October 31, 2012

The Laurel Park opinion: more than meets the eye?

By Brian T. Hodges Senior Attorney

Earlier this week, the Ninth Circuit held that the City of Tumwater, Washington, did not commit a taking when it enacted two ordinances which prohibit six manufactured home park owners from converting their parks to other, more economically efficient uses.  Despite the adverse outcome for the park owners, PLF’s amicus arguments in support of the owners were well-received by the court.  Let me explain.

PLF filed a brief arguing that the Tumwater ordinances, which essentially “freeze” property for use as manufactured home parks, amount to a taking.  We built our argument on the premise that the ordinances unfairly singled out a few park owners to take on the entire public burden of providing affordable housing in Tumwater.  This position is consistent with Armstrong v. United States, in which the Supreme Court famously remarked that the constitutional “guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens, which in all fairness and justice, should be borne by the public as a whole.”  The basic idea is that the government must compensate people when it forces them to dedicate their property for public use.

The Ninth Circuit agreed.  It held that the character of the government’s action weighed in favor of finding a taking.  The ordinances did indeed single out a handful of park owners and force them alone to provide low-income housing, when that burden could have been distributed more widely.  That was a signal to the court that the city’s regulations were little more than a naked command that the park owners must supply a public good.  The city’s scheme was exposed by the court’s finding that the other uses allowed under the ordinances do not provide truly economically attractive alternatives.  In short, the city avoided the responsiblity of solving a housing problem by forcing private property owners to do it, without compensating them for their troubles.

So why did the court hold that no taking occurred?  The reason is that the court did not believe the economic impact to the park owners was severe enough to require compensation.  However, the court did hint that a park owner who could show a substantial loss would probably prevail on a takings claim.

The Laurel Park opinion proves that courts must consider the “worthiness” of the government’s regulatory purpose when deciding whether the “character of the government’s actions” evidences a taking.  That, of course, was the primary point of our brief.  (I note that we relied heavily on Professor Eagle’s exposition of that issue).

There are two more interesting aspects of Laurel Park that deserve mention.  The opinion is noteworthy because it adds to the very small library of cases in which the Ninth Circuit has “assumed without deciding” that a takings claim made under the Penn Central balancing test can be brought as a facial challenge.  This means that plaintiffs retain the ability to challenge laws as takings “on their face” without necessarily needing to show the regulation’s specific effect on a particular property owner.

The Laurel Park opinion also is important for Washington state takings law.  Because the park owners brought a takings claim under the Washington Constitution, the Ninth Circuit had to determine what Washington state law said about takings.  The court recognized that a recent Washington Supreme Court decision holds that a regulation which deprives a property owner of a “fundamental attribute of property ownership” constitutes a taking.  PLF recently filed a brief defending the “fundamental attribute” takings test in a case called Lemire, which is currently pending with the Washington Supreme Court.  The Laurel Park opinion is consistent with the position we are advancing in Lemire.

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