Posted by: Patricia Salkin | August 21, 2014

FL Appeals Court Holds City’s Refusal to Change its Comprehensive Plan was not a Taking

Landowners brought an inverse condemnation action against city, challenging the city’s refusal to change the comprehensive plan. The case involved two parcels of land located in the City of Flagler Beach, Florida (“City”) under recreational zoning. The first parcel had been operated as a nine-hole golf course (“golf course parcel”). The second parcel was a vacant parcel situated inside the golf course parcel (“condo parcel”). For several decades, the golf course parcel and the condo parcel made up a single parcel owned by Ocean Palm Estates, Inc. (“Ocean Palm Estates”), which was the predecessor in title to Ocean Palm Golf Club Partnership (“Ocean Palm Golf”). Eventually, Ocean Palm Estates threatened the City with litigation over its refusal to change the zoning from recreational.

Subsequently, the City and Ocean Palm Estates entered into a Development Agreement. It created a Planned Unit Development consisting of two parcels. The golf course parcel would remain and be designated recreational in the Comprehensive Plan. If not, the golf course parcel would be maintained as an open space. In return, the City would allow residential development on the condo parcel. The Comprehensive Plan designated the condo parcel as “high density residential” and the zoning was changed. The Development Agreement would expire on July 1, 2003.

Ocean Palm Estates sold both parcels, deeding the golf course parcel to Ocean Palm Golf and the condo parcel to Ocean Palm Condominium Ventures, Inc. (“Ocean Palm Condo”), which was Caribbean Condo’s immediate predecessor in interest. The City rejected Ocean Palm Condo’s first attempt at development in 2000. The second attempt at development was not successful either. In 2001, Ocean Palm Condo deeded the condo parcel to Caribbean Condo. In June 2002, Caribbean Condo made a third development proposal. Knowing the Development Agreement would soon expire; Caribbean Condo sought an extension of the agreement. The City denied the extension, but approved the site plan, with conditions. Caribbean Condo was unable to revise the plan to the conditions because the other items required by the Development Agreement would not fit.

Caribbean Condo made a fourth attempt to develop the condo parcel in 2004. To be built, it required that Caribbean Condo purchase one acre of the golf course parcel from Ocean Palm Golf. The City found issues with the plan and asked Caribbean Condo to resolve issues with the plan before the City would reschedule a hearing. Caribbean Condo, unable to resolve the issues that they were unable to do. In 2008, Caribbean Condo tried another approach to development by trying to get the property “down-zoned” so they could develop single-family residences on both the condo parcel and the golf course parcel. To do so, the Comprehensive Land Use Plan had to be amended to make both parcels “low density residential.” The ownership of the two parcels was not merged for the proposal.
The application for the Comprehensive Plan amendment listed Ocean Palm Golf as the owner, even though the application sought an amendment re-designating both the golf course parcel and the condo parcel. Moreover, the application did not distinguish between the two parcels.

After a second public hearing, again that drew strong public opposition, the City denied the amendment. On appeal to the trial court, Ocean Palm Golf and Caribbean Condo jointly alleged that the City’s refusal to change the Comprehensive Plan’s designation left the parcels without any economic viability, resulting in a taking or at a minimum resulted in a partial taking. At trial, representatives of Ocean Palm Golf and Caribbean Condo testified that they bought their respective parcels with the plan of developing the condo parcel into a high-density residential complex pursuant to the terms of the Development Agreement and operating the golf course as an amenity. After the golf course was closed in 2008, the company was no longer able to make the mortgage payments. The parties presented conflicting expert testimony as to the economic viability of the property. Of major contention was whether the golf course parcel should be considered independent from the condo parcel or whether the two parcels should be considered as a single unit, which the court held that each option had an economically beneficial use. The trial court entered judgment in favor of the City.

On appeal, the court noted three factors to consider: physical contiguity, unity of ownership, and unity of use. Dep’t of Transp., Div. of Admin. v. Jirik, 498 So.2d 1253, 1255 (Fla.1986). To determine whether there is unity of use, the courts have assessed the following factors: (1) intent of the owner, (2) the adaptability of the property, (3) the dependence between parcels, (4) the highest and best use of the property, (5) zoning, (6) the appearance of the land, (7) the actual use of the land, and (8) the possibility of tracts being combined in use in the reasonably near future. Because the property was separately platted and unoccupied, there was a rebuttable presumption of separateness. The unity of use factor weighed in favor of finding that the presumption was rebutted. The purchasers worked together to obtain approval of symbiotic developments on the parcels. And, Ocean Palm Golf and Caribbean Condo treated the two parcels as one in their application.

The unity of ownership factor also weighed in favor of finding that the City rebutted the presumption of separateness. Although different companies now owned the parcels, there was substantial overlap in principals and shareholders. Moreover, in the amendment application, the parcels were claimed to be owned by Ocean Palm Golf alone. Ocean Palm Golf made a similar representation in a prior lawsuit. Lastly, the physical contiguity factor weighed in favor of finding that the City rebutted the presumption of separateness. The two parcels at issue not only were they contiguous, but one was located within the other.

The court held that because the City rebutted the presumption of separateness and the parcels retained an economically beneficial use was substantial evidence that the trial court properly relied on.
Further, the court concluded that no partial taking occurred. In Penn Central Transportation Co. v. City of New York, the Court identified three factors to apply when analyzing of whether a regulation constituted a taking: (1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action.

The court stated that the third factor, weighed in favor of finding a partial taking because the burden of the regulation fell disproportionately on Ocean Palm Golf. In a separate but related case involving the same parties, a prior trial court found that “this parcel constituted a substantial portion of the green space for the City” and that “it was the only privately owned parcel with an ‘R’ recreational designation.” Thus, while the benefits of the open space provided by the golf course were widely shared throughout the Flagler Beach community, Ocean Palm Golf alone shouldered the burden of that regulation. However, the first factor weighed in favor of finding that there had been no partial taking.

The matter is currently on appeal to the Florida Supreme Court.

Ocean Palm Golf Club Partnership v City of Flagler Beach, 139 So 3d 463(FL 5/30/2014)

The opinion can be accessed at:

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