Shands v. City of Marathon

Citations: 999 So. 2d 718; 2008 WL 5412069Docket: 3D07-3288

Court: District Court of Appeal of Florida; December 30, 2008; Florida; State Appellate Court

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Rodney Shands, Robert Shands, Kathryn Edwards, and Thomas Shands (collectively referred to as the Shands) appealed a final order from the District Court of Appeal of Florida, which dismissed their inverse condemnation claim against the City of Marathon. The trial court ruled that the Shands' state claim constituted a facial taking that fell outside the four-year statute of limitations, and also found the federal claim not ripe for consideration. The appellate court reversed the trial court's decision, clarifying that the Shands' claim was an as-applied taking, which was filed within the statutory period. The court determined that the federal claim was ripe for adjudication. The Shands' property, originally purchased in the 1950s, underwent zoning changes after the adoption of the State Comprehensive Plan in 1986 and remained in the City’s jurisdiction upon its incorporation in 1999. The City denied the Shands' application for a dock permit and their subsequent Beneficial Use Determination (BUD) application, despite a Special Master's recommendation for a building permit or purchase of the property. The appellate court's reversal allows for further examination of whether the City's actions resulted in an inverse condemnation of the Shands' property.

The key issue is whether a taking occurred due to changes in zoning by Monroe County's 1986 State Comprehensive Plan or the City's 1999 land development regulations (LDRs). To establish a taking, the analysis must first determine if the landowner has been deprived of all or nearly all economic use of the property, referencing Taylor v. Village of North Palm Beach. A categorical taking, relevant here, involves a total regulatory taking that precludes any development, as defined by Lucas. A facial taking occurs when regulation entirely denies economically beneficial use, while a mere reduction in value (e.g., 95% rather than 100%) does not trigger this standard. If regulations allow for variances or transferable development rights, a facial taking claim fails. For an as-applied taking, the focus is on the specific impact of regulations on the property, requiring a detailed inquiry into permissible uses pre- and post-regulation enactment. Factors influencing whether a taking has occurred include the economic effect of the regulation and the extent of interference with investment-backed expectations, as established in Glisson v. Alachua County. The Shands claim an as-applied taking but reference standards relevant to facial takings, while the City contends a facial taking occurred, despite evidence that not all economic value was eliminated. The analysis follows the framework in Lucas to assess the Shands' claims regarding economic use deprivation.

Monroe County's adoption of the State Comprehensive Plan in 1986 resulted in a zoning change for Shands Key from General Use (GU) to Open Space (OS), allowing low-intensity residential uses that rely on self-contained facilities. The Offshore Island District permits detached residential dwellings, and Transfer of Development Rights (TDR) and ROGO allocation points are available, indicating that the ordinances did not eliminate all economically beneficial uses of the property. The Shands family, who inherited the property and had minimal investment-backed expectations, did not have a specific development plan nor had they pursued development since purchasing the land in 1956. Consequently, their subjective expectation of developing the land does not equate to a vested right. The enactment of the land regulations did not constitute a facial taking, as some economic value remains due to available TDRs and ROGO allocation points, despite a development moratorium. The Shands' claim for inverse condemnation does not assert a categorical takings claim since the regulations do not preclude all economic use. However, their as-applied takings claim is ripe for review, as they received a final decision through the BUD process from the Marathon City Council regarding the regulations' application to their property.

The City of Marathon was found to lack the discretion to grant a variance due to a legitimate development moratorium, rendering its determination final. A "final determination" necessitates at least one meaningful application, which the Shands fulfilled by applying for a dock permit and subsequently filing a BUD application after the permit was denied. The BUD process assesses permissible property uses under current regulations. The City Council's rejection of the Special Master's BUD recommendation was conclusive, and no alternative less intense use was proposed that might qualify for a variance. Consequently, further attempts by the Shands to obtain permits were deemed futile, establishing that their federal claim was ripe for consideration and should not have been dismissed.

The dismissal of the Shands' state and federal claims was found erroneous, as a motion to dismiss based on the statute of limitations requires extraordinary circumstances. The statute of limitations for the Shands' as-applied taking claim did not begin until February 27, 2007, aligning with the City’s final rejection of their BUD application, thus making their state claim timely under Florida's four-year statute. The appellate court reversed the trial court's dismissal orders and remanded the case for further proceedings, leaving it to the trial court to assess whether the City’s denial amounted to a compensable taking and what compensation might be warranted, including the potential for TDRs or outright property purchase. The appellate court's review focused solely on the dismissal related to the statute of limitations.

The City of Marathon, Florida, established the Conservation-Offshore Island (C-OI) Zoning District through Ordinance No. 2007-37 to protect properties with significant environmental constraints. Compliance with Health Department regulations for sewage and potable water is mandated. Ordinance 2004-15 is noted for extending a development moratorium in sensitive natural areas, aligning with Florida statutes concerning critical state concerns. The Code of Ordinances allows landowners denied development permits to seek non-judicial remedies before pursuing court action for perceived denials of beneficial use. The Florida Constitution protects property from being taken without public purpose and compensation, and while the regulations in question are acknowledged as valid, the Shands are pursuing damages for a taking claim rather than disputing the regulations' constitutionality. The term "facial" refers to evaluating the constitutional validity of an ordinance, distinct from determining whether a taking has occurred. Inverse condemnation claims, which allow property owners to seek compensation for property de facto taken without formal condemnation, fall under a four-year statute of limitations. The State contends the Shands' claims began accruing in 1986 or 1999, following zoning changes. Additionally, land development regulations encompass local zoning and other controls over land development, with relevant cases considered regarding the economic impact on property owners and their investment-backed expectations.

A Transfer of Development Rights (TDR) program allows public agencies to incentivize the transfer of development potential from preservation areas to growth-appropriate zones. Landowners can receive TDR credits as compensation for limiting development on their properties, which can then be purchased by developers to increase density in designated areas. The excerpt also references the City of Marathon's code of ordinances and discusses legal precedents regarding takings claims, noting that a lack of personal financial investment does not automatically defeat such claims. It highlights cases where compensation was deemed unnecessary, as it could result in a "windfall." Additionally, it mentions a temporary moratorium on building in environmentally sensitive areas and relevant court rulings that clarify the conditions under which such moratoriums may or may not constitute a taking. Lastly, it outlines the authority and process of the City Council regarding decisions on beneficial uses, emphasizing public participation in hearings and the appeal process governed by Chapter 380 of Florida Statutes.

City of Marathon's Ordinances from 2004 to 2006 are referenced, noting uncertainty regarding the current status of a building moratorium. If the moratorium has lapsed, the Shands may be able to reapply for limited residential use, which could nullify their takings claim, although building permits in environmentally sensitive areas are prioritized last. 

Legal principles from Suitum v. Tahoe Regional Planning Agency establish two key requirements for a regulatory takings claim against a state entity in federal court: a plaintiff must obtain a final decision from the relevant government entity regarding the application of the contested regulations to their property, and must also seek compensation through state-established procedures. The first requirement ensures only regulations that excessively restrict property use constitute a taking under the Fifth Amendment. The second stipulates that a claim cannot be made for a violation of the Just Compensation Clause unless the property owner has utilized state compensation procedures and been denied.

Additionally, Transfer of Development Rights (TDRs) can alleviate economic losses from property use restrictions but are not intended to substitute for compensable takings unless the property owner has been denied all reasonable economic use. The City Code allows for compensation through TDRs or purchases only in cases of categorical takings, as defined by the Lucas precedent.