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NC Planning |
Key Legal IssuesTakings David W. Owens, Professor, Institute of Government,
The University of North Carolina at Chapel Hill, CB#
3330, Knapp Building, UNC-CH, Chapel Hill, N.C. 27599-3330 The Fifth Amendment to the U.S. Constitution provides: “[N]or shall private property be taken for public use, without just compensation.” Although the same language does not appear in the North Carolina constitution, the court has held that Article I, Section 19, of the state constitution, providing that no person shall be “deprived of his life, liberty, or property but by the law of the land,” has the same functional impact as the federal taking clause.[1] The compensation requirement is straightforward when the issue is seizing a private residence to quarter troops, as in the early days of the country’s existence, or using private property for a public road, as in modern applications.[2] However, when a landowner alleges in an inverse condemnation suit[3] that land use regulations are so restrictive as to be the equivalent of a seizure or a taking of property, thereby mandating compensation to the owner, the legal issues become rather complex. The taking issue has been the subject of a number of important federal court decisions. The federal courts have long ruled that land use regulations preventing noxious land uses and uses that are nuisances or threats to public health and safety, are not takings even if property values are substantially reduced.[4] On the other hand, even modest physical invasions of property require compensation,[5] as do regulations that eliminate all economically beneficial uses of a property.[6] When landowners are required to dedicate a property interest to the government, there must be a substantial connection between the dedication and the need for it created by the development. [7] The concept that there can be a regulatory taking—that a land use regulation can be so restrictive as to constitute a taking of private property—was first set forth in 1922 in Pennsylvania Coal v. Mahon.[8] The oft-quoted conclusion of Justice Oliver Wendell Holmes in this case was, “[W]hile property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”[9] In 1987 the U.S. Supreme Court confirmed that compensation, not just invalidation, was the appropriate remedy when there was a regulatory taking, even if the taking was temporary.[10] However, it has proven elusive to determine just when a taking has occurred absent the extraordinary situations of a physical invasion or a total deprivation of value. The courts must examine each challenged regulation on a case by case basis to consider whether the owner has been left with any economically viable use of the property.[11] The Supreme Court’s analytic framework was summarized by Justice Brennan in Penn Central:
In engaging in these essentially ad hoc, factual inquiries, the Court’s decisions have identified several factors that have particular significance. 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.[12] The taking issue has not been frequently litigated in North Carolina state courts. Only a handful of cases have addressed the issue to any substantial degree. Three of these decisions, early prezoning cases, illustrate that the court will uphold substantially restrictive regulations designed to protect public health and safety. In 1875 the court upheld a Goldsboro ordinance prohibiting wooden buildings and its application to a building already under construction.[13] The court ruled that no damages were due if the building was a nuisance because it was a fire hazard. In 1906 the court upheld a ban on discharges into water-supply streams and noted that reasonable regulations to protect the public health, safety, and morals (including restrictions on land use and building) were not a taking.[14] In 1926 the court upheld a Winston-Salem ordinance prohibiting the sale of fresh meat or seafood in any location other than the city market, even when the ordinance was applied to preexisting businesses located elsewhere.[15] The court found the ordinance to be within the police power to protect the public safety and enforce sanitary conditions. In its first major review of a zoning restriction challenged as an unconstitutional taking, the court in 1938 examined a Greensboro setback ordinance involving the height of walls allowed on rear- and side-yard property lines. In In re Parker[16] the court found no taking even though the individual project involved might cause no harm and even though the operation of the ordinance might seriously depreciate the property’s value. The court noted that an individual’s right to use of his or her property was subordinate to the general welfare and public interests such as traffic control, fire safety, and aesthetics:
The court elaborated on this point in a 1949 challenge to a Charlotte zoning requirement prohibiting a restaurant in a residential zoning district. Justice Sam Ervin wrote, “If the police power is properly exercised in the zoning of a municipality, a resultant pecuniary loss to a property owner is a misfortune which he must suffer as a member of society.”[18] In 1954 the court confirmed that a change in zoning did not in and of itself give rise to a claim for compensation by landowners whose property values were affected by the change.[19] A 1961 case, Helms v. City of Charlotte,[20] was as close as the North Carolina courts have come to finding a taking in a zoning case. Helms involved two very small lots along a creek that had been rezoned from an industrial district to an exclusively residential district. The court held that reduction in value alone did not constitute a taking: “The mere fact that a zoning ordinance seriously depreciates the value of the complainant’s property is not enough, standing alone, to establish its invalidity.”[21] However, the court held, to avoid a taking claim, the ordinance must not preclude all practical use of the land, thereby rendering the property “valueless.” In this instance the court was clearly concerned that the city was not allowing the business or commercial use of the lots for which they were suited, but had limited use to a residence; there was no evidence on the record that a small “shotgun” residence on this particular site could be sold for more than its construction cost. The court remanded the case for findings on whether the ordinance left any reasonable and practical use of the lot.[22] In 1983 the court upheld Asheville’s floodplain zoning ordinance in Responsible Citizens v. City of Asheville. [23] The test articulated for taking analysis was (1) whether the ends sought to be achieved were within the police power and (2) whether the means by which they were obtained were reasonable. Protecting public safety was held to be a permissible objective, and preventing floodway obstructions and requiring floodproofing were held to be reasonable means of accomplishing this. In 1989 the court in Finch v. City of Durham[24] examined the taking issue in the context of reviewing a “down zoning” and reaffirmed the basic test for a taking: there is no taking unless the owner is deprived of practical use of the property and the property is rendered of no reasonable value. Deprivation of previously held property rights[25] and diminution of value does not in and of itself constitute a taking. The court noted that the plaintiffs had exercised their option to purchase with knowledge that the planning board had recommended a rezoning, in essence taking a speculative risk that the rezoning would fail. The court found that the ordinance had a reasonable nexus to the legitimate public objective of maintaining the integrity of the adjacent single-family residential neighborhood, that alternative rezonings such as clustered residential had been proposed by the city but not pursued by the owner, and that the property in any event retained practical use and reasonable value. The court again confirmed that a diminution in value resulting from a rezoning is not compensable in Messer v. Town of Chapel Hill.[26] In this case the plaintiffs had challenged the rezoning of a 150 acre tract, alleging a taking. While the appeal was pending, the property was sold for $1,500,000. The court dismissed the takings challenge, noting the sale “establishes beyond preadventure that the property continued a ’practical use and a reasonable value’ following the amendment to the zoning ordinance.”[27] Cases challenging the application of other land use regulations have produced similar results in the court of appeals. King v. State,[28] involved denial of state permits to place fill in wetlands in order to build a road and subdivide an eight acre peninsula in Topsail Sound. The court held the denial was not a taking because the state had established that practical development alternatives existed.[29] Likewise, in Guilford County Department of Emergency Services v. Seaboard Chemical Corp.,[30] the court held that denial of a special use permit for a hazardous waste facility in a watershed area was not a taking because many other uses of the site were permissible. [31]
See, e.g., Carolina Beach Fishing Pier, Inc. v. Town of Carolina Beach, 274 N.C. 362, 163 S.E.2d 363 (1968); DeBruhl v. State Highway and Public Works Comm’n, 247 N.C. 671, 102 S.E.2d 229 (1958). 2. Even “physical occupation” cases can present difficult issues. For example, Long v. City of Charlotte, 306 N.C. 187, 293 S.E.2d 101 (1982), involved an action for inverse condemnation due to aircraft overflights, brought by a landowner located under the end of a new runway at the municipal airport. The court ruled that there was a taking if there was material interference with the use and the enjoyment of a property so as to cause substantial diminution of its market value. See also Smith v. City of Charlotte, 79 N.C. App. 517, 339 S.E.2d 844 (1986); Hoyle v. City of Charlotte, 276 N.C. 292, 172 S.E.2d 1 (1970). 3. G.S. 40A-51 provides a statutory framework for bringing an inverse-condemnation suit. 4. Goldblatt v. Hempstead, 369 U.S. 590 (1962) (restricting quarry excavation even though preexisting mine was thereby rendered useless); Miller v. Schoene, 276 U.S. 272 (1928) (requiring destruction of diseased ornamental trees to protect apple orchards on other property); Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) (limiting property to residential uses even though 75% reduction in property value resulted); Pierce Oil Corp. v. City of Hope, 248 U.S. 498 (1919) (requiring removal of preexisting oil-storage tanks near residences even though it rendered existing business impractical); Hadacheck v. Sebastian, 239 U.S. 394 (1915) (requiring preexisting use mining clay and manufacturing bricks to be closed even though property value was reduced over 90%); Reinman v. City of Little Rock, 237 U.S. 171 (1915) (requiring preexisting livery stable to be closed when city expanded around it); Murphy v. California, 225 U.S. 623 (1912) (outlawing use of property for billiard hall); Mugler v. Kansas, 123 U.S. 623 (1887) (outlawing use of preexisting brewery equipment lawfully in use before prohibition). 5. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982). A requirement that members of the public be allowed access to and use of the property has also been held to be a taking. Kaiser Aetna v. United States, 444 U.S. 164 (1979). 6. Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992); Agins v. City of Tiburon, 447 U.S. 255 (1980). In Lucas the court held that even when all economically beneficial uses were prohibited, there was no taking if the regulation was preventing a use that would otherwise be prevented by the state’s background common law principles of nuisance and property law. On remand the South Carolina Supreme Court ruled that the use prohibited by the regulation would not have been prevented by state nuisance law. It remanded the case to the trial court for findings on damages due to a temporary taking. 424 S.E.2d 484 (S.C. 1992). For a detailed discussion of this case, see David W. Owens, Richard D. Ducker, and Milton Heath, Supreme Court Establishes Rule on “Total Taking”: Perspectives on the Lucas Case, PLANNING AND ZONING BULLETIN No. 3 (1992). Total removal of an essential attribute of property, or a core property right such as the right of descent, can also be a taking. Hodel v. Irving, 481 U.S. 704 (1987). 7. Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987). The size of the exaction must not exceed that which is “roughly proportional” to the impacts generated by the development being approved. Dolan v. City of Tigard, 512 U.S. 374 (1994). See also Pennell v. San Jose, 485 U.S. 1, 19-20. The North Carolina Court of Appeals relied on a similar test to hold that the exaction of land for a major road through a small subdivision was a taking, but the supreme court reversed on other than constitutional grounds. Batch v. Town of Chapel Hill, 326 N.C. 1, 387 S.E.2d 655 (1989), cert. denied, 496 U.S. 931 (1990). 8. , 260 U.S. 393 (1922). See also Dellinger v. City of Charlotte, 114 N.C. App. 146, 441 S.E.2d 626 (1994), rev. granted, 336 N.C. 603, 447 S.E.2d 388, dismissed, rev. improvidently granted, 340 N.C. 105, 455 S.E.2d 159 (1995). 9. Id. at 415. 10. First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987). On remand the California Court of Appeals ruled that the ordinance was not a taking. 210 Cal. App. 3d 1353, 258 Cal. Rptr. 893 (2nd Dist. 1989), cert. denied, 493 U.S. 1056 (1990). Section 1983 of the Civil Rights Act of 1871 allows suits against persons, including local governments, who deprive persons of their constitutional rights. 42 U.S.C. § 1983. 11. Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470 (1987); Agins v. Tiburon, 447 U.S. 255 (1980); Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978). 12. Penn. Cent. Transp. Co. v. New York City, 438 U.S. 104, 123-124 (1978) (citations omitted). Also see the discussion of amortization in Chapter Six. 13. Privett v. Whitaker, 73 N.C. 554 (1875). 14. Durham v. Eno Cotton Mills, 141 N.C. 615, 54 S.E. 453 (1906). 15. Angelo v. Winston-Salem, 193 N.C. 207, 136 S.E. 489, aff’d, 274 U.S. 725 (1927). 16. 214 N.C. 51, 197 S.E. 706, appeal dismissed, 305 U.S. 568 (1938). In addition to concerns regarding taking when zoning affects property values, the taking issue is raised when zoning or subdivision ordinances require dedication of land for roads, parks, utilities, or open space. In River Birch Assoc. v. City of Raleigh, 326 N.C. 100, 388 S.E.2d 538 (1990), the court ruled that the required conveyance of open space was not a taking because it was reasonably related to the valid purpose of preserving urban open space within a portion of the approved development. The issue is also raised by the termination of nonconforming uses. 17. 214 N.C. at 57, 197 S.E. at 710. 18. Kinney v. Sutton, 230 N.C. 404, 411-412, 53 S.E.2d 306, 311 (1949). The court reached the same conclusion in a 1964 case challenging restrictions on signs in Charlotte’s zoning ordinance. Schloss v. Jamison, 262 N.C. 108, 136 S.E.2d 691 (1964). 19. McKinney v. City of High Point, 239 N.C. 232, 79 S.E.2d 730 (1954). 20. 255 N.C. 647, 122 S.E.2d 817 (1961). 21. Id. at 651, 122 S.E.2d at 820. 22. In another taking case, Roberson’s Beverages, Inc. v. City of New Bern, 6 N.C. App. 632, 171 S.E.2d 4 (1969), cert. denied, 276 N.C. 183 (1970), the court of appeals reviewed a challenge to New Bern’s rezoning of a site previously used as a bottling plant (and as a warehouse for nine years) from a business-commercial zone to an office-institutional zone. The court held that depreciation of value did not render a rezoning a taking or otherwise unconstitutional. Because there was no showing that the building could not be converted to a permissible use, that it could not be razed and the property converted to a permissible use, or that the nonconforming warehouse use could not be continued, the rezoning was upheld. See also Blades v. City of Raleigh, 280 N.C. 531, 187 S.E.2d 35 (1972); Michael v. Guilford County, 269 N.C. 515, 153 S.E.2d 106 (1967). A series of cases have also held that reasonable amortization provisions are not a taking. 23. 308 N.C. 255, 302 S.E.2d 204 (1983). The court also held that regulating lands within the hazard zone but not those outside it, did not violate the equal protection clause because the distinction was a reasonable classification bearing a rational relationship to a permissible state objective. 24. 325 N.C. 352, 384 S.E.2d 8 (1989). The plaintiffs contended that the 1985 rezoning reduced the value of the property from $550,000 (if used for a proposed motel) to $20,000 (if used as one single-family lot). The city contended that other valuable uses were available, including use as a church or a day-care site or additional single-family lots. The jury concluded that there had been a taking, but that the plaintiffs had suffered no damages. The trial court then granted a judgment notwithstanding the verdict as to damages, invalidated the rezoning, and awarded $150,937 in damages. The supreme court ruled that as a matter of law there had been no taking. 25. Note that as a preliminary matter the plaintiff must establish that they in fact have a protected property right. See Adams Outdoor Advertising v. North Carolina Dep’t of Transportation, 112 N.C. App. 120, 434 S.E.2d 666 (1993), where the plaintiff contended that DOT’s planting of trees in the state right-of-way as part of a highway beautification project obscured the visibility of eleven of its billboards and was a compensable taking under the state’s inverse condemnation statute. The court dismissed the complaint, finding no basis for a claim of a “right to be seen.” 26. 346 N.C. 259, 485 S.E.2d 269 (1997). 27. Id. At 261. 28. 125 N.C. App. 379, 481 S.E.2d 330, 346 N.C. 280, 487 S.E.2d 548 (1997). 29. The court concluded the Lucas test for a taking-a deprivation of all economically beneficial or productive use of the property-was similar to the Finch standard of determining whether the property was left with a practical use and a reasonable value. The court concluded:
Id. at 386, ___. 30. 114 N.C. App. 1, 441 S.E.2d 177, rev. denied, 336 N.C. 604, 447 S.E.2d 390 (1994). 31. The court also held that costs of cleaning up previous contamination of the site is not a factor in determining whether practical uses of the site remained as those costs would be required regardless of disposition of the special use permit. |
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