Amicus Curiae Brief — Tahoe-Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency

Supreme Court,

Sactembe la 200 | 7ILED

3

No. 00-1167 @) SEP 12 2001

CLERK

In The

Supreme Court of the United States

TAHOE SIERRA PRESERVATION COUNCIL, INC., et al.

Petitioners,

v.

TAHOE REGIONAL PLANNING AGENCY, et al.,

Respondents.

On a Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF AMICUS CURIAE

NATIONAL ASSOCIATION OF HOME BUILDERS

IN SUPPORT OF PETITIONERS

*CHRISTOPHER G. SENIOR

DAVID CRUMP

NATIONAL ASSOCIATION OF

HOME BUILDERS

1201 15™ STREET, NW

WASHINGTON, DC 20005

(202) 266-8200

Attorneys for Amicus Curiae

*Counsel of Record

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TABLE OF CONTENTS

INTEREST OF THE AMICUS CURIAE

SUMMARY OF ARGUMENT

ARGUMENT

I. MORATORIA SHOULD BE ANALYZED AS

TAKINGS UNDER THE CONSTITUTION, IN

RECOGNITION OF THE FACT THAT THEY

HAVE THE SAME EFFECT ON AS ANY OTHER

GOVERNMENTAL REGULATORY SCHEME

WHICH FREEZES OR ELIMINATES

ECONOMICALLY VIABLE USE OF

PROPERTY

A. MORATORIA ARE NOT MERE PLANNING

B. LAND IS FUNDAMENTALLY DIFFERENT

FROM OTHER PROPERTY, AND IMPACTED

FAR DIFFERENTLY BY A TEMPORARY

FREEZE ON USE

C. CALCULATION OF ACTUAL DAMAGES

SHOULD BE THE PRIMARY ANALYSIS IN

THE COMPENSATION PHASE OF A

TAKINGS CASE, NOT WHEN

DETERMINING WHETHER OR NOT A

TAKING HAS OCCURRED......00.00.0.......000000. 8

CCRIUUE RAEI ON soxccseccoscssssevessnnsiesnsennieuniinieeniiaiiianannan 12

TABLE OF AUTHORITIES

CASES Page(s)

Agins v. City of Tiburon, 447 U.S. 255 (1980) ..........00. l

City of Monterey v. Del Monte Dunes at Monterey, Lid.,

rr nce ens enetemnsemesnccmnascnensseecs 2

Dolan v. City of Tigard, 512 U.S. 374 (1994) ..........0.. 2

Eberle v. Dane County Board of Adjustment,

I, III 0c scsssssnssssssennseconecoes 4

First English Evangelical Lutheran Church v. County of

Los Angeles, 482 U.S. 304 (1987) ......cccccccccccccccesneeenenenees 3

Florida Rock Indus. v. United om, 45 Fed. Cl. 21

LALA TEED 9

Hughes v. Washington, 389 U.S. 290 (1967) ...........00 1]

Keshbro, Inc. et al. v. City of Miami, et al., 2001 WL

eraser rn esnnensencnsennsesanesecnesees 4

Lopes v. City of Peabody,

718 N.E.2d 846 (Mass. 1999) .0.......cccccccccssceeeeeeeeeeeeeennees 4

Loretto v. Teleprompter Manhattan CATV Corp.,

TT TE ll

Loveladies Harbor, Inc. v. United States, 28 F.3d 1171

ATS 1

iv

Lucas v. South Carolina Coastal Council,

eS Ce UE ccurersntuiccnsnntiniaesnenenceninsatsitinaniiantens l

MacDonald, Sommer & Frates v. Yolo County,

Gar Cs TD cenneneccnrictnnctininennsinitsilipeptiiainiinnsidiinns l

Mayhew v. Town of Sunnyvale, 964 S.W.2d 922

SP CITIIEED : diitecnmrcnncnsinpnaniaiinniantiibininiaaiiiainaitmieaathliaatt, 11

Nollan vy. California Coastal Comm'n,

ae EET UITE cxinasdinsninnsninnsespeiiitiniisiaiiiitantattiniialtintatats l

Palazzolo v. Rhode Island, 533 U.S. _, 121 S.Ct. 2448

GIUTIITED ‘sevintensscnnnhesuiniennessepmnimnntaiiiictsecatinmmivanmstatastatainaiaiel 2

San Diego Gas & Electric Co. v. City of San Diego,

Se Ci UIEED sustsnintcinienintetenreentnsninntenaitaniiasiatanianiies l

Steel v. Cape Corp., 667 A.2d 634 (Md. App. 1996) .....4

Suitum v. Tahoe Regional Planning Agency,

PRED CIE IENTED sstrcnnicciciscsiienesiiininitanndiiiatbiintintsintsli nessa 2

Williamson County Regional Planning Comm'n

v. Hamilton Bank, 473 U.S. 172 (1985) .......cccccccccceceeeees l

Woodbury Place Partners v. City of Woodbury, 492

D.W.2d 258 (Minn. Ct. App. 1993) .........ccccccccccceseeeeeees 4

Yee v. City of Escondido, 503 U.S. 519 (1992) ............... l

LEGAL JOURNALS & REFERENCE BOOKS

Black's Law Dictionary 1026 (7" ed. 1999) ...........000000+ 3

Merriam-Webster's Dictionary of Law (1996) . ...........++: 3

J. Margaret Tretbar, Calculating Compensation for

Temporary Regulatory Takings, 42 U. Kan.L.Rev. 201

Aa 4,9

Scott E. Mollen, Moratorium Declared Unconstitutional,

UE 6

David Schultz, The Price is Right! Property Valuation

For Temporary Takings, Hamline L. Rev. 281 (1998) .10

NEWSPAPERS

Stephany Boyd, New Vote Possible for Blue Hill Ban,

Bangor Daily News, March 26, 1998 ..........ccccccsseeeeeeees 5

George Stankevich, Moratoria on Development, The

Incependent (accessed Sept. 10, 2001)

<www.indyeastend.com/lex/0527981x.htm> . ..........:++++ 3

Steve Chawkins, Ventura Mulls Building Moratorium, Los

Angeles Times, June 4, 2001, at B4 .............cccceeeeenenenens 5

John Fuchs, Moratorium No Substitute for Poor Planning,

Milwaukee Journal-Sentinel, February 14, 1998, at 2 ....5

vi

Luis Monteagudo Jr., Planners Sidestep Building

Moratorium Issue, San Diego Union-Tribune, July 14,

EID cenmscconmavssccsannnnnmenneneitetenetiniuninmatiimeniisess 5

Mike Lindbolm, Newcomers Opposition To Development

Refueled Anti-Growth Movement, Seattle Times, June 4,

SOUR USTED cccesensncssesnnsstamacsintainennesnciinantninsanciiiiantioinstiaail 6

INTERESTS OF THE AMICUS CURIAE

The National Association of Home Builders (“NAHB”)

has received the parties’ written consent to file this brief as

amicus curiae in support of the petitioners. Letters of

consent have been filed with the Clerk of the Court.'

NAHB represents over 203,000 builder and associate

members throughout the United States. Its members

include not only people and firms that construct and

supply single family homes, but also apartment,

condominium, multi-family, commercial and industrial

builders, land developers, and remodelers. It is the voice

of the American shelter industry. NAHB, therefore, is

concerned with any judicial decision that calls into

question the remedies available to its members under the

U.S. Constitution, particularly as here when a lower court

has so clearly misinterpreted a decision of the U.S.

Supreme Court.

NAHB has been before the Court as an amicus curiae

or as “of counsel” to the landowner in a number of cases

involving the rights of property owners and the remedies —

available to them when their rights are interfered with.

These include Agins v. City of Tiburon, 447 U.S. 255

(1980), San Diego Gas & Elec. Co. v. City of San Diego,

450 U.S. 621 (1981), Williamson County Regional

Planning Comm'n v. Hamilton Bank, 473 U.S. 172 (1985),

MacDonald, Sommer & Frates v. Yolo County, 477 U.S.

340 (1986), Nollan v. California Coastal Comm'n, 483

U.S. 825 (1987), Yee v. City of Escondido, 503 U.S. 519

(1992), Lucas v. South Carolina Coastal Council, 505 U.S.

ae

' Pursuant to Rule 37.6 of this Court, amicus states that its counsel

in whole or part by counsel for a party, and no one other than amicus

made a monetary contribution to its preparation.

2

1003 (1992), Dolan v. City of Tigard, 512 U.S. 374 (1994),

Suitum v. Tahoe Regional Planning Agency, 520 U.S. 725

(1997), City of Monterey v. Del Monte Dunes at Monterey,

Lid., 526 U.S. 687 (1999), and Palazzolo v. Rhode Island,

533 US. ---, 121 S.Ct. 2448 (2001).

SUMMARY OF ARGUMENT

By excluding governmentally imposed building

moratoria from review as takings of property, the U.S.

Court of Appeals for the Ninth Circuit has misread this

Court’s opinion in First English and stripped property

owners of their right to petition the courts for redress for

what is unquestionably a governmental action which

blocks the full and fair exercise of the rights of property

ownership. By looking at governmental intent in adopting

moratoria rather than the effect such regulatory acts have

on property, the Ninth Circuit further misapplied well-

settled takings law precedent.

This Court must not only reverse the erroneous

decision below, but should also provide a clear analytical

framework for all courts to utilize when analyzing

moratoria as temporary takings. This analysis should draw

upon this Court’s prior takings jurisprudence, including

precedent on distinct investment-backed expectations.

Such an analysis should use these expectations as both a

threshold test and, more comprehensively, in determining

the actual amount of just compensation owed a property

owner. This two-stage review would help end the

confusion which leads too many courts to confuse the

amount of just compensation owed with the existence of

the right to just compensation itself, a problem which is

particularly acute when analyzing compensation due as the

result of moratoria.

3

ARGUMENT

I. MORATORIA SHOULD BE ANALYZED AS

TAKINGS UNDER THE CONSTITUTION, IN

RECOGNITION OF THE FACT THAT THEY

HAVE THE SAME EFFECT ON AS ANY

OTHER GOVERNMENTAL REGULATORY

SCHEME WHICH FREEZES OR

ELIMINATES ECONOMICALLY VIABLE

USE OF PROPERTY.

It is well-settled law that when a governmental

regulatory action strips property of its essential value that a

taking has occurred requiring the payment of just

compensation. In First English Evangelical Lutheran

Church v. County of Los Angeles, 482 U.S. 304 (1987),

this Court recognized that even time-limited regulations

which freeze the use of property may also be compensable

takings.

Black’s Law Dictionary defines moratoria as “the

suspension of a specific activity’,” and ‘Merriam-Webster’s

Dictionary of Law adds that they are “a waiting period set

by an authority’.” A planning moratorium in particular is

“the most extreme land-use action that a municipality can

take because it suspends completely the rights of owners to

use their property.”’ While moratorium come in many

variations, they all prohibit the use of property in some

manner, for some length of time, and for some at least

allegedly legitimate purpose.

But regardless of their form, the economic

consequences of moratoria are real, and they are

? Black's Law Dictionary 1026 (7" ed. 1999).

> Merriam-Webster 's Dictionary of Law (1996).

* George Stankevich, Moratoria on Development, The Independent

(accessed Sept. 10, 2001) <www.indyeastend.conv/lex/052798Ix.htm>

permanent. That the actual regulation itself is ‘temporary’

merely impacts the degree of just compensation owed, not

the existence of the injury itself. Some examples of the

real economic consequences inflicted on property owners

by temporary restrictions include loss of rents‘, loss of

commercial lease payments’, loss of development profits’,

loss of interest paid on secured loans related to property

development, loss of access to the property’, and the

payment of real estate taxes and assessments during the

period of restriction’.

Indeed, moratoria may “restrict not only the

landowner's ability to develop the property, but also affect

selling prospects and any expectations of income

producing potential.”"* Moratoria can have serious

economic consequences.

Had some form of what was just described carried

some other name, it would be hard to imagine how any

court would not at least analyze such an exercise of raw

governmental power as a taking. Yet, once the label

“moratoria” is applied, along with the concept of a

“limited duration,” courts such as the one below often

throw up their hands and declare that takings law simply

does not apply. These decisions proceed from

fundamental misconceptions of both law and fact.

; ym , Inc., et al. v. City of Miami, et al., 2001 WL 776555 (Fla.

* Woodbury Place Partners v. City of Woodbury, 492 N.W. 2d 258

(Minn. Ct. App. 1993)

, Steel v. Cape Corp., 677 A.2d 634 (Md. App. 1996)

Eberle v. Dane County Board of Adjustment, 595 N.W. 2d 730

(Wis. 1999)

Opes v. City of Peabody, 718 N.E.2d 846 (Mass. 1999)

Tretbar, Calculating Compensation for Temporary Regulatory

Takings, 42 U. Kan.L.Rev. 201, 217 (1993).

A. MORATORIA ARE NOT “MERE

PLANNING DELAYS.”

There are those who claim, some more sincerely than

others, that moratoria are nothing more than mere delays

inherent in the land use approval process, much like time

spent reviewing permit applications or the time spent in

public hearings.

Nothing could be further from the truth.

One need go no further than a local newspaper to see

that moratoria are often a political tool rather than one

used selectively by planners. In Bangor, Maine, “[a] new

petition drive may result in another vote on a proposal to

temporarily ban large commercial [construction]

projects.”"' “In the face of a serious election challenge, the

current Brookfield administration has declared a building

moratorium on Captiol Drive,” reads the first line of a

story from Wisconsin.” In San Diego, California,

“{cJounty planning commissioners yesterday declined to

get involved in the debate over a proposed building

moratorium ... . ‘It’s a highly political issue,’ said [one]

commissioner.” “In the wake of bitter neighborhood

opposition to a proposed McDonald’s, Ventura officials

are considering an eight-month ban of most commercial

development,” reads another report."

These stories are representative of what can only be

described as nakedly political efforts to strip away the

"' Stephany Boyd, New Vote Possible for Blue Hill Ban, Bangor Daily

News, March 26, 1998.

"2 John Fuchs, Moratorium No Substitute for Poor Planning,

Milwaukee Journal Sentinel, February 14, 1998, at 2.

'3 Luis Monteagudo Jr., Planners Sidestep Building Moratorium

issue, San Diego Union-Tribune, July 14, 2001, at B3:2.

'4 Steve Chawkins, Ventura Mulls Building Moratorium, Los Angeles

Times, June 4, 2001, at B4.

property rights of the few for the satisfaction of the many.

In fact, moratoria are even used to override professional

land use management plans adopted by communities but

later opposed by the local ‘not-in-my-backyard’ choir."*

Moratoria, if anything, are certainly not normal parts of the

planning process.

One legal newspaper summed up the role that

moratoria are actually playing in the development process.

“In an effort to forestall development, towns will

sometimes enact moratorium statutes. Developers

confronted with such moratorium statutes must decide

whether to risk antagonizing town officials by litigating or

wait for the moratorium to be lifted.”

As such, cowts can not reasonably consider moratoria

to be within the scope of a normal plan or permit review

process. They are powerful, damaging regulations, which

need to be considered in the same legal light as any other

governmental action that takes property.

B. LAND IS FUNDAMENTALLY

DIFFERENT FROM OTHER

PROPERTY, AND IMPACTED FAR

DIFFERENTLY BY A TEMPORARY

FREEZE ON USE.

‘in analyzing the petitioners’ claims, the Ninth Circuit

Court of Appeals suggests two categories of economic

consequences resulting from temporary property

restrictions. In the first instance, a permanent regulation

subsequently invalidated that results in the loss of all

economic, beneficial or productive use, while in effect, is

'S See, e.g., Mike Lindbolm, Newcomers Opposition To Development

Refueled Anti-Growth Movement, Seattle Times, June 4, 1999, at B3.

'® Scott Mollen, Moratorium Declared Unconstitutional, 206 N.Y.

L.J.4 (1991).

categorized as a “temporary taking”, compensable under

the Fifth Amendment.

In the second instance, a temporary regulation that

results in a loss of all economic, beneficial or productive

use, while in effect, is categorized by the court as a mere

fluctuation in value. The Ninth Circuit perceives this

fluctuation like a series of tickertape readings of stock

market price quotations, even though the actual economic

loss may be identical to that in the first category.

An ownership interest in land differs greatly from an

ownership interest in a share of stock. Land is tangible;

stock is intangible. Stock will fluctuate in value from the

time it is purchased until the time it is sold. Land will also

fluctuate in value from the time it is purchased, until sold.

However, unlike stock, in that interval between purchase

and sale, land may be used. It may be farmed, leased, built

upon, subdivided, mined, or employed for income

production in countless ways. Given adequate resources,

the only limits are those of imagination, and government

restrictions.

The economic effect from the loss of all beneficial,

productive or economic use of land is a permanent effect

that is not restored by the cessation of the temporary

regulation. A crop has not been harvested, rents have not

been collected, income has not been realized.

It is this concept that the Ninth Circuit, and other

courts, fails to comprehend. If a governmental regulation

halted pension payments to retirees, no one would accept

an argument that no taking would occur if the

grandchildren of those individuals were later able to

collect the money, without interest, years later. Yet that

argument is made regularly with regard to real property

whenever a court claims that “sometime in the future” the

8

land can still be used, even if it that means by some future

owner (including the descendants of the present owner).

That land is perpetual is used to justify stripping away

present value on the basis of potential future uses,

conveniently ignoring the reality of the saying ‘in the long

run, we’re all dead’ — including the current owners of that

moratoria-strangled parcel of real property.

This Court must clearly explain this simple but deeply

misunderstood reality through this opinion, and remind

other courts that when real property is taken, justice

delayed is indeed justice denied. That real property may

last indefinitely does not support the proposition that it can

never suffer a temporary taking.

C. CALCULATION OF ACTUAL

DAMAGES SHOULD BE THE

PRIMARY ANALYSIS IN THE

COMPENSATION PHASE OF A

TAKINGS CASE, NOT WHEN

DETERMINING WHETHER OR NOT

A TAKING HAS OCCURRED.

Courts such as the Ninth Circuit have consistently

confused the establishment of a takings claim with the

calculation of the precise degree of just compensation

owed a private property owner. Time and again judges

have focused on how little actual damage they perceive

has occurred in the takings case before them, basing their

judgments on little more than the self-protective pleas of

local governments or their own often minimal

understanding of the land development process.

The demand that petitioners prove they have lost

everything in order to receive any compensation at all has

led to comments like this from Judge Smith of the Federal

Court of Claims:

The notion that the government can take

two- thirds of your property and not

compensate you but must compensate you if

it takes 100% has a ring of irrationality, if

not unfairness, about it. If the law said that

those injured by tortious conduct could only

have their estates compensated if they were

killed, but not themselves if they could still

breathe, no matter how seriously injured, we

would certainly think it odd, if not barbaric.

Yet in takings trials, we have the

government trying to prove that the patient.

has a few breaths left, while the plaintiffs

seek to prove, often at great expense, that

the patient is dead. This all-or-nothing

approach seems to ignore the point of the

Takings Clause.

Florida Rock Indus. v. United States, 45 Fed. Cl. 21, 23 -

24 (1999).

Indeed, it does ignore the point of the Takings Clause

to rule that while a property owner may have suffered

grievous financial loss as the result of a governmental

moratorium, if even a bare smidgen of value remains — at

least to the court — no takings claim can stand.

That calculating actual damages in a moratorium case

can present somewhat of a challenge is understandable.

“Identification of what the property owner has lost as a

result of the land- use regulation in question is not an easy

process.”"? Another commentator notes that, “(ujnlike

permanent takings, where the condemnor pays the owner

the full fair market value for the property acquired,

"’ Tretbar, 42 U. Kan. L. Rev. at 216.

10

temporary takings suggest alternative compensatory

schemes simply because they are temporary.”

Unlike most other regulations, moratoria place an

immediate and complete freeze on the use of property.

While this freeze is theoretically finite, during its existence

an owner losses 100% of his ability to use his property in

any way contrary to the restrictions imposed under the

moratoria. Of course, due to the nature of real property,

the land is unlikely to have lost 100% of its value during

the moratorium, though the actual damages could be

substantial.

What may work most efficiently to balance such a

difficult legal equation is a two-step takings analysis using

the well-developed concept of distinct investment-backed

expectations. First, a court would use these investment-

backed expectations as a simple threshold requirement,

where proof of deprivation of economically viable use of

property would be enough to show the existence of a

taking. Second, these same distinct expectations would be

weighed as the central component of the debate over

compensation, where each side would be free to battle over

how much - if anything — should actually be awarded.

Rather than forcing plaintiffs to show the elimination

of all economic value to prove governmental liability for a

takings claim, a plaintiff would be required to show only

the existence of distinct, investment-backed expectations

and evidence indicating the degree to which they have

been frustrated. The government, at this threshold stage,

could present evidence challenging the degree of impact,

or the validity of the expectations in the first place.

"* David Schultz, The Price is Right! Property Valuation For

Temporary Takings, 22 Hamline L. Rev. 281, 301 (1998).

11

However, instead of battling over percentages of loss

and the full impact of the regulation upon the property,

here a court would need only ascertain that |) distinct

investment-backed expectations exist, and that 2) they

have been frustrated because the property owner has been

denied the ability to put his land to economically viable

uses for a period of time.

That such a focus is not only reasonable but central to

most takings analysis is echoed throughout cases of this

Court and others. “The economic impact of the regulation,

especially the degree of interference with investment-

backed expectations, is of particular significance.” Loretto

v. Teleprompter Manhattan CATV Corp., 458 U.S. 419,

426 (1982); “{I)}nterference with distinct investment-

backed expectations, [is] a way of limiting takings

recoveries to owners who could demonstrate that they

bought their property in reliance on a state of affairs that

did not include the challenged regulatory regime.”

Loveladies Harbor, Inc. v. United States, 28 F.3d 1171,

1177 (Fed. Cir. 1994); “Even if the governmental

regulation has not entirely destroyed the property's value, a

taking can occur if the regulation has a severe enough

economic impact and the regulation interferes with distinct

investment-backed expectations. . . . The reasonable

investment-backed expectation of the claimant is critical to

this analysis. . .” Mayhew v. Town of Sunnyvale, 964

SW2d 922, 937 (Texas 1998).

This focus on effect would also steer the takings debate

away from the far too commonly addressed and

constitutionally invalid focus on governmental intent.

“(T]he Constitution measures a taking of property not by

what a State says, or by what it intends, but by what it

does.” Hughes v. Washington, 389 U.S. 290, 298 (Stewart,

J. concurring).

12

CONCLUSION

The National Association of Home Builders

respectfully requests this Court to rule that moratoria

should indeed be analyzed as temporary takings for all the

reasons described above, and to reverse the decision ef the

U.S. Court of Appeals for the Ninth Circuit.

DATED: September 12, 2001

Respectfully submitted,

*Christopher G. Senior

David Crump

National Association

of Home Builders

*Counsel of Record for

Amicus Curiae