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Eminent Domain: Regulatory Takings
The Takings Clause of the Fifth Amendment of the U.S.
Constitution provides that private property must not be taken for public
use without payment of just compensation. (The clause is made applicable
to the states through the Fourteenth Amendment.) Under the Minnesota Constitution,
article 1, section 13, private property must not be taken, destroyed,
or damaged for public use without payment of just compensation. Definition of a “taking.” The classic taking
is a direct appropriation or physical invasion of private property. Since
1922, however, the courts have recognized that a state statute or local
ordinance may impose restrictions or demands on the use of private property
that are so onerous that it amounts to a taking and the government must
compensate the owner. Lingle v. Chevron, U.S.A., Inc., 125 S. Ct. 2074,
2081 (2005) (citing Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922))
view
case. In these instances, called regulatory takings, the property
owner brings an inverse condemnation action to compel the government to
begin eminent domain proceedings and compensate the owner. A compensable
regulatory taking may be temporary or permanent. First English Evangelical
Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987) view
case. Categorical or per se regulatory takings. There are
two situations in which a court could find that a regulation is clearly
a taking—a categorical or “per se” taking. First, if the
regulation requires an owner to allow a physical invasion of the property,
however minor, the owner must be compensated. Lingle, 125 S. Ct. at 2081
see case (citing Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S.
419 (1982) see
case (state law requiring landlords to permit cable TV companies to
install cable facilities in apartment buildings held to be a taking)).
The second situation is when the regulation denies
the owner of all economically viable use of the property and the regulation
is not merely an explicit statement of common law limitations already
present in the title. Lingle, 125 S. Ct. at 2081 (citing Lucas v. South
Carolina Coastal Council, 505 U.S. 1003 (1992) see
case. Penn Central test. Apart from the two situations in
which the Court would find a categorical taking or taking per se, there
is little guidance on what constitutes a regulatory taking, and courts
have relied on ad hoc factual inquiries. Penn Central Transp. Co. v. New
York City, 438 U.S. 104, 124 (1978) see
case (historical preservation designation limited development options
for railroad station not a taking). In these cases, a court will analyze
a regulatory takings claim under a three-part test in which the court,
considering the parcel as a whole, looks at: Id.; Johnson v. City of Minneapolis, 667 N.W.2d 109,
114-115 (Minn. 2003) see
case (following Penn Central analysis, court held that the “cloud
of condemnation” over Nicollet Mall property in Minneapolis due to
drawn out conflict over proposed LSGI development was a taking). The Court does not look at whether the regulation is
an effective way to achieve the stated purpose; the focus is not on the
government’s purpose (once public use or purpose is established),
but on the impact on the property owner’s rights. Lingle, 125 S.
Ct. 2074 see
case. Each of the tests for regulatory takings looks for the functional
equivalent to an appropriation or physical invasion of private property.
Id. at 2084. Minnesota’s government enterprise or arbitration test. In general, a regulation that diminishes property value alone does not constitute a taking. In Minnesota, however, a regulation that is designed to benefit a government enterprise, such as an airport, and results in a substantial diminution in value, may be a taking. McShane v. City of Faribault, 292 N.W.2d 253 (Minn. 1980) see case and see case (airport safety zoning ordinance that limited development and caused a substantial and measurable decline in market value was a taking). When a regulation arbitrates between competing uses,
the court looks at whether the regulation deprives the property of all
reasonable uses before determining that it is a taking. Concept Properties,
LLP v. City of Minnetrista, 694 N.W.2d 804, 823 (Minn. App. 2005) see
case and see
case (“comprehensive planning objective [is] to balance many
public interests and to promote the City’s particular land-use goals
and rural values”), rev. denied (Minn. July 19, 2005). Development moratorium. Local governments have authority to impose a moratorium on development in order to protect the planning process. Minn. Stat. §§ 394.34 http://www.revisor.leg.state.mn.us/bin/getpub.php?type=s&num=394.34, 462.355 http://www.revisor.leg.state.mn.us/bin/getpub.php?type=s&num=462.355, subd. 4. During the moratorium, a property owner may have limited or no economically viable use of the property. The U.S. Supreme Court has held that under the federal constitution, a temporary regulation that denies all economically viable use of property is not a per se taking. The Court applies the Penn Central factors to determine if the regulation amounts to a compensable taking. Tahoe-Sierra Preservation Council, Inc. v. Tahoe Reg. Planning Agency, 535 U.S. 302 (2002) see case; Woodbury Place Partners v. City of Woodbury, 492 N.W.2d 258 (Minn. App. 1992) see case (remanded for determination of whether moratorium constituted a taking under case-specific analysis of Penn Central).
Removal of nonconforming uses. The 2006 Legislature
enacted a number of significant changes to the statutes governing eminent
domain in Minnesota. See Minn. Laws 2006, ch. 214 http://www.revisor.leg.state.mn.us/bin/getpub.php?type=l&year=2006&sn=0&num=214,
effective May 20, 2006, with certain exceptions. One of the changes requires
a local government to compensate the owner of a nonconforming use if the
local government requires its removal as a condition of granting a permit,
license, or other approval for a use, structure, development, or activity.
This provision does not apply if the permit, license, or approval is for
construction that cannot be done unless the nonconforming use is removed.
Minn. Stat. §117.184 http://www.revisor.leg.state.mn.us/bin/getpub.php?type=s&num=117.184.
August 2006
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The Castle Coalition
Presents the CastleWatch Month in Review: August 2006 1. BEATING THE
ODDS: A COLORADO ACTIVIST SAVES HIS LAKE
Respectfully,
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