This post was authored by Olena Botshteyn, Esq.
North Mill Street, LLC (“NMS”) owns a parcel of commercial real estate in Aspen, Colorado. The parcel is located within a Service Commercial Industrial (“SCI”) zoning district, and when NMS purchased the parcel free market residential (“FMR”) development was allowed in the SCI zone as a conditional use. In 2017, the City Council adopted Ordinance 29, which amended the City Zoning Code and eliminated FMRs as a permitted conditional use within the SCI zone. After this, NMS applied to rezone the parcel to a Mixed-Use zoning district, which would allow NMS to have FMR use as additional to a commercial use of the property. The City’s Community Development Department (“CDD”) and Planning and Zoning (“P&Z”) Commission recommended the City Council to deny the application, claiming the proposed development was not compatible with the community character, and the Council agreed. NMS then had an option to go through the Planned Development (“PD”) review process, which allows to obtain a variance from the standard permitted zone district land uses, but rather than going through this process, NMS sued the City in the federal district court, asserting substantive due process, equal protection, and regulatory takings claims. The court dismissed the complaint for the lack of subject matter jurisdiction, having agreed with the City’s argument that because NMS never went through PD review, its claims were not ripe. NMS appealed.
On appeal, the court first evaluated the ripeness of the takings claim. Generally, in the zoning context, in order to ripen its takings claim, a developer must at least resort to the procedure for obtaining variances and obtain a final determination by the agency whether it would allow the proposed development. The court then made distinctions between jurisdictional and prudential ripeness, and concluded that the district court erred in dismissing the case for the lack of jurisdictional and not the prudential ripeness. The claim becomes ripe in the context of subject matter jurisdiction when the plaintiff shows that it “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” The court concluded that NMS adequately alleged that it suffered economic injury that was fairly traceable to the City’s adoption of Ordinance 29 and denial of NMS’ rezoning application, and therefore its claims were jurisdictionally ripe. At the same time, NMS’ claims lacked prudential ripeness, as “avenues still remain for the government to clarify or change its decision.” The City was not bound by the findings it made in denying the rezoning application, and could potentially grant a variance through the PD review process. Accordingly, the court dismissed the petitioner’s takings claim and other claims, having concluded that they have the same factual and legal bases.
North Mill Street, LLC v City of Aspen, 2021 WL 3163952 (10th Cir. CA 7/27/2021)