Beach Group Investments bought beachfront land and obtained local permits to build a condominium complex. Subsequently, the Florida Department of Environmental Protection changed its setback requirements and, as a result, rejected Beach Group’s permit application. A trial court held that the inability to build the condo project caused a 96% loss in value and that any attempt to obtain a variance would have been futile. As such, Beach Group suffered a regulatory taking for which it was owed just compensation. An appellate court reversed, however, theorizing that it was “reasonably possible” that Beach Group could obtain a variance and must therefore pursue one before its taking claim would be ripe for adjudication.
Beach Group Investments purchased property on Hutchinson Island off the Florida coast for $2.4 million and then contracted to build a townhouse condominium project that it would sell for approximately $8.7 million. The City of Fort Pierce granted all the necessary permits for the development and Beach Group then applied to the Florida Department of Environmental Protection for a coastal development permit. At the time Beach Group purchased the property, there were no obstacles to receiving the coastal development permit. But in the meantime, the Department changed its erosion control regulations that resulted in the setback line moving significantly landward. The Department denied Beach Group’s permit application for failure to comply with the new setback requirements and repeatedly told Beach Group that no variance would be allowed. Unable to develop the land, Beach Group lost the property to bank foreclosure. It then sued the Department for taking the property without just compensation.
The trial court held that any variance application would have been futile based on the history between Beach Group and the Department and the Department’s stated views on the matter. The court also found that alterations to the project to comply with the new setback rules would render it economically unsound, resulting in large losses to Beach Group – up to 96% of the property’s value. The court therefore found Beach Group had suffered a regulatory taking. But the Court of Appeal reversed, issuing a bright-line rule that a property owner must apply for a variance, even if it is futile. Beach Group is asking the Florida Supreme Court to review the case and PLF notified the court that it will file an amicus brief if the court grants review.
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