As any child of five can tell you, taking a toy away in exchange for the promise of some future benefit does not change the fact that the toy was taken in the first place. This is also true of real property: A token gift of potential unknown value in no way changes the character of the initial taking. Under Supreme Court precedent, when all value of real property is regulated away, a taking has occurred and just compensation is due.
Gordon and Molly Beyer found themselves in just such a situation when they were informed that the nine-acre island in the Florida Keys they bought in 1970 for $70,000, intending to build a retirement home, had been reclassified as a bird rookery, requiring them to leave it in its natural state. Their island was zoned for general use at the time of purchase, but various regulatory actions restricted use over the years until the Beyers were informed that their property rights had quite literally gone to the birds. In exchange for the loss, they were awarded 16 nonmonetary, rate of growth ordinance (ROGO) points that might be sold to another property owner who wished to develop their land.
The Beyers pursued administrative review and inverse-condemnation proceedings, where a state court ultimately determined that no uses other than primitive camping and picnicking were allowed on the property, but that no taking had occurred. This was because the Beyers had no reasonable, investment-backed expectations for use of their property and because the award of ROGO points satisfied any expectations they had (if this is confusing to you, you’re not alone).
A series of fruitless appeals followed until finally in 2016, the Florida Supreme Court declined to hear the case. The Beyers―through their estate's representative; the litigation dragged on so long that they've both passed away―are now requesting that the Supreme Court take their case. Cato has filed an amicus brief* supporting their petition and urging the Court to provide desperately needed clarity to regulatory-takings jurisprudence.
We argue that the Beyers were subject to a total taking and deserve just compensation for that loss. Giving them ROGO points does not change that analysis. Additionally, when engaging in an ad hoc, factual inquiry, courts must follow the Supreme Court’s instructions to consider three factors—economic impact, interference with investment-backed expectations, and the nature of the government action—rather than inappropriately focusing on just one of the three. Courts must consider how and when property owners form “reasonable” investment-backed expectations rather than assuming that property restrictions (or lack thereof) at the time of purchase play no role in shaping expectations.
Regulatory-takings jurisprudence is a quagmire that Florida courts further contort to ensure that state authorities can regulate without the constitutional responsibility to provide just compensation for burdened property. If the Court fails to take this case, it is not just property owners who will suffer. Allowing the state-court ruling to stand—blessing theft of property without compensation—may work directly against the purpose of the regulations; rather than providing effective conservation, lack of compensation may create a race to develop.
Consider the Beyers’ situation: if they had known in 1970 that they would not be able to build their retirement home one day, their best course of action would have been to develop the island to its highest allowable limit. Refusing compensation in cases that clearly fall under the Supreme Court’s total-deprivation-of-use rule will merely provide incentives to investors who want to avoid the risk of total loss to develop as much as possible, as quickly as possible.
The Court will decide whether to take the case of Ganson v. City of Marathon later this fall.
*This is the first brief that Cato research fellow Trevor Burrus has officially signed. He's contributed to more than 100 over the years, but only recently became a member of the bar. Now he can get the public credit he richly deserves.