Eminent Domain & Regulatory Takings

Question 1

Eminent Domains

Answer 1

(aka condemnation): An intentional action initiated by the government to “take” property for public use and pay just compensation to the property owner.

Question 2

Regulatory Takings

Answer 2

(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.

Question 3

5th Amendment’s Takings Clause

Answer 3

“[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.

Question 4

The rationale for “takings”

Answer 4

“[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:

1. What does “public use” mean?
2. What amounts to “just compensation”?

Public use is the “bigger” issue nowadays.

Question 5

The “Public Use” Requirement – Established by Kelo

Answer 5

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.”

Question 6

The-ends-justify-the-means test for public use:

Answer 6

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

Question 7

What does “Just compensation” mean?

Answer 7

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.

Question 8

Factors for determining Fair Market Value (5)

Answer 8

1. Recent past sales prices for the property (if any);
2. Recent sale prices of comparable;
3. The capital value of the property if used as a rental;
4. Rebuilding cost of the building in question (discounted for the age of the building)
5. Value the property would bring if used in the new, “intended” way.

** Courts cannot look at personal value of the house**

Question 9

Regulatory Takings: Key Issue

Answer 9

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…

Question 10

Diminution in value test

Answer 10

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.

Question 11

Ad Hoc balancing Test factors

Answer 11

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

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.

Question 12

Do courts generally allow conceptual severance of property rights for takings purposes?

Answer 12

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….”

Question 13

Reverse “spot” zoning

Answer 13

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

Question 14

Key points for regulatory takings (3)

Answer 14

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”?

Question 15

Per Se takings

Answer 15

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

Question 16

Key takeaway from Horne

Answer 16

The 5th Amendment applies to takings of personal property as well as real property.

Question 17

Two standards for regulatory takings cases

Answer 17

(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.)

Question 18

Exception to per se taking rule

Answer 18

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).

Question 19

Noxious Use (Public Nuisance) Doctrine

Answer 19

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.

Question 20

Lucas Total Wipeout Rule

Answer 20

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.

Question 21

Where does the noxiuos-use doctrine still apply?

Answer 21

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.

Question 22

Catetory #1 Per Se Takings

Answer 22

(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.

Question 23

Category #2 Non-per se takings (aka partial takings) (3)

Answer 23

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

Question 24

Exaction

Answer 24

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.

Question 25

The question with exactions is when do these rise to a “takings”?

Answer 25

But how much of a connection is required between the exaction & the public purpose?

In Dolan, Ms. Dolan sought to expand her plumbing store and to pave her parking lot. She requested a permit, and the city granted the permit if she would convey or dedicate two portions of her land as a link with a pedestrian bike path.

SCOTUS found that there WAS an essential nexus between the exactions and the government objective for requiring the permit.

But they added a new requirement: a rough proportionality must exist between the exaction and the impact of the proposed development.

SCOTUS said there was no proportionality and required the city “to make some effort to quantify its finding in support of the [bike path] dedication beyond just conclusory statement.

Question 26

Standard for exactions to be permitted

Answer 26

1. There must be an “essential nexus” between the legitimate public purpose and the means imposed to achieve them. (Nollan)

A gov’t can’t put on a condition unless that condition is connected to the reason it is requiring the permit in the first place.

2. A rough proportionality must exist between the exaction and the impact of the proposed development. (Dolan)

Question 27

Test for Judicial Takings (Stop the Beach)

Answer 27

If a court declares that what was once an established right of private property no longer exists, it has taken that property, no less than if the State had physically appropriated it or destroyed its value by regulation.”

But the mere clarification of existing rights under State law does not amount to a taking. It must be a change in what the state law has consistently held in the past.