Landowners May Win on Restrictions : Experts See Courts Permitting Damages for ‘Down Zoning’

Despite a string of California court decisions to the contrary, lawyers and academics around the country appear to agree that landowners will eventually win the legal right to receive damages for unduly restrictive land-use regulations.

According to most experts here for a conference on “The Future of Zoning,” the only question is whether the U. S. Supreme Court will finally resolve the issue in a new case accepted from Davis, Calif., last month, or, instead, kick the matter aside, as it has in three other cases over the past five years. The conference was sponsored by the Lincoln Institute of Land Policy.

Sheldon J. Plager, a law professor at Indiana University, seemed to sum up the feelings of many experts when he said a decision in favor of landowners is an “inevitability, given the fact that the three youngest members of the court are also the three most conservative.”

Builders and government officials have been confused for years about whether a city’s or county’s “down zoning” a parcel of land to restrict development constitutes an unconstitutional confiscation of private property.

Blame State Courts

The issue is particularly important to California, where state courts prohibit builders from filing suit to seek damages. A number of experts lay blame for confusion about the issue at the feet of California courts, which have generally blessed path-breaking efforts to use local land-use controls, not only to avoid nuisances, but also to exact benefits for the general public from developers of specific real estate projects.

The U.S. Supreme Court has heard three cases in the last five years raising this issue, including two from California, but has been unable to resolve it. The first two were decided on procedural grounds, while in the third, the court declared that the landowners had not exhausted all other administrative and legal remedies before coming to the Supreme Court. In October, the court decided to take yet another case--involving a zoning dispute outside Davis--in an attempt to settle this issue once and for all.

In the Davis case, a landowner seeking to build single-family homes on 40 acres of land outside the city limits, was turned down. The Yolo County general plan calls for residential development on the site, but the Davis city general plan says the area should be placed in an agricultural preserve. Howard Ellman of San Francisco, the landowners’ attorney, said when the case was accepted for review that, after frustration in the three previous cases, he hopes “we have the case.”

Case for Decision

Yet most of the land-use attorneys gathered at the conference here seemed to agree with Chicago land-use attorney Marlin Smith, who said: “Were this three cases ago, I would be the first to say this is the case the court is going to have to decide the issue on.

“But, I said that (in the first three cases), and I’ll be damned if I’m going to say it in the fourth.”

The conference commemorated the publication of “The Zoning Game Revisited,” a new book written by longtime zoning attorney Richard Babcock, who now teaches at Duke Law School, and his former law partner, Charles Seimon. Babcock’s first book, “The Zoning Game,” published in 1966, helped bring the problems of local land-use laws into national prominence. The crusty Babcock freely admitted at the conference that the new book, which deals with 11 important land-use controversies over the past 15 years, is not meant as an academic tome but as a book that “tries to tell a good yarn.”

“It is no longer possible to recognize the system of land-use control blessed by the Supreme Court in Euclid vs. Ambler ,” Smith said, referring to the 1926 case that first upheld zoning as a proper exercise of a municipality’s police power.

For Public Benefit

Pointing specifically to the widespread California practice of development exactions, Smith added: “This is a direct product of our attempt to use the land-use system to confer public benefits rather than protect against private harm.

“I’m not opposed to such a system, but zoning is not well designed to suit that purpose.”

A number of experts attending the conference called for a revolution, or at least an evolution, in the zoning field. Philadelphia lawyer Jan Z. Krasnowiecki, who once wrote an article entitled, “Abolish Zoning,” called for its replacement with a quasi-judicial process that would involve fact-finding and a judicial-type record.

Prof. Orlando Delogu of the University of Maine Law School, suggested that local zoning be replaced by a free-market system of land use, tempered by strategic intervention by state governments and review power--but not veto power--by localities.

‘Collective Property Right

And Interior Department economist Robert Nelson argued that zoning is fast becoming a “collective property right,” which will eventually be bought and sold with the property itself, much as condominium association membership is today. Indeed, in urban areas around the country--including Washington, Atlanta, Houston and Dallas--entire residential neighborhoods are banding together to sell their property to developers, and localities are passing protective ordinances, similar to condo-conversion laws, for use in such situations.

At the same time, however, many others in attendance argued that zoning is so popular among local officials that it is politically impossible to replace it with something else. “I think it’s an abomination,” Seimon said. “But I think we are going to have to live with it, and that means we are going to have to make it work.”

To many, “making it work” seems to mean first and foremost resolving the question of compensation for restrictive zoning. The lawyers seemed perplexed and frustrated at the Supreme Court’s inability to resolve the issue, even though the justices have heard three cases. Prof. Gideon Kanner of Loyola Law School in Los Angeles, said the line of lawyers filing briefs on the issue has become so long that it has assumed the proportion of a parade.

All are hopeful, however, that the new case from the Davis area will prove to be definitive--and most agreed that the decision, when it comes, will favor landowners.

Cities Fear Bankruptcy

Many municipalities have argued that the cost of a decision requiring compensation could bankrupt them. But some of the attorneys at the conference here called that claim an exaggeration.

“There will be a little flood of flaky cases filed by flaky lawyers, leading to retrenchment and making it harder for the good cases,” said Kanner. I’m not sure the risk to the public treasury is that great.”

Added Babcock: “I would suggest that either courts will be less likely to find ordinances invalid, or else cities will start giving the ballpark away (to developers) because they’re afraid to deny anything.”

Seimon suggested that a ruling favoring landowners “would make the reform we’ve all been talking about much more difficult to achieve.” Yet some other participants disagreed, saying that if the new case from Davis were decided in favor of the landowner, the evolution of zoning might be helped along.

“I’m not persuaded that the net result will be the dire consequences some people are predicting,” said Delogu. “Instead of rigidness, perhaps we’ll have move evolution. Developers will have new opportunities. Communities may sense new responsibilities. You may see the zoning game played with a little more openness and candor.”