COMMENTS THOMAS W. KELTY, Chief Counsel, Illinois Municipal League

It's Bad . . . But, It Could Be Worse

The headlines sounded the death knell: "High court upholds property rights," "BAD NEWS: Court Chills Zoning Authority," "High court again undermines zoning authority" and "High court expands property owner rights." The experts pronounced that zoning and land use regulation were dead, that the Supreme Court had taken away the power of municipalities to regulate development and land use; that a "chilling effect" on the zoning could be expected; and, that municipal officials would no longer be willing to regulate land use for fear of the litigation that might result. All of these comments and many more lamenting the end of the concepts of zoning and land use regulation came in the wake of decisions by the United States Supreme Court in the cases of First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, decided June 9, 1987 and Nollan v. California Coastal Commission, decided June 26,1987. However, a closer reading of the opinions reveal that the true effect of the rulings are to place more pieces of information in the zoning and land use puzzle. Those pieces, while potentially uncomfortable for municipalities, do not spell the end of zoning or land use regulation and do not enable every developer or petitioner to litigate a denial of zoning or land use.

First English Evangelical Lutheran Church of Glendale v. County of Los Angeles

In 1957, First English Evangelical Lutheran Church purchased land in a canyon along the banks of a creek that is a natural drainage channel for a watershed area. The church developed the area as a retreat center and recreational area for handicapped children. In 1978, the property, known as "Lutherglen", was flooded thereby destroying the improvements. Subsequent to the flood, the County of Los Angeles ("Los Angeles") adopted an interim ordinance which provided in part that,

"A person shall not construct, reconstruct, place or enlarge any building or structure, any portion of which is, or will be, located within the outer boundary lines of the interim flood protection area located in Mill Creek Canyon ..."

The ordinance was effective immediately because Los Angeles determined that it was "required for the immediate preservation of the public health and safety . . ." Within its scope, the ordinance encompassed the property owned by the church. Subsequent to the adoption of the ordinance, the church filed a complaint alleging in part that the ordinance denied all use of Lutherglen. In addition, the complaint sought to recover from the Los Angeles Flood District in inverse condemnation and in tort for engaging in "cloud seeding" during the storm that flooded Lutherglen. The claims at issue in the appeal (deprivation of use in inverse condemnation) were stricken from the complaint by the Trial Court and affirmed by the Appellate Court by relying on the case of Agins v. Tiburon, 24 Cal. 3rd 266, 598 P. 2d 25 (1979), Aff'd on other grounds, 447 U.S. 255 (1980). In Agins, the Supreme Court of California had decided that a landowner may not maintain an inverse condemnation suit in the courts of that state based upon a "regulatory" taking. According to the United States Supreme Court opinion in discussing Agins,

"In the (California Supreme) court's view, maintenance of such a suit would allow a landowner to force the legislature to exercise its power of eminent domain. Under this decision, then, compensation is not required until the challenged regulation or ordinance has been held excessive in an action for declaratory relief or writ of mandamus and the government has nevertheless decided to continue the regulation in effect."

Returning to the case at bar, Chief Justice Rehnquist writing for the Supreme Court then discusses several cases in which similar questions were presented in a fashion that did not allow the Supreme Court to reach the compensation question presented in this case. In the court's words,

"In affirming the decision to strike this allegation, the Court of Appeal assumed that the complaint

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sought 'damages for the uncompensated TAKING of the use of Lutherglen by County Ordinance No. 11,855.' (citations omitted) . . . The disposition of the case on these grounds isolates the remedial question for our consideration . . . The California Court of Appeal has thus held that regardless of the correctness of the appellant's claim that the challenged ordinance denies it 'all use of Lutherglen' appellant may not recover damages until the ordinance is finally declared unconstitutional, and then only for any period after that declaration for which the county seeks to enforce it. The constitutional questions pretermitted in our earlier cases is therefore squarely presented here." (Emphasis by the Court.)

However, in framing the issue, the court notes that it is not deciding whether the ordinance actually denied the church of all use of its property or whether the county might have avoided a conclusion that a taking had occurred by establishing that the denial was part of the State's authority to enact safety regulations. "These questions, of course, remain open for decision on the remand we direct today."

In discussing its rationale for this decision, the Supreme Court quotes a lengthy list of cases establishing various principles of law relating to the compensation question. However, one case cited by the court sums up the holding of the court regarding from what point compensation should be provided. Citing Jacobs v. United States, 290 U.S. 13 (1933),

"The suits were based on the right to recover just compensation for property taken by the United States for public use in the exercise of its power of eminent domain. THAT RIGHT WAS GUARANTEED BY THE CONSTITUTION. The fact that condemnation proceedings were not instituted and that the right was asserted in the suits by the owners did not change the essential nature of the claim. The form of the remedy did not qualify the right. It rested upon the 5th Amendment. Statutory recognition was not necessary. A promise to pay was not necessary. Such a promise was implied because of the duty imposed by the amendment. THE SUITS WERE THUS FOUNDED UPON THE CONSTITUTION OF THE UNITED STATES." (Emphasis by the Court.)

Continuing its discussion by addressing the subject of a temporary or regulatory taking, the court cites Pumpelly v. Green Bay Company, 13 Wall. 166, (1872), "It would be a very curious and unsatisfactory result if ... it shall be held that if the government refrains from the absolute conversion of real property to the uses of the public it can destroy its value entirely, can inflict a reporable and permanent injury to any extent, can, in effect, subject it to total destruction without making any compensation, because, in the narrowest sense of that word, it is not TAKEN FOR THE PUBLIC USE." (Emphasis by the Court.)

Nollan v. California Coastal Commission

After the decision of the Supreme Court in the Lu-

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therglen case, unbeknownst to municipalities, the Supreme Court had one more surprise before it left Washington for the summer. That surprise came in the case of Nollan v. California Coastal Commission. The Nollan case signals the beginning of a long process of establishing standards for ascertaining whether a law or regulation constitutes a taking under the 5th Amendment.

Factually, Nollan submitted a proposal to the California Coastal Commission (CCC) requesting a permit to demolish an existing summer home and replace it with a more permanent structure. The CCC granted the permit subject to the condition that a public easement be granted along the beachfront edge of the property to allow the public access to an adjacent public beach. The Nollan's objected to the Commission, which, after a public hearing, upheld the imposition of the deed restriction as a condition of issuing the permit.

Upon pursuing their case through the California Courts, the access requirement was eventually upheld for a number of reasons, including the fact that the easement did not deprive the Nollans of all reasonable use of the property. From the decisions of the California Courts, the Nollans appealed to the United States Supreme Court on the sole issue of taking by the government through the imposition of the easement restriction as a requirement for receiving the building permit.

In a 5-4 decision, Justice Antonin Scalia delivered the opinion of the divided court. Justices Brennan, Blackman and Stevens filed dissents severely criticizing the rationale used by the majority in achieving its result.

Justice Scalia begins his rationale of the court's decision by noting that requiring the landowner to convey the easement to the CCC, unconnected to the building permit process, would be a compensable taking. He then frames the issue by stating,

"Given, then, that requiring uncompensated conveyance of the easement outright would violate the 14th Amendment, the question becomes whether requiring it to be conveyed as a condition for issuing a land use permit alters the outcome."

He continues and answers the question by stating, "We have long recognized that land use regulation does not affect a taking if it 'substantially advances a legitimate state interest' and does not 'deny an owner economically viable use of his land' . . ." Although this statement may shed some light on the rule of law to be applied in similar situations, the court's opinion acknowledges that they have not defined what constitutes a "legitimate state interest" or what type of connection must exist between the regulation and the state interest to satisfy the requirement that the regulation will "substantially advance" the state interest.

Justice Scalia rejects the notion that the permit restriction advances the governmental purpose of the CCC. It is important to note that he does not reject the concept of the building restriction or the state interest advocated by the CCC but the rationale that the CCC uses to link the two together.

"It is quite impossible to understand how a requirement that people already on the public

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beaches be able to walk across the Nollans' property reduces any obstacles to viewing the beach created by the new house. It is also impossible to understand how it lowers any 'psychological barrier' to using the public beaches, or how it helps to remedy any additional congestion on them caused by the construction of the Nollans' new house."

In rejecting the rationale of the CCC, Justice Scalia attempts to provide some guidance to local governments by summarizing the rule of the court in similar cases. "Unless the permit conditions serves the same governmental purposes as the development ban, the building restriction is not a valid regulation of land use but 'an out-and-out plan of extortion.' (citations omitted)" Later in the opinion, Scalia expands upon this statement.

"We view the 5th Amendment's property clause to be more than a pleading requirement, and compliance with it to be more than an exercise in cleverness and imagination. As indicated earlier, our case has described the condition for abridgement of property rights through the police power as a 'SUBSTANTIAL Advancing' of legitimate state interest. We are inclined to be particularly careful about the adjective where the actual conveyance of property is made a condition to the lifting of a land use restriction, since in that context there is height and risk that the purpose is avoidance of the compensation requirement, rather than the stated police power objective."

Finally, Scalia instructs the State of California on how it can accomplish its public purpose in this case. "California is free to advance its 'comprehensive program,' if it wishes, by using its power of eminent domain for this 'public purpose', . . . but if it wants an easement across the Nollans' property, it must pay for it."

Conclusion

While both of the cases discussed above present ominous potential difficulties for municipalities, the court is careful to note in each case that there are a number of questions which remain undecided and that there are methods by which municipalities and units of government across the country can avoid the results in the Lutherglen and Nollan cases. For example, in the Lutherglen case, the court notes that "Once a court determines that a taking has occurred, the government retains the whole range of options already available — amendment of the regulation, withdrawal of the invalidated regulation, or exercise of eminent domain." Also in Lutherglen the court carefully notes that the decision is limited to the instant facts, "We limit our holding to the facts presented, and of course do not deal with the quite different questions that would arise in the case of normal delays in obtaining building permits, change in zoning ordinances, variances and the like which are not before us."

In Nollan, the court has not rejected the concept of imposing restrictions as a condition of building permits or similar regulations, it simply requires that there be a

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close connection between the restriction and the governmental purpose sought to be advanced. In fact, Justice Scalia notes that the method by which the court analyzes the connection of the restriction to the state interest advance is not new. "Our conclusion of this point is consistent with the approach taken by every other state court that has considered the question, with the exception of California State Court." One of the states that has considered a similar question is Illinois. (See Pioneer Trust & Savings Bank v. Mt. Prospect, 22 Ill. 2d 375, 176 N.E.2d 799 (1961).)

The Supreme Court has not ended the ability of government to zone or regulate land use. These cases stand for two simple principles. A land use restriction must bear a substantial relation to the state interest it seeks to advance and the regulation must be tailored to meet that purpose. Second, if a restriction by the unit of government renders the property totally unusable, the government must pay for the regulatory taking. Certainly, misreading and misinterpretation of these decisions will spawn a heavy volume of litigation seeking to overturn land use restrictions and attempting to obtain compensation from municipalities across the United States. However, the best defense against these claims couched in terms of the Lutherglen and Nollan cases is reasonable exercise of the powers granted to municipalities in the areas of land use regulation and use of the police power. Officials who avoid the temptation to impose substantial requirements on landowners to achieve "governmental purposes" through the backdoor will be sustained. Units of government that too stringently restrict the use of property, for whatever reason, will be required to pay for that property. Only those officials who have attempted to make landowners bear a greater burden than the rest of the public to accomplish various governmental purposes need fear these decisions rendered by the Supreme Court. •

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