Eminent Domain & Regulatory Takings Flashcards
Eminent Domains
(aka condemnation): An intentional action initiated by the government to “take” property for public use and pay just compensation to the property owner.
Regulatory Takings
(aka Inverse condemnation): Government intends to regulate property, and the property owner initiates the lawsuit, claiming that the gov’ts action amounts to a “taking.”
Regulations could be zoning ordinances or other statutes that limit the ability to use the property or allow the gov’t to use your property.
5th Amendment’s Takings Clause
“[N]or shall private property be taken for public use, without just compensation.”
Authority for Eminent Domain
Nowhere in the Constitution is there an affirmative authorization for power of eminent domain.
The rationale for “takings”
“[T]he existence of the power of eminent domain generally has the effect of promoting efficiency. In the absence of the power, transaction costs and purchase costs would be higher, resulting in greater costs for transportation, power, etc, resulting in either higher costs being passed along to consumers or people choosing less efficient means of transportation . . . .”
Key issues:
- What does “public use” mean?
- What amounts to “just compensation”?
Public use is the “bigger” issue nowadays.
The “Public Use” Requirement – Established by Kelo
Clear public uses are not questionable Ex. Takings for public parks, public highways public buildings, etc.
Key takeaways from Kelo
Gov’t cannot take property if it is not for public use – no matter if just compensation is paid.
So property owners who want to keep their land have to argue that the taking isn’t for a public use – otherwise, they just have to fight over how much money is “just compensation.”
The-ends-justify-the-means test for public use:
If the claimed purpose of the legislative action is within the legislative body’s authority (the ends are legitimate), then the court will not question the legislative body’s determination on how to accomplish its purpose
What does “Just compensation” mean?
The measure of “just compensation” is “fair market value” of the property, measured based upon the property’s highest and best use.
Fair market value = the amount that a willing buyer would pay to a willing seller.
But for eminent domain cases, we don’t have willing sellers. They are forced sellers.
Factors for determining Fair Market Value (5)
- Recent past sales prices for the property (if any);
- Recent sale prices of comparable;
- The capital value of the property if used as a rental;
- Rebuilding cost of the building in question (discounted for the age of the building)
- Value the property would bring if used in the new, “intended” way.
** Courts cannot look at personal value of the house**
Regulatory Takings: Key Issue
Whether a taking has occurred as a consequence of a gov’t action (other than eminent domain), which does not allow the property owner to get just compensation.
Remember, if a government enacts a zoning ordinance or a statute that impacts property, it is under no obligation to pay landowners from the restricted use – UNLESS it amounts to a regulatory taking!
So they key issue is where to draw the line between appropriate regulations and regulatory takings…
Diminution in value test
Where the government regulation greatly reduces the value of the property interest, the regulation amounts to a taking, so just compensation is due.
The question is usually how much is too much, so the court will look at the factors to decide the lost value and any benefit the landowner received because of the new regulation. (Ad hoc balancing)
Rationale for the test: To promote justice, the test guards against disproportionately burdensome losses. This also advances efficiency to the extent it protects expectations.
Ad Hoc balancing Test factors
- Diminution in value b/c of regulation (just one factor)
- How much has regulation interfered with distinct investment-backed expectations?
- Character of the Gov’t action/regulation
This regulation had extensive provisions allowing for transferring of the property rights to an adjacent property. Thus, Penn Central received some benefit from the regulation for its other – non-landmark properties.
Do courts generally allow conceptual severance of property rights for takings purposes?
No: “Takings 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 government action has effected a taking, this Court focuses both on the character of the action and on the nature and extent of the interference with rights in a parcel as a whole….”
Reverse “spot” zoning
Consider this: Both historic-district legislation and zoning law regulate all properties within a given physical community whereas landmark laws apply only to selected parcels.” (Remember, spot zoning isn’t favored because it singles people out.)
more restrictive zoning of a particular spot
Key points for regulatory takings (3)
Key points for regulatory takings
“[N]or shall private property be taken for public use, without just compensation.”
Key issues:
(1) Does the regulation go too far amounting to a “taking”?
(2)Is this for a public use?
(3) What amounts to “just compensation”?
Per Se takings
Where the regulation requires some physical appropriation of a person’s property (requiring installation of cable boxes, etc.)
Standard for per se takings: Just compensation is required, regardless of any other factors.
If an intrusion is permanent, the per se taking rule applies. (The court calls this a permanent physical occupation.)
If an intrusion is temporary, court calls it a temporary invasion, and the ad hoc balancing test applies
Key takeaway from Horne
The 5th Amendment applies to takings of personal property as well as real property.
Two standards for regulatory takings cases
(1) Ad hoc balancing from Penn Central for cases where the regulation does not require physical appropriation by the government.
(2) Per-se-takings standard, where the regulation requires some physical appropriation of a person’s property (requiring installation of cable boxes, handing over raisins, etc.)
Exception to per se taking rule
Voluntary permission exception: Where the owner has voluntarily permitted the initial occupation, the court has held that governmental regulations do not amount to a per se taking (so ad hoc balancing is used).
Noxious Use (Public Nuisance) Doctrine
Rule: a regulation enacted under the state’s police power for the purpose of abating a public nuisance is not a taking – even if it results in a substantial loss for the property owner.
Lucas Total Wipeout Rule
When the value of the land is essentially wiped out by the regulation, then this will be a per se taking for which just compensation is due.
This means that the court will not look at the public purpose the regulation was sought to advance. And if the value is essentially wiped out, then there will be no reciprocal advantage to the property owner, so no balancing needs to be done.
Where does the noxiuos-use doctrine still apply?
It applies if this would be a nuisance under state common-law principles.
This means that the legislature is removed from the process because the legislature can always come up with some public harm it is seeking to prevent.
Nuisance per se can be used for the noxious use exception, but not if the locality recently passed the ordinance because then courts question whether that recent ordinance creating the nuisance per se was really just a way to get around the constitutional protections of takings law.
Catetory #1 Per Se Takings
(1) Loretto/Horne – Physical appropriation test:
does the regulation require/authorize a premanent physical appropriation of private property by either the gov’t or a third party?
(2) Lucas – Total-wipeout rule:
If the value of the property is reduced to essentially zero b/c of the regulation, then there is a per se taking and no balancing is needed. ** Any time per se: look to nuisance. If common law nuisance, then justified
The nuisance theory is the exception for takings: If the regulated activity would be a common-law nuisance according to that state’s laws, then the regulation is justified and won’t amount to taking.
Category #2 Non-per se takings (aka partial takings) (3)
Penn Central - Ad hoc balancing factors
(1) Diminution in value b/c of regulation (just one factor)
(2) How much has regulation interfered with distinct investment-backed expectations?
(3) Character of the Gov’t action/regulation
Exaction
The action of demanding and obtaining something from someone, especially a payment or service.
A sum of money demanded for a payment or service.
An act of demanding unfair and exorbitant payment; an act of extortion.
Exactions are government measures that require developers to provide goods and services (or pay fees) as a condition to getting project approval.
