Saturday, September 03, 2005

Another Takings Case that Everyone Should Read

The Fourth DCA released a VERY interesting opinion (here's the link) on August 31. The summary paragraph says its an inverse condemnation case, but the text makes it appear that the controversy is over valuation in a straight condemnation case.

The key issue: whether the lower court properly held that experts could not testify regarding proper valuation of lands that were unbuildable because permits to properly address drainage had been denied by SFWMD, the Corps and the County. Expert engineers would have testified that the permits had been denied because the various agencies wanted the area for a wildlife corridor. Appraisers would have testified that the proper "comps" were lands outside the district that were buildable, and that the difference in value reflected "condemnation blight" from the County's earlier purchases and condemnation efforts.

The lower court had excluded the testimony on the basis that it was improper because those issues should have and could have been raised in direct challenges to the permit denials. The appeals court overturned that decision (though limited some of the language that the experts could use in describing the effects of the government actions). The substantive law on this would take a multi-page essay. But here are some of the interlocking policies:

1) It would have been improper for the agencies to deny the permits for the purpose of suppressing land values prior to condemnation; if proven in a challenge, this would result in overturning the denial (and presumably allowing the lands to be developed)

2) It would have been improper for the agencies to deny the permits for the purpose of establishing a wildlife corridor on private lands; if proven in a challenge, this would result in overturning the denial (and presumably allowing the lands to be developed). If it were found a valid reason, it would have established a taking insofar as it denied the ability to use the property.

3) However, there may have been a proper technical basis for denying the permits; this would have resulted in a proper limit on the use of the land.

4a) However, even a proper denial of the permits could have results in a taking if all economic USE was lost; here, the County appraised the property values at $6,000 per acre, but there is no evidence that the property could be used for anything. There is still an open question as to whether property that can't be used, but still has economic value (for purposes other than use) falls under the categorical Lucas rule.

NOTE, however, that if the denial was based on the fact that the requested use would be a nuisance, the denial wouldn't create a taking. The 5th DCA in the Best case (below), held as much last month.

4b) In valuing the property after "proper" denial, the caselaw is unclear as to what use should be used in assessing value, but there is reason to believe that it should be based on the premise that at least a single family home could be built on any lot; there is a presumption that a single family home is not a nuisance, and therefore that probably establishes a ground floor valuation. HOWEVER, this also appears to be one of the yet to be finally established points of law.

5) In the inverse condemnation context, it appears that a landowner can "concede" the validity of a permit denial to establish the loss of all economic use, and then sue based on the taking and get the value of the property. The question then becomes whether the purpose and effect of the denial can be used to bolster a claim that the proper valuation of the land would reflect the ability to build under the denied permit, rather than the value of the land without the permit. That is, if the permit denial was proper, what is the right use of the land for valuation? Is there a minimum use that reflects the ability to build a single family home? We would not expect so in the case of, say, a submerged lot, or a parcel that clearly lies completely in a protected wetland, or for a property located somewhere inherently unsafe (floodway in the First English case) but I don't think that this question has been clearly answered; it's obviously a key question in this case, and this opinion may establish the answer: the Fourth would have allowed expert testimony that claimed that the proper valuation for the lands without the permits was based on developable property outside the area in question. On the other hand, the Fifth's decision in Best seems to indicate that the landowner would have to lititgate the issue of the permit denial seperately, especially if there was any claim that the denial would be a nuisance.

6) However, if this was a condemnation/valuation case (as stated in the text), rather than an inverse condemnation/valuation case (as stated in the introduction), these policies seem to play differently. If the government is trying to take the property, government action that improperly suppresses the value should be taken into account; the government can't regulate just to make its purchases cheaper. But again, I'm not sure whether (historically) it would be right for the landowner to claim the "value" of the land as though the denied permits had been granted where the permit denials weren't challenged (that is, can the landowner effectively collaterally attack the purpose of the denial). Again, the question is: what is the right comparable, land that is developable under a permit, or land without those rights? Here, the court is allowing expert testimony that the lands SHOULD have been able to get permits absent improper government motives, and that the lands should be valued like developable lands. But again, this seems to run contrary to the Fifth's position in Best.

I'm not sufficiently expert in some of the issues to be able to point out the relevant cases, exceptions and controversies, and I hope we'll get some other commentary on this soon.

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