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County Motion in Maui Affordable Housing Exaction Case

The County of Maui has filed a motion for summary judgment in the federal court challenge to the County's affordable housing exaction ordinance.  The memorandum in support of the motion is posted here (215k pdf).

The Maui ordinance, enacted last year, imposes a 40% to 50% affordable requirement on new housing developments.  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 earlier filed a motion for partial summary judgment (1.5mb pdf) asking the court to declare the ordinance unconstitutional on its face 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.  The plaintiff's motion is posted here.  See this post for more on the nexus analysis.

The hearing on both motions is currently set for June 2, 2008, at 9:45 a.m., before District Judge Ezra.

Disclosure: I presented testimony against an earlier version of the ordinance.

Nollan/Dolan in Federal Court Challenge to Maui's "Affordable Housing" Exaction Scheme

The plaintiff property owner has filed a motion for partial summary judgment in the federal court challenge to Maui County's "affordable housing" requirement.  Kamaole Pointe Development LP v. County of Maui, Civ. No. CV07-00447 DAE LEK (filed Feb. 28, 2008). 

The Maui ordinance, enacted last year, imposes a 40% to 50% affordable requirement on new housing developments.  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's motion is posted here (1.5mb pdf).  It asks the court to declare the ordinance unconstitutional on its face 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.

Update: the hearing on the motion is set for April 28, 2008, at 10:30 a.m. in Judge Ezra's courtroom.

[Disclosure: I presented testimony against an earlier version of the ordinance.]

County Withdraws Motion to Dismiss Land Use Civil Rights Complaint

The Garden Island reports that a property owner's appeal of the County of Kauai's approval of its permits with allegedly illegal conditions is going forward after the County withdrew its motion to dismiss.

The County Attorney’s Office filed for the motion to dismiss based on the Planning Commission failing to issue a “written decision and order containing findings of fact and conclusions of law,” which it claims is the only decision the court can review. Without it, there is no subject matter to base a case.

The Planning Commission has this on its Feb. 12 agenda, which, if approved, would apparently ratify the commission’s Dec. 11 approval of Creeksides’ permit applications.

Full report here.

The Right to Exclude Others From Gated Communities

The Garden Island reports that the Kauai County Council is considering a ban on "gated communities" --

A stalled plan to ban gated communities should return to County Council’s agenda by the end of February, Mayor Bryan Baptiste said yesterday. 
   
“It’s not a public safety issue to me,” he said. “It’s so we don’t isolate ourselves from each other."

All I can say about the issue is, what about the right to exclude others?  This may be the most fundamental "stick" in the bundle of rights known as property, and can't be taken away by regulation, no matter how well-intentioned the regulation may be. 

After all, if you can't keep others off your property, what have you got left?  According to the U.S. Supreme Court, nothing (except perhaps a per se regulatory takings claim).  As the Court held in Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987):

We have repeatedly held that, as to property reserved by its owner for private use, "the right to exclude [others is] `one of the most essential sticks in the bundle of rights that are commonly characterized as property.'" Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 433 (1982), quoting Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979). In Loretto we observed that where governmental action results in "[a] permanent physical occupation" of the property, by the government itself or by others, see 458 U.S., at 432 - 433, n.9, "our cases uniformly have found a taking to the extent of the occupation, without regard to whether the action achieves an important public [483 U.S. 825, 832] benefit or has only minimal economic impact on the owner," id., at 434-435. We think a "permanent physical occupation" has occurred, for purposes of that rule, where individuals are given a permanent and continuous right to pass to and fro, so that the real property may continuously be traversed, even though no particular individual is permitted to station himself permanently upon the premises.

This concept isn't anything new.  My Damon Key partners Charlie Bocken and Diane Hastert argued and won the Kaiser Aetna case in the U.S. Supreme Court, and Diane and I prevailed on the same issue in a follow-up Ninth Circuit case, Boone v. United States, 944 F.2d 1489 (9th Cir. 1991).  We also secured the right to just compensation in the Court of Federal Claims for a taking of the right to exclude in Alameda Gateway, Ltd. v. United States, 45 Fed. Cl. 757 (1999). 

Federal Equal Protection Land Use Case Filed

A complaint has been filed in U.S. District Court against the mayor of Kauai County, the county  Department of Planning, and the Planning Commission over the Coconut Beach development.  The complaint seeks relief for violations of equal protection, and federal civil rights laws.  Charley Foster has some background on the case here.  Download the complaint here.

Deal Or No Deal: Ninth Circuit Says Honolulu May Have to Live Up to Its Eminent Domain Promises

I've had a chance to review Matsuda v. City and County of Honolulu, No. 06-15337 (Jan 14, 2008), a decision by the Ninth Circuit on the Contracts and Due Process clauses, but which also involves how local governments exercise the power of eminent domain.  The case revolves around Chapter 38 of the Honolulu Revised Ordinances, which was the local version of the "land reform act" at issue in Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229 (1984) before it was repealed in 2005.

Background

Finding that the economic ills purportedly caused by the concentrated ownership of private single-family residential property in Hawaii, Haw. Rev. Stat. ch. 516 allowed homeowner/lessees to petition the Hawaii Housing Authority to exercise eminent domain on the homeowner's behalf and condemn the fee simple interest underneath their homes from the lessor, and transfer it to the lessee upon payment of just compensation.

After that statute was upheld by the U.S. Supreme Court against a Fifth Amendment public use challenge in Midkiff, and under the Hawaii Constitution's public use clause by the Hawaii Supreme Court in Hawaii Hous. Auth. v. Lyman, 68 Haw. 55, 704 P.2d 88 (1985), efforts were made to pass similar legislation affording condominium owners the same ability to force condemnation of their leasehold interests. 

Chapter 38

At the state level, those efforts were ultimately unsuccessful, but the City and County of Honolulu eventually enacted a local version, codified as Hon. Rev. Ord. ch. 38.  The ordinance relied on the same "anti-oligopoly" rationale as the Land Reform Act, and when it was challenged under the public use clauses of the U.S. and Hawaii Constitutions, the courts predictably, as in Midkiff and Lyman, rejected both federal (Richardson v. City and County of Honolulu, 124 F.3d 1150 (9th Cir. 1995)) and state (Richardson v. City and County of Honolulu, 76 Haw. 46, 868 P.2d 1193 (1994)) challenges. 

Under chapter 38, the owners of many Honolulu condominium projects were permitted to condemn and take the leasehold interests from their lessors.  By 2005, however, public sentiment regarding eminent domain had turned (as noted in this report), and the City Council surprisingly repealed chapter 38.

Matsuda

The story does not end there, however, because at the time of repeal, several condominium apartment owners had begun the process to condemn their leaseholds, and claimed they were entitled to continue the process through to completion. 

In Matsuda, the condo owners applied to the city to "convert" (condemn) their leases, and entered into written contracts with the city, in which the condo 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 condo owners.  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.  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 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:

No State shall . . . pass any Bill of Attainder, expost facto Law, or Law impairing the Obligation of Contracts. . .

U.S. Const. art. I, § 10.  This provision was designed to prevent states and their political subdivisions from passing laws relieving politically favored persons (and the government itself) of their contractual obligations. The condo owners also alleged violation of the Due Process Clause.  The District Court granted summary judgment to the city and threw the case out.

Reserved Powers / Contracts Clause

The court held that the repeal of Chapter 38 was not a local government impairing its own contracts -- and the Contracts Clause was inapplicable -- because the contracts were not enforceable under the "reserved powers" doctrine, which states that any contract whereby the government purports to contract away its discretion to exercise an essential attribute of sovereignty is void.  Thus, there was no contract to be impaired.  The seminal cases applying this doctrine to the exercise of eminent domain are West River Bridge Co. v. Dix, 47 U.S. 507 (1848) and Contributors to Pennsylvania Hospital v. City of Philadelphia, 245 U.S. 20 (1917).  In those cases, the Court held that contracts whereby the government implicitly and indirectly agreed to not take property were not enforceable.

Best Efforts

The Ninth Circuit reversed, holding that the district court applied the wrong legal test.  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.  The Ninth Circuit held that the reserved powers doctrine was not applicable because West River Bridge and Contributors to Pennsylvania Hospital cases were contracts limiting the exercise of the power of eminent domain, while the contracts at issue in Matsuda required the exercise of the power.  The Ninth Circuit held:

As an initial matter, the City's contracts with the Lessees did not expressly require the City to condemn the property at Discovery Bay.  As discussed above, Chapter 38 imposed several requirements for a successful condemnation which were beyond the City's power to control, and the City only agreed to use its best efforts to achieve those results.  Thus, if an insufficient number of condominium owners applied to the City or if the public hearing held by the Department failed to produce a finding that condemnation would serve a valid public purpose, the City would not have been obligated under the contracts to proceed with the condemnation.

Slip op. at 408.  Presumably, the Ninth Circuit would reach a different result if the contract did require the city to condemn the property, as that would be a clear delegation of sovereign powers also. The court held that the district court should have found that a contract existed, and gone forward to determine whether the repeal of Chapter 38 "impaired" those contracts.

Due Process

The district court, applying the same reserved powers analysis noted above, also held that there were no enforceable contracts, and therefore no property was at stake, and it did not need to address the condo owners' Due Process claims.  The Ninth Circuit reversed and sent the case back for a determination of whether the city/owner contracts were "property." 

Sidebar:  The oral argument recordings are posted here.  KITV's report is here. The Hawaii Supreme Court dealt with another condominium project in City and County of Honolulu v. Sherman,110 Haw. 39, 129 P.3d 542 (Feb. 28, 2006).

Nevada SCT: Upon Further Review, It's a Per Se Regulatory Taking

Thanks to Patty Salkin's Law of the Land blog for summarizing the recent Supreme Court of Nevada opinion in Hsu v. County of Clark, No. 46461 (Dec. 27, 2007).  Read Professor Salkin's summary or the opinion itself for the complete details, but these are the facts in a nutshell:

The county enacted building height restrictions on property around the Las Vegas airport.  A property owners within the zone brought an inverse condemnation action, asserting the height restriction imposed a physical occupation of their airspace, and that the ordinance was a per se regulatory taking.  In an unpublished order, the Nevada Supreme Court held that a per se taking did not occur, and that the applicable analysis was under the Penn Central test [Penn Central Trans. Co. v. City of New York, 438 U.S. 104 (1978)].  On remand, the trial court dismissed, and the property owner again appealed.

During the pendency of the second appeal, the Nevada Supreme Court published an opinion in a similar case, McCarran Int'l Airport v. Sisolak, 137 P.3d 1110 (Nev. 2006), which held that airport height restrictions were a physical invasion and thus a per se (not Penn Central) taking.  The issue presented in Hsu was whether the earlier unpublished Nevada Supreme Court controlled as "law of the case," or whether the subsequent Sisolak rule would control.

The court determined that the usual rule of law of the case must under some circumstances yield to equitable principles.  Generally speaking, when an appellate court states a rule of law applicable to a case, that rule may not be revisited as the litigation progresses.  This doctrine is related to the doctrines of stare decisis (as applied, for example, by the U.S. Supreme Court in John R. Sand & Gravel v. United States, No. 06-1164 (Jan. 8, 2008)), and issue and claim preclusion, which prevent relitigation of issues and cases in the interest of finality and judicial economy.

However, the doctrine of law of the case is merely a prudential rule, not jurisdictional, and a court may refuse to apply it if the rule in the case is "clearly erroneous" or would "work a manifest injustice."  Slip op. at 7.  The court held that the law of the case doctrine will not apply when the applicable law changes during the pendency of a case.  The court noted that Sisolak determined that an ordinance that imposes a height restriction to allow aircraft to fly through a landowner's airspace was a per se regulatory taking of private airspece, and that determination should apply to Hsu.

This case presents an interesting contrast to the recent decision in John R. Sand & Gravel, where the U.S. Supreme Court held that decisions going back to the 1880's would not be revisited under the doctrine of stare decisis.

2007 in Review: Taking Substantive Due Process Seriously Again

After Lingle v. Chevron, U.S.A., Inc., 544 U.S. 528 (2005) informed us that the "substantially advance a legitimate state interest" test was one of substantive due process, not regulatory takings, the courts began revisiting the long-neglected topic of substantive due process in the land use context. 

• The Ninth Circuit finally jettisoned the Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996) (en banc) doctrine in Crown Point Development, Inc. v. City of Sun Valley, 506 F.3d 851 (9th Cir. Nov. 1, 2007).  Armendariz stood for the unusual proposition that a property owner's claim for violations of substantive due process rights were "subsumed" within the owner's claim for violation of the Takings Clause.  Thus, in land-related issues, a property owner could only bring takings claims.  No longer, as I wrote here.

• In Cine SK8, Inc. v. Town of Henrietta (No. 06-1718-cv) (Nov. 8, 2007), the Second Circuit detailed one way to prove a land use substantive due process case.  The court also noted that when a local government agency acts outside the scope of its delegated jurisdiction, it violates due process.  More here.

• In  Franco v. National Capital Revitalization Corp., No. 06-CV-645 (July 12, 2007), the Court of Appeals for the District of Columbia also provided guidance on how substantive due process principles may guide the issue of Kelo pretext.  While the issue in Franco involved the public use clause, as I noted in this post, the analysis has much crossover with substantive due process issues.

Land Use Round Up

A round up of posts of possible interest to readers:

• Koloa Creekside sues county -- a developer is suing the County of Kauai for civil rights violations, and unlawful exactions:

The 18-page lawsuit names as defendants the county of Kaua‘i, the Planning Commission, and the Planning Department and its director. It asks for the Koloa Creekside Estates project to be found exempt from the Koloa-Po‘ipu-Kalaheo Development Plan and, if not, the imposed conditions to be declared unlawful.

The developer also opposes some requirements that it was previously willing to concede — such as a land dedication, impact fees and construction schedule, the lawsuit states.

Attorneys argue in the case for automatic approval of the permits because the county failed to meet its own deadlines.

• Charley Foster at Planet Kauai adds his comments on the NY Times story about the NIMBY phenomenon in Hawaii.

• Jesse Souki at Hawaii Land Use Law blog digests HAWSCT's latest water law decision, In re Contested Case Hearing on the Water Use Permit Application Filed by Kukui (Molokai), Inc., No. 24856 (Dec. 26, 2007), here.  Jesse also comments about Honolulu's proposal for an "affordable housing" exaction here.

• Jay Fidell at Hawaii Public Radio recently had a ThinkTechHawaii program on the possibilities for a constitutional convention.  Podcast here.  HPR news has posted a summary podcast here.

• In Bering Strait Citizens for Responsible Resource Development v. U.S. Army Corps of Engineers, No. 07-35506 (9th Cir. Jan. 3, 2008), the Ninth Circuit upheld a gold mining permit issued pursuant to the Clean Water Act.

2007 in Review: Private Agreements and Public Process

These seemingly unrelated court decisions were tied together with a common thread: private agreements for the most part are not substitutes for public processes, whether it is eminent domain, rezoning, or the granting of permits.   

Several courts determined that agreements in which government agreed with private parties to exercise eminent domain were invalid: 

• One case (in which I am involved as counsel for the property owners so won't comment in detail) involved a development agreement between the County of Hawaii and a developer to take property for a road.  The trial court struck down the attempt -- here is the court's Findings of Fact and Conclusions of Law.  More on the case here.

• In a similar vein, a Washington state court of appeals in HTK Mgm't, L.L.C. v. Rokan Partners, No. 58113-9-I (Wash. Ct. App., July 23, 2007) held that eminent domain "is an inherent power of the state and redelegations of that power to private parties are invalid."  The court struck down an assignment of rights allowing a private party to, in effect, exercise eminent domain, holding that by agreeing to do so, the government abandoned the attempt to take the property. 

• In Wheat Ridge Urban Renewal Auth. v. Cornerstone Group XXII, LLC, No. 06SC591 (Dec. 3, 2007), the Colorado Supreme Court refused to order a redevelopment agency to condemn private property and turn it over to a developer to build a Walgreen's store.  The court held that judges have no authority to compel an agency to take property even if the agency had entered into a contract with the developer in which it agreed to do so.  The court denied the developer's attempt to enforce specific performance of the contract.

This wasn't limited to eminent domain, and other courts applied a similar rationale to other land use areas: 

• In Neighbors in Support of Appropriate Land Use v. County of Tuolumne, No. F051690 (Dec. 7, 2007), a California District Court of Appeals held that a development agreement cannot be used to avoid zoning restrictions, and can't substitute for the rezoning process.  Development agreements are vested rights agreements only.

• In The League of Residential Neighborhood Advocates v. City of Los Angeles, No. 06-56211 (Aug. 21, 2007), the Ninth Circuit held that an agreement settling a RLUIPA claim can't override state law.  Details and analysis here and here.  The petition for rehearing/en banc review is posted here.