Arguing that Regulatory Taking Analysis Should Focus on That Portion of a Property That Is Actually Affected by the Regulatory Change in Order to Measure the True Cost of the Regulation to the Property Owner
This Massachusetts Supreme Judicial Court (“SJC”) appeal deals with an alleged regulatory taking of real property in the Town of Ashland (“Town”). In 1999, the plaintiff, Giovanella, purchased two adjacent parcels in the Town. One parcel already had a house on it; the other was vacant. When the plaintiff sought approval to build a house on the vacant lot, he was prevented from doing so under a Town wetland ordinance establishing stringent setback requirements that had been adopted by the Town several months after the plaintiff had purchased the two properties. The plaintiff brought suit against the Town, alleging that this wetland ordinance resulted in a regulatory taking of his property that should be compensated. In order to decide whether a compensable regulatory taking occurred in this case, the SJC must decide how to value the diminution in value of the plaintiff’s property caused by the regulation. In that connection, the SJC has requested amicus briefing on an issue that NELF has dealt with in several cases, namely how to define the “parcel as a whole.”
This is a question of first impression for the SJC. In its request for amicus participation, the SJC expressed the issue as follows: “In this action the plaintiff alleged, inter alia, that the town’s denial of an Order of Conditions for building a small home amounted to an unconstitutional taking of his separately platted, residentially-zoned land, which was not part of a development scheme but was adjacent to a parcel previously owned by the same owner; the issue presented, among others, is what is the ‘relevant parcel’ for purpose of takings analysis.”
NELF has filed an amicus brief on this issue in support of the plaintiff. As NELF explains in its brief, courts considering an alleged regulatory taking review the impact of the regulation on the “relevant parcel” by analyzing the “parcel as a whole.” Courts do this based upon a fraction whose denominator is the pre-regulation value of the entire property (the “parcel as a whole”) and whose numerator is the whole parcel’s post-regulation value. If the reduction in value is significant (generally above 70%), the court will typically find a taking; otherwise, the regulatory imposition will be a simple, uncompensated reduction in value. Simply put, in this case the question comes down to whether, for the purposes of the SJC’s takings analysis, the “parcel as a whole” should be considered to be just the vacant parcel on which the plaintiff sought to build a house (and was prevented from doing so by the post-purchase regulation) or that parcel together with the other parcel that the plaintiff purchased in 1999. The Superior Court granted the Town’s motion for summary judgment on the takings claim. A basis for this decision was that the Superior Court analyzed Giovanella’s two lots together and found that, with a house already built on the adjacent lot, requiring the other lot to remain vacant did not result in a significant diminution of the total value of the combined properties. NELF argues, based largely on the seminal article by Harvard Law School Professor Frank Michelman from which is derived the economic underpinning for modern regulatory takings analysis, that the Superior Court was incorrect and that the “relevant parcel” for the takings analysis was not both of Giovanella’s properties combined, but the affected parcel alone. NELF’s participation in this case is in line with its prior efforts in several cases (including amicus filings in the U.S. Supreme Court) to have the courts adopt an appropriate and sensible approach to identifying the relevant parcel for regulatory takings analysis, one that focuses on that portion of a property that is actually affected by the regulatory change so as to measure the true cost of the regulation to the property owner.
This Massachusetts Supreme Judicial Court (“SJC”) appeal deals with an alleged regulatory taking of real property in the Town of Ashland (“Town”). In 1999, the plaintiff, Giovanella, purchased two adjacent parcels in the Town. One parcel already had a house on it; the other was vacant. When the plaintiff sought approval to build a house on the vacant lot, he was prevented from doing so under a Town wetland ordinance establishing stringent setback requirements that had been adopted by the Town several months after the plaintiff had purchased the two properties. The plaintiff brought suit against the Town, alleging that this wetland ordinance resulted in a regulatory taking of his property that should be compensated. In order to decide whether a compensable regulatory taking occurred in this case, the SJC must decide how to value the diminution in value of the plaintiff’s property caused by the regulation. In that connection, the SJC has requested amicus briefing on an issue that NELF has dealt with in several cases, namely how to define the “parcel as a whole.”
This is a question of first impression for the SJC. In its request for amicus participation, the SJC expressed the issue as follows: “In this action the plaintiff alleged, inter alia, that the town’s denial of an Order of Conditions for building a small home amounted to an unconstitutional taking of his separately platted, residentially-zoned land, which was not part of a development scheme but was adjacent to a parcel previously owned by the same owner; the issue presented, among others, is what is the ‘relevant parcel’ for purpose of takings analysis.”
NELF has filed an amicus brief on this issue in support of the plaintiff. As NELF explains in its brief, courts considering an alleged regulatory taking review the impact of the regulation on the “relevant parcel” by analyzing the “parcel as a whole.” Courts do this based upon a fraction whose denominator is the pre-regulation value of the entire property (the “parcel as a whole”) and whose numerator is the whole parcel’s post-regulation value. If the reduction in value is significant (generally above 70%), the court will typically find a taking; otherwise, the regulatory imposition will be a simple, uncompensated reduction in value. Simply put, in this case the question comes down to whether, for the purposes of the SJC’s takings analysis, the “parcel as a whole” should be considered to be just the vacant parcel on which the plaintiff sought to build a house (and was prevented from doing so by the post-purchase regulation) or that parcel together with the other parcel that the plaintiff purchased in 1999. The Superior Court granted the Town’s motion for summary judgment on the takings claim. A basis for this decision was that the Superior Court analyzed Giovanella’s two lots together and found that, with a house already built on the adjacent lot, requiring the other lot to remain vacant did not result in a significant diminution of the total value of the combined properties. NELF argues, based largely on the seminal article by Harvard Law School Professor Frank Michelman from which is derived the economic underpinning for modern regulatory takings analysis, that the Superior Court was incorrect and that the “relevant parcel” for the takings analysis was not both of Giovanella’s properties combined, but the affected parcel alone. NELF’s participation in this case is in line with its prior efforts in several cases (including amicus filings in the U.S. Supreme Court) to have the courts adopt an appropriate and sensible approach to identifying the relevant parcel for regulatory takings analysis, one that focuses on that portion of a property that is actually affected by the regulatory change so as to measure the true cost of the regulation to the property owner.
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