Moderator : Michael D. Zarin Partner, Zarin & Steinmetz - PowerPoint Presentation

Moderator: Michael D. ZarinPartner, Zarin & Steinmetz Participants :Michael Allan WolfEsq., Professor of Law & Richard E. Nelson Chair in Local Government Law, University of Florida Levin College of LawDonald E. ElliottFAICP, Director, Clarion Associates, LLCDwight H. MerriamFAICP, Esq., Partner, Robinson & Cole LLPJohn R. NolonEsq., Counsel, Land Use Law Center & Professor of Law, Elisabeth Haub School of Law at Pace University Judicial Challenges to Land Use Decisions

Takings Tangles:Parcel as a Whole, Passive Takings, and Exactions Yet Again   Murr v. State of Wisconsin, 859 N.W.2d 628 (Wisc. Ct. App. 2014), cert. granted, 136 S. Ct. 890 (2016)Litz v. Maryland Department of the Environment, 131 A.3d 923 (Md. 2016)Harris County Flood Control District v. Kerr, 2016 Tex. LEXIS 501 (2016)California Building Industry Association v. City of San Jose, 351 P.3d 974 (Cal. 2015), cert. denied , 136 S. Ct. 928 (2016) Michael Allan Wolf Esq., Professor of Law Richard E. Nelson Chair in Local Government Law University of Florida Levin College of Law

Murr v. State of Wisconsin, 859 N.W.2d 628 (Wisc. Ct. App. 2014), cert. granted, 136 S. Ct. 890 (2016)  Wis. Adm. Code NR 118.08 (2016) DEPARTMENT OF NATURAL RESOURCES CHAPTER NR 118 STANDARDS FOR THE LOWER ST. CROIX NATIONAL SCENIC RIVERWAY[Also St. Croix County, WI, Code of Ordinances, Land Use And Development, Subch. III.V, Lower St. Croix Riverway Overlay District § 17.36I.4.a. (July 1, 2007)] (4) SUBSTANDARD LOTS. Lots of record in the register of deeds office on January 1, 1976, or on the date of the adoption of an amendment to a riverway ordinance that makes a lot substandard, which do not meet the requirements of this chapter, may be allowed as building sites provided that the following criteria are met: (a) 1. The lot is in separate ownership from abutting lands, or 2. The lot by itself or in combination with an adjacent lot or lots under common ownership in an existing subdivision has at least one acre of net project area. Adjacent substandard lots in common ownership may only be sold or developed as separate lots if each of the lots has at least one acre of net project area.

Murr v. St. Croix County Bd. of Adjustment, 796 N.W.2d 837, 840 (Wis. Ct. App. 2011) Murr Admin. Code § NR 118.08(4) does not apply to merge her two contiguous parcels, because the parcels did not come under common ownership until after the effective date identified in the ordinance. We disagree and conclude the argues a St. Croix County ordinance that mirrors Wis. ordinance applies to all abutting properties that existed on the specified date, regardless of when they come under common ownership .

Murr v. State, 2015 WI App 13, at 1, 30. We agree with the circuit court that the challenged regulatory action, an ordinance that effectively merged the Murrs' two adjacent, riparian lots for sale or development purposes, did not deprive the Murrs of all or substantially all practical use of their property. Accordingly, we affirm. . . . The Murrs presumably knew that bringing their substandard, adjacent parcels under common ownership resulted in a merger under the Ordinance. Accordingly, even if the Murrs did intend to separately develop or sell Lot E, that expectation of separate treatment became unreasonable when they chose to acquire Lot E in 1995, after their having acquired Lot F in 1994. In short, the Murrs "never possessed an unfettered 'right'" to treat the lots separately.

Petitioners' Brief on the Merits, Murr v. Wisconsin, No. 15-214, at i.  QUESTION PRESENTED  In a regulatory taking case, does the “parcel as a whole” concept as described in Penn Central Transportation Company v. City of New York, 438 U.S. 104, 130-31 (1978), establish a rule that two legally distinct, but commonly owned contiguous parcels, must be combined for takings analysis purposes?  

Brief for Respondent State of Wisconsin, Murr v. Wisconsin, No. 15-214, at i.   QUESTION PRESENTED  Whether land lots that were created and defined under state law, which merged pursuant to a preexisting state law merger provision, are a single “parcel” for regulatory takings purposes.  Brief for Respondent St. Croix County, Murr v. Wisconsin, No. 15-214, at i. QUESTION PRESENTED Petitioners own two adjacent lots of land that border a nationally designated wild and scenic river bisected by tree-lined bluffs. Each lot is “substandard” because neither lot alone meets a county zoning ordinance’s minimum buildable acreage requirement for residential development due to flood risks and other topographical challenges. An exception that lifts that buildable acreage restriction on lots applies to commonly owned, adjacent lots only after the buildable acreage on the substandard lots is combined. As a result petitioners are permitted to build one residence on their two lots, but not a separate residence on each lot, and neither lot can be sold as a separately developable lot.   The question presented is whether a court, in reviewing a regulatory takings challenge to a county’s application of its minimum buildable acreage requirement to two commonly owned, adjacent substandard lots , may assess the economic impact of the zoning requirement by comparing the value of the two lots with one residence to the value of the two lots with a residence on each lot .

LESSONS LEARNED:Every disgruntled landowner is a potential client for public interest property rights law firms such as the Pacific Legal Foundation.There are some very talented land use experts who can help local governments in need.

Litz v. Maryland Department of the Environment, 131 A.3d 923, 925 (Md. 2016)  In this litigation, Ms. Litz makes a second appearance before this Court regarding a parcel of real property (containing a lake) in Caroline County, Maryland, that was contaminated allegedly by run-off from failed septic systems serving homes and businesses in the Town of Goldsboro . The human sewage seeped out of the septic fields into ground and surface water flowing into drainage swales, which drained into streams flowing into Ms. Litz's lake. Ms. Litz operated a popular lake-front recreational campground on her property in Goldsboro. Unable to operate the campground because of the pollution to her lake, Ms. Litz lost the property through foreclosure by the bank holding the mortgage. . . . 

Litz v. Maryland Department of the Environment, 131 A.3d 923, 931 (Md. 2016)A difficulty with Ms. Litz's claim of a "taking“ fitting neatly within conventional thinking about inverse condemnation is that her allegations focus predominantly on the inaction of Respondents, rather than any affirmative action by those parties . There is no controlling Maryland law that we could find that sheds light on this wrinkle. Thus, we look outside our borders for guidance. Upon this review, it seems appropriate (and, in this case, fair and equitable, at least at the pleading stage of litigation) to recognize an inverse condemnation claim based on alleged "inaction" when one or more of the defendants has an affirmative duty to act under the circumstances. Therefore, we hold, as a matter of Maryland law, that an inverse condemnation claim is pleaded adequately where a plaintiff alleges a taking caused by a governmental entity's or entities' failure to act, in the face of an affirmative duty to act.

LESSONS LEARNED:The struggle to differentiate between government immunity for torts and inverse condemnation for non-eminent domain takings has real-life financial implications for local and state governments. The text of the takings clause is a palette for creative judges, especially for those who otherwise pride themselves on adhering to constitutional text and original intent.

Harris County Flood Control Dist. v. Kerr, 2016 Tex. LEXIS 501, at *1-2, 59 Tex. Sup. J. 1185 This long-running dispute poses a question of constitutional law: whether governmental entities that engage in flood-control efforts are liable to homeowners who suffer flood damage, on the theory that the governments effected a taking of the homeowners' property by approving private development without fully implementing a previously approved flood-control plan . Under the circumstances presented, we answer no. . . .  Plaintiffs (the homeowners) consist of about 400 homeowners whose homes were located in the upper White Oak Bayou watershed of Harris County. The homes suffered flood damage one or more times when flooding occurred during Tropical Storm Francis in 1998, Tropical Storm Allison in 2001, and another unnamed storm in 2002. The homeowners sued Harris County and the Harris County Flood Control District (collectively the County), asserting a takings cause of action. . . .

Harris County Flood Control Dist. v. Kerr, 2016 Tex. LEXIS 501, at *15-17, 59 Tex. Sup. J. 1185Generally, plaintiffs seeking recovery for a taking must prove the government "intentionally took or damaged their property for public use, or was substantially certain that would be the result." Sovereign immunity does not shield the government from liability for compensation under the takings clause. Much of our takings jurisprudence focuses on mens rea. We have made clear that a taking cannot be established by proof of mere negligent conduct by the government. "[T]he requisite intent is present when a governmental entity knows that a specific act is causing identifiable harm or knows that the harm is substantially certain to result.“ . . .Only affirmative conduct by the government will support a takings claim. We have always characterized a takings claim as based on some affirmative "act" or "action" of the government. . . . A government cannot be liable for a taking if "it committed no intentional acts." We have not recognized a takings claim for nonfeasance.

LESSONS LEARNED:State constitutional law and the wording of the state takings clause can often influence the outcome. In the war against climate change, local and state governments may be damned if they do and damned it they don’t.

California Building Industry Association v. City of San Jose, 351 P.3d 974, 978-79 (Cal. 2015), cert. denied, 136 S. Ct. 928 (2016)  In 2010, after considerable study and outreach to all segments of the community, the City of San Jose . . . enacted an inclusionary housing ordinance that, among other features, requires all new residential development projects of 20 or more units to sell at least 15 percent of the for-sale units at a price that is affordable to low- or moderate-income households. . . .  

California Building Industry Association v. City of San Jose, 351 P.3d 974, 978-79 (Cal. 2015), cert. denied, 136 S. Ct. 928 (2016) [T]he conditions that the San Jose ordinance imposes upon future developments do not impose “exactions” upon the developers' property so as to bring into play the unconstitutional conditions doctrine under the takings clause of the federal or state Constitution . Furthermore, . . . the conditions imposed by the San Jose ordinance at issue here do not require a developer to pay a monetary fee but rather place a limit on the way a developer may use its property. In addition, the conditions are intended not only to mitigate the effect that the covered development projects will have on the city's affordable housing problem but also to serve the distinct, but nonetheless constitutionally legitimate, purposes of (1) increasing the number of affordable housing units in the city in recognition of the insufficient number of existing affordable housing units in relation to the city's current and future needs, and (2) assuring that new affordable housing units that are constructed are distributed throughout the city as part of mixed-income developments in order to obtain the benefits that flow from economically diverse communities and avoid the problems that have historically been associated with isolated low-income housing.

California Building Industry Association v. City of San Jose, 136 S. Ct. 928, 928-29 (2016) (Thomas, J., concurring in denial of certiorari) For at least two decades, however, lower courts have divided over whether the Nollan/Dolan test applies in cases where the alleged taking arises from a legislatively imposed condition rather than an administrative one . The decision below, for example, reiterated the California Supreme Court’s position that a legislative land-use measure is not a taking and survives a constitutional challenge so long as the measure bears “a reasonable relationship to the public welfare.” 61 Cal. 4th, at 456-459 and n. 11, , 351 P. 3d, at 987-990, n. 11; compare ibid. with, e.g., Home Builders Assn. of Dayton and Miami Valley v. Beavercreek, 89 Ohio St. 3d 121, 128, 2000 Ohio 115, 729 N. E. 2d 349, 356 (2000) (applying the Nollan/Dolan test to legislative exaction). I continue to doubt that “the existence of a taking should turn on the type of governmental entity responsible for the taking.” Until we decide this issue, property owners and local governments are left uncertain about what legal standard governs legislative ordinances and whether cities can legislatively impose exactions that would not pass muster if done administratively. These factors present compelling reasons for resolving this conflict at the earliest practicable opportunity.

LESSONS LEARNED:Koontz did not solve the Nollan/Dolan exactions puzzle. For now, most courts still give zoning generous deference. President Trump might give Justice Thomas another vote to expand the reach of Nollan/Dolan, putting user fees and other growth management and affordable housing provisions at risk.

Fair and Affordable HousingDon Elliott, FAICP Clarion Associates Denver, CO

California Building Industry Assn. v.City of San Jose (2016) California Supreme Court determines that formula inclusionary housing requirement is not subject to the Nollan and Dolan tests of “rational nexus” and “rough proportionality.”U.S. Supreme Court denies cert. 20

Lessons LearnedThis is the first post-Koontz case where the U.S. Supreme Court to clarify it’s Koontz holding that Nollan and Dolan apply to money exactions.At least some types of money exactions do not.21

Inclusive Communities Project v. Texas Department of Housing and Community Affairs(Supreme Court 2015) 2015 U.S. Supreme Court Decision: You can bring a claim under the Fair Housing Acts based on “Disparate Impact” Disparate Impact = a claim that a facially neutral law or regulation actually creates or perpetuates patterns of segregation that are inconsistent with the local government’s duty to Affirmatively Further Fair Housing.Remanded to District Court22

Inclusive Communities Project v. Texas Department of Housing and Community Affairs(U.S. District Court. 2016) BUT (and it’s a big one) There is a “robust causation requirement” you need to show that the challenged policy or regulation caused the discriminatory outcomeStatistics alone are probably not enoughLegitimate government interests in public health and safety are not ignoredCannot be based on a single decision – focus on practice and outcomes over time23Big target so far has been allocation of Low Income Housing Tax Credits at the state or regional level

Inclusive Communities Project v. Texas Department of Housing and Community Affairs(District Court 2016) Remand asks District Court to re-evaluate based on its reasoning and the HUD AFFH regulations – which call for a burden shifting approach) regulations Held: ICP has failed to prove a prima facie case – so the burden does not shift to TDHCA to show justification for why its LIHTC does not violate FHAA.24We now adopt the burden-shifting approach for claims of disparate impact under the FHA. 1. A plaintiff must prove a prima faciecase of discrimination by showing that a challenged practice causes a discriminatory effect. 2. If the plaintiff makes a prima facie case, the defendant must then prove “that thechallenged practice is necessary to achieve one or more substantial , legitimate, nondiscriminatory interests . . . .”. 3.If the defendant meets its burden, the plaintiff must then show that the defendant’s interests “could be served by another practice that has a less discriminatory effect .”).

Lessons Learned“it may also be difficult to establish causation because of the multiple factors that go into investment decisions about where to construct or renovate housing units.” I.e. – it’s gonna be hard to win these claimsAnd might be harder if HUD AFFH regulations used by district court are modified or repealed in 201725

Inclusive Communities Project v. U.S. Treasury Department (U.S. District Court. 2016) ICP sues Treasury – who administers the LIHTC program – claiming it is inherently discriminatoryCourt holds that claim is not enough to support a “Discriminatory Intent” claim, but – after ICP v. TDHCA – may be enough to support a “Discriminatory Impact” claimAllows the ICP to replead the case and see if it can meet show a prima facie case26

Lessons LearnedICP doesn’t quitCourts are reading ICP v TDHCA seriously and giving plaintiffs a chance to make a prima facie caseCourt upheld ICP on standing and on governmental immunity defenses But we still don’t know what a successful prima facie case looks like 27

PreemptionFederal versus state versus local versus state versus federal… Dwight H. Merriam FAICP, Esq., Partner, Robinson & Cole LLP

Atay v. Maui Syngenta Seeds v. Kauai(9 th Cir 2016) Maui and Kauai ordinances banning genetically engineered (GE) plants preempted by federal law.The state law preempted the local ordinance.Applied the “comprehensive statutory scheme” test 29

Lessons LearnedIllustrates the interplay of federal-state-local regulation 30

Nebraska and Oklahoma v. Colorado(US 2016) Gonzales v. Raich, 545 U.S. 1, 12 (2005) versus Colorado’s Amendment 64 to the state’s Constitution 31

Lessons LearnedEven the U.S. Supreme Court may not be above avoiding hard cases…What will the Trump administration do? 32

City of Longmont v. Colorado Oil and Gas Association(Colo. 2016) Home-Rule community ordinance banned fracking.State statute regulated oil and gas production.Court invalidated ordinance based on operational preemption.33Ordinance frustrated state regulation of a mixed state/local issue.

Lessons LearnedIf an ordinance under consideration locally could conflict with state law, particularly where there is already tension between state and local interest, take special care to narrowly tailor the local law. 34

Case Digests John R. Nolon Esq., Distinguished Professor of Law, Elisabeth Haub School of Law at Pace University Counsel to the Land Use Law Center Avoiding Common Mistakes Made by Land Use Boards in New York

Failure to Conform Zoning to the Comprehensive P lan West Branch Conservation Assoc. v. Town of Ramapo , (NY App. Div. 2d Dept., 2001) . Rezoning was invalid. It was not enacted as part of a well-considered plan but constituted the singling out of a small parcel for a use totally different from that of the surrounding area for the exclusive benefit of the owner of the property.

Failure to Conform Zoning to the Comprehensive Plan IILittle Joseph Realty v. Babylon, (NY. App. Div. 2nd Dept., 2008). Conformance found where the town board engaged in extensive review of the amendment prior to its adoption, taking into consideration the community’s land use problems.

Failure to Leave Value in Imposing Land Use RegulationsPutnam Co. National Bank v. City of NY, (NY App. Div. 2 nd Dept., 2007). Watershed regulation that left 20% of the value not a taking. Plaintiff failed to carry heavy burden of proof that under no permissible use would the parcel as a whole be capable of producing a reasonable return. A taking is not unconstitutional merely because the value of the property was “substantially reduced” or because it “deprives the property of its most beneficial use.”

Failure to Leave Value in Imposing Land Use Regulations IIUnderlying doctrine: Spears v. Berle, (Court of Appeals, 1979). A land use regulation is deemed too onerous when it renders the property unsuitable for any reasonable income producing use and “thus destroys its economic value, or all but a bare residue of its value.”

Regulating the User Rather than Just the UseKempisty v. Town of Geddes , (NY App. Div. 4th Dept., 2012). Invalidated board’s disapproval of a site plan. There was evidence, including an affidavit of the Town Supervisor, that action was based solely on Kempisty’s prior zoning violations and deteriorating relationship with the town officials. This “runs afoul of the ‘fundamental principle’ that ‘conditions imposed on the [approvals] must relate only to the use of the property without regard to the person who owns or occupies that property.’”

Regulating the User Rather than Just the Use IIFGL & L Property Corp. v. City of Rye, (Court of Appeals, 1985). The Court of Appeals invalidated a requirement that a development be owned as a condominium. The State’s zoning enabling act does not authorize municipalities, expressly or implicitly, to require a certain type of ownership. Matter of Dexter v. Town Bd. Of Town of Gates, (Court of Appeals, 1975). Court of Appeals invalidated a zoning condition that provided that if the particular applicant left the site, the zoning would revert to the previous classification.

Failure of Boards to Justify Decisions Based on Substantial Evidence on the RecordLouhal Properties, Inc. v. Strada , (Supr. Ct. Nassau County, 2002). Agreed with owner of 7-Eleven who challenged restriction on hours of operation. Holding: “absent substantial evidence showing the external impact of the land use in question, a restriction on hours of operation must be deemed an impermissible attempt to regulate the details of a business” and, therefore, to constitute an invalid exercise of police power.

Failure of Boards to Justify Decisions Based on Substantial Evidence on the Record IIMetro Enviro Transfer, LLC v. Village of Croton-On-Hudson , (Court of Appeals, 2005 ). Village board denied application for renewal of a special use permit to operate a construction a waste transfer station. The Board relied upon its consultant who concluded that the violations “signify a facility that continually promises to improve but nonetheless persistently violates regulations that are designed to protect health and the environment.” The Court of Appeals noted that a reviewing court “may not substitute its own judgment for that of the board even if a contrary determination is itself supported by the record” where the board has adequate grounds for that decision.

Basing Decisions on Citizen OppositionYoung Development Inc. v. Town of West Seneca, (NY App. Div. 4th Dept., 2012). Basing a decision solely on citizen opposition is a violation of due process. No substantial evidence on the record justifying the decision to deny the application. The decision was improperly based solely on citizen opposition.

Failure to Follow PrecedentMatter of Hunt v. ZBA Village of Malverne, (NY App. Div. 2nd Dept., 2006). Where the ZBA failed to follow a precedent no invalidity was found. The facts were materially different from the prior decision. In re Carona Realty v. Town of North Hempstead, (NY App. Div. 2nd Dept., 2006). Decision invalid where the town board granted landmark status after previously denying it and there was no change in underlying facts and no reason was given for a different result, decision. Agency’s failure to provide a valid and rational explanation for its departure from its prior precedent “mandates reversal even though there may be substantial evidence in the record to otherwise support the determination.”

Ensuring that Conditions Bear an Essential Nexus with Adverse ImpactsTwin Lakes Development v. Town of Monroe, (Court of Appeals, 2003). Court rejected argument that a $1,500 per lot recreation fee was a taking because it was not based on an individualized determination and was not roughly proportional to of the recreational needs generated by its subdivision plan. The town’s legislative determination was based on a sound analysis of the threatened loss of open land resulting from development.

Failure of ZBA to Follow State Required Balancing Test for Area VariancesRussia at Kings Point v. ZBA Village of Kings Point, (NY App. Div. 2nd Dept., 2007). Failure to literally follow balancing test factors contained in state statute regarding an area variance renders the variance invalid.

Granting a Use Variance Where Hardship is Self-CreatedFriends of Lake Mahopac v. ZBA , (NY App. Div. 2nd Dept., 2005). The court held that “an owner who knowingly acquires land for a use prohibited by zoning may not obtain a use variance on the ground of hardship,” as it is self-created.

Granting a Use Variance When Economic Proof is InsufficientMatter of DeFeo v. ZBA of Town of Bedford, (NY App. Div 2nd Dept., 2016). Presentation of some but not comprehensive proof that the property cannot yield a reasonable return is cause to overturn granting of a use variance. The court held that entitlement to a use variance is not established simply by showing that the proposed use would be more profitable than an allowed use that did not require the variance.

Planning Board Basing Decision on its Interpretation of the Zoning CodeMatter of Jamil v. Village of Scarsdale Planning Board, (NY App. Div. 2nd Dept., 2005). The court held that the board does not have the power to interpret the meaning of provisions in the local zoning law. This power is vested exclusively in the building inspector and the Zoning Board of Appeals.

Improper Reasons for Holding Executive SessionsBallard v. New York Safety Track, LLC, (NY App. Div. 3rd Dept., 2015). The planning board invalidly conducted three executive sessions/ They can only be called for certain purposes, such as the consideration of an appointment or to discuss pending litigation. The board must identify a proper rationale for such sessions explaining why with some degree of particularity.

Avoid Conflicts of Interest of Board MembersEastern Oaks Dev., LLC v. Town of Clinton , (NY App. Div. 2nd Dept., 2010). After the board approved its subdivision, the applicant hired a town board member to construct a road which was later offered to the town for dedication, along with a bond to guarantee its compliance with the town’s standards. A dispute arose over the dedication and the town board member recused himself from a vote regarding it. The Court held that the allegation that a dispute between the contractor/board member’s dispute and the developer resulted in the Town Board’s denial of the dedication, if proved at trial, would provide a basis for setting aside the Town Board’s determination, even though the conflicted board member recused himself from the vote.

Wine & Cheese ReceptionWhen? Now (5:15-6:30PM) Where? JI-RotundaWhat?California WinesArtisanal CheesesCharcuterieCrackersFruitCrudités