This rule precludes the placement of onerous requirements on property owners seeking governmental approval. In Dolan v. City of Tigard, U. The vast majority of preservation takings cases fall within this category. Under this scenario, a property owner argues that a taking has occurred as a result of the denial of an application concerning the use of his or her property.
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In determining whether a taking has occurred, it is important to identify the "relevant parcel. Thus, for example, in analyzing a takings claim, courts should look at the entire historic estate rather than the segment of the estate on which a historic preservation commission has ruled that development may not occur. The "parcel as a whole" analysis is especially significant in view of Lucas v. South Carolina Coastal Council , U. In other words, if a regulation renders property completely valueless i. Without the "parcel as a whole" rule, property owners could claim that a categorical taking has resulted with respect to the portion of property directly affected by the challenged regulatory action.
See District Intown Properties Ltd. Partnership v. District of Columbia , F. Although decided over 30 years ago, Penn Central Transportation Co. City of New York , U. Rhode Island, U. Tahoe Regional Planning Agency , U. Chevron, U. Judicial review of regulatory takings claims is based upon a three-factored inquiry: the character of the government action; the economic impact of that action on the property; and the claimant's distinct investment-backed expectations.
This prong focuses on the nature of the action in dispute. As noted above, permanent occupations are treated as per se takings and governmental actions involving exactions or conditioned approval are generally subject to a higher level of scrutiny. Historic preservation regulations are rarely challenged on this issue. Indeed, in Penn Central , the U. Supreme Court recognized that preserving historic structures is "an entirely permissible goal" and the imposition of restrictions on historic property through historic preservation ordinances is an "appropriate means of securing" that purpose.
Ch. 12 Takings - Environmental Law Section
The vast majority of preservation cases involving takings claims focus on the question of economic impact. To succeed under this factor, the property owner must demonstrate that the challenged regulation will result in the denial of the economically viable use of his or her property.
This inquiry focuses on the impact of the regulation on the property and not the property owner. Takings claims involving the mere designation of properties as historic resources pursuant to historic preservation ordinances under both federal and state constitutions have uniformly been rejected. City of Philadelphia , A. Takings claims involving the denial of permission to alter or demolish historic structures are also routinely dismissed. Both federal and state courts have ruled that governmental actions under historic preservation laws that prevent landowners from realizing the highest and best use of their property are not unconstitutional.
A taking will not result when the owner can realize a reasonable rate of return on his or her investment or can continue to use the property in its current condition or upon rehabilitation. Several courts have also ruled that a property owner must establish that he or she cannot recoup his or her investment in the historic property through sale of the property "as is" or upon rehabilitation.
Under the final Penn Central factor, the property owner must show that the challenged regulatory action interferes with his or her "distinct investment-backed expectations.
Justice Kennedy: Takings in the balance
To prevail, the expectation must be objectively reasonable rather than a "mere unilateral expectation. In Palazzolo v. Rhode Island , the Supreme Court ruled that the acquisition of property subsequent to the adoption of a law, such as a historic preservation ordinance, does not bar a takings claim. This does not mean, however, that the existence of a preservation law or designation of a property as historic prior to acquiring title is not a relevant factor.
Conversely, the argument raised by property owners, that the application of preservation laws unconstitutionally interferes with their investment-backed expectations in situations where the property in question has been designated after the property was purchased, has also been rejected. Courts have found that an owner's expectation to be free from regulation is not reasonable.
In some situations, statutory provisions may protect individuals from potential regulatory takings. Many jurisdictions, for example, include provisions in their preservation ordinances that establish a separate administrative process for considering cases of undue hardship that may lead to potential takings claims.
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Commonly referred to as economic hardship provisions, they enable local governments to address hardship claims in individual cases and help prevent invalidation of commission decisions on constitutional grounds. Economic hardship provisions are typically invoked once an owner has been denied permission to demolish or substantially alter his or her property.
An applicant may be required to submit detailed information to show that retention or sale of the property is economically infeasible. The standard for measuring economic hardship may vary from one jurisdiction to the next. Most jurisdictions, however, use the same standard as that for a regulatory taking, finding economic hardship when an owner has been denied all economically viable use of his or her property.
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A number of states have enacted so-called "takings" laws mandating a governmental assessment of the impact of a proposed action on individual property owners to avoid situations that may ultimately result in a compensable taking. A proposed regulation or governmental action may fail to be enacted based upon its projected impact on constitutionally-protected property rights. In a very limited number of states, compensation may be required upon a showing by a private owner that the value of his or her property and, in some cases, a portion of that property has been diminished by a certain percentage sometimes as low as 10 percent.
While highly controversial, the impact of takings laws on historic preservation has not been documented. Nonetheless, because historic preservation laws may affect private property, these laws are likely to have some impact on efforts to regulate historic property and should be consulted where applicable.
Under the Fifth Amendment, a federal, state, or local government may confiscate privately-owned properties for public use, provided that "just compensation" is paid. This authority has been both helpful and harmful to historic properties. On the one hand, scores of historic buildings have been demolished through the application of eminent domain proceedings under urban renewal, transportation and other public works programs.
Mahon , US , is usually cited as the first regulatory takings case. In Pennsylvania Coal , the property owners were granted surface rights to property and waived any claim related to the coal company's express right to remove coal from underneath the surface. The state then enacted a statute prohibiting the mining of coal without leaving pillars to prevent surface subsidence.
The court, stating that "the statute is admitted to destroy previously existing rights of property and contract," concluded in a famous aphorism "while property may be regulated to a certain extent, if a regulation goes too far it will be recognized as a taking.
A total or "categorical" regulatory taking is a regulation that takes all economically viable use of the land. The preeminent decision of a categorical regulatory taking is Lucas v.
In Lucas , the property owner purchased two lots on which he intended to construct two residences. The lots were feet from the beach. After the purchase, the state enacted a statute that prohibited all structures, including homes, in coastal dune areas. The court held that the property owner suffered a taking due to the statute's effect of destroying all of the value of the property.
Successful total regulatory taking cases are not prevalent, as they require a showing of elimination of all economic uses. Dep't of Natural Resources , Mich ; NW2d no categorical taking in denial of a wetland permit where the entire property, not just the affected parcel, retained value , and Bevan v. Brandon Twp , Mich , ; NW2d 37 no categorical taking where effect of zoning ordinance creates a "disparity in value between uses," rather than a total loss of value.
The most difficult type of taking for a practitioner to analyze is that of a partial regulatory taking. In a partial regulatory taking, a property owner is left with some viable uses of its property following application of a regulation. Partial regulatory takings are analyzed under what are commonly known as the " Penn Central " factors, in reference to the factors set forth in the landmark decision of Penn Central Transportation Co v.
New York City , US , The designation subjected the property to numerous development restrictions, which limited the property's utility and thwarted the property owner's plan to construct an office building over the train station. The court set forth the following test:. 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. Using this formula, the court found no taking had occurred. The court looked at the parcel as a whole and found that the restrictions did not interfere with the property owner's present and historical use of the property.
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