged greater than 50%—if the structures are located seaward of the

4
  The baseline is an invisible jurisdictional line typically drawn along the crests of
the oceanfront sand dunes, and it serves as the starting point for determining the
other jurisdictional line—the setback line—under the Beachfront Management Act.
See S.C. Code Ann. § 48-39-280.
5
  The setback line "must be established landward of the baseline a distance which
is forty times the average annual erosion rate or not less than twenty feet from the
baseline . . . ." S.C. Code Ann. § 48-39-280(B); see also Jackson, supra note 2
(stating the average annual erosion rate for beaches in South Carolina is 1.8 feet
per year); S.C. Code Ann. § 48-39-290(B) (setting forth a number of restrictions on
development in the area between the baseline and setback line).
setback line.6 However, because Folly Beach does not have a setback requirement,
oceanfront property owners may build new seawalls or repair existing seawalls all
the way up to the baseline, so long as the plans are approved by the city.
                                          B.

A portion of the northeast end of Folly Beach has a double row of properties. The
"A lots" are directly adjacent to the ocean-side of East Ashley Avenue, and the "B
lots"—also known as "super-beachfront" lots—are closest to the ocean. There is
no road between the A and B lots, so the B lots are accessible only through the A
lots.

Historically, an individual or entity would own an A lot and the contiguous B lot
and would transfer the lots to a new owner simultaneously. The B lots—all of
which were undeveloped until some twenty years ago—were frequently submerged
or, at best, on active beach. Therefore, the B lots typically had little to no
independent value7 and served no purpose other than to provide beach access to the
A lots directly adjacent to them.
However, beginning in the mid- to late-1990s, following Folly Beach's first round
of beach renourishment, some of the B lots were elevated enough to make
development possible. As a result, over the next decade and with Folly Beach's
approval, seventeen of the thirty-seven super-beachfront lot owners developed
single-family residences on their B lots. Nonetheless, the perpetual easement line
runs through the B lots, preventing many B-lot owners from developing their
properties and leaving the owners who did develop super-beachfront houses little
buildable area to do so. 8

6
    See S.C. Code Ann. § 48-39-290(B)(2).
7
 The B lots were often worth less than $500, and many of the owners voluntarily
abandoned their B lot in tax sales. In fact, the only reason the B lots even exist is
because in the 1950s, another road was platted and paved in front of the B lots,
parallel to East Ashley Avenue. That road has long since been destroyed by the
eroding beach and is now permanently lost.
8
    Accordingly, most of the new super-beachfront houses touched the edge of the
Due to the high rate of erosion in Folly Beach, the newly renourished B lots were
quickly reclaimed by the sea. In response, many of the owners who developed
their B lot also built seawalls in front of their super-beachfront houses.9
Unfortunately, the seawalls did not stop the beach erosion and, instead,
exacerbated the erosion problem for neighboring properties with undeveloped B
lots and no seawalls. The sand attrition on the neighboring properties turned into
areas the ACOE dubbed "blue blobs"—giant depressions that held rain and
seawater and spanned the length of multiple properties, even reaching into A lots
in some places. Because these blue blob areas were located on private property,
they were not repaired by the ACOE or the periodic beach renourishment, nor were
the costs to repair the blue blob areas paid for by the federal government. Rather,
the repair of the erosion on lots neighboring the super-beachfront properties was
required to be paid for entirely by the City of Folly Beach or the owners of the
damaged lots. In other words, innocent property owners who had chosen not to
develop their B lots had to pay for the damage caused by the seawalls of their
neighbors' super-beachfront properties.

                                        C.

Each round of beach renourishment in Folly Beach was projected to last for around
eight years. However, as the number of super-beachfront houses and associated
seawalls increased, so too did the frequency and cost of beach renourishment. As
is relevant to this case, the last four rounds of renourishment occurred in 2005,
2007, 2014, and 2018, and the next one is already scheduled for 2024—none of

buildable area on the B lots, with little to no space between the houses and the
perpetual easement line. In fact, between beach renourishments, the super-
beachfront houses were not infrequently surrounded by the ocean on three sides.
Because the ACOE places the renourishment sand all the way up to the perpetual
easement line, the vertical rebuilding of the beach occurs within mere feet of the
backdoors to these super-beachfront houses.
9
  A few of the super-beachfront houses do not have a seawall. Folly Beach and
DHEC often take those unprotected super-beachfront houses "out of service" for
renters due to safety concerns, usually related to the failure or overflow of the
home's unprotected septic system onto active beach. However, even super-
beachfront homes with seawalls are occasionally taken out of service for similar
reasons, including Braden's Folly's B lot.
which are eight years apart. As a result, the ACOE threatened to cut off federal
funding for the renourishment projects unless Folly Beach stopped allowing super-
beachfront lots to be developed and attempted to unwind the existing super-
beachfront development. Given the importance of the beach to the local economy,
and its inability to pay for the renourishment projects on its own, Folly Beach
agreed to do so.

The city took multiple steps to reverse super-beachfront development. For
example, it created a Dune Management Area (DMA), which prohibits
development within forty feet of the perpetual easement line. The DMA affects all
of the B lots. In consequence, the DMA prohibits new development on the B lots
and—should any existing super-beachfront houses be more than 50% damaged in a
storm or otherwise—prevents repair of the existing structures on the B lots.
Likewise, in April 2019, Folly Beach amended its Code of Ordinances. Notable to
this appeal, Folly Beach amended its existing merger ordinance to provide that
adjacent lots under common ownership may no longer be sold or developed as
separate lots if (1) either lot is undersized 10 and (2) one or both lots touch the
baseline. 11 The zoning ordinances allow nonconforming uses to continue on

10
  Folly Beach's zoning ordinances set the minimum lot size at 10,500 square feet,
but a grandfather clause relaxes this restriction for substandard lots that preexisted
adoption of the ordinances. Therefore, a number of nonconforming small lots exist
in Folly Beach, particularly along the ocean. As we discuss further below, the two
lots at issue in this case are both less than 10,500 square feet and, thus, are
nonconforming with Folly Beach's zoning ordinances.
11
     Specifically, the newly amended merger ordinance stated, in relevant part:
         (B) Combination of lots. If two or more lots of record . . . are in single
         ownership on or after March 1, 2019, . . . and if all or part of one or
         more of these lots do not comply with the lot area standards [requiring
         lots to be a minimum of 10,500 square feet in size] . . . ; and if one or
         both of these lots are adjacent to . . . [the] Baseline, the lots involved
         shall be considered to be an individual lot for the purposes of this
         [zoning ordinance], and no portion of these lots shall be used or sold
         which do not comply with the lot area standards, nor shall any
         division of the lots be made that leaves remaining any lot that fails to
properties affected by the merger ordinance. Likewise, the zoning ordinances
prohibit the rebuilding of a nonconforming structure that is damaged or destroyed
by more than 50% of its market value. 12 Thus, if an affected property owner had
developed both his A and B lots, and those lots were merged by the amended
ordinance, he could continue to use or rent both houses on the merged lot even
though the area is zoned single-family residential. This nonconforming use could
continue until one of the houses was destroyed beyond 50% of its pre-damaged
market value. However, upon a 50% or more destruction of one of the houses, the
zoning ordinances would prevent the rebuilding of the damaged structure, instead
allowing the existence of only one house on the single, merged lot.13

         comply with the lot area standards.
Folly Beach, S.C., Code of Ordinances § 168.04-01 (2022). The prior version of
the merger ordinance did not apply unless both commonly owned, undersized lots
touched the baseline.
12
     In particular, the reconstruction ordinance provides, in relevant part:

         (A) More than 50% of pre-damaged market value. In the event a
         nonconforming structure is damaged or destroyed, by any means, to
         the extent of 50% [or more] of its market value prior to such
         destruction, such structure shall not be restored unless in conformance
         with the standards for the zoning district in which it is located . . . .
         (B) Less than 50% of pre-damaged market value. . . . [If] a
         nonconforming structure . . . is damaged or destroyed, by any means,
         to an extent of less than 50% of its market value prior to such damage
         or destruction, it may be restored to its pre-damaged state provided
         reconstruction is initiated within 24 months and provided the
         reconstruction complies with all other city ordinances as well as all
         state and federal laws and does not create any new nonconformities.

Folly Beach, S.C., Code of Ordinances § 168.03-05 (2022).
13
  In tandem with its creation of the DMA and amendment of the merger
ordinance, Folly Beach began more aggressively applying the avulsion doctrine.
See Severance v. Patterson, 370 S.W.3d 705, 722 (Tex. 2012) ("Courts generally
With this background in mind, we now turn to the particular facts of this case.

                                          II.
                                          A.

Braden's Folly owns adjacent lots (Lot A and Lot B) on East Ashley Avenue. Both
Lots are very small: Lot A is 8,377 square feet, and Lot B is 3,808 square feet. 14
Pursuant to Folly Beach's local zoning ordinances, all lots must be at least 10,500
square feet. Because Lots A and B preexisted Folly Beach's zoning ordinances,
their sizes were grandfathered in upon passage of the zoning laws but are
nonetheless classified as nonconforming.

When Braden's Folly acquired the Lots in 1999, there was a small house on Lot A,
and Lot B was undeveloped because it was either underwater or part of the active
beach. Following a beach renourishment in 2005, Lot B became developable
because it had been transformed into mostly sandy beach. Therefore, between
2006 and 2007, Braden's Folly received building permits from Folly Beach and

adhere to the principle that a riparian or littoral owner acquires or loses title to the
land gradually or imperceptibly added to or taken away from their banks or shores
through erosion, the wearing away of land, and accretion, the enlargement of the
land. . . . Avulsion, by contrast, as derived from English common law, is the
sudden and perceptible change in land and is said not to divest an owner of title."
(cleaned up)). As a result, Folly Beach filed suit against any B-lot owner who was
attempting to develop his property in the near future. In particular, Folly Beach
sought to prohibit B-lot owners from building on the portions of their lots that
resulted from avulsion (i.e., the beach renourishment) because that land was part of
the active beach and, thus, was owned by the State and protected by the public trust
doctrine. The circuit court granted the property owners' motion to dismiss the
lawsuit in May 2020. Folly Beach's appeal of that decision is pending in the court
of appeals at this time.
14
  To be more precise, Lot B is approximately the same size as Lot A. However,
taking the perpetual easement line into account, the buildable area on Lot B is only
3,808 square feet.
constructed two single-family residences—a larger, more modern one on Lot A
and a smaller one on Lot B—for a total cost of $1.1 million.15

According to Braden's Folly, it had always intended to keep one of the Lots and
sell the other—whichever of Lot A or B received the highest offer—in order to pay
for the construction costs of the two houses. However, construction on the Lots
finished in 2007 during the housing market collapse and Great Recession, which
made selling either of the Lots financially unfeasible at that time. Nonetheless,
even after the housing market recovered, Braden's Folly did not place the Lots on
the market, continuing to use them for family vacations and as rental properties
that grossed an average of $117,000 per year combined. It was not until February
2018 that Braden's Folly finally put the houses on the market, listing Lot A for $1.3
million and Lot B for $1.2 million.
One year later, upon the amendment of Folly Beach's merger ordinance in April
2019, Lots A and B were legally combined or "merged" into a single lot. In May
2019, Folly Beach sent a letter to Braden's Folly requesting it stop marketing the
Lots separately and advising it to inform any prospective purchasers of the merger
ordinance. Braden's Folly did not respond, continuing to list the Lots separately
with no indicia either Lot was impacted by the merger ordinance.
Eventually, in August 2019, Braden's Folly received its first offer: a $1.1 million
offer to purchase Lot A. Braden's Folly did not accept the offer, and the
prospective purchasers declined to pursue the property further after learning of the
existence of the merger ordinance and its impact on Lot A. Braden's Folly's realtor
thereafter advised Braden's Folly to "[u]se this [offer] contract to go after the city.
You might get your money and not have to sell" either Lot.

15
  Lot A did not have independent access to the beach except for through Lot B.
Likewise, Lot B did not have independent access to a road or room for a septic
system. One had to cross Lot A to access Lot B. As a result, while the homes
were being constructed, Braden's Folly granted itself a series of purported
easements across the Lots to provide beach access for Lot A and road access and
septic lines for Lot B. We discuss the efficacy of these easements in section IV.D
of the opinion.
Four months later, not having received a single other offer, Braden's Folly filed suit
against Folly Beach, claiming its inability to sell was due to the existence of the
merger ordinance. According to Braden's Folly, the merger ordinance had upset its
reasonable, investment-backed expectation under the Penn Central test and
amounted to an unconstitutional taking.
Subsequently, in October 2020, Braden's Folly received a second offer to purchase
Lot A for $1.2 million but instructed its realtor to decline the offer as it was
"unable to accept due to the City's [merger] ordinance." Upon learning of the
second offer, Folly Beach informed Braden's Folly it objected "in the strongest
terms to the continued marketing of these properties separately during the
pendency of this lawsuit." Braden's Folly again ignored the city's correspondence.
Rather, despite receiving only two offers in nearly two-and-a-half years, Braden's
Folly inexplicably raised the listing price for Lot B to $1.25 million.
In December 2020, Braden's Folly received a third offer, this time to purchase Lot
B for $1.2 million. When Braden's Folly informed the prospective purchaser
(Christopher Bonner) of the merger ordinance and pending litigation, Bonner
stated he did not care whether the properties were merged and "would still like to
get the [Lots] under contract." Therefore, on January 4, 2021, Bonner offered $2.2
million for Lots A and B together. The offer did not have an expiration date, but
Braden's Folly did not respond, later claiming it had no intention of selling during
litigation or "below market value."
Having received no response, one week later, on January 11, 2021, Bonner
unilaterally raised his offer to $2.55 million for Lots A and B—full asking price.
Again, Braden's Folly did not respond to the offer. That same day, the listing for
Lot A was removed from the internet. Three days later, the listing for Lot B
naturally expired and was removed from the internet.

For the next two weeks, Bonner repeatedly attempted to get a response from
Braden's Folly, reiterating his $2.55 million offer on numerous occasions.
Meanwhile, an unrelated property went on the market just down the street from
Lots A and B, and Bonner purchased that lot instead.
On January 28, 2021, after Bonner had acquired the other nearby lot, Braden's
Folly reached out to Bonner, purportedly attempting to accept Bonner's $2.55
million offer for both Lots. However, Bonner replied that he had purchased
another property nearby and no longer had as high a motivation to purchase Lots A
and B. Because Bonner now intended Lots A and B to be purely investment
properties, rather than ones he would live on with his family, he lowered his offer
for Lots A and B to $2 million. Braden's Folly countered, stating it would accept
$2.6 million (i.e., higher than Bonner's initial offer when he was a more motivated
buyer). Bonner declined to purchase the Lots at that price. Because the Lots have
remained off the market since January 2021, Braden's Folly has not received any
further offers to purchase Lots A and B, whether merged or separate.
                                        B.

In the interim, the pending takings lawsuit progressed, and Braden's Folly and
Folly Beach filed cross-motions for summary judgment. The circuit court
ultimately granted summary judgment to Braden's Folly, finding the merger
ordinance constituted an as-applied taking because it unreasonably interfered with
Braden's Folly's investment-backed expectation to sell the Lots separately. The
circuit court held a property owner's reasonable investment-backed expectations
are defined at the time the investment is made, and Braden's Folly intended to sell
one of the Lots when it constructed the houses in 2006 and 2007. Likewise, the
circuit court found the merger ordinance had an impermissibly detrimental
economic impact on the value of the Lots, citing an alleged $508,000 market value
loss calculated by an appraiser hired by Braden's Folly during litigation. Lastly,
the circuit court found the character of the merger ordinance was akin to a classic
taking, explaining that, while merging "undeveloped or partially developed
properties may not amount to a regulatory taking, . . . forcing two single-family
residential houses to be merged into one property amounts to a taking." 16 The
circuit court therefore concluded that "all" of the Penn Central factors weighed in

16
  While the amended ordinance merged a number of lots, in many cases, one or
both of the lots merged was undeveloped. Moreover, some of the developed B lots
are owned by a different entity than the A lots. Because those adjacent A and B
lots are not contiguous and owned by the same entity, the merger ordinance does
not apply to them. There are only five developed B lots owned by the same entity
as the A lots, so aside from Braden's Folly, there are only four other property
owners for whom the merger ordinance merged two developed lots. None of those
property owners sued Folly Beach over the merger ordinance.
favor of Braden's Folly, and that the merger ordinance as-applied to the Lots
amounted to a regulatory taking.

Folly Beach directly appealed to this Court pursuant to Rule 203(d)(1)(A)(ii),
SCACR (stating the notice of appeal should be directly filed with the clerk of this
Court if the appeal involves a constitutional challenge to a municipal ordinance).
                                        III.

In reviewing the grant of summary judgment, this Court applies the same standard
as the circuit court. Byrd v. City of Hartsville, 365 S.C. 650, 656, 620 S.E.2d 76,
79 (2005). Summary judgment is appropriate "if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law." Rule 56(c), SCRCP. The Court
must view the evidence and all reasonable inferences taken from it in the light
most favorable to the non-moving party. Osborne v. Adams, 346 S.C. 4, 7, 550
S.E.2d 319, 321 (2001).

The question of whether a taking has occurred is a question of law that this Court
reviews de novo. Dunes W. Golf Club, L.L.C. v. Town of Mt. Pleasant, 401 S.C.
280, 314, 737 S.E.2d 601, 619 (2013) (first citing Carolina Chloride, Inc. v.
Richland Cnty., 394 S.C. 154, 171, 714 S.E.2d 869, 877 (2011); and then citing Ex
parte Brown, 393 S.C. 214, 224, 711 S.E.2d 899, 904 (2011)).
                                        IV.
The Takings Clause of the Fifth Amendment to the United States Constitution
provides that private property shall not "be taken for public use, without just
compensation." U.S. Const. amend. V; see Chi., Burlington & Quincy R.R. v. City
of Chi., 166 U.S. 226, 239 (1897) (making the Takings Clause applicable to the
States via the Due Process Clause of the Fourteenth Amendment). 17 "As its text
17
  The South Carolina Constitution has a similar Takings Clause. See S.C. Const.
art. I, § 13. The takings analysis under the South Carolina Constitution is identical
to the analysis under federal law. Byrd, 365 S.C. at 656 n.6, 620 S.E.2d at 79 n.6.
Because neither party raises the Takings Clause in the South Carolina Constitution,
we do not discuss it further.
makes plain, the Takings Clause does not prohibit the taking of private property,
but instead places a condition on the exercise of that power," namely, the payment
of just compensation to the affected property owner. Lingle v. Chevron U.S.A.
Inc., 544 U.S. 528, 536 (2005) (quoting First Eng. Evangelical Lutheran Church of
Glendale v. Cnty. of L.A., 482 U.S. 304, 314 (1987)) (internal quotation marks
omitted).
"The paradigmatic taking requiring just compensation is a direct government
appropriation or physical invasion of private property." Id. at 537. However,
beginning with its decision in Pennsylvania Coal v. Mahon, 260 U.S. 393 (1922),
the United States Supreme Court recognized that "government regulation of private
property may, in some instances, be so onerous that its effect is tantamount to a
direct appropriation or ouster—and that such 'regulatory takings' may be
compensable under the Fifth Amendment." Lingle, 544 U.S. at 538; see also Byrd,
365 S.C. at 656, 620 S.E.2d at 79 ("An inverse condemnation may result from the
government's physical appropriation of private property, or it may result from
government-imposed limitations on the use of private property.").
The question of what constitutes a regulatory taking for purposes of requiring just
compensation has proven considerably difficult for courts to answer. Penn Cent.,
438 U.S. at 123. In Mahon's "storied but cryptic formulation, 'while property may
be regulated to a certain extent, if [the] regulation goes too far it will be recognized
as a taking.'" Lingle, 544 U.S. at 538 (quoting Mahon, 260 U.S. at 415). "The rub,
of course, has been—and remains—how to discern how far is 'too far.'" Id.; see
also Murr v. Wisconsin, 137 S. Ct. 1933, 1942 (2017) (recognizing that a
regulation "can be so burdensome as to become a taking, yet the Mahon Court did
not formulate more detailed guidance for determining when this limit is reached");
Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001) ("Since Mahon, we have
given some, but not too specific, guidance to courts confronted with deciding
whether a particular government action goes too far and effects a regulatory
taking.").

In answering that question, the Supreme Court, "quite simply, has been unable to
develop any 'set formula.'" Penn Cent., 438 U.S. at 124; Ark. Game & Fish
Comm'n v. United States, 568 U.S. 23, 31 (2012) (recognizing there is "no magic
formula"). Nonetheless, it has articulated two overarching principles that should
guide all takings decisions. First, a court's analysis must be "informed by the
purpose of the Takings Clause, which is to prevent the 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.'" Palazzolo, 533 U.S. at 617–18 (quoting
Armstrong v. United States, 364 U.S. 40, 49 (1960)); Andrus v. Allard, 444 U.S.
51, 65 (1979) ("The Takings Clause, therefore, preserves governmental power to
regulate, subject only to the dictates of justice and fairness." (citation omitted)
(internal quotation marks omitted)). Second,

      government regulation—by definition—involves the adjustment of
      rights for the public good. Often this adjustment curtails some
      potential for the use or economic exploitation of private property. To
      require compensation in all such circumstances would effectively
      compel the government to regulate by purchase. "Government hardly
      could go on if to some extent values incident to property could not be
      diminished without paying for every such change in the general law."
Andrus, 444 U.S. at 65 (quoting Mahon, 260 U.S. at 413).
Applying those principles, the Supreme Court has carved out two relatively narrow
categories of regulatory takings that always require compensation, neither of which
is implicated here. 18 Other than those narrow categories, however, regulatory
takings challenges are generally governed by the balancing test set forth in Penn
Central. Lingle, 544 U.S. at 538; Palazzolo, 533 U.S. at 617. That test requires
consideration of three factors: "(1) the economic impact of the regulation on the
claimant; (2) the extent to which the regulation has interfered with distinct
investment-backed expectations; and (3) the character of the governmental action."
Murr, 137 S. Ct. at 1943; Penn Cent., 438 U.S. at 124; see also Palazzolo, 533
U.S. at 633 (O'Connor, J., concurring) (characterizing the Penn Central test as the
polestar for regulatory takings). The Supreme Court has described the Penn
Central test as an "essentially ad hoc, factual inquir[y]" amounting to a "complex
factual assessment[] of the purposes and economic effects of government action[]"
that "depends largely upon the particular circumstances in that case." Tahoe-Sierra
18
  See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)
(holding a government regulation that requires a property owner suffer a
permanent physical invasion of his property, however minor, will require just
compensation); Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) (finding a
regulation that completely deprives a property owner of all economically beneficial
use of his property amounts to a compensable taking).
Pres. Council, Inc. v. Tahoe Reg'l Plan. Agency, 535 U.S. 302, 323, 326 (2002)
(internal alteration and quotation marks omitted) (first quoting Penn Cent., 438
U.S. at 124; then quoting Yee v. Escondido, 503 U.S. 519, 523 (1992); and then
quoting Penn Cent., 438 U.S. at 124).

It bears repeating that, because Penn Central is a balancing test, "[t]here is no
abstract or fixed point at which judicial intervention under the Takings Clause
becomes appropriate. . . . Resolution of each case . . . ultimately calls as much for
the exercise of judgment as for the application of logic." Andrus, 444 U.S. at 65;
see also Murr, 137 S. Ct. at 1943 ("A central dynamic of the Court's regulatory
takings jurisprudence, then, is its flexibility. This has been and remains a means to
reconcile two competing objectives central to regulatory takings doctrine. One is
the individual's right to retain the interests and exercise the freedoms at the core of
private property ownership. . . . The other persisting interest is the government's
well-established power to adjust rights for the public good. . . . In all instances, the
analysis must be driven by the purpose of the Takings Clause, which is to prevent
the 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." (cleaned up)).

                                          A.

"Before determining whether a taking has occurred, a court must first determine
what, precisely, is the property at issue." Dunes W. Golf Club, 401 S.C. at 305,
737 S.E.2d at 614. "The definition of the relevant parcel profoundly influences the
outcome of a takings analysis." Dist. Intown Props. v. Dist. of Columbia, 198 F.3d
874, 880 (D.C. Cir. 1999). Because a takings analysis requires a court to compare
the value that has been taken from the property with the value remaining in the
property, one of the most critical steps is determining how to define the unit of
property whose value supplies the denominator of the takings fraction. Keystone
Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 497 (1987); Palazzolo, 533
U.S. at 631 (describing the determination of the denominator in the takings fraction
as a "difficult, persisting question"). In essence, the question is whether a court
must consider a regulation's impact on only part of the property or on the whole
parcel. Dunes W. Golf Club, 401 S.C. at 306, 737 S.E.2d at 615.

In the past, the Supreme Court oftentimes—but not always—found the
denominator in the takings fraction amounted to the entire property, and not merely
the part "taken" or interfered with by the government regulation. See, e.g., Penn
Cent., 438 U.S. at 130–31 ("'Taking' jurisprudence does not divide a single parcel
into discrete segments and attempt to determine whether rights in a particular
segment have been entirely abrogated. In deciding whether a particular
governmental action has effected a taking, this Court focuses . . . [on] the parcel as
a whole . . . ."); Tahoe-Sierra Pres. Council, 535 U.S. at 331 ("Of course, defining
the property interest taken in terms of the very regulation being challenged is
circular."). More recently, in Murr v. Wisconsin the United States Supreme Court
set forth a new, more nuanced multifactor test to define the relevant parcel. 137 S.
Ct. at 1945–46 (applying the new test to two contiguous properties affected by a
merger ordinance).

"First, courts should give substantial weight to the treatment of the land, in
particular how it is bounded or divided, under state and local law." Id. at 1945.
Second, courts should consider the physical characteristics of the property,
including "the surrounding human and ecological environment." Id. As to this
second factor, it may be particularly relevant whether "the property is located in an
area that is subject to, or likely to become subject to, environmental or other
regulation." Id. at 1945–46 (citing Lucas, 505 U.S. at 1035 (Kennedy, J.,
concurring) ("Coastal property may present such unique concerns for a fragile land
system that the State can go further in regulating its development and use than the
common law of nuisance might otherwise permit.")). Third and finally,
      courts should assess the value of the property under the challenged
      regulation, with special attention to the effect of burdened land on the
      value of other holdings. Though a use restriction may decrease the
      market value of the property, the effect may be tempered if the
      regulated land adds value to the remaining property, such as by
      increasing privacy, expanding recreational space, or preserving
      surrounding natural beauty. . . . [I]f the landowner's other property is
      adjacent to the small lot, the market value of the properties may well
      increase if their combination enables the expansion of a structure, or if
      development restraints for one part of the parcel protect the
      unobstructed skyline views of another part. That, in turn, may counsel
      in favor of treatment as a single parcel and may reveal the weakness
      of a regulatory takings challenge to the law.

Murr, 137 S. Ct. at 1946; see also Dunes W. Golf Club, 401 S.C. at 309 n.17, 737
S.E.2d at 616 n.17 (explaining the "extent of contiguous commonly-owned
property gives rise to a rebuttable presumption defining the relevant parcel," and
stating the court may consider "various factors including whether the property is
divided by a road; whether the property was acquired at the same time; whether the
purchase and financing of parcels were linked; the timing of development; whether
the land is put to the same use or different uses; whether the owner intended to or
actually did use the property as one economic unit; and the treatment of the
property under state law") (quoting Giovanella v. Conserv. Comm'n of Ashland,
857 N.E.2d 451, 457–58 (Mass. 2006))).
Here, we find the Murr factors weigh in favor of identifying the relevant parcel as
Lots A and B combined. See Quinn v. Bd. of Cnty. Comm'rs, 862 F.3d 433, 441
(4th Cir. 2017) ("The multifactor standard established by the Supreme Court's
decision in Murr suggests that the lots subject to merger should be viewed as a
collective.").
As to the first Murr factor (the treatment of the land), Lots A and B are currently
merged under state and local law, and there are no physical or topographical
boundaries that would limit joint treatment or development of the Lots. See Quinn,
862 F.3d at 441; Dunes W. Golf Club, 401 S.C. at 309 n.17, 737 S.E.2d at 616 n.17
(citing Giovanella, 857 N.E.2d at 457–58). In fact, the Lots have always been
owned and sold as a single unit and were even redeveloped by Braden's Folly at the
same time. See Dunes W. Golf Club, 401 S.C. at 309 n.17, 737 S.E.2d at 616 n.17
(citing Giovanella, 857 N.E.2d at 457–58). Likewise, due to both the zoning
ordinances and the DMA, Braden's Folly is prohibited from selling the Lots
separately or from building separate homes on each should one of the existing
homes be more than 50% destroyed. See Murr, 137 S. Ct. at 1948.

Furthermore, with respect to the second Murr factor (the property's physical
characteristics), the Lots are located on the beach, a quintessential example of an
area that is heavily regulated and likely to become subject to additional
environmental regulations. See Lucas, 505 U.S. at 1035 (Kennedy, J., concurring).
Finally, turning to the third Murr factor (the value of the property), "the
prospective value that Lot [A] brings to Lot [B] supports considering the two as
one parcel for purposes of determining if there is a regulatory taking." Murr, 137
S. Ct. at 1948. As it currently stands, and regardless of the impact of the merger
ordinance, Lot B is restricted by Folly Beach's DMA. As a result, should the house
on Lot B be destroyed by 50% or more, the DMA would prevent any
redevelopment on that lot. The merger of Lots A and B would allow the property
owner to maintain a beach house on at least one of the lots—Lot A—while
simultaneously enjoying the unparalleled beach access of Lot B. Moreover, any
economic impact resulting from the merger ordinance "is mitigated by the benefits
of using the property as an integrated whole, allowing increased privacy and
recreational space, plus the optimal location of any improvements." Id. Allowing
only one house to be built on the two combined lots could increase the market
value of the Lots as well because it would allow for the expansion of the existing
Lot A house, and it ensures unobstructed ocean views for that single, larger house
(rather than Lot A having little to no ocean view due to the existence of the home
on Lot B). Id. at 1946.
As a result, we hold the appropriate denominator in the takings fraction, and the
appropriate parcel to compare any economic impact resulting from the merger
ordinance, is the entirety of Lots A and B combined.

                                         B.
Equally important to defining the relevant parcel, we recognize that the unique
legal landscape surrounding beach management regulation in Folly Beach must
underlie our analysis of the Penn Central factors and inform our determination of
what is "just and fair" in this situation. As discussed above, the extreme erosion in
Folly Beach has caused it to receive unparalleled discretion to promulgate its own
beachfront management regulations, including those dealing with setback
requirements and erosion control barriers. The legal exemptions Folly Beach is
afforded by the state's Beachfront Management Act create an unusual situation that
leaves a locality—rather than the state or federal government—as the primary
entity in charge of establishing policies to protect the beach and public trust,
including prohibiting beachfront development. Of course, the same locality also
has competing interests, such as fostering local beachfront development, drawing
in tourism via rental properties, and increasing the local tax base.

It is clear Folly Beach weighed those competing interests differently in the past.
Two decades ago, Folly Beach prioritized growth and development. Now,
however, it appears Folly Beach believes that allowing development of the super-
beachfront lots causes a nuisance to nearby property owners, whose lots are eroded
even more than the nine-feet-per-year average due to the seawalls in front of the
neighboring super-beachfront properties. Moreover, in recent years, Folly Beach
has pursued policies reflecting its view that super-beachfront development risks the
livelihood of the entire community via the potential destruction of the beach (if
there is no renourishment) or levying a significant, unpopular tax assessment on
locals (if forced to pay for the renourishment itself).

Given the uniqueness of letting a locality control its own beach management, we
find some discretion must be allowed to the locality to review and unwind
decisions that it later realizes were unwise. Cf. Esposito v. S.C. Coastal Council,
939 F.2d 165, 169 (4th Cir. 1991) (explaining that establishing a policy of
withdrawal from building seaward of a setback line in an effort to address
beachfront erosion is a decision "in which . . . legislatures who deal with the
situation from a practical standpoint[] are better qualified than the courts to
determine the necessity, character[,] and degree of regulation which these new and
perplexing conditions require" (internal alteration and quotation marks omitted)
(quoting Gorieb v. Fox, 274 U.S. 603, 608 (1927))); Lucas, 505 U.S. at 1035
(Kennedy, J., concurring) (noting that coastal property in particular presents unique
concerns for a fragile land system, and that those unique concerns may allow the
regulating authority to "go further in regulating [beach properties'] development
and use than the common law of nuisance might otherwise permit"). Borrowing
from Justice Kennedy's sound rationale, the unique concerns facing the beach and
coastline at Folly Beach may allow the city to "go further" in regulating super-
beachfront development than the law might otherwise permit.
Of equal importance, the merger ordinance is only one of several tools Folly Beach
has employed to push back super-beachfront development. In particular, the
creation of the DMA must impact our analysis, as—wholly separate from the
merger ordinance—development is now prohibited in Folly Beach within forty feet
of the perpetual easement line. Thus, regardless of our decision on the
constitutionality of the merger ordinance, Braden's Folly cannot redevelop Lot B in
the event it is ever destroyed more than 50% of its current value because Lot B is
located almost entirely within the DMA. The DMA is but one example of Folly
Beach's attempts to ensure the continuing availability of federal funding to rebuild
the beach.
The benefits resulting from periodic beach renourishment not only impact the
public as a whole, but Braden's Folly in particular. According to the ACOE, absent
the ongoing beach renourishment projects, the erosion in Folly Beach would have
swept away not only the entirety of the B lots by now, but also the entirety of the A
lots on East Ashley Avenue as well.19 If federal funding is lost due to super-
beachfront development, and Folly Beach is unable to secure enough local funds to
itself pay for the renourishment projects, all of the houses on the northeast end of
Folly Beach—including both of Braden's Folly's Lots—will be underwater in the
next two to three decades.
Keeping Folly Beach's unique legal landscape in mind, we turn to the Penn Central
test.
                                        C.

The first Penn Central factor is the economic impact of the merger ordinance on
Braden's Folly.

The United States Supreme Court has uniformly rejected the proposition that a
diminution in property value, standing alone, can establish a taking. Penn Cent.,
438 U.S. at 131; Andrus, 444 U.S. at 66; Dunes W. Golf Club, 401 S.C. at 317–18,
737 S.E.2d at 621. Rather, the Supreme Court has advised that courts must focus
"on the uses the regulations permit." Penn Cent., 438 U.S. at 131; Dunes W. Golf
Club, 401 S.C. at 317–18, 737 S.E.2d at 621. Likewise, while a comparison of
property values before and after the regulation is relevant, "it is by no means
conclusive." Keystone Bituminous, 480 U.S. at 490 (quoting Goldblatt v.
Hempstead, 369 U.S. 590, 594 (1962)). "The extent of diminution in value is but
one fact for consideration in determining whether governmental action constitutes
a taking." Dunes W. Golf Club, 401 S.C. at 317, 737 S.E.2d at 621 (cleaned up)
(citation omitted).
Here, an appraisal report commissioned by Braden's Folly found that if Lots A and
B were sold separately, they were worth $508,000 more than if they were sold as a

19
  We specifically reference an ACOE map in the record showing that, absent any
of the federally-funded beach renourishments (which started in the 1990s), the
ACOE estimates the location of the mean highwater line would be in the middle of
East Ashley Avenue—a staggering impact on local property owners that would
result from only thirty years of unchecked erosion on Folly Beach. It may be
important to recall that the ACOE does not provide federally-funded beach
renourishment behind the perpetual easement line, thereby imposing all costs to
restore those areas on the city and the property owners.
single, merged lot. Thus, Braden's Folly asserts it has lost the opportunity to obtain
$508,000 in future profits. While we take issue with the appraiser's calculations, 20
we will assume for the purposes of discussion that they are accurate, and the
appraiser correctly calculated the value of the Lots merged together as $2.2
million. Thus, using the takings fraction, Braden's Folly is asserting a 23%
economic impact due to the merger ordinance:

                  Value of
               property taken
                (Numerator)              $508,000
                                  =                       =      23%
                  Value of              $2,200,000
               relevant parcel
               (Denominator)

While not insignificant, a 23% reduction in value is far less than other reductions
in value found constitutional by the Supreme Court. E.g., Vill. of Euclid v. Ambler
Realty Co., 272 U.S. 365 (1926) (75% diminution in value not a taking);
Hadacheck v. Sebastian, 239 U.S. 394 (1915) (87.5% diminution in value not a
taking).
Notably, the Supreme Court has considered a number of takings cases in which a
loss of an opportunity to make future profits was at issue. See, e.g., Andrus, 444
U.S. at 54, 66 (dealing with a prohibition on the sale of certain bird artifacts);
Mahon, 260 U.S. at 412–13, 414–15 (involving a regulation prohibiting the

20
  We find any reliance on the appraiser's report is questionable at best. For
example, although there are also other areas of concern, the values of the Lots
merged and separate were calculated using different methods, making any
comparison between the results akin to comparing apples to oranges. Specifically,
in finding a $508,000 difference between the Lots value if sold separately as
compared to merged into a single property, the appraiser compared the gross
proceeds of the Lots sold separately with the net proceeds of the Lots sold as a
single unit. In comparing net proceeds to net proceeds, the difference in values of
the Lots merged and separate is around $64,000—a negligible diminution in value
of around 3%. See Murr, 137 S. Ct. at 1949 ("The expert appraisal relied upon by
the state courts refutes any claim that the economic impact of the regulation is
severe.").
removal of coal from underground if it would cause subsidence of human
habitations aboveground). In those two cases, the Supreme Court found the key
distinction was whether a regulation physically restricted the property at issue:
Mahon involved a loss of profit opportunity accompanied by a physical restriction
against the removal of the coal, whereas Andrus involved a loss of profit
opportunity that was not accompanied by a physical restriction of the property.
See Andrus, 444 U.S. at 65–66 & n.22 (distinguishing Mahon). As explained by
the Andrus Court,
      The regulations challenged here do not compel the surrender of the
      artifacts, and there is no physical invasion or restraint upon them.
      Rather, a significant restriction has been imposed on one means of
      disposing of the artifacts. But the denial of one traditional property
      right does not always amount to a taking. At least where an owner
      possesses a full "bundle" of property rights, the destruction of one
      "strand" of the bundle is not a taking, because the aggregate must be
      viewed in its entirety. In this case, it is crucial that appellees retain the
      rights to possess and transport their property, and to donate or devise
      the protected birds [and bird artifacts].
      It is, to be sure, undeniable that the regulations here prevent the most
      profitable use of appellees' property. Again, however, that is not
      dispositive. When we review regulation, a reduction in the value of
      property is not necessarily equated with a taking. In the instant case,
      it is not clear that appellees will be unable to derive economic benefit
      from the artifacts; for example, they might exhibit the artifacts for an
      admissions charge. At any rate, loss of future profits—
      unaccompanied by any physical property restriction—provides a
      slender reed upon which to rest a takings claim. Prediction of
      profitability is essentially a matter of reasoned speculation that courts
      are not especially competent to perform. Further, perhaps because of
      its very uncertainty, the interest in anticipated gains has traditionally
      been viewed as less compelling than other property-related interests.

444 U.S. at 65–66 (emphasis added) (internal citations omitted). Here, the merger
ordinance is not accompanied by any physical restriction on the Lots.
Moreover, as Folly Beach has repeatedly conceded, even under the merger
ordinance, Braden's Folly remains able to rent out the houses on the Lots
separately and continue bringing in revenue, with the average gross receipts for the
Lots amounting to approximately $117,000 per year. See Penn Cent., 438 U.S. at
131 (stating courts should focus "on the uses the regulations permit," rather than
what is not permitted); Dunes W. Golf Club, 401 S.C. at 317–18, 737 S.E.2d at 621
(same); cf. Murr, 137 S. Ct. at 1949 ("They can use the property for residential
purposes, including an enhanced, larger residential improvement."); Palazzolo, 533
U.S. at 631 ("A regulation permitting a landowner to build a substantial residence
on an 18-acre parcel does not leave the property 'economically idle.'" (citation
omitted)); Quinn, 862 F.3d at 442 ("Quinn can still build homes on his land; the
[Merger] Provision only requires that the development be less dense than he had
hoped."); Beard v. S.C. Coastal Council, 304 S.C. 205, 208, 403 S.E.2d 620, 622
(1991) (finding a setback provision did not effect a taking in part because the
property owners could still sell the property and utilize the rental units on the
property).

Finally, it is legally significant that, during the pendency of this lawsuit, Bonner—
a buyer who was unquestionably aware of the amended merger ordinance and its
impact on the Lots—offered Braden's Folly its full asking price of $2.55 million
for both Lots. Bonner diligently pursued the sale, emailing and calling Braden's
Folly daily for several weeks but receiving no response to his inquiries or full-
priced offer. Given those facts, it is absurd to suggest the merger ordinance had an
unconstitutionally negative economic impact on the Lots. After all, Braden's Folly
was offered its full asking price for the Lots. It simply chose not to accept that
offer, perhaps due to its realtor's advice to continue marketing the Lots solely to
"go after the city. You might get your money and not have to sell."

For all of these reasons, it is our opinion the economic impact factor weighs
heavily in favor of finding there has been no compensable taking.

                                         D.

We next turn to the second Penn Central factor: the extent to which the merger
ordinance interfered with Braden's Folly's investment-backed expectations.
"In evaluating a regulatory takings claim, the purpose of consider[ing] . . .
investment-backed expectations is to limit recoveries to property owners who can
demonstrate that they [invested in] their property in reliance on a state of affairs
that did not include the challenged regulatory regime." Columbia Venture, L.L.C.
v. Richland Cnty., 413 S.C. 423, 449, 776 S.E.2d 900, 914 (2015) (internal
alteration and quotation marks omitted) (citation omitted). "A reasonable
investment-backed expectation must be more than a unilateral expectation or an
abstract need." Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984) (quoting
Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 161 (1980))
(internal quotation marks omitted); Penn Cent., 438 U.S. at 130 ("[T]he
submission that [a property owner] may establish a 'taking' simply by showing that
they have been denied the ability to exploit a property interest that they heretofore
had believed was available for development is quite simply untenable."). Rather,
courts will evaluate a property owner's reasonable, investment-backed expectations
through an objective lens. Dunes W. Golf Club, 401 S.C. at 320, 737 S.E.2d at
622; Columbia Venture, 413 S.C. at 449, 776 S.E.2d at 914 ("The subjective
expectations of the claimant are irrelevant. The critical question is what a
reasonable owner in the claimant's position should have anticipated." (internal
alteration marks omitted) (quoting Chancellor Manor v. United States, 331 F.3d
891, 904 (Fed. Cir. 2003)) (internal citation omitted)).
For example, courts in the past have looked to a number of objective factors,
including: (1) whether the challenged regulation interferes with the existing use of
the property; 21 (2) the degree to which the property's general locale is subject to

21
  Penn Cent., 438 U.S. at 136 (noting the regulation at issue did not interfere with
the present use of the property: "[The property's] designation as a landmark not
only permits but contemplates that appellants may continue to use the property
precisely as it has been used for the past 65 years . . . . So the law does not
interfere with what must be regarded as Penn Central's primary expectation
concerning the use of the parcel."); Esposito, 939 F.2d at 170 ("[W]e note that 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. We find that the Act permitted the . . . plaintiffs to
continue their existing use of their property and dwellings in the same manner that
they could have used the property prior to its enactment. The plaintiffs, in fact,
have stipulated that 'none of the Plaintiffs . . . have discontinued use of their
property, as it was used before enactment of the subject Statutes.' They continued
to retain the fundamental incidents of ownership, including the right to possess the
regulation; 22 and (3) whether the property owner acquired the land after the
regulation went into effect.23 Likewise, in cases involving merger ordinances,

property, exclude others from it, alienate the property and continue to use it for
residential and recreational purposes; and they were significantly diminished only
in their discretion to rebuild a structure in the speculative event of its virtually
complete destruction." (emphasis added) (cleaned up)); Carolina Chloride, 394
S.C. at 173, 714 S.E.2d at 878 (stating that "continuation of the existing use of the
property is the property owner's primary expectation when considering an owner's
investment-backed expectations for the property" (quoting Byrd, 365 S.C. at 662,
620 S.E.2d at 82) (internal quotation marks omitted)); Dunes W. Golf Club, 401
S.C. at 319, 737 S.E.2d at 622 (finding the fact that the property had always been
used as a golf course necessarily meant the owner's primary expectation was to
continue using the property as a golf course, not to build houses on the land).
22
   Lucas, 505 U.S. at 1035 (Kennedy, J., concurring) (stating coastal property
engenders a greater degree of concern due to the fragile ecosystem, and therefore
the State may be permitted to go further in regulating development and use than in
other types of environments); Murr, 137 S. Ct. at 1948 ("The land's location along
the river is also significant. Petitioners could have anticipated public regulation
might affect their enjoyment of their property, as the Lower St. Croix was a
regulated area under federal, state, and local law long before petitioners possessed
the land."); Columbia Venture, 413 S.C. at 449, 776 S.E.2d at 914 ("In examining
the reasonable expectations prong, the level of industry regulation is a pertinent but
not determinative factor." (quoting Chancellor Manor, 331 F.3d at 906) (internal
quotation marks omitted)); Dunes W. Golf Club, 401 S.C. at 319, 737 S.E.2d at 622
(finding the property owner's expectations were unreasonable in part because they
"did not take into account the wetlands, easements, or substantial changes to the
[property] that would be required" to bring those expectations to fruition); cf.
Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Tr. for S. Cal.,
508 U.S. 602, 645 (1993) ("Those who do business in [a] regulated field cannot
object if the legislative scheme is buttressed by subsequent amendments to achieve
the legislative end.") (citation omitted)).
23
  Palazzolo, 533 U.S. at 633, 634 (O'Connor, J., concurring) ("Further, the
regulatory regime in place at the time the claimant [invests in] the property at issue
helps to shape the reasonableness of those expectations. . . . For example, the
courts may also find objective indicia of a property owner's investment-backed
expectations by examining the sizes and shapes of the properties to be merged. Cf.
Murr, 137 S. Ct. at 1948 (noting it was reasonable to treat two adjacent lots as
merged because they were contiguous along their longest edge, and their narrow
shape and topography made it "reasonable to expect their range of potential uses
might be limited").

Here, there is some objective evidence that Braden's Folly's investment-backed
expectation in developing Lot B was to sell one of its Lots separately from the
other. Braden's Folly invested in its Lots in 2006 and 2007 when it redeveloped
the house on Lot A and built a new super-beachfront house on Lot B.24 At that

nature and extent of permitted development under the regulatory regime vis-à-vis
the development sought by the claimant may also shape legitimate expectations
without vesting any kind of development right in the property owner."); Murr, 137
S. Ct. at 1949 ("Petitioners cannot claim that they reasonably expected to sell or
develop their lots separately given the regulations which predated their acquisition
of both lots."); Columbia Venture, 413 S.C. at 449, 776 S.E.2d at 914 (explaining a
property owner's reasonable investment-backed expectations are defined at the
time he makes the relevant investment in the property, and any regulatory regime
in place at that time informs the scope of those expectations; but also stating that
while "timing and sequence are quite probative and material to [the] analysis, . . .
they are simply not dispositive" (citations omitted)).
24
   There is language in one of our prior cases that could indicate a property owner's
investment-backed expectations are defined only at the time he purchases the
property. See, e.g., Columbia Venture, 413 S.C. at 449, 776 S.E.2d at 914 ("A
property owner's reasonable investment-backed expectations are defined at the
time the property is purchased." (quoting Norman v. United States, 63 Fed. Cl.
231, 267 (2004))). However, that language should not be read out of context: in
that case, the owner's investment in the property was made when he purchased the
property. Here, the relevant investment was made in the property when Braden's
Folly redeveloped the land. In other words, investment-backed expectations are set
at the time the property owner actually invests in the property, for example, at the
time he purchases it or at some other future point in time. However, as we explain
below, the reasonableness of those expectations may be impacted by future events
occurring after the time the investment is made.
time, the merger ordinance did not exist, and property owners along East Ashley
Avenue freely developed and sold their A and B lots independently from one
another. Objectively, it would have been reasonable for Braden's Folly to have
expected to be able to do the same. See Murr, 137 S. Ct. at 1949; Palazzolo, 533
U.S. at 633, 634 (O'Connor, J., concurring); Columbia Venture, 413 S.C. at 449,
776 S.E.2d at 914.25 Additionally, Braden's Folly attempted to set up a
complicated system of easements between Lots A and B to ensure both properties
had road and beach access as well as room for a septic system. There would have
been no reason for Braden's Folly to establish the easements if it did not intend to
sell one of the Lots.

However, there are also a number of objective factors that weigh against finding
Braden's Folly's reasonable, investment-backed expectation was solely to be able
to sell the Lots separately from one another. First, Braden's Folly has used these
Lots for family vacations and as rental properties for several decades. The
"primary expectation" would seemingly be to continue those uses—something with
which the merger ordinance does not interfere. See Penn Cent., 438 U.S. at 136;
Esposito, 939 F.2d at 170; Dunes W. Golf Club, 401 S.C. at 319, 737 S.E.2d at
622; Carolina Chloride, 394 S.C. at 173, 714 S.E.2d at 878.
Second, we find significant Braden's Folly's delay in attempting to sell the Lots
after their redevelopment. As explained above, the housing market collapsed
around the time construction on the Lots was completed, which made selling one
of the Lots financially unfeasible for several years. However, once the market
recovered, Braden's Folly waited many years to put the Lots on the market,
continuing to use them both as family vacation homes and rental properties.
Moreover, even after the houses were placed on the market, Braden's Folly made
little to no effort to actually sell either property. 26 While Braden's Folly may have
25
  Likewise, Folly Beach affirmatively issued building permits for super-beachfront
construction, which could have increased Braden's Folly's expectation that
developing Lot B was reasonable. But cf. Palazzolo, 533 U.S. at 633, 634
(O'Connor, J., concurring) ("[T]he nature and extent of permitted development
under the regulatory regime vis-à-vis the development sought by the claimant may
also shape legitimate expectations without vesting any kind of development right in
the property owner." (emphasis added)).
26
     For example, although the houses were continuously listed for nearly three years
initially intended to sell one of the Lots following construction, that expectation
apparently changed over time. 27

Third, even assuming Braden's Folly's investment-backed expectation remained the
same, the government cannot be held hostage by a property owner's expectations
indefinitely when an owner refuses to implement those expectations. Rather, at
some point, the government must have a right to regulate local properties in a
measured fashion without running afoul of the takings doctrine, even if its
regulation runs contrary to an owner's unspoken and unimplemented investment-
backed expectations. See Columbia Venture, 413 S.C. at 449, 776 S.E.2d at 914
(explaining the property owner's subjective expectations and efforts to implement
those expectations are irrelevant, and courts must instead focus on what a
reasonable, similarly situated property owner should have anticipated (quoting
Chancellor Manor, 331 F.3d at 904)).
This is particularly true when, as here, the government regulation affects properties
in a dynamic, fragile environment. Coastal areas are some of the most heavily
regulated areas in the state due to their inherent vulnerability and volatility.

beginning in February 2018, Braden's Folly received only two offers over the first
two-and-a-half years—one in August 2019, and one in October 2020.
Nonetheless, Braden's Folly never lowered the listing prices for the Lots, instead
raising the listing price for Lot B by $500,000 in December 2020.
27
  At three different places in the record, one of the Braden brothers testified
specifically about the changed expectation regarding the Lots, stating:
     (1) "Eventually, the real estate market rebounded and offers were
         available for us to sell but we decided to continue renting and
         vacationing at the houses instead." (Emphasis added).

     (2) "[I]t was our intention to own one and sell one. When that didn't
         happen, then we went into rental, and that then kind of became sort of
         the combination of usage, where it was personal and rental, and it sort
         of bounced up and down based upon the different ages of [our]
         children and the locations of [our family members]."

     (3) "There was a lot of family resistance [to selling the Lots]."
Nonetheless, at the time Lot B was developed and Braden's Folly initially
formulated its investment-backed expectation, Folly Beach had enacted little to no
regulations protecting the beach from over-development, including setback
requirements or prohibitions on seawalls. In terms of beach regulation, Folly
Beach was an outlier compared to surrounding coastal towns.
Over a decade later, when Braden's Folly half-heartedly attempted to actually
implement its purported investment-backed expectation and placed the Lots on the
market, there had been a number of events that impacted the reasonableness of
Braden's Folly's initial expectation. More specifically, the need for regulation in
Folly Beach's coastal areas had become evident. The frequency of large-scale
beach renourishments steadily increased due to the super-beachfront development,
objectively indicating that development was not sustainable. Of more concern, the
super-beachfront houses and their seawalls created a public nuisance via the blue
blob areas. Once it became apparent that the developed B lots were the source of
these flooded areas, it likewise became objectively unreasonable for Braden's Folly
to expect to own Lot B with no restrictions or regulations impacting its ownership,
including its ability to alienate the property in whatever manner it chose. While it
is true the unreasonableness of Braden's Folly's expectations did not fully manifest
until after it invested in the redevelopment of the Lots, we harken back to Braden's
Folly's inexplicable delay in implementing its investment-backed expectation.
That delay was entirely within Braden's Folly's control. We find it objectively
unreasonable for Braden's Folly to see the creation and worsening of a public
nuisance created by super-beachfront development and not expect the city to
regulate in some fashion to attempt to fix the problem. See Lucas, 505 U.S. at
1035 (Kennedy, J., concurring) ("I agree with the Court that nuisance prevention
accords with the most common expectations of property owners who face
regulation . . . ."); Quinn, 862 F.3d at 442 (holding a merger ordinance did not
constitute an unconstitutional taking even though it interfered with the owner's
investment-backed expectations to develop the affected properties; explaining the
owner could still implement his expectations, just in a less dense manner than he
had initially envisioned).

Fourth, we find the purported creation of easements between Lots A and B does
not weigh heavily in favor of Braden's Folly's investment-backed expectation. As
briefly alluded to in note 15, supra, the easements were created when "Mark
Braden granted himself" the rights to beach access for Lot A and road access and
septic lines for Lot B. (Emphasis added.) However, Braden's Folly could not
create those easements while owning both the dominant and servient estates, so the
easements do not legally exist. Windham v. Riddle, 370 S.C. 415, 419, 635 S.E.2d
558, 560 (Ct. App. 2006) (explaining an easement cannot exist where both the
purported servient and dominant estates are owned by the same person (citing
Haselden v. Schein, 167 S.C. 534, 539, 166 S.E. 634, 635 (1932))), aff'd, 381 S.C.
192, 672 S.E.2d 578 (2009); cf. 12 S.C. Jur. Easements § 32 (Sept. 2022 Update)
("Courts generally have held that upon acquisition of the dominant tenement and
the servient tenement by the same person at the same time, an easement is
extinguished by merger."). Thus, while Braden's Folly argues the attempt to create
the easements showed its investment-backed expectation to separately sell the
Lots, because the easements do not exist, their attempted creation does not impact
this factor of the Penn Central test or cause this factor to weigh in favor of
Braden's Folly.
Fifth and finally, the size, shape, and orientation of the Lots provides objective
indicia that Braden's Folly's expectation to develop and sell Lot B was
unreasonable. Specifically, most of Lot B is subject to the perpetual easement for
renourishment, leaving a very small footprint in which a house could be built, far
below the minimum lot size requirement in Folly Beach's zoning ordinances.
However, Lot B is contiguous with another undersized (albeit slightly larger)
parcel—Lot A—owned by the same entity. Combining the two Lots makes a
single "normal" sized lot that many other property owners living on East Ashley
Avenue have used to develop one single-family home. Thus, the small size of the
Lots provides some objective evidence that Braden's Folly's intent to develop and
sell a separate single-family residence was objectively unreasonable. See Murr,
137 S. Ct. at 1948; see also id. at 1947 ("[L]ot lines are themselves creatures of
state law, which can be overridden by the State in the reasonable exercise of its
power.").
Accordingly, in sum, there are some facts that weigh in favor of finding Braden's
Folly's investment-backed expectation was reasonable and some that weigh in
favor of finding its expectation was unreasonable. We therefore find this factor of
the Penn Central balancing test does not weigh in favor of either party. See
Palazzolo, 533 U.S. at 634, 635 (O'Connor, J., concurring) (explaining that
"[I]nvestment-backed expectations, though important, are not talismanic under
Penn Central"; and counseling against giving investment-backed expectations
"exclusive significance" lest the State wield too much power, or the property
owner "reap windfalls and an important indicium of fairness is lost"); Columbia
Venture, 413 S.C. at 454, 776 S.E.2d at 917 ("[D]eveloping real estate carries with
it certain financial risks, and it is not the government's duty to underwrite this risk
as an extension of obligations under the takings clause." (quoting Taub v. City of
Deer Park, 882 S.W.2d 824, 826 (Tex. 1994))).
                                          E.

Finally, we turn to the third Penn Central factor and analyze the character of the
government action, specifically, whether Folly Beach's merger ordinance is akin to
an eminent domain action.

Regulatory takings cases "aim[] to identify regulatory actions that are functionally
equivalent to the classic taking in which government directly appropriates private
property or ousts the owner from his domain." Lingle, 544 U.S. at 539. A
regulation will be more readily found to amount to an unconstitutional taking if it
causes "private property [to be] pressed into some form of public service under the
guise of mitigating serious public harm." Lucas, 505 U.S. at 1018; Penn Cent.,
438 U.S. at 124. However, if the regulation is merely a "public program adjusting
the benefits and burdens of economic life to promote the common good," the
regulation will pass constitutional muster. Penn Cent., 438 U.S. at 124, 125
(stating that "[z]oning law[s] are, of course, the classic example" of such a public
program). It therefore becomes important for a court to consider "the magnitude or
character of the burden a particular regulation imposes upon private property
rights" as well as "how any regulatory burden is distributed among property
owners." Lingle, 544 U.S. at 542 (emphasis omitted) ("In answering [the takings]
question, we must remain cognizant that 'government regulation—by definition—
involves the adjustment of rights for the public good . . . .'" (quoting Andrus, 444
U.S. at 65)); see also Penn Cent., 438 U.S. at 133 ("Legislation designed to
promote the general welfare commonly burdens some more than others.").
In Murr, the Supreme Court discussed the character of merger ordinances
extensively, stating:
      The merger provision here is likewise a legitimate exercise of
      government power, as reflected by its consistency with a long history
      of state and local merger regulations that originated nearly a century
      ago. Merger provisions often form part of a regulatory scheme that
      establishes a minimum lot size in order to preserve open space while
      still allowing orderly development.

      When States or localities first set a minimum lot size, there often are
      existing lots that do not meet the new requirements, and so local
      governments will strive to reduce substandard lots in a gradual
      manner. The regulations here represent a classic way of doing this: by
      implementing a merger provision, which combines contiguous
      substandard lots under common ownership, alongside a grandfather
      clause, which preserves adjacent substandard lots that are in separate
      ownership. Also, as here, the harshness of a merger provision may be
      ameliorated by the availability of a variance from the local zoning
      authority for landowners in special circumstances.

      Petitioners' insistence that lot lines define the relevant parcel ignores
      the well-settled reliance on the merger provision as a common means
      of balancing the legitimate goals of regulation with the reasonable
      expectations of landowners. Petitioners' rule would frustrate
      municipalities' ability to implement minimum lot size regulations by
      casting doubt on the many merger provisions that exist nationwide
      today.
      ....

      . . . Finally, the [character of the] governmental action [(i.e., the
      merger ordinance)] was a reasonable land-use regulation, enacted as
      part of a coordinated federal, state, and local effort to preserve the
      river and surrounding land.

137 S. Ct. at 1947–48, 1949–50 (internal citations omitted); see also Quinn, 862
F.3d at 441, 443, 445 (reaching a similar holding for similar reasons: "Local
governments require flexibility to expand services like sewer in response to
community needs; those governments also must be able to control the density of
development in order to prevent overcrowding in schools, clogging of streets,
overload on sewer facilities, degradation of the environment, and a host of other
concerns. As recognized in Murr, adding a highly dubious constitutional overlay
to the already complex mixture of legal requirements risks making land use
planning a well-nigh impossible undertaking.").

Here, Folly Beach's merger ordinance does not unfairly single out Braden's Folly's
Lots. Rather, as discussed by the Murr Court, merger ordinances have long been
employed as a tool to regulate lot sizes. Like in Murr, the merger ordinance here is
"a reasonable land-use regulation, enacted as part of a coordinated . . . effort to
preserve the [beach] and surrounding land." 137 S. Ct. at 1949–50.28

While Braden's Folly was slightly burdened by the merger ordinance, it in turn will
"benefit greatly from the restrictions that are placed on others." Keystone
Bituminous, 480 U.S. at 491. Folly Beach and its witnesses set forth in detail the
advantages to local beachfront property owners and the public at large should the
city unwind the super-beachfront development. The most important of the benefits
to local property owners is the continued existence of federal funding for beach
renourishment, which in turn (1) protects the A and B lots—particularly given that
all of the lots would be underwater at this point if it were not for the continual
beach renourishment; and (2) avoids property owners paying higher taxes if federal
funding is extinguished and Folly Beach must pay for the renourishments with
local funds alone.
Accordingly, we find the character of the merger ordinance is not akin to a classic
eminent domain action. Rather, in light of the potential public costs of continuing
unchecked super-beachfront development, we reject the argument that Folly
Beach's merger ordinance constitutes anything but responsible land use policy—
one that is generally applicable and widely accepted nationwide. See, e.g., Murr,
137 S. Ct. at 1949–50; Quinn, 862 F.3d at 443. We thus hold this factor of the

28
  We find it significant that the quote in the preceding sentence is the entirety of
the Murr Court's analysis of this Penn Central factor: the Supreme Court was so
dismissive of the possibility that a merger ordinance could enact a taking that it
addressed the character of the government action in a single sentence in its
opinion. That cursory analysis speaks volumes as to the strength of its finding as
to this factor of the Penn Central test.
Penn Central test weighs in favor of finding the merger ordinance did not effect a
taking of the Lots.

                                         F.

After applying the Penn Central test, we find two factors weigh strongly in favor
of Folly Beach: the economic impact and the character of the government action.
As to the third factor, we find there is competing evidence regarding whether the
merger ordinance interfered with Braden's Folly's reasonable, investment-backed
expectation. We therefore conclude the third factor is a neutral factor that does not
weigh in favor of either party. As a result, we hold the Penn Central balancing test
overall weighs in favor of Folly Beach, and the merger ordinance did not effect an
unconstitutional taking of Braden's Folly's Lots.
                                         V.

Braden's Folly's super-beachfront house is one of a handful in Folly Beach that are
unintentionally threatening the continued existence of the beach as a whole. In
response, Folly Beach amended its merger ordinance to require the combination of
jointly-held, undersized, contiguous lots that abut the beach. That merger
ordinance is but one part of a coordinated effort by the city to protect the beach and
the federal funding that keeps the beach from eroding away entirely.
In accordance with every other jurisdiction in the country that has addressed the
constitutionality of merger ordinances, we find Folly Beach's ordinance is a
reasonable land-use regulation. It is true that Braden's Folly is slightly burdened
by the merger ordinance in that the ordinance restricts one method by which
Braden's Folly could alienate its property. However, despite the impact of the
merger ordinance, Braden's Folly generally retains a near-full "bundle of sticks"
incident to its ownership of the Lots: it may continue to use the properties in the
same manner it has for decades, it may alienate the properties as a single unit, and
it may exclude others from the properties as it sees fit. See Andrus, 444 U.S. at
65–66. Moreover, any economic impact on the value of the Lots appears to be de
minimis. We therefore hold the merger ordinance did not unconstitutionally take
Braden's Folly's property without just compensation. As a result, we reverse the
circuit court's entry of summary judgment in favor of Braden's Folly and remand to
the circuit court to enter judgment for Folly Beach.
REVERSED AND REMANDED.
BEATTY, C.J., FEW, JAMES, JJ., and Acting Justice Kaye G. Hearn,
concur.