P. 1993-1994
This case presents a question
that is linked to the ultimate determination whether a regulatory taking has
occurred: What is the proper unit of property against which to assess the
effect of the challenged governmental action? Put another way, “[b]ecause our
test for regulatory taking requires us to compare the value that has been taken
from the property with the value that remains in the property, one of the
critical questions is determining how to define the unit of property ‘whose
value is to furnish the denominator of the fraction....’"
As commentators have noted, the answer to this question may be outcome determinative.
Why is the answer often "outcome determinative?" Is it a bad thing to have clear constitutional rules that serve as guideposts?
Page 1994:
Defining the property at the
outset, however, should not necessarily preordain the outcome in every case. In
some, though not all, cases the effect of the challenged regulation must be
assessed and understood by the effect on the entire property held by the owner,
rather than just some part of the property that, considered just on its own,
has been diminished in value. This demonstrates the contrast between regulatory
takings, where the goal is usually to determine how the challenged regulation
affects the property’s value to the owner, and physical takings, where the
impact of physical appropriation or occupation of the property will be evident.
Why isn't the impact of this regulation "evident" in this case, where one of two lots purchased separately by the Murr family can no longer be developed or sold as a separate lot?
So the Court goes on----
Page 1945:
As the foregoing discussion
makes clear, no single consideration can supply the exclusive test for
determining the denominator. Instead, courts must consider a number of factors.
These include the treatment of the land under state and local law; the physical
characteristics of the land; and the prospective value of the regulated land.
The endeavor should determine whether reasonable
expectations about property ownership would lead a landowner to anticipate that
his holdings would be treated as one parcel, or, instead, as separate tracts.
The inquiry is objective, and the reasonable expectations at issue derive from
background customs and the whole of our legal tradition.
What does this multi-factor "reasonable expectations" test mean?
See page 1945-1946 for the Court's explanation of three crucial factors.
Practice tips:
1. Be extra careful how you structure purchases of sensitive undeveloped land.
2. Think about purchasing multiple lots separately, under different ownership (e.g Dad owns one lot, Mom owns the other lot or Corp A owns one lot Corp B owns the other)
3.
Do not purchase adjacent lots in sensitive areas unless you plan to develop them as one.
For example, going forward in a case like
Lucas, the developer might want to purchase beach front lots a few blocks apart and consider separate ownership for each lot. Then, if regulation requires one of several lots to be left in undeveloped state, it is a total taking of that particular lot owned by Company A rather than a partial taking of Lots 1, 2 & 3.
Lots owned by separate Corps and situated several blocks apart are less likely to be treated as one big lot for Takings purposes.
Make it hard for the Grasping Hand of the Regulatory State to deprive your clients of their constitutional right to Just Compensation.
Finally, the Court's decision in
Murr (page 1948-1949):
Under the appropriate
multifactor standard, it follows that for purposes of determining whether a
regulatory taking has occurred here, petitioners’ property should be evaluated
as a single parcel consisting of Lots E and F together. First, the treatment of
the property under state and local law indicates petitioners’ property should
be treated as one when considering the effects of the restrictions. As the
Wisconsin courts held, the state and local regulations merged Lots E and F.
Petitioners’ land was subject to this
regulatory burden, moreover, only because of voluntary conduct in bringing the
lots under common ownership after the regulations were enacted. As a result,
the valid merger of the lots under state law informs the reasonable expectation
they will be treated as a single property. [This was the landowners big mistake--did they consult a lawyer before doing this!!!!]
Second, the physical characteristics
of the property support its treatment as a unified parcel. The lots are
contiguous along their longest edge. Their rough terrain and narrow shape make
it reasonable to expect their range of potential uses might be limited. The
land’s location along the river is also significant. Petitioners could have
anticipated public regulation might affect their enjoyment of their property,
as the Lower St. Croix was a regulated area under federal, state, and local law
long before petitioners possessed the land.
Third, the prospective value
that Lot E brings to Lot F supports considering the two as one parcel for
purposes of determining if there is a regulatory taking. Petitioners are
prohibited from selling Lots E and F separately or from building separate
residential structures on each. Yet this restriction is mitigated by the
benefits of using the property as an integrated whole, allowing increased
privacy and recreational space, plus the optimal location of any improvements.
....
Considering petitioners’
property as a whole, the state court was correct to conclude that petitioners
cannot establish a compensable taking in these circumstances. Petitioners have
not suffered a taking under Lucas, as they have not been deprived of all
economically beneficial use of their property. They can use the property for
residential purposes, including an enhanced, larger residential improvement.
The property has not lost all economic value, as its value has decreased by
less than 10 percent. See Lucas, supra, at 1019, n. 8 (suggesting
that even a landowner with 95 percent loss may not recover).
Petitioners furthermore have not suffered a taking
under the more general test of Penn Central. The expert appraisal relied
upon by the state courts refutes any claim that the economic impact of the
regulation is severe. Petitioners cannot claim that they reasonably expected to
sell or develop their lots separately given the regulations which predated
their acquisition of both lots. Finally, the governmental action was a
reasonable land-use regulation, enacted as part of a coordinated federal,
state, and local effort to preserve the river and surrounding land.