Amicus Curiae Brief — Bridge Aina Le'a, LLC, Petitioner v. Hawaii Land Use Commission

No. 20-54

In The

Supreme Court of the United States

BRIDGE AINA LE’A, LLC,

Petitioner,

v.

HAWAII LAND USE COMMISSION,

Respondent.

On Petition for Writ of Certiorari to

the United States Court of Appeals

For the Ninth Circuit

AMICI CURIAE BRIEF OF

NATIONAL ASSOCIATION OF HOME

BUILDERS OF THE UNITED STATES AND

CALIFORNIA BUILDING INDUSTRY

ASSOCIATION IN SUPPORT OF PETITIONER

NICK CAMMAROTA

CALIFORNIA BUILDING

INDUSTRY ASS’N

1215 K Street

Suite 1200

Sacramento, CA 95814

(916) 443-7933

ncammarota@cbia.org

DEVALA A. JANARDAN*

THOMAS J. WARD

NATIONAL ASSOCIATION

OF HOME BUILDERS

OF THE U.S.

1201 15th Street, N.W.

Washington, D.C. 20005

(202) 266-8200

djanardan@nahb.org

* Counsel of Record

i

TABLE OF CONTENTS

Page(s)

INTEREST OF AMICI CURIAE .......................... 1

SUMMARY OF ARGUMENT ............................... 3

ARGUMENT ........................................................... 4

I. THIS CASE IS THE PERFECT VEHICLE

FOR THIS COURT TO PROVIDE CLARITY

ON LUCAS AND PENN CENTRAL

REGULATORY TAKINGS; THE

PETITIONER, FACTS, AND LOWER

COURT RESULT HERE EXEMPLIFY

COUNTLESS SIMILAR INSTANCES

ACROSS THE COUNTRY............................... 4

A. The Ninth Circuit, Similar to Countless

Courts Nationwide, Wholly Ignores

the Realities of Development and

Reasonable Expectations of Developers.......... 5

B. While Project Planning is Fluid, Development

Expectations Still Exist Throughout the

Decades of Time and Investment Needed

to Complete a Development Project ................ 9

II. THE NUANCES OF TAKINGS LAW ARE

NOT SIMPLY ACADEMIC EXERCISES THE COUNTRY'S HOUSING CRISIS IS

EXACERBATED BY THE LACK OF

CLARIFYING STANDARDS ........................ 12

ii

TABLE OF CONTENTS (cont.)

Page(s)

A. Land Use Regulations and Litigation Are

Extremely Time and Cost Intensive; the

Lack of Uniform Application of Regulatory

Takings Standards Adds to This Cost ......... 12

B. Large Litigation Costs Are Partially Borne

By the Homebuyer in One Way

or Another ..................................................... 15

CONCLUSION ..................................................... 18

iii

TABLE OF AUTHORITIES

Page(s)

CASES

Berkeley Hillside Pres. v. City of Berkeley,

241 Cal.App.4th 943, (Oct 15, 2015), reh'g denied,

41 Cal.App.4th 943 (Feb. 03, 2016),

review denied ......................................................... 6

Berkeley Hillside Preservation v. City of Berkeley,

184 Cal.Rptr.3d 643 (March 2, 2015) ................... 6

Bridge Aina Le’a, LLC v. Land Use Comm’n,

950 F.3d 610 (9th Cir. 2020) ..................5, 9, 10, 11

Florida Rock Indus. v. United States, 791 F.2d 893

(Fed. Cir. 1986), cert. denied, 479 U.S. 1053

(1987) ................................................................... 10

Kirby Forest Indus., Inc. v. United States,

467 U.S. 1 (1984) .......................................... 10 - 11

Lost Tree Vill. Corp. v. United States, 787 F.3d

1111 (Fed. Cir. 2015)......................................10, 14

Love Terminal Partners, L.P. v. United States,

889 F.3d 1327(Fed. Cir. 2001) .............................. 9

Lucas v. So. Carolina Coastal Council,

505 U.S. 1003 (1992) ................................2, 3, 4, 14

Olson v. United States, 292 U.S. 246 (1934) ......... 10

Penn Central Transp. Co. v. City of NY,

438 U.S. 104 (1978) ....................................2, 3, 4, 8

iv

TABLE OF AUTHORITIES (cont.)

Page(s)

Sherman v. Town of Chester, 752 F.3d 554

(2d Cir. 2014) ....................................................... 15

Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l

Planning Agency, 535 U.S. 302 (2002) ................. 4

STATUTORY &

CONSTITUTIONAL PROVISIONS

U.S. CONST. AMEND. V .............................................. 2

U.S. CONST. AMEND. XIV .......................................... 2

OTHER

Jesse Bricker, Arthur B. Kennickell, et al.,

Changes in U.S. Family Finances from 2007

to 2010: Evidence from the Survey of Consumer

Finances, Federal Reserve Bulletin,

June 2012, Vol. 98, No. 2, https://www.

federalreserve.gov/pubs/bulletin/2012/

PDF/scf12.pdf ..................................................... 16

David L. Callies, Regulating Paradise: Land Use

Controls in Hawai’i (2d Ed. 2010), https://pdfs.

semanticscholar.org/dcbb/ac8af6e99ba94717ead

8a8e767485db04485.pdf ....................................... 8

Paul Emrath, Government Regulation in the Price

of a New Home, Special Studies, May 2, 2016,

https://www.nahbclassic.org/generic.aspx?

genericContentID=250611................................... 14

v

TABLE OF AUTHORITIES (cont.)

Page(s)

Paul Emrath, How Government Regulation

Affects the Price of a New Home, Special Studies,

(July 5, 2011), http://www.nahbclassic.org/

generic.aspx?sectionID=734&genericContent

ID=161065&channelID=311 ................................. 7

William I. Gulliford, III, The Effect of Notice

of Land Use Regulations Upon InvestmentBacked Expectations and Takings Challenges,

23 Stetson L. Rev. 201 (Fall, 1993) ...................... 9

Dennis Hollier, Why Big Development is So

Difficult in Hawaii, Hawaii Business Magazine,

(April 8, 2013), https://www.hawaiibusiness.

com/why-big-development-is-so-difficult-inhawaii/ .................................................................. 8

Tim Iglesias, Housing Impact Assessments:

Opening New Doors for State Housing Regulation

While Localism Persists, 82 Or. L. Rev. 433

(Summer 2003) .................................................... 12

Daisy Linda Kone, Land Development,

BuilderBooks (10th Ed., 2006 ............................... 6

James E. Krier & Stewart E. Sterk, An Empirical

Study of Implicit Takings, 58 Wm. & Mary

L. Rev. 35 (2016) ................................................... 4

vi

TABLE OF AUTHORITIES (cont.)

Page(s)

Carolina Reid and Hayley Raetz, Perspectives:

Practitioners Weigh in on Drivers of Rising

Housing Construction Costs in San Francisco,

U.C. Berkeley Terner Center (Jan. 2018) .......... 12

Michael H. Schill, Regulations and Housing

Development: What We Know, Cityscape:

A Journal of Policy Development & Research,

Vol. 8, No. 1 (U.S. Dept of Housing & Urban

Development, 2005), https://www.huduser.gov/

periodicals/cityscpe/vol8num1/ch1.pdf ............ 13

Gregory M. Stein, Regulatory Takings and Ripeness

in the Federal Courts, 48 Vand. L. Rev. 1

(Jan., 1995) .................................................5, 14, 15

Sylvia R. Lazos Vargas, Florida's Property

Rights Act: A Political Quick Fix Results in

A Mixed Bag of Tricks, 23 Fla. St. U. L.

Rev. 315 (Fall, 1995) ........................................... 14

Robert M. Washburn, “Reasonable InvestmentBacked Expectations” As a Factor in Defining

Property Interest, 49 Wash. U. J. Urb.

& Contemp. L. 63 (Summer 1996) ........................ 9

Na Zhao, NAHB 2020 “Priced-Out” Estimates,

Eye on Housing Blog (Jan. 24, 2020),

http://eyeonhousing.org/2020/01/nahb-2020priced-out-estimates/ .......................................... 17

vii

TABLE OF AUTHORITIES (cont.)

Page(s)

Press Release, Pacific Legal Foundation,

PLF Client Coy Koontz Jr. is Honored by

Owners’ Counsel of America (Jan. 27, 2014),

https://pacificlegal.org/press-release/plf-clientcoy-koontz-jr-is-honored-by-owners-counsel-ofamerica/ .............................................................. 15

California News Wire Servs., Vacant Sunset

Gordon Tower Approved for Apartments,

Dec. 12, 2018 9:44pm, https://patch.com/

california/hollywood/vacant-sunset-gordontower-approved-apartments ................................ 16

1

INTEREST OF AMICI CURIAE 1

The National Association of Home Builders of the

United States (“NAHB”) is a Washington, D.C.based trade association whose mission is to enhance

the climate for housing and the building industry.

Chief among NAHB’s goals is providing and

expanding opportunities for all people to have safe,

decent, and affordable housing. Founded in 1942,

NAHB is a federation of more than 800 state and

local associations. About one-third of NAHB’s

approximately 140,000 members are home builders

or remodelers, and constitute 80% of all homes

constructed in the United States.

NAHB is a vigilant advocate in the nation’s

courts. It frequently participates as a party litigant

and amicus curiae to safeguard the constitutional

and statutory rights and business interests of its

members and those similarly situated.

The California Building Industry Association

(“CBIA”) is a statewide non-profit trade association

comprising approximately 3,000 member companies

involved in all aspects of the residential

development industry. CBIA and member

companies directly employ over one hundred

Counsel of record for all parties received notice at least

10 days prior to the due date of the amici curiae’s intention to

file this brief. Letters of consent are on file with the Clerk. No

counsel for a party authored this brief in whole or in part, and

no counsel or party made a monetary contribution intended to

fund the preparation or submission of this brief. No person

other than amici curiae, its members, or its counsel made a

monetary contribution to its preparation or submission.

1

2

thousand people. CBIA is the recognized voice of the

homebuilding industry in California.

NAHB and CBIA file this brief together as amici

curiae. The vast majority of amici curiae’s builder

and developer members own and develop real

property. These members engage in land

development and construction activities that span

the entire development process, from idea inception

to maintenance after sale of a housing unit.

Therefore, they are directly impacted and concerned

with any decision that dilutes their rights under the

Fifth and Fourteenth Amendments. U.S. CONST.

Unfortunately, many of amici

AMENDS. V, XIV.

curiae’s members have been forced to initiate their

own regulatory takings lawsuits, and are well aware

of the financial and emotional toll from protracted

regulatory takings litigation. Amici curiae believe

that its members would be greatly served if this

Court grants the Petition and provides clarifying

guidance on Lucas and Penn Central regulatory

takings. See Lucas v. So. Carolina Coastal Council,

505 U.S. 1003 (1992); Penn Central Transp. Co. v.

City of New York, 438 U.S. 104 (1978).

3

SUMMARY OF ARGUMENT

Similar to countless development projects across

the United States, the Petitioner here went through

heavy upfront investment and a rigorous due

diligence process. Yet, the Ninth Circuit applied

Lucas and Penn Central in such a way that ignores

the countless steps developers must take and the

expectations developers have when creating new

communities. These expectations do not materialize

at the final step of the sale of a housing unit, but

rather throughout the entire development process.

Further, the impact from the lack of consistency

from regulatory takings lawsuits goes beyond just

the courtroom. Without clarification from this Court,

such lawsuits will continue to be needlessly time

intensive and financially burdensome. This not only

impacts home builders and land developers, but also

home buyers in the form of higher housing costs.

Amici respectfully urge this Court to grant certiorari

to resolve important Lucas and Penn Central

questions that have a broad impact.

4

ARGUMENT

I. THIS CASE IS THE PERFECT VEHICLE

FOR THIS COURT TO PROVIDE CLARITY

ON

LUCAS

AND

PENN

CENTRAL

REGULATORY

TAKINGS;

THE

PETITIONER,

FACTS,

AND

LOWER

COURT RESULT HERE EXEMPLIFY

COUNTLESS

SIMILAR

INSTANCES

ACROSS THE COUNTRY.

The “ultimate constitutional question” that

underlies the Takings Clause “is whether the

concepts of fairness and justice” are served by

categorical rules or by a Penn Central inquiry.

Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l

Planning Agency, 535 U.S. 302, 334 (2002). In this

case, Hawaii state courts, a jury, and the district

court all found that various principles of fairness

and justice were violated by the State of Hawaii

Land Use Commission under both Lucas and Penn

Central.

However, in the end, the Ninth Circuit has ruled

in favor of the government, similar to 90% of

regulatory takings lawsuits, thus providing the land

owner with no relief. James E. Krier & Stewart E.

Sterk, An Empirical Study of Implicit Takings, 58

Wm. & Mary L. Rev. 35, 58 (2016). The Petitioner,

facts, and result in this case are emblematic of

countless land use takings claims, making this the

perfect vehicle for this Court to reexamine whether

Lucas and/or Penn Central are exemplars that

guarantee fairness and justice. Amici, therefore,

respectfully urge this Court to grant certiorari.

5

A. The Ninth Circuit, Similar to Countless

Courts Nationwide, Wholly Ignores the

Realities of Development and Reasonable

Expectations of Developers.

Residential construction is one of the most

heavily regulated industries in the country. While

the development approval process varies from one

place to another, almost everywhere, builders must

deal with numerous layers of local, state, and federal

permits and approvals. As one academic states,

“[d]evelopers typically obtain construction and

permanent loan commitments early in the

development process; such commitments will expire

during a prolonged permitting process, leaving

developers with the risk of interest rate increases

and uncertainty as to the availability of any funds at

all . . . .” Gregory M. Stein, Regulatory Takings and

Ripeness in the Federal Courts, 48 Vand. L. Rev. 1,

44-45 (Jan. 1995).

Home builders and land developers of all sizes

have reasonable investment-backed expectations at

various stages of development. In particular,

complex and large-scale projects such as the one in

this case routinely take decades to complete and

require heavy investment up front. The Ninth

Circuit dismisses these expectations and labels

them no different to a “starry eyed hope of winning

the jackpot if the law changes.” Bridge Aina Le’a,

LLC v. Land Use Comm’n, 950 F.3d 610, 633-35 (9th

Cir. 2020). While this makes no sense, it is

unfortunately emblematic of how little governments

and lower courts understand about the development

process. Home builders and land developers do not

6

acquire and invest millions of dollars 2 in land to

“grow rocks.”

A successful developer understands that a vision

for development must go through an initial

investigation process, well before even approaching

the locality on any permitting issues. Certainly, this

initial step includes research on market trends,

economic conditions, site constraints, regulatory

factors and off-site conditions. Daisy Linda Kone,

Land Development, BuilderBooks (10th Ed. 2006) at

4. This involves hiring or retention of a number of

professionals, including market research and

financial analysis consultants and project planners

(land planners, architects, landscape architect, land

use attorneys, engineers, and interior designers). Id.

at 11-16. The market professionals will research the

necessary data required to identify appropriate

buyer demographics, discern buyer preferences,

advertising campaigns, land acquisition costs, pro

forma and cash flow analysis. At the same time, the

project planners direct the actual project proposal

and can include issues such as the development of

the conceptual master plan, design, geotechnical

conditions, soil analysis, topographic factors, site2

Amici note that small development projects also face

significant hurdles. For example, one replacement single

family home on an existing single family lot, which received

community and all government approvals was held up for 11

years including Supreme Court review. The project was

ultimately abandoned by the homeowner who moved his family

to a different city. Berkeley Hillside Pres. v. City of Berkeley,

184 Cal.Rptr.3d 643 (March 2, 2015); Berkeley Hillside Pres. v.

City of Berkeley, 241 Cal.App.4th 943 (Oct. 15, 2015), reh’g

denied, 241 Cal.App.4th 943 (Feb. 03, 2016), review denied.

7

specific issues (such as dealing with hazards, rightsof-way, existing structures, historical districts). Id.

at 3.

After all that, the development team looks at the

regulatory scheme for the property. For example,

residential construction is one of the few industries

in which a government-issued permit is typically

required for each unit of production. The rules do

not stop there, as a constricting web of regulatory

requirements affects every aspect of the land

development and home building process, adding

substantially to the cost prior to construction. The

breadth of these regulations is largely invisible to

the public, and even the regulators themselves, yet

nevertheless has a profound impact on housing

affordability and homeownership.

Regulations that stem from federal legislation

include: Clean Water Act, National Environmental

Policy Act, Endangered Species Act, Energy Policy

Act, Occupational Safety and Health Act, Fair

Housing Act, and Safe Drinking Water Act. Paul

Emrath, How Government Regulation Affects the

Price of a New Home, Special Studies, (July 5, 2011),

http://www.nahbclassic.org/generic.aspx?

sectionID=734&genericContentID=161065&channel

ID=311 (last visited Aug. 15, 2020). Regulations

imposed by state and local governments are even

more numerous, covering zoning, earth moving,

sediment and erosion control, land dedication, gas

service, impact fees, tree preservation, long-term

facility maintenance, public service impacts,

transportation, setback requirements and burning

restrictions.

8

Land development in Hawaii is particularly

difficult. As Hawaii land use expert David Callies

notes, “[l]and use in Hawai’i continues to be the most

regulated of all the fifty states. According to many

sources, going from raw land to the completion of a

project may well average ten years, given that such

raw land is almost certainly classified by the State

Land Use Commission initially as either

Conservation or Agriculture (still, between them,

compromising 95 percent of the land area of the

state).” Regulating Paradise: Land Use Controls in

Hawai’i (2d Ed. 2010) at 1, https://pdfs.semantic

scholar.org/dcbb/ac8af6e99ba94717ead8a8e76748

5db04485.pdf.

A land use zoning reclassification in Hawaii from

agriculture to urban is no simple affair, as it

requires “public hearings, detailed plans and a lot of

time . . . . opponents of a development have an

opportunity to testify, provide their own expert

witnesses and cross-examine the witnesses for the

developer. Consequently, disputed cases can be

laborious affairs.” Dennis Hollier, Why Big

Development is so Difficult in Hawaii, Hawaii

Business Magazine (April 8, 2013), https://www.

hawaiibusiness.com/why-big-development-is-sodifficult-in-hawaii/.

Similar to home builders and land developers

across the county, the Petitioner here went through

enormous hurdles and processes at the front end of

the development process. Thus, the developer had

expectations of seeing the project through

completion. The Ninth Circuit’s decision wholly

ignores these expectations and shows why Penn

Central in particular needs this Court’s clarification.

9

Thus, we urge this Court to grant certiorari in this

case.

B. While Project Planning is Fluid, Development

Expectations Still Exist Throughout the

Decades of Time and Investment Needed to

Complete a Development Project.

It is high time to move past the notion that the

determinative criteria for determining investmentbacked expectations is “the regulatory environment

at the time of the acquisition of the property.” Bridge

at 634, citing Love Terminal Partners, L.P. v. United

States, 889 F.3d 1331 (Fed. Cir. 2018); but see,

William I. Gulliford, III, The Effect of Notice of Land

Use

Regulations

Upon

Investment-Backed

Expectations and Takings Challenges, 23 Stetson L.

Rev. 201, 217 (Fall, 1993) (“Distinct” implies that

the expectation must have some sharply defined and

tangible manifestation, such as a set of construction

plans, loan agreements, or a building permit.”).

Developers who have reasonably invested $20

million in up-front costs have expectations that the

property will be developed. See, e.g., Robert M.

Washburn,

“Reasonable

Investment-Backed

Expectations” As a Factor in Defining Property

Interest, 49 Wash. U. J. Urb. & Contemp. L. 63, 71

(Summer 1996)(citations omitted)(suggesting a

more holistic view of what constitutes expectations,

such as the degree of impairment of the property, the

uses available before the restriction, the

expectedness of the governmental action, whether

existing uses were permitted to continue, and the

harshness of the local regulatory and legal climate.).

10

These countless development steps mean nothing

to the Ninth Circuit, concluding “Bridge did not

expect any profit from its purchase of the property

unless and until the Commission amended the 1991

Order’s affordable housing condition.” Bridge at 634.

But this is not true. The Petitioner invested heavily

at the front end of project development, including

countless steps of due diligence, financing,

marketing, and more. 3 This was a true investment

in the project, not just mere land speculation. See,

e.g., Florida Rock Indus. v. United States, 791 F.2d

893, 905 (Fed. Cir. 1986), cert. denied, 479 U.S. 1053

(1987)(“In determining the severity of economic

impact, the owner’s opportunity to recoup its

investment or better, subject to the regulation,

cannot be ignored.”). Additionally, sudden changes

that affect these expectations cannot be dismissed as

mere fluctuations like the Ninth Circuit has done

here. See Kirby Forest Indus., Inc. v. United States,

467 U.S. 1, 14 (1984)(“We have frequently

recognized that a radical curtailment of a

Just compensation calculation in the eminent domain

context requires consideration of the “highest and most

profitable use for which the property is adaptable and needed

or likely to be needed in the reasonably near future . . . to the

full extent that the prospect of demand for such use affects the

market value while the property is privately held.” Olson v.

United States, 292 U.S. 246, 255 (1934). Why is it that the

Ninth Circuit literally ignored these considerations? But see,

Lost Tree Vill. Corp. v. United States, 787 F.3d 1111, 1118 (Fed.

Cir. 2015) (holding in the regulatory takings context that the

highest and best use of a parcel is “the reasonably probable and

legal use of vacant land or improved property, which is

physically possible, appropriately supported, financially

feasible, and that results in the highest value.”).

3

11

landowner's freedom to make use of or ability to

derive income from his land may give rise to a taking

within the meaning of the Fifth Amendment, even if

the Government has not physically intruded upon

the premises or acquired a legal interest in the

property.”).

In no other manufacturing or service industry is

a business required to provide 60% of its product at

a subsidized rate as the Petitioner was originally

required to do. Builders construct affordable housing

across the country, but it is offensive when the very

government requirement of building subsidized and

below market rate units is used by the Ninth Circuit

to explain why the developer has no reasonable

investment-backed expectations! Bridge at 634

(citing to the fact that the Petitioner would need to

invest more than $286 million in infrastructure and

development costs before seeing a return, and uses

this to justify its holding that there is no reasonable

investment-backed expectation at the time of the

taking.).

There is often an assumption that any sort of

delay in the development process is natural and

reality, and that if a developer is estopped from

building now, he may simply build in the future.

How is it fair that the very government that causes

the delay can then use such common delays to argue

that no taking has occurred. The notion that

investors and investment-backed expectations are

not affected and that builders can easily start over

time and time again is seriously misguided. The

impact on developers is severe but effectively

ignored by lower courts and now requires this

12

Court’s intervention. We respectfully urge this

Court to grant certiorari.

II. THE NUANCES OF TAKINGS LAW ARE

NOT SIMPLY ACADEMIC EXERCISES –

THE COUNTRY’S HOUSING CRISIS IS

EXACERBATED BY THE LACK OF

CLARIFYING STANDARDS.

A. Land Use Regulations and Litigation Are

Extremely Time and Cost Intensive; the Lack

of Uniform Application of Regulatory Takings

Standards Adds to This Cost.

One of the oft-overlooked aspects of housing

affordability is the impact of regulation 4 and the

impact of land use litigation. See, e.g., Tim Iglesias,

Housing Impact Assessments: Opening New Doors

for State Housing Regulation While Localism

Persists, 82 Or. L. Rev. 433, 436-37 (Summer

2003)(noting that “housing issues are often ignored

by local decision-makers” and that “the prospective

beneficiaries of thoughtful housing policies are often

not involved in decisions affecting them; [and]

Scholars at the University of California, Berkeley

surveyed planners and builders and found that the “only one

factor on which all interviewees and focus group participants

agreed: the most significant and pointless factor driving up

construction costs was the length of time it takes for a project

to get through the city permitting and development processes.”

Carolina Reid and Hayley Raetz, Perspectives: Practitioners

Weigh in on Drivers of Rising Housing Construction Costs in

San Francisco, U.C. Berkeley Terner Center (Jan. 2018), at 2,

https://ternercenter.berkeley.edu/uploads/San_Francisco_Co

nstruction_Cost_Brief_-_Terner_Center_January_2018.pdf.

4

13

decisions harming housing are often practically

irreversible. . . .”).

Of course, not all regulations are barriers to

housing, but as a federal publication notes, there is

a cost that should not be discounted:

Government rules requiring developers . . .

to undertake environmental impact

analyses are likely to generate higher costs

and lead to a diminished supply of housing

for two reasons. First, the review itself . . .

could be very costly. Second, potential

lawsuits . . . could be even more

problematic. . . . the developer would have

to factor into the project the costs of delay

and settlement. In some instances, this

uncertainty actually may deter builders

from undertaking projects, thereby

reducing the overall supply of housing and

increasing price.

Michael H. Schill, Regulations and Housing

Development: What We Know, Cityscape: A Journal

of Policy Development & Research, Vol. 8, No. 1

(U.S. Dept of Housing & Urban Development, 2005)

at 10, https://www.huduser.gov/periodicals/city

scpe/vol8num1/ch1.pdf.

On average, all regulations imposed by

government at all levels account for 24.3 percent of

the final price of a new single-family home built for

sale. Sixty percent of this -- 14.6 percent of the final

house price -- results from regulations imposed

during the lot's development. Further, regulation

accounts for almost 55 percent of a price of a

developed lot sold to a builder. The remaining 40 or

14

so percent -- 9.7 percent of the final house price -- is

the result of costs incurred by the builder after

purchasing the finished lot. Paul Emrath,

Government Regulation in the Price of a New Home,

Special Studies, May 2, 2016, https://www.nahb

classic.org/generic.aspx?genericContentID=250611.

Higher litigation costs invariably translate into

higher home prices, and this is not simply the fault

of the home builder. See, e.g., Lost Tree at 1118

(noting that the land owner “persuasively argues

that in the real world, real estate investors do not

commit capital either to undevelopable property or

to long, drawn-out, expensive and uncertain takings

lawsuits.”).

The lack of discernable regulatory takings

standards plays a direct role in housing

affordability. Due to the lack of clear regulatory

standards, takings lawsuits require heavy time and

financial resources. Even the Lucas case took over

five years to get to the Supreme Court and the legal

fees incurred were in excess of half a million dollars.

Sylvia R. Lazos Vargas, Florida's Property Rights

Act: A Political Quick Fix Results in A Mixed Bag of

Tricks, 23 Fla. St. U. L. Rev. 315, 400 (Fall, 1995).

Unfortunately, when landowners are faced with

the possibility of a decades-long court battle, they

often either acquiesce to the harsh demands of the

government, or they “scale down their plans (more,

perhaps, than the law requires), sell their land, give

up, go out of business, or are otherwise frustrated.”

Stein at 47.

Moreover, if the property owner does decide to go

to court, even a cursory examination of land use

15

cases included in just this brief presents a dreadful

outlook, as the arrival of the grim reaper often

occurs before resolution of the case. See e.g., Stein at

47 (“A foreclosure sale purchaser, for example, was

the landowner in [a lawsuit]: The claim survived

even though the original developer did not.”); Press

Release, Pacific Legal Foundation, PLF Client Coy

Koontz Jr. is Honored by Owners’ Counsel of America

(Jan.

27,

2014),

https://pacificlegal.org/

press-release/plf-client-coy-koontz-jr-is-honored-byowners-counsel-of-america/ (Coy Koontz, Sr. filed

the original lawsuit 20 years before the Supreme

Court made its decision in 2013. Koontz Sr. passed

away in 2000). Sherman v. Town of Chester, 752 F.3d

554, 560 (2d Cir. 2014) (“ . . . . Sherman became

financially exhausted to the point of facing

foreclosure and possible personal bankruptcy. And

while the case was pending on appeal, Sherman

died.”).

B. Large Litigation Costs Are Partially Borne

By the Homebuyer in One Way or Another.

Land use decisions in particular have an impact

far beyond administrative hearing rooms and

courtrooms. These decisions impact whether safe

and decent housing units are built, regardless of

whether these units are market rate or subsidized

by the builder. 5 These units provide fundamental

Some land use litigation even impacts housing after it

is built. One anecdotal example concerns a 299-unit tower

(with 45 below-market units). After the building was

completely constructed and new residents moved in, a lawsuit

was filed challenging the city’s approval of the project claiming

that the developer did not properly preserve part of a 1920s-

5

16

benefits that are essential to the well-being of

families, communities, and the Nation.

Homeownership in particular is beneficial: it is

crucial for wealth creation, as a portion of a

homeowner’s mortgage payment every month is set

aside and becomes part of the homeowner’s equity.

The latest of the Survey of Consumer Finances,

published by the Board of Governors of the Federal

Reserve System, reports that the primary residence

accounts for about one-quarter of all assets held by

households by 2016, ahead of other financial assets,

business interests and retirement accounts. Jesse

Bricker, Arthur B. Kennickell, et al., Changes in

U.S. Family Finances from 2007 to 2010: Evidence

from the Survey of Consumer Finances, Federal

Reserve Bulletin, June 2012, Vol. 98, No. 2,

https://www.federalreserve.gov/pubs/bulletin/201

2/PDF/scf12.pdf. Yet, owning a suitable home is

increasingly out of financial reach for many

households.

Land use regulatory takings cases are extremely

expensive, and are aggregated into the cost of a

housing project. Future homeowners bear the

burden of these litigation costs in the form of higher

housing costs.

NAHB economists have studied the impact of

increases in housing prices on the number of eligible

era restaurant that was an Old Spaghetti Factory location. All

the residents were evicted for three years while the case was

pending. California News Wire Servs., Vacant Sunset Gordon

Tower Approved for Apartments, Dec. 12, 2018 9:44pm,

https://patch.com/california/hollywood/vacant-sunsetgordon-tower-approved-apartments.

17

buyers in a given market. Na Zhao, NAHB 2020

“Priced-Out” Estimates, Eye on Housing Blog (Jan.

24, 2020), http://eyeonhousing.org/2020/01/nahb2020-priced-out-estimates/ (last visited Aug. 18,

2020). These studies are based on mortgage

underwriting standards, through which it is possible

to calculate the number of households that can

qualify for a mortgage before an increase in a

representative home price and the number that can

qualify for a mortgage after a price increase. The

difference in these two numbers represents the

number of households that are “priced out” of the

market for a representative home.

Even a modest increase in the price of a home has

drastic effects on housing affordability for a large

number of potential home buyers. Nationally, each

$1,000 increase in home price to the ultimate buyer

result in 158,857 households “priced-out” of a

median-priced new home in 2020. Id. Thus, the cost

of litigation takes its toll, as even a modest housing

price increase by the builder due to litigation has

drastic effects on housing affordability for a large

number of potential home buyers.

The cost and time associated with delays and

litigation can therefore add tens of thousands of

dollars to the cost of building a modest single-family

home. It is important for this Court to recognize that

regulatory takings litigation is needlessly

complicated and that regulatory taking standards

have not been uniformly applied, thus needing this

Court’s intervention. We urge this Court to grant

certiorari.

18

CONCLUSION

For the foregoing reasons, amici curiae the

National Association of Home Builders of the United

States and the California Building Industry

Association respectfully submit the Petition should

be granted.

Dated: August 21, 2020

NICK CAMMAROTA

CALIFORNIA BUILDING

INDUSTRY ASS’N

1215 K Street

Suite 1200

Sacramento, CA 95814

(916) 443-7933

ncammarota@cbia.org

DEVALA A. JANARDAN*

THOMAS J. WARD

NATIONAL ASSOCIATION

OF HOME BUILDERS

OF THE U.S.

1201 15th Street, N.W.

Washington, D.C. 20005

(202) 266-8200

djanardan@nahb.org

* Counsel of Record