Drawn-Out Tahoe Case May Be a Watershed on Land Use

For several hundred families, the 1970s dream of retiring at Lake Tahoe has led instead to more than 20 years of litigation, frustration and taxes.

Dorothy Cook, a widowed bookkeeper who was living in the San Fernando Valley, purchased a small lot overlooking the lake in 1977. Kenneth and Betty Eberle bought two adjoining wooded lots about the same time.

But when it came time to build, they were blocked by a 1981 moratorium on development, a supposedly temporary delay that has stretched out for years.

Environmentalists said runoff from rain and melting snow would drain through certain lots if developed and pollute the crystal-clear water of the mountain lake. So the owners’ building permits were denied, even as they watched houses going up on some of the lots around them.

“We haven’t been able to do anything with it, except pay taxes,” Kenneth Eberle of Cambria, Calif., said of his Tahoe lot.

The Eberles and Cook are part of a 1984 lawsuit brought by nearly 700 families who had been prohibited from building on their Tahoe lots. They sought compensation from the California-Nevada planning agency that imposed the moratorium.

Today, the Supreme Court will take up the Tahoe case to decide a question of property law that is being closely watched by builders, environmentalists and land-use planners across the nation.

The outcome will determine when, if ever, the government must pay for delays in allowing property owners to use their land.

The case turns on the meaning of the 5th Amendment to the Constitution, which says “private property [shall not] be taken for public use, without just compensation.”

At one time, an unconstitutional “taking” of private property was limited to instances where the government took over land for its use. More recently, the high court has made clear that a government regulation that bars all beneficial use of private property can also trigger a demand for compensation.

It has remained unclear, however, whether a temporary freeze or a moratorium on development entitles the landowners to compensation.

Over 17 years, the Tahoe case has bounced back and forth in the federal courts, prompting a classic liberal-conservative split among judges on the West Coast--with conservatives siding with property owners and liberals arguing that government has the right to limit certain uses of property.

In the most recent rounds, the litigation has focused on whether property owners deserve money for a “temporary taking” of their land.

A trial judge in Reno ruled that the Tahoe families were entitled to compensation because the moratorium deprived them of all use of their land for at least three years. Strangely enough, the lawsuit has proceeded as a dispute over how things stood in 1984--three years after the moratorium was imposed--and has essentially ignored the fact that the owners still are unable to build on their land.

In an appeal, lawyers for the regional planning agency argued that the building moratorium was justified by the need to protect the lake. The U.S. 9th Circuit Court of Appeals agreed two years ago, reversing the decision of the trial judge.

A moratorium, by its nature, is a temporary measure, said Judge Stephen Reinhardt of Los Angeles. It “did not deprive the plaintiffs of all ‘use’ of their property,” he reasoned, because its usefulness “runs from the present to the future.” Someday, the lot owners may win a permit to build on their land. And they are free to sell it to others, including to the U.S. Forest Service, he said.

“In reaching this conclusion, we preserve the ability of local governments to do what they have done for years--to engage in orderly, reasonable land-use planning through a considered and deliberative process. To do otherwise would turn the Takings Clause into a weapon to be used indiscriminately to penalize local communities for attempting to protect the public interest,” wrote Reinhardt, a liberal leader of the 9th Circuit.

In dissent, Judge Alex Kozinski of Pasadena joined four of his conservative colleagues in all but urging the Supreme Court to reverse Reinhardt’s opinion.

“Let’s say the government decides to use your house as a warehouse for three years. You are locked out and the government has the run of the property for that period,” Kozinski wrote. “Is there any doubt that you have suffered a taking for which you should be compensated? Of course not. Why should the case be any different if the government simply prohibits you from using your house for three years, but never gets around to using it as a warehouse?”

The Supreme Court voted in June to hear the property owners’ appeal in the case (Tahoe Sierra Preservation Council vs. Tahoe Regional Planning Agency, 00-1167). Under Chief Justice William H. Rehnquist, the high court has moved repeatedly to strengthen the rights of property owners.

Santa Monica attorney Michael M. Berger, who is representing the Tahoe lot owners, argues that property owners are entitled to compensation whenever the government forbids them from using their land, even temporarily.

“If it’s a flat-out prohibition of using your land, whether’s it’s for a day or a decade, it’s taking,” Berger said. Compensation “may not be worth much if it’s just for a short time, but it’s still a taking.”

In his brief to the Supreme Court, Berger says the Tahoe lot owners have been left with nothing but a “barren title.” They have paid assessments for putting in waterlines, sewage facilities and roads around the lake, and they pay property taxes. Yet the planning board continues to bar them from building.

Under the regional land-use plan, lots around the Tahoe Basin were rated on a point system according to their likelihood of causing erosion. Runoff from developed properties has increased nitrogen levels in the lake, triggering algae growth. Owners with land judged to be a “low hazard” obtained permits, while owners with “high hazard” lots were denied.

Environmentalists fear that a ruling in favor of the Tahoe lot owners would tie the hands of land-use planners. Even temporary measures to protect the environment could result in huge liability judgments against the government, they said.

Timothy Dowling, a lawyer with the pro-environment group Community Rights Counsel, said Berger is “taking an extreme position. No court has ever recognized an absolute constitutional right to build immediately.” Dowling filed a friend-of-the-court brief on behalf of the National League of Cities, the National Conference of State Legislatures and other government groups.

In a move that might surprise conservatives, the Bush administration’s Solicitor Gen. Theodore B. Olson joined the case on the side of the Tahoe planning board. He defended Reinhardt’s opinion, telling the justices that “temporary development [moratoriums] represent an important land-use planning tool with a well-established tradition.”

Today, Olson will be in the courtroom to help argue the case for the planning agency.

The families who have been fighting the lawsuit say they are taken aback to hear it described as a dispute over a “temporary” ban on development. Their years of enjoying retirement are ebbing.

“We’re 84 years old,” Hall McElree of San Francisco said of himself and Georgetta, his wife. “We bought a lot in the early ‘70s. We wanted a place to retire, a place to ski, maybe a place for our kids. It’s lovely up there, but we’re not going to ski these days.

“I think we are prejudiced about this situation,” McElree said mildly. “We can’t understand why there is a house on both sides of us, but we can’t do anything with our lot,” McElree said.

When the lawsuit began, there were 700 families as plaintiffs. Now, 449 are left in the case, the others having died, sold their lots or given up.

Donald Turner of San Diego said he visited Tahoe as a young Navy man and found just the right place to build an A-frame home.

“I had designed it, had planned and was shocked when I learned we couldn’t build,” he said. “Gosh, it’s been a long time, but it’s a terrible thing to have a piece of land and not be able to do anything with it. This has destroyed a dream for a lot of people.”