When will the Government Figure it Out?

Three weeks ago, the State of Florida deposited $8.85 million with the Clerk of Court for Monroe County to compensate the landowners in Florida DEP v. West for the condemnation of their North Key Largo properties in April 2004. When this eminent domain action was filed as a slow-take in 1995, the State offered a mere $160,000 for the subject properties. Our response to the slow-take was a regulatory taking counterclaim. That was our way to protect landowners from the State "walking away" from any jury verdict it did not like.

Land values began to rise in 2001 -- although not on these properties. In 2004 the State opted for a "quick-take." At that time, the State's estimated fair market value of the two parcels -- based on the confiscatory regulatory scheme -- was $630,000. But after executing the quick-take, the State could no longer walk away from a jury verdict that exceeded its budget. After all, nobody had been able to build on North Key Largo since February 8, 1982 (except at the Ocean Reef Club and a few existing subdivisions).

After the 2004 quick-takes, we re-cast the regulatory taking counterclaim into a jury instruction on condemnation blight. Even though the Florida Supreme Court has embraced condemnation blight on at least two occasions, the State's in-house attorneys could not grasp the concept. Fortunately we had a trial judge, Luis Garcia, who understands government cannot prohibit a landowner from using his property, and then benefit from its own actions by driving down the property's acquisition cost. (In 2001, Judge Garcia ruled the same way in another case, Shadek v Monroe County, where White & Case attorney Doug Halsey raised the same issues and Monroe County settled by paying $6 million in temporary taking damages.)

So ... the government goes down for the count again! I have remarked, on numerous occasions, that the reason for this waste of money is nothing more than the "tyranny of the majority" in small, attractive, relatively well-to-do communities such as the Florida Keys. Those who already own homes in the Keys will do everything in their power to prevent others from doing so. To that end, the "got-miners" elect like-minded County Commissioners, who respond by prohibiting new development wherever they find it. It's a self-perpetuating, downward spiral, that could well -- unless reversed -- bankrupt every owner of developed property in the Keys.

To got-miners: think about it!

Confiscatory Land Use Regulations are Unconstitutional in Florida: It is Time For the Kill

To the best of our knowledge, no local government in Florida -- other than Monroe County and its municipalities -- has ever been able to maintain confiscatory land development ("zoning") regulations. In 1984, the Florida Supreme Court held, in Dade County v. National Bulk Carriers, 450 So. 2d 213, 216 (Fla. 1984) that "if a zoning ordinance is confiscatory, the relief available is a judicial determination that the ordinance is unenforceable and must be stricken."

Government lawyers are wont to say that National Bulk Carriers was overruled, sub silentio, by the Supreme Court in First English Evangelical Church v. Los Angeles County, 482 U.S. 304 (1987), but that does not seem to be the case. In Joint Ventures v. FDOT, 563 So. 2d 162 (Fla 1990), a post-First English Florida Supreme Court held unconstitutional a statute that allowed the FDOT to "freeze" all development, for up to five years, and for a second five years if it wished, by recording a "reservation map" in the county records.

The 1990 supreme court invalidated Florida's "reservation map" statute, on Due Process grounds, after comparing its effect to the "condemnation blight" case of Bd. of Commissioners v. Tallahassee Bank, 1o8 So. 2d 74, 86 (Fla 1st DCA 1958), writ quashed, 116 So. 2d 762 (Fla 1959), stating "We perceive no valid distinction between "freezing" property in this fashion and deliberately attempting to depress land values in anticipation of eminent domain proceedings. Such action has been consistently prohibited."

In Joint Ventures, the supreme court sealed the fate of the Florida Keys' "Beneficial Use Determination" ("BUD") ordinances, when responding to FDOT's argument that "the property owner can always sue in inverse condemnation," as follows.

DOT contends that Joint Ventures' right to seek compensation through inverse condemnation cures the statute's failure to expressly provide for compensation. We disagree. ... [T]hat remedy is not equivalent to a property owner's remedy under the doctrine of eminent domain. Inverse condemnation affords the affected property owner an after-the-fact remedy, when there has already been a "taking" by regulation, and it is not a substitute for eminent domain protection facilitated by chapters 73 and 74 [Fla. Stat.]

The property owner who must resort to inverse condemnation is not on equal footing with an owner whose land is "taken" through formal condemnation proceedings. The former has the burden of seeking compensation, must initiate the inverse condemnation suit, and must finance the costs of litigation without the procedural protections afforded the condemnee.

In Joint Ventures (1990), as in National Bulk Carriers (1984), the Florida Supreme Court held the "reservation map" statute unconstitutional on Due Process grounds.

Fast forward to today. If it were not for the Keys' governments' "beneficial use" ordinances, many of these local land use regulations would have been declared unconstitutional 23 years ago. But let's take a look at those ordinances in the context of National Bulk Carriers and Joint Ventures -- the law in Florida.

• Not one of the Keys' BUD ordinances provides for the acquisition of a landowner's property by the exercise of eminent domain, if the property has been rendered unbuildable by the local government's zoning regulations. A first-year law student could see this is a Due Process violation that renders the underlying confiscatory regulations unconstitutional.
• Monroe County recently raised the "application fee" for a Beneficial Use Determination to almost $5,000. This is reminiscent of the $2 "poll tax" cases of the '60's. Is it remotely possible that a local government can assess the owners of land within its boundaries a "poll tax" of $5,000? If the government cannot assess a $2 fee for the right to vote, it cannot assess a $5,000 fee for the right to Just Compensation. Or any fee, for that matter.

There is a solution to this madness, and we are about to undertake it. We will soon file an action in the United States District Court for the Southern District of Florida, on behalf of several non-resident owners of Florida Keys property -- under the Federal court's "diversity jurisdiction" -- against the local governments and certain Florida state officials, to invalidate major portions of the Florida Keys' local government comprehensive plans and land development regulations, on Due Process grounds and Florida law.

Postscript: This situation reminds me of Pogo, who would say "we have met the enemy, and it is us." The reason the Florida Keys is up to its neck in "just compensation" liabilities is the classic tyranny of the majority problem. The people who own developed property in the Keys, and vote there, simply do not want anyone else to build anything within their driving radius. These cluckheads, who elect like-minded cluckheads to the County Commission and municipal Councils, have not yet figured out that they will be paying the bills for this fiasco for decades to come.

Has the Tide Turned?

Since 1986, the Florida Keys' confiscatory land use regulations have been imposed only on owners of undeveloped land. Two-thirds of those landowners reside outside the Florida Keys. They have no right to vote on the "got-miners" choices for the County Commission. Since the got-miners' "rate-of-growth" ordinance was imposed on the Keys in 1992, vacant landowners have been selling their property to the government at rock-bottom prices that rarely reached 15% of Fair Market Value.

In 1996, Andy Tobin and I sent Voice of Reason newsletters to just over 10,000 owners of undeveloped Keys' properties. Today there are only 4,000 such owners. The Keys' rate-of-growth ordinances have limited development to under 250 building permits/year since 1992 -- or less than 3,750 dwelling units in 17 years. This suggests about 2,250 parcels have been sold to government at unfair prices.

Now that the Florida DEP v. West, et al., decision has been released by the 3d District Court of Appeal, perhaps the remaining 4,000 owners of undeveloped Keys' land will realize that the State has been acquiring Keys' property -- for 17 years -- for about 10% of Fair Market Value. The 3d District Court of Appeal will issue its "mandate" on the West decision in two days (November 5th), and we assume the State is not dumb enough to lose another half-million dollars in interest on a high-risk petition for "discretionary review" by the Florida Supreme Court (only 11% are accepted for "review;" substantially fewer actually result in a reversal).

[This post replaces an earlier post.]

It Could Be a Busy 4th Quarter

After three weeks away from the pressure of brief-writing -- not to mention the stress of moving our pending regulatory taking and due process lawsuits -- it is a bit easier to cope. I did spend some of that downtime (at least an hour) thinking about what can be done to bring the Keys' land use regulations in line with those of a civilized society. Like the South of France. Not likely, that.

That raises a question: what civilized society would we like to emulate? California? There's a basket case, where affordable housing exactions are killing potential housing projects, and the state budget is a joke. How about Miami, Naples, or Fort Lauderdale? They have too much of everything, and the high vacancy rates to go with it.

Has anyone else noticed that Florida local governments (including the Keys) spent taxpayers' money like drunken sailors in the 2001-06 run-up? And now they're stuck with overpaid administrators and pension obligations that they will never be able to meet. OK, there's a goal.

First, fire half the County staff, starting with those who draw the largest paychecks. I challenge anyone to explain why we need a County Administrator when we have a County Commission that consists of five geniuses, all of whom are former (or future, because they are so smart) Nobel Prize winners. We could also do away with the County Attorney position, as all five Commissioners are more versed in the law than any attorney could possibly be. And the entire planning department could be let go, as there is nothing left to plan.

In the Keys, the City of Marathon cannot give away its building permits. The "village" of Islamorada was (correctly, I might add) deemed "charm-less" by United States District Judge James Lawrence King, and it is being sued by its former mayor, and a bunch of other people, over its sewer impact fees. Key West is, well, Key West. Monroe County may well be the only county in Florida where the population decreased over the 2000-2010 decade. Trust me, we will not get a merit badge for that statistic.

So ... are things good in the Keys? No. We have had several years of over-building, in large part because the State and County superseded the market, so every person who could, built a house. We now have a queue as long as my arm, of people who definitely do NOT want to build here. (The reason people wanted to build here was that "it was difficult.") We have had an artificial market here for 17 years, and it finally folded. Do we have a problem? Yes.

Do we need to change the regulatory climate in the Keys? Yes.

Voice of Reason Recipients Getting the Message

Five weeks after mailing the latest Voice of Reason to every owner of Tier I land in unincorporated Monroe County, responses from all over the country have been strong. One-third of the affected landowners reside outside Florida; another third live in Florida but outside Monroe County; the other third reside in Monroe County.

We have been getting e-mails and telephone calls every day from landowners who have resisted the State's siren invitations to buy their land for pennies on the dollar. Almost without exception, these landowners have no clue what their property would be worth in a proper eminent domain proceeding. But ... these are individuals who have rejected State offers for years, and are willing to fight. The faint-hearted sold out long ago.

We continue to tell Keys landowners that they are opposing one of the United States' most intransigent enemies of landowners -- local governments that are captives of the homevoters that elect them.

If you have not received a Voice of Reason in the past six weeks, it is likely that the Monroe County Property Appraiser does not have your current address on file. You can resolve this by calling or writing the Property Appraiser to correct your mailing address. You will then receive the next Voice of Reason in the mail. That is because we use the Property Appraiser's database to build our mailing list. (To download the March 2009 issue, click on the title of this post.)

The Florida Keys Exclusionary Zoning System Needs to be Declared Unconstitutional

Professor Edward Ziegler, editor of Rathkopf's The Law of Zoning and Planning, has an article in the latest edition of The Urban Lawyer, where he makes the following observations.

Zoning almost by definition is exclusionary in nature, and this is, and has been, true even in many of America's major cities. .... Our regional problem today is that the strong arm of NIMBYism has turned the gentility of old "snob zoning" schemes into zoning schemes that perhaps can best be described as "hyper exclusion on steroids." ....

Typically, concerns about growth within a local community follow a certain political dynamic. .... NIMBYism at some point begins to dominate both the public's perception of future growth and the politics of the local planning and zoning process.

Eventually, anti-growth sentiment develops to the point where nearly everyone but the realtors' lobby has been turned into a BANANA (Build Absolutely Nothing Anywhere Near Anybody). Land use "activists" and civic-minded neighborhood organizations now emerge with the goal of promoting growth management and the "public interest" (often under the banners of "environmental protection" and "fighting urban sprawl") and pressure the city to enact increasingly intensive and burdensome zoning and growth management programs.

Sound familiar? Well, it should. Looking back over the past 25 years, we can see Professor Ziegler's "growth management nightmare" develop in the Florida Keys just as he described it. Since the early 1980's, Monroe County's elected officials have bent over backwards to play the BANANAs and NIMBYites games. First came massive downzonings in 1986, when thousands of platted subdivision lots were stripped of any right to build anything, and a 1-year moratorium was imposed on development on North Key Largo -- that is still in effect today, 22 years after that year ended!

Then, in 1992 the County, led by its since-disgraced top BANANA, Commissioner Jack London, rammed through a "Rate of Development" ordinance -- allegedly based on a hurricane evacuation infrastructure deficiency (US-1 needed to be widened) -- that was supposed to last no more than 10 years, or to 2002. Well, guess who proceeded to oppose all efforts to widen US-1 and build a new bridge over Jewfish Creek. You guessed it, the Monroe County Commission and its bosom buddies, the neighborhood NIMBY associations (who continue to steadfastly oppose anything that would improve hurricane evacuation times).

Professor Ziegler's article doesn't mention how one can remove the obstructive and value-reducing "growth management" plans put into place by the NIMBYs, BANANAs, and their elected lap-dogs. But we can suggest one. Convince a state or federal judge to follow the lead of the Massachusetts Supreme Court in Zuckerman v. Town of Hadley, 813 N.E. 2d 843 (MA 2004), and declare the Rate of Development system unconstitutional.

$4,500 Poll Tax Approved by Moron County Commissioners

One wonders what goes through the feeble minds of elected officials, not to mention their sycophantic in-house counsel. Two weeks ago, I noted that the Florida Keys' elected County Commissioners were entertaining their planners' proposed fee of $4,500 for a "Beneficial Use Determination," a/k/a "BUD." Well, they weren't embarrassed in the least. They adopted said $4,500 "poll tax" on April 15, 2009.

In other jurisdictions, similar statutes and ordinances are called "taking avoidance" procedures. Many communities are justifiably concerned that their land development regulations "go too far," placing the local taxpayers in a position where they will have to pony up millions of dollars when regulations go "too far." The more enlightened communities utilize their taking avoidance ordinances to back off on overly confiscatory regulations, and save the taxpayers a ton of money. The Florida Keys $4,500 fee will just cause more litigation. It is now being used to pay planners' salaries, instead of what it was originally intended to do -- save money.

On December 1, 2007, I reported on a good example of municipal incompetence on the part of the City of Half Moon Bay, California, when it got slammed with a $36.8 million inverse condemnation judgment as "payback" for its years of staunch opposition to a residential subdivision within the city limits. Nearly a year later, I reported, also on this blog, that Half Moon Bay and the landowner had reached a settlement. The City would allow the development of the property or, if the California Coastal Commission prevented same, it would pay the landowner $18,000,000.

Monroe County is headed for serious financial trouble, whether the County Commissioners know it or not, and this latest dumb move just digs the hole deeper. Property tax rates in this community are the lowest in the State of Florida, but that will not last long with these clowns in office.

Protecting Non-Voting Property Owners from the Tyranny of the Majority

Today I learned that one of our Florida Keys "regulatory taking" plaintiffs is the subject of animosity from some of his fellow landowners who own homes on developed land. His "friends" believe this gentleman is trying to bankrupt Monroe County with his regulatory taking claim. I would point out that our client's "fellow landowners" are responsible for the election of our County Commission, as 70% of the owners of undeveloped Keys land are not registered to vote in Monroe County.

The drafters of the United States Constitution feared, more than anything else, the "tyranny of the majority" that can be launched by the majority of voters -- or in some instances one judge -- against a minority of voters. It was for that reason that the Bill of Rights was adopted by the first U.S. Congress and all of the States. None of the first 10 amendments to the U.S. Constitution protect the rights of government -- they are intended to protect the rights of the minority against the evil doings of the majority.

Monroe County suffers from a number of parochial failings, including the "got-miner" mentality of a majority of its voters (and their lackeys, the County Commissioners). Over the past 20 years, Keys got-miners have used the ballot box to halt the construction of homes and businesses by the non-voting minority landowners. This is wrong -- in fact, this is sick. Our clients have turned to that 1789 document, called the United States Constitution, to correct this wrong -- and their unaffected neighbors are pissed as hell. We and our clients are not trying to bankrupt the County. Even if we were, the County cannot declare bankruptcy to avoid paying Just Compensation to our clients.

Non-charter Florida counties have no bankruptcy avenue to take. Non-charter counties -- including Monroe County -- have no corporate existence; they are merely lines on a map. They cannot absolve their debts by filing for bankruptcy; in fact they cannot file for bankruptcy, period.

What can happen -- and now likely will happen -- is that Monroe County's Commissioners will be replaced by a board of accountants named by the Governor -- just as happened in Miami several years ago, and the accountant board will raise property taxes to the maximum allowed by the Florida Constitution (10 mills). That is four times the current property tax rate of about 2.5 mills.

For you got-miners who are listening, let us assume you now pay $4,000 per year in property taxes. One-half of that sum goes to the School Board, so you are only paying $2,000 to the County. The County's tax assessment runs about 2.5 mills, the lowest rate in the State of Florida, lower even than Palm Beach or Collier Counties. The Florida Constitution limits local government taxes (outside of municipalities) to 10 mills. So your County ad valorem tax could jump a factor of 4 until it hits the Constitutional maximum, or $8,000 per year. Add back the $2,000 school tax, and your tax bill has just gone from $4,000/year to $10,000/year. But just think, that vacant lot next door will never be developed, and it will only cost you $6,000/year to keep it that way. (One way or another, we are forced to pay for getting our wishes granted.)

It is unlikely that increasing all Monroe County tax bills by a factor of four will compensate all of the landowners (70% non-voting) for the regulatory taking of their land, but at that point the State of Florida will be on the hook for the difference. There will be no County bankruptcy filing under any circumstances. The developed-property owners will get nailed with several years of maximum tax bills, and the State will cough up the rest of the money. Our clients, most of whom are well into their senior years, will quietly laugh all the way to the bank (if they can find one, that is).