REDUCING JUST COMPENSATION FOR
ANTICIPATED CONDEMNATIONS
Alan Romero*
Journal of Land Use &
Environmental Law, Spring 2006
21 J. Land
Use & Envtl. Law 153
I.
Introduction ............................................................... 153
II.
Determining Just Compensation
......................... 155
III.
Government Actions Reducing Market
Value to be Compensated
156
A. Planning ......................................................................
156
B. Publicity ......................................................................
158
C. Delay ............................................................................
158
D. Zoning .........................................................................
158
E. Building and Safety Regulations
............................ 159
F. Restricting Improvement and
Rehabilitation ....... 160
G. Government Improvements and Conduct Offsite ..
161
IV.
Constitutional Limits ............................................
162
A. Regulatory Takings by Denying
Economically
Viable Use ........................................................................
163
B. Illegitimate Purpose ..................................................
172
C. Figuring Just Compensation ..................................
188
V.
Conclusion .................................................................... 197
Governments,
and those they represent, generally prefer to spend as little as possible on
acquiring property interests. If they can get the desired property interest for
free, even better. Regulation of land often may satisfy the public’s need for
an interest in property without requiring any condemnation.
For example, if the government can prohibit coastal development by regulation
without paying compensation, it can save the expense of buying a negative
easement or fee simple title to the coastal land.[1]
But
sometimes the public interest requires an easement or fee simple title by
condemnation. In those cases, the government [*154] generally cannot hope
to acquire the necessary property interest for free. Of course, sometimes the
government can provide incentives that will induce some owners to voluntarily
grant the needed property interests to the public.[2]
But otherwise the government is going to have to pay.
Even
then, the government would generally like to save as much money as it can.
Sometimes political interests motivate the government to be more generous to
landowners. But
many cases evidence the government’s desire to reduce the just compensation
bill as much as possible.[3]
The
government often tries to save money by arguing that the “just compensation”
required by the Fifth Amendment does not require as much money as the landowner
asserts. Payment of fair market value for the interest condemned is generally
considered to be just compensation. So
the government may argue that fair market value is less than the landowner
believes.[4]
Another
way that the government might save money, though, is to actively reduce the fair
market value of properties it plans to condemn. If the government can plan what
lands it may want to acquire in the future, it can also plan ways to reduce the
costs of acquiring those lands.
This
article discusses various ways in which governments may reduce the cost of
condemning property interests by using their regulatory and police power to
reduce property’s market value in advance. It is not hard for the government
to do. But regulating to reduce just compensation may sometimes
unconstitutionally abuse the regulatory power. So besides describing and
illustrating ways that government may reduce just compensation by regulation and
other precondemnation activities, I discuss the constitutional boundaries to
such strategies. The government’s precondemnation activities may themselves
take property or deny [*155] substantive due process if they deprive the
owner of too much of the property’s value or if they do not further a
legitimate state interest – some interest other than saving money in eminent
domain proceedings. And even if precondemnation activities do
not take property or deny substantive due process, the Just Compensation Clause
sometimes will require the government to pay for the resulting market value
losses if the government does ultimately condemn the property.
The
Fifth Amendment prohibits governments from taking private property unless they
pay owners “just compensation.”[5]
To be just, compensation ordinarily must at least equal the fair market value of
the property taken by the government.[6]
But fair market value is not constant, of course. Property values as a whole may
fluctuate, but changes in a particular property or its neighborhood may also
cause changes in market value. Such changes in market value can contribute to
disagreements about what compensation the government must pay the owner of
condemned property. The
usual rule, however, is that the government must pay the market value at the
moment it actually exercises its eminent domain power, the moment it actually
takes the property from the owner.[7]
But
before that moment, the market may already have anticipated the condemnation by
the government. That anticipation sometimes may make the property worth less on
the market than it was worth before the market had reason to anticipate
condemnation. The government’s preparation for condemnation may also lead to
changes in permitted uses of the property or changes in the surrounding area
that reduce the market value of the subject property.
Ordinarily,
the property owner cannot complain. Changes in market value are one of the
risks, as well as one of the rewards, of property ownership. But if the
government has caused the loss in market value in preparing to condemn the land,
the property owner may object that the government simply took part of her
property in advance. Yet the law generally has been on the government’s [*156]
side: the government pays only the value on the day title changes from owner to
government.
Whether
purposeful or not, there are many ways the government can cause the market value
of future condemnation acquisitions to decline before actually beginning
condemnation proceedings. This section categorizes the types of government actions that reduce
the market value of properties that are ultimately condemned.
Merely
planning to condemn a particular property may reduce the property’s market
value, or at least slow the property’s appreciation in value.[8]
For example, property designated as the possible site of a hazardous waste
facility may have a reduced market value because it is no longer an attractive
or feasible site for homes or for farming.[9]
Therefore, when the time comes to actually condemn the property and use it for a
hazardous waste facility, the government pays only the depressed market value,
not the value it would have if the property were being used for say a mobile
home park, or even if the market were still anticipating such a use.
One
might reason that the mere possibility of condemnation should not depress the
market value because the property owner who starts farming or builds a mobile
home park will still be fully compensated for that value if the government does
eventually con- [*157] demn the property.[10]
But the government only pays for the property it condemns. It does not pay the
costs of relocating a business, lost goodwill, lost opportunity costs as time
passes without the development proceeding, and so on. A developer who wants to
build a mobile home park will undoubtedly sharply discount the value of a parcel
that the government plans to condemn, even though the developer may still be
willing to pay more than the value it would have if the government’s intended
use were the only possible use.[11]
In
Althaus v. United States,[12]
for example, the National Park Service frequently discussed in public meetings
its intention to acquire all private lands within Voyageurs National Park.[13]
The Park Service prepared land acquisition maps and otherwise planned to acquire
those private lands for as little as possible.[14]
As a result, there was virtually no market for buying those private lands, and
even the Park Service argued that speculators might only offer twenty-five to
fifty percent of their market value.[15]
Similarly,
plans to condemn may impair market value by impairing access to credit for
developing the property. In Mesa Ranch
Partnership v. United States,[16]
for example, certain property was included within a Department of Interior Land
Acquisition Plan for Point Reyes National Seashore. But since the government had
not yet initiated condemnation proceedings, the property owner tried to proceed
with developing a residential subdivision. Lenders would not finance the
development, however, because they anticipated the future condemnation, but
could not be sure that the property would be condemned and that the government
would pay sufficient compensation to pay off a development loan.[17]
Besides
formally planning to acquire certain property, government agencies and officials
may publicly discuss the possibility. [*158] Regardless of how definite
those plans may be, the result for the property owner may be the same: the
property’s value is depressed because the market anticipates the possible
condemnation.[18]
The
government may also save some condemnation expense by simply delaying regulatory
action on property that it anticipates condemning. Delay can save money in two
ways. First, if a building permit or zoning action would permit some development
on the property, delaying such actions prevents the property from becoming more
valuable as a result of the planned development.[19]
Second, delaying regulatory action may actually reduce the value of the
property. For example, in Citino v.
Redevelopment Agency,[20]
the plaintiff’s land lost all market value during a nine-year period in which
the redevelopment agency never implemented a redevelopment plan for the
plaintiff’s property and surrounding property.[21]
On the
other hand, timely regulatory action may decrease, rather than increase, market
value. So sometimes the government may promptly take regulatory action on a
property it plans to condemn. The simplest strategy is simply downzoning property that the government
may desire to condemn. If the government wants to condemn land for an
airport, for example, downzoning prospective acquisitions from industrial land
to agricultural land would significantly reduce the property’s market value. Then,
when the time comes to exercise its eminent domain power, the government would
save a substantial amount of money by paying less just compensation to the
owners.[22]
In Grand Trunk Western Railroad [*159]
Co. v. City of Detroit,[23]
the city apparently zoned blighted property along a railway to permit only
multi-family residential buildings, knowing that it could not feasibly be used
for such purposes, but anticipating that at some point the city would condemn
the land for housing development.[24]
Rather
than downzoning the anticipated acquisition, the government may instead
establish buffer zones that can reduce the property’s market value, or at
least slow its increase in value. If neighboring property is zoned industrial
rather than agricultural, for example, the market value of residential property
will be less.
Finally,
the government may target future acquisitions directly with zoning changes. The
government could, for example, designate an airport zone that permits only lower
value uses. Then, when the day comes to actually acquire the land and build an
airport, the land will be worth less than if it had been developed industrially.
A special zone like this may even prevent the land from being developed
altogether. And the market value of land that may only be used for a
governmental use will surely be less than the value of land that could be used
for private development.
Other
regulatory actions can also depress or restrain market value. The government can
use building or safety regulations to prevent or obstruct private development on
land that the government plans or hopes to condemn.[25]
For example, the district court in Amen v. City of Dearborn[26]
found that the city had denied building permits, repair permits, and occupancy
permits in an effort to acquire certain properties for less.[27]
In Roth v. State High- [*160]
way Commission,[28]
the court found that the State Highway Commission had asked several times that
local governments not issue building permits for any property within an area
planned for a highway, and the city consequently refused to issue a building
permit to the plaintiff.[29]
Another
regulatory device to prevent future acquisitions from appreciating in value is
to limit or prohibit improvement and rehabilitation of specified properties. If
the government plans to condemn a blighted area, for example, preventing
rehabilitation in the meantime would ensure that the market value of the land
does not substantially increase. In fact, it almost ensures that the market
value will decrease, because the property will likely continue to deteriorate.
For
example, in In re Elmwood Park Project
Section 1, Group B,[30]
the city notified owners in an urban renewal area that it would be initiating
condemnation proceedings. But during the next ten years, the plaintiff alleged,
the city delayed the proceedings and deliberately caused the value of the
properties to decline by, among other things, refusing to issue building permits
to improve the properties.[31]
Then, twelve years after beginning the process, the city discontinued the
original proceedings and began new condemnation proceedings, using appraisals
based on the now blighted, vandalized, and depressed market values of the
properties.[32]
State
law may permit cities to freeze development of property for a specified period
of time while the city decides whether to acquire or condemn the land.[33]
Governments also have commonly restricted improvement of properties
while they make planning decisions about what regulatory restrictions are
appropriate for the properties.[34]
This sort of a moratorium on development, however, [*161] is not overtly
connected to a decision about whether to condemn properties, and therefore is
less likely to reduce the compensation to be paid when property is condemned. Still,
even this sort of a moratorium for regulatory decision-making will keep the
property undeveloped or unimproved, and if the government ultimately decides to
condemn some property subject to the moratorium rather than just regulate it,
the property will be worth less when condemned.
Even if
the government does not formally prohibit or restrain development, the
government may still try to prevent improvement and rehabilitation informally.
In one case, for example, the landowners alleged that the government told owners
that they would not receive compensation for improvements and discouraged them
in various ways from making improvements.[35]
If these informal means work, they too will reduce the compensation the
government will have to pay when it eventually condemns the property.
Finally,
the government may depress or restrain the market value of land by developing
government improvements nearby. Some improvements may increase the value of
nearby land, like roads, parks and infrastructure, but other improvements may
decrease the value of neighboring land. If the government intends to acquire
land in an area for some government development, acquiring some of the land and
beginning development thereon may reduce the cost of acquiring the rest of the
land.
[*162]
For example, in Merkur Steel Supply, Inc.
v. City of Detroit,[36]
the City of Detroit planned to acquire plaintiff’s land for an airport
expansion. For years, however, the city did not actually condemn the land, but
obstructed plaintiff’s efforts to expand its business on its land. Plaintiff
eventually sued in inverse condemnation, alleging among other things that the
city tried to reduce the cost of acquiring plaintiff’s land by condemning much
of the surrounding property in order to prevent plaintiff’s expansion.[37]
A
related but different claim, also suggested in Merkur
Steel, is that the government intentionally let neighboring properties
deteriorate.[38]
The result, of course, is that the subject property declines in value along with
the neighboring properties.[39]
Similarly, the government may not only allow neighboring properties to
deteriorate, it may even demolish them in the process of redevelopment. When a
building is surrounded by debris and vacant lots, it is much less valuable than
when surrounded by other valuable uses.[40]
The
government could acquire land for very little if it could use all of these
strategies freely. If there were no limits, the government could simply prohibit
use of a parcel for any purpose and make it useless, then condemn it and pay no
compensation at all. But of course there
are limits. This section discusses three constitutional limitations on reducing
just compensation for anticipated condemnations. First, the government’s
precondemnation conduct may itself amount to a taking by depriving the owner of
the use or value of her property. Second, the government may take property, or
deny substantive due process, if the regulation does not serve a purpose other
than reducing the compensation to be paid when the [*163] property is
eventually condemned. Finally,
even when the regulation does not take property or deny due process, if the
government does ultimately condemn the property, the Fifth Amendment may require
the government to pay the higher market value of the property before its
regulatory activities depressed the value.
If
regulation goes too far, it will be treated as a taking of private property
requiring just compensation, even though the government may not have intended to
take the property.[41]
The compensation-reducing strategies discussed in Part II may sometimes go too
far.
Government
land-use regulation that deprives the owner of economically viable use of her
land is a taking of private property requiring just compensation.[42]
In rare cases, the government may make a property useless for any purpose other
than its own planned use. But even if the property is not useless, the restraint
on use and the resulting loss of value may be so extreme that the government has
effectively taken the owner’s property. The court will consider “[t]he
economic impact of the regulation on the claimant and … the extent to which
the regulation has interfered with distinct investment-backed expectations” in
deciding whether the regulation is constitutionally equivalent to a taking.[43]
In this section, I consider possibilities that the precondemnation activities
discussed in Part II will amount to a taking in this way by reducing the
property’s value so much that it is equivalent to taking the property away
from the owner.
Ordinarily,
planning and publicity will not themselves impair the market value so severely
that they effectively take the property from the owner. Planning a condemnation,
or even passing legislation authorizing a condemnation, obviously does not
actually [*164] take the property from the owner, nor does it make the
property useless. Plans may change, of course, and the property may never
actually be condemned by the government.[44]
If courts grant just compensation for merely planned takings, inverse
condemnation suits can subvert the legislative power to decide if and when to
condemn.[45]
In the meantime, the owner is still legally free to use or transfer her property
as she wishes until the government actually condemns it. “[I]n the absence of
an interference with an owner’s legal right to dispose of his land, even a
substantial reduction in the attractiveness of the property to potential
purchasers does not entitle the owner to compensation under the Fifth
Amendment.”[46]
Many cases have held that planning a condemnation therefore does not take the
property until the condemnation actually occurs.[47]
But
sometimes planning or publicity may actually deny an owner all economically
viable use of her land, or nearly so.[48]
For example, if the property’s present use is not economically viable,
planning and publicizing condemnation for the property may make it practically
impossible to rehabilitate the land or sell it to another who would develop it
in an economically useful way.[49]
A [*165] number of cases have held that urban blight declarations can
destroy substantially all the value of property in the blighted area. If the
property is not ultimately condemned, some courts have correctly held that the
government has nonetheless taken the owner’s property.[50]
When the
government delays giving permission for property use or development, the delay
may be a taking of this sort if, during the period of delay, the property cannot
be used productively. Obviously, if the property is already developed and
valuable, even a very long delay in permitting some more valuable use will not
deprive the owner of all or nearly all value – just the extra increment of
value that the owner sought, however substantial that may be. But
if the property is undeveloped or otherwise useless in its present condition and
the owner is unable to use or sell her property while the government delays
decisions about permits, zoning or condemnation, the owner has been deprived of
all value of her property during that period of delay.[51]
In Ehrlander
v. State Department of Transportation & Public Facilities,[52]
for example, the developer, Ehrlander, bought undeveloped land for residential
development. Ehrlander sought subdivision plat approval, but the city denied
approval for part of his property because the Department of Transportation (DOT)
intended to acquire an unspecified part of the property for a highway.[53]
Ehrlander alleged that DOT unreasonably delayed the condemnation of his land for
three years, thus taking his property because he could not subdivide his
property as long as the city was waiting for DOT to decide what land it was
going to condemn for [*166] the highway.[54]
The Alaska Supreme Court held that Ehrlander had properly alleged a taking,
because he was “deprived of the most important incidents of ownership, the
rights to use and alienate property.”[55]
The owner was deprived of the right to use the property because it was
unimproved and he could not improve it while the planned condemnation prevented
subdivision approval. Additionally, his ability to market the property was
allegedly “substantially impaired” by the planned, but uncertain,
condemnation.[56]
But even
if the owner is deprived of all value during a period of delay, the delay may
not last forever. The government may eventually issue the permit or otherwise
allow the property to be used again. The delay itself will only be a taking if,
in light of all the circumstances, the burden on the owner is unfair and should
be borne by the public.[57]
As the Supreme Court put it in Penn Central Transportation Co. v. City of New York,[58]
these are “essentially ad hoc, factual inquiries.”[59]
Of course, “the duration of the restriction is one of the important factors
that a court must consider in the appraisal of a regulatory takings claim.”[60]
But in Tahoe-Sierra Preservation Council,
Inc. v. Tahoe Regional Planning Agency, the Court said that “with respect
to that factor as with respect to other factors, the ‘temptation to adopt what
amount to per se rules in either direction must be resisted.’“[61]
Other considerations include the “landowners’ investment-backed
expectations, the actual impact of the regulation on any individual, the
importance [*167] of the public interest served by the regulation, [and]
the reasons for imposing the temporary restriction.”[62]
So if
the government’s delay has a major economic impact on the owner’s
investment-backed expectations, as in Ehrlander,
and the government does not have a good reason for the delay, it is likely to be
a taking. But if the government does have a good reason for the delay, it is
less likely to be a taking. In fact, while Tahoe-Sierra
Preservation Council resists categorical rules, most other courts that have
considered the issue have suggested that normal and reasonable delays can never
be takings.[63]
The Supreme Court in First English
Evangelical Lutheran Church v. County of Los Angeles[64]
stressed that it was not holding that the government must pay compensation for
“normal delays in obtaining building permits, changes in zoning ordinances,
variances, and the like which are not before us.”[65]
Many cases have held that normal delays do not take property, even if the
property is useless during the period of delay.[66]
In Agins v. City of Tiburon,[67]
for example, a pending condemnation limited the owners’ ability to sell their
property, but they were free to sell or develop when the proceeding ended. The
Court stated that “[m]ere fluctuations in value during the process of
governmental decisionmaking, absent extraordinary delay, are ‘incidents of
ownership. They cannot be considered as a ‘taking’ in the constitutional
sense.’”[68]
The
emphasis on ad hoc determinations in Tahoe-Sierra
Preservation Council seems to leave open at least a hypothetical possibility
that consideration of all the circumstances might find a temporary regulatory
taking based on other factors, even though the delay was normal. And some courts
have suggested that even normal delays may take property. The Alaska Supreme
Court, for [*168] one, reversed summary judgment for a condemning
authority even though the plaintiff had not alleged that the authority’s delay
was extraordinary.[69]
If the property is useless for a substantial period, and the government is
depriving the owner of that value, it might seem that the public as a whole
should bear the burden of lost property value resulting from public
deliberations about condemnation and the like.[70]
But that argument seems obviously to go too far, because it would require the
government to pay compensation for delay incident to even normal permitting
processes. As the Court observed in Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning
Agency:
[T]he extreme categorical rule that any deprivation of all
economic use, no matter how brief, constitutes a compensable taking surely
cannot be sustained. Petitioners’ broad submission would apply to numerous
“normal delays in obtaining building permits, changes in zoning ordinances,
variances, and the like,” as well as to orders temporarily prohibiting access
to crime scenes, businesses that violate health codes, fire-damaged buildings,
or other areas that we cannot now foresee.[71]
The
Court reasoned that a “rule that required compensation for every delay in the
use of property would render routine government processes prohibitively
expensive or encourage hasty decisionmaking.”[72]
Besides
this practical fear that the government would have to abandon or pay
compensation for “numerous practices that have long been considered
permissible exercises of the police power,”[73]
there is a good theoretical reason to conclude that normal delays [*169]
do not take property. While even normal delays may very well deny the owner use
of her property for a time, all properties are equally subject to such delays
and enjoy the benefits of other properties being subject to such decision-making
processes as well. This “average reciprocity of advantage”[74]
means that the owner does not unfairly bear a burden to benefit the public in
its efforts to regulate land uses because all other owners are likewise subject
to the same burden, which benefits the owner in return.[75]
When
delays are extraordinary, however, the owner is subjected to a burden to which
others are not subject. Furthermore, that burden cannot even be justified by the
importance of the government’s activity because it is not important for the
government to delay extraordinarily, beyond what the normal and reasonable
process requires. Depriving the owner of
all economically viable use because of extraordinary delay therefore should
generally be considered a taking, although some such cases might still not be
takings because the temporary burden on the owner is so small in relation to the
value of the property as a whole over time.[76]
Delay
may also constitute a taking when the property has some value to begin with, but
during the period of delay it becomes useless. In such a case, the taking is not
just temporary. The government has not just deprived the owner of the use of
valuable property for a time, but has instead made the property worthless by its
conduct. In Citino v. Redevelopment Agency,[77]
for example, the redevelopment agency designated plaintiff’s apartment
building for condemnation and redevelopment, but agreed that plaintiff could
redevelop the property himself on certain conditions. Plaintiff improved the
property under the threat of fines from the Agency. But even though the Agency
acquired the neighboring properties, for nine years the Agency did not follow
through with its redevelopment plan and allowed the area to deteriorate so [*170]
much that plaintiff’s building was practically useless.[78]
The court therefore held “that the defendant’s actions in failing to
implement its redevelopment plan for the area in a reasonable amount of time,
although not formally abandoning the plan, and in permitting the overall
deterioration of the property within the area, amounts to a taking of the
plaintiff’s property without just compensation.”[79]
If the
delay is a taking under the circumstances, the government must pay just
compensation for the taking period even if the government later permits
development. In First English, the
county’s ordinance allegedly denied the property owner all use of its property
for several years. The Supreme Court held that invalidating the ordinance in
such a case, and thereby allowing the owner to use its property again, was “a
constitutionally insufficient remedy” and that the county must pay just
compensation for the period during which it deprived the owner of all use of its
land.[80]
The Court reasoned that “temporary use and occupation” takes property from
an owner just as permanent occupation does.[81]
If
the government downzones, denies building permits, or otherwise restrains the
use and development of the land to keep it more affordable for eventual
condemnation, this inverse condemnation theory will generally find the
government’s regulatory action to be a taking only if the property cannot
practically be used for any permitted purpose.[82]
The land-use regulation may be unconstitutional because of the government’s
illegitimate purpose, but that’s a different theory discussed in the next
section.[83]
As far as this theory goes, the regulatory act will generally be a taking only
if the property is undeveloped, or maybe if somehow its currently [*171]
permitted use has become completely unfeasible.[84]
Even then, if the zoning action, development moratorium, or other regulatory
action is only temporary while the government considers condemnation or
appropriate land uses or whatever, and the period of deliberation is normal or
reasonable, the regulatory act still will not be considered a taking under this
theory.[85]
This
kind of precondemnation activity will never be a taking solely because of its
effect on an owner’s property. If the government condemns other land in the
area, or allows the surrounding area to deteriorate, or otherwise uses or
affects neighboring land in a way that depresses the market value of property to
be condemned, the government has not even restrained the owner’s use and
enjoyment of her property, let alone taken it from her. Government conduct
offsite can certainly affect a property’s value, but mere injury to market
value does not amount to a taking.[86]
Neighbors, public or private, can always affect a property’s value by what
they do with their own property. That is one of the risks of property ownership.
However,
if the government’s offsite conduct causes actual damage to the property,
rather than merely making it worth less because of how it changes the
surrounding area, the government may have to pay just compensation. “A
property owner may be required to bear without compensation incidental damages
which are suffered alike by the public in general, but he is entitled to
compensation for special and peculiar damage inflicted upon him.”[87]
[*172] This may be especially true under state constitutions that require
compensation for property “taken or damaged.”[88]
So if the government builds an airport runway and the runway causes a nuisance
on property not yet condemned, the government may have to pay just compensation
for the lost market value of the uncondemned property.[89]
But if the property is simply worth less because the government’s conduct has
made the area less desirable for development, changed traffic patterns, and so
on, then the government does not have to pay just compensation.[90]
Government
regulation may also deny the owner substantive due process of law if the
regulation does not further a legitimate public purpose. In Village
of Euclid v. Ambler Realty Co.,[91]
the Supreme Court held that a zoning ordinance does not violate the Due Process
Clause unless it is “clearly arbitrary and unreasonable, having no substantial
relation to the public health, safety, morals, or general welfare.”[92]
Then, in Nectow v. City of Cambridge,[93]
the Supreme Court held that the application of a zoning law to a particular
property did violate the Due Process Clause because it did not “bear a
substantial relation to the public health, safety, morals, or general
welfare.”[94]
For twenty-five years, the Supreme Court also maintained that “[t]he
application of a general zoning law to particular property” may similarly be a
taking if it “does not substantially advance legitimate state interests.”[95]
But [*173] the Court recently decided in Lingle
v. Chevron[96]
that the purpose served by a regulation does not affect whether the regulation
is a taking.[97]
Still, the Court reaffirmed that a regulation may violate the Due Process Clause
if it does not serve a legitimate governmental purpose.[98]
Despite
the Lingle decision that failure to
substantially advance a legitimate state interest does not make a regulation a
taking, the regulation’s purpose may still result in a taking in one way that Lingle
acknowledges. That is, it may be a taking not because it doesn’t serve a
legitimate purpose, but because the purpose it serves is unfairly or uniquely
accomplished at the expense of the individual property owner. The Court in Lingle
emphasized again that the Takings Clause does not prevent any conduct by the
government, but simply requires the government to pay compensation when it would
otherwise “forc[e] some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a whole.”[99]
The Court explained that the “substantially advances” test “cannot tell us
when justice might require that the burden be spread among taxpayers through the
payment of compensation.”[100]
The test ensures that the regulation is doing something legitimate and useful,
but:
[t]he owner of a property subject to a regulation that
effectively serves a legitimate state interest may be just as singled out and
just as burdened as the owner of a property subject to an ineffective
regulation. It would make little sense to say that the second owner has suffered
a taking while the first has [*174] not. Likewise, an ineffective
regulation may not significantly burden property rights at all, and it may
distribute any burden broadly and evenly among property owners. The notion that
such a regulation nevertheless “takes” private property for public use
merely by virtue of its ineffectiveness or foolishness is untenable.[101]
The
Court thus seems to have indicated that a regulation may be a taking not because
of the magnitude of the burden on the owner, but because of “how any
regulatory burden is distributed among property owners.”[102]
Even if inequality alone cannot create a taking, the distribution of the burden
is certainly relevant to the takings determination, at least.
A
regulation, then, might be a taking because its purpose is by its nature
achieved at the expense of individual property owners rather than being fairly
distributed among property owners.[103]
The typical regulatory purposes are naturally accomplished without unfairly
unequal burdens on property owners. Zoning regulations are naturally reciprocal,
in that all landowners are generally subject to such regulations and all,
including the subject property owner, enjoy the benefit of the general
regulatory approach.[104]
And some regulations that burden smaller groups of landowners are still
constitutional without compensation because of their [*175] general
public benefit. In some early takings cases, the Supreme Court held that even if
regulation burdened only one or a few landowners, the government need not pay
compensation when the regulation was prohibiting “harmful or noxious uses.”[105]
Such regulation is not unfair, despite its unequal burden, because it simply
mitigates or prevents harms or burdens caused by the property owners themselves.
But in Penn Central, the Supreme Court
said that those earlier cases are “better understood as resting not on any
supposed ‘noxious’ quality of the prohibited uses but rather on the ground
that the restrictions were reasonably related to the implementation of a policy
. . . expected to produce a widespread public benefit and applicable to all
similarly situated property.”[106]
And in Lucas v. South Carolina Coastal
Council,[107]
the Court said that this principle “was … the progenitor of our more
contemporary statements that ‘land-use regulation does not effect a taking if
it ‘substantially advance[s] legitimate state interests.’”[108]
While the Court has now rejected the broader-sounding “substantially
advances” test for takings, Lingle
reaffirms this narrower understanding of the test – that a regulation may be a
taking if it burdens a single landowner or a small group of landowners, but does
not apply to all similarly situated property, or does not produce a widespread
public benefit. That is, it may be a taking if the regulatory burden is unfairly
distributed.
So if a
regulation furthers a purpose that naturally requires unfairly unequal burdens,
then the regulation could be a taking for that reason. Some courts have found takings, for
example, when “land use restrictions . . . are clearly imposed to support or
subsidize some distinct Government function or enterprise (such as the provision
of public parks, schools, playgrounds, roads, airports, or flood control
projects, etc.), where the burdens imposed are based largely on the accident of
ownership of land at a particular location.”[109]
In such cases:
[T]here
is no approximation of equal sharing of cost or of sharing according to capacity
to pay as there is where a public benefit is obtained by subsidy or expenditure
of public funds. The accident of ownership [*176] of a particular
location determines the persons in the community bearing the cost of increasing
the general welfare.[110]
While
the benefit of the government improvement may be widespread, the regulatory
burden is not “applicable to all similarly situated property,”[111]
but only those properties that happen to be in the location selected for the
government’s project.
Similarly,
if the government restrains property development only because it anticipates
condemning the property and wants to save money, the government imposes a unique
burden on the property owner simply because of the accident that the owner has
property the government wants. Property
owners generally are not subject to such restraints. Even similar types of
property are not subject to such restraints - only those properties that the
government has happened to select for acquisition. So if the only reason for a precondemnation development restraint is to
save money when the property is ultimately condemned, the restraint is by its
nature unequal and takes property because, in fairness, the public as a whole
should bear the burden of land acquisition for public projects.
Penn
Central also says that one factor to
consider in deciding whether a regulation is a taking is “the character of the
governmental action.”[112]
The Federal Circuit has recently held that the government’s bad faith is a
relevant part of the character of the government’s action. In Cooley
v. United States,[113]
the court considered a takings claim based on the Army Corps of Engineers’
denial of a wetlands fill permit under the Clean Water Act. In discussing the
issues on remand, the court said:
Accordingly, those agencies receive appropriate deference in
acquiring technical information. However, in the instant case the agency admits
its requests for additional information were not necessary for issuing a permit.
The trial court previously discounted the credibility of the Corps’ argument
that the permit denial letter requested additional information in an altruistic
effort to issue a permit. In conducting a Penn
Central analysis, the trial court may weigh [*177] whether the
Corps’ conduct evinces elements of bad faith. A combination of extraordinary
delay and intimated bad faith, under the third prong of the Penn Central analysis, influence the character of the governmental
action.[114]
So in
this way, too, the purpose of the government’s precondemnation activity is
relevant to deciding whether that activity amounts to a taking of property
requiring just compensation.
Finally,
regardless of how the Supreme Court construes the federal Takings Clause, state
takings clauses may still be construed to require just compensation when
government regulation restrains property use without a legitimate reason. In Johnson v. City of Minneapolis,[115]
for example, the Minnesota Supreme Court recently declined to decide a federal
takings claim under the Penn Central
test and instead found a taking under the state constitution.
The court said that, under the Minnesota constitution, “an abuse of the power
of eminent domain may be tantamount to a regulatory control, constituting a de
facto taking ‘when that abuse is specifically directed against a particular
parcel.’”[116]
The city had misled the property owners into thinking that their properties
would certainly be acquired for redevelopment and had acted in bad faith in
causing the redevelopment deal to fail.[117]
The court held that the city had thus taken some of the value of the properties
that were designated for acquisition but never condemned.[118]
The court ended with the caution that its decision does not mean “property
owners are entitled to compensation for any diminishment in value or loss of
income caused by the prospect that their property will be condemned at some
future date,” but Johnson
certainly indicates the possibility that state constitutions will grant just
compensation when the government restrains development of specific properties in
bad faith and thereby impairs the properties’ value.[119]
Precondemnation
activity that serves no purpose other than saving money on condemnation is also
a deprivation of substantive due process.
The Supreme Court “[has] not elaborated on the standards for determining what
constitutes a ‘legitimate state interest,’” but has said in the takings
context that the term includes a “broad range of governmental purposes.”[120]
Ordinarily, of course, land-use regulations further state interests in planning
communities, protecting health and safety, and harmonizing land uses, although
they could certainly further other legitimate purposes as well. But
if the government’s precondemnation activity does not further a legitimate
purpose, then it does not matter how much of the owner’s property is taken.
The government’s action is invalid under the Due Process Clause.
Whatever
the range of “legitimate” state interests, the Supreme Court has identified
one illegitimate interest: obtaining a property interest without paying
compensation. In Nollan
v. California Coastal Commission, the Court held that conditioning a
building permit on the surrender of a lateral easement across the beach was
unconstitutional. The Court explained:
Similarly here, the lack of nexus between the condition and the
original purpose of the building restriction converts that purpose to something
other than what it was. The purpose then becomes, quite simply, the obtaining of
an easement to serve some valid governmental purpose, but without payment of
compensation. Whatever may be the outer limits of “legitimate state
interests” in the takings and land-use context, this is not one of them. In
short, unless the permit condition serves the same governmental purpose as the
development ban, the building restriction is not a valid regulation of land use
but “an out-and-out plan of extortion.”[121]
As the
Court noted, the government has a legitimate interest in obtaining property,
like easements. The government likewise has a legitimate interest in saving
money in acquiring property for public uses. But it is not legitimate to
circumvent the Just Compensation Clause and try to obtain that property for free
by [*179] using the regulatory power as leverage to extort the property
from the owner. Similarly,
it is not legitimate to try to obtain property for less by using the regulatory
power to depress market values, rather than to further good-faith planning
goals.[122]
In the exactions situation, the government seeks to obtain a property interest
for free, whereas in the precondemnation regulation situation, the government
merely seeks to pay less for an interest it may eventually condemn. But that is
a difference only of degree. In both cases, the government is not
regulating to reduce public burdens or injuries resulting from a land use, to
harmonize conflicting land uses, or to further any other such legitimate
purpose. The government is regulating simply to save money in acquiring land.[123]
There is
another, more significant difference between exactions and precondemnation
regulation, however. When the government demands that the property owner convey
some property interest in exchange for permission to develop her property, the
government’s own conduct objectively reveals the illegitimate reason for the
property regulation. The government conditionally denies permission to develop
the property, but tells the owner it will grant permission if the owner conveys
the property interest. So the government will permit development if the owner
conveys the interest, but will restrain development if the owner does not convey
the interest. At that point, the only reason why the regulation [*180] is
still restraining development is that the owner hasn’t given the government
some of her property. That is not a legitimate reason to restrain development.[124]
The
objective reasons for precondemnation regulation, on the other hand, are less
clear. Even if the regulation or other precondemnation activity does depress the
property’s value, thus reducing just compensation to be paid, the
precondemnation activity may also have furthered other purposes that are
legitimate. If the government could have rationally thought that its
precondemnation activity would further some legitimate purpose – some purpose
other than reducing the amount to be paid in just compensation later – then
the government has not denied the property owner substantive due process.[125]
So courts should be deferential and only find a substantive due process
violation when there is clearly no possible purpose for precondemnation activity
other than saving condemnation expenses in the future.[126]
This is
true even if the government regulators did not actually intend to further any
purpose other than saving money on later condemnations. As long as the
precondemnation activity could have been thought to further some legitimate
purpose, it should not matter that the regulators were primarily or even
entirely motivated by the desire to save money on condemnation.[127]
As the California Supreme Court observed in Landgate,
Inc. v. California Coastal Commission:[128]
The Court of Appeal erred in its attempt to divine … the
“true,” illegitimate, motive for the Commission’s [*181] decision
to deny Landgate’s development permit. The proper inquiry is not into the
subjective motive of the government agency, but whether there is, objectively,
sufficient connection between the land use regulation in question and a
legitimate governmental purpose so that the former may be said to substantially
advance the latter. This type of objective inquiry is consistent with the
principle that courts do not delve into the individual purposes of
decisionmakers in a quasi- adjudicative proceeding, but rather look to the
findings made by the government agency and determine whether these are based on
substantial evidence. Thus, we must determine not whether a sinister purpose
lurked behind the Commission’s decision, but rather whether the development
restrictions imposed on the subject property substantially advanced some
legitimate state purposes so as to justify the denial of the development permit.[129]
However,
some courts have relied upon evidence of actual illicit intent in deciding
substantive due process challenges to land use regulation.[130]
For example, in Blanche Road Corp. v.
Bensalem Township,[131]
the Third Circuit held that evidence of intentional delaying of permits to
prevent a subdivision development would establish a substantive due process
violation.[132]
Considering such evidence makes more sense if a court is trying to decide if an
executive official was acting so arbitrarily, or with such bad faith, that it
“shocks the conscience,” a substantive due process standard adopted by the
Supreme Court in reviewing executive actions like police conduct in pursuing a
motorcyclist.[133]
The Third Circuit has held that this standard should apply to executive action [*182]
concerning regulation of land as much as it applies to other executive action.[134]
But
I don’t need to get into the debate about whether land-use regulatory actions
are legislative or executive, a debate which may have little practical
significance in resolving substantive due process cases anyway.[135]
The substantive due process theory of Nollan
is clearly based on an objective fact about the purposes served by the
government regulation, not an assessment of how egregiously the regulators
acted.[136]
Still, evidence of actual intent may not be entirely irrelevant to this
particular inquiry. This substantive due process theory requires a court to
examine the relationship between the means chosen by the government and the ends
served thereby. Courts generally should defer to government decisionmakers, as
long as there is any apparently rational purpose for their action. But if the
evidence shows that the government was actually motivated by illegitimate
purposes, a court does not have the same reason to defer to the government’s
judgment. There is not as much of a reason to assume the government was acting
in good faith to achieve some legitimate purpose when the court can see what the
government actually intended to achieve. The actual illegitimate motive itself
may not thus make the action a due process violation, but it may justify the
court in more closely scrutinizing whether the action did objectively advance
some legitimate purpose despite the actual illegitimate purpose.[137]
Some
courts have held that if property owners are not entitled to receive development
permission, the Due Process Clause does not protect them at all because denying
permission does not deprive them of any property right.[138]
This “entitlement” requirement [*183] comes from the Supreme
Court’s decision in Board of Regents v.
Roth,[139]
which involved neither land-use regulation nor substantive due process.[140]
I have previously argued that this reasoning is inconsistent with the Supreme
Court’s original approval of zoning in Euclid
v. Ambler Realty Co.[141]
The ordinance in Euclid did not
entitle the owners to develop their property, but the Court did not say that
they therefore had no due process rights in developing their property. Instead,
the Court reasoned that the public benefits of zoning outweighed the
individual’s right to use her property as she pleased.[142]
Even while applying its “entitlement” precedents, the Second Circuit
acknowledged that:
It is not readily apparent why land regulation cases that
involve applications to local regulators have applied the … entitlement test
to inquire whether an entitlement exists in what has been applied for …
instead of simply recognizing the owner’s indisputable property interest in
the land he owns and asking whether local government has exceeded the limits of
substantive due process in regulating the plaintiff’s use of his property by
denying the application arbitrarily and capriciously.[143]
Regardless
of whether an owner has a “right” to a certain sort of development approval,
the owner clearly owns her property. She has the right to use her property any
way she chooses within the boundaries of the common law, such as nuisance law.
Any further restraint of her property use by the government takes away some of
her property rights, and must be consistent with the limitations of the Due
Process Clause as well as the Takings Clause.[144]
In
summary, government’s precondemnation activities may take property, and deny
the owner substantive due process, if they deprive the owner of some part of her
property rights with no objective purpose other than obtaining the property for
less, because such property restraints are not fairly and equally distributed
and do not further a legitimate public purpose. The rest of this section
discusses the circumstances in which particular compensation- [*184]
reducing practices may take property or deny substantive due process in this
way.
The
government certainly has good reasons to plan its acquisitions well in advance.
Advance planning promotes deliberate consideration of government projects.
Planning future acquisitions is also necessary so that the government can plan
funding for those acquisitions, which often requires years of preparation. And
planning future acquisitions helps prevent the economic waste that would result
from incompatible development on or near the planned government development.
Planning future condemnations therefore will consistently serve a legitimate
state interest.
Publicizing
government plans also generally has a legitimate purpose. The public has an
interest in such plans and should have an opportunity to discuss, comment, and
object.[145]
“[T]o allow recovery under all circumstances for decreases in the market value
caused by precondemnation announcements might deter public agencies from
announcing sufficiently in advance their intention to condemn.”[146]
[*185]
Statutes may even require such an opportunity for the public to comment.[147]
But
sometimes the government publicizes before it plans. That is, sometimes the
government may indicate to the public that it may condemn certain land in the
future, even though the government has not actually gone through the applicable
planning process to arrive at that conclusion. In such cases, the government
cannot justify publicity on the same grounds.
Statutes and due process would not require the publicity. Still, the government
might reason that public awareness and input, even before the planning process,
will help ensure planning that is sensitive to public concerns and reduce the
severity of potential citizen reaction. Sometimes, though, a plaintiff might
establish a substantive due process violation if the only purpose of early
publicity, without any procedural need to publicize, is to prevent land from
being developed in the meantime in a way that would increase the ultimate cost
to the condemning authority.
As
discussed above, extraordinary delay may be a taking when it deprives the owner
of all use and enjoyment of her property for a time.[148]
But even if it deprives the owner of some, but not all use, or deprives the
owner of all use for a period not long enough to amount to a taking, it should
still be a substantive due process violation if it does not serve a legitimate
state interest. Delay that results from good faith deliberation always serves a
legitimate state interest, even if the government is doing a poor job of
deliberating. But
in some cases it seems the government’s only reason for delay is not to
deliberate further, but to stall while it considers condemning the property. If
so, the government’s reason is not legitimate.[149]
Sure, the government wants time to consider a condemnation decision. But it is
not a legitimate reason to prevent development that otherwise is consistent with
land use regulations and policies. The only reason for the delay is that the
government does not want the owner to develop the property, or receive building [*186]
or zoning permissions for the property, in a way that increases the cost of
condemning the property. Saving money in this way is not a legitimate public
purpose.
If the
government zones a property in order to assure compatibility with neighboring
uses, to promote orderly development, or for other normal planning purposes, the
zoning itself is not a substantive due process violation regardless of whether
the zoning depresses market value, although it may still be a taking if it makes
the property useless, of course.
But
if the government downzones a particular area because it anticipates condemning
the land, the downzoning should be treated as a substantive due process
violation because the government’s purpose is not legitimate. The government
legitimately desires to reduce the costs of land acquisition, but it cannot
legitimately restrain land use just to save itself money.[150]
Some
courts have recognized this possible unconstitutional abuse of the zoning power.
For example, in State ex rel. Tingley v.
Gurda,[151]
the Wisconsin Supreme Court found that:
[T]he city planning commission contemplates some time in the
future a boulevard along Mud creek, and, with that in view, a zoning regulation
has been promulgated destroying the value of the property which will later have
to be taken for that purpose, so that the city may be able to carry out the
boulevarding project with less expense to itself.[152]
The
court held that the city had exceeded the authority of the zoning law when it
used the zoning power to zone “a block in the heart of an industrial section
to residential purposes only” in order to reduce the cost of later
condemnation.[153]
On the
other hand, the government may have a legitimate reason to directly prevent
development of property that it is considering condemning. The government does
not want the owner to develop the property wastefully. Even if the government
fully compensates the owner for the increased market value, the owner’s
investment was still economically wasteful. The government ends up undoing
valuable improvements that it does not need, and having to pay for the
privilege. It may seem that the government is simply saving itself some money,
but it is doing more than that. It is preventing waste. So a moratorium on
development while condemnation is being considered should not be considered a
taking for failure to advance a legitimate state interest.
But if
the regulatory restraint is not preventing waste, then it seems to clearly be a
taking. For example, in the unlikely case that a moratorium prevented
rehabilitation of an improvement that the government would keep and use after
condemnation, the moratorium would not prevent waste in the same way as when the
improvements would not long be useful. The government’s only other purpose is
to keep the value of the property down, which is an illegitimate purpose.
The
biggest problem for the landowner claiming a substantive due process violation
based on this kind of precondemnation activity is that the government has not
interfered with any recognized property right. A property owner may have an
expectation, but not a property right, to a good or compatible neighborhood
around her. If the government has not taken away any of the owner’s property
rights at all, it doesn’t matter what purposes the government has advanced.[154]
The property owner has no due process claim.
One way
the government may try to reduce the market value of properties it plans to
condemn is by acquiring other properties in the area first.[155]
Although reducing compensation may be one purpose, government condemnation and
development nearby will also surely serve a legitimate interest in advancing
whatever [*188] project the government has in mind. But even if in an
unusual case the evidence showed that the government really had no need of
certain property condemned nearby and had no plans to make use of it, and also
showed that the effect was to depress the market value of necessary properties,
the owner of later-acquired property could not claim that the earlier
condemnations denied her substantive due process, because she had no property
interest in what happened on the neighboring land. As for those whose land was
taken, they would have no reason to claim a taking or due process violation
because the government in fact formally took their land and paid them just
compensation for it.
In some
cases the government allegedly neglected, demolished, or otherwise affected
neighboring properties in order to reduce the value of property in the area
before acquiring it.[156]
Doing so might further a legitimate state interest in using public resources
wisely by not maintaining or rehabilitating properties that the government
intends to demolish anyway. And again, the affected property owner cannot really
claim that the government has taken her property by allowing the area to
deteriorate. However substantial the impact on her use and enjoyment of the
property, the government has not taken away any recognized property right,
regardless of the interests advanced by its actions.
Most of
the time the government’s precondemnation activities will not themselves
amount to a taking. If the government were to stop there and never condemn the
property, it would need to pay no compensation to the owner at all, even though
the owner may have suffered some actual lossduring that anticipated condemnation
period. That is simply one of many risks that come with ownership: the
government and private owners alike may make decisions that affect the use and
value of any particular [*189] property, and the value of the property
will rise and fall because of those decisions, and in anticipation of those
decisions.[157]
But
when the government does ultimately take the property in formal condemnation
proceedings, there is a second constitutional question: how much must the
government pay for the condemned property? What compensation is “just”? The
usual rule is that the government must pay the market value at the moment it
actually takes title from the owner.[158]
But a property’s real market value might have been significantly higher if the
government had not already started depressing the value by its regulatory or
other precondemnation activities.
In
general, the government should compensate owners for their full loss. “The
owner is to be put in the same position monetarily as he would have occupied if
his property had not been taken.”[159]
Taking property is not an instantaneous action. After making the decision to
condemn, planning, funding, negotiating, and litigating a taking can take a long
time. If the property declines in value because of that process, or because of
other precondemnation activities, the owner has suffered a loss solely because
of the taking, and the government should make her whole.[160]
Of
course, we cannot determine actual market values very precisely to begin with.[161]
And then isolating different causes of [*190] market value declines is
even harder. So
sometimes it may be too speculative to determine how much the property would be
worth were it not for the government’s precondemnation activities.[162]
But the owner should be able to offer such proof and should be able to recover
such value if she can sufficiently prove it.[163]
Proof of
just compensation is even harder when there are multiple causes of market
decline, or when market values generally increase, but the pending condemnation
slows the increase in market value of the subject property. When the
precondemnation activities themselves constitute a taking, as discussed above,
the government must pay the entire market value at that earlier time. There is
no need to isolate different effects on market value in such a case. But when
the precondemnation activities themselves are not a taking, and the question is
simply what compensation is required upon eventual condemnation, the government
usually should not have to pay the owner for declines in value due to market
changes generally, only those declines specifically due to the government’s
precondemnation activities.[164]
Somehow the evidence must establish how much loss was due to the precondemnation
activities and not other market influences.
In some
cases, however, just compensation should include lost market value even if due
to general market decline rather than anticipation of condemnation. If the
government has indicated its intent to condemn or otherwise begun the
condemnation process in some way, the market value may decline, but it also may
be practically impossible to find a real buyer at all. If the owner is unable to
sell the land because of the market’s anticipation [*191] of the
condemnation, the owner not only loses the discounted market value because of
the pending condemnation, but also may lose additional value as the market
declines but she is unable to sell. The Supreme Court of Washington recognized
this problem in Lange v. State,
finding that:
Once the State manifested its unequivocal intent to appropriate
the Lange property, appellants were precluded from exercising their business
judgment and selling the property before the market fell further. Moreover,
appellants were precluded from taking any steps to counteract the market decline
by making improvements on the land or otherwise changing its use. Thus,
appellants were deprived of the most important incidents of ownership, the
rights to use and alienate property. In addition, because the condemnation did
in fact take place, appellants were prevented from holding their property, as
other owners would be able to do, until economic conditions improved and market
values rose again.[165]
The
court therefore held that just compensation would require valuing the property
at the time the highway location was first announced, even though the court had
not found that the announcement itself constituted a taking.[166]
If an
owner would not have sold the property but for the pending condemnation,
however, the just compensation principle does not require compensating her for a
general decline in market value during the time she was unable to sell. The
government need only put the owner in the position she would have been in had
there been no condemnation – and in such a case, had there been no
condemnation, the owner would have suffered the same general decline in market
value, as owners often do. In general, then, this additional compensation for
general market declines while condemnation was looming should be paid only to
owners who acquired the property for development and have demonstrated by at
least some preliminary steps that they were going to develop the property when
the precondemnation activities got in the way [*192] and practically
prevented them from developing and selling the property.[167]
The rest
of this section discusses the different types of precondemnation activities and
how they can affect the measure of just compensation.
The
government certainly may have legitimate, important reasons to plan and
publicize future land acquisitions. The government shouldn’t pay more for the
property as a result of such public planning. But the government shouldn’t pay
less either. If
the planning and publicity also depressed the market value, that publicity is
really just part of the condemnation process. The market has simply already
discounted the property’s value by some probability of eventual condemnation.
The government shouldn’t avoid paying a bill just because the market sees it
coming.[168]
Similarly, lenders will almost certainly refuse to finance development of
property that is targeted for condemnation, even though the owner is free to
proceed with such development until the government actually condemns the land,
if it ever does.[169]
Lack of available [*193] financing will likewise reduce the value of the
land even before the government formally condemns the land, yet is the direct
result of the condemnation decision.
The
government therefore should pay the market value the land would have had if the
government had never targeted the land for acquisition.
Some condemnation statutes expressly direct that market value must be determined
without depreciation resulting from the condemnation project itself.[170]
But it can be especially difficult to determine how much the property would have
been worth if the government had never begun to plan and publicize the
condemnation. Sometimes particular events may logically provide a date on which
to measure the market value of the ultimately condemned property. For example, a
government declaration that an urban area is blighted will surely impair the
market value of properties in that area. But it may be years before the
government actually condemns the property. If so, the government should pay as
just compensation at least the market value of the property on the date of the
blight declaration.[171]
Condemnation
takes time. Once the government begins planning a condemnation, passes a
resolution to condemn, or otherwise [*194] begins the process of
condemnation, the property may immediately become less valuable. The market recognizes that it will not be
privately useable much longer, and many otherwise valuable uses are no longer
feasible. If the government pays only the market value on the date of actual
condemnation,[172]
it will not actually “put [the owner] in the same position monetarily as he
would have occupied if his property had not been taken.”[173]
Some
courts have recognized this problem, however, and held that “any decrease in
property value attributable to the project for which the eminent domain
proceeding is instituted is to be disregarded in computing just compensation.”[174]
So if the delay is in actually carrying out a planned condemnation, it doesn’t
matter whether the delay was reasonable or unreasonable. The market value is
figured as if the condemnation proceeding never began, because that is how much
the owner has lost.
On the
other hand, some have reasoned that some delay is unavoidable, and the law
should not discourage governments from announcing their intentions to condemn
before formally commencing the condemnation. Therefore, the government will be
required to pay market value lost during anticipation of condemnation only if
the government “acted improperly either by unreasonably delaying eminent
domain action following an announcement of intent to condemn or by other
unreasonable conduct prior to condemnation.”[175]
But such a rule leaves open the possibility that the owner will have suffered
some of the real loss from the condemnation, but not be compensated for it,
simply because the government had a good reason for causing the loss. It
doesn’t matter how good the reason; if the government causes the loss in
taking property for the benefit of the public, the government should compensate
the owner for the loss.[176]
As
discussed in the previous section, the government may take property when it
depresses the market value of targeted property by downzoning or denying permits
and the like. If the loss is great enough to amount to a taking, or if the
government does not have a legitimate reason for the regulatory action, then the
government action will require compensation or be invalid under substantive due
process. But if the loss is not substantial enough to amount to a taking, and
the government has a legitimate reason for the regulatory action, then there is
no reason that just compensation should be the greater market value the property
would have had but for the permissible regulatory action. For example, if the
government had a legitimate reason for downzoning a property from industrial to
open space-agricultural, when it eventually condemned the property it should pay
the property’s market value as open space-agricultural land at that time, not
the earlier industrial value. That’s the general rule, and there is no reason
to do differently if the government had a legitimate reason for the downzoning.
On the other hand, if the government denied a permit necessary to properly
maintain the property because it anticipated condemning the land, just
compensation should be the market value the property would have had if the owner
had been permitted to properly maintain it.[177]
So the market value of condemned property should be determined based on the
present condition and currently permitted uses, unless the owner can show that
the government’s regulatory decisions were themselves unconstitutional because
they had no legitimate purpose.
Sometimes
the government temporarily prohibits development while it decides whether to
condemn particular properties. During the temporary prohibition, the property
may decline in value because of market anticipation of the condemnation. Such [*196]
losses in value should be compensated in the same way as any loss due to market
anticipation of condemnation, as discussed above.
The
property owner also loses some of the value of her property during the temporary
prohibition if she can’t use it as she wants to. The government has a
legitimate reason for the temporary prohibition, however, and the owner will
rarely be deprived of all beneficial use of the land, so that temporary loss
itself will not be a taking. But if the government ultimately condemns the land,
just compensation should be measured on the date that the owner was denied the
right to use and enjoy her property. The Alaska condemnation statute, for
example, recognizes this principle. The statute prohibits making improvements on
land after a summons has been issued in a condemnation proceeding, and therefore
requires the court to determine the market value of the property on the date the
summons was issued.[178]
The
government might temporarily prohibit development for other reasons, however,
such as planning land uses for an area. In such cases the government has not
prohibited development to avoid wasteful development of land the government is
going to take anyway. Instead, the government has prohibited development because
it is not yet sure whether any particular development will be consistent with
other uses, the city’s needs, and so on. Again, such a temporary prohibition
for a reasonable purpose and time will not be a taking. If the government then
at some point decides to condemn a particular property that is subject to the
temporary prohibition, the government should pay the market value at the time of
the taking, according to the general rule. Even if the temporary prohibition
affected the property’s market value, that lost value wasn’t due to
anticipation of condemnation.
If the
government plans to condemn multiple properties for a project, later- acquired
properties may be worth less than they were worth at the start of the project
because of the market’s reaction to the government project. Just compensation
should be measured by the market value when the project first began. In Becos
v. Masheter,[179]
for example, the acquisition of properties for a highway caused the neighborhood
to deteriorate and reduced the market value of a later-condemned parcel. The
court held that valuation should be made on a date “reasonably related to
events [*197] in the vicinity of the property taken whereby the
appropriating authority’s activity contributed to or caused substantial
depreciation of the property taken.”[180]
Similarly, in Uvodich v. Arizona Board of
Regents,[181]
a university announced an expansion program and for ten years acquired
residential properties in implementing that program. The court held that the
university did not thereby take properties that were yet to be acquired, but did
suggest that just compensation should be measured at a time that would
compensate the owners for the depreciation they had already experienced due to
the expansion program.[182]
On the
other hand, if the government has caused a property’s value to decline by
letting neighboring areas deteriorate or be developed in certain ways, the loss
in value is compensable only if the owner can show that the government conduct
itself amounted to a taking. That is the only reason to grant compensation for
such losses, whether the property is ever condemned or not. An owner whose
property is condemned cannot demand compensation for market value her property
would have had if the government had maintained the area better or the
neighborhood had been developed in a different way. The owner has to show that
those actions themselves were takings, or otherwise wrongful, in order to
recover for such losses in value.[183]
Governments
can easily be tempted to save money in eminent domain proceedings by doing what
they can to depress the market value of properties they hope to condemn. They
may even feel it is their duty to save money in this way, if the law allows it.
And even if a government doesn’t mean to depress market value, often its
precondemnation activities will have that effect.
Those
activities include planning possible condemnations well in advance, at least
when the planned governmental use will [*198] cause the property to
decline in value rather than increase in value; publicizing the intention to
acquire land and thereby discouraging private investment in the land; zoning the
land in a way that will keep its value down; denying building and other permits,
whether expressly because of the possible condemnation or for other reasons;
prohibiting development temporarily while the government decides whether to
condemn property and what property to condemn; acquiring other properties in the
area; allowing the neighboring area to
decline in value by not maintaining it or by permitting lower value uses; and
delaying at any stage of the process while the property declines in value.
These
compensation-reducing activities generally will not impair so much of the
property’s value that they themselves are takings, independent of any eventual
formal exercise of the eminent domain power. Their effects generally are
temporary, so that even if the property is useless for a time, the property
still retains substantial value once it becomes useable again – assuming the
government does not ultimately condemn the land. But sometimes the government
may actually destroy a property’s entire value, such as by planning to condemn
land for a project, changing the area around it, and making the land practically
useless for any other purpose. If so, the government should pay compensation
even if it does not ultimately condemn the land formally.
The
government’s precondemnation activities are more likely to deny substantive
due process, or be a taking, for failure to substantially advance a legitimate
state interest. The government has no
legitimate purpose for taking a property interest from the owner if the only
objective purpose is to reduce just compensation to be paid when the government
might later condemn her land. Usually planning and publicizing condemnations
will further legitimate interests in public decision- making, even if they also
further the illegitimate purpose of reducing just compensation to be paid.
Temporary development prohibitions or permit denials will generally serve a
legitimate interest in avoiding waste. But
the government denies substantive due process, or should pay just compensation
for a taking, if it delays at any stage of the regulatory or condemnation
process, and the delay is unreasonable and serves no purpose other than to cause
the value of property to decline while the government considers condemnation.
Even if
precondemnation activities do not themselves take property, they may still
affect the amount of compensation the government should justly pay if it does
eventually condemn the land. In principle, the government should pay the owner
the value the property would have had at the time of taking if the [*199]
government had never begun the process of condemning the land, including
planning and publicizing the condemnation. If
the condemnation is part of a larger project, market value should be determined
as if the government had not begun work on any of the project, even on land
other than the subject property. And if, in anticipation of
condemnation, the government previously prevented the owner from using and
enjoying the land, the property should be valued on that earlier date rather
than the date of actual taking.
As even
this concluding summary demonstrates, these constitutional limitations on
government’s precondemnation activities do not prevent all
compensation-reducing strategies. But
any government conduct that is intended only to reduce compensation paid to
owners of condemned property is inconsistent with the underlying principle of
the Just Compensation Clause, that the government should not “forc[e] some
people alone to bear public burdens which, in all fairness and justice, should
be borne by the public as a whole.”[184]
The true cost of the government’s project includes the full market value of
the necessary property, without any governmental intervention to alter that
market value. The property owners have not
done anything wrong to justify making them bear some of the costs of the public
use on their own. Governments therefore should avoid and resist the temptation
to hide some of the costs of public projects by making private owners bear such
costs. And condemnation statutes should define the compensation to be paid in
ways that help prevent government abuse of the regulatory power in a way that
unfairly burdens private owners of land to be condemned.
* Associate Professor of Law, University of Wyoming College of Law. B.A., Brigham Young University, 1990; J.D., Harvard Law School, 1993. Thanks to Ben Denton for his research assistance and the Goodstein Law Faculty Research Fund for its financial support of this article.
[1] See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1003 (1992) (“The state legislature enacted the Beachfront Management Act, which barred Lucas from erecting any permanent habitable structures on his parcels.”)
[2] Cf. United States v. Virginia Elec. & Power Co., 365 U.S. 624, 625, 626 n.1 (1961) (observing that a property owner gave the government a flowage easement over 1840 acres in exchange for only one dollar because the owner expected the rest of her property to be more valuable as a wild game preserve if the government created an artificial lake on the property).
[3] See, e.g., Amen v. City of Dearborn, 363 F. Supp. 1267 (E.D. Mich. 1973) (recounting a city’s various efforts to buy properties in a redevelopment area at the cheapest prices possible), rev’d, 532 F.2d 554 (6th Cir. 1976); Roth v. State Highway Comm’n, 688 S.W.2d 775, 776 (Mo. Ct. App. 1984) (noting that the State Highway Commission offered $465,000 for property that its own agent found would require $2,250,000 in just compensation).
[4] For example, the National Park Service (NPS) condemned hundreds of private tracts of land in assembling the land for Voyageurs National Park. The NPS indicated to landowners its intention to acquire land for 30% of market value. Condemnation suits evidenced the NPS strategy: the judicially determined fair market value on average exceeded NPS’s offers of compensation by 785%. See Althaus v. United States, 7 Cl. Ct. 688, 691 (1985).
[5] U.S. Const. amend. V; see also Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226, 241 (1897) (holding that the Fourteenth Amendment requires states to provide just compensation when taking private property for public use).
[6] See, e.g., United States v. Miller, 317 U.S. 369, 374 (1943) (stating that just compensation usually equals market value).
[7] See, e.g., First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 320 (1987); Miller, 317 U.S. at 374.
[8] See, e.g., Smith v. State, 123 Cal. Rptr. 745, 746 (Ct. App. 1975) (reciting allegations that a resolution concerning development of state highway substantially decreased the value of plaintiff’s property); 4 Julius L. Sackman, Nichols on Eminent Domain 12-415 (rev. 3d ed. 1985) (“If the projected public work will be injurious to the neighborhood through which it will pass, the fact that it is hanging like a sword of Damocles over the heads of the land owners in the vicinity cannot but fail to have a depressing effect upon values.”); Joseph C. Rust, Note, The Condemnor’s Liability for Damages Arising Through Instituting, Litigating, or Abandoning Eminent Domain Proceedings, 1967 Utah L. Rev. 548, 549 (listing ways in which government plans to condemn may cause decline in market value). Declarations of urban blight, prerequisite to urban renewal projects, can dramatically impair market value of properties long before property is condemned. See, e.g., Washington Mkt. Enters. v. City of Trenton, 343 A.2d 408, 414-15 (N.J. 1975) (“From the time it becomes generally known that an area has been selected as the site of an urban renewal project … there ceases to be a ready market for premises within the area. It becomes difficult to find tenants and impossible to enter into long-term leases. Upkeep, maintenance and renovation cease; the value of the property tends constantly to diminish.”).
[9] See, e.g., Littman v. Gimello, 557 A.2d 314, 319 (N.J. 1989).
[10] See id. (“Plaintiffs’ allegations concerning harm to potential farming operations are also comprised of nothing more than uncertainty caused by governmental planning and possible forgone economic opportunities. They can still use their land for farming and if it is eventually condemned, they will get a fair price for it. If it is not condemned, they can go on farming.”).
[11] See id. at 320 (“Realistically no one will invest in their property while there is still a risk that it will be condemned.”).
[12] 7 Cl. Ct. 688 (1985).
[13] Id. at 691.
[14] Id.
[15] Id. at 695.
[16] 2 Cl. Ct. 700 (1983).
[17] Id. at 705-06.
[18] See, e.g., Commonwealth v. Levine, 281 A.2d 909, 910 (Pa. Commw. Ct. 1971) (finding sufficient plaintiff’s allegations that public proclamations of a proposed highway route and imminent condemnation, among other things, caused loss of tenants and impaired market value of his property); Maxey v. Redev. Auth., 288 N.W.2d 794, 802 (Wis. 1980) (concluding that statements to press that property would be taken, among other things, constituted a taking even before property was legally restrained).
[19] See, e.g., Amen v. City of Dearborn, 363 F. Supp. 1267, 1272 (E.D. Mich. 1973) (finding that a city had delayed building permits, occupancy permits, and repair permits in campaign to reduce the expense of acquiring desired properties), rev’d, 532 F.2d 554 (6th Cir. 1976).
[20] 721 A.2d 1197 (Conn. App. Ct. 1998).
[21] See id. at 1203-04, 1209.
[22] See, e.g., Kissinger v. City of Los Angeles, 327 P.2d 10, 14 (Cal. Ct. App. 1958) (noting that the government had changed zoning of property in an airport area from multi-family residential to single-family residential, thus reducing market value from $114,000 to $48,000); State ex rel. Tingley v. Gurda, 243 N.W. 317, 320 (Wis. 1932) (considering the possibility that the city unlawfully zoned property residential to depress its value in anticipation of condemning it for a future road); Gideon Kanner, What to Do Until the Bulldozers Come? Precondemnation Planning for Landowners, 27 Real Estate L.J. 47, 60 (1998) (“[Z]oning may be changed so as to lower property values in anticipation of condemnation.”).
[23] 40 N.W.2d 195 (Mich. 1949).
[24] See id. at 198-99.
[25] See Cambria Spring Co. v. City of Pico Rivera, 217 Cal. Rptr. 772, 775 (Ct. App. 1985) (describing a city’s plan to issue no permits for improvements inconsistent with its redevelopment plan for the project area); Sproul Homes v. State ex rel. Dep’t of Highways, 611 P.2d 620, 621 (Nev. 1980) (reciting plaintiff’s allegation that city denied building permits in an effort to coerce plaintiff to sell land for less than fair market value); Kanner, supra note 22, at 60 (“[I]t is common that building permits are withheld causing the targeted properties to fall into disrepair, so that cities can acquire them cheaply.”).
[26] 363 F. Supp. 1267 (E.D. Mich. 1973), rev’d, 532 F.2d 554 (6th Cir. 1976).
[27] See id. at 1272 (holding that the city took plaintiffs’ property as a result of various efforts to depress the value of properties in an acquisition area).
[28] 688 S.W.2d 775 (Mo. Ct. App. 1984).
[29] See id. at 776.
[30] 136 N.W.2d 896 (Mich. 1965).
[31] See id. at 900.
[32] See id.
[33] See Lomarch Corp. v. Mayor of Englewood, 237 A.2d 881, 882-83 (N.J. 1968) (upholding the Official Map Act that permitted a city ordinance prohibiting development of part of the plaintiff’s property for one year while the city decided whether to purchase or condemn the land for parks, but holding that the city must pay just compensation for temporarily taken land).
[34] See Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 337-38 (2002) (“[M]oratoria … are used widely among land-use planners to preserve the status quo while formulating a more permanent development strategy. In fact, the consensus in the planning community appears to be that moratoria, or ‘interim development controls’ as they are often called, are an essential tool of successful development.” (footnotes omitted)); Elizabeth A. Garvin & Martin L. Leitner, Drafting Interim Development Ordinances: Creating Time to Plan, Land Use L. & Zoning Dig., June 1996, at 3 (“With the planning so protected, there is no need for hasty adoption of permanent controls in order to avoid the establishment of nonconforming uses, or to respond in an ad hoc fashion to specific problems. Instead, the planning and implementation process may be permitted to run its full and natural course with widespread citizen input and involvement, public debate, and full consideration of all issues and points of view.”). See generally Robert H. Freilich, Interim Development Controls: Essential Tools for Implementing Flexible Planning and Zoning, 49 J. Urb. L. 65 (1971) (advocating use of interim development controls to aid good planning).
[35] See Foster v. City of Detroit, 254 F. Supp. 655, 662 & n.17 (E.D. Mich. 1966), aff’d, 405 F.2d 138 (6th Cir. 1968) (noting that a city advised a property owner only to “keep the roof on and the water running” and, as a condition to obtaining a building permit, required him to sign a waiver of any claim to the increased value of the property as a result of the proposed improvements).
[36] 680 N.W.2d 485 (Mich. Ct. App. 2004).
[37] See id. at 493.
[38] See id. at 499 n.3 (“Some evidence in the record indicates that the city stopped services such as trash pickup around the area and also began dumping trash on property the city acquired. Further, plaintiff suggested that through condemnation, the city acquired some of the residential properties around the area, but let those properties become run down.”).
[39] See Amen v. City of Dearborn, 363 F. Supp. 1267, 1273 (E.D. Mich. 1973) (finding that city’s efforts to reduce cost of acquiring property included selling property in the area to polluting industries), rev’d, 532 F.2d 554 (6th Cir. 1976).
[40] See, e.g., Thomas W. Garland, Inc. v. City of St. Louis, 596 F.2d 784, 786 (8th Cir. 1979) (recounting plaintiff’s allegations that the city had acquired surrounding properties for redevelopment, demolished them, but abandoned the redevelopment, thereby taking plaintiff’s property); Foster v. City of Detroit, 254 F. Supp. 655, 660 (E.D. Mich. 1966) (describing deterioration of a neighborhood planned for urban renewal, and effects on plaintiffs’ property), aff’d, 405 F.2d 138 (6th Cir. 1968).
[41] See Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) (“[W]hile property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”).
[42] See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015-18 (1992) (stating that and explaining why government must pay just compensation when “regulation denies all economically beneficial or productive use of land”); Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 485 (1987); Agins v. City of Tiburon, 447 U.S. 255, 260 (1980) (“The application of a general zoning law to particular property effects a taking if the ordinance . . . denies an owner economically viable use of his land.”).
[43] Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978); see also Lucas, 505 U.S. at 1019 n.8 (observing that even if an owner is not deprived of all economically beneficial use, the owner may still establish a taking in particular cases).
[44] Danforth v. United States, 308 U.S. 271, 286 (1939) (“The mere enactment of legislation which authorizes condemnation of property cannot be a taking. Such legislation may be repealed or modified, or appropriations may fail.”).
[45] See Howell Plaza, Inc. v. State Highway Comm’n, 226 N.W.2d 185, 189 (Wis. 1975) (“If this court countenances suits for inverse condemnation and permits the award of damages – in effect by decree transfers property to a condemning authority before the project is finally decided on – private citizens claiming they have been damaged by a threatened taking will in effect have preempted the legislative function.”).
[46] Kirby Forest Indus. v. United States, 467 U.S. 1, 15 (1984); see also Agins, 447 U.S. at 263 n.9 (“Mere fluctuations in value during the process of governmental decisionmaking, absent extraordinary delay, are ‘incidents of ownership.’“ (quoting Danforth v. United States, 308 U.S. 271, 285 (1939))).
[47] See, e.g., Santini v. Connecticut Hazardous Waste Mgmt. Serv., 342 F.3d 118, 131 (2d Cir. 2003) (reasoning that a siting declaration did not take property because property still had some use and value); Barthelemy v. Orange County Flood Control Dist., 76 Cal. Rptr. 2d 575, 579 (Ct. App. 1998) (“[M]ere designation of property for public acquisition, even though it may affect the marketability of the property, is not sufficient. ‘The right of a governmental body to plan for the acquisition of property is unquestioned. In the absence of special circumstances it does not give rise to an action for inverse condemnation.’“ (quoting City of Walnut Creek v. Leadership Hous. Sys., Inc., 140 Cal. Rptr. 690, 696 (Ct. App. 1977))); Far-Gold Constr. Co. v. Chatham, 357 A.2d 765, 768 (N.J. Super. Ct. App. Div. 1976) (holding that a municipality’s resolution expressing desire to acquire property for a park did not take property); Westgate, Ltd. v. State, 843 S.W.2d 448, 452 (Tex. 1992) (holding that the government’s proposal to condemn property was not a taking).
[48] See Washington Mkt. Enters., Inc. v. City of Trenton, 343 A.2d 408, 416 (N.J. 1975) (when “the threat of condemnation has had such a substantial effect as to destroy the beneficial use that a landowner has made of his property, then there has been a taking of property within the meaning of the Constitution.”).
[49] See Drakes Bay Land Co. v. United States, 424 F.2d 574, 586 (Ct. Cl. 1970) (holding that the federal government took land never condemned for Point Reyes National Seashore by officially declaring its intent to take the land and otherwise preventing subdivision and development of plaintiff’s land).
[50] See, e.g., Foster v. City of Detroit, 254 F. Supp. 655, 665-66 (E.D. Mich. 1966) (holding that abandoned condemnation proceedings in urban renewal zone took plaintiff’s property because it substantially destroyed its value), aff’d, 405 F.2d 138 (6th Cir. 1968). But see Washington Mkt. Enters., 343 A.2d at 411 (“One of the arguments advanced was that the very act of filing a declaration of blight was a ‘taking of property’ because it seriously impaired land values. We held that this was not a taking, saying: ‘It is akin to the result which flows from municipal zoning. If some diminution in market value can be said to follow from a finding of blight inspired by the valid exercise of police power, it is Damnum absque injuria.’“ (citation omitted)).
[51] See City of Los Angeles v. Tilem, 191 Cal. Rptr. 229, 235 (Ct. App. 1983) (holding that a city took land during a three-year period when pending condemnation for road widening “rendered the real estate virtually useless” and prevented sale).
[52] 797 P.2d 629 (Alaska 1990).
[53] See id. at 631.
[54] See id. at 633.
[55] Id. at 635 (quoting Lange v. State, 547 P.2d 282, 288 (Wash. 1976)).
[56] Id. at 634 (quoting Lange, 547 P.2d at 288); see also Lange, 547 P.2d at 287-88 (explaining that a developer whose land is to be condemned loses all use of the property, because he can neither develop nor sell the land, and thus is in a different position than other property owners who may “continue to use the property, derive some income or benefit from it, and thus moderate the market decline”).
[57] See Santini v. Connecticut Hazardous Waste Mgmt. Serv., 342 F.3d 118, 131 (2d Cir. 2003) (holding that a siting announcement was not a taking, in part because the declaration was temporary and the property recovered some of its value after the announcement was withdrawn).
[58] 438 U.S. 104 (1978).
[59] Id. at 124.
[60] Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 342 (2002); see also Steven J. Eagle, Planning Moratoria and Regulatory Takings: The Supreme Court’s Fairness Mandate Benefits Landowners, 31 Fla. St. U. L. Rev. 429, 474 (2004) (“However, the fact that the duration of a moratorium significantly exceeds the duration customary under similar circumstances would greatly enhance the possibility that the moratorium was compensable under the Tahoe-Sierra fairness test.”).
[61] Tahoe-Sierra, 535 U.S. at 342 (quoting Palazzolo v. Rhode Island, 533 U.S. 606, 636 (2001) (O’Connor, J., concurring)).
[62] Id. at 320; see also Penn Central, 438 U.S. at 124 (“The economic impact of the regulation on the claimant and, particularly, the extent to which the regulation has interfered with distinct investment-backed expectations are, of course, relevant considerations. So, too, is the character of the governmental action. A ‘taking’ may more readily be found when the interference with property can be characterized as a physical invasion by government, than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good.” (citations omitted)).
[63] See Roth v. State Highway Comm’n, 688 S.W.2d 775, 777-78 (Mo. Ct. App. 1984) (holding that a jury had substantial evidence of “aggravated delay” of seven years and “untoward activity” in obstructing building permits and demanding that plaintiff settle another case before highway commission would file a condemnation petition).
[64] 482 U.S. 304 (1987)
[65] Id. at 321.
[66] See, e.g., Roth, 688 S.W.2d at 777 (“It has been recognized that some delay prior to and during the pendency of condemnation proceedings is unavoidable and that, where it is a natural consequence of the proper exercise of the right of eminent domain, it does not give rise to a cause of action….”).
[67] 447 U.S. 255 (1980).
[68] Id. at 263 n.9 (quoting Danforth v. United States, 308 U.S. 271, 285 (1939).
[69] See Ehrlander v. State Dep’t of Transp. & Pub. Facilities, 797 P.2d 629, 635 (Alaska 1990).
[70] See Armstrong v. United States, 364 U.S. 40, 49 (1960) (reasoning that the Just Compensation Clause is “designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”).
[71] 535 U.S. 302, 334-35 (2002) (citation omitted).
[72]
Id. at 335. The Court
further stated that:
[S]uch a rule would undoubtedly require changes in numerous practices that have long been considered permissible exercises of the police power. As Justice Holmes warned in Mahon, “[g]overnment hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law.” Id. (omitted citation).
[73] Id,
[74] Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) (justifying and distinguishing a land-use restriction that “secured an average reciprocity of advantage”).
[75] See Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 836 n.4 (1987) (“If the Nollans were being singled out to bear the burden of California’s attempt to remedy these problems, although they had not contributed to it more than other coastal landowners, the State’s action, even if otherwise valid, might violate either the incorporated Takings Clause or the Equal Protection Clause. One of the principal purposes of the Takings Clause is ‘to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.’” (citation omitted)); Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 491 (1987) (“While each of us is burdened somewhat by such restrictions, we, in turn, benefit greatly from the restrictions that are placed on others.”).
[76] See Tahoe-Sierra Preservation Council, 535 U.S. at 303 (“A permanent deprivation of all use is a taking of the parcel as a whole, but a temporary restriction causing a diminution in value is not, for the property will recover value when the prohibition is lifted.”).
[77] 721 A.2d 1197 (Conn. App. Ct. 1998).
[78] See id. at 1202-04, 1209.
[79] Id. at 1209-10; see also Howell Plaza, Inc. v. State Highway Comm’n, 226 N.W.2d 185, 189 (Wis. 1975) (“Long delays in actually acquiring property after the public improvements have been announced can result in substantial hardship to property owners, for which they ought in justice to receive compensation. We have no doubt that there can be a cause of action for inverse condemnation if … property owners so situated have been deprived of all, or substantially all, of the beneficial use of their property.”).
[80] First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 322 (1987).
[81] Id. at 318-19 (quoting United States v. Dow, 357 U.S. 17, 26 (1958)).
[82] See HFH, Ltd. v. Superior Court, 542 P.2d 237, 244 (Cal. 1975) (en banc) (“[A] zoning action which merely decreases the market value of property does not violate the constitutional provisions . . . .”); cases cited supra note 42.
[83] See infra Part III.A.2.
[84] See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015-18 (1992) (holding that government must pay just compensation when “regulation denies all economically beneficial or productive use of land”).
[85] See, e.g., Williams v. City of Central, 907 P.2d 701 (Colo. Ct. App. 1995) (holding that a ten-month moratorium did not take property even if the owner could not use the property for any purpose during those ten months); Woodbury Place Partners v. Woodbury, 492 N.W.2d 258, 263 (Minn. Ct. App. 1992) (holding that a two-year moratorium pending review of a plan for land adjacent to a interstate highway was not a taking because it did not deprive the owner of all economically beneficial use of the land).
[86] See, e.g., Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 131 (1978) (stating that “diminution in property value, standing alone,” cannot establish a taking); Hurst v. Starr, 607 N.E.2d 1155, 1158-59 (Ohio Ct. App. 1992) (“Properties located in the vicinity of the highway, even those where there is no actual take of the property, may suffer a loss of market value to some extent. However, if there has been no taking of a person’s property, there is no right to compensation or damages. Under such circumstances, the loss suffered by the owner has been described as damnum absque injuria.”).
[87] Aaron v. City of Los Angeles, 115 Cal. Rptr. 162, 170 (Ct. App. 1974) (affirming an inverse condemnation award in favor of landowners whose property was worth less because of jet noise from airport nearby); see also Richards v. Wash. Terminal Co., 233 U.S. 546, 557 (1914) (holding that special damage from smoke and gas, not common to other owners along the railroad, required payment of just compensation); Perron v. Telecable Assocs., 784 So. 2d 852, 853 (La. Ct. App. 2001) (“[I]t must be determined ‘whether that damage is not suffered by those in the general neighborhood-that is, whether the damage is peculiar to the individual who complains.’ Therefore, this Court has concluded that damages such as the noise of traffic, a less pleasant view, and a circuitous or more inconvenient route to petitioner’s property, even when these factors resulted in an actual diminution of market value of the property, were not in themselves special damages and were not recoverable.” (citation omitted)).
[88] See, e.g., Cal. Const. art. I, §19 (“Private property may be taken or damaged for public use only when just compensation … has first been paid to … the owner.”); Albers v. County of Los Angeles, 398 P.2d 129, 137 (Cal. 1965) (“[A]ny actual physical injury to real property proximately caused by the improvement as deliberately designed and constructed is compensable….”).
[89] See Aaron, 115 Cal. Rptr. at 170.
[90] See, e.g., Village of Round Lake v. Amann, 725 N.E.2d 35, 48 (Ill. App. Ct. 2000) (“A decreased market value is compensable only if it results from loss of access or other damage caused by the public improvement; otherwise, it is damnum absque injuria.”).
[91] 272 U.S. 365 (1926).
[92] Id. at 395.
[93] 277 U.S. 183 (1928).
[94] Id. at 188.
[95] Agins v. City of Tiburon, 447 U.S. 255, 260 (1980); see also Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 834 (1987) (“We have long recognized that land-use regulation does not effect a taking if it ‘substantially advance[s] legitimate state interests’….”); Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 127 (1978) (“[A] use restriction may constitute a ‘taking’ if not reasonably necessary to the effectuation of a substantial government purpose.”).
[96] 125 S. Ct. 2074 (2005).
[97] See id. at 2083-84 (“But such a test is not a valid method of discerning whether private property has been ‘taken’ for purposes of the Fifth Amendment.”).
[98] See id. at 2083 (“An inquiry of this nature has some logic in the context of a due process challenge, for a regulation that fails to serve any legitimate governmental objective may be so arbitrary or irrational that it runs afoul of the Due Process Clause.”); id. at 2087 (Kennedy, J., concurring) (noting that the Court’s decision “does not foreclose the possibility that a regulation might be so arbitrary or irrational as to violate due process,” but explaining that the property owner had voluntarily dismissed its due process claim).
[99] Armstrong v. United States, 364 U.S. 40, 49 (1960), quoted in Lingle, 125 S. Ct. at 2080.
[100] Lingle, 125 S. Ct. at 2084.
[101] Id.
[102] Id.
[103] I have argued elsewhere that this is how the Court’s now-rejected “substantially advances” test should be understood in the takings context. See Alan Romero, Two Constitutional Theories for Invalidating Extortionate Exactions, 78 Neb. L. Rev. 348, 365-68 (1999). In short, substantive due process sets outer limits to the government’s power to act, while the Takings Clause divides all permissible government actions into two groups: those that require compensation and those that don’t. The Takings Clause tries to avoid unfair burdens on individual property owners. So in the takings context, a regulation that does not advance “legitimate state interests” would be a taking not because the government does not have the power to take such an action, but because it is unfair to take such an action at the individual owner’s expense, rather than the public’s expense. But even though the Court has rejected the verbal formulation – that a regulation is a taking if it doesn’t substantially advance a legitimate state interest – the Court clearly still recognizes the principle that a regulation may be a taking because of the inequality of the regulatory burden.
[104] See Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 133-36 (1978) (declaring that landmark preservation law, like zoning laws generally, did not unfairly burden a landmark owner because the owner enjoyed reciprocal benefits along with the rest of the public, even though many owners were not subject to landmark restrictions); Landgate, Inc. v. Cal. Coastal Comm’n, 953 P.2d 1188, 1195 (Cal. 1998) (“[W]hereas ‘the Fifth Amendment’s just compensation provision is “designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole,”‘ a rational permit regulation scheme is imposed on the public as a whole to ensure the orderly development of real property, benefiting as well as burdening property owners.”(citation omitted)); Romero, supra note103, at 366-68.
[105] See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1022 (1992) (“[M]any of our prior opinions have suggested that ‘harmful or noxious uses’ of property may be proscribed by government regulation without the requirement of compensation.”).
[106] Penn Central, 438 U.S. at 133 n.30.
[107] 505 U.S. 1003 (1992).
[108] Id. at 1023-24 (citation omitted).
[109] 1 Rathkopf’s The Law of Zoning and Planning §6:60 (4th ed. 2004) (citations omitted).
[110] Allison Dunham, A Legal and Economic Basis for City Planning, 58 Colum. L. Rev. 650, 665 (1958).
[111] Penn Central, 438 U.S. at 133 n.30.
[112] Id. at 124.
[113] 324 F.3d 1297 (Fed. Cir. 2003).
[114] Id. at 1307 (citation omitted); see also In re Elmwood Park Project Section 1, Group B, 136 N.W. 2d 896, 900 (Mich. 1965) (“The principle is firmly established in Michigan law … that a city may not by deliberate action reduce the value of private property and thereby deprive the owner of just compensation…. [M]any of the acts alleged by appellant, if so performed, -- such as sending letters to tenants, filing lis pendens, intense building department inspection and citations against owners for any violations of the building code, and, finally, refusal to permit a long established business to continue in a building because it was going to be condemned – would … constitute a taking.”).
[115] 667 N.W.2d 109 (Minn. 2003).
[116] Id. at 115 (quoting Orfield v. Hous. & Redev. Auth., 232 N.W.2d 923, 927 (Minn. 1975)).
[117] See id. at 116.
[118] See id.
[119] Id.
[120] Nollan v. Cal. Coastal Comm’n, 483 U.S. 825, 834-35 (1987).
[121] Id. at 837 (quoting J.E.D. Assocs. v. Atkinson, 432 A.2d 12, 14 (N.H. 1981)).
[122] See Joint Ventures, Inc. v. Dep’t of Transp., 563 So. 2d 622, 626 (Fla. 1990) (“We do not question the reasonableness of the state’s goal to facilitate the general welfare. Rather we are concerned here with the means by which the legislature attempts to achieve that goal…. [T]he state may [not] deliberately restrict land use under its police power before the commencement of condemnation proceedings without the duty of compensation.”); cf. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416 (1922) (“[A] strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.”).
[123]
The court
described this sort of regulatory abuse in San
Antonio River Auth. v. Garrett Bros., 528 S.W.2d 266, 273-74 (Tex. Ct. App. 1975):
[I]n exercising the police power, the governmental agency is acting as an arbiter of disputes among groups and individuals for the purpose of resolving conflicts among competing interests. This is the role in which government acts when it adopts zoning ordinances, enacts health measures, adopts building codes, abates nuisances, or adopts a host of other regulations…. But where the purpose of the governmental action is the prevention of development of land that would increase the cost of a planned future acquisition of such land by government, the situation is patently different. Where government acts in this context, it can no longer pretend to be acting as a neutral arbiter. It is no longer an impartial weigher of the merits of competing interest among its citizens. Instead, it has placed a heavy governmental thumb on the scales to insure that in the forthcoming dispute between it and one, or more, of its citizens, the scales will tip in its own favor…. To permit government, as a prospective purchaser of land, to give itself such an advantage is clearly inconsistent with the doctrine that the cost of community benefits should be distributed impartially among members of the community.
[124] See Romero, supra note 103, at 359.
[125] See, e.g., Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 19 (1976) (“It is enough to say that the Act approaches the problem of cost spreading rationally; whether a broader cost-spreading scheme would have been wiser or more practical under the circumstances is not a question of constitutional dimension.”); Williamson v. Lee Optical, 348 U.S. 483, 488 (1955) (“It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it.”).
[126] Courts continue to disagree about how egregious land use regulation must be to violate substantive due process. See Parna A. Mehrbani, Comment, Substantive Due Process Claims in the Land-Use Context: The Need for a Simple and Intelligent Standard of Review, 35 Envtl. L. 209, 229-36 (Winter 2005). But regardless of the verbal standard, everyone agrees that the courts should be deferential and that a regulation will deny substantive due process if it does not serve any legitimate purpose.
[127] See, e.g., Pinheiro v. County of Marin, 131 Cal. Rptr. 633, 636 (Ct. App. 1976) (“[T]he general rule is that ‘the purpose or motive of the city officials in passing an ordinance is irrelevant to any inquiry concerning the reasonableness of the ordinance…. If the conditions justify the enactment of the ordinance, the motives prompting its enactment are of no consequence.’“ (citation omitted)); Eagle, supra note 60, at 483 (“[T]he general rule is that the presence of bad faith does not, in itself, invalidate an otherwise reasonable land-use regulation.”).
[128] 953 P.2d 1188 (Cal. 1998).
[129] Id. at 1198 (citations omitted).
[130] See, e.g., In re Elmwood Park Project Section1, Group B, 136 N.W.2d 896, 900 (Mich. 1965) (“The principle is firmly established in Michigan law … that a city may not by deliberate action reduce the value of private property and thereby deprive the owner of just compensation.”).
[131] 57 F.3d 253 (3d Cir. 1995).
[132] Id. at 268-69; see also Woodwind Estates, Ltd. v. Gretkowski, 205 F.3d 118, 124-26 (3d Cir. 2000) (holding that evidence of intentional delaying of subdivision approval to prevent financing of subdivision would support finding a substantive due process violation).
[133] County of Sacramento v. Lewis, 523 U.S. 833, 847 (1998) (“[T]he substantive component of the Due Process Clause is violated by executive action only when it ‘can properly be characterized as arbitrary, or conscience shocking, in a constitutional sense.’“ (quoting Collins v. Harker Heights, 503 U.S. 115, 128 (1992))).
[134] See United Artists Theatre Circuit, Inc. v. Township of Warrington, 316 F.3d 392, 401-02 (3d Cir. 2003).
[135] See Mehrbani, supra note 126, at 238.
[136] Nollan and the Court’s subsequent decision in Dolan v. City of Tigard, 512 U.S. 374 (1994), do not say they are substantive due process cases, but I think that is the best way to understand them. See Romero, supra note 103, at 358-61, 370- 73. In any event, they certainly discuss what interests are legitimate and illegitimate in the land-use context.
[137] I previously made a similar argument to justify the Supreme Court’s requirement in Dolan that the city make an “individualized determination” showing a proportional relationship between a requested land-use permit and an exaction imposed by the permitting authority. See Romero, supra note 103, at 383-84.
[138] See, e.g., Norton v. Village of Corrales, 103 F.3d 928, 932 (10th Cir. 1996) (stating that if the zoning commission’s decision on plat approval was discretionary, the owner had no constitutional right to due process concerning that decision); Spence v. Zimmerman, 873 F.2d 256, 258 (11th Cir. 1989) (holding that property owners did not have a property interest in a temporary certificate of occupancy); RRI Realty Corp. v. Incorporated Village of Southampton, 870 F.2d 911, 917- 19 (2d Cir. 1989) (holding that the property owner had no protected property right because the zoning board’s decision was discretionary); Mehrbani, supra note 126, at 233.
[139] 408 U.S. 564 (1972).
[140] See id. at 576-78.
[141] See Romero, supra note 103, at 372-73.
[142] See Euclid v. Ambler Realty Co., 272 U.S. 365, 395 (1926).
[143] RRI Realty Corp., 870 F.2d at 917.
[144] See Mehrbani, supra note 126, at 238-39 (arguing that courts should not apply the entitlement rule to land-use cases).
[145] See Merced Irrigation Dist. v. Woolstenhulme, 483 P.2d 1, 13 n.9 (Cal. 1971) (en banc) (indicating the desirability of “afford[ing] the public some direct participation in the planning and placement of [government] projects”); Westgate Ltd. v. State, 843 S.W.2d 448, 453 (Tex. 1992) (“Construction of public-works projects would be severely impeded if the government could incur inverse-condemnation liability merely by announcing plans to condemn property in the future. Such a rule would encourage the government to maintain the secrecy of proposed projects as long as possible, hindering public debate and increasing waste and inefficiency. After announcing a project, the government would be under pressure to acquire the needed property as quickly as possible to avoid or minimize liability. This likewise would limit public input, and forestall any meaningful review of the project’s environmental consequences. The government also would be reluctant to publicly suggest alternative locations, for fear that it might incur inverse condemnation liability to multiple landowners arising out of a single proposed project. Failing to consider available alternatives is not only inefficient, but is at odds with proper environmental review.” (citation omitted)); Littman v. Gimello, 557 A.2d 314, 319 (N.J. 1989) (noting the public’s interest in location of hazardous waste facilities).
[146] Klopping v. City of Whittier, 500 P.2d 1345, 1354 (Cal. 1972) (en banc); see also City of Buffalo v. J.W. Clement Co., 269 N.E.2d 895, 904 (N.Y. 1971) (“To hold the date of the Announcement of the impending condemnation, whether directly to the condemnee or by the news media, constitutes a De facto taking at that time, would be to impose an ‘oppressive’ and ‘unwarranted’ burden upon the condemning authority. At the very least, it would serve to penalize the condemnor for providing appropriate advance notice to a property owner. And to so impede the actions of the municipality in preparing and publicizing plans for the good of the community, would be to encourage a converse policy of secrecy which ‘would but raise (greater) havoc with an owner’s rights.’“ (quoting City of Buffalo v. J.W. Clement Co., 311 N.Y.S.2d 98, 114 (App. Div. 1970) (Gabrielli, J., dissenting)).
[147] See, e.g., R.I. Gen. Laws §23-19-10.2(b)(2) (2001) (requiring a Rhode Island resource recovery corporation to give public notice of condemnation plans and accept public comments in a public forum).
[148] See supra part III.A.
[149] Cf. Cooley v. United States, 324 F.3d 1297, 1306-07 (Fed. Cir. 2003) (stating that “extraordinary delay in decision-making may constitute a taking,” but it is very rare for delay to be a taking “without a concomitant showing of bad faith”).
[150] See, e.g., San Diego Gas & Elec. Co. v. City of San Diego, 146 Cal. Rptr. 103,110 (Ct. App. 1978) (“[I]f the state downzones a property to decrease its value as a prelude to later acquiring the property, the zoning may be found to have been a condemnation.”); Grand Trunk W. R. Co. v. City of Detroit, 40 N.W.2d 195, 200 (Mich. 1949) (holding a zoning ordinance “unreasonable and confiscatory” because it zoned property residential when the only way it could be developed residentially was if the government condemned the property).
[151] 243 N.W. 317 (Wis. 1932).
[152] Id. at 320.
[153] Id.
[154] See cases cited supra note 138.
[155] See, e.g., Merkur Steel Supply, Inc. v. City of Detroit, 680 N.W.2d 485, 493 (Mich. Ct. App. 2004) (noting plaintiff’s allegation that the city tried to reduce the cost of acquiring plaintiff’s land by condemning much of the surrounding property in order to prevent plaintiff’s expansion).
[156] See Thomas W. Garland, Inc. v. City of St. Louis, 596 F.2d 784, 786 (8th Cir. 1979) (recounting plaintiff’s allegations that the city had acquired surrounding properties for redevelopment, demolished them, but abandoned the redevelopment, thereby taking plaintiff’s property); Amen v. City of Dearborn, 363 F. Supp. 1267, 1273 (E.D. Mich. 1973) (finding that the city’s efforts to reduce the cost of acquiring property included selling property in the area to polluting industries), rev’d, 532 F.2d 554 (6th Cir. 1976); Merkur Steel Supply, 680 N.W.2d at 499 n.3 (“Some evidence in the record indicates that the city stopped services such as trash pickup around the area and also began dumping trash on property the city acquired. Further, plaintiff suggested that through condemnation, the city acquired some of the residential properties around the area, but let those properties become run down.”).
[157] See Danforth v. United States, 308 U.S. 271, 285 (1939) (“A reduction or increase in the value of property may occur by reason of legislation for or the beginning or completion of a project. Such changes in value are incidents of ownership. They cannot be considered as a ‘taking’ in the constitutional sense.”).
[158] See, e.g., First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 320 (1987); United States v. Miller, 317 U.S. 369, 374 (1943).
[159] United States v. Reynolds, 397 U.S. 14, 16 (1970); see also Olson v. United States, 292 U.S. 246, 255 (1934); Boston Chamber of Commerce v. Boston, 217 U.S. 189, 195 (1910) (“[T]he question is, What has the owner lost? not, What has the taker gained?”).
[160] See H. Dixon Montague, Market Value and All that Jazz: The Proof of the Pudding Is in the Eating, 30 Urb. Law. 631, 650 (1998) (“[T]he government should not be permitted to artificially influence a market by various value depressing acts so that the property it must acquire in that market will come at a cheaper price. An owner whose property is the type traded in the marketplace is entitled to compensation in a condemnation case based on free market transactions uninfluenced by such governmental activity.”); Christopher Serkin, The Meaning of Value: Assessing Just Compensation for Regulatory Takings, 99 Nw. U. L. Rev. 677, 696-97 (2005). Similarly, if the government’s precondemnation conduct, or anticipation of the condemnation, makes the property worth more, the government is not required to pay the higher market value in compensation for the taken property. See, e.g., United States. v. Cors, 337 U.S. 325, 333-34 (1949) (holding that the government need not pay higher market value for condemned tugs because the government’s own war-time demand for tugs increased their market value); Miller, 317 U.S. at 376-77 (“If, however, the public project from the beginning included the taking of certain tracts but only one of them is taken in the first instance, the owner of the other tracts should not be allowed an increased value for his lands which are ultimately to be taken any more than the owner of the tract first condemned is entitled to be allowed an increased market value because adjacent lands not immediately taken increased in value due ed improvement.”).
[161] See Serkin, supra note 160, at 683-84 (describing difficulties with determining “market value” as a measure of just compensation).
[162] See Atchison, Topeka & Santa Fe Ry. Co. v. S. Pac. Co., 57 P.2d 575, 581 (Cal. Ct. App. 1936) (“[T]he trial court would have permitted an indulgence in unfathomable speculation had it opened the road to the examination of witnesses … to determine whether there was a slump in the market in this area, and, if so, what it was due to, during that period [between announcement and commencement of an eminent domain action].”).
[163] See, e.g., Klopping v. City of Whittier, 500 P.2d 1345, 1353 (Cal. 1972) (en banc) (“Since the condemnee has the burden of proving damages, requiring the condemnee to lay a proper foundation in these matters and properly instructing the jury should adequately circumscribe speculation and render unnecessary a rule of exclusion created from apprehension of speculation.” (citations omitted)).
[164] See id. at 1351 (“In [a de facto taking claim], the owner claims his property has been Taken on the earlier date; thus all decline in value after that date is chargeable to the condemner. This would include damages wholly unrelated to the precondemnation activity of the public agency. For example, losses due to a general decline in market value in the area or to the adverse consequences of a natural disaster would be borne by the condemner since the Taking of the property is said to have occurred at the earlier date. In the instant case, however, plaintiffs do not contend that the subject properties should be treated as if they were actually condemned [earlier]…. Rather plaintiffs submit that any decrease in the market value caused by the precondemnation announcements should be disregarded and that the property should be valued without regard to the effect of the announcements on the property.”).
[165] Lange v. State, 547 P.2d 282, 288 (Wash. 1976) (en banc).
[166] See id. (“Under these circumstances the loss suffered is so closely connected to the condemnation itself that our constitutional concern for truly just compensation requires valuation in an eminent domain proceeding at a time earlier than the date of trial. This conclusion is necessary if the condemnee is to be placed in the same position monetarily as he would have occupied had his property not been taken.”).
[167] See id. (“The special use of the land by the owner must be acquiring and holding the property for subsequent development and sale. Further, the owner must have taken active steps to accomplish this purpose. A property owner who purchased land or took steps to market it in contemplation of the condemnation could not insulate himself from a later general decline in market values and benefit from the holding in this case.”).
[168] See, e.g., Jersey City Redev. Agency v. Kugler, 277 A.2d 873, 875 (N.J. 1971) (“The rule supported by the weight of authority in the ordinary condemnation case is that the proper basis of compensation is the value of the property as it would be at the time of the taking (or at the time fixed by the statute, such as the date of commencement of the condemnation proceedings) disregarding either the depreciating threat of or the inflationary reaction to the proposed public project.”); Lange, 547 P.2d at 286 (“It is similarly widely recognized that any decrease in property value attributable to the project for which the eminent domain proceeding is instituted is to be disregarded in computing just compensation. This rule also applies to situations in which the condemnation activities themselves have depreciated property prior to the institution of formal eminent domain proceedings.” (citations omitted)); John Lewis, Law of Eminent Domain §745 (3d ed. 1909) (“If the proposed improvement had depreciated the value of the property, it would be very unjust that the condemning party should get it at its depreciated value, … the correct rule would seem to be that the value should be estimated irrespective of any effect produced by the proposed work.”). But see United States v. Va. Elec. & Power Co., 365 U.S. 624, 636 (1961) (stating that just compensation “must exclude any depreciation in value caused by the prospective taking once the Government ‘was committed’ to the project” (citation omitted)).
[169] See, e.g., Madison Realty Co. v. City of Detroit, 315 F. Supp. 367, 370 (E.D. Mich. 1970) (noting that pending condemnation, and government condemnations in the surrounding area, prevented plaintiffs from borrowing money to improve property); Kanner, supra note 22, at 49 n.7 (“Needless to say, these decisions are unsound, indeed absurd, because they ignore the realities of a landowner having to secure the necessary permits and financing to create a substantial improvement, in the face of municipal plans to tear it down shortly after it is built, when the public project eventually materializes. No rational lender would lend money for such a venture. Still, if the courts insist that this is the law, no reason appears why the landowners should not be able to enjoy the benefit of that law when they are able to improve land slated for public acquisition.”).
[170] See, e.g., Md. Code Ann., Real Prop. §12105 (2003) (“[F]air market value includes any amount by which the price reflects a diminution in value occurring between the effective date of legislative authority for the acquisition of the property and the date of actual taking if the trier of facts finds that the diminution in value was proximately caused by the public project for which the property condemned is needed, or by announcements or acts of the plaintiff or its officials concerning the public project, and was beyond the reasonable control of the property owner.”); 26 Pa. Stat. Ann. §1-604 (1997) (“Any change in the fair market value prior to the date of condemnation which … was substantially due to the general knowledge of the imminence of condemnation, other than that due to physical deterioration of the property within the reasonable control of the condemnee, shall be disregarded in determining fair market value.”); Wash. Rev. Code §8.26.180 (2004) (“Any decrease or increase in the fair market value of the real property to be acquired prior to the date of valuation caused by the public improvement for which such property is acquired or by the likelihood that the property would be acquired for such improvement … will be disregarded in determining the compensation for the property.”).
[171] See Washington Mkt. Enters., Inc. v. City of Trenton, 343 A.2d 408, 411 (N.J. 1975) (citing a New Jersey statute and discussing just compensation for blighted property); City of Buffalo v. J. W. Clement Co., 269 N.E.2d 895, 903 (N.Y. 1971) (explaining that when “condemnation blight” reduces the value of later condemned property, “compensation shall be based on the value of the property at the time of the taking, as if it had not been subjected to the debilitating effect of a threatened condemnation”); City of Cleveland v. Carcione, 190 N.E.2d 52, 56-57 (Ohio Ct. App. 1963) (holding that just compensation had to be determined at a time before the renewal project caused neighborhood decline).
[172] See, e.g., Lange v. State, 547 P.2d 282, 285 (Wash. 1976) (en banc) (noting the usual rule and the potential unfairness of determining market value on date of trial).
[173] United States v. Reynolds, 397 U.S. 14, 16 (1970).
[174] Lange, 547 P.2d at 286.
[175] Klopping v. City of Whittier, 500 P.2d 1345, 1355 (Cal. 1972) (en banc); see also State ex rel. Dep’t of Transp. v. Barsy, 941 P.2d 971, 976 (Nev. 1997) (following the rule from Klopping); Eric Kades, Avoiding Takings “Accidents”: A Tort Perspective on Takings Law, 28 U. Rich. L. Rev. 1235, 1274- 77 (1994) (citing examples of courts using reasonableness tests to determine whether just compensation is required tion delay); Kanner, supra note 22, at 61 (“[T]o serve a broader public purpose, the prospective condemnees may have to suffer some minor incidental losses, as the public decision-making process progresses and knowledge of prospective public land acquisitions spreads, affecting market values at the targeted owners’ expense.”).
[176] Cf. Kanner, supra note 22, at 62 (“[T]he burdens of substantial delays in the implementation of public projects must fall somewhere, and given the constitutional doctrine that protects individual property owners from having to shoulder a disproportionate share of the cost of public improvements, it is only fair that it fall on the government that (1) is best situated to expedite the process, (2) is the effective cause of the loss, (3) has superior cost spreading ability, (4) has superior resources that it can use until the cost of the project can be fairly spread on society that benefits from it.”).
[177] See id. at 66-67 (“[I]f the local municipality refuses to issue the permits necessary to make repairs, that should be fully documented because if the poor condition of the property at the time of trial is attributable to the municipality’s interference with proper maintenance, the negative impact of it will then be disregarded because the fair market value may not reflect any diminution caused by the imminence of the condemnation, or any preliminary acts taken in anticipation of it.”).
[178] Alaska Stat. §09.55.330 (2000).
[179] 238 N.E.2d 548 (Ohio 1968).
[180] Id. at 551.
[181] 453 P.2d 229 (Ariz. Ct. App. 1969).
[182] See id. at 234 (“[P]roperty cannot be charged with a lesser value at the time of taking when the decrease in value is occasioned by reason of the taking itself.”). The court also noted that “[o]ther jurisdictions which have had occasion to consider the question of depreciated value resulting from a general plan of condemnation do not permit depreciation in value caused by the condemnor to inure to its benefit.” Id. at 235 (citations omitted).
[183] See, e.g., Madison Realty Co. v. City of Detroit, 315 F. Supp. 367, 370-71 (E.D. Mich. 1970) (holding that city took property three years before formal condemnation because by then city had made the property “a complete financial loss” by, among other things, “failing to safeguard said property so as to prevent its deterioration, in making impracticalble plaintiff’s protection of the property, in removing from the vicinity all indicia of a residential area, [and] in preventing the continued uses and enjoyment of the property as a residential building by making said property inaccessible….”).
[184] Armstrong v. United States, 364 U.S. 40, 49 (1960).