Posted by: Patricia Salkin | October 3, 2018

TX Appeals Court Holds Property Owner Sufficiently Pled a Reasonable Investment-Backed Expectation to Develop Property into Marina with Dry Boat Storage

This post was authored by Matthew Loeser, Esq.

Premier Tierra Holdings, Inc. sought to develop or sell its property for a mixed-use marina development project, including: residences and elevated dry boat storage. Prior to Premier’s acquisition of the property, the International Bank of Commerce (“IBC”) made a loan secured by the property to an entity controlled by Namir Faidi. Faidi proposed the construction of ninety-foot-high structures containing 240 residential condominium units on the property, along with a redeveloped marina that would provide elevated boat storage. Construction commenced on the project, but it was destroyed during Hurricane Ike. IBC foreclosed on the property in early 2009 and conveyed it to Premier, an affiliate of IBC. Premier then submitted a plat application to the City reflecting the project’s plan of development, which included up to one hundred residential units and up to 250 dry stack enclosed boat slips. At the time the plat application was filed, the City had no meaningful land-use regulations, any subdivision platting or zoning ordinances, or any general or comprehensive plan that would prohibit the Project.

Five days after the application was filed, the City approved a new zoning ordinance, which prohibited dry boat storage and apartment property classifications anywhere on the property. The City’s governing body, the Board of Aldermen rejected Premier’s plat application. Premier then sued the City, seeking declarations that its rights in the project vested when it filed the initial plat application, and that it was not required to comply with later-enacted zoning ordinances. Premier then filed a “Second Amended Petition and Application for Writ of Mandamus” in the trial court, which included a request for a declaratory judgment concerning its rights in the Project and a takings claim. The City Parties responded with an amended plea to the jurisdiction, and argued that the trial court lacked jurisdiction over Premier’s declaratory judgment claim because the project was denied based on existing regulations rather than the subsequently enacted Ordinance, and therefore no justiciable controversy existed. The trial court denied the City Parties’ plea to the jurisdiction, resulting in this appeal.

As to the jurisdictional argument, the court first noted that Chapter 245 specifically authorized a declaratory judgment action for this purpose. As such, the trial court did not err in denying the City Parties’ plea to the jurisdiction and overrule the City Parties’ first issue. As to the takings claim, Premier did not allege a physical taking of the Property, but that the City Parties intentionally took Premier’s vested property right to market, develop, and/or use the property as a marina with elevated dry boat storage without Premier’s permission, without adequate compensation, and for public use. In support of its allegations, Premier argued that the City had no zoning Ordinance or other duly adopted ordinances or plans that would prohibit dry boat storage when Premier’s rights vested. Furthermore, the City since rejected Premier’s initial platting application based on one or more zoning ordinances or on items that were not duly adopted, irrelevant, or inapplicable. Premier also alleged that the City’s actions resulted in years of negotiations and litigation that have caused Premier to suffer an uncompensated taking of private property well in excess of $2 million. Finally, at the time Premier acquired the Property, the court found that Premier had a reasonable investment-based expectation to develop and/or market the property as a marina with elevated dry boat storage. Accordingly, the court affirmed the trial court’s order denying the City Parties’ first amended plea to the jurisdiction.

Village of Tiki Island v Premier Tierra Holdings, Inc., 555 S.W. 3d 738 (TX App. 8/14/2018)


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