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 and Michigan Constitution.

But it is not that simple. In part one of this two-part series on property taking, discussion centered 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. This article focuses on court’s role in disputes about taking, how the courts analyze someone’s claim that a taking has occurred, and further resources.

One simply cannot assert that a regulatory taking has happened, and a government never intends to initiate or impose a regulatory taking (as it would with a condemnation). Rather, the decision that a regulatory taking occurred is made by a judge, following a court case on the matter. That means the regulation believed to have created a taking has already occurred, and the court is reviewing what happened after-the-fact. Part of the judge’s decision will be to determine if the regulation “went too far” using the analysis in part one. If the court decides that a regulatory taking did occur, the judge will then establish fair market value for what was taken.

Not every regulation amounts to a regulatory taking, and short of a total economic deprivation, loss of economic value by itself does not constitute a taking. The constitution does not guarantee that someone can make as much profit as he or she would like through the use of his or her private property, only that it can be put to some reasonable use. Sometimes even regulation that appears to result in a total economic deprivation may not be a taking.

In many ways, modern zoning laws codify historic nuisance common law principles that date back many years, even centuries. Property ownership brings with it inherent limits on engaging uses that would violate those principles—such as limits on nuisance-like harms to neighboring properties. If the regulation merely codifies a limit on use that already existed through those “background principles,” then the owner never had those rights in the first place and nothing was taken—that is, no regulatory taking. This principle was established in the Supreme Court case Lucas v South Carolina Coastal Council (505 US 1003 (1992)).

When a regulatory taking case goes to court, the analytical process usually used by the court might be outlined in the following way. Keep in mind this explanation is brief, and far more detail will occur with individual court cases.

The first question asked is whether there are other constitutional claims that could apply to the regulation in question, such as procedural due process, substantive due process, equal protection, etc. One constitutional requirement, for example, is that property cannot be regulated without due process of law. So if due process was not followed, the court will focus on that. If there were such problems, then there is a very good chance the court will not deal with the regulatory taking claim at all.

Second, if other constitutional claims do not apply, the court will determine if the regulation amounted to one of the two types of categorical regulatory takings described in part one (i.e., a total economic deprivation or an ouster). If it did, then the task is to determine the value of the property interest taken and order the government to pay the private property owner that dollar amount.

Third, if the regulation did not amount to a categorical taking, the court will apply the “ad hoc” balancing test to determine whether it amounted to a regulatory taking nonetheless, given the facts of the particular case. In doing this, the court’s job is to balance the interests of the public (government’s regulation) with the interests of the private property owner. The court looks at the following three factors:

• Reasonableness of the owner’s investment-backed expectations.
• Reasonableness of the government’s regulation.
• Severity of the economic impact on the private property owner.

The result under this ad hoc balancing test is that most regulations are found not amount to a regulatory taking because of their relatively minor impact on the property owner and the government regulation’s importance to society. But there will also be cases where the impact on the property owner is significant, or the government’s regulation is highly questionable. In those cases, a regulatory taking may have occurred. If a court determines that it has, as with the other ways to get here, its task is to then determine the value of the property interest taken and order the government to pay the private property owner that dollar amount.

Finally, if the governmental regulation involves a dedication or exaction requirement, and if that dedication or exaction requirement was indeed statutorily enabled, the court will apply the 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)) tests to ensure that there was a reasonable connection between the dedication required and the harm that would have been caused by the development, and that the cost to the developer is roughly proportional to the scope of the harm avoided. (If the dedication or exaction requirement was not enabled in the first place, then it would be struck down on that ground alone, before getting to a regulatory taking claim.)

Michigan State University Extension has additional fact sheets on takings on this topic. Land Use Series “Summary of Property Takings Case Law” by Christopher Grobbel, Ph.D. (2002) reviews court cases on takings law. The Land Use Series “A Behavioral Approach to Avoid Regulatory Takings” by Joseph F. Galvin, Esq. and Kurt H. Schindler, AICP, focuses on behaviors by local officials which can get their government into problems with regulatory takings. You may also be interested in the Train of Thought for Property Taking Case. And finally, the content of these two articles, with more detail: Land Use Series “Property Taking, Types and Analysis” (December 16, 2013) by Norton and Schindler (found at the Land Use Services web page)