Chapter 5 - § 5.7 • REGULATORY TAKINGS
| Jurisdiction | Colorado |
Whether or not a specific exaction is involved, a landowner may claim that the zone designation, subdivision standards, or other land use regulations applicable to his or her land constitute a "taking of property" without compensation, in violation of the U.S. and Colorado constitutions. The purpose of "takings" law is to prevent a local government from forcing private landowners to bear public burdens that in all fairness and justice should be borne by the public.66 The threshold inquiry in analyzing any takings claim is whether the landowner has identified a cognizable property interest that has been taken.67
The Fifth Amendment to the U.S. Constitution, made applicable to the states by the Fourteenth Amendment, provides that ". . . nor shall private property be taken for public use without just compensation." Colorado's constitution contains a similar provision, requiring: "Private property shall not be taken or damaged, for public or private use, without just compensation."68 Colorado's constitutional takings provision differs from the Fifth Amendment in that it explicitly prohibits damaging private property for public or private use. The intent of including the word "damaged" was to grant relief to property owners who had been substantially damaged by the creation of public improvements abutting their land, but whose land had not been physically taken by the local government.69 To recover in a suit alleging that one's property has been damaged under this provision of the Colorado Constitution, the property owner must have sustained a unique or special injury that is different in kind from or not common to the general public, and not just greater than any injury suffered by the general public. Annoyance and inconvenience to a property owner do not rise to the level of a compensable damaging.70
Some regulatory takings involve physical occupation of some portion of private property (such as a regulation requiring a property owner to allow the installation of cable television cabling fixtures)71 or a requirement that the property owner grant an easement or permission for the public to pass over his or her private property.72 These are sometimes referred to as "physical invasion" takings because they require the property owner to forego one of the most basic of property rights — the right to exclude others from his or her own private property. Increasingly, courts find that regulations that create a physical invasion of private property are a per se regulatory taking for which compensation must be paid. In other words, the courts treat physical invasion takings as if they were requirements for the dedication of land or property, and often evaluate the impact of the government's action by the same standards used to review other types of exactions. Those standards are reviewed in §§ 5.2 through 5.6.
Because it is easier to recover damages if the court finds that there has been a physical invasion, property owners often try to describe the result of a government activity or decision as an occupation of their property. In 2000, the Colorado Court of Appeals considered a case in which the plaintiffs argued that aircraft overflights from Denver International Airport were an invasion of the airspace above the plaintiffs' land. The court concluded that, under applicable Federal Aviation Administration regulations, there had been no physical invasion.73 Similarly, the Colorado Supreme Court considered whether electromagnetic radiation and noise from a high voltage electric transmission line was an invasion of the plaintiff's property, and held that intangible invasions are not physical invasions for purposes of inverse condemnation or trespass claims.74
A second, and more difficult, type of regulatory taking is one in which there is no physical invasion of property, but there is instead a restriction on the uses to which the property can be put or the conditions attached to those uses. The U.S. Supreme Court has, for example, recognized that state property laws may effect a taking if they recharacterize private property as public property.75 The following discussion focuses on this "non-physical-invasion" type of regulation.
Although the two are often confused, in Colorado a "regulatory takings" claim is different from a claim of inverse condemnation. An inverse condemnation claim is essentially a claim that the government has appropriated a piece of one's property for a public use "just as if" the government had condemned it, but failed to follow the proper condemnation procedures (which would involve payment of just compensation).76 An inverse condemnation claim can be defeated by a showing that the government involved does not have authority to condemn property through eminent domain, but a takings claim cannot be defeated by the same showing.77 In addition, the Colorado Court of Appeals has held that an inverse condemnation claim cannot be based on loss of tenants and revenue between the time a local government announces a condemnation of land and the time it actually takes possession of the property.78 Although the general proper measure of compensation is diminution of market value, courts have discretion to apply restoration as the measure of compensation where adjacent public construction created need for the property owner to construct a retaining wall.79
§ 5.7.1—A Final Determination
As a prerequisite to any takings challenge, the landowner must show that the governing body has reached a final authoritative determination regarding the type and intensity of allowable development.80 This requirement is based on the principle that a court cannot determine whether a regulation "goes too far" in regulating private property unless the court knows how far the regulation goes.81 This means that a landowner must apply for and be denied available variances, special use permits, or exemptions that might have achieve the landowner's desired outcome before resorting to the state courts.82 It may require the submission of multiple development proposals if the court determines that the denied application could have been modified or scaled back to meet the government's objections,83 or it may require that the applicant submit at least one "meaningful application."84
At some point, however, if it appears clear that the local government is destined not to approve any development on the property, the applicant may successfully claim that it would be "frivolous" to keep applying for ever smaller development. The courts occasionally consider such cases even in the absence of a final determination.85 More recently, the U.S. Supreme Court has narrowed this exception to seeking a final decision by holding that if the regulation forecloses any opportunity for the local government to use its discretion in applying the regulation and the local government lacks the authority to permit any development, a final determination will be presumed.86 Consequently, when a land use regulation prohibits the filling of wetlands as a precursor to development,87 or prohibits development in an environmentally sensitive area but offers transferable development rights in exchange for refusing to allow development,88 the landowners may proceed to the courts with their takings claims. Landowners who have waited an inordinate amount of time to have their protest of a discharge permit heard by the state agency responsible for issuing such permits, or to have their request for a determination of compensation processed, may also proceed to court to settle a takings claim.89
Prior to 2019, the landowner was required to show that there is no available remedy to obtain regulatory takings damages in the state courts before pursuing a takings claim in federal court.90 However, the U.S. Supreme Court overruled prior cases requiring exhaustion of state litigation in 2019 and held that property owners may bring Fifth Amendment claims for compensation as soon as their property has been taken, and without showing the exhaustion of any state court remedies.91
§ 5.7.2—Test Elements
Both the federal and state courts have extensively considered the question of when a land use regulation amounts to a taking. The test involves two elements. First, a court must determine whether the land use regulation fails to substantially advance a legitimate state interest.92 If the regulation fails to do so, it constitutes a taking.93 Second, even if the regulation substantially advances a legitimate state interest, it will constitute a taking if it prevents all economically viable use of the property.94 This second requirement is more complex than it might appear, however, and has resulted in extensive litigation, as described below.
On the question of whether a land use regulation substantially advances legitimate state interests, courts generally defer to the legislative determination that a specific circumstance affecting the public necessitates regulation. If the harm to the landowner is the same harm suffered by other members of the general public, the landowner will generally not be able to sustain a takings claim.95 Courts are generally willing to recognize broad police power purposes, such as minimization of burdens on taxpayers, preservation of character of neighborhoods, aesthetics, prevention of congestion, traffic safety, protection of the environment, and others, as legitimate state interests that may be advanced through land use regulation. So long as a regulation bears some substantial relationship to a legitimate state interest, this prong of the test will be met.
Of greater interest is the second prong of the takings test: whether the regulation denies the landowner all the economically viable use of his or her property. The Colorado Supreme Court has emphasized that so long as a landowner is left with some reasonable use of his or her property, a land use regulation will not amount to a taking.96 The case law emphasizes that a...
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