Daily Development for
Tuesday, December 31, 1996

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

CONSTITUTIONAL LAW; TAKINGS; REGULATORY TAKINGS; PARTIAL REZONING: Rezoning of a portion of undeveloped land does not constitute a regulatory taking if there is remaining use value in portion of land that has not been rezoned.

Zealy v. City of Waukesha, 548 N.W.2d 528 (Wis. 1996).

Plaintiff claimed a regulatory taking when the city downzoned roughly 8.2 of his 10.4 acres. The downzoning - a wetlands preservation device - changed the zoning from residential and business classifications to agricultural classification. The property at the time was used as a peet farm, but the owner had plans to develop it and in fact had granted a sewer easement to the city in exchange for a promise of free hook-ups when the property was developed.

The court seized the review opportunity in this case to clarify the state law on takings, and bypassed a number of narrow bases on which it might have disposed of it in order to reach the broader issues. The most interesting issue addressed by the court was the question of whether the court ought to include the non-downzoned portion of the landowner's parcel in order to evaluate whether there had been a denial of "all practical use" of the property. The landowner argued that the value of the downzoned property had been reduced from over $200,000 to $4000. For purposes of analysis, the court assumed that the landowner might have claimed a complete taking if the landowner's whole parcel had been downzoned in this way. But it concluded that it should take into account the remaining value in the area of the parcel that was not downzoned in making its analysis.

Citing recent U.S. Supreme Court authority, the court stated that segmenting property for purposes of takings analysis has never been endorsed by the United States Supreme Court. Since the remaining acreage could still support residential and commercial development, the plaintiff did not lose all or substantially all of the use of his land.

Comment 1: Have we seen the end of the analysis in this conundrum? There is a certain logic in concluding that a landowner has not lost "all viable use" when some of the property still has development potential. For instance, where the entire parcel is downzoned, but the impact of the downzoning affects some portions of the property more than others, we should take into account the overall impact, rather than analyze each square foot separately.

But to extend this reasoning to situations in which the local authorities have downzoned a substantial portion of the owner's land, leaving a "tail" that still is developable, appears to preserve a rather large "loophole" for public agencies in a jurisprudence already riddled with special exceptions benefitting such agencies.

What if a landowner owns several non-contiguous parcels subject to the authority of the same zoning agency. Would we argue that the landowner retains "viable use" in "property" if the agency downzones only one parcel, and leaves the others alone? Clearly, the courts have not reached this point yet, but doesn't the court's reasoning drive toward that analysis?

Where the agency has downzoned a substantial portion of land, why not look at the impact of the downzoning on the value of that land? This is the "property interest" affected by the public action.

Comment 2: Having stated the argument, the editor must confess that he is not 100% comfortable with it. The reason that the great minds on our highest courts have had difficulty in line-drawing in the takings area is that we all know that, as a practical matter, some public discretion in land management must be allowed without compensation, even though the Constitution compels compensation when an individual is called upon to sacrifice for the greater good. The proper balance is infinitely elusive.

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