Opposition Brief — Kelly v. Tahoe Regional Planning Agency
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No. 93-548
In The
Supreme Court of the United States
October Term, 1993
= e a
WILLIAM CODY KELLY, Trustee,
Petitioner
THE STATE OF CALIFORNIA,
THE STATE OF NEVADA
PAHOE REGIONAL PLANNING AGENCY,
> » Ti. 4
Re Sponde HIS
=—@
Petition For Writ Of Certiorari
To The Supreme Court Of The State Of Nevada
———-—- ——_— @—- —
BRIEF IN OPPOSITION OF RESPONDENT
TAHOE REGIONAL PLANNING AGENCY
e —
Gary A. Owen
CROWELL, SUsICH, OWEN &
TACKES
510 West Fourth Street
P.O. Box 1000
Carson City, Nevada 89702
(702) 882-1 31]
Counsel of Record
for Respondent
T ? » i rm] , 4 . .
Lu/loe Regional PlaQnnine AVeNcyYy
QUESTIONS PRESENTED
1. Should this Court grant certiorari to consider a
Fifth Amendment takings decision, reached after nearly
five weeks of trial and unanimously affirmed by the
Nevada Supreme Court, emanating from the unique regu-
lations of the Tahoe Regional Planning Agency governing
environmental protection in the complex ecosystem of the
Lake Tahoe Basin, where those-regulations, as applied to
six hilltop lots owned by Petitioner William Cody Kelly,
permit residential use as reflected by the lots’ conceded,
undiminished market value of between $2,000,000 and
$4,000,000?
2. Did William Cody Kelly suffer denial of economi-
cally viable use of those lots, where they originally were
part of an undivided, 44-acre parcel acquired by him for
$500,000 and upon which rested the Fleischmann Man-
sion, the object of his desire for the land, where Kelly
lived in the mansion 18 years, later selling it for
$1,100,000, and divided the remainder of the parcel into
39 executive, residential lots, sales of which, excluding
those at issue but including the mansion, have produced
approximately $5,600,000?
3. Should this Court grant certiorari to review a
ruling by the Nevada trial court, affirmed without com-
ment by the Nevada Supreme Court, that the Tahoe
Regional Planning Compact preempts Article 1, Section 8,
of the Nevada Constitution, the takings proscription,
where Kelly failed before the Nevada Supreme Court - as
he fails before this Court —- to demonstrate how this case
would have been decided differently under the Nevada
ii
QUESTIONS PRESENTED - Continued
Constitution, as opposed to the Fifth Amendment to the
United States Constitution, and where decisions of the
Nevada Supreme Court regularly intermix discussions of
the state and federal Takings Clauses?
lii-
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ............ccccceccccees i
ee, iii
8. vi
TABLE OF ABBREVIATIONS ..................... x
I. STATEMENT OF THE CASE .................. 2
fe Weemneeeee Ge BPE CASE... 1c ccecscscves 2
B. THE LAKE TAHOE BASIN................. 3
C. KELLY’S ACQUISITION OF THE 44-ACRE
TST TEE eRe Tee Tee eT eTT Ter 5
D. THE 1969 TAHOE REGIONAL PLANNING
FEE 6
E. THE CREATION OF UPPAWAY ESTATES... 7
F. IMPLEMENTATION OF THE 1980,
AMENDED TAHOE REGIONAL PLANNING
a ike ceed eewese 9
a. re erty 9
ES. 10
SS SG aanawews 13
EY Nc awcckvecnevsevecveaesces 14
G. THE ECONOMIC IMPACT OF TRPA’S REG-
EE 17
Il. REASONS FOR DENYING THE PETITION... 18
EE 18
iV
TABLE OF CONTENTS - Continued
Page
B. THE ISSUES HERE - ASSUMING THEY
CLEARLY EMERGE AT ALL - ARE NOT
NATIONALLY IMPORTANT QUESTIONS
CA Ps CANE bdo vdceeteecsbeueiacess 19
C. THE NEVADA SUPREME COURT PROP-
ERLY CONDUCTED THE AD HOC, FAC-
TUAL INQUIRY: THE EVIDENCE
DEMONSTRATED THE HILLTOP LOTS
WERE ALLOWED BENEFICIAL, RESIDEN-
TIAL USE AND MAINTAINED HIGH MAR-
KET VALUES REFLECTING IT. KELLY’S
REASONABLE, INVESTMENT-BACKED
EXPECTATIONS ALSO WERE SATISFIED... 20
1. The Ad Hoc, Factual Inquiry .......... 20
2. Kelly Has Suffered No Unconstitutional
Pere ere 21
3. Kelly’s Reasonable, Investment-Backed
Expectations Have Been Satisfied ...... 22
4. Kelly’s Penn Central Argument Need Not
Be Reached, But In Any Event Does Not
Fit This Case And Presents No Reason
pt fe RR Re ear ae eae 24
a. The Nevada Supreme Court
Employed Grounds Other Than
“The Penn Central Quotation” To
Decide This Case, Rendering It
Unnecessary To Reach The Issue... 25
TABLE OF CONTENTS - Continued
Page
b. This Case Presents The Same “Fac-
tual Context” As Kelly Insists Is
Necessary for A Correct Reading of
FW RE 4b dca cy ccceiceecnaeee rs 25
c. Kelly’s Approach Is Designed To Cir-
cumvent Candid Analysis of His
Reasonable, Investment-Backed
PPT ere eee 27
D. KELLY’S PREEMPTION ARGUMENT IS
BEREFT OF VITALITY: HE FAILS HERE -
AS HE FAILED BELOW - TO SHOW HOW
THE CASE WOULD HAVE BEEN DECIDED
DIFFERENTLY UNDER THE NEVADA
CAPER PEEING oo x> vdnvewastavecevausure 28
HE. CONCLUSION... ooo o cc orcccccccieneen.. 30 a
vi
TABLE OF AUTHORITIES i
Page
CASES:
Agins v. Tiburon, 447 U.S. 255 (1979) ......... cece eee 20
Alper v. Clark County, 93 Nev. 569, 571 P.2d 810
PEG CACC eee ea eeh ete Cad bade ture deuaeeesenEenkes 29
Carr-Bricken v. First Interstate Bank, 105 Nev. 570,
Peeve ey COUN es cod ev cody awe eee eeteneteiaaes 28
Ciampitti v. United States, 22 Cl. Ct. 310 (1991) ...... 27
City And County of San Francisco v. Golden Gate
Heights Investment, 14 Cal.App.4th 1203 (1993). .... 27
Connolly v. Pension Benefit Guaranty Corp., 475 U.S.
RR eae 24
County of Clark v. Alper, 100 Nev. 382, 685 P.2d 943
Co Sere rrr rrr errr erry corre rr prac 29
Daines v. Markoff, 92 Nev. 582, 555 P.2d 490 (1976) .... 29
Deltona Corp. v. United States, 657 F.2d 1184 (Fed.
Cir. 1981), cert. denied, 455 U.S. 1017 (1982) ....... 27
jentgen v. United States, 657 F.2d 1210 (Ct. Cl. 1981) .... 27
Keystone Bituminous Coal Assn. v. DeBenedictis, 480
Shs Pt DOMED bw ereseencedse evade beeewd eee ceN ek: 20
Lucas v. South Carolina Coastal Council, 505 U.S.
oo ee ae, me CRUE v o5 0:0 000 0eddeueeneees 21, 22
Nollan v. California Coastal Comm’n, 483 U.S. 825
STE dn 54.60% + 0-90 0:05.00020000505 ce RETeNS Naeen eee 27
a
Vil
TABLE OF AUTHORITIES - Continued
Pace Resources, Inc. v. Shrewsbury Tp., 808 F.2d 1023
(3d Cir. 1987), cert. denied, 482 U.S. 906 (1987),
reh’g denied, 483 U.S. 1040 (1987)...............
Penn Central Transp. Co. v. New York City, 438 U.S.
Pe CRN rs 005 4exececatvensnneneeent 22, 24, 25,
People ex rel. Younger v. County of El Dorado, 96 Cal.
Rptr. 553, 487 P.2d 1193 (Cal. 1971)...........
People of California v. Tahoe Regional Plan Agency,
FOO F.2G TIES CU COs, B90)... woe cccesceess 9,
People of California v. Tahoe Regional Planning
Agency, No. CIV-S-84-0561-EJG, United States
District Court, Eastern District of California
SU v.64 6etbreuctedcadsucseneeeasnauanivanai
People of St. of Cal. ex rel. Younger v. Tahoe Reg. P.
Ag., 516 F.2d 215 (9th Cir. 1975), cert. denied, 423
Sa Ne PE 0 Sb Suc decidcectscsness Coecenaes
Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984) .
Sproul Homes v. State ex rel. Dep't Hwys., 96 Nev.
Sees Se Wee Se CONE oS ooccncccwssaceeeeuase
Tacchino v. State ex rel. Dep't Hwys., 89 Nev. 150,
Det Hide EAE COOTNE cates bvicsctcsiccevestecce
Tahoe Regional Planning Agency v. “Douglas County,
et al., No. R-75-130 (D. Nev., Oct. 24, 1975)...
Tahoe-Sierra Preservation v. Tahoe Reg. Planning, 938
ee Be SUE Se NER c ccc cues sccnscvcsseenes
Page
ree 7
Vili
TABLE OF AUTHORITIES - Continued
Page
Truckee-Carson Irr. Dist. v. Wyatt, 84 Nev. 662, 448
P.2d 46 (1968), cert. denied, 395 U.S. 910 (1968) .... 28
Yee v. City of Escondido, Cal., 503 U.S. __, 112 S.Ct.
BE ES odie debe MeN Nee Vicks sued Reaencnnes 20, 27
Unrtep States CONSTITUTION
gl A a PO 2, 29, 30
EEOC POT EEE OTE EEE PE CET Ere 2
NEVADA CONSTITUTION
PE Ee SEE vawecascdacncessneedaes deeds causoesen 29
FEDERAL STATUTES
Federal Clean Water Act (33 U.S.C. § 1251 et seq.) .... 10
INTERSTATE COMPACTS
Tahoe Regional Planning Compact, Pub. L. 91-148, 83
Stat. 360 (1969); Cal. Gov. Code §§ 66800 &
66801; NRS 277.190 & 277.200 Article I(c).......... 6
PE Tr oo cade vavesnvavecvdcedeedévateiaceess 6
i Se CL eso eL old seeus eens ue deo hibei Es bases 7
Tahoe Regional Planning Compact, Pub. L. 96-551, 94
Stat. 3233 (1980); Cal. Gov. Code §§ 66800 &
GORGE; INNS 277.190 & 277 20e cc ccccccccevcccvess 6, 9
CS EE 6 vin 5 Vee once deed ceed een ek ieee 9
SE SE no o-od-dcd ete chase eea ds cneoae eens Gg
ee a TT
ix
TABLE OF AUTHORITIES - Continued
Page
PE UD cece erent sa ccebkedieaeei seen eee 9
PE I eee od ekke nd cedek er esee ihe 9
Pn: Na oh eos OEE ORES eda eh eee eeas 10
Pe Ws oo-0 ook oa ee eee ae 10
TREATISES AND ARTICLES
3 K. Manaster and D. Selmi, California Environmen-
tal Law and Land Use Practice, § 64.04(6) (1990)..... 6
Land-Capability Classification of The Lake Tahoe
Basin, California-Nevada: A Guide For Planning,
Co a rr ee rere 7
Mandelker, Investment-Backed Expectations: Is There
A Taking?, 31 Washington University Journal of
Urban and Contemporary Law (1987), at 14....... 23
TABLE OF ABBREVIATIONS
The following abbreviations are employed in this
brief:
1. App.
2. Ex.
3. Hilltop Lots
10.
IPES
Kelly
Pet.
TRPA
Uppaway
1969 Compact
1
Appendix to Kelly’s Petition for
Writ of Certiorari
Exhibit in Evidence Before The
Trial Court
Lots 33, 34, 35, 36, 37 & 38 of
Uppaway Estates
TRPA’s Individual Parcel Evalua-
tion System
Petitioner William Cody Kelly,
Trustee
Kelly’s Petition for Writ of Cer-
tiorari
Record on Appeal Before The
Nevada Supreme Court
Respondent Tahoe Regional Plan-
ning Agency
Uppaway Estates, Kelly’s Planned
Unit Development
Tahoe Regional Planning Com-
pact, Pub. L. 91-148, 83 Stat. 360
(1969); Cal. Gov. Code §§ 66800 &
66801; NRS 277.190 & 277.200
xi
TABLE OF ABBREVIATIONS - Continued
11. 1980 Compact —- Tahoe Regional Planning Com-
pact, as amended, Pub. L. 96-551,
94 Stat. 3233 (1980); Cal. Gov.
Code §§ 66800 & 66801; NRS
277.190 & 277.200
12. 1984 Plan - The TRPA Regional Plan, adopted
April 26, 1984
13. 1987 Plan — The TRPA Regional Plan, adopted
June 25, 1987
No. 93-548
¢
In The
Supreme Court of the United States
October Term, 1993
¢
WILLIAM CODY KELLY, Trustee,
Petitioner,
VS.
THE STATE OF CALIFORNIA,
THE STATE OF NEVADA,
TAHOE REGIONAL PLANNING AGENCY,
Respondents.
+
Petition For Writ Of Certiorari
To The Supreme Court Of The State Of Nevada
+
BRIEF IN OPPOSITION OF RESPONDENT
TAHOE REGIONAL PLANNING AGENCY
¢
The Tahoe Regional Planning Agency (TRPA),
Respondent, respectfully submits this brief in opposition
to the Petition for Writ of Certiorari to The Supreme
Court of The State of Nevada, dated October 5, 1993, filed
herein by Petitioner William Cody Kelly, Trustee (Kelly),
which petition was received by Respondent on October 6,
1993.
I
STATEMENT OF THE CASE!
A. NATURE OF THE CASE
This case involves the environmentally fragile
enclave in the Lake Tahoe Basin and the special approach
there to land use regulation. It focuses upon the effort by
TRPA,? an entity created by interstate compact, to stem
continuing, precipitous decline of Lake Tahoe’s once-pris-
tine water quality and environs. The action concerns
application of TRPA’s 1987 regulations to six sensitive
Hilltop Lots situated in Uppaway, a nearly-built-out,
upscale subdivision developed by Kelly on the shore of
the lake near Glenbrook, Nevada.
While Kelly challenged TRPA’s 1987 Plan, including
its IPES program, as in violation of Fifth and Fourteenth
Amendment takings and due process proscriptions, the
Nevada trial court in a 128-page decision — reached after
! That we have not described the decisions below does not
mean we concur in Kelly’s description of them. See Pet. at 6-9.
Indeed, he distorts the rulings by discursively isolating bits and
pieces out of context And while we shall deal with his mis-
characterizations im the text below, the essence of the rulings is
apparent both from iis Statement of The Case and a brief
perusal of portsens of the appendices to the petition. App. A
1-20; App. D 2-23. We are also mindful of the admonition that a
brief in opposition “shall be as short as possible. ...” Sup. Ct. R.
15.3. The abundance and complexity of the facts of this case,
however, coupled with Kelly’s mis-descriptions of them, neces-
sitated a lengthy Statement of The Case.
2 Terms represented by abbreviations such as “TRPA”,
“Hilltop Lots”, “Uppaway”, “IPES” and others frequently used
in this brief are referred to in the Table of Abbreviations imme-
diately precedirg the title page.
nearly five weeks of trial, testimony of numerous lay and
expert witnesses and a surfeit of documentary evidence -
sustained the measure: it neither lacked scientific under-
pinning nor deprived Kelly of economically viable use of
the Hilltop Lots. The Nevada Supreme Court unani-
mously affirmed.
B. THE LAKE TAHOE BASIN
The Lake Tahoe Basin rests over 6,000 feet above sea
level in the Sierra Nevada, occupying 324 square miles
astride the Nevada-California border. Lake Tahoe, the
focal point of the basin, is surrounded by magnificent
mountain peaks, some almost a mile higher than the
surface of the lake. Descending abruptly from the peaks
and ridges to the lake’s edge, the lands within the basin
are quite steep, with about three-quarters of the area
comprising slopes in excess of 30 percent. Ex. C-5, p. 7.5
The tenth deepest in the world, Lake Tahoe is “ultra-
oligotrophic”, characterizing a lake extremely clear and
having few nutrients otherwise supporting growth of
algae. Until recently, the lake had a 10,000-year history of
3 The basin’s resplendent beauty, coupled with proximity
to California’s population centers, has marked it the quintessen-
tial retreat. But in the prescient words of the California Supreme
Court, “there is good reason to fear that the region’s natural
wealth contains the virus of its ultimate impoverishment.” Peo-
ple ex rel. Younger v. County of El Dorado, 96 Cal. Rptr. 553, 487
P.2d 1193, 1195 (Cal. 1971).
being at or near equilibrium in the gain and loss of
nutrients. Id. at 8-9; App. A 2.4
Once disturbed, soil in the Lake Tahoe Basin is
unable to function as a medium for growth of vegetation
and storage of nutrients. Disturbance also causes
increased sediment loads to Lake Tahoe, in turn resulting
in storage of nutrients in the lake, rather than in the
watersheds where they belong. See Ex. E-11 c., p. 30; App.
A 2.5
Lake Tahoe is experiencing a downward trend in
water quality. Because of increased sediment, there has
been a decline in annual average depth of visibility from
31.2 meters in 1968 to 27.6 meters in 1981 and a drop in
winter clarity from an average 33.6 meters in 1968 to 14.9
meters in 1981. There has been a corresponding 110 per-
cent surge in algae from 1959 to 1980. Ex. C-5, p. 12. Lake
4 Dr. Charles R. Goldman, the eminent limnologist from the
University of California at Davis, and perhaps the scientist most
familiar with Lake Tahoe, testified that the lake retains its water
for approximately 700 years. That is a result of its enormous
volume, 156 cubic kilometers, very small watershed, single out-
fall and limited inflows. 47 R. 1007-1008. Hence, water flowing
into the lake is going to be there a long time, so that accompany-
ing nutrients tend to accumulate and promote increasing algal
growth. Id. at 1009; see generally App. D9 & 12-16.
° The recent annual suspended sediment load to Lake
Tahoe from surface runoff is approximately 27,000 metric tons,
about four times the natural load. Isolated examples of develop-
ment have revealed suspended sediment concentrations 100 to
1,000 times the natural. These elevated amounts of sediments,
accompanied by nutrients, cause an increase in algal produc-
tivity and a decline in the clarity-of the lake. Ex. E-11 c., p. 31.
Tahoe is losing transparency at nearly a half meter per
year. 47 R. 1015; App. A 3 & D 10.
Residential development at Lake Tahoe boomed in
the years surrounding enactment of the 1969 and 1980
Compacts (post). See generally 54 R. 2040-2050. At the
height of planning activities under the 1980 Compact,
there were about 19,000 to 20,000 vacant lots in the Tahoe
Basin. Id. at 2082. In 1989, the year TRPA’s IPES system
was implemented, there were approximately 12,000
vacant lots remaining. See 54 R. 2082.°
C. KELLY’S ACQUISITION OF THE 44-ACRE PAR-
CEL
Aware of possible creation of an interstate agency to
address environmental problems at Lake Tahoe (35 R.
522-523), Kelly in 1966 acquired the single, 44-acre parcel
that was to become Uppaway. Id. at 493-494; App. D 2. He
paid $500,000 cash for the land. 35 R. 494. The
Fleischmann Mansion, a 7,500-square-foot home, existed
on the parcel and was an object of Kelly’s desire for a
residence before the purchase. Id. at 494-495. The prop-
erty also contained a caretaker’s residence and guest
house. Id. at 496-497. Kelly had retained a consultant to
assure himself that, when spending $500,000 for a resi-
dence, he would be able to recoup his investment through
subdivision development. Id. at 503-505. In short, he
wanted to be sure of regaining his $500,000 by selling the
6 A decline in lots after 1983 was the result primarily of
federal and state land-purchase programs. 54 R. 2082.
SLL
residence and enough land to produce that amount. Id. at
505; App. D 2.
Kelly lived in the mansion from 1966 through 1984.
35 R. 496; App. D 2. He later sold it for $1,100,000 (35 R.
543; App. D 4), but continued to maintain a residence in
the guest house. 36 R. 582-583.
D. THE 1969 TAHOE REGIONAL PLANNING COM-
PACT
Following decades of efforts to grapple with develop-
ment pressures and environmental deterioration at Lake
Tahoe (see generally 48 R. 1152-1160), capped by the
Report of the Lake Tahoe Joint Study Committee in the
mid-1960’s (Ex. 26), the States of California and Nevada
enacted the 1969 Compact. Pub.L. 91-148, 83 Stat. 360;
Cal. Gov. Code §§ 66800 & 66801; NRS 277.190 & 277.200.
Establishing an agency described as the “sui generis [off-
spring] of a marriage between sovereign partners”, People
of St. of Cal. ex rel. Younger v. Tahoe Reg. P. Ag., 516 F.2d
215, 218 (9th Cir. 1975), cert. denied, 423 U.S. 868 (1975),
the 1969 Compact mandated TRPA’s adoption of a
regional plan of resource conservation and orderly devel-
opment. 1969 Compact, Art. I(c); App. D 3.
Due to structural defects’ in the accord, including the
synergistic confluence of Article III(g)’s voting procedure
7 A number of the deficiencies in the 1969 Compact are
treated in 3 K. Manaster and D. Selmi, California Environmental
Law and Land Use Practice, § 64.04(6) (1990). While early federal
and state efforts to revise the faulty compact failed, continuing
discussions ultimately resulted in the 1980 Compact (post),
under which TRPA’s current regulations were adopted. See gen-
erally 48 R. 1177-1189.
and Article VI(k)’s allowance of major projects to be
“deemed approved” absent a vote constituting “action”
(App. A 4), there arose acute concerns over TRPA’s ability
to address the problems besetting Lake Tahoe. 48 R.
1177-1180; see App. D 3.
E. THE CREATION OF UPPAWAY ESTATES
Uppaway was a 39-lot planned unit development, of
which Lots 33 through 39, the Hilltop Lots, comprised
Phase III. The project was described by Kelly as a “sited
parcel land sale program.” Ex. 39, p. 26 (emphasis in
original). Most of Uppaway was located in a TRPA land
capability district allowing one percent land coverage. 46
R. 817-818.8 Kelly received a variance, however, for
approximately seven percent land coverage in the one
percent area. Ex. 39, p. 23. Uppaway was “deemed
approved” by TRPA under the 1969 Compact, even
though it received seven negative votes and only two
affirmative ones by TRPA board members. Ex. 1, p. 2;
App. D 3-4. The project’s “deemed-approved” status was
confirmed by an unpublished federal court order in Tahoe
8 TRPA employs a scientific system of “land capability”
classification, allocating maximum amounts of impervious sur-
face depending upon, inter alia, the erosion and runoff potential
of soils and the steepness of slopes on which they rest. The
method was devised by Dr. Robert G. Bailey, a geomorphologist,
and is articulated in his report, Land-Capability Classification of
The Lake Tahoe Basin, California-Nevada: A Guide For Planning,
Robert G. Bailey (1974). Ex. 2-6.
Regional Planning Agency v. Douglas County, et al., No.
R-75-130 (D. Nev., Oct. 24, 1975).?
While immediately building infrastructure and com-
mencing sales of lots in Phases I and II, Kelly did not start
even off-site improvements, such as the road, for the
Hilltop Lots (Phase III) until 1982. He first wanted to see
how sales of lots in Phases I and II proceeded. 35 R. 626.
The hilltop improvements were not completed until 1983.
Ex. 1-41; App. A 7 & D 8.'°
9 What was deemed approved was a 39-lot subdivision and
land coverage variance. Kelly himself described Uppaway as a
“sited parcel land sale program.” Ex. 39, p. 26 (emphasis of “land
sale” added). The approval, therefore, was of building sites
only, not homes. TRPA has never questioned the validity of
Uppaway’s creation; nor has the Nevada Supreme Court. Con-
trary to Kelly’s representation (Pet. at 8 n. 10), the Nevada high
court affirmed the project’s lawful existence and substantial
coverage variance. App. A 19. When the lots would be built
upon, however, the focus of IPES (post), was correctly deter-
mined by the Nevada tribunal as beyond the ambit of Uppa-
way’s approval and the federal court order confirming it. Id. at
18-19.
10 These undisputed facts betray repeated misstatements
by Kelly that he has been delayed development “for 19 years”.
Pet. 4, 6, 10 & 25. Having not even readied the Hilltop Lots for
residential construction until 1983, that simply is not the case.
Moreover, due to a federal court injunction lasting from 1984
through mid-1987 (post), TRPA was legally unable to approve
homes on the hilltop once it was improved. The petition’s impli-
cations of privation are also belied by Kelly’s sales, as of July
1989, of 24 lots in Phases I and II for the total sum of $5,236,000.
47 R. 938; Ex. ZD.
F. IMPLEMENTATION OF THE 1980, AMENDED
TAHOE REGIONAL PLANNING COMPACT
1. The 1980 Compact. Due to the failure of the 1969
Compact to cope with mounting degradation of the Lake
Tahoe Basin, the states, with Congress’ approval, exten-
sively amended the accord in December, 1980. Pub.L.
96-551, 94 Stat. 3233 (1980); Cal. Gov. Code §§ 66800 &
66801; NRS 277.190 & 277.200.'' In terms far more exigent
than its predecessor, the 1980 Compact accentuated grow-
ing threats to the ecology of the region and declared the
need to establish “environmental threshold carrying
capacities,”'2 along with a plan achieving them while
providing orderly growth. 1980 Compact, Art. I(a); App.
D 5. It made a number of significant changes to the 1969
Compact, including stricter project-review standards.
App. A 5 n. 4.
The 1980 Compact required TRPA to adopt the envi-
ronmental threshold standards within 18 months after
December, 1980 (1980 Compact, Art. V[b]), and amend its
regional plan to achieve and maintain them within one
year after that. Id., Art. V(c). The compact also mandated
'! The background of the 1980-amendments to the Compact
and the planning process they spawned are treated in People of
California v. Tahoe Regional Plan Agency, 766 F.2d 1308, 1310-1312
(9th Cir. 1985).
12 “Environmental threshold carrying capacities”, defined
in Article II(i) of the 1980 Compact, were performance standards
for maintenance of components of the Tahoe Basin’s ecosystem.
They included, among others, bench marks for air and water
quality, soil conservation and vegetation preservation. The stan-
dards were adopted in August, 1982. App. D 6.
10
that all projects be directly, versus “deemed”, approved
by the agency. Id., Art. VI(b).19
2. Ordinance 81-5. As a first step toward imple-
menting the 1980 Compact, TRPA in June, 1981, enacted
Ordinance 81-5, representing a coalescence of TRPA’s
responsibilities both as an area-wide planning agency
under Section 208 of the Federal Clean Water Act (33
U.S.C. § 1251 et seq.) and to insure the amended plan
required by the compact would not be outstripped by
precipitate development of high-hazard lands. Ex. 32,
§§ 1.10, 1.20 & 1.30. Public hearings had indicated that,
absent quick action, serious degradation in water quality
“may irreversibly damage Lake Tahoe and the Lake Tahoe
region.” Id., § 1.40. In response, Ordinance 81-5 estab-
lished a discretionary, “case-by-case” permit system for
residential development on the most environmentally
sensitive land capability districts, including District 1
comprising the Hilltop Lots. Id., § 2.00; App A 5 n. 4. The
process was designed to give TRPA a measure of breath-
ing room in its attempt to solve the conundrum of thou-
sands of single-family lots on sensitive lands and
pressing demands to develop them. (During early efforts
to implement the 1980 Compact, there were 19,000-20,000
vacant lots in the Tahoe Basin. 54 R. 2082.)
‘3 TRPA was required to define by ordinance which activ-
ities were not “projects” and thus exempt from TRPA approval.
1980 Compact, Art. VI(a). In February, 1981, TRPA adopted
Ordinance 81-1 for that purpose. Ex. 31. Contrary to Kelly’s
assertion (Pet. at 4), Ordinance 81-1 did not apply “exclusively”
to Uppaway: it was a basin-wide measure. Indeed, as the trial
court found, Ordinance 81-1 was evenly applied and did not
deny Kelly equal protection of the laws. App. D 20.
11
Shortly after adoption of Ordinance 81-5, Uppaway
Development Company, Kelly’s corporation, applied to
TRPA for approval of a residence on one of the Hilltop
Lots. TRPA advised Kelly, however, that to be eligible
under Ordinance 81-5, off-site improvements for the lot,
such as roads and drainage structures, were required to
be in place. See Ex. 1-7; Ex. 32, §§ 12.11 & 12.21; App. A
5-6. In early 1982 Kelly again was told by the agency of
the need for those improvements as a prerequisite for
residential development. See Ex. 1-11.
In July, 1982, TRPA approved Kelly’s plans for hilltop
off-site improvements as in accordance with the subdivi-
sion map “deemed approved” under the 1969 Compact.'4
34 R. 236-237; Ex. A-17. Shortly after approval of the
plans, Kelly filed applications under Ordinance 81-5 for
single-family residences on the Hilltop Lots. Ex.’s 25
through 29. Kelly agreed to proceed under Ordinance
81-5 (34 R. 239) and hence was to follow the normal,
discretionary case-by-case review procedure before build-
ing permits could be approved. See App. D 7. While this
occurred in mid-1982, the improvements for the Hilltop
Lots, as we have noted, were not completed until Octo-
ber, 1983. See Ex. 1-41; App. D 8.
Hundreds of applications similar to Mr. Kelly’s were
pending before TRPA at the time. App. B 6-7. Moreover, as
14 TRPA’s approval of the improvement plans was neces-
sary because Kelly, along with changes to lot configurations on
the hilltop, had proposed constructing # adi to access the area
instead of the cable railway envisioned by the subdivision map
deemed approved. See Ex. 1-20.
12
the trial court observed, TRPA was faced with the “diffi-
cult and time-consuming task of implementing the novel
and complex planning approach of the 1980 Compact,
including its pressing deadlines for the adoption of envi-
ronmental threshold carrying capacities and a new plan
and ordinances attaining and maintaining them... .” App.
D 35. Added to that task was “resolving the dilemma of
what to do about the 17,000, more or less, preexisting
single-family lots, of which Mr. Kelly’s holdings were a
portion.” [d.'5
Although Kelly’s applications under Ordinance 81-5
became eligible for approval in 1983 (Ex. A-29), TRPA on
August 26, 1983, temporarily suspended issuance of per-
mits, pending adoption of the new regional plan required
by the 1980 Compact. Ex. A-32, p. 3. TRPA counsel had
advised the agency it no longer could approve projects
because the new plan prescribed by the compact was
overdue (id. at 1; App. D 8): Article V(c) had required the
plan be enacted within one year after adoption of the
environmental thresholds. The latter were approved
'S Kelly portrays TRPA’s treatment of him in the early
1980’s as a parade of horrors. See Pet. at 4. The trial court,
however, repeatedly found TRPA’s actions to be fair and reason-
able. See, e.g., App. D 20 (Kelly failed to prove TRPA’s conduct
was the product of inaction or discrimination toward him); /d.
(no evidence of fraud or malice on the part of TRPA); App. D 35
(no evidence of intentional neglect or malice over the winter
months of 1983-1984); App. D 36 (despite delays, actions of
TRPA were reasonable and justified under all the circum-
stances).
13
August 26, 1982, the one-year deadline thus expiring
August 26, 1983.16
3. The 1984 Plan. On April 26, 1984, TRPA adopted
an amended plan representing its first, albeit unsuccess-
ful attempt to comply with the mandates of the 1980
Compact. See Ex. A-35; App. D 8. The ordinance enacting
the plan permitted continued, discretionary issuance of
permits for then-pending applications under Ordinance
81-5. Ex. A-35, p. 14. As a result, Kelly’s Hilltop-Lot
applications would have been processed under Ordi-
nance 81-5, as opposed to the new rules prescribed by the
1984 Plan. 34 R. 249-250; App. D 8.
Culminating a historic planning process of dimen-
sions not even the framers of the 1980 Compact could
have foreseen (Ex. A-35, § 1.25; see People of California v.
Tahoe Regional Plan Agency, 766 F.2d at 1311-1312), the
1984 Plan attempted to balance acute pressures for devel-
opment with consumption of scant remaining resources
in a manner TRPA felt — incorrectly - was in compliance
with the environmental thresholds. On April 26, 1984, the
very day TRPA adopted the plan, the State of California
and League to Save Lake Tahoe sued TRPA, alleging the
plan violated the 1980 Compact. People of California v.
Tahoe Regional Planning Agency, No. CIV-S-84-0561-EJG,
United States District Court, Eastern District of California
(1984). App. D 8. TRPA’s appreval of projects under the
disputed plan was immediately halted by a temporary
‘© The trial court determined TRPA’s suspension of permits
“was done in good faith for a significant public purpose and
was reasonable in duration given the complexity of the tasks
undertaken.” App. D 22.
14
restraining order (34 R. 250-251), followed by a prelimi-
nary injunction on August 9, 1984. App. D 8-9. The pre-
liminary injunction was affirmed on appeal. People of
California v. Tahoe Regional Plan Agency, 766 F.2d 1308.
The 1984 Plan thus never took effect. Tahoe-Sierra
Preservation v. Tahoe Reg. Planning, 938 F.2d 153, 155 (9th
Cir. 1991). Because of the injunction, TRPA was unable to
act upon projects, including residences on the Hilltop
Lots, until after adoption of the 1987 Plan settling the
litigation. See 34 R. 251; App D 9.
4. The 1987 Plan. Following its unsuccessful appeal
to the Ninth Circuit, and while still under preliminary
injunction, TRPA instituted a “Consensus Building Work-
shop” to obtain the broadest possible range of private
and governmental viewpoints on the makeup of a new
regional plan. As a result of the negotiations, tentative
agreements on various elements of a plan began to
emerge in late 1986. App. B 7; see generally Exs. Z & D-9.
On June 25, 1987, TRPA adopted the 1987 Plan, the prod-
uct of the consensus discussions. Ex. F-18. That action
settled the 1984 Plan lawsuit, which was dismissed July
15, 1987.
The 1987 Plan, presently in effect, is designed to
attain and maintain the environmental threshold carrying
capacities while allowing orderly development. It con-
tains elements addressing land use, recreation, conserva-
tion, public facilities and implementation. 51 R.
1591-1592. The plan also incorporates “planning area
statements” for 175 planning areas in the Lake Tahoe
Basin. Akin to zoning maps, the statements prescribe
density and permissible uses. 51 R. 1592-1593. Planning
icc secaaaneiiaesiaiiiniiiiiablliiiaiit aaiaia
15
Area Statement No. 059, applicable to Uppaway, permits
single-family residential development at a density of one
unit per acre. 51 R. 1636; Ex. I-2.
The keystone of the 1987 Plan, in terms of residential
development, is IPES, a scientifically-based system for
gradual build-out of all vacant residential lots in the Lake
Tahoe Basin, excluding those in stream zones (inapplica-
ble here). IPES is designed to direct construction initially
to those areas most suitable for it in accordance with
environmental thresholds. Ex. I-1, p. VII:3; App. A 8.
When IPES was under consideration by the Con-
sensus Building Workshop there were approximately
18,000 vacant residential parcels (52 R. 1738); and
demand to use them far exceeded the basin’s ability to
accommodate the development. With uncontrolled build-
ing portending permanent loss of Lake Tahoe to eutro-
phication, a priority system, such as IPES, was needed to
allow the most suitable, in terms of protecting the lake’s
water quality, to be built upon first. 48 R. 1212; App. D 10.
As of December 31, 1988, all vacant residential par-
cels in the basin, approximately 12,000 by that time (see 52
R. 1746), had been evaluated by “IPES teams” consisting
of a soil scientist, hydrologist and an engineer or land use
planner. Ex. I-3, § 37.5; App. A 8; App. D 11. Applying set
criteria, including “relative erosion hazard” and “runoff
potential,” the teams determined scores for all lots. Ex.
I-3, § 37.2; 52 R. 1747-1783. Having assembled the scores,
the TRPA Governing Board statistically established 725 as
16
the “IPES line”, with parcels scoring above it eligible to
receive building permits. 51 R. 1625; App. A 8; App D 11.
Due to the injunction against the 1984 Plan and adop-
tion of the 1987 version, Kelly was required to have the
Hilltop Lots evaluated under IPES. App. D 10-11.!7 When
that occurred, one of the six was given a passing score of
758. Ex. 2-2; 28 R. 8295. That lot immediately became
eligible to receive a development allocation and building
permit. 28 R. 8295. Prior to trial, Kelly had appealed the
remaining IPES scores as allowed by TRPA regulations.
28 R. 8295. As a result, a second of the six lots received a
passing score. 28 R. 8295; Ex. YYY.'8
17 Kelly asserts - understandably without citation to the
record — that there was a “concession at trial” that the 1975 court
order confirming Uppaway’s “deemed-approved” status “took
the [Hilltop Lots] out of the strictures imposed by IPES.” Pet. at
5 n. 4. There was, to be sure, no such TRPA capitulation at trial
or elsewhere. Indeed, the trial court’s erroneous exemption of
the lots from IPES (App. B 100) directly led to TRPA’s successful
cross-appeal. The Nevada Supreme Court ruled that Kelly,
although having approved lots and land coverage, nonetheless
was subject to IPES’ principal attribute of directing timing of
construction. App. A 17-19.
18 The post-appeal IPES scores for the four non-passing lots
were 693, 694, 702 and 725. App. D 11. The scores were suffi-
ciently near the 725-level to make Kelly eligible in 1990 to
purchase IPES points, as permitted by Section 37.2 I, including
Appendix J, of Chapter 37 of the TRPA Code of Ordinances. Ex.
I-3. (The money paid would be deposited into a TRPA fund
earmarked for water-quality improvement projects.) At $672 per
point, the sum presently assessed (id.), Kelly could cause all of
his lots to pass the IPES line by spending $60,480.
— ee
17
The numerical level defining top-ranked parcels
under IPES, initially set at 725, may be lowered in any
local jurisdiction on an annual basis. Ex. I-3, § 37.8.C.
Lowering of the line is dependent upon findings by
TRPA, inter alia, that progress is being made in the juris-
diction on capital improvements for water quality. Id.,
§ 37.8.C(1). It will take approximately two to three years
for the IPES line to reach Keily’s Hilltop Lot with the
lowest IPES appeal score. 53 R. 1881-1883.19
G. THE ECONOMIC IMPACT OF TRPA’S REGULA-
TIONS
The trial court found the Hilltop Lots maintained
current, substantial values under the 1987 Plan and that
the plan, including IPES, did not deny Kelly their eco-
nomically viable use. App. D 18 & 21. Kelly’s own expert
appraiser testified that the lots — in the presence of IPES —
19 Kelly harps of a TRPA “concession” that he may never be
allowed to build residences on the Hilltop Lots. Pet. at 6 & 9
n. 11. He disingenuously cites as “evidence” minutes of a post-
trial TRPA meeting (Pet. at 9 n. 11), which were stricken by the
Nevada Supreme Court because they were not part of the record
on appeal. App. A 20 n. 18. Kelly fails, moreover, to acknowl-
edge that two of the six lots already have passed IPES. App. A
13. And he ignores TRPA’s expert’s opinion on movement of the
IPES line (53 R. 1881-1883), the scholarliness of which convinced
the trial court and the Nevada Supreme Court. App. B 67; see
App. A 15-16. indeed, as the trial court observed, “Mr. Ziegler
and others testified that in the next several years the 725 point
cut-off line is likely to move downward. The line needs to be
lowered by only 33 or less points to make all four remaining lots
eligible.” App. B 75. Furthermore, Kelly’s position is under-
mined by his ability to purchase IPES points. Fn. 18, ante.
18
were worth $2,025,000. App. B 45-46; see Ex. ZY, p. 16.
And that as of January 1, 1982, five years before IPES,
they were worth $1,825,000. App. B 46. It thus was Kelly’s
expert’s opinion that from 1982 through 1987, transcend-
ing Ordinance 81-5 and the 1984 and 1987 Plans, five of
the six Hilltop Lots suffered no decrease in market value.
55 R. 2300-2301. And the sixth maintained substantial
value as well. Ex. ZY, p. 16. During oral argument before
the Nevada Supreme Court, Kelly acknowledged the lots
were worth “between two and four million dollars.” App.
A 15 n. 14.
As of July 1, 1989, retail sales of 24 non-Hilltop Lots
at Uppaway had produced an aggregate gross sum of
$5,236,000. 47 R. 938. Also, eight unsold non-Hilltop Lots
were valued at $710,000 as of the same date. 47 R.
939-940; Ex. ZE. Once again at oral argument, Kelly
admitted he had already received approximately
$5,600,000 from prior sales at Uppaway. App. A 16 n. 16.
II
REASONS FOR DENYING THE PETITION
A. SUMMARY
The petition should be denied. The issues raised are
not nationally significant; nor are they likely to recur.
Moreover, on these unusual, complex facts the ruling of
the Nevada Supreme Court clearly was correct. Finally,
Kelly’s preemption argument has no legal vitality: the
case likely would have been decided identically under
the Nevada Constitution.
a
19
B. THE ISSUES HERE - ASSUMING THEY CLEARLY
EMERGE AT ALL - ARE NOT NATIONALLY
IMPORTANT QUESTIONS OF FEDERAL LAW
The reach of the issues at bench is decidedly narrow.
Land use and environmental planning for the Lake Tahoe
Basin does not lend itself to questions of national signifi-
cance. Indeed, the unique processes challenged by Kelly
are driven by the equally exceptional qualities of the
basin. Planning for Lake Tahoe’s extraordinary ecosystem
and developmental patterns, quite simply, is like plan-
ning for no other place on earth. Thus, although most
cases of the takings genre turn principally upon their
facts, the facts here are so unusual as to render the
Nevada Supreme Court's decision applicable virtually to
Lake Tahoe alone.
This case’s confines are impelled, moreover, by the
factual labyrinth both lower courts were required to navi-
gate to reach their decisions: trial transcripts alone con-
sumed over 2,600 pages; documentary evidence literally
would fill a small room. Steeped in an exceptional factual
array, a case as this is not likely to reappear.
A decision by this Court on the issues Kelly raises
thus would be so novel as to severely constrain its prece-
dential value. We respectfully submit the petition should
be rejected for this reason alone.
20
C. THE NEVADA SUPREME COURT PROPERLY
CONDUCTED THE AD HOC, FACTUAL INQUIRY:
THE EVIDENCE DEMONSTRATED THE HILLTOP
LOTS WERE ALLOWED BENEFICIAL, RESIDEN-
TIAL USE AND MAINTAINED HIGH MARKET
VALUES REFLECTING IT. KELLY’S REASON-
ABLE, INVESTMENT-BACKED EXPECTATIONS
ALSO WERE SATISFIED.
1. The Ad Hoc, Factual Inquiry. A zoning regula-
tion effects a Fifth-Amendment taking if it does not “sub-
stantially advance legitimate state interests”2° or denies
an owner “economically viable use” of his or her land.
Agins v. Tiburon, 447 U.S. 255, 260 (1979). Rather than
establish a set formula for a taking, this Court has man-
dated resort to an “ad hoc, factual inquiry” probing the
economic impact of the regulation, its interference with
reasonable, investment-backed expectations and the char-
acter of the governmental action.?! These inquiries
““must be conducted with respect to specific property,
and particular estimates of economic impact and ultimate
valuation relevant in the unique circumstances.’” Key-
stone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470,
495 (1987).
20 The substantial-advancement prong of takings calculus
was not an issue before the Nevada Supreme Court and has not
been raised here.
21 The character of TRPA’s regulations, in terms of whether
they physically encroached upon Kelly’s property, also is not at
issue. See generally Yee v. City of Escondido, Cal., 503 U.S. ___, 112
S.Ct. 1522, 1534 (1992). Kelly acknowledged to the Nevada
Supreme Court that “the character of the governmental action in
this case cannot be considered a physical invasion... . ” Kelly
Op. Br. at 37.
|
21
2. Kelly Has Suffered No Unconstitutional Eco-
nomic Impact. The evidence below established Kelly’s
Hilltop Lots were — and are — permitted residential use
under the 1987 Plan and IPES.?? And there is no more
persuasive evidence of the economic vitality, or viability,
of that use than the value of the lots, conceded by Kelly
as between $2,000,000 and $4,000,000. App. A 15 n. 14.23
22 Kelly seriously misunderstands or miscasts IPES when
he asserts: “[N]o new subdivision lots had been approved under
IPES since 1982.” Pet. at 24. Indeed, IPES was not even a part of
TRPA’s regulations until 1987. Up to that time, TRPA had
employed interim, single-family home approval mechanisms,
such as Ordinance 81-5, followed by the 1984 Plan which
allowed similar permits. Approvals from mid-1984 through
mid-1987, however, were forbidden due to California’s injunc-
tion. Further, IPES is not a program to review creation of new
subdivision lots, but instead to allow gradual development of
the thousands extant. Equally meritless is Kelly’s assertion that
IPES is a temporary taking. Pet. at 24. Lots retaining consistent,
saleable values as Kelly’s hardly have been “taken”, and as
noted in Footnote 18 (ante), Kelly since early 1990 has been able
to purchase IPES points to render the four non-passing lots
immediately developable. Further, Kelly throughout the 1987
Plan has enjoyed significant transfer of development oppor-
tunities. See Ex. I-3, §§ 20.3, 34.2 & 34.3.
23 Kelly attacks the Nevada Supreme Court’s ruling by sur-
prisingly portraying this Court’s decision in Lucas v. South Caro-
lina Coastal Council, 505 U.S. __, 112 S.Ct. 2886 (1992), as
gauging “economically viable use” in terms of “use” alone,
exclusive of the value of the property allowed that use. Pet. at
21-23. Aside from disregarding Lucas’ facts (post), Kelly’s rea-
soning is a non sequitur: one cannot so simply sever value from
use; indeed, a use is economically viable in terms of the value
attributable to it. And that attribution is measured by market
value of the land. Kelly has failed not only to show absence of
value, but even diminution. Further, his insistence upon use of
“current fair market value” (Pet. at 24) ought fall on deaf
22
That even Kelly viewed the lots’ values as integral to
the takings inquiry is manifest from his presentation to
the Nevada Supreme Court: “The court compares the
market value of what has been taken with the value remain-
ing after the government's challenged action.” Kelly Op.
Br. at 37 (emphasis added). The courts below made pre-
cisely that comparison, establishing that Kelly had suf-
fered no unconstitutional economic impact.?4
3. Kelly’s Reasonable, Investment-Backed Expecta-
tions Have Been Satisfied. As much as he tortures Lucas,
112 S.Ct. 2886, in hopes of obscuring the use and value of
the Hilltop Lots, Kelly misapplies Penn Central Transp. Co.
v. New York City, 438 U.S. 104 (1978) (Pet. at 11-15 &
ears. The appraisal evidence at trial - including his own - after
all showed substantial current values. Finally, Kelly forgets that
Lucas involved a regulation flatly prohibiting any structure on
the plair tiff’s lots, causing the state court to find them valueless.
Lucas, 112 S.Ct. at 2889. And the lower court's finding of no
value “was the premise of the Petition for Certiorari” and the
factual assumption underlying this Court's decision. Id. at 2896
& n. 9.
24 Rather than forthrightly address the undisputed use and
value of his property, Kelly is content to attack the decisions
below through excerpting snippets, which standing alone dis-
tort the rulings. For example, Kelly repeatedly quotes a single
sentence of the trial court’s opinion, to the effect that it is
difficult, if not absurd, to avoid calling TRPA’s ordinances a
temporary taking. Pet. at 7-8 & 24. The quotation, however, is
torn from its context: immediately after it the court proceeded
with its analysis sustaining the regulations. App. B 84. The cited
remark, to be sure, is nothing more than rhetorically fitting
hyperbole establishing a point of departure for the court’s val-
idating discussion.
ce oT
23
20-21), essentially asking this Court to omit the expecta-
tions factor —- and again neglect the truth. Kelly would
just as soon forget that the genesis of the Hilltop Lots was
a single, 44-acre parcel for which he paid a single
$500,000; that he expected to purchase a home, the
Fleischmann Mansion, and secure return of his invest-
ment if necessary by development. We must respectfully
ask: what more could Kelly have anticipated - even
dreamed of —- than to live in the mansion nearly 20 years,
sell it for over a million dollars and end up with the
Hilltop Lots, alone worth $2,000,000 - $4,000,000? And
that is not to mention developing a luxury subdivision
producing approximately $5.6 million to date, including
proceeds from the mansion. Surely a reasonable person
would be content.?5
Apart from his abundant return, it should have been
no surprise to Kelly that his land would become subject
to extraordinary interstate regulations to protect the
equally exceptional Alpine lake, a portion of whose
waters his property abutted. Indeed, Kelly was aware in
1963 - three years before his purchase — of the potential
onset of a regional agency to protect the lake. And his
awareness no doubt was more acute in 1969 when, five
years before he subdivided his land, TRPA was created
and mandated to enact a plan for the area. Expectations,
to be reasonable, after all must “take into account the
25 “Reasonable”, in terms of “reasonable, investment-
backed expectations”, implies the expectation must be “appro-
priate under the circumstances”, an objective test. Mandelker,
Investment-Backed Expectations: Is There A Taking?, 31 Washing-
ton University Journal of Urban and Contemporary Law (1987),
at 14.
24
power of the state to regulate in the public interest”,
including modification of land use rules when it per-
ceives the need for change. Pace Resources, Inc. v. Shrews-
bury Tp., 808 F.2d 1023, 1033 (3d Cir. 1987), cert. denied,
482 U.S. 906 (1987), reh’g denied, 483 U.S. 1040 (1987). And
those expectations only could have been diminished
when Kelly, notwithstanding the late 1970’s being awash
in rumblings of dissatisfaction with the 1969 Compact,
eschewed development of the Hilltop Lots until over two
years after the 1980 amendments were adopted. One
doing business in a regulated field, especially a sophisti-
cated attorney-developer as Kelly, simply must expect
legislative schemes to be altered by subsequent amend-
ments to achieve as-yet unattained goals. Connolly v. Pen-
sion Benefit Guaranty Corp., 475 U.S. 211, 227 (1986); see
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005-1009
(1984).
In sum, and in spite of his intractably revisionist
approach to the evidence below, Kelly received more than
he reasonably could have expected: he obtained the home
he desired and far more money than necessary to cover
his investment. His reasonable, investment-backed expec-
tations, therefore, were satiated.
4. Kelly’s Penn Central Argument Need Not Be
Reached, But In Any Event Does Not Fit This Case And
Presents No Reason To Grant Certiorari. Kelly contends
the Nevada Supreme Court “misapplied” the observation
in Penn Central Transp. Co. v. City of New York, 438 U.S. at
130-131, that “ ‘Taking’ jurisprudence does not divide a
single parcel into discrete segments and attempt to deter-
mine whether rights in a particular segment have been
entirely abrogated. [T]his Court focuses rather . . . on the
25
nature and extent of the interference with rights in the
parcel as a whole. ...” Pet. at 11-21. Kelly’s argument is
to no avail, however, because this Court need not reach it;
but if it did, his contention does not fit this case. Kelly’s
view, moreover, conflicts with the need to consider his
investment-backed expectations.
a. The Nevada Supreme Court Employed Grounds
Other Than “The Penn Central Quotation” To Decide
This Case, Rendering It Unnecessary To Reach The
Issue. While the Nevada Supreme Court referred to the
Penn Central quotation, it did so only after observing:
When considering the [economic-impact] factor,
we note that Kelly’s lots remain valuable assets.
Kelly’s own appraiser testified to the fact that
the Hilltop lots maintained substantial value dur-
ing the period of time in question.
App. A 15 (emphasis added and footnote
deleted).
In a footnote to its remark, the Nevada court stressed that
“{djuring oral argument, Kelly’s counsel estimated the
value of the Hilltop lots to be between two and four
million dollars.” App. A 15 n. 14.
The manifest propriety of the decision below thus
rests comfortably upon the admitted value of the Hilltop
Lots themselves. There was no need te look to other
portions of Uppaway to sustain TRPA’s regulations and
hence none to review the Nevada court’s application of
the Penn Central quotation.
b. This Case Presents The Same “Factual Context”
As Kelly Insists Is Necessary for A Correct Reading of
a
i 26
Penn Central. The predicate for Kelly’s Penn Central argu-
ment is missing: Kelly does enjoy reasonable return from
his property.26 See generally Pet. at 11-15. Kelly, as the
plaintiff in Penn Central, hence cannot credibly argue that
his lots, individually or in conjunction with Uppaway as
a whole, have been taken. See id. at 14-15.27 Indeed, in
view of the factual history of this case, which he repeat-
edly side steps, Kelly finds himself precisely in the same
position as the plaintiff in Penn Central: he contends he
somehow is “entitled to something more than a reasonable
return” on his investment. Pet. at 14 (emphasis added).
And it is Kelly, to be sure, who, in spite of exponential
fulfillment of his original expectations, wants to exploit
26 One scarcely can envision more compelling evidence of
reasonable return than the concessions of Kelly’s appraisal wit-
ness and counsel that the Hilltop Lots, standing alone, main-
tained significant values. Or, for that matter, the
acknowledgment of his appraiser that the lots suffered no dimi-
nution in value in the face of TRPA’s regulations.
°7 Kelly beseeches the Court to level “a very uneven play-
ing field” for developers. Pet. at 18 n. 22. That entreaty surely
rings hollow in view of the plenty realized by Kelly from Uppa-
way. Moreover, the decisions below were evenhanded and
exemplified no such extreme position as Kelly decries in his
parenthetical missive to the Court. And that Kelly assertedly
has “paid out (or owes) over $400,000” for improvements and
TRPA costs and fees (id.) does not change the result. As the
Hilitop Lots’ values reflect, Kelly is enjoying the manifest bene-
fits of those improvements. That he must pay costs attendant to
an unsuccessful constitutional broadside is not to be laid at
TRPA’s doorstep. Distilled to its dubious essence, Kelly seems to
be saying, “the more you spend, the more you deserve to win.”
27
his property “to its fullest extent.” Id. (emphasis in origi-
nal).28 His insistence that this case is foreign to the “fac-
tual context” in Penn Central, therefore, simply is not
believable.??
c. Kelly’s Approach Is Designed To Circumvent
Candid Analysis of His Reasonable, Investment-Backed
Expectations. Kelly chides the Nevada Supreme Court for
“reaching back” 18 years and ignoring the intervening
creation of separate lots under Nevada law. Pet. at 20-21.
28 Kelly’s repeated citation of cases such as Deltona Corp. v.
United States, 657 F.2d 1184, 1191 (Fed. Cir. 1981), cert. denied,
455 U.S. 1017 (1982); Jentgen v. United States, 657 F.2d 1210, 1213
(Ct. Cl. 1981); Ciampitti v. United States, 22 Cl. Ct. 310, 319-321
(1991); and City And County of San Francisco v. Golden Gate
Heights Investments, 14 Cal.App.4th 1203, 1209 (1993) (Pet. at
17-20), does not assist him. First, none appears to apply the Penn
Central quotation in as egregious a fashion as Kelly maintains.
Pet. at 17-18. More important, if the regulated portions of the
plaintiffs’ parcels in those cases indeed were “worthless” or
“valueless”, as Kelly contends (Pet. at 19-20), the cases only
illuminate the gross disparity between Kelly’s argument and the
facts here. Those cases are not this case: the Hilltop Lots, as
Kelly admits, are quite valuable. App. A 15 n. 14.
29 Equally implausible is Kelly’s likening of TRPA’s regula-
tions to the public easement whimsically exacted and rightfully
denounced by this Court in Nollan v. California Coastal Comm'n,
483 U.S. 825 (1987) (Pet. at 11-12), or to the spate of flagrant
physical appropriations and public uses held to be takings in
the cases Kelly cites at page 12, Footnote 14, of his petition.
Partial takings, whether by physical appropriation, overflight,
public use or actions in eminent domain, do not even vaguely
mirror regulation of private use of private property such as the
Hilltop Lots. The important distinction between regulation of
private use and physical or other direct governmental takings
remains alive and well. See Yee v. City of Escondido, Cal., 112 S.Ct.
at 1534.
28
It is as though the Nevada tribunal was to have cast a
sightless eye toward his acquisition of and expectations
for the single, 44-acre parcel, of which the Hilltop was an
undivided part — and for which Kelly paid the equally
unitary sum of $500,000. The lower court apparently also
was to have disregarded Kelly’s near-20-year residence in
the Fleischmann Mansion and sale of it for over twice the
price for the entire 44 acres. And this is not to mention
development of the remaining land.
Kelly, in sum, asks this Court to don blinders -
literally to jettison reality and the ad hoc, factual inquiry.
No case or text Kelly cites contemplates so untoward a
notion. His argument thus is no reason to review this
case.
D. KELLY’S PREEMPTION ARGUMENT IS BEREFT
OF VITALITY: HE FAILS HERE - AS HE FAILED
BELOW - TO SHOW HOW THE CASE WOULD
HAVE BEEN DECIDED DIFFERENTLY UNDER
THE NEVADA CONSTITUTION
Kelly urges this Court to review the ruling by the
trial court, affirmed without comment by the Nevada
Supreme Court, that his takings claim under the Nevada
Constitution was preempted by the 1980 Compact (16 R.
5209-5210). Pet. at 26-29. But when he raised the same
question before the Nevada Supreme Court, TRPA argued
he failed to show how the trial court’s ruling, even if
error, had denied him substantial justice. TRPA Ans. Br.
at 84 (citing Nev. R. Civ. P. 61; Carr-Bricken v. First Inter-
state Bank, 105 Nev. 570, 573, 779 P.2d 967, 969 [1989];
Truckee-Carson Irr. Dist. v. Wyatt, 84 Nev. 662, 666-667, 448
———~P.2d 46, 50-51 [1968], cert. denied, 395 U.S. 910 [1968]
29
[burden is upon appellant to show error not harmless and
that a different result is probable]). But despite oppor-
tunities both in his reply memorandum (Kelly Rp. Br. at
80) and at oral argument, Kelly failed - indeed did not
even attempt — to articulate to the Nevada court how the
case would have been decided differently under Article 1,
Section 8, the takings proscription of the Nevada Consti-
tution. And he fails here - understandably.
The Takings Clauses of the United States and Nevada
Constitutions are worded quite similarly: “nor shall pri-
vate property be taken for public use, without just com-
pensation” (U.S. Const. Amdt. V); “nor shall private
property be taken for public use without just compensa-
tion having been first made, or secured, except in cases of
war, riot, fire or great public peril. .. . ” (Nev. Const. Art.
1, § 8). Kelly did not cite below, and has not cited here, a
single Nevada Supreme Court decision discussing how
Article 1, Section 8, of the Nevada Constitution should be
read differently from its federal counterpart. Nor have we
unearthed one. Indeed, the Supreme Court of Nevada
historically has intermixed its discussions of the two pro-
visions. See, e.g., Sproul Homes v. State ex rel. Dep't Hwys.,
96 Nev. 441, 443, 611 P.2d 620, 621-623 (1980); Alper v.
Clark County, 93 Nev. 569, 572, 571 P.2d 810, 811-813
(1977); Daines v. Markoff, 92 Nev. 582, 587, 555 P.2d 490,
493 (1976); see also County of Clark v. Alper, 100 Nev. 382,
386, 389, 392 & 394, 685 P.2d 943, 946, 948-951 (1984);
Tacchino v. State ex rel. Dep't Hwys., 89 Nev. 150, 152-153 &
n. 1, 508 P.2d 1212, 1213-1214 & n. 1 (1973). And even
Kelly blended the two in his argument to the Nevada
Supreme Court. See Kelly Op. Br. at 30.
til
30
The Nevada Supreme Court’s correct disposition of
Kelly’s Fifth Amendment claim thus foreshadows identi-
cal treatment of a takings claim under the Nevada Consti-
tution. Indeed, it is difficult to imagine deciding this case
differently under any state’s constitution. Moreover, as
sentinel of the state constitution, the Nevada high court
had every opportunity to take up Kelly’s claim and rule
accordingly had it felt a different result would follow.
Kelly, however, gave it no reason to do so. And he gives
none to this Court.
We respectfully submit, therefore, that the preemp-
tion question is not viable. It is not apropos for certiorari.
Ii!
CONCLUSION
This case is too idiosyncratic to bear nationally prom-
inent issues. Its peculiarities aside, the action was cor-
rectly decided by the Nevada Supreme Court, and the
question of preemption is barren of the legal vigor requi-
site for extraordinary review. Kelly’s petition, accord-
ingly, should be denied.
DATED: November 23, 1993.
Respectfully submitted,
Gary A. OQweENn
CROWELL, SUSICH, OWEN & TACKES
510 West Fourth Street
P.O. Box 1000
Carson City, NV 89702
Counsel of Record for Respondent
Tahoe Regional Planning Agency
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.