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Sunday, October 21, 2018
Would You Pay $10 for Maui Beachfront Land?
By Robert Thomas @ 3:51 PM :: 672 Views :: Maui County, Land Use

New Amicus Brief In SCOTUS Hawaii Case: Takings Is About Denial Of *Use* Not Whether Property Has Value

by Robert Thomas, InverseCondemnation, October 16, 2018

Would you pay, say $10 for an undeveloped Maui beachfront parcel that is zoned for hotel and residential purposes, but currently is not developable because the County in the past wanted to condemn the land and turn it into a public park (but then ran out of money)?

In furtherance of its acquisition plan, the County changed the parcel's Community Plan (known as a "general plan" in most jurisdictions) designation to "park." But it never amended the Hotel zoning, which allows lesser intensive uses such as single-family homes. But then the County didn't have enough money -- beachfront property, it turns out, was (and is) a lot more spendy than the government appraisers thought -- so it never actually acquired the land. But having downplanned the parcel in order to take it, it never bothered uplanning it when it couldn't: the County never reverted the CP designation to its former state, but instead left the "park" designation in place.

Which resulted in a land bank, because under Hawaii law an application for use of the land and development permits (or even things like confirmation that development doesn't need any discretionary permits) cannot even be processed by the County planning agency unless both the zoning and the CP are "consistent." And here, Hotel zoning is not "consistent" with the CP park designation. End result: no development unless and until the County amends the CP park designation, which it is not inclined to do. Why should it, after all? No development or use allowed is just about as good as having a park there, with the added benefit that they don't have to bother paying for it. 

So going back to our initial question: would you pay something to step into the shoes of the property owner in this story? It could be a good deal: maybe, just maybe, some time in the indeterminate future, the County just might change those use prohibitions, and let whomever owns the property then actually do something with it, true? Why not take a chance? 

We'd bet that a lot of people might take that bet and pay $10 to roll the dice. And might pay even more. No present use, but hey, maybe some value. In the Hawaii Supreme Court's words, the owners could "hold it for a period of time, and as it increases in value and depending on [their] strategy and financial objectives, sell it for profit."  And that, the court concluded, was a use. Because someone might pay for it. Thus, the court held there was no regulatory taking because the owner retained what the court called "investment use."

Welcome to newspeak, takings edition. 

The property owner, as we mentioned in this post, has challenged the Hawaii Supreme Court's ruling, by asking the U.S. Supreme Court to hear the case.

Last week, a coalition of those who believe that in Lucas and other decisions, the Court held that takings doctrine is based on deprivation of use -- and not simply value (after all, what doesn't have some value or "investment use?") -- filed an amici brief which argues:

This case raises two important issues that have divided the lower federal courts and state courts of last resort in the quarter century since Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). The petition first asks whether any residual value in a parcel of property that is rendered unbuildable by regulation will defeat a categorical total takings claim. If so, the petition asks to what extent the courts should consider any residual value when evaluating a total takings claim. Review by this Court is necessary to provide much needed stability and uniformity in takings law. As the law stands right now, a property owner’s right to obtain compensation for a categorical taking varies depending upon seemingly irrelevant factors, such as the property’s location. Constitutional rights should not be subject to such uncertainty and uneven application.

Br. at 5.

Stay tuned for further.

PDF: Brief Amicus Curiae of Pacific Legal Foundation, Cato Institute, Owners' Counsel, et al., Leone v. County o..

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