Condemnation Blight in the Florida Keys

From 1979 to 1986, the State of Florida forced a confiscatory land use regime on the landowners of the Florida Keys, through its woebegone facilitators, the Monroe County Commission. One of Governor Graham's targets, sure to pick up votes for his senatorial campaign, was the area between Jewfish Creek and the Ocean Reef Club. This area, known as North Key Largo, had been the locus of pre-development activities since the mid-1970's. Interest had picked up as the water and electricity utilities announced their intentions to serve North Key Largo. And Fritz Scharenberg, a successful Key Biscayne developer, announced his intentions to build a 2,500 unit development, called Port Bougainville, at the southern end of North Key Largo.

From the mid-1970's through 1983, Fritz Scharenberg received all the necessary development approvals for his project, and another half-dozen major developments had entered the development approval pipeline. Lawsuits were filed by environmental opponents, and the State of Florida placed its heavy thumb on the scale by demanding the County Commission adopt a "major development moratorium" -- which it did on February 9, 1983 -- precluding indefinitely any development approvals that involved more than five acres or 50 dwelling units. The alternative offered to the County Commission, was that the Florida Department of Community Affairs (its current name) would adopt the moratorium under the supervisory powers granted to it by the 1972 Legislature under the guise of protecting "Areas of Critical State Concern." (The State Legislature had so designated the Florida Keys in 1979.)

The February 9, 1983 moratorium was extended several times until it was replaced by a "one-year" moratorium on September 15, 1986. The 1986 moratorium was "intended" to allow the development of a Habitat Conservation Plan (HCP) for North Key Largo, said HCP to be completed within 6 months of September 15, 1986. The HCP was never approved by Monroe County -- and was actively opposed by state agencies anxious to keep the moratorium in place -- and the moratorium is still in place as I write this post, more than 21 years after it was to expire.

During the past 22 years, most North Key Largo landowners capitulated and sold their property to the state for 10 to 15 cents on the dollar. (I mean what it would have been worth if the County-State moratorium had not been in effect.) There were a few hard-shelled landowners who said "no" to every offer that came their way. Eventually the State had to commence eminent domain proceedings to get the curmudgeons out of the way.

In 1995, the State filed a "slow-take" condemnation action against two North Key Largo parcels. The first thing we did was file a counterclaim in inverse condemnation (since slow-takes can be abandoned by the condemnor), that also raised the Condemnation Blight issue. Fortunately, the real estate market went crazy in 2001. After watching those numbers for some time, the State converted its slow-take claims into "quick-takes" in 2004. When that happened, we asked the Court to rule on the Condemnation Blight issue we had raised in 1996.

That took three hearings and the testimony of two County Commissioners from the 1982-88 era. The Court agreed that North Key Largo was blighted, and ordered the parties to prepare appraisals that disregarded all land use regulations (State, County, and Federal) that were adopted after February 8, 1983.

The case finally went to trial in April 2007 and, given the Court's Condemnation Blight instructions, yielded verdicts that far exceeded the "good-faith" deposits of $550,000 for Parcel 1 and $80,000 for Parcel 7. The jury returned verdicts of $5,060,000 on Parcel 1 and $450,000 on Parcel 7. The State appealed both final judgments on October 30, 2008.

At the top of this blog entry is a miniature version of the convincing piece of evidence in the Condemnation Blight hearings. That chart, showing that private property transactions ended, and government ownership took off like a rocket, simultaneously, in 1982-84. This is the kind of evidence it takes to establish Condemnation Blight. And it is relatively easy to cull from the county property appraiser's database.

Government "intentions" don't matter. What the market does, matters. Our win in the West-Richardson case has been appealed, and we hope to come out of this with a written opinion from the Florida 3rd District Court of Appeal. There are another 3,500 owners of 7,500 parcels of land in the Florida Keys who will benefit from this decision.