We suggest you take a read through the California Court of Appeal's opinion in Felkay v. City of Santa Barbara, No. B304964 (Mar. 18, 2021). It's all there: Lucas wipeout takings, futility and exhaustion, coastal zone property rights.
This is an inverse condemnation case, seeing compensation for the city denying the owner any economically beneficial use of his property, because it was on a bluff face. Under the city's ordinances, bluff faces can't be built on. The planning commission staff said so, but they also recommended to the commission that this would be a taking, and the commission should therefore employ the takings safety-valve provision in the ordinance which allows the city to approve development if denial would be a taking (to paraphrase that old lung-dart commercial, "it's better to switch than to fight").
"No deal" the commission said, rejecting staff's recommendation, "we'll show 'em who is boss! We'd rather fight. Our law says there's no building on land we think is on a bluff face." City council concluded the same.
Property owner then filed both a writ of administrative mandate (APA appeal for all you non-Californians) and an inverse condemnation complaint, collectively asking the court to allow development and require compensation. Responding to the writ request, the city argued that substantial evidence supported its conclusion that the owner's land fit within the definition of "bluff," and the court agreed. But the court allowed the inverse claim to go to trial to test the city's claim that the takings/inverse claim wasn't ripe (hey, there may be other uses that can be made on that bluff!), and to determine compensation.
The city's project planner (Kennedy) testified, and when asked by the trial judge whether anything could be built on property deemed to be on a bluff, she responded:
“I would say that they received a denial for that, so that’s the case.” The court later asked Kennedy why the city did not just tell Felkay at the beginning that “8.2 trumps whatever you might submit. We’re not going to allow anything on the bluff face. Don’t submit anything. . . .
Slip op. at 6. The court concluded that it would be futile for the owner to seek further denials of development, and that there was a taking. After the court concluded there was a taking, it gave the city a choice: pay up for the taking or back off. The court convened a jury to determine compensation. The jury awarded compensation of $2.4 million.
The court of appeal affirmed both the ripeness conclusion and the (unappealed) jury verdict:
The city contends that the inverse condemnation claim was not ripe because after the city denied his permit application, Felkay did not submit a revised application. We disagree....The trial court found the city’s expert, Kennedy, to be “a defining witness in the case” who “convinced [the court] that there would be NO POINT in going back to seek mitigation.” The court did not err in crediting her testimony. (Cf. Benson v. California Coastal Com. (2006) 139 Cal.App.4th 348 [commission not estopped by staff member’s telephone call that applicant need not attend hearing].) Felkay was not required to submit a second proposal because the city “made plain” it would not allow any development below the 127-foot elevation, and because the area above that elevation was “not buildable.”
Slip op. at 9, 11.
In short, when the law itself prohibits any development, and that is confirmed both by the city's own actions and the testimony of its expert that the law "trumps" any application, an owner doesn't need to ask to get denied again.
Check it out.
Felkay v. City of Santa Barbara, No. B304964 (Cal. App. Mar. 18, 2021)
