N. Mill St., LLC v. City of Aspen

• Decision Date: 27 July 2021
• Docket Number: No. 20-1130,20-1130
• Citation: 6 F.4th 1216
• Parties: NORTH MILL STREET, LLC, Plaintiff - Appellant, v. The CITY OF ASPEN; The Aspen City Council, Defendants - Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

6 F.4th 1216

NORTH MILL STREET, LLC, Plaintiff - Appellant,

v.The CITY OF ASPEN; The Aspen City Council, Defendants - Appellees.

No. 20-1130

United States Court of Appeals, Tenth Circuit.

FILED July 27, 2021

Christopher D. Bryan (David L. Lenyo, with him on the briefs), of Garfield & Hecht, Aspen, Colorado, for Plaintiff - Appellant.

Josh A. Marks, Berg Hill Greenleaf & Ruscitti, Boulder, Colorado, for Defendants - Appellees.

Before HOLMES, BALDOCK, and MATHESON, Circuit Judges.

MATHESON, Circuit Judge.

North Mill Street, LLC ("NMS") owns commercial property in Aspen, Colorado. It sued the City of Aspen and the Aspen City Council (collectively, the "City") in federal court. The complaint alleged several claims, including that the City's changes to Aspen's zoning laws and denial of a rezoning application caused a regulatory taking of NMS's property without just compensation in violation of the Takings Clause of the Fifth Amendment. The district court concluded NMS's action was not ripe under Article III of the Constitution because NMS has not obtained a final decision from the City on how the property may be developed. The court thus dismissed the case for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(1). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm on the alternative ground that NMS's claims lack prudential ripeness.¹

I. BACKGROUND

A. Factual History

NMS owns Mill Street Plaza ("MSP"), a parcel of commercial real estate in Aspen, Colorado. MSP is located within a Service Commercial Industrial ("SCI") zoning district. When NMS's predecessor in interest purchased the property in 2007, free market residential ("FMR") development was allowed in the SCI zone as a "conditional" or "ancillary" use.² Of the four SCI-zoned properties in Aspen, only MSP lacked any FMR units. NMS alleged that without the opportunity to develop FMR units at MSP, "future redevelopment of the Mill Street Plaza is not economically viable." App., Vol. 1 at 60.

1. Ordinance 29

In 2017, the Aspen City Council adopted Ordinance 29. Ordinance 29 amended Chapter 26.710 of the Aspen Land Use Code ("LUC") to eliminate FMR housing as a permitted conditional use within the SCI zoning district.³

Section 26.310.040 of the LUC provides the standards the City must consider when amending the LUC, as it did with Ordinance 29. The standards include:

• "Whether the objectives of the proposed amendment further[ ] an adopted policy, community goal, or objective of the City including, but not limited to, those stated in the Aspen Area Community Plan," and

• "Whether the objectives of the proposed amendment are compatible with the community character of the City and in harmony with the public interest and the purpose and intent of this Title."

LUC § 26.310.040.

In the resolution adopting Ordinance 29, the City Council found that the amendments to the LUC prohibiting FMR development in the SCI zone met or exceeded these standards. App., Vol. 1 at 101.

2. Rezoning Application

After Ordinance 29 was adopted, NMS filed a rezoning application with the City's Community Development Department ("CDD").⁴ The application requested that the City rezone MSP to a Mixed Use zoning district. Parcels that are zoned for Mixed Use may combine commercial uses with FMR and affordable housing units.

The CDD staff prepared a report (the "CDD Report") recommending denial of the rezoning application. The CDD Report considered the review criteria for rezoning set forth in Section 26.310.090 of the LUC. That section provides, "In reviewing an amendment to the Official Zone District Map, the City Council and the Planning and Zoning Commission shall consider," among other things:

• "Whether the proposed amendment is compatible with surrounding zone districts and land uses, considering existing land uses and neighborhood characteristics;" and

• "Whether the proposed amendment is consistent and compatible with the community character in the City and in harmony with the public interest and the intent of [the LUC]."

LUC § 26.310.090(a), (d). The staff found that the rezoning proposal failed to meet either criterion. App., Vol. 2 at 38-41.

The CDD Report also found the loss of SCI-zoned land would run counter to the goals of the "Aspen Area Community Plan" ("AACP") and the "Civic Center Master Plan" ("CCMP"). According to the Report, "[t]hough not a regulatory document, the [AACP] provides aspirational guidance for long term goals of the Aspen community." Id. at 30. The CCMP, "which was adopted by the City Council in 2006, is a regulatory document that contains a section relating to sustainable locally serving businesses." Id. at 30.

The City's Planning and Zoning ("P&Z") Commission, having considered the CDD Report, adopted a resolution recommending that the City Council should deny the rezoning application (the "P&Z Resolution"). The P&Z Resolution agreed with and adopted the CDD Report's findings. It found:

[P]ursuant to Land Use Code Section 26.310.090(A) the rezoning proposal is not compatible with surrounding zone districts and land uses, when considering existing land use and neighborhood characteristics; and, the Planning and Zoning Commission further finds that the proposed rezoning is inconsistent with the goals and statements of the Aspen Area Community Plan (AACP), the 2006 Civic Center Master Plan, and the 2018 Commercial, Lodging, and Historic District Design Standards and Guidelines—River Approach Area ....

Id. at 52. The City Council, acting on the P&Z Commission's recommendation, denied the rezoning application.

3. PD Review

Planned Development ("PD") review is a process that "allows for the site specific development of mixed land uses in circumstances that warrant variation from the standard permitted zone district land uses." App., Vol. 1 at 96-97.

The purpose of Planned Development review is to encourage flexibility and innovation in the development of land which, [among other things,] [p]romotes the purposes, goals and objectives of applicable adopted regulatory plans, [and] [a]chieves a more desirable development pattern, a higher quality design and site planning, a greater variety in the type and character of development and a greater compatibility with existing and future land uses than would be possible through the strict application of the zone district provisions.

LUC § 26.445.010. The LUC sets out a detailed procedure through which a landowner may submit a proposal for a specific Planned Development. See id. ch. 26.445.

In PD review, "[a] development application may request variations in the allowed uses permitted in the zone district." Id. § 26.445.060. Section 26.445.060 of the LUC provides that the City "shall consider" the following four criteria in determining whether to vary existing zoning restrictions for a Planned Development:

(a) The proposed use variation is compatible with the character of existing and planned uses in the project and surrounding area. In meeting this standard, consideration shall be given to the existence of similar uses in the immediate vicinity, as well as how the proposed uses may enhance the project or immediate vicinity.

(b) The proposed use variation is effectively incorporated into the project's overall mix of uses. In meeting this standard, consideration shall be given to how the proposed uses within a project will interact and support one another.

(c) The location, size, design, and operating characteristics of the proposed use variation minimizes adverse effects on the neighborhood and surrounding properties.

(d) The proposed use variation complies with applicable adopted regulatory plans.

Id. Section 26.445.060 further specifies that "[t]he permitted and conditional uses allowed on the property according to its zoning shall be used as a guide, but not an absolute limitation, to the land uses which may be considered during the review." Id.

Although NMS applied to rezone MSP for Mixed Use, it has not submitted a development application for PD review.

B. Procedural History

Rather than seek PD review, NMS sued the City of Aspen and the Aspen City Council in federal district court.⁵ NMS's amended complaint asserted Fifth and Fourteenth Amendment substantive due process, equal protection, and regulatory takings claims under 42 U.S.C. § 1983. In addition to relief under § 1983, NMS requested a declaratory judgment that Ordinance 29 is invalid and unenforceable, and a permanent injunction against its enforcement. The amended complaint also asserted a "Reverse Spot Zoning and/or Piecemeal Downzoning" claim under "the United States and Colorado Constitutions, state statutes, the City of Aspen Home Rule Charter, and City of Aspen Municipal ordinances." App., Vol. 1 at 33-34.

The City moved to dismiss the amended complaint under Fed. R. Civ. P. 12(b)(1), arguing that NMS's claims were not ripe and the court therefore lacked subject matter jurisdiction.⁶ It argued that the City Council had "not definitively determined if free market residential uses are permissible at Mill Street Plaza" because NMS had not yet pursued PD review. Id. at 79.

The district court agreed with the City and dismissed the amended complaint without prejudice for lack of subject matter jurisdiction under Rule 12(b)(1).⁷

II. DISCUSSION

A. Legal Background

1. Regulatory Takings

The Fifth Amendment's Takings Clause provides that "private property [shall not] be taken for public use, without just compensation." U.S. Const. amend. V. The Supreme Court has recognized that "government regulation of private property may, in some instances, be so onerous that its effect is tantamount to a direct appropriation or ouster—and that such ‘regulatory takings’ may be compensable under the Fifth Amendment." Lingle v. Chevron U.S.A., Inc. , 544 U.S. 528, 537, 125 S.Ct. 2074, 161 L.Ed.2d 876 (2005). The Court has identified two categories of regulatory action that are "per se" takings: (1) "where government requires an owner to suffer a permanent physical invasion of her property—however...