inversecondemnation.com

Update on Federal Court Nollan/Dolan Challenge to Maui's "Affordable Housing" Exaction

An update on the latest filings in the federal court challenge to Maui County's affordable housing exaction ordinance.  Kamaole Pointe Development LP v. County of Maui, Civ. No. CV07-00447 DAE LEK (D. Haw. filed Aug. 23, 2007). 

First, some background.  The Maui "workforce housing" ordinance, enacted last year, imposes a 40% to 50% affordable requirement on new housing developments of five or more units, and on an application to subdivide a lot into five or more parcels.  Ordinance 3418 is posted here.  I posted on the case earlier here (contains a link to the complaint), and analyzed the legal problems with the ordinance under state law here.

The plaintiff landowner sought summary judgment on the issue of whether the Ordinance is void on its face.  The motion is posted here (1.5mb pdf).  It asks the court to declare the ordinance unconstitutional under the Nollan/Dolan doctrine of unconstitutional exactions, which requires the government to show a substantial nexus between the exaction and some problem caused by the property owner before the government may demand tribute as a condition of development.  The exaction must also be roughly proportional to the problem.  See this post for more on the nexus analysis.  The County opposed the motion for summary judgment, and filed this brief (160kb pdf).  The property owners recently filed a reply brief responding to the County's argument (850kb pdf). 

The County also filed its own motion for summary judgment (200kb pdf), which was opposed by the landowner in this brief (1.8mb pdf). The County responded in this reply brief (80kb pdf).

Petition for Rehearing in Pratt Construction v. Cal. Coastal Comm'n

The property owner has filed a Petition for Rehearing asking the California Court of Appeal (2d District) to reconsider its decision in Charles A. Pratt Constr. Co., Inc. v. Cal. Coastal Comm'n, No. B190122 (May 8, 2008).  In that case, the court held the property owner's right to develop was not vested, and that a takings claim was not ripe since the owner could submit other plans for development.  The Land Use Law Blog details the case and provides commentary in "The Development Blues: Property Lies Undeveloped for 30 Years and Counting."

The opinion's opening paragraphs took a literary approach to the issue, citing "September Song," Einstein, and Heraclitus.  The Petition responds with flourishes of its own, quoting Stephen Hawking's "A Brief History of Time," and Jim Croce's "Time in a Bottle," arguing that the opinion overlooked or misstated the facts of the case, the controlling law, and reflects the court's failure to understand the coastal zone development process. 

It must be something about the law of vested rights that brings out the philosophical: in our article on Hawaii's vested rights law, Arrow of Time: Vested Rights, Zoning Estoppel, and Development Agreements in Hawaii, my co-authors and I drew upon time theory to explain how vested rights law attempts to wrest order from chaos. 

Read the Pratt Petition here.

Two Recent Law Review Articles (Water Law and Shoreline Issues)

Two recent U. Hawaii Law Review articles worth mentioning.  Although neither is available free on the web, they can be obtained through legal research services such as Westlaw or Lexis, or through the U. Hawaii Law Review.  If you don't have a UHLR subscription, you should. It's only $30 per year for US addresses.

Water Regulation, Land Use and the Environment
David L. Callies and Calvert G. Chipchase; 30 U. Haw. L. Rev. 49 (Winter 2007)

In this article, the authors assert that the "public trust" doctrine, as misconstrued by the Hawaii Supreme Court, has distorted water law and the land use process:

Problems arise in the planning process when water and non-economic uses of water are given a sacrosanct status that abjures private use for the benefit of "the public." This is increasingly happening under flawed interpretations of the public trust doctrine.

p. 49 (citing In re Water Use Permit Applications (Waiahole), 84 Haw. 97, 9 P.3d 409 (2000); In re Water Use Permit Applications, 105 Haw. 1, 93 P.3d 643 (2004); In re Water Use Permit Applications, 113 Haw. 52, 147 P.3d 836 (2006)). The article continues:

Many courts have forgotten that the jus privatem is as much a part of the public trust doctrine as the jus publicum. Certainly water should be available for future use, but is also should be readily available for current use. When the balance between current private and abstract or future public needs is distorted, water use and availability of water becomes the primary, or even sole, consideration in the process. This leads to the preservation of water for such uses as "minimum stream flows" and non-beneficial use by selected segments of the public and, ultimately, an elitist, communitarian regime that bears no relationship to either traditional notions of water rights or constitutionally protected rights in property.

Id. The authors analyze the multi-layered land use planning laws in Hawaii, the state Water Code (Haw. Rev. Stat. ch. 174C), and the Hawaii Supreme Court's extension of the public trust doctrine beyond navigation and commerce to the promotion of reasonable and beneficial use of water resources in Waiahole.  p. 70.  The article also discusses how Arizona, Colorado, and New Mexico regulate their water resources, and what lessons these jurisdictions may provide for Hawaii.  pp. 77-92.

More Than a Line in the Sand: Defining the Shoreline in Hawai'i After Diamond v. State
Simeon L. Vance and Richard J. Wallsgrove; 29 U. Haw. L. Rev. 521 (Summer 2007)

In this article, the authors analyze the differences in the various definitions of the "shoreline" under Hawaii law, and the Hawaii Supreme Court decision in Diamond v. State, 112 Haw. 161, 145 P.3d 704 (2006) .  As detailed in this post about the Diamond case, the term "shoreline" is used to define both the boundary between public and private property as well as the baseline for measuring the shoreline setback (a no-build zone on beachfront property).

The difference between a  certified shoreline  and a  seaward boundary line  has become a confusing and potentially divisive issue. Confusion is predictable because the definition of  shoreline  for certification purposes is essentially identical to the definition Hawai'i courts have used to determine property boundary lines. Despite their similarity, however, the two lines  are not necessarily the same because their purposes, the impacts and the processes for determining these  lines' are uniquely and significantly different.

The most critical of these differences is that shoreline certifications are not designed to determine ownership.  Instead, the line of ownership dividing public and private coastal property is the seaward boundary. Markedly different from the shoreline certification process outlined above, determinations of seaward boundary lines often take the form of quiet title actions, eminent domain actions, or land court petition actions.  The state's responsibility to uphold the public trust and preserve its interest in property triggers the need for  a more rigorous and cautious approach.  In these situations, the state does not rely on shoreline certifications, but conducts its own survey in recognition of the "importance of lateral [shoreline] access over state-owned lands for recreation, native gathering practices and other purposes."

p. 532 (footnotes omitted).  The article is a good introduction to Hawaii's unique approach to shoreline law, and a worthy read.  And I'm not just saying that because it cites several posts from this blog as authority (See, e.g., notes 92, 146, 179, and 180, and accompanying text).

New Category: Court of Federal Claims | Federal Circuit

Administrative note: I've created a new category for indexing posts, "Court of Federal Claims (CFC) | Federal Circuit."  The decisions by these courts are worth following because the CFC is the Article I court that has exclusive nationwide jurisdiction over regulatory takings and inverse condemnation claims against the federal government seeking monetary damages in excess of $10,000.  The predecessor court to the CFC was vested with jurisdiction to render money judgments against the United States following Abraham Lincoln's statement to Congress:

It is as much the duty of Government to render prompt justice against itself, in favor of citizens, as it is to administer the same between private individuals.

The U.S. Court of Appeals for the Federal Circuit reviews the CFC. 

Here's a few past inversecondemnation.com posts about CFC/CAFC decisions:

• Claim For Flooding Not Barred By Statute of Limitations
• Inverse Condemnation And The Border Patrol
• Wait, I Thought The Police Power And The Public Use Clause Were "Coterminous"
• Land Use Round Up
• Court of Federal Claims Takings Round Up

CFC: Takings Claim For Flooding Not Barred By Statute of Limitations

In Richard A. Forsgren Revocable Living Family Preservation Trust v. United States, No. 07-14L (May 12, 2008), the Court of Federal Claims (the court which has exclusive jurisdiction over inverse condemnation claims against the federal government in excess of $10,000) held that a property owner who alleged the government caused its land to flood by not maintaining a subsurface drain stated a claim under the Fifth Amendment, and that the claim was not barred by the six year statute of limitations.  On the statute of limitations issue, the court discussed the US Supreme Court's recent decision in John R. Sand & Gravel v. United States, No. 06-1164 (Jan. 8, 2008) which held that the six year statute is jurisdictional.  Read the complete opinion here.

Can a City Bind Itself to Exercise Eminent Domain? Brief Opposing Cert in Matsuda

Following up on the earlier post about the cert petition in Matsuda v. City and County of Honolulu, 512 F.3d 1148 (9th Cir. Jan 14, 2008), the Brief in Opposition is posted here (1.7mb pdf).  The Supreme Court docket report is here (No. 07-1305).

HAWICA: EA Required For Importation of GMO Algae

The Hawaii Intermediate Court of appeals has issued an opinion in Ohana Pale Ke Ao v. Board of Agriculture, State of Hawaii, No. 27855 (May 21, 2008).  The court ruled on two issues related to the importation of genetically-modified algae into Hawaii by the tenant of a State-owned facility on the Big Island of Hawaii:

This appeal presents two issues: (1) whether the Board was required to comply with the Hawaii Environmental Policy Act (HEPA), Hawaii Revised Statutes (HRS) chapter 343, before approving a permit to import genetically engineered (GE) algae for production in a facility on state lands; and if so, (2) whether two prior environmental impact statements (EISs) prepared for the state lands where production of the GE algae is planned satisfied the Board's HEPA obligations.

Slip op. at 1-2.  I attended the oral arguments and blogged about the issues in the case here.

The ICA held the Board should have required an EA. The court rejected the Board's argument that the permit procedures in Haw. Rev. Stat. ch. 150A, which were enacted after chapter 343 and contain a detailed process for the importation of microorganisms worked an implied repeal of the EA requirement.  The court held that the plan to grow the organisms at the state facility is "an action that proposes the use of state land," slip op. at 13, and therefore "HRS § 343-5 plainly and unambiguously required the preparation of an EA before the Board could approve [the] application."  Id.  The court held that although chapters 343 and 150A may "overlap in their application and purpose, they do not conflict and both can be given effect."  Id. at 16.

On the second issue, the ICA held the two earlier EISs did not satisfy the Board's obligations:

The two EISs, which were prepared more than three and two decades ago, respectively, confirm that the NELH and HOST parks were still conceptual or in their infancy stages when the EISs were prepared.  It is clear from the EIS that as the nature and details of individual projects to be conducted at either park became known, further HEPA review was expected. 

Slip op. at 21.  The ICA did not address how this holding squares with section 343-5's requirement that the EA be accomplished at "the earliest practical time."  The Hawaii Supreme Court addressed this requirement in the "Koa Ridge" case.  Sierra Club v. State of Hawaii Office of Planning, 109 Haw. 411, 126 P.3d 1089 (Jan. 27, 2006). 

Can a City Bind Itself to Exercise Eminent Domain? Cert Petition in Ninth Circuit Case on Reserved Powers, Public Use, and Contracts Clause (Matsuda)

As noted in this post, the City and County of Honolulu has sought US Supreme Court review of Matsuda v. City and County of Honolulu, 512 F.3d 1148 (9th Cir. Jan 14, 2008).  I've finally obtained a copy of the petition, which is posted here (2mb pdf).  The Supreme Court docket report is here (No. 07-1305).

After detailing the background facts, the petition advances a single Question Presented:

Several lessees of a residential condominium apartment complex ("Lessees") filed a lawsuit against the City and County of Honolulu (the "City") challenging Ordinance 05-001 (2005).  Ordinance 05-001 repealed the City's leasehold conversion ordinance, Chapter 38, Revised Ordinances of Honolulu ("ROH"), the statutory process by which leasehold condominium owners, including Lessees, could purchase the leased fee title to their units, through the use of the City's power of eminent domain.  Pursuant to Chapter 38, the Lessees executed contracts with the City for the acquisition of the leased fee interests in their condominium units.  However, Lessees never received City Council approval prior to the repeal of Chapter 38, and therefore they were unable under Ordinance 05-001 to complete their leasehold conversion.

The Ninth Circuit Court of Appeals departed from the longstanding policy of judicial deference to local legislative determinations of public use in the exercise of the power of eminent domain and held that the City's repeal of Chapter 38 may violate the Contracts Clause and/or the Due Process Clause of the Constitution of the United States.

Therefore, the question presented in this petition is as follows:

Whether the Ninth Circuit erred in concluding that the Honolulu City Council's repeal of the leasehold conversion ordinance may violate the Contracts Clause and/or the Due Process Clause, and whether after the repeal, the City can still be contractually bound to exercise its power of eminent domain to acquire property for the leasehold conversion?

Petition at i-ii. 

Chapter 38 was Honolulu's version of the Hawaii Land Reform Act at issue in Hawaii Housing Auth. v. Midkiff, 467 U.S. 229 (1984), and permitted conversion of condominium interests to fee simple, via a condemnation process. In Matsuda, apartment owners applied to the city to "convert" (condemn) their apartment leases, and entered into written contracts with the city, in which the apartment owners each agreed to pay the city $1,000, in return for which the city promised that after its acquisition of the lease, it would convey it to the apartment owner.  The owners subsequently received the city's approvals, but final approval by the City Council was withheld because the council was already considering repealing chapter 38, which it did in 2005. 

The ordinance repealing chapter 38 eventually contained a provision allowing any conversion proceeding which has been approved by the City Council to be completed, but because Matsuda's had not received final council approval, the taking was denied.  Matsuda and others filed suit against the city in federal court, alleging that the repeal of chapter 38 was a violation of the U.S. Constitution's Contracts Clause.  The district court dismissed the case since in the court's view, the plaintiffs had no legally enforceable contract with the City. 

The Ninth Circuit held that the district court should have viewed the repeal of Chapter 38 with "heightened scrutiny" because the repeal of Chapter 38 was the city voiding its own contracts, and remanded the case for further proceedings. A complete summary of the Ninth Circuit's opinion is posted here.

Download the complete Petition for Writ of Certiorari.  The Brief in Opposition is posted here.

Federal Circuit: No Property in Contract for Airport Screening Service

In Huntleigh USA Corp. v. United States, No 2007-5118 (May 15, 2008), the US Court of Appeals for the Federal Circuit held that a company which provides passenger and baggage screening services at airports did not have a protectable Fifth Amendment property interest in contracts to provide those services to airlines.  Huntleigh sought just compensation for a taking after the federal government assumed security screening in the wake of the 2001 terror attacks, and rendered its existing screening service contracts worthless.

In 1974, Congress required the airlines to screen passengers and luggage, and most airlines hired private contractors to perform the screenings.  In 2001, Huntleigh had contracts with 75 airlines, and was responsible for screening at 35 airports nationwide.  After the 2001 terrorist attacks, Congress created the Transportation Security Administration and determined that the new agency could provide better security.  Congress enacted the Air Transportation Security Act which provides that the TSA could accomplish the screening itself, or could "assume the rights and responsibilities" of the airlines by assuming private security contracts.  If TSA chose the latter option, ATSA required it to provide "adequate compensation to parties to the contract."

The law effectively terminated Huntleigh's security contracts, and it filed suit in the Court of Federal Claims seeking just compensation for a taking of its property, and compensation under ATSA.  The CFC held that Congress had merely frustrated Huntleigh's business expectations, and that TSA had not actually assumed any of its contracts but had instead taken over its screening duties.

The Federal Circuit affirmed, holding that the contracts were not property.  Huntleigh argued that the government did not merely frustrate its business expectations, but had, in effect, made its contracts illegal.  Relying upon Omnia Commercial Co. v. United States, 261 U.S. 502 (1923), the court disagreed.

In this case, the purpose of ATSA was not to take action with respect to any security screening contract to which Huntleigh was a party. Rather, its purpose was to transfer security screening responsibilities from the airlines to the federal government. This action, directed at the airlines, frustrated Huntleigh’s business interests.

Slip op. at 17.  The court also affirmed the CFC's determination that ATSA compensation was not required because TSA did not actually assume Huntleigh's contracts, but took over its duties.  A fine distinction, but one that was enough for the Federal Circuit.  Slip op. at 22.

Cal. Court of Appeals: Taking Claim For Denial of Coastal Development Permit Not Ripe

In Charles A. Pratt Constr. Co., Inc. v. Cal. Coastal Comm'n, No. B190122 (May 8, 2008), the California Court of Appeal (2d District) held the property owner's right to develop was not vested, and that a takings claim was not ripe since the owner could submit other plans for development.

In that case, the California Coastal Commission denied a coastal development permit, and the property owner sought an order compelling the permit to issue, as well as damages for the taking of its property.  The owner's first claim was that its right to develop was vested in 1990 pursuant to Cal. Govt. Code § 66498.1 et seq. when it filed the vesting tentative map.  The court rejected the argument, holding that vesting only applies to "requirements created and imposed by local ordinances," and coastal policies are matters of statewide concern.  Slip op. at 4-5. The court also rejected claims that the Commission's actions were arbitrary and capricious, holding that each of the Commission's reasons for denying the permit was supported by the record. Slip op. 7-11.

The property owner also argued that if the Commission's interpretation of the rules were correct, that conclusion deprived the property of all value and was a taking.  The court held that this claim was not ripe even though the property owner had made one meaningful application for development.  The court held the owner had submitted "only one plan," which the Commission denied.  The court distinguished City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 US. 687 (1999), because in that case, the government rejected 19 different site plans in five formal decisions.  The court held "the Commission has shown its willingness to consider alternatives" to the owner's proposal, slip op. at 12, and that the owner "has yet to submit proposals that contemplate a reduction in the size, scope, configuration or density of the project."  Id. at 13.

The Land Use Law Blog details the case and provides commentary in "The Development Blues: Property Lies Undeveloped for 30 Years and Counting."

Read the full opinion here.