1. REGULATORY TAKINGS: PAST, PRESENT, AND FUTURE Timothy J. Dowling Chief Counsel Community Rights Counsel 2002 Minnesota Association of City Attorneys Educational Conference and Annual Meeting

2. Community Rights Counsel  Nonprofit public interest law firm  Assists towns and other local governments in defending land use controls and other community protections  Emphasis on takings cases  Close working relationship with the International Municipal Lawyers Association

3. Community Rights Counsel Cases  Mamaroneck, NY open space protections  Lake Tahoe planning moratoria  Washington, DC historic preservation laws  Anchorage, AK fair housing laws  San Francisco Tenant Protections  Riverside, CA fire safety protections  Pennsylvania & Ohio bans on harmful coal mining  Rhode Island wetland protections  Las Vegas Airport Safety Protections

4. TAKINGS LITIGATION HANDBOOK: Defending Takings Challenges to Land Use Regulations To order the Takings Litigation Handbook, contact American Legal Publishing at 1-800-445-5588 or www.amlegal.com.

5. Takings Litigation Handbook: Defending Takings Challenges to Land Use Regulations The first ever “soup to nuts” Handbook for defending land use regulations from takings challenges. Explains the procedural and substantive defenses that should enable the local government to prevail in takings cases. Offers advice for the development of a proper record, obtaining insurance coverage and filing preliminary motions.

7. Bad News for Local Governments  Many takings lawsuits  Expensive and time-consuming to defend  Many landowner victories in the U.S. Supreme Court

8. Good News for Local Governments  Local governments win the vast majority of takings cases  Landowner wins in U.S. Supreme Court are narrow  Very strong arguments against an expansive interpretation of the Takings Clause Delete sample document icons and replace with working document icons as follows: From Insert Menu, select Object... Click “Create from File” Locate File name in “File” box Make sure “Display as Icon” is checked Click OK Select icon From Slide Show Menu, Select “Action Settings” Click “Object Action” and select “Edit” Click OK

9. Today’s Topics  Five Themes for LitigatingTakings Cases  Three Categories of Takings Claims  Ten Cutting-Edge Issues  RLUIPA  Palazzolo v. Rhode Island  Tahoe Moratorium Case

10. Five Themes for Litigating Regulatory Takings Cases 1. Narrow Text and Original Meaning 2. Judicial Respect for our Federal System 3. Judicial Deference to the Policymaking Branches 4. Avoiding Unduly Harsh Fiscal Impacts 5. The Government as Guardian of Property Rights and Property Values

11. THE TAKINGS CLAUSE “Nor shall private property be taken for public use, without just compensation.” Minnesota Rule for Gov’t Enterprise Function McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) (airport zoning: taking based on substantial and measurable decline in market value)

12. Three Categories of Inverse Condemnation Claims 1. Physical Occupation Cases 2. Pure Regulatory Takings Cases 3. Dedications and Exactions Delete sample document icons and replace with working document icons as follows: From Insert Menu, select Object... Click “Create from File” Locate File name in “File” box Make sure “Display as Icon” is checked Click OK Select icon From Slide Show Menu, Select “Action Settings” Click “Object Action” and select “Edit” Click OK

13. Loretto v. Teleprompter Manhattan CATV Corp. (1981)

14. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)  A government-compelled permanent physical occupation of private property is a per se taking  Per se rule is “very narrow”  A continuous right of access is permanent, even if the actual invasion is intermittent

15. Lucas v. South Carolina Coastal Council (1992)

16. Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992)  Regulation that denies all economically viable use of land is a per se taking  Avoid per se liability if regulation is justified by “background principles of law”

17. Penn Central Transportation Company v. New York City (1978)

19. Penn Central Transp. Co. v. New York City, 438 U.S. 104 (1978) Multifactor Test:  Character of the government action  Economic impact  Reasonable, investment-backed expectations

20. Nollan v. California Coastal Commission (1987)

22. Nollan v. California Coastal Commission, 483 U.S. 825 (1987)  Compelled dedication must bear a “logical nexus” to the problem or concern posed by the proposed development.  The Nollan dedication failed because enhanced beach-side access is not logically related to the loss of the view from the highway.

23. Dolan v. City of Tigard (1994) Picture #1

24. Dolan v. City of Tigard (1994) Picture #2

25. Dolan v. City of Tigard, 512 U.S. 374 (1994)  Dedication requirement must be “roughly proportional” to the harm anticipated from the proposed development  Precise mathematical calculation is not required  Must make some effort to quantify findings to support the dedication  Kottschade v. City of Rochester, 537 N.W. 2d 301 (Minn. Ct. App. 1995)

26. Under Dolan, local governments must be prepared to demonstrated that: 1. The proposed development exacerbates or creates the need for a public service; 2. The dedication demanded will benefit the proposed development or help address the need; and 3. The dedication demanded is “roughly proportional” to the harm.

28. Top Ten Issues for Local Governments to Win in Regulatory Takings Cases Procedural Issues 1.Takings cases against local governments generally must be filed in state court. Williamson County Reg’l Planning Comm’n v. Hamilton Bank (U.S. 1985). Issue preclusion prevents re-litigation of the same issues in federal court.

29. Compensation Ripeness:  Carpenter Outdoor Advertising, Co. v. City of Fenton, 251 F.3d 686 (8 th Cir. 2001)  Kottschade v. City of Rochester, Civil No. 01-898 ADM/AJB (D. Minn. Jan. 22, 2002) Finality Ripeness:  Wheeler v. City of Wayzata, 533 N.W. 2d 405 (Minn. 1995)  Hunkins v. city of Minneapolis, 508 N.W. 2d 542 (Minn. Ctr. App. 1994)

30. Procedural Issues 2.There is no right in state court to have a jury decide the question of liability. Top Ten Continued...

31. Defining the Lucas Box 3. A per se taking under Lucas occurs only where land is rendered valueless. 4. Reasonable planning moratoria and permit delays are not Lucas takings.  Woodbury Place Partners v. City of Woodbury, 492 N.W. 2d 258 (Minn. Ct. App. 1993)  Nuisance Abatement: Zeman v. City of Minneapolis, 552 N.W. 2d 548 (Minn. 1996); City of Minneapolis v. Fisher, 504 N.W. 2d 520 (Minn. Ct. App. 1993) 5.Statutes and regulations may act as “background principles” that defeat takings claims.  Palazzolo v. Rhode Island  Outdoor Graphics, Inc. v. City of Burlington, 103 F.3d 690 (8 th Cir. 1996) (billboard ordinance) Top Ten Continued...

32. Winning Under Penn Central 6.Clear rules define the “parcel as a whole” for takings analysis and prevent segmentation into affected and non- affected portions. 7.The finding of a taking under Penn Central requires a very dramatic (greater than 90 percent) diminution in value.  Animas Valley Sand & Gravel, Inc. v. Board of County Comm'rs, 2001 WL 1598634, No. 00SC151 (Colo. Dec. 17, 2001) (a taking under Penn Central occurs only where regulation leaves a landowner with "slightly greater than de minimis" value) 8.There is no generalized means-end theory of takings liability. The question of whether a land-use law advances a legitimate state interest is a due process inquiry.

33. Properly Limiting the Nollan and Dolan Tests 9. The essential nexus/rough proportionality test of Dolan/Nollan applies only to required dedications, not impact fees and other development conditions. 10. The essential nexus/rough proportionality test of Dolan/Nollan does not apply to so-called “unsuccessful exactions.”  Goss v. City of Little Rock, 151 F. 3d 861 (8 th Cir. 1998) Top Ten Continued...

34. Religious Land Use and Institutionalized Persons Act  Originally passed as the Religious Freedom Restoration Act (RFRA) of 1993.  City of Boerne v. Flores, 521 U.S. 507 (1997) struck down RFRA for exceeding Congress’s enforcement powers under the Fourteenth Amendment.  RLUIPA passed in 2000 to reinstate strict scrutiny for government actions that burden exercise of religion.

35. RLUIPA (cont.)  General Rule: “No government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person” unless it “is in furtherance of a compelling governmental interest” in the “least restrictive means” possible.  Rooted in Congress’s Spending power and the Commerce Clause  Shifts Burden of Proof to Government

36. RLUIPA Case Law  Constitutionality upheld in Mayweathers v. Terhune, 2001 WL 804140 (E.D. Cal. 2001)  Relaxed exhaustion and ripeness requirements in Murphy v. Zoning Comm’n for the Town of New Milford, 148 F. Supp.2d 173 (D. Conn. 2001).  Fear of arrest was precisely the type of chilling effect on religious practices Congress intended to trigger RLUIPA. Murphy v. Zoning Comm’n.

37. RLUIPA Case Law (cont.) Substantial Burden Further Defined:  Aesthetic harm of 150-ft. pole on golf course adjacent to church was not a substantial burden on congregation’s religious exercise. Omnipoint Communications v. City of White Plains, 202 F.R.D. 402 (S.D. N.Y. 2001).  National Park Service’s ban on selling t-shirts on National Mall in Washington, DC was not substantial burden on vocation to spread the gospel. Henderson v. Kennedy, 265 F.3d 1072 (D.C. Cir. 2001).  Importance of Religious Practice also a factor. Henderson v. Kennedy.

38. RLUIPA’s Affect on Zoning  Chicago changed zoning laws to avoid RLUIPA liability. C.L.U.B. v. City of Chicago, 157 F. Supp.2d 903 (N.D. Ill 2001).  Churches sued under RLUIPA’s discrimination provision because clubs and recreation centers were uses of right in certain areas where churches were not.  Chicago required special use permits of other “church-like uses” and suit failed.

39. Palazzolo Coastal Wetlands

43. Palazzolo v. Rhode Island (U.S.)  Takings challenge to the denial of a permit to fill 18 acres of pristine coastal wetlands  Palazzolo seeks $3,150,000 based on profits expected from building 74 single-family homes  Rhode Island Supreme Court deemed the case unripe because: (1) Palazzolo failed to apply for a permit to build the 74 homes; and (2) Palazzolo failed to seek permission to fill less than 11 acres or to build on the upland portion of the property.

44. Palazzolo v. Rhode Island 121 S. Ct. 2448 (June 28, 2001)  5-4 win for landowner  “Movement” case handled by Pacific Legal Foundation in the Supreme Court  Mush – raises more questions than it answers

45. Palazzolo: Six Opinions Justice Kennedy (Majority) -- joined by Chief Justice Rehnquist and Justices O’Connor, Scalia, and Thomas Justice O’Connor (Concurrence) Justice Scalia (Concurrence) Justice Stevens (Dissent) Justice Ginsberg (Dissent) Justice Breyer (Dissent)

46. Four Factual Wrinkles in Palazzolo 1. The Nature of the Takings Claim: Subdivision vs. Beach Club Proposal? 2. The Number of Houses that May be Built: One or Several? 3. Palazzolo’s Acquisition Date: 1978 or 1959? 4. The Trial Court’s Nuisance Finding

47. Summary of Palazzolo Rulings  Case is ripe  Claim is not barred simply because Palazzolo acquired the land after the rules were issued  No per se take under Lucas because the land retained significant value

48. The Palazzolo Ripeness Ruling  Reaffirms basic ripeness rule: court must know the extent of permitted development  “[A] landowner may not establish a taking before a land-use authority has the opportunity, using its own reasonable procedures, to decide and explain the reach of a challenged regulation.”  State law may impose additional ripeness rules -- beyond federal ripeness rules -- to control damage awards based on hypothetical uses.

49. The Palazzolo “Notice Rule” Ruling  Post-enactment acquisition is not an absolute bar to a takings challenge to a statute or regulation  Fairness concerns  “Background principles” include statutes and rules derived from a State’s legal tradition

50. Palazzolo: Expectations Analysis  Pre-existing statutes and rules are still relevant to the Penn Central test  O’Connor concurrence plus four dissenters  No other Justice joined Scalia’s view to the contrary

51. Palazzolo: The Lucas Per Se Rule Issue  $200,000 in value (6.4% of claimed value) defeats a Lucas per se claim; a 93.6% value loss is not enough to trigger the Lucas per se rule  “Token interest” does not defeat a Lucas claim  Palazzolo describes Lucas test both in terms of “use” and “value”

52. Palazzolo: Concluding Observations 1. Both sides claim victory 2. The Court may have muddled the parcel-as-a -whole rule 3. No discussion of the value of wetlands 4. More charged rhetoric from Justice Scalia 5. More rhetorical flourish from the Court in favor of takings claimants

53. Lake Tahoe Picture #1

54. Lake Tahoe Picture #2

55. Lake Tahoe Picture #3

56. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 216 F.3d 764 (9th Cir. 2000), cert. granted, 121 S. Ct. 2589 (June 29, 2001) “Whether the Court of Appeals properly determined that a temporary moratorium on land development does not constitute a taking of property requiring compensation under the Takings Clause of the United States Constitution?”

57.  Lake losing one foot of clarity every year due to uncontrolled development  32-month planning moratorium to allow for preparation of a regional growth plan  450 landowners brought facial takings claim Tahoe Facts

58.  Moratorium reasonable in scope and duration  No interference with reasonable expectations (average holding period in the Tahoe Basin = 25 years)  No Penn Central Taking  Per se taking under Lucas Tahoe: Trial Court

59.  No Lucas Taking  Must consider all uses, including future uses  Cannot “temporally sever” the landowners’ property interests (parcel-as-a-whole rule)  Agins v. City of Tiburon, 447 U.S. 255 (1980) -- “mere fluctuations in value during the process of government decisionmaking, absent extraordinary delay... cannot be considered a ‘taking’...” Tahoe: Ninth Circuit

60.  Key issue = meaning of the Court’s 1987 ruling in First English  The only issue concerns the Lucas ruling  The trial court found that none of the land is “valueless”  It is now undisputed that the moratorium was reasonable in scope and duration  Restrictions under the regional plan are not before the court Tahoe: In the Supreme Court

61. TAHOE ORAL ARGUMENT Woodbury Place Partners v. City of Woodbury, 492 N.W.2d 258 (Minn. Ct. App. 1992) J. SCALIA: My impression is that most of these moratoriums, or moratoria, whatever they’re called would not be total….. MR. BERGER: That’s correct, Justice Scalia – and I think that’s the more typical kind of moratorium, and the kind that most of the amici on the agency’s side have been talking about. C. J. REHNQUIST: There was one Minnesota moratorium that was – seemed somewhat like this that had been sustained by, I think the appellate court. MR. BERGER: There was one, Your Honor, and I would submit that that court erred. It happens. Lower courts do that sometimes. (Laughter.) C. J. REHNQUIST: So we notice. (Laughter.) MR. BERGER: And we believe that that simply is not an appropriate precedent for this court to follow.

62. MCQUEEN V. SOUTH CAROLINA COASTAL COUNCIL  McQueen bought two oceanfront lots in the 1960s  In 1977, South Carolina adopted rules that restrict the filling of coastal wetlands  McQueen took no action for 30 years after his purchase; the lots reverted to their natural condition  In 1991, the State denied McQueen permission to fill and develop the lots  It is undisputed that the permit denial extinguished all economically viable use of the land  Issue: Did McQueen’s inaction for thirty years reflect the lack of a reasonable expectation to develop that defeats his takings claim?