Saturday, April 11, 2015

New Arkansas law requires local governments to pay for a "takings" where certain "regulatory programs" reduce FMV by at least 20 percent

On April 6, 2015, Arkansas' governor signed into law SB 757, a law that may either end zoning in Arkansas...or not.  On its face, the law is a bludgeon to zoning laws:  it seems at first to require local governments to compensate for a "taking" where a "regulatory program" causes a decrease of "at least 20%" of the fair market value of real property.  Zoning laws are specifically mentioned within the definition of a "regulatory program."

Whether this law is, in fact, a bludgeon to zoning, or a completely meaningless piece of legislation, depends on how you read the second half of the definition of "regulatory program" in 5(B).  The first part of the "regulatory program" definition seems to include almost all aspects of today's zoning laws in its ambit; however, the law then provides that such regulations are only within the law's scope "when the regulatory program is not designed to carry out or protect the adopted plans of a governmental unit that are designed to protect the health, safety, or welfare of the citizens."  Here's my question:  aren't all zoning laws premised on an exercise of the police power (e.g., health, safety, welfare, etc.)?  I think that is a pretty low bar to meet.    

However, the other issue is how (5)(A) relates to (5)(B).  Perhaps the police power limitation only applies to the second part of the definition in (5)(B).  In that case, (5)(A) would provide that "'Regulatory program' means a rule, regulation, law, or ordinance that affects the fair market value of real property."  This more broad definition does not have the exception for police power-enacted laws.  Does the explicit reference in (5)(B) exempting zoning laws premised on the police powers mean that they are also exempted from (5)(A)?

These ambiguities will seemingly make a major difference in whether Arkansas's local governments can continue on with zoning programs.  I am writing this very quickly:  what do others see that I missed?

The full text of the law is at the link above.  Here are the major operative sections of the law:

 

(a)(1) An owner of real property asserting a taking under this 10 subchapter shall bring a cause of action in circuit court claiming that the implementation of a regulatory program by a governmental unit has permanently reduced by at least twenty percent (20%) the fair market value of the real property.

(2) The reduction in the fair market value of the real property shall be determined by comparing the fair market value of the real property as if the regulatory program is not in effect and the fair market value of the real property determined as if the regulatory program is in effect.

(3) To assert that a taking has occurred, the regulatory program must have been implemented at the time the owner acquired title or after the effective date of this subchapter, whichever is later.  

(4) Upon a preponderance of the evidence, the real property shall be deemed to have been taken for the use of the public.  

(b) A jury shall determine the amount of the difference in fair market value.

A "regulatory program" is defined as follows:

(5)(A) "Regulatory program" means a rule, regulation, law, or ordinance that affects the fair market value of real property.  (B) "Regulatory program" includes without limitation moratoriums on growth, aesthetic or scenic districts, environmental districts, overlay districts, green space ordinances, landscape ordinances, tree ordinances, land use planning programs, and zoning programs by a governmental unit when the regulatory program is not designed to carry out or protect the adopted plans of a governmental unit that are designed to protect the health, safety, or welfare of the citizens.

Many thanks to Celeste Pagano, who sent this my way.

Stephen R. Miller

https://lawprofessors.typepad.com/land_use/2015/04/new-arkansas-law-requires-local-governments-to-pay-for-a-takings-where-certain-regulatory-programs-r.html

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Comments

This is just one in a long line of similar state regulations and ballot measures. Every time one is passed, planners and environmentalists predict Armageddon,and Armageddon never comes. Oregon's Measure 37 created the most angst, but it wasn't nearly as bad as predicted, then was mitigated by Measure 49. Many are searching for a bright-line rule for takings, and it's difficult to find.

Posted by: Jesse Richardson | Apr 12, 2015 4:05:06 AM

Subsection (e)(12)(E) states that the subchapter does not apply to actions taken by a governmental unit "under its police power to make laws and regulations for the benefit of its communities." That pretty much parallels the definition language that you quote in the blog and also seems to undermine any real impact of this poorly conceived legislation.

Posted by: Josh Galperin | Apr 12, 2015 9:26:04 AM

Josh, good catch. I think that makes it official that the legislation is meaningless in practice.

Posted by: Stephen Miller | Apr 12, 2015 1:54:41 PM