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Property takings initiative still unconstitutional

In a victory for taxpayers, the U.S. Supreme Court on April 23 upheld regulations that limited uncontrolled development around Lake Tahoe. The court ruled that a moratorium on development does not amount to a “taking” of private property under the Fifth Amendment. The court rejected landowners’ arguments to award them taxpayer dollars to the tune of $27 million dollars. In defense of the moratorium, 22 states and the Bush administration joined the case against property owners.

For the past 50 years the lake’s legendary clarity has declined. As more homes, golf courses, and hotels were built around the lake, water quality has steadily deteriorated because of severe soil erosion and pollution. “The lake’s unsurpassed beauty, it seems, is the wellspring of its undoing,” Justice Stevens wrote, voting with the majority to dismiss the landowners’ lawsuit. The Tahoe Regional Planning Agency used the moratorium to develop a long-term regional use plan. The final plan was adopted in 1987 and was not challenged. The court noted that property values have been maintained despite TRPA regulations, a fact plaintiffs did not deny.

The plaintiffs argued that a restriction that even temporarily deprives property owners of all “economically viable” use of their land is a “taking” for which the Fifth Amendment requires compensation. The court disagreed, saying “A rule that required compensation for every delay in the use of property would render routine government processes prohibitively expensive, or encourage hasty decision making,” and that “such an important change in the law should be the product of legislative rule making rather than adjudication.”



The ruling also preserves the important distinction between physical and “regulatory” takings, rejecting claimants’ efforts to blur the line. It limits the reach of the Lucas per se rule to regulations that completely eliminate all property value, rejecting the oft-heard argument that Lucas guarantees a constitutional right to build and that regulations can deny all “economically viable” use even where land retains value. It weighs concerns about “inefficient and ill-conceived growth” in its consideration of fairness. It recognizes that land use restrictions and zoning enhance property values and generate a reciprocity of advantage. It acknowledges the importance of careful planning in protecting our communities from harmful development.

What does this mean for CABPRO’s “Property Owner Claims Reimbursement Initiative” (POCRI), which attempts to establish a “process” to force taxpayers to “reimburse” real estate owners for a “reduction” in property value resulting from normal planning and regulatory decisions? It means, quite simply, that POCRI is as unconstitutional as ever, no matter how you spin the most important Supreme Court ruling on the Fifth Amendment in 20 years.




Signature gatherers for POCRI will ask you to “protect your property rights.” However:

1.We already have a good judicial “process” for determining “takings” in Nevada County, and even if we didn’t, only the State of California (not POCRI) can change the current process.

2.The entire legal premise of POCRI is incorrect. According to 150 years of Supreme Court rulings interpreting the Takings Clause, including Tahoe:

— There is a long-established Constitutional precedent supporting the public regulation of private property, for reasons too obvious to state. And it has nothing to do with a socialist plot to deprive anyone of their land or livelihood.

— If your property is seized for public use by any unit of government, you are already entitled to just compensation under the Fifth Amendment.

— If your property loses all value (100 percent) through regulation, you are entitled to just compensation. Developers are not entitled to “reimbursement” for a simple reduction in the value of their real estate. In fact, public decisions affect not only real estate, but all forms of our assets, in both directions, and taxpayers aren’t held liable. For example, the Federal Reserve Bank raises the discount rate which causes your bank to raise interest rates, lowering the value of your home, and nobody is “reimbursed.” Taxpayers don’t guarantee anyone’s real estate investments any more than they guarantee our stock portfolios or Beanie Baby collections.

3. If a constitutional issue arises, there is an entire judicial system to which owners can appeal, provided they have a case.

A less obvious flaw in the initiative is proponents’ misunderstanding of how real estate values are determined. Realtors understand that the value of any parcel is established primarily by three factors – location, location, and location – so that all our property values exist within a clear context. It follows that much of the value of any parcel comes from beyond its property lines, from the investments that others – mainly taxpayers- have made. These include roads, airports, schools, water supply, public parks, sewage disposal, police and fire protection, transportation systems, access, etc. What would our properties be worth without these public investments in sound planning? Zilch.

And yet, CABPRO proclaims, “If any public action causes my property values to go down, taxpayers have to reimburse me!” No, we don’t, not according to a century and a half of Supreme Court rulings, including last month’s.

Lastly, POCRI doesn’t even define its own terms, not that doing so would solve its legal problems. Terms like “beneficial best use”, “existing use and utility,” along with the question of the initiative’s effect on existing regulations, all of which would swing the door of the public treasury wide open for abuse. The court cases to define these terms would take millions of dollars and tie the county up in court for eternity.

In sum, POCRI would lead to an explosion of litigation between local government and property owners, property owners and neighbors, and between local government, state and federal agencies – litigation that taxpayers will fund. Even worse, it fails to achieve the stated purpose of the initiative. Rather than increasing the value of property it will diminish it by failing to protect adjacent homeowners and the community from incompatible and inconsistent uses.

But, not to worry. This budget-buster is still unconstitutional.

Susan Levitz is a resident of Nevada City


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