Opinion
No. CX-00-1371.
Filed April 17, 2001.
Appeal from the District Court, Crow Wing County, File No. C599945.
Gerald S. Duffy, James A. Yarosh, Anthony J. Gleekel, Siegel, Brill, Greupner, Duffy Foster, P.A., (for appellant)
Carla J. Heyl, and
Larry Minton, (for respondent)
Considered and decided by Lansing, Presiding Judge, Crippen, Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Jeff Olsen appeals the district court's grant of summary judgment against his regulatory-takings claims. Olsen challenges the district court's holding that Olsen cannot maintain a takings claim for property he purchased with knowledge of zoning restrictions he now claims constitute a regulatory taking. Because Olsen has failed to establish the existence of elements essential to each of his takings claims, we affirm.
FACTS
On May 31, 1994, Jeff Olsen purchased approximately 75 acres of land located in the City of Ironton for $26,000. At the time of Olsen's purchase, the land was zoned "O," Open Development/Extraction District, and had been included in that zoning category since at least January 1980, when Ironton adopted its first comprehensive land-use plan.
Under the Ironton zoning code, the uses permitted in "O" Open Development/Extraction District include (1) "open space uses" as regulated by the City Council; (2) tree nurseries; and (3) recreational uses. The permitted conditional uses include (1) recreational areas and (2) mineral extraction.
In 1993, the Minnesota legislature established the Cuyuna Country State Recreational Area, a 5,000-acre region that includes the 75 acres of land that Olsen later purchased. See Minn. Stat. § 85.013 (2000) (listing state parks and recreation areas). The mission of the management plan for the Cuyuna Country Recreation Area is to provide appropriate recreational and educational opportunities in a natural environment. The City of Ironton looks to this management plan when making land-use decisions. At the time he purchased the land, Olsen was aware that the property he purchased was zoned "O" and was located within the state recreational area.
In 1998, about four years after he purchased the land, Olsen petitioned the Ironton planning commission to rezone the Olsen property from "O" to "R-1," Single and Two Family Residential. Although Olsen did not submit a formal property-development plan with his petition, he indicated that the purpose of the rezoning was to permit him to build a home on the property. The Ironton planning commission denied the petition because (1) the requested rezoning was inconsistent with surrounding land uses; (2) the rezoning would result in "spot zoning;" (3) if the property were rezoned, Olsen could further subdivide the property into five-acre residential lots; and (4) any residence in that area would require Ironton to address residential safety issues, including fire protection and emergency services. The Ironton city council affirmed the planning commission's denial of the rezoning petition based on the planning commission findings and additional evidence.
In May 1999, Olsen sued the City of Ironton, alleging (1) the city, through its zoning ordinances and failure to rezone, had taken the Olsen property without just compensation in violation of state and federal constitutions; and (2) the city had acted in an arbitrary and capricious manner by denying Olsen's petition to rezone the property. As a remedy for the takings claim, the complaint seeks both damages under 42 U.S.C. § 1983 and a writ of mandamus to compel the city to initiate condemnation proceedings. Olsen later abandoned his appeal from the denial of his rezoning petition and proceeded only on the takings claim.
Both Olsen and the City of Ironton moved for summary judgment. The district court granted summary judgment to the City of Ironton on the grounds that the undisputed evidence demonstrated that Olsen bought his property knowing that it was zoned "O," and therefore Olsen could not maintain a takings claim.
DECISION
When we review a grant of summary judgment, we determine whether there are any genuine issues of material fact and whether the district court erred in its application of the law. Wallin v. Letourneau, 534 N.W.2d 712, 715 (Minn. 1995). This court will affirm the district court's judgment if it can be sustained on any grounds. Myers v. Price, 463 N.W.2d 773, 775 (Minn.App. 1990), review denied (Minn. Feb. 4, 1991) (citing Brecht v. Schramm, 266 N.W.2d 514, 520 (Minn. 1978)).
A takings analysis typically involves factual issues that make summary judgment inappropriate. Arcadia Dev. Corp. v. City of Bloomington, 552 N.W.2d 281, 285 (Minn.App. 1996), review denied (Minn. Oct. 29, 1996). But when a party has failed to produce sufficient evidence on an essential element of a takings claim, it is proper to grant summary judgment for the defendant. See Lubbers v. Anderson, 539 N.W.2d 398, 401 (Minn. 1995).
Both the federal and Minnesota state constitution forbid the taking of private property for public use without just compensation. U.S. Const. amend. V; Minn. Const. art. I, § 3. The takings clause originally applied only to physical appropriations of property, but in the 1920s, the U.S. Supreme Court recognized that regulations on property may also be considered takings if the regulation goes "too far." Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415, 43 S.Ct. 158, 160 (1922).
In determining whether a regulation goes "too far," the U.S. Supreme Court has recognized two distinct classes of regulatory takings: (1) categorical takings, in which the regulation "denies all economically beneficial or productive use of land" under Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015, 112 S.Ct. 2886, 2893 (1992); and (2) case-specific takings, which involve consideration of the economic impact of the regulation, the interference with reasonable investment-backed expectations, and the character of the regulation. Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124, 98 S.Ct. 2646, 2659 (1978); see also Agins v. City of Tiburon, 447 U.S. 255, 261-62, 100 S.Ct. 2138, 2141-42 (1980).
The Minnesota Supreme Court has also recognized a third class of takings that may occur when the government adopts a land-use regulation designed to benefit a specific public or governmental enterprise. McShane v. City of Faribault, 292 N.W.2d 253, 258-59 (Minn. 1980) (holding that an airport zoning regulation which limited the building height and development density of private property located near the airport was enacted for a specific government enterprise). If the land-use regulation is enacted for the benefit of a "government enterprise," the government must compensate the landowners whose property "has suffered a substantial and measurable decline in market value as a result of the regulations." Id. at 259.
In the district court and on appeal, Olsen argued two separate theories for recovery. First, he claims that the "O" zoning constitutes a categorical Lucas taking, which deprives him of all economically beneficial and productive use of his land. Second, he claims that the "O" zoning is designed to benefit a specific public or governmental enterprise, and under McShane, he has demonstrated a measurable decline in market value as a result of the "O" zoning.
I
We first evaluate whether Olsen has presented sufficient evidence to withstand summary judgment on his categorical, or Lucas, taking claim. In Lucas, the U.S. Supreme Court held that a regulation that "denies all economically beneficial or productive use of the land" is compensable under the Fifth Amendment without case-specific inquiry into the public interest advanced by the regulation. Lucas, 505 U.S. at 1015-16, 112 S.Ct. at 2893. Lucas had purchased two residential-zoned lots for $975,000. Id. at 1006-07, 112 S.Ct. at 2889. South Carolina subsequently passed the Beachfront Management Act that prohibited construction on the lots of any improvements that could be occupied. Id. The South Carolina trial court determined that the Beachfront Management Act deprived Lucas of any reasonable economic use of his lots and rendered them valueless. Id. The U.S. Supreme Court agreed that if the regulation deprived Lucas of all economically beneficial use of the land, it constituted a categorical taking, but remanded to determine whether, as a matter of state law, the restrictions on the land were already prohibited in the title. Id. at 2901, 112 S.Ct. at 1031.
Olsen's circumstances are significantly different from those described in Lucas. Olsen has not established that the "O" zoning deprives him of "all economically beneficial or productive use" of his property. The undisputed record indicates that the "O" zoning has several permitted and conditional uses, including recreational uses, tree nurseries, recreational areas, and "open spaces uses" allowed by the city council. Olsen has not demonstrated that these permitted uses would have no economically beneficial value, nor has he demonstrated any attempt to use the property within the permitted or conditional uses. Further, Olsen's own appraiser estimates the current value of the land at $32,000 with the "O" zoning restrictions, and the state has expressed its willingness to purchase the land at that appraised value.
Olsen's only proposal to use the property was to obtain a rezoning and construct a home. But this subjective desire to use the property for a purpose prohibited by the property's current zoning does not trigger the Lucas analysis for a categorical taking. In the absence of any evidence that the "O" zoning deprives the property of all economically beneficial use, summary judgment is appropriate as a matter of law.
II
Secondly, we evaluate whether the "O" zoning was designed to benefit a specific governmental enterprise and thus triggers a McShane analysis of whether Olsen suffered a measurable decline in market value as a result of the regulation. Under McShane, a land-use regulation designed to benefit a specific public or governmental "enterprise" imposes a governmental obligation to compensate landowners who have suffered a substantial and measurable decline in market value as a result of the regulation. McShane, 292 N.W.2d at 258-59. The purpose of this less-stringent takings test is to ensure that a landowner receives compensation when the burden of governmental activities falls on a few individuals while the public as a whole receives an advantage. Id. at 258.
The McShane taking resulted from zoning ordinances imposed by the Commissioner of Aeronautics that limited the use, population density, and permissible structures on land surrounding airport runways. Id. at 255. The Minnesota Supreme Court held that the airport-zoning ordinance was designed to benefit a specific governmental "enterprise" (i.e., the municipal airport), which is distinguishable from the usual "arbitration" governmental function of balancing competing land uses. Id. at 258. When the government enacts a land-use regulation in its "enterprise" capacity, the landowner may recover compensation for a substantial and measurable decline in market value as a result of the regulation. Id. at 258-59.
We question whether a land-use regulation adopted in 1980, contemporaneous with preparation of the first comprehensive plan, could be considered a land-use regulation adopted to benefit a specific governmental enterprise. But even if we accept the application of the McShane analysis, the evidence does not establish that Olsen has suffered a substantial and measurable decline in market value as a direct and traceable result of the "O" zoning.
Olsen has not demonstrated the value of the property before the "O" zoning was adopted in 1980 nor any substantial decrease that resulted from the adoption of the "O" zoning. The only evidence of market value in the record is that Olsen bought the land for $26,000, which was 14 years after the "O" zoning was adopted. Olsen's appraiser evaluated the land as currently worth $32,000. Without evidence of a substantial and measurable decline in market value, Olsen has failed to prove an essential element of his claim, and summary judgment was proper.
Because Olsen has not presented sufficient evidence to sustain either of his takings theories, the district court did not err in granting summary judgment in favor of the City of Ironton.