Property Law Outline - Takings Doctrine

  1. Takings Clause
    1. Historically, takings clause only applied to the federal government. It was incorporated in the 1880s through the 14th Amendment.
    1. "Nor shall private property be taken for public use without just compensation."
      1. We focus on two aspects:
        1. "be taken"
        1. "for public use"
  1. Analyzing a Takings Clause Challenge:
    1. Eminent Domain OR Inverse Condemnation?
      1. Eminent Domain- occurs when the government takes land and pays for it.  Two options:
        1. Straightforward condemnation (obviously for public use)
          1. This includes takings for roads, public parks, etc.
        1. Taking of private land for private use (not obviously a public use)
          1. Arise when the government has restricted the use of privately-owned land to such an extent that compensation is required.
            1. Issue is that all regulations "take" some right and therefore devalues the property to some extent.
            2. Therefore, the legal problem in regulatory taking cases is where to draw the line between gov't regulations requiring compensation and those that may proceed without compensation.
          1. Issue: Is taking by eminent domain to give to private parties unconstitutional if it ostensibly creates some public benefit?
          1. Berman v. Parker (1960s)
            1. Large-scale redevelopment plan of DC blighted neighborhoods. Redevelopment commission wants to condemn property to give it to private developers. Department store owner  claims that his store is not “blighted” since he’s doing well.
            2. Court says that urban blight is a big social problem, and "public use" includes “physical, aesthetic, or monetary benefit" to the public, even if it is via private development.
          1. Poletown (1981)
            1. Detroit condemns whole Polish suburb to give it to GM; GM was under serious pressure from foreign competition for first time and was threatening to leave Detroit. It would save jobs, but Poletown was a thriving area at the time. 4200 were displaced.
            1. Michigan Supreme Court says that economic development is a legitimate public purpose.
            1. However, this is eventually overturned as going too far.
          1. Midkiff (Supp)
            1. Hawaii passes law to bust up land oligopoly (market failure).  When a certain number of tenants petition the land board, they will acquire land by eminent domain and resell it to tenants.
            2. Court applies a rational basis test for public use- “any conceivable public interest.” Land oligopoly is a public concern, so this is constitutional.
              1. Court applies a very deferential standard of review regarding legislative findings.
              1. The way the legislature is going about solving the problem doesn't even need to be rational, there just must be a rational basis for the legislature to think it will work.
            1. NOTE: This is an extreme case.  It is unlikely that this kind of land oligopoly situation is going to occur again.
          1. Kelo v. City of New London (Supp)
            1. New London wants to take P’s house as part of “economic redevelopment” of area north of a new Pfizer plant going in.
            1. Court says that economic development is a legitimate public use.
              1. NOTE: Court considers the political process is important here.  New London had hearings and had to listen to these people before going ahead with the plan.
            1. Dissent says this is crazy. Every home would produce more revenue as a Walmart (or at least the legislature might think so). What are the limits?
            2. Thomas (dissent) seems to evoke the sentiment that most of these types of economic development plans don't work. Should this matter to the Court?
          1. After Kelo, some states have passed laws saying “economic development alone is not a valid public use.”
            1. Other states have codified tougher standards of review for public use
      1. Inverse Condemnation- occurs when the government takes land and does not pay.  Three types:
        1. Permanent Physical Occupation (PPO)
          1. Occurs when the government is permanently occupying someone else's property. This almost automatically qualifies as a taking.
          1. Ex: Loretto v. Telepromter CATV (Supp)
            1. 1973 law said that a landlord has to allow CATV companies to install cable wires on the roofs of their apartment buildings for a nominal fee of $1. Prior to this the CATV company negotiated with the landlords.
            1. Court holds that this is a permanent physical occupation, and thus a per se taking.
            1. NOTE: What is the difference between building and fire codes that require fire hydrants to be placed in specific locations?
              1. Symbolism of having your land occupied by a third party vs. owning and installing your own safety equipment.
              2. Difficult issue- no real answer to this question.
          1. Ex: Causby
            1. Gov't flies planes over Causby's house and makes it so they can't raise chickens. Court says this is a PPO.
          1. Analysis:
            1. Issue here is whether it is a permanent taking.
              1. Temporary physical invasions are subject to the Penn Central Test (see below).  This is the test applied in Pruneyard, for example.
              2. Does it matter that the use of the building could change so that the CATV hook up was no longer required?  Court says no here.
            1. PPO analysis falls under the "character of the government action" prong of the Penn Central test.  BUT, since it is a PPO, it is a per se taking.
        1. Exaction
          1. Occurs when the government demands something in return for a building permit or other type of benefit that the gov't can confer.
          2. Issue is what can the government ask for in return?
          3. Analysis:
            1. Ask: Would it be a taking if no permit was involved?
            2. Three questions:
              1. Is there a legitimate government interest?
              1. Is there an essential nexus between the demands/exactions and the legitimate government interest?
              1. Is there a rough proportionality between the detriment to the landowner through the exactions and the benefit to the city?
          1. Nollan
            1. Nollan asks for a building permit on his beachfront property.  The city says he will be blocking visual access to the beach and demands that he allow for a public easement  across his beach to connect two public beaches.
            1. Court holds that:
              1. There must be a legitimate government interest involved.
                1. Here, the gov't has a legitimate interests in providing visual access to the beach.  Gov't has legit interests in aesthetics.
              1. AND there must be an essential nexus between the condition placed on the exchange and the legitimate state interest involved.
                1. Here, there is no nexus, because providing access between two public beaches is not a way to provide visual access to the beach.
          1. Dolan (p.1049)
            1. Dolan asks for a permit to expand her store.  City demands that she must (1) Dedicate a patch of land to the city as a flood plain; and (2) allow a biking and pedestrian pathway.
            1. Justification for (1) is that the area floods and the parking lot and building will mean less land to hold flood waters.  Justification for (2) is that the city is trying to keep traffic down and the new store will get more traffic.
            2. Court holds that:
              1. Gov't interests in keeping traffic levels low and in preventing flooding are legitimate.
              2. There is an essential nexus between the legitimate gov't interest and the exactions. 
              1. BUT, there also must be a rough proportionality between the gov't's demands and the legitimate interest. 
                1. City must show that there is a rough proportionality between the detriment to the landowner and the benefits.  Kind of like narrow tailoring.
                2. Here, the city could have accomplished justification (1) by just requiring Dolan to keep flood plain area open. She doesn't need to dedicate it to the city.
                3. Also, the city must show that it will benefit from the bike path.  Must show some evidence that traffic will be reduced.
            1. Important case because a third prong is added to the Nollan test.
        1. Regulatory Taking
          1. In 1922, Pennsylvania Coal v. Mahon said that regulation of property can go so far so as to constitute a taking.
            1. These are mostly claims against state and local governments, not against the federal gov't.
          1. In Hadashek and Schoene, the Court upheld regulatory takings claims as proper exercise of states' police powers to prevent/control nuisance in order to protect health, safety, morals, etc.
          1. Issue: As a practical matter, it is difficult to compensate for every regulation that affects property value. BUT, at the same time, a small number of owners whose property is being taken are bearing the whole burden for something that ostensibly benefits everyone.
          1. Penn Central (p.325)
            1. Penn Central wanted to build office buildings, but city said that the station was an historic property and vetoed the plans pursuant to historic property preservation legislation. City gave Penn Central Transferrable Dev. Rights (TDRs) to develop elsewhere.
            2. Penn Central claims this is a regulatory taking.
            3. Court lays out a test for determining whether a regulatory taking has occurred:
              1. Economic Impact of the legislation
                1. Looking at the parcel as a whole, does the regulation unfairly place the burden of a public program on the individual?
                  1. Can’t just be that it lowers property values. Laws change property values all the time.
                  1. Must be a burden but not benefit at all to landowners to pass this test.
                1. If there is a complete taking (all value), then it is only valid if there is CL defense of nuisance that legitimizes the gov't's actions. (See Hadashek and Schoene above).
                1. Here, Penn Central can sell unused their expansion rights
                1. Also, they will benefit from preservation of historic districts like the general public.
              1. Interference with Reasonable Investment-backed Expectations
                1. Here, Penn Central can still continue their current uses and can still turn a profit.
                1. They also can sell rights they don’t use.
              1. Character of the Government Action: Does the action reasonably effectuate a legitimate gov't interest?
                1. If PPO ---> Per se taking.
                2. A temporary physical occupation, however, is not a per se taking.
                3. It’s less likely to be a taking when the gov’t acts to adjust the rights of the public at large in the name of the common good.
                  1. Zoning, e.g., substantially interferes with property rights but isn’t a taking.
          1. Lucas v. S.C. Coastal Comm. (p.354)
            1. City commission moves the setback line in front of which no one can build so as to prevent erosion on the SC coast.  Now, Lucas can't do anything with his oceanfront property.
            2. Court analyzes this under Penn Central, but stops after the first factor.
              1. Economic Impact- This is a total wipeout of all value.  Doesn't buy the city's argument that Lucas can put a gazebo or a viewpoint on his property.  He wants to build a house.
                1. Since the regulation renders the land totally valueless or affects a total preclusion of the owner’s use of the land, it is a taking, UNLESS it could have been brought under traditional nuisance law.
                  1. Essentially, if this type of use always would have been permitted, then there is no taking.
                  1. Legislature must be able to show that it is prohibiting a classic nuisance.
                1. Court strikes down the nuisance argument here because anything can be framed as harm-preventing rather than benefit-conferring.  This use normally would have been okay.
            1. In Bennet v. Spear, the gov’t designated a new species as endangered under the Endangered Species Act; now P can’t use his water rights at all. This is a taking under Lucas. However, if the species was already endangered, it is not a taking, because the person was already on notice.