You regulatory takings mavens know the "denominator" issue. It first came into our collective consciousness in the Penn Central case, where the Supreme Court concluded, among other things, that the property to be analyzed for regulatory takings purposes was not just Penn Central's air rights, or even the parcel which it wanted to develop. Instead, the Court concluded that the property against which the development ban was to be measured was the entirety of Penn Central's property in the area. (For more on the case, see Professor Kanner's article, "Making Laws and Sausages: A Quarter-Century Retrospective of Penn Central Transportation Co. v. City of New York, 13 Wm. & Mary Bill of Rights J. 679 (2005)).
From that inasuspicious beginning, there's been an entire body of jurisprudence that has built up around what the "relevant parcel" is when a court is determining a regulatory taking, also known as the the "denominator" issue. Even economists are into it.
This subject is going to be the topic of a presentation at the upcoming ALI-CLE Eminent Domain and Land Valuation Conference (February 5-7, 2015, in San Francisco), "Denominators and Bright Lines: The Search for the Relevant Parcel in Eminent Domain and Regulatory Takings" by our colleagues Bradford B. Kuhn, Dwight H. Merriam, and Mark M. Murakami.
Which brings us to our case of the day, Murr v. State of Wisconsin, No. 2013AP2828 (Dec. 23, 2014), an opinion by the Wisconsin Court of Appeals.
The Murrs owned two adjacent lots, down by the river. There was a cabin on one lot, and the other was vacant. A county ordinance -- which prohibited the "individual development or sale of adjacent, substandard lots under common ownership, unless an individual lot has at least one acre of net project area" -- merged the two lots. The Murrs tried to upgrade the cabin and sell the vacant parcel, and sought a variance to use the lots separately. The county denied their application, and the courts affirmed.
Having exhausted their administrative remedies, the Murrs sued in state court for a "wipeout" taking of the vacant lot under the Wisconsin Constitution's takings clause. The trial court considered the combined uses of the two lots, and held that it was not a regulatory taking because the Murrs' retained some economically beneficial uses.
On appeal, the Murrs argued that the court should have considered the vacant parcel separate from the other, and not in combination. The court of appeals rejected the argument, however, since the parcels are contiguous and both are owned by the Murrs. The court concluded it is a "well-established rule that contiguous property under common ownership is considered as a whole regardless of the number of parcels contained therein." Slip op. at 10.
Once the court defined the denominator property as both parcels, it made short work of the Lucas per se takings argument, holding that the Murrs can use their vacant property for residential purposes, a "significant and valuable use of the property." Id. at 11. Thus, no wipeout.
The court also rejected the Murrs' ad hoc Penn Central takings theory, see slip op. at 13-15, hodling against them on each of the three prongs of the test.
Murr v. State of Wisconsin, No. 2013AP2828 (Wis. App. Dec. 23, 2014)