Tuesday, March 22, 2016
The United States Supreme Court is presently reviewing a case with lots of land use law principles. Murr v. Wisconsin involves two nonconforming (or “substandard”) lots. The Court of Appeals of Wisconsin found (in an unpublished decision) that an ordinance that merged two adjacent, riparian lots for purposes of sale or development did not constitute a regulatory taking. The issue for the United States Supreme Court centers on the “relevant parcel” inquiry.
In 1960, Murr’s parents purchased a lot and built a cabin on the lot, then transferring title to the family business. In 1963, Murr’s parents purchased the adjacent lot in their personal names, but never built anything on the lot. In 1994 and 1995, both lots were conveyed to Murr and her siblings, bringing the lots into common ownership.
Murr requested the following eight variances or special exception permits: (1) variance to sell or use two contiguous substandard lots in common ownership as separate building sites; (2) variance to reconstruct and expand a nonconforming structure outside its original footprint; (3) variance to fill, grade, and place a structure in the slope preservation zone; (4) special exception to fill and grade within forty feet of the slope preservation zone; (5) special exception to fill and grade more than 2000 square feet; (6) variance to construct retaining walls and stairs inside the ordinary high-water mark setback; (7) variance to reconstruct a patio within the ordinary high-water mark setback; and (8) variance to construct a deck within the ordinary high-water mark setback.
The applicable ordinance was adopted pursuant to WIS. ADMIN. CODE § NR 118.08(4) and provides, in pertinent part:
(4) SUBSTANDARD LOTS Lots of record in the Register Of Deeds office on January 1, 1976 or on the date of the enactment of an amendment to this subchapter that makes the lot substandard, which do not meet the requirements of this subchapter, may be allowed as building sites provided that the following criteria are met:
*181 (a) 1. The lot is in separate ownership from abutting lands, or
2. The lot by itself or in combination with an adjacent lot or lots under common ownership in an existing subdivision has at least one acre of net project area. Adjacent substandard lots in common ownership may only be sold or developed as separate lots if each of the lots has at least one acre of net project area.
(b) All structures that are proposed to be constructed or placed on the lot and the proposed use of the lot comply with the requirements of this subchapter and any underlying zoning or sanitary code requirement
Each of the Murr lots contained approximately ½ acre of net project area.
After the variances and special exceptions were denied, and upheld by the Court of Appeals, Murr filed suit, claiming a regulatory taking. The suit averred that the regulation deprived them of “all, or practically all, of the use of Lot E because the lot cannot be sold or developed as a separate lot”. Note that Lot E (the lot with no dwelling) could not be farmed or otherwise used because of the steep terrain and size. Murr and the State filed motions for summary judgment. Although the lower court found the claims by Murr time barred, the court reached the merits of the claim. The court found that the “property as a whole” included both lots, not each individual lot separately. Therefore, the regulation did not enact a taking, as residential uses remain.
The Court of Appeals found that Zealy v. City of Waukesha, 201 Wis.2d 365, 548 N.W.2d 528 (1996) stands for the proposition that continguous property, “[r]egardless of how that property is subdivided” should be considered as one parcel for the purposes of regulatory takings analysis. “[The] well-established rule [holds] that property under common ownership is considered as a whole regardless of the number of parcels contained therein.” Viewing the two lots as one, Murr failed to show that all or virtually all uses of the property are denied. Therefore, the Lucas claim failed.
The court proceeded to review the case under the Penn Central balancing test, as Murr “obliquely suggest[ed]” a partial taking as well. Citing the environmental character of the regulation, the court balanced the factors and rejected that claim as well.
The issue before the United States Supreme Court is whether Wisconsin’s rule that merges adjacent properties under common ownership for the purposes of regulatory takings analysis is constitutional. Given the fact specific nature of regulatory takings analysis, I predict that the court will reject the automatic merger rule and remand the case.
For those that read this blog, perhaps the more important question is whether merging adjacent nonconforming lots under common ownership, which appears to be a reasonable and common practice, will result in successful takings claims if the case is indeed remanded. In the context of nonconforming lots, should a provision that merges adjacent nonconforming lots be reviewed in the context of a regulatory takings claim as one lot or two lots?
This case frankly drives me crazy, since the posture of the case, and Wisconsin’s rather arbitrary rule of combining adjacent parcels as the relevant parcel for regulatory takings claims, obscures the real land use issue- methods of dealing with nonconforming lots. This important issue is lost in translation, and ignored in the briefs (and was ignored in the Wisconsin courts).
Although reasonableness is not the test for regulatory takings claims or for determining the relevant parcel, I further predict that on remand the Wisconsin Court of Appeals, on remand, will find that in these particular circumstances, where a local ordinance merges adjacent nonconforming lots under common ownership, the two lots should be considered as one in the relevant parcel analysis.