Daily Development for
Tuesday, July 29, 1997

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

CONSTITUTIONAL LAW; TAKINGS; REGULATORY TAKINGS; NUISANCE RATIONALE: Minnesota upholds regulation permitting revocation of operating permits for apartment operators where apartment complex is situs of three instances of disorderly use involving occupants.

Zeman v. City of Minneapolis, 552 N.W.2d 548 (Minn. 1996).

Zeman's license to operate his property as a rental dwelling was temporarily revoked pursuant to ordinance by the Minneapolis city council. Zeman owned and operated the multi-unit rental property for approximately twenty years before the council's action. The ordinance generally allowed revocation when the rental property was the situs of three instances of disorderly use involving occupants of the dwelling. In a subsequent action by Zeman, some 20 months later, the trial court ordered his license reinstated, but found that he had failed to establish that a remedial taking had occurred. The Court of Appeals remanded the case for a new analysis.

On appeal, held: reversed. The Minnesota Supreme Court found that no taking had occurred because the ordinance was designed to serve the legitimate public interest of deterring criminal activity in residential neighborhoods through a cooperative effort of landlords and the police. In determining whether a taking took place, the court concluded that no firmly established test exists and that takings law turns largely on the particular facts underlying each case. It stated that the present scholarly consensus rests on the factors listed by the U.S. Supreme Court in Penn Central v. City of New York, though the themes from the Mugler line of cases involving regulations designed to prevent harm to the public are also influential. The court cited the Penn Central factors requiring review to be 1) the economic impact of the regulation on the person(s) suffering the loss, 2) the extent to which the regulation interferes with distinct investment-backed expectations, and 3) the character of the government action. In applying these factors, the court found that the first two militated toward a decision in Zeman's favor, however the third favored the city. In addition Mugler and its progeny indicated that the enforcement of regulations drawn to prevent harm to the public, that seem able to achieve their goal, do not result in a taking. Thus, no taking had occurred in the instant case.

In a curious footnote the court elected not to discuss Lucas, finding it inapplicable primarily because the trial court decided so. Although there had been testimony that indicated the property had a "negative" value if not used for rental purposes, that court did not feel this was a Lucas-like situation where Zeman was denied all economically beneficial use of the property during the time period at issue.

Compare: City of St. Petersburg v. Bowen, 675 So.2d 626 (Fla. 2d DCA 1996) (A municipal order that completely closed an apartment complex for one year to curtail illegal drug use by tenants and others at the property is a compensable taking.)

Comment: The Lucas commentary is the most problematic part of the court's opinion. The court stated "a per se exception to the general approach exists, where the rgulation deprives the property owner of all viable uses of his or her property. " 532 N.W.2d at n. 4. Here the court upheld the trial court's conclusion that, despite evidence to the contrary, the regulation had not destroyed all investment backed expectations in Zeman's property.

But most commentators regard Lucas as supporting the conclusion that where the purpose of the regulation is to abate a "public nuisance," then there is no compensable taking even when the regulation reduces the property value to zero. Thus, it is puzzling why the court elected to carefully differentiate this case from Lucas and describe Lucas as creating a per se takings test when it went on to conclude that the regulation here involved an "anti-nuisance" regulation.

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