Here's the latest in an issue we've been following out of North Carolina.
In Kirby v North Carolina Dep't of Transportation, No. COA14-184 (Feb. 17, 2015), the N.C. Court of Appeals not only held that the property owners' claims were ripe, but that the Map Act -- which gives the DOT the ability to designate property for future highway use and prevent its development in the meantime -- effected a taking. The court reversed the trial court's dismissal and sent the case back down for a calculation of the compensation owed to each property owner. A big win for the property owners.
We've set out the background here and here, but the short story is that the N.C. legislature adopted a statute which allows the DOT to designate future highway corridors, but doesn't require it to actually acquire the property. Once the DOT files a map showing the location of the future highway with a county registrar of deeds, the owners of the properties designated cannot even pull building permits. Although there are means for property owners to seek relief from the development prohibition, that process is a limited one, and a property owner must show extreme hardship.
The stated purpose of the Act is to keep acquisition costs low. We posted the Beroth Oil decision, in which the N.C. Supreme Court concluded that these cases could not be prosecuted as a class action here. And we commented on the "map act" cases here.
The court of appeals concluded that the property owners' claims for inverse condemnation, regulatory takings, and equal protection were ripe because the Act and the filing of the maps were an exercise of the state's power of eminent domain, and not merely the state "regulating" property under its police power, as the DOT argued. Relying on the rationale of a Florida Supreme Court case, Joint Ventures, Inc. v. Dep't of Transportation, 563 So.2d 622 (Fla. 1990), the court held that the purpose of the Act was to reduce the cost of acquisition in the event of future condemnation, and was thus an exercise of the eminent domain power. In other words, a taking.
There's a lot of good language and quotations in the Kirby opinion, but we think the heart of the decision is on pages 30-42, with the crux of the takings rationale set out on pages 40-41. Once the DOT files a map with the register of deeds, the Act bars the issuance of building permits, "and are absolute." Slip op. at 41. The court rejected the DOT's argument that this was "merely" a "temporary three-year restriction on new improvements" which eventually will be lifted. To the contrary, the court concluded that the prohibition on use could last as long as 60 years, based on a letter sent from DOT's CEO. This is a taking:
Therefore, with potentially long-lasting statutory restrictions that constrain Plaintiffs’ ability to freely improve, develop, and dispose of their own property, we must conclude that the Map Act is distinguishable from the cases that established the rule that “the recording of a map showing proposed highways, without any provision for compensation to the landowners until future proceedings of condemnation are taken to obtain the land, does not constitute a taking of the land, or interfere with the owner’s use and enjoyment thereof.”
Slip op. at 43 (quoting Browning v. North Carolina State Highway Comm'n, 139 S.E.2d 227, 230-31 (N.C. 1964)). In other words, the map designations were not merely preliminary planning, as the DOT argued, but clouded the plaintiffs' ability to use and market their properties.
Having concluded that the Act works a taking, the court remanded the case to the trial court "to consider evidence concerning the extent of the damage suffered by each Plaintiff as a result of the respective takings and concerning the amount of compensation due to each Plaintiff for such takings." Slip op. at 45.
More on the issue of map designations as takings in this article: Trent Andrews, Official Maps and the Regulatory Takings Problem, 2011 B.Y.U. L. Rev. 2251 (2011).
More from the Kirby case from the Winston-Salem Journal ("N.C. Appeals Court says state must pay landowners in the path of the Northern Beltway").