Williams v. City of Central

• Decision Date: 01 June 1995
• Docket Number: No. 94CA0943,94CA0943
• Parties: Jay H. WILLIAMS, Plaintiff-Appellant, v. CITY OF CENTRAL, State of Colorado, Defendant-Appellee. . IV
• Court: Colorado Court of Appeals

Page 701

907 P.2d 701

Jay H. WILLIAMS, Plaintiff-Appellant, v. CITY OF CENTRAL, State of Colorado, Defendant-Appellee.

No. 94CA0943.

Colorado Court of Appeals,

Div. IV.

June 1, 1995.

Rehearing Denied June 29, 1995.

Certiorari Denied Dec. 4, 1995.

Holley, Albertson & Polk, P.C., Eric E. Torgersen, Scott D. Albertson, Golden, for plaintiff-appellant.

Hall & Evans, L.L.C., David R. Brougham, Josh A. Marks, Denver, for defendant-appellee.

Opinion by Judge DAVIDSON.

Plaintiff, Jay H. Williams, appeals from the judgment of the trial court dismissing his claims against defendant, City of Central (Central City), for regulatory taking and inverse condemnation. The issue presented is whether Central City's interim moratorium on development in its gaming district resulted in a compensable temporary taking of Williams' real property. We hold that it did not and, therefore, affirm.

The following facts are not disputed. Williams is the owner of an historic building in Central City known as the Belvidere Theater. Williams purchased the Belvidere Theater in 1990, prior to amendment of the Colorado Constitution to allow limited stakes gambling in Central City.

The area in which the Belvidere Theater is located was designated for commercial use at the time of the purchase. In 1991, the designation was changed to gaming district. Limited stakes gambling and all other uses, other than parking lots, were allowed only by special review under the gaming district zoning ordinance. Such special use permits are issued in the discretion of the city council upon application.

The Belvidere Theater was in a state of disrepair when it was purchased by Williams and required substantial renovation and improvements before it could become useable for any economically viable purpose. Under Central City's historic preservation ordinance, the building may not be demolished or remodeled without approval from the Central City Historic Preservation Commission.

In late March or early April of 1992, Williams applied for a special use permit to conduct a limited stakes gambling establishment in the Belvidere Theater. A contract for the sale of the property was then pending contingent upon the issuance of a special use permit for limited stakes gambling.

On April 15, 1992, the city council adopted a resolution which placed a moratorium on further development in the gaming district. All pending special use permit applications were thereby suspended until certain studies were completed concerning Central City's capacity to absorb the growth spawned by the approval of limited stakes gambling. Excepted from the moratorium were uses of property for public works, public utilities, public health or safety facilities, medical offices, hospitals, clinics, county or city social services facilities, and public or private parking lots.

Williams' application for a special use permit was, accordingly, suspended. As a result, the pending sale of the Belvidere Theater fell through.

Ten months after institution of the moratorium, the growth studies were completed and the moratorium was repealed. Williams then filed this action against Central City, asserting that he was entitled to damages because the moratorium effected a temporary regulatory taking of his property and on a theory of inverse condemnation.

The trial court dismissed the entire action for failure to state a claim for relief under C.R.C.P. 12(b)(5) on the grounds that the temporary suspension of special use permits was not a compensable temporary taking under the Fifth Amendment and that, because the moratorium had been repealed, the inverse condemnation claim would not be ripe until Williams had attempted unsuccessfully to obtain a special use permit. We agree with the trial court on both issues.

I.

A governmental regulation that prohibits all reasonable use of property constitutes a taking within the meaning of the Fifth Amendment and Colo. Const. art II, § 10. Van Sickle v. Boyes, 797 P.2d 1267 (Colo.1990).

Originally, the United States Supreme Court applied the takings clause only to physical appropriation of property, but later established the principle that a regulation can effect a taking if it goes too far. See PruneYard Shopping Center v. Robins, 447 U.S. 74, 100 S.Ct. 2035, 64 L.Ed.2d 741 (1980); Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922).

Such "regulatory takings" ordinarily are identified by a case-specific factual inquiry which weighs competing public and private interests. See Agins v. City of Tiburon, 447 U.S. 255, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980). Nevertheless, regulations which compel owners to suffer physical invasion or occupation of their property or, as recently decided, which deny owners all economically beneficial or productive use of the land, are ipso facto, regulatory takings. See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992) (a regulation that renders property devoid of all economically viable use must be considered categorically a compensable taking); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982).

Also, until recently, a landowner suffering a regulatory "taking" could elect either to attack the validity of the regulation and seek injunctive relief or, alternatively, to seek compensation for inverse condemnation. If the regulation were judicially invalidated, however, compensation was not constitutionally required for the period between the enactment of the regulation and its invalidation. See Agins v. Tiburon, 24 Cal.3d 266, 157 Cal.Rptr. 372, 598 P.2d 25 (1979).

In First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 107 S.Ct. 2378, 96 L.Ed.2d 250 (1987) (First English I ), however, the United States Supreme Court determined that invalidation of a regulatory restriction, although converting the taking to a "temporary" one, was not a sufficient remedy to meet the demands of the Just Compensation clause of the Fifth Amendment. The Court therefore held that monetary compensation must be provided for the interim period of compelled compliance with the invalid regulation.

A.

Williams concedes that no physical taking is implicated here. Based upon the above described principles, however, he claims that, under Lucas and First English I, a categorical compensable taking occurred because the suspension of special use permit applications deprived him of all economically viable use of the Belvidere Theater during the 10 months the moratorium was in effect. We do not agree.

1.

We initially examine, under a traditional takings analysis, Williams' assertion that he has suffered a categorical taking.

Generally, to determine whether there has been a denial of all use of a landowner's property, a court must compare the value that has been taken from the property to that which remains; the interference with rights in the discrete segment of the property affected is measured against the value of the property as a whole. Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 107 S.Ct. 1232, 94 L.Ed.2d 472 (1986).

a.

The effect of a regulation which is temporary by design, however, is not measured simply by the value of the property "taken" during the limited time frame in which the regulation was in effect. To the contrary, the determination as to the nature and extent of the interference with the property in its entirety must take into consideration the value the property retains after the moratorium has been lifted. See Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978); Woodbury Place Partners v. City of Woodbury, 492 N.W.2d 258 (Minn.App.1992).

This is because, even if the ability to sell or develop the property is restricted during the moratorium, the landowner is free to continue with sale or development once the regulation is lifted. See Agins v. City of Tiburon, supra (when condemnation proceedings are begun, but later abandoned, pre-condemnation activities do not constitute a taking).

Under this analysis, an interim regulation prohibiting construction or development is not a temporary taking even if such restrictions would be held too onerous to survive scrutiny had they been permanently imposed. First English Evangelical Lutheran Church v. County of Los Angeles, 210 Cal.App.3d 1353, 258 Cal.Rptr. 893 (1989) (First English II ). Absent extraordinary delay, fluctuations in value that occur during a temporary moratorium enacted to effect the process of governmental decisionmaking are, simply, incidents of ownership. See Agins v. City of Tiburon, supra; Woodbury Place Partners v. City of Woodbury, supra.

Thus, a temporary limitation on property use, resulting from the otherwise good faith, reasonable institution of a moratorium in order to bring about effective governmental decisionmaking does not result in a categorical taking.

b.

Here, Williams' application for a special use permit was suspended temporarily pending governmental study and decision making concerning the growth accompanying the commencement of limited stakes gambling. As a matter of law, this 10-month delay in the realization of the economic benefits of commercial development of the Belvidere Theater was not extraordinary. See McCutchan Estates Corp. v. Evansville-Vanderburgh County Airport Authority District, 580 N.E.2d 339 (Ind.App.1991) (nine-month delay not extraordinary as a matter of law); see also Dufau v. United States, 22 Cl.Ct. 156 (1990) aff'd without opinion, 940 F.2d 677 (Fed.Cir.1991) (sixteen-month delay not extraordinary as a matter of law); First English II, supra (delay of more than two years not unreasonable); Guinnane v. City & County of San Francisco, 197 Cal.App.3d 862, 241 Cal.Rptr. 787 (1987) (delay of more than one year not unreasonable as a matter of law); Woodbury Place Partners v. City of Woodbury, supra (delay of two years not...