Posted by: Patricia Salkin | April 14, 2013

Fed. Dist. Court in FL Invalidates County Corridor Preservation Scheme

Hillcrest Property LLP v. Pasco County, 2013 WL1502627 (M.D. Fla.) involved defendant’s “Right of Way Preservation Ordinance” as a means of avoiding payment to landowners through whose property designated existing and future transportation corridors ran.  If no development were requested, the County may acquire the property through traditional eminent domain means, but if a development application were filed, the Ordinance requires uncompensated dedication of the land.  The county attorney declared that the Ordinance saved millions of dollars annually for the County through this scheme of “voluntary” dedication.  Plaintiff challenged the scheme inter alia under the due process and just compensation clauses and state constitutional grounds.  A federal magistrate found the Ordinance unconstitutional and recommended issuance of an injunction to a federal judge.

The court said that the challenged Ordinance was adopted to implement the County Comprehensive Plan and allowed interim use by the landowner of the dedicated property until the County needs it.  If the landowner believes the rough proportionality of the dedication is excessive, she may apply for a discretionary waiver, but must provide extensive appraisal and other information at her own expense for determination of a County review committee which may pay the differential, grant credits on systems development charges or provide for other waivers of costs of associated improvements, or any combination thereof.  A landowner may also apply for a variance from the waiver by showing that the application of that waiver causes a hardship; however, the variance is highly discretionary.  Plaintiff owns 16.5 acres of land zoned commercial.  Under the challenged Ordinance, there was a 50-foot right-of-way overlap of a future public road along one side of the property for approximately 1400 feet.  Plaintiff applied for site plan approval for a shopping center.  Defendant demanded the right of way, while the Florida Department of Transportation (“FDOT”) demanded a further 90-foot setback.  Plaintiff resubmitted the site plan with the reservation of right objecting to the dedication and setback and did not appeal the grant of the site plan approval with those conditions.  Nor did Plaintiff seek a waiver or variance; instead Plaintiff filed this action in Federal District Court.

The action did not assert a taking, except under Nollan and Dolan, and also raised due process and equal protection challenges, as well as access to the courts and denial of a jury trial grounds.  On cross motions for summary judgment, the federal magistrate found the challenged Ordinance most susceptible to a substantive due process challenge, finding it bore no rational relationship to a legitimate governmental purpose but rather was effectively an extortion scheme by which the county leveraged its police power with a system of burdensome appeals to acquire property, thus circumventing the eminent domain process.  The magistrate made very various rulings recommending invalidity of the Ordinance.  Both sides appealed to the federal judge.

Defendant first argued that the due process claim was not ripe, as would be a taking claim in similar circumstances.  Under Lingle v. Chevron U.S.A., 544 U.S. 528, 541-42 (2005) there are four possible takings claims to which the government may go “too far” under the takings clause:  permanent occupation, deprivation of all economically beneficial use, failure of the Penn-Central factors, or failure to meet the nexus and rough proportionality tests of Nollan and Dolan.  For due process purposes, the enactment of the challenged Ordinance, with its complicated system to avoid just compensation, makes a final decision as to Plaintiff’s property and, if the allegations be true, entitles Plaintiff to nominal damages at least.  The court rejected defendant’s contention that there was a four-year statute of limitation on challenging the constitutionality of the Ordinance before a concrete injury occurred.  Even if there were such a limitation, the court found that if there were such a statute of limitations, this complaint was timely.

The court noted the frequent conflation between the due process and takings claims and added that a plaintiff may have a substantive due process claim if a regulation does not advance a legitimate governmental purpose – a very different issue from that of just compensation.  If the taking not be for a public use or be arbitrarily and capriciously applied, there could be a substantive due process violation.  In this case, the magistrate found that the challenged ordinance leveraged the police power so as to compel a landowner to relinquish rights granted by the Constitution or to expend its time and effort in defending property rights.  Nollan and Dolan prohibit the discretion to grant or deny a governmental accommodation in return for relinquishment of a constitutional right.  This is true under the free speech and search and seizure clauses and enforced by substantive due process.  Under Nollan and Dolan, it is possible for a real property exaction to occur if there is a nexus between the exaction and the impact of the use and that exaction is administered in rough proportionality.

In this case there was some relationship between the exaction and the need for a transportation facility; thus there was no “Nollan problem.”  However, under Dolan, it is the public agency that bears the burden of proof to show rough proportionality.  In this case the challenged ordinance reverses that burden and requires the County to prove nothing as well as to be the arbiter of the amount of just compensation it will pay.  Any right to develop land is thus held at ransom – a perverse outcome and effectively a scheme of extortion.  If the landowner refuses to dedicate the land, the property remains undeveloped.  If the landowner agrees, it effectively waives the right to just compensation unless it undertakes a burdensome administrative process.  This case, therefore, is about due process, rather than takings.

In this case, Defendant required conveyance of the land in the transportation corridor to be made to the County at no cost, avoiding eminent domain altogether and requiring a landowner to undergo an “in-house review” in which the landowner has the burden of proof.  The land accumulated under the scheme may never be used – there is no requirement that the County ever build a road and nothing prevents it from diverting the property to another use or selling it.  While building and maintaining an adequate road system is a legitimate governmental purpose, the means chosen to achieve those objectives must be constitutional.  Landowners could bring an inverse condemnation action under Florida law, but it would not be on the same footing as a landowner in a traditional eminent domain proceeding, with its attendant protections of an appraisal, attorney fees, burden of proof, and payment into court before a taking occurs.  For those who do not seek to develop before the road is ready to be built utilize statutory eminent domain proceedings, while those who seek to develop earlier must presumably give up the land for free.  The court added:

In sum, the Ordinance discriminates based on economic aspiration.  Against the class of landowners who never attempt to develop, Pasco County will acquire land by eminent domain, beginning when and if Pasco County needs the land.  A landowner without need of a permit enjoys the protection of condemnation and receives the “just compensation” guaranteed by the Constitution.  A landowner who aspires to develop property and who aspires to a permit for a grocery store, a doctor’s office, an apartment building, or the like faces an immediate confiscation of land.  For these landowners, a last but forlorn hope for just compensation is in Pasco County’s prolix, opaque, and overbearing Ordinance.  Further, these landowners’ just compensation is an elusive contingency, held for ransom by a committee methodically acquiring property at a steep, aggregate discount.

Thus the court concluded there was an improper use of the police power and a failure to advance a legitimate governmental purpose (i.e., not using eminent domain but the extortion of administrative scheme).

The court found no equal protection violation, given the use of a rational basis analysis where the landowner was required to negate any plausible inference that there was a legitimate basis for the transportation facility.  Similarly, the Plaintiff failed to show how its access to the federal courts and right to a jury trial were denied.  The court also declined to reach claims based on the Florida Constitution, noting that Plaintiff had also filed similar claims in state court.

With a flourish, the court concluded:

Pasco County has enacted an ordinance that effects what, in more plain-spoken times, an informed observer would call a “land grab,” the manifest purpose of which is to evade the constitutional requirement for “just compensation,” that is, to grab land for free.  Viewed more microscopically, Pasco County’s Ordinance designs to accost a citizen as the citizen approaches the government to apply for a development permit, designs to withhold from a citizen the development permit unless the citizen yields to an extortionate demand to relinquish the constitutional right of “just compensation,” and designs first and foremost to accumulate – for free – land for which a citizen would otherwise receive just compensation.

Aware undoubtedly of the brazenness of the Ordinance, Pasco County has garnished the Ordinance, has disguised the Ordinance, has planted in the Ordinance a distraction, using the familiar phrase “roughly proportional” or “rough proportionality,” words intended to evoke the soothing reassurance of the Supreme Court’s decision in Dolan, words intended to deploy aggressively the foggy notion that if the words “roughly proportional” appear in a scheme to regulate land, the scheme is constitutional. Not so.

The parties laboriously briefed in this action an array of theories. Both the magistrate judge and I have examined, exhaustively and exhaustingly, the contending theories, briefed and unbriefed.  The magistrate judge has opined formidably. Accepting the magistrate judge’s report for the most part but viewing the law in part from a slightly different vantage, I contribute some additional analysis and accept the magistrate judge’s conclusion.  Another judge might find the magistrate judge’s opinion or this opinion inexact in this or that particular of constitutional law.  Nonetheless, this Ordinance is an unmistakable, abusive, and coercive misapplication of governmental power, perpetrated to cynically evade the Constitution.  The Ordinance cannot stand, whether for the precise reasons stated here or for a related reason.

This case is a tour de force in its analysis of the effect to frustrate the constitutional protection of dealing with the just compensation clause by way of the due process clause.  Constitutional requirements cannot be frustrated by jerry-built devices allocating burdens and requiring the party deprived of property to take the initiative of securing just compensation.  The case presents an object lesson in what local governments should not do.

Hillcrest Property LLP v. Pasco County, 2013 WL1502627 (M.D. Fla. 4/12/2013).

The opinion can be accessed at:

Special thanks to Edward Sullivan, Esq. of Garvey Schubert and Barer for providing this summary.


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