If there’s a money quote in yesterday’s opinion by the Supreme Court of Nevada which “wholly affirm[ed] a trial court judgment awarding $48 million in just compensation for Las Vegas’s regulatory taking in City of Las Vegas v. 180 Land Co., LLC, No. 24-13605 (Apr. 18, 2024), it might just be this sentence:
Although the City rejected 180 Land’s development proposals, its representatives had previously recognized the site’s ability to be developed residentially.
Slip op. at 8.
That alone should tell you where this one is ultimately headed. But let’s break it down and see how this got there.
Residential PUD Zoning
It started off well for the property owner, who owned land it wanted to use as a golf course, part of a (much) larger 2,200 acre ranch. The city preliminarily approved a request to zone the proposed golf course for residential PUD (planned unit development – which should reveal to you land uses when this went down (1980s)). In 1990, the city was satisfied and the golf course area was zoned R-PD7 (Residential Planned Unit Development).
This being Nevada, the zoning approval meant that the golf course was actually built.
General Plan: Open Space
During the construction, the city adopted a new General Plan which designated the parcel as “Parks/Schools/Recreation/Open Space.” But despite the change in the GP, the zoning was not altered. Indeed, in 1986, the city confirmed in a letter that the R-PD7 zoning remained for the golf course. And in 2001, the city adopted another ordinance that “formally rezoned it to R-PD7 on the Official Zoning Map Atlas, and repealed any previous conflicting ordinances.” Slip op. at 5.
By 2015, however, the golf course was struggling. “[T]he operator of the golf course informed the then-landowners, Fore Stars, Ltd., that it could not longer make a profit operating the golf course and thereafter terminated the lease in 2016.” Id.
Residential Zoning, Residential Development
That same year, an outfit known as “180 Land” acquired the assets of Fore Stars, including the golf course area, and later a fellow named Yohan Lowie acquired ownership. It was time to change the use from a golf course to something more in line with the zoning.
180 Land segmented the 9 parcels of the golf course into four development areas. One of these, a 35-acre parcel, became the focus of the dispute. In 2016, 180 Land sought to develop the site, first by seeking to change the GP designation from Open Space to low-density residential, and then by submitting typical development applications such as a Tentative Map, and site review. City staff recommended approval. While these were in-progress, 180 Land also sought approval of a new Master Development Agreement. Staff was on board with that as well.
Successful Opposition to the Residential Project
Then came the opponents, a “homeowner group” which challenged the city’s approval of a separate application for another one of the four former golf course parcels. Next up, the discussion of the 35-acre parcel residential development at a City Council public hearing became “contentious,” with “strong public opposition to 180 Land’s applications.” Slip op.at 7.
The City ultimately denied the applications despite the City’s planning staff having recommended approval. The City’s final decision stated that the denials were “due to significant public opposition to the proposed development, concerns over the impact of the proposed development on surrounding residents, and concerns on piecemeal development of the Master Development Plan area rather than a cohesive plan for the entire area.” Despite rejecting the 35-acre application, in part because of concerns over “piecemeal development,” the City also rejected the comprehensive Master Development application in August 2017, two months after rejecting the 35-acre application. Also in August 2017, the City rejected applications from 180 Land pending since 2016 for three access points to the golf course acreage from neighboring public streets and to install fencing around two water features on the acreage. The City stated it denied the applications because of “the various public hearings and subsequent debates concerning the development on the subject site” and instructed 180 Land to file an application for a “Major Review” under the City’s municipal code. 180 Land did not file any Major Review applications. The City also denied 180 Land’s application for a technical drainage study, though Las Vegas Municipal Code (LVMC) 19.16.105 requires such a study before residential development is allowed.
Slip op. at 7-8.
City’s Representations
But that wasn’t the end of the story. “Although the city rejected 180 Land’s development proposals, its representatives had previously recognized the site’s ability to be developed residentially.” Slip op. at 8. Various city employees and officials confirmed that the city had already approved the residential zoning of the property and under Nevada land use law, zoning is king: if the GP is inconsistent with the zoning, the zoning trumps.
Inverse Condemnation
Next up, an inverse claim in a Nevada state court. The trial court held that the “hard zoning” was indeed R-PD7, meaning that 180 Land had “as a right” a single-family and multiresidential development. Slip op. at 9. You know what that means: the city could either let ’em build, or condemn. It could not use its police power to deny the “as of right” development. The trial court granted 180 Land multiple summary judgments on liability, and considered valuation evidence of just compensation:
[T]he district court ultimately adopted 180 Land’s expert’s valuation of the land, $34,135,000, noting that the City did not present any contrary valuations or any other rebuttal evidence and did not depose 180 Land’s expert. The district court also granted 180 Land’s requests for reimbursement of its property taxes, prejudgment interest, and attorney fees. In doing so, the district court rejected 180 Land’s request for a 23-percent prejudgment interest rate, calculating its prejudgment interest award using a prime plus 2-percent rate. The final judgment in favor of 180 Land totaled $48,114,039.30.
Slip op. at 9-10. Both sides appealed. The city sought to overturn the takings judgment, while 180 Land challenged the amount of prejudment interest.
Nevada Supreme Court: a Right to Develop
The Supreme Court described the issue as “whether the site’s R-PD7 residential zoning or its PR-OS land designation [on the General Plan] governed 180 Land’s ability to develop the property and/or conferred certain rights on 180 Land.” Slip op. at 10. When the taking issue is framed that way (as a land usey and not a takings issue), then you can kind of see where this one is going. If the zoning defined 180 Land’s property rights, game over. Vested, etc. If the city’s argument — that it could deny “any development applications” inconsistent with the GP designation were accepted, then no property and no taking.
In short, the taking issue turned on the question of whether zoning or the General Plan controlled the use of 180 Land’s land. You can read pages 11-12 of the opinion for the details, but the short story is that the court concluded that indeed, zoning is law while the GP is “not a legislative mandate from which no leave can be taken.” Slip op. at 11.
Plan/Zone Consistency?
What about the rubric in Nevada land use law that zoning must be consistent with a general plan? The court was not convinced because “[t]he problem with applying the consistency requirement in this case is that the substantial evidence demonstrates that the R-PD7 zoning predated the PR-OS land designation.” Slip op. at 12. Zoning: 1986. GP: 1992. And the court also noted that the ordinance adopting the PR-OS GP designation expressly noted that the GP designation didn’t modify or invalidate the existing zoning.
Murr Denominator Parcel
Having determined that 180 Land had a vested right to develop in accordance with the residential zoning, the court held that the city’s denial of its residential development applications was a taking. The court identified the property interest: the 25-acre parcel. It rejected the city’s claim that Murr v. Wisconsin required the denominator to be the entire 9-parcel former golf course.
The court applied the multi-factor Murr standard to conclude that no, the property here was only the 35-acre residentially-zoned parcel, not the other of 180 Land’s holdings. The court also rejected the city’s claim that the case wasn’t even ripe because 180 Land submitted “only one development application[.]” Slip op. at 21. To the court, that one denied application was enough, and “any further attempts to apply for development by 180 Land would have been futile[.]” Id.
Lucas Wipeout
On the merits, we urge you to read pages 24-26 of the opinion, where the court analyzes the case to conclude that this worked a “per se regulatory taking.” In short, a Lucas economic wipeout. This passage is worth quoting at length:
The City’s denials of 180 Land’s applications and the discussion of those applications at various city council meetings show no meaningful indication that the City would allow any development on the 35 acres. As noted above, the City’s denials stated it was rejecting the applications based on strong public opposition and that 180 Land had not provided a cohesive plan for the entire golf course acreage. But the City provided no regulatory basis for the denials13 that would allow 180 Land to seek a variance or submit an amended application that would resolve any such issues. The City similarly rejected 180 Land’s Master Plan application that provided a cohesive plan for the golf course acreage. That these denials occurred despite the City’s planning office working with 180 Land on at least one of the proposals and repeatedly recommending that the City approve the applications underscores an unwillingness to allow any development. And the City did not provide 180 Land with any viable alternatives for it to reap economic benefit from the 35 acres when denying its applications. In short, the City’s actions demonstrate that it would not approve any development on the 35 acres. Further, we discern no error in the district court adopting 180 Land’s expert’s opinion that, without the ability to develop the 35 acres, it had no economic value
Slip op. at 25-26.
Just Compensation
The court next considered the city’s argument that the trial court got the just compensation wrong. No abuse of discretion, so judgment affirmed. The most interesting part of this part of the opinion in our opinion is on pages 28-29, where the court noted that the landowner met its burden of introducing relevant valuation evidence (an expert who opined on the land’s value in its highest and best use). And, stunningly, that the city
“presented no contrary evidence[,]” and didn’t even depose 180 Land’s expert. Indeed, it made no effort to rebut the expert report. Slip op. at 29. Whoa.
And what of the landowner’s appeal on the amount of prejudment interest? No go because the rate it sought would not merely make up for the delay in payment, but would “reimburse it for the purported profit it lose had it been able to develop the land.” Slip op. at 32.
The opinion ended by summing up:
When a governmental agency acts in a manner that removes all the economic value from privately owned land, just compensation must be paid. Here, the City’s actions demonstrated a refusal to allow any development on the 35-acre parcel owned by 180 Land such that the parcel no longer had any economic value. The district court therefore did not err in finding that a taking occurred. Nor did the district court err in its just compensation award, as it based that decision on uncontroverted evidence from a duly admitted expert witness.
Slip op. at 32.
There it is.
Congratulations are in order for our Nevada colleague Kermitt Waters and his firm.
City of Las Vegas v. 180 Land Co., LLC, No. 24-13605 (Nev. Apr. 18, 2024)