Shands v. City of Marathon

Government takes family’s land and uses gimmicks to avoid paying for it

Cases > Property Rights > Shands v. City of Marathon
Active: Litigation is ongoing

The Shands family has owned Shands Key, a small Florida island, since the 1950s. Purchased by World War II surgeon and Mississippi hospital owner Dr. R.E. Shands, the island was originally zoned for residential use and could have been developed with at least seven homes. Today, however, government regulations designed to protect the environment prohibit any development on the island—not even a dock, thus reducing the property’s value by 98 percent. But rather than pay the family compensation for this taking, the city offered “transferrable development rights” or a promise that the family can develop property somewhere else. Because the government can’t use gimmicks such as “transferable development rights” (TDRs) to avoid paying for taking property, Dr. Shands’ four children are fighting back in state courts.

When Dr. R.E. Shands bought what was then known as Little Fat Deer Key in 1956, the small island near the City of Marathon in Florida’s Middle Keys was uninhabited. The World War II surgeon and Mississippi hospital owner hoped to one day build a road to his island, being close to the main highway and the local airport, and turn the 7.9 acres of land into a family vacation spot. Dr. Shands, unfortunately, passed away in 1963 before he could do either. The island, now known as Shands Key because the federal government renamed it after Dr. Shands to honor his service to the country, was left to his wife and then passed on to their four children.

At the time of Dr. Shands’s death, the island was zoned for residential use and could have accommodated at least seven new homes by right. The island remained vacant for many years, however, while the Shands children were growing up and building lives of their own. However, by 2004, when they were well into adulthood and finally ready to build on the island, the Shands children discovered that the local, state, and federal governments had enacted so many environmental and developmental restrictions; Shands Key could no longer be developed, despite the fact development regularly took place on neighboring islands. Government regulations today allow only camping and beekeeping on Shands Key. Even those uses would be nearly impossible, as the rules prohibit building even so much as a dock to facilitate boating back and forth to the island.

The Shands strongly desire to fulfill their father’s dream and build on the island that bears his name, but since government regulations have stripped all use of their property, the Constitution guarantees them just compensation. With its full development rights, the land would be worth $3 million or more, but government restrictions have slashed the land’s worth to an estimated $60,000. That is, the city has destroyed 98 percent of the economic value of their property, and even worse, the city didn’t pay the Shands for the lost property value. All the city offered in return were TDRs.

Used by governments all over the country to avoid paying for property takings, TDRs are essentially coupons given to property owners who could theoretically use them to build somewhere else or sell them to another developer. However, there is virtually no market for TDRs in the Florida Keys, which makes them essentially worthless.

Governments can’t use TDRs or any other type of gimmicky substitute as a magical “get out of just compensation free” card. So, Rodney Shands and his siblings are fighting back in Florida court to stop the city’s illegal use of TDRs and defend their constitutional right to just compensation for the taking of their property.

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What’s at stake?

  • Governments cannot prohibit the development of private property and avoid paying for a taking. If a government wants to preserve a piece of land, it must pay for it.
  • Governments cannot avoid paying for taking property by giving the property owner some form of transferrable development rights instead of just financial compensation.

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