Posted by: Patricia Salkin | February 3, 2014

Fed. Dist Ct in FL Strikes Down Right of Way Preservation Ordinance as a Taking

In November of 2005, Pasco County, Florida adopted the Right of Way Preservation Ordinance (the “Ordinance”) to build more roads in the County and widen those that already exist. Pasco County designated certain “transportation corridors,” where portions of land would be used to expand the roads. If a landowner owns land within the designated transportation corridors, and the landowner has no intention of developing that land, then Pasco County will take such land when needed and pay “just compensation.” If, on the other hand, a landowner owns land within the designated transportation corridors, but the landowner intends to develop the land, a different process applies. Under such circumstances, the Ordinance requires Pasco County to deny the landowner’s development permit and forbid development of the land, unless the landowner agrees to dedicate the land within the transportation corridor to the County for free. If the landowner agrees to dedicate the land, the Ordinance allows for certain temporary uses until the County needs the land to build the road.

The landowners may apply for a dedication waiver if they believe that the “amount of land required to be dedicated to the county exceeds the amount of land that is roughly proportional to the transportation impacts of the proposed development site.” A dedication waiver must be supported by numerous impact studies and other reports. If the waiver is granted, the landowner may receive either partial compensation or a waiver of the “excess dedication [of land].” The landowners may apply for a variance from the “strict requirements of the waiver provision” (i.e., providing the traffic studies and other reports). The variance will be granted if the landowner provides sufficient evidence that compliance with the waiver provision requirements will cause unreasonable hardship, conflict with the law or an objective of the Ordinance, harm the public welfare, or cause an otherwise undesirable result.

Hillcrest Property, LLP owns sixteen-and-a-half acres of undeveloped property located near a major road. Part of the property falls within the County’s designated transportation corridor. In December of 2006, Hillcrest sought to develop a shopping center on part of the property located within the corridor. The Pasco County Development Review Committee rejected Hillcrest’s application and demanded that the property within the corridor be dedicated for “future right-of-way.” Thereafter, Hillcrest revised its site plan and removed the proposed improvements within the corridor. A meeting was later held where Pasco County and Hillcrest discussed the second proposal. At the meeting, the Committee demanded that Hillcrest dedicate a ninety-foot setback in addition to the land within the corridor. Since Hillcrest’s proposed development was still located within this setback, the Committee also denied the second proposal. Hillcrest submitted a third and final proposal in which it included no developments in either the corridor or the setback area as requested by the County. The plan included a reservation of rights that objected to the dedication by stating that Hillcrest did not intend to provide the right of way without compensation or a right to challenge the County’s acquisition of the land. The Review Committee approved the third application, but provided in its order that Hillcrest “shall convey” the majority of the requested land at no cost.

Hillcrest sued the County in the United States District Court for the Middle District of Florida for using “permit authority as leverage to compel landowners [to relinquish their] right to just compensation.” Hillcrest did not pursue an administrative appeal or inverse condemnation action before filing suit with the district court. Hillcrest claimed violations of the Fifth Amendment’s Takings Clause, as well as rights to due process, equal protection, access to the courts, a jury trial, and several state claims. The parties moved for summary judgment, and the magistrate court made recommendations to the district court to deny parts and grant parts of both parties’ motions. The bulk of the magistrate court’s report discussed the recommendation to grant Hillcrest’s motion on the facial violations of due process. Both parties objected to the recommendations adverse to them.

The district court began its discussion by evaluating Hillcrest’s substantive due process claims. Pasco County asserted that Hillcrest’s as-applied due process challenge to the Ordinance was unripe for review. The court explained that while facial due process challenges ripen upon an ordinance’s enactment, as-applied challenges ripen once the ordinance is applied to the property in question. The Williamson County ripeness test applies to just compensation claims, as well as claims that a “regulation goes too far.” A claim is ripe under this test if (1) the government entity reached a “final decision regarding the application of the regulations to the property at issue” and (2) the plaintiff sought compensation through available state procedures. In the present case, the first prong is satisfied because Pasco County reached a final decision when it approved Hillcrest’s final application on the condition that it dedicate part of its land. The second prong is also satisfied because although Hillcrest failed to seek a waiver or a variance from the Ordinance’s strict requirements, doing so would not have exempt Hillcrest from the Ordinance altogether. As such, Hillcrest was not required to pursue a waiver or variance because these do not constitute an appeal from the entire decision. The present matter was thus found to be ripe for review.

Next, the court considered whether Pasco County used its police power to compel Hillcrest to surrender its rights guaranteed by the Fifth Amendment’s Takings Clause. The Takings Clause prohibits governmental regulation of private property if the regulation does not “substantially advance legitimate state interests.” The government should not force a private person to “bear public burdens [that] should be borne by the public as a whole.” If the regulation does serve a public use, and a taking is necessary, then the government must provide the property owner with “just compensation.” If the regulation does not serve a public use, then even just compensation will not remedy the constitutional violation.

Nollan and Dolan, two cases decided by the US Supreme Court, considered “unconstitutional conditions” in the context of the Takings Clause and found that “a government cannot condition the receipt of the governmental accommodation on the relinquishment of a constitutional right.” The court in the present case determined that based on the particular facts, the applicable case here was Dolan and not Nollan. The Dolan Court considered a taking that was allegedly an unconstitutional taking even without just compensation. The Court explained that the burden of proof rests on the government to show that there is a “rough proportionality” between the required dedication of land and the impact to the proposed public development. The government cannot take any more land “than necessary to mitigate the development’s contribution to the public hardship.”

Here, the court reasoned that the first problem with the Ordinance is that it requires the landowner to prove the absence of a “rough proportionality,” in direct conflict with the Dolan requirement that the government bear the burden to prove a “rough proportionality.” For this reason, the court concluded that the permit condition is necessarily in violation of the Takings Clause. The Ordinance further violates the Takings Clause because it leaves the determination of “just compensation” in the hands of the County, as opposed to a “disinterested fact-finder.” Overall, the Ordinance serves as a form of extortion by forcing landowners to give up their land for free, or else their property will remain “forever undeveloped.” In so doing, Pasco County abused its police power in order to compel landowners to abandon rights that are guaranteed by the Takings Clause of the Fifth Amendment.

The court next discussed whether Pasco County used its police power to avoid eminent domain. The court engaged in a detailed analysis of the two relevant Florida Supreme Court cases, Joint Ventures and Wright. In Joint Ventures, the statute at issue allowed for portions of private property that fell within the designated transportation corridor to be “frozen,” such that the landowner was prohibited from developing the property until the state decided it was needed for public development. This way, it would be less costly to the state when it was time to seize the property and provide the landowners with “just compensation.” The court declared this an unconstitutional circumvention of eminent domain. Similarly, in Wright, the county’s comprehensive plan provided for the same type of “freezing” as the statute in Joint Ventures. The court in Wright distinguished the facts from Joint Ventures. In Wright, the county created maps of tentative transportation corridors that were subject to change, whereas in Joint Ventures, the state’s sole purpose was to lower the value of the property in anticipation of eminent domain proceedings. The Wright court still found it to be a misuse of police power, however, since the county failed to provide just compensation.

Here, the court found that the Ordinance exceeded the misuses in both Joint Ventures and Wright. In those cases, the regulations prohibited the landowners from developing their property, but the land was not immediately seized by the government without just compensation – as in the present case. As described by the court, “rather than unconstitutionally depressing land value in anticipation of eminent domain, the Pasco County Ordinance avoids eminent domain altogether.” The Ordinance here seizes private property that may never even be used. The court notes that while the Ordinance’s purported objectives are “bona fide, legitimate governmental objectives,” the government is not furthering these objectives by seizing the land of private landowners before the land is needed for any public development. As a result, Pasco County used its police power to avoid eminent domain, in violation of Hillcrest’s right to due process.

Finally, the court discussed whether Pasco County used its police power to obtain a “bulk discount” from having to pay just compensation. For landowners with no intention of developing their property, the Ordinance allows for them to be justly compensated at the time the land is needed for public development. On the other hand, landowners who do wish to develop their property are faced with a choice between evils: surrender to the government’s wishes and give up part of their property for free, or refuse same and never develop their land. The court here concluded that Pasco County was obviously discriminating in order to save itself money in the long run. By preventing landowners from developing property that falls within the transportation corridor, the County avoids having to pay significantly more money in order to justly compensate them for the developed land. Undeveloped land, on the other hand, is far less expensive to compensate. Moreover, the conditional permits result in the County ultimately receiving land for free because it is given up “voluntarily” by the landowners seeking development permits. The court labeled this practice “discriminat[ion] based on economic aspiration,” and concluded that the County abused its police power by failing to advance a legitimate governmental purpose in its enforcement of the Ordinance.

Hillcrest Property, LLP v. Pasco County, 939 F. Supp. 2d 1240 (MD FL 4/12/2013)

The opinion can be accessed at: http://ia601702.us.archive.org/33/items/gov.uscourts.flmd.243604/gov.uscourts.flmd.243604.196.0.pdf


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