The U.S. Supreme Court has decided that a property owner who has been granted transferable development rights (TDRs), but has been denied the right to develop her property, need not attempt to sell the TDRs before bringing a takings claim in court.
The court, in an opinion by Justice David H. Souter, found that the property owner had received enough information about the limits on developing her property for her to claim that the planning agency had taken her property without compensation in violation of the Fifth and 14th amendments.
The Tahoe Regional Planning Agency (TRPA), a compact between California and Nevada, regulates development in the Lake Tahoe region. One feature of the plan creates stream environment zones (SEZs). Under the planning agency's 1987 plan, no further construction is permitted in SEZs, although SEZ owners are entitled to certain TDRs, which they can sell to owners of other parcels in the region on which development is permitted.
Bernadine Suitum owns an 18,300 square-foot lot in an area classified by the plan as being in an SEZ. In 1989, Suitum sought permission to build a house on her lot. Although her lot is surrounded by parcels on which houses were built prior to the adoption of the 1987 plan, the Tahoe agency denied Suitum permission to do any kind of development on the lot because it is in an SEZ.
Although Suitum may not develop the lot, the plan provides her with several TDRs, including one residential development right and 183-square feet of land coverage.
Under the 1987 plan, a multi-unit development requires the owner to acquire residential development rights from other parcels for each unit to be built, so in principle, there should be a substantial market for Suitum's TDRs.
The trial court found that Suitum's TDRs are worth between $10,000 and $50,000, depending on whether she succeeds again in obtaining a development allocation.
Suitum challenged TRPA in federal court, alleging violations of her rights under the Fifth and 14th amendments. She made a takings claim against TRPA based on its refusal to permit any development on her lot.
TRPA argued that Suitum's claims were not "ripe or ready" for judicial review because she made no attempt to sell the TDRs to which she is entitled under the 1987 plan. The district court agreed that Suitum's claims were not ripe.
The Ninth Circuit likewise agreed, also finding that Suitum was required to obtain a final decision from TRPA concerning the application of the 1987 plan to her property. The court stated that a final decision was required because it could not "determine whether a regulation has gone 'too far' unless it knows how far the regulation goes."
Unless Suitum tried to transfer her development rights, the court concluded that it could not know the regulation's full economic impact, or how the regulations would interfere with the amount of money Suitum reasonably thought that she would obtain, two important considerations of a regulatory takings claim analysis.
In the Supreme Court, Suitum argued that she was not required to try to sell her TDRs before bringing her takings claim in court because she had already been denied the right to any economically realistic use of her property.
TRPA maintained that until Suitum reasonably pursued transfer of her development rights, the trial court would not be able to decide whether she could gain any economic benefits from her land.
The Court pointed out that the planning agency had already decided how Suitum could use her land, and that it was also within its power to lessen the impact of the regulations the agency administers.
Subsequently, the court concluded there was no question that Suitum had met the finality requirements: TRPA had determined that her land was located entirely within a zone in which development is not permitted.
NACo and other state and local interest groups participated in this case by filing an amicus brief that was written by Professor Robert Brauneis of George Washington University in Washington, D.C. These groups agreed with the position of TRPA that Suitum's takings claim was not ready for decision, and further argued that the number and variety of TDR programs across the country should prevent the court from issuing theoretical proclamations about takings issues.
This is a ruling on a narrow issue; the outcome is not favorable for counties but should not have a major impact on the main body of takings law. It remains to be seen how the court will reconcile its provisional statements on final judgments in this case with the more definitive terms it has used on this subject in earlier takings cases.
Suitum v. Tahoe Regional Planning Agency, No. 96-243 (May 27, 1997)
(Donna Clemons-Sacks serves as deputy general counsel for the International
Municipal Lawyers Association.)