APA Minnesota State Planning Conference St. Cloud, Minnesota September 30, 2011 Jean Coleman, Attorney/Planner CR Planning, Inc.

Planners are good guys. Right? We want the best for our community We try to balance community goals with private property owner’s rights We write zoning ordinances so the development process is Predictable Consistent Fair

So why do we so often get accused of “taking” people’s property rights?

4 When you own land, you have rights, but the community also has rights

5

Federal Takings Clause U.S. Constitution – Fifth Amendment “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; …. nor shall private property be taken for public use, without just compensation.

Federal Takings Clause U.S. Constitution – Fifth Amendment “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; …. nor shall private property be taken for public use, without just compensation.

Straight up eminent domain Government takes title or an easement Public use of the property Roadways Trails Parks Public buildings Government pays landowner fair market price

Not so straight up eminent domain Government takes private land and gives it to another private entity to develop Public benefit is higher tax revenues or a “better” use Kelo v. City of New London, 545 U.S. 469 (2005) Held that New London's economic development plan qualified as a public use Not a taking

Post Kelo legislative changes Minnesota Legislature responded by passing Laws of Minnesota 2006, chapter 214 "eminent domain may only be used for a public use or public purpose“ Clarifies that "public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health, do not by themselves constitute a public use or public purpose"

A Minnesota twist Removal of nonconforming uses 2006 change - Minn. Stat. § Local government must compensate the owner of a nonconforming use if the local government requires its removal as a condition of granting a permit, license, or other approval for a use, structure, development, or activity. Does not apply if the permit, license, or approval is for construction that cannot be done unless the nonconforming use is removed

But a regulation doesn’t take property for a public use? Does it?

The case that started it all Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) State law said you can’t mine coal so as to cause a persons’ home to fall down USSC case established regulatory takings doctrine Holding - a mere restriction by government on the use of land, in the absence of any physical occupation or appropriation of land, can trigger a Fifth Amendment right to compensation. If a regulation "goes too far" it is a taking

The case that started it all Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922) State law said you can’t mine coal so as to cause a persons’ home to fall down This USSC case established the regulatory takings doctrine Holding - a mere restriction by government on the use of land, in the absence of any physical occupation or appropriation of land, can trigger a Fifth Amendment right to compensation. If a regulation "goes too far" it is a taking

The “easy” takings cases When the loss of use or loss of value is total Categorical taking – compensation is required when a regulation requires a physical invasion of the property Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) Per se taking - regulation denies the owner of all economically viable use of the property Lucas v. South Carolina Coastal Council, 505 U.S (1992)

But what if the loss of use or value is not total? Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978) Grand Central Terminal designated an historic landmark NYC denied application for 55-story office building USSC denied the takings claim Established a balancing test – Balance the interest of the state in regulating against the private loss

How do we know if it goes too far? Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978) Applied when there is less than total loss of value Three part balancing test the character of the regulation – is there a legitimate state interest the economic impact on the landowner the extent of interference with investment-backed expectations

Does the regulation further a valid public interest? Stop, could be a Taking NO YES Does the alleged taking affect the entire parcel? Stop, could be a Taking YES NO Does the alleged taking severely reduce the value? YES Probably not a taking NO Does the regulation interfere with reasonable investment backed expectations? Probably not a taking NO Stop, could be a Taking YES “Rule of thumb” regulatory takings flow chart

Can a moratoria get us in trouble? Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg. Planning Agency, 535 U.S. 302 (2002) USSC held that a temporary regulation that denies all economically viable use of property is not a per se taking Since not per se, then the Court applies the Penn Central factors to determine if the regulation amounts to a compensable taking

We need to be able to do our job USSC held that a landowner has the right to a reasonable use over a reasonable period of time, and the mere loss of the present right to use land is not a taking “Moratoria are an essential tool of successful development” and a rule that required compensation for any deprivation of all economic use, no matter how brief in time, might lead to hasty decision making

Exactions Exaction - a government requirement that a landowner dedicate land or a property interest as a condition for granting a permit Dolan - permit to expand a store conditioned on the dedication of a portion of the property for a greenway pedestrian/ bicycle path Dolan v. City of Tigard, 512 U.S. 374, 391 (1994) Nollan - permit to build a larger residence on beachfront property conditioned on dedication of an easement for public to cross a strip of property Nollan v. California Coastal Comm’n, 483 U.S. 825, (1987)

Exactions USSC held an exaction may be a taking unless: There is an essential nexus between a legitimate government interest and the condition exacted And there is a rough proportionality between the planned development and the required dedication. “No precise mathematical calculation is required, but the city must make some sort of individualized determination that the required dedication is related both in nature and extent to the impact of the proposed development.” Dolan

Exactions In 2004 Minnesota amended statute to incorporate the essential nexus and rough proportionality terms used in Dolan For municipal park and utility dedications Minn. Stat. § , subds. 2b and 2c

Minnesota Takings Clause Minnesota Constitution, Article l, Section 13 “Private property shall not be taken, destroyed or damaged for public use without just compensation therefor, first paid or secured.”

A Minnesota perspective Very few regulatory takings cases reviewed by MN Supreme Court under Minnesota Constitutional takings clause A regulation that diminishes property value alone does not constitute a taking Minnesota’s uses a government enterprise or arbitration test

A Minnesota perspective It may be a regulatory taking if the regulation Benefits a government enterprise such as an airport And it results in a substantial diminution in value McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) It may be a regulatory taking if the regulation Arbitrates between competing uses And it deprives the property of all reasonable uses Concept Properties, LLP v. City of Minnetrista, 694 N.W.2d 804, 823 (Minn. App rev. denied)

MN Government Enterprise case DeCook v. Rochester International Airport Joint Zoning Board, 2011 WL (Minn. 3/30/2011) Disagreement about whether state or federal takings clause should be applied Disagreement about what test to apply to determine if the regulation resulted in a taking

Airport Zoning 240 acre property In 1989 when purchased only 19 acres were subject to airport safety zone A 2002, zone A extended and permitted land uses restricted Jury in the trial court found a reduction in value of $170, % of market value

Airport Zoning The MN Supreme Court held that the controlling law was that of McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) Because it arose from an airport safety zone ordinance and airports are “government enterprises” The “broader” MN constitutional takings clause governed – covers “damage” caused by regulation Held that when a land use regulation benefited “a specific governmental purpose” then compensation is owed if the there is a “substantial and measurable decline in market value” 3.5-6% decline in value was substantial

What does this mean to me? Very few Minnesota regulatory takings cases DeCook is Being interpreted as a narrowly applying to airport zoning only because it is clearly a government enterprise Landowners may be emboldened Don’t change your perspective on regulatory takings based on this one case

“I feel a chill” Someone stands up a tells me that I can’t stop them from doing what they want on their land

When accused - Remember First, take a deep breath In general, a regulation that diminishes property value alone does not constitute a taking Very, very, very few regulatory takings cases are successful

When accused - Respond “No, it is not a taking” The community can, within reasonable bounds, put limits on how you use your property This is a community decision, it is not me arbitrarily saying you can’t do what you want

Map source: U.S. Supreme Court U.S. Federal Court of Appeals 8 th Circuit includes Minnesota U.S. Federal Court of Appeals 8 th Circuit includes Minnesota Supreme Court of MN MN Court of Appeals District (Trial) Courts Final local land use decision County CUP or Subdivision