MSU Extension

“If you do not give me the zoning permit, I’ll sue you for taking my property” is a statement that might be made at a more contentious planning commission meeting. The statement may make planning commissioners nervous. The statement may be made by an angry citizen knowing that private property is protected by the U.S. Constitution.

But “regulatory takings claims are often more effective politically, rather than being based on a solid legal foundation” said Richard K. Norton, Esq., Associate Professor and Chair of Urban and Regional Planning Program Taubman College of Architecture and Urban Planning at University of Michigan. Norton was speaking at the Michigan Association of Planning (MAP) annual conference, October 2, 2013.

Statements about private property rights are in both the U.S. Constitution and in the Michigan Constitution:

“No person shall be . . . deprived of life, liberty, or property without due process of law; nor shall private property be taken for public use without just compensation.” Fifth Amendment of the U.S. Constitution

“. . . private property shall not be taken for public use without just compensation therefor being first made or secured in a manner prescribed by law. Compensation shall be determined in proceedings in a court of record.” Article 10§2; 1963 Michigan Constitution

Neither constitution prohibits government from taking property, Norton said, but both provide some protection against governmental abuse. These provisions require that when government takes property, it must do so in a fair way (due process), it must do so only for a “public use,” and it must compensate the property owner a fair amount for the property taken (takings).

The takings clause was originally understood to apply only to actual takings—that is, when government condemns land by exercising its powers of eminent domain. The clause has since been accepted by the courts as applying to regulations as well, after the U.S. Supreme Court ruled in Pennsylvania Coal Co. v Mahon that “if regulation goes too far it will recognized as a taking” (260 U.S. 393, 415 (1922)).

Since the Pennsylvania Coal case the courts have been working out what it means for a regulation to go “too far.” Norton said there are four categories of regulatory

First, a regulatory taking occurs when the government regulates property to the point that it results in a total economic loss for the private property owner. The U.S. Supreme Court decision that established this rule is Lucas v South Carolina Coastal Council (505 US 1003 (1992)). This is called a “total economic deprivation,” taking completely the right to use one’s property. This is the first of two kinds of “categorical” taking (i.e., if the condition or category applies—such as total economic loss—then it is a taking, without consideration of other factors). takings and then explained a thought process to evaluate if such a taking has occurred or not:

• Second, a regulatory taking occurs when the government regulation compels a private property owner to allow others to enter upon his or property. The U.S. Supreme Court decision that established this rule is Loretto v Teleprompeter Manhatton CATV Corp (458 US 419; 423 N.E. 2d 320 (1982)). This is called a “permanent physical invasion” or “ouster,” taking completely the right to exclude others from one’s property. This is the second kind of categorical taking.
• Third, a regulatory taking may have occurred when government regulates such that part, but not all of the private property owner’s use of the property is diminished. In these situations the takings claim is settled on a case-by-case review, as each situation will be different. The court strives to balance the interests of the public (government actions) with the interests of the private property owner. The U.S. Supreme Court decision that established this rule is Penn Central Transportation Co. v New York City (438 US 104 (1978)). This is referred to as the “ad hoc balancing test,” and it is always decided on a case-by-case basis given the particular facts of the case and the interests at stake.
• Finally, a regulatory taking may have occurred when government demands that a property owner convey either a property interest or in lieu payments (“dedications” or “exactions”) in exchange for some type of governmental permit or decision that would allow the development to proceed. These kinds of dedications and exactions are actually quite limited in Michigan because of statutory enabling limits imposed through the Michigan Land Division Act and the Michigan Zoning Enabling Act. When such a dedication is legitimately applied, however, then the courts will assess whether it amounted to a regulatory taking nonetheless by applying the U.S. Supreme Court decisions of Nollan v California Coastal Commission (485 US 825; 107 L Ed 2d 3141 (1987)) and Dolan v City of Tigard (512 US 374; 114 S Ct 2309; 129 L Ed 304 (1994)). These decisions demand that there be an “essential nexus” or reasonable connection between the dedication being imposed and the harm being addressed (Nollan), and that the cost of that dedication to the property owner be “roughly proportional” to the scope of that harm prevented (Dolan). This is called an exaction.

In this article the focus is on the constitution’s provisions on private property rights, and the four categories of regulatory takings: categorical (total economic deprivation), categorical (physical invasion), regulatory taking (“ad hoc balancing test”), and dedications or exactions. In the next article on this topic we will focus on the court’s role in disputes about taking, how the courts analyze someone’s claim that a taking has occurred, and further resources on the topic from Michigan State University Extension. 

Photo credit: Kurt H. Schindler, MSU Extension