An inverse condemnation challenge to a permit denial is not ripe until the government makes a final determination regarding the scope of allowable development on a plaintiff’s property, the California Court of Appeal held in York v. City of Los Angeles, 33 Cal. App. 5th 1178 (2019).

The plaintiffs submitted an application to the

The United States Supreme Court overturned a 34-year-old precedent established by Williamson Planning Comm’n v. Hamilton Bank, holding that landowners pursuing takings claims need not seek redress in state courts before pursuing a federal claim.  Knick v. Township of Scott, No. 17–647 (U.S. S.Ct. Jun. 21, 2019).

The Knick decision arose from a

Twenty years was a reasonable period of time for a public agency to accept a right-of-way dedication offer by physically occupying the property. Prout v. Department of Transportation, 31 Cal. App. 5th 200 (2019).

Prout developed a 165-acre residential subdivision that fronted State Highway 12 in Calaveras County. In 1989, Prout submitted to the California Department of Transportation (Caltrans) an application for an encroachment permit to connect his subdivision’s private road to Highway 12. Caltrans approved the encroachment permit conditioned upon Prout dedicating a 20-foot-wide strip of vacant land along Highway 12 (1.31 acres total) as public right-of-way. Final subdivision maps recorded in 1990 labeled the 20-foot strip as “area in the process of being deeded to Caltrans for highway purposes.” However, “the matter simply ‘fell through the cracks,’” and the 20-foot strip was never transferred by deed to Caltrans. In the subsequent years, Prout never was assessed or paid property taxes on the 20-foot strip, and he did not fence the area within his subdivision parcels.

Two decades later, while planning for work to improve Highway 12, Caltrans discovered that the 20-foot strip of land had never been transferred by deed. Caltrans requested that Prout sign a deed to convey the strip of land; Prout refused. Caltrans proceeded with widening Highway 12 to include the 20-foot strip of land, completing the work in 2011.

Prout filed an inverse condemnation action against Caltrans, alleging that Caltrans owed him just compensation for physically occupying the 20-foot strip of land. Caltrans filed a cross-complaint for breach of contract, promissory estoppel, and specific performance, alleging that Prout had accepted the benefit of the encroachment permit but refused to finalize the dedication and deed of the 20-foot strip. In response, Prout argued that if the dedication of the 20-foot strip was a condition of the encroachment permit (as claimed by Caltrans), it was an illegal exaction.
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The Ninth Circuit held that the City of Carson’s mobile home rent control board’s decision not to factor in debt service increases in its adjustment of a rental rate for a mobile home park did not result in a regulatory taking of the mobile home park owner’s property. Colony Cove Props., LLC v. City of Carson, 888 F.3d 445 (9th Cir. 2018)

The plaintiff purchased a $23 million rent-controlled mobile home park in the City of Carson, $18 million of which was financed through a loan.  When the plaintiff acquired the property, the City Rent Review Board’s application review guidelines required the Board to consider certain expenses submitted by property owners against the property’s income to determine what rents would give the owner a fair return on their investment. At the time the plaintiff purchased the property, these expenses included debt service, which are interest payments made on a loan to purchase the rent-controlled property.  Subsequently, the City revised its guidelines for considering rent increases and the City’s new rent control formula no longer factored in debt service expenses.

The plaintiff twice petitioned the city’s Rent Review Board for a several hundred-dollar rent adjustment, per space. Applying the new guidelines, the City only granted a rent increase of $36.74.  The plaintiff sued the City, contending the Board’s decision was an unconstitutional taking. The jury awarded the plaintiff over $3 million in damages and the City appealed the decision.
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Under the doctrine of regulatory takings, a regulation of property that goes “too far” in burdening property rights will be recognized as a Fifth Amendment taking. The Supreme Court’s recent decision in Murr v. Wisconsin (U.S. Supreme Court No. 15-214, June 23, 2017), represents an important step in the evolution of regulatory takings jurisprudence. It addresses the issue of how to define the “proper unit of property” in the regulatory takings analysis, a question often termed “the denominator problem.” In Murr, the Court rejected the notion that a legally defined parcel is necessarily the relevant unit of analysis finding that, under certain circumstances, multiple legal parcels may jointly constitute the relevant unit of property. But the Court avoided adopting a bright-line rule to determine the relevant unit of property and instead adopted a complex, multifactor test to address the denominator problem.

Background of this Case

The property at issue in Murr consisted of two adjacent lots, Lot E and Lot F, in Troy, Wisconsin, owned by two brothers and two sisters, the petitioners in the case. Local regulations prevented these lots from being sold or developed unless there was a minimum of one acre of developable land. A lot merger provision also provided that adjacent lots under common ownership could not be sold or developed as separate lots if they did not meet the size requirement.

The two lots were situated along the St. Croix river, with a steep bluff cutting through the lots limiting the lots’ developable area. Though each lot was approximately 1.25 acres in size, the lots’ combined buildable area was only 0.98 acres due to the terrain.

The petitioners’ parents purchased Lot F in 1960 and built a small cabin on it. Lot F was later transferred to the family plumbing company. In 1963, they purchased neighboring Lot E, which they held in their own names. The lots remained under separate ownership until 1995, when they were transferred to the petitioners.

The petitioners became interested in moving the cabin on Lot F to a different portion of the lot and selling Lot E to fund the project. However, based on the lot merger provision, the local zoning board determined that the lots could not be separately sold or developed.

The petitioners filed an action, alleging that these restrictions amounted to a regulatory taking by effectively depriving them of all or practically all use of Lot E.

The Takings Clause

The Takings Clause of the Fifth Amendment provides that property shall not “be taken for public use, without just compensation.” Traditionally, the Takings Clause reached only a direct appropriation or physical occupation of property. The Court’s regulatory takings jurisprudence was initiated by Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922), which declared that “while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”

Two subsequent Supreme Court decisions provide guidance on application of this principle. In Lucas v. South Carolina Coastal Council, 505 U. S. 1003 (1992), the Court stated that, with certain qualifications, a regulation which “denies all economically beneficial or productive use of land will require compensation under the Takings Clause.” When a regulation impedes the use of property without depriving the owner of all economically beneficial use, a taking may still be found based on multiple factors described in Penn Central Transportation Co. v. New York City, 438 U. S. 104, 124 (1978), which include (1) the economic impact of the regulation; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action.
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In Property Reserve v. Superior Court, S217738 (Cal. Supreme Court, July 21, 2016) the Supreme Court of California held that the precondemnation entry and testing statutes are constitutional when reformed to permit affected property owners the right to have a jury determine damages.

The California Department of Water Resources sought a court order allowing