September 26, 2012

Florida town council targets property owners for regulatory taking (or bankruptcy)

By Christina M. Martin Attorney

Simone and Lyder Johnson intimately know why individuals need steadfast protection against government power. Their case, which they won at the trial level, will soon be heard by the Florida Court of Appeal.  In Pacetta, LLC v. Town of Ponce Inlet, the trial court determined that the town made numerous promises to entice the Johnsons into starting a major development, only to have thr town council turn against them and destroy most of their property’s value.

The reason? The trial judge found that the property owned by the Johnson’s business “had been long targeted for acquisition” by the Mayor and council members. Further, the town’s treatment of the Johnsons was designed to keep prices low to allow the town or an alternate investment group to “acquire the property upon the developer’s failure.”

The Johnsons’ saga started in 2004 after they purchased six acres of property through their business, Pacetta, LLC, in hopes of building a small residential development. The town’s planners and council loved the idea so much that in 2005, they invited the Johnsons to expand their idea and help develop a larger sixteen acre waterfront area. They all agreed that the larger development would only be feasible if the Johnsons purchased the rest of the land. Relying on numerous town promises that their development would be approved and the town’s comprehensive land-use plan appropriately altered, the Johnsons purchased the remaining acres.

Over the course of 2005, 2006, and 2007, the Town made many more assurances to the Johnsons. For example, the council adopted ordinances that laid the foundation for the necessary land-use changes. It also issued permits for the early stages of the development, including a planned 900 foot seawall and utilities for a planned marina.

Tragically, local political forces obstructed the plan. In 2007, the council passed the first of many moratoriums on the project. In 2008 and 2009, it passed ordinances singling out the Johnsons’ land and destroying any economically feasible use of most of the property. The Johnsons sued.

The trial judge found that some of the property had been unconstitutionally taken and that all of the land was “inordinately burdened” under the Bert J. Harris, Jr. Act.  Using equitable estoppel, the judge refused to let the Town argue that the Johnsons’ interest in the development never vested. The judge found that the Johnsons’ were entitled to compensation for their planned use, even though the town never approved their final plans. Additionally, the judge determined that the Town violated the Johnsons’ rights to equal protection and due process. The town singled out the Johnsons for bad treatment, costing them somewhere around $30 million.

The Johnsons are not alone. Property owner across the country often find themselves in the government’s crosshairs. While the facts are not always as shocking or as personal, they are frequently just as tragic for the individuals involved.  Not only must we protect property rights to protect individual liberty, but we must also demand that our government deal fairly with individuals, rejecting the sort of lawless behavior conducted by the Town of Ponce Inlet.

Refusing to offer much in terms of settlement, the Town is appealing the Bert J. Harris, Jr. portion of the ruling, arguing that since it never granted final approval or finished the requisite alterations to its land-use plan, it should not be held responsible for its broken promises. The Town must wait until a jury determines damages to appeal the other claims. The Florida chapter of the American Planning Association and the Florida League of Cities have filed an amicus brief supporting the Town. PLF may also file an amicus in support of the Johnsons and their businesses, since this case is so important to property owners across Florida.

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