Update: On November 7, 2013, the Supreme Court handed down a merit decision in this case. Read the analysis here.

Read the analysis of the oral argument here. 

On March 12, 2013, the Supreme Court of Ohio will hear oral argument in the case of Willis Boice v. Village of Ottawa Hills, 2012-0413. This case raises issues regarding regulatory taking of property through a zoning ordinance.

Background

The plaintiffs purchased two adjoining lots in the village of Ottawa Hills in 1974. Parcel 1 contained a home, and Parcel 2 was vacant. The home on Parcel 1 extended slightly onto Parcel 2. The year before the plaintiffs bought the parcels, the previous owners detached a portion of Parcel 2 and added it to Parcel 1 so that the home would not straddle both parcels. As a result of this reconfiguration, Parcel 2 was reduced in size to 33,000 square feet; at that time, the minimum square footage requirement for building a home on a parcel under the zoning law as it existed was 15,000 square feet.

In 1978, the Ottawa Hills village council passed an ordinance providing that the minimum square footage required to build a single family residence in that zoning district was 35,000 square feet. In 2002, the council adopted a new zoning map that placed the two parcels in a different zoning district, but the square footage requirement remained 35,000 feet. In 2004, the plaintiffs tried to build a new single family residence on Parcel 2, but were informed that they could not do so because the lot did not meet the 35,000 square foot requirement. They requested a variance, or in the alternative, a reconfiguration of the line between the parcels to increase the size of Parcel 2 to 35,000 feet. The variance was denied after village residents expressed opposition. The Zoning Commission denied the proposed lot reconfiguration because of citizen opposition, lot size, green space, lot frontage, and the size of surrounding lots. The plaintiffs argued that the original plat of the area (from 1926) showed two separate lots and that the original plat developers did not intend to restrict the lot size to 35,000 square feet. They further argued that they had, for many years, relied upon the understanding that Parcel 2 was buildable, and had paid taxes on it as if it were buildable.

The Lucas County Court of Common Pleas affirmed the Zoning Commission’s decision on administrative appeal. The plaintiffs appealed to the Sixth District Court of Appeals, which reversed and remanded the case to the trial court for redetermination of the regulatory takings issue in light of different legal standards. On remand, the trial court concluded that neither the 1978 or 2002 amendments to the zoning regulation constituted a taking because the plaintiffs had not established that the amendments interfered with their distinct investment-backed expectations and did not establish that the nonconforming lot was otherwise buildable.

Appellate Decision

The Sixth District Court of Appeals held that there was no regulatory taking and affirmed the decision of the trial court. It found that the zoning ordinance did not interfere with the plaintiffs’ distinct investment-backed expectations because “the only ‘use’ [the plaintiffs] ever intended for Parcel 2 was to sell it for a profit.” Therefore, the only loss the plaintiffs suffered was a loss in market value, and they were not denied an economically viable use because they never intended to build a house on the property themselves. The loss of market value was not sufficient to establish a taking. Additionally, the court held that the plaintiffs could not establish a valid preexisting nonconforming use, because they never actually used Parcel 2 as a buildable lot and thus never acquired a vested right to use it as a buildable lot.

Key Precedent

Negin v. Board of Bldg. and Zoning Appeals of City of Mentor, 69 Ohio St. 2d 492 (1982) (explaining that a lot is rendered useless for any practical purpose if the only use of the lot is for sale to an adjacent landowner).

Penn Central Trans. v. New York City 438 U.S. 104 (1978) (determination of a regulatory taking requires analysis of the economic impact of the regulation on the plaintiff, the extent to which the regulation has interfered with distinct investment-backed expectations, and the character of the governmental action).

Lingle v. Chevron U.S.A., Inc., 544 U.S. 528 (2005) (holding that a regulatory action that does not deprive a landowner of all economically beneficial uses must be analyzed under Penn Central).

BSW Dev. Group v. Dayton, 83 Ohio St.3d 338, 344 (1998) (to establish a taking, a plaintiff must establish more than loss of market value or loss of comfortable enjoyment).

Boices’ Argument

The Boices argue that the zoning ordinance has completely deprived them of the ability to build any structure on the land. They point to a number of U.S. Supreme Court cases in which the Court upheld a zoning regulation where the landowner retained some ability to build on or otherwise use or develop the property. In contrast, the Boices argue that they are prohibited from building even “accessory structures,” such as a detached garage, storage shed, swimming pool, or others, because of the way the 2002 ordinance is written: the ordinance requires accessory structures to be in the “rear yard” of a “building,” which necessarily requires a building (i.e., a house) on the property before any accessory structures can be built. If no house can be built, no accessory structures can be built because there will be no “rear yard.”

The Boices also argue that the facts of this case are identical to Negin v. Board of Bldg. and Zoning Appeals of City of Mentor, in which the Ohio Supreme Court struck down a zoning ordinance that left the landowner’s property with no practical use except for sale to an adjoining landowner. Finally, the Boices argue that whether or not a landowner intends to use the land for a particular purpose does not deprive him of the vested right to do so, which right the landowner acquired along with the property. They argue that the intent to use the land as a building site is not a prerequisite to the free alienability of the fee simple interested in land, which necessarily includes the right to use the land as a building site.

Village of Ottawa Hills’ Argument

Ottawa Hills argues that under the U.S. Supreme Court’s decision in Lingle v. Chevron, a government action that does not deprive a landowner of all economically beneficial use of the land must be analyzed under the Supreme Court’s framework in Penn Central Trans. v. New York City, which analyses (1) the economic effect of the regulation on the claimant, (2) the extent to which the regulation interferes with “distinct investment-backed expectations,” and (3) the character of the governmental action. The Village argues that all three factors weigh in its favor, because (1) the Boices realized an overall appreciation on the property despite the decrease in market value [which, by itself, is not enough to establish a taking], (2) the plaintiffs failed to establish through evidence that they ever had more than a unilateral intention to sell Parcel 2 as a buildable lot, and (3) the character of the governmental action did not constitute a physical restriction on the property or a restriction on the ability to transfer title. Furthermore, because the land retained some economic value, there was no total loss of economically beneficial use. The Village also argues that the Boices cannot claim a vested right in the use of the property as a buildable lot because they did not present evidence of a substantial non-conforming use that existed at the time the ordinances were amended. Because Parcel 2 remained vacant throughout their entire term  of ownership, the Boices obtained no vested right to sell Parcel 2 as a buildable lot.

Plaintiff’s Proposed Propositions of Law

1. Elimination of the only permissible use of a parcel of residential property through regulation is a total regulatory taking.
2. The pre-existing vested rights in property exist independent of a landowner’s intent to personally exercise those rights.

Village of Ottawa Hills’ Proposed Counter-Propositions of Law

1. The denial of a variance or request for lot split by a municipal zoning commission is not a regulatory taking.
2. There is no vested right to a former zoning classification where the landowner has made no use of the property in accordance with the former zoning classification.

Amici

The Ohio Municipal League has filed an amicus brief in support of Ottawa Hills. It argues that under Penn Central, a partial regulatory taking does not occur where a property owner fails to establish anything more than a loss of market value and does not establish any distinct investment backed expectation for use of the property. It also argues that to prove a substantial noncomforming use, the landowner must prove that the land was actually used as such; the mere contemplation of a nonconforming use is insufficient. The State of Ohio has filed an amicus brief in support of Ottawa Hills. It argues that a total regulatory taking occurs only when a regulation completely eliminates the property’s value, and that a partial taking may occur only where the regulation interferes with an owner’s reasonable, distinct investment-backed expectation. For some background on regulatory takings, read this In Sharper Focus post.

Student Contributor: Greg Kendall