1 00:00:00,040 --> 00:00:03,320 Welcome back to the Deep Dive. It is great to have you with us 2 00:00:03,320 --> 00:00:05,200 again today. We are. 3 00:00:05,800 --> 00:00:07,840 We're effectively crossing a border. 4 00:00:07,920 --> 00:00:09,760 We're leaving the world. We've spent the last few 5 00:00:09,760 --> 00:00:12,760 sessions in the world of private property disputes. 6 00:00:13,120 --> 00:00:17,120 You know the vibe, right? The the neighbor with the noisy 7 00:00:17,120 --> 00:00:21,320 rooster, the spite fence, the contract between just two 8 00:00:21,320 --> 00:00:24,200 people, the adverse possessor creeping across the property 9 00:00:24,200 --> 00:00:27,760 line, all of that is well, it's a world of private ordering. 10 00:00:27,760 --> 00:00:30,800 It's the cozy world of Stay off my lawn and you breached our 11 00:00:30,800 --> 00:00:32,439 contract. It's intimate. 12 00:00:32,439 --> 00:00:34,280 It's person to person. Exactly. 13 00:00:34,360 --> 00:00:37,360 But today we are stepping into the arena of the state. 14 00:00:37,600 --> 00:00:40,800 We're talking about Chapter 5 in the property law journey, land 15 00:00:40,800 --> 00:00:44,560 use controls. And honestly, this marks a a 16 00:00:44,560 --> 00:00:47,200 fundamental psychological shift in how we have to think about 17 00:00:47,200 --> 00:00:50,120 ownership because suddenly it's not just about what you want to 18 00:00:50,120 --> 00:00:52,920 do with your land, it's about what the government allows you 19 00:00:52,920 --> 00:00:55,080 to do. That is the perfect way to frame 20 00:00:55,080 --> 00:00:57,440 it. I mean, up until now, property 21 00:00:57,440 --> 00:00:59,960 law feels very individualistic. It's all about rights between 22 00:00:59,960 --> 00:01:03,040 people. But land use is where we meet 23 00:01:03,440 --> 00:01:05,319 the police power. The police power. 24 00:01:05,440 --> 00:01:07,840 And just to be clear for everyone listening, when we say 25 00:01:07,840 --> 00:01:11,400 police power, we aren't talking about officers with badges and 26 00:01:11,400 --> 00:01:14,000 sirens and handcuffs. No, not at all. 27 00:01:14,000 --> 00:01:17,760 It's a legal term of art in constitutional and property law. 28 00:01:17,800 --> 00:01:21,600 The police power is this, this massive inherent authority of 29 00:01:21,600 --> 00:01:26,000 the state to regulate for the public health, safety, morals 30 00:01:26,000 --> 00:01:29,200 and and general welfare. It is the engine that drives 31 00:01:29,200 --> 00:01:31,360 civilization. I mean, it's the power that 32 00:01:31,360 --> 00:01:34,520 allows the government to say no, you can't build a dynamite 33 00:01:34,520 --> 00:01:37,160 factory next to a kindergarten. Or you have to wear a seat belt. 34 00:01:37,280 --> 00:01:39,920 Exactly. And the dramatic arc of this 35 00:01:39,920 --> 00:01:43,640 entire deep dive is the conflict, the tension between 36 00:01:43,640 --> 00:01:46,000 that police power and the Constitution. 37 00:01:46,160 --> 00:01:48,760 Right, Because generally speaking, when the government 38 00:01:48,760 --> 00:01:51,720 regulates under the police power to stop you from hurting others, 39 00:01:52,000 --> 00:01:54,280 they don't have to pay you. That's just regulation. 40 00:01:54,280 --> 00:01:56,520 It's the price of admission. It's the price of living in a 41 00:01:56,520 --> 00:01:58,400 civilized society. But. 42 00:01:58,800 --> 00:02:00,640 The 5th Amendment has a takings clause. 43 00:02:00,720 --> 00:02:02,840 Right. Nor shall private property be 44 00:02:02,840 --> 00:02:05,880 taken for public use without just compensation. 45 00:02:06,120 --> 00:02:09,160 And that is the fiction point. That's the whole ball game. 46 00:02:09,840 --> 00:02:12,680 If the government regulates too much, does it cross a line? 47 00:02:13,080 --> 00:02:16,400 Does it stop being a regulation and start being a taking? 48 00:02:16,600 --> 00:02:17,880 And do they have to write a check? 49 00:02:18,080 --> 00:02:21,320 Do they have to write a check? That is the question that haunts 50 00:02:21,320 --> 00:02:25,800 this entire field of law. So to keep us from getting lost 51 00:02:25,800 --> 00:02:28,680 in the weeds, because this is a massive topic, we have 52 00:02:28,680 --> 00:02:33,600 structured this deep dive into three, let's call them massive 53 00:02:33,600 --> 00:02:36,160 buckets. We're calling it the Big Three 54 00:02:36,160 --> 00:02:38,520 Road map for your exam. OK, let's map it out. 55 00:02:39,120 --> 00:02:41,480 Bucket number one is zoning. Zoning. 56 00:02:41,480 --> 00:02:44,400 This is the proactive stuff. It's the legislature drawing 57 00:02:44,400 --> 00:02:47,920 lines on a map and saying houses go here, factories go there. 58 00:02:48,120 --> 00:02:51,400 It's regulation and usually no money changes hands. 59 00:02:51,400 --> 00:02:53,960 OK, so that's the day-to-day planning bucket #2? 60 00:02:54,200 --> 00:02:56,120 Eminent domain. The nuclear option. 61 00:02:56,120 --> 00:02:57,560 That's it. The government isn't just 62 00:02:57,560 --> 00:03:00,520 regulating, they're actually seizing the title to your land 63 00:03:00,840 --> 00:03:03,680 to build a highway or a school they admit they are taking. 64 00:03:03,680 --> 00:03:05,400 It and they pay you. And they pay you. 65 00:03:05,560 --> 00:03:09,760 And then there's bucket #3. And bucket #3 the one that keeps 66 00:03:09,760 --> 00:03:13,600 law students awake at night is regulatory takings. 67 00:03:13,680 --> 00:03:15,760 The Gray zone. This is the Gray zone where the 68 00:03:15,760 --> 00:03:18,840 two concepts collide. It's when the government claims 69 00:03:18,840 --> 00:03:22,400 they were just zoning or regulating, but the court looks 70 00:03:22,400 --> 00:03:26,160 at the result and says no, you went too far, you broke the 71 00:03:26,160 --> 00:03:29,120 property, you have to pay. And this is, I mean, it's a 72 00:03:29,120 --> 00:03:32,320 goldmine for analysis because it merges property law with 73 00:03:32,320 --> 00:03:34,720 constitutional law. We're dealing with the 5th 74 00:03:34,720 --> 00:03:36,600 Amendment, the 14th Amendment, due process. 75 00:03:36,600 --> 00:03:39,080 It's all in the mix here. Which is why it's so heavily 76 00:03:39,080 --> 00:03:41,920 tested you to put on both your property hat and your con law 77 00:03:41,920 --> 00:03:43,840 hat. So let's start with Section 1. 78 00:03:43,840 --> 00:03:47,600 Then let's start with zoning the police power in action. 79 00:03:47,840 --> 00:03:50,840 Let's do it. Now, I think most people you 80 00:03:50,840 --> 00:03:54,720 know have a misconception here. They assume their local City 81 00:03:54,720 --> 00:03:57,000 Council just naturally has the power to zone. 82 00:03:57,000 --> 00:03:59,400 Like we are a city, therefore we can tell you where to build. 83 00:03:59,600 --> 00:04:01,560 But legally, that's not true, is it? 84 00:04:01,680 --> 00:04:04,120 No, it's not inherent at the local level at all. 85 00:04:04,680 --> 00:04:07,760 In the American legal system, cities and municipalities are 86 00:04:07,760 --> 00:04:09,280 considered creatures of the state. 87 00:04:09,280 --> 00:04:11,400 Creatures of the state. Yeah, they don't have sovereign 88 00:04:11,400 --> 00:04:13,560 power on their own. They only have the power the 89 00:04:13,560 --> 00:04:15,400 state legislature decides to give them. 90 00:04:15,800 --> 00:04:18,000 So the power to zone has to what? 91 00:04:18,079 --> 00:04:19,440 Trickle down. Exactly. 92 00:04:19,800 --> 00:04:23,160 Zoning authority is delegated from the state legislature down 93 00:04:23,160 --> 00:04:26,480 to the local City Council via something called an enabling 94 00:04:26,480 --> 00:04:28,480 act. An enabling act. 95 00:04:28,480 --> 00:04:32,240 You'll often see references to the Standard State Zoning 96 00:04:32,240 --> 00:04:34,680 Enabling Act. That was a Model Law from the 97 00:04:34,680 --> 00:04:38,240 1920s that basically said, OK cities, we grant you the police 98 00:04:38,240 --> 00:04:41,720 power to zone for the health, safety and morals of the 99 00:04:41,720 --> 00:04:43,200 community. Permission. 100 00:04:43,200 --> 00:04:44,680 Slip. It's a permission slip from the 101 00:04:44,680 --> 00:04:47,160 state capital. Without that, a city can't zone 102 00:04:47,160 --> 00:04:49,800 a single lot. OK, so the power flows from the 103 00:04:49,800 --> 00:04:51,920 state. Now let's imagine a scenario. 104 00:04:52,240 --> 00:04:54,160 A city passes a zoning ordinance. 105 00:04:54,520 --> 00:04:57,360 I own a plot of land and I hate the new rule. 106 00:04:57,680 --> 00:05:00,040 I mean, I despise it. Stops me from building the 107 00:05:00,040 --> 00:05:01,520 skyscraper I've always dreamed of. 108 00:05:02,040 --> 00:05:04,000 So, being a good American, I sue. 109 00:05:04,520 --> 00:05:06,880 Of course. What is the standard of review? 110 00:05:06,880 --> 00:05:08,600 Is the court going to look at this strictly? 111 00:05:08,960 --> 00:05:12,000 Generally, no, and this is a huge take away for anyone 112 00:05:12,000 --> 00:05:15,400 looking at a fact pattern. Courts grant extreme deference 113 00:05:15,400 --> 00:05:17,320 to legislative judgments in zoning. 114 00:05:17,480 --> 00:05:20,400 Extreme deference. We apply the rational basis 115 00:05:20,400 --> 00:05:22,760 test. The rational basis test now in 116 00:05:22,760 --> 00:05:27,080 the hierarchy of legal hurdles, that is a very low bar. 117 00:05:27,080 --> 00:05:28,800 Is the lowest bar in constitutional law. 118 00:05:29,560 --> 00:05:32,520 It's barely a bar at all. If the city can show that the 119 00:05:32,520 --> 00:05:35,840 regulation is not arbitrary and that it has any conceivable 120 00:05:35,840 --> 00:05:40,000 rational basis related to public health, safety or welfare, the 121 00:05:40,000 --> 00:05:42,160 city wins. Any conceivable basis? 122 00:05:42,160 --> 00:05:44,360 I mean, that sounds almost impossible to be. 123 00:05:44,440 --> 00:05:47,440 It basically is. As the challenger you have the 124 00:05:47,440 --> 00:05:51,000 burden of proof and it is heavy. You have to prove the law is 125 00:05:51,120 --> 00:05:53,560 totally irrational or purely arbitrary. 126 00:05:53,560 --> 00:05:56,320 So if the city just comes up with any reason. 127 00:05:56,320 --> 00:05:59,760 Any reason if the city says we are limiting building height to 128 00:05:59,760 --> 00:06:01,240 preserve sunlight on the sidewalk? 129 00:06:01,520 --> 00:06:03,280 The court says that sounds rational. 130 00:06:03,280 --> 00:06:05,320 Case closed. We want to reduce traffic. 131 00:06:05,320 --> 00:06:06,600 Rational. Case closed. 132 00:06:06,960 --> 00:06:08,800 It's an incredibly deferential standard. 133 00:06:08,800 --> 00:06:12,080 So unless I can prove they singled me out specifically out 134 00:06:12,080 --> 00:06:15,200 of spite, or that the law is completely unhinged from 135 00:06:15,200 --> 00:06:18,040 reality, the zoning sticks. That's long and short of it. 136 00:06:18,240 --> 00:06:22,160 OK, now we can't talk about zoning without talking about the 137 00:06:22,160 --> 00:06:25,480 origin story. We have to go back to 1926. 138 00:06:25,680 --> 00:06:29,640 The case is Village of Euclid V Ambler Realty Co. 139 00:06:29,640 --> 00:06:33,080 The granddaddy of them all. This is why traditional zoning 140 00:06:33,080 --> 00:06:35,880 is called Euclidean zoning. And a fun fact for the exam, 141 00:06:36,040 --> 00:06:37,880 it's not named after the Greek mathematician. 142 00:06:38,040 --> 00:06:39,920 Right, it's named after the village of Euclid. 143 00:06:39,920 --> 00:06:42,520 OH, exactly. So set the scene for us. 144 00:06:43,280 --> 00:06:46,880 Why was this case so pivotal? I mean, what was the world like 145 00:06:46,880 --> 00:06:49,640 before Euclid? Well, before Euclid, it wasn't 146 00:06:49,640 --> 00:06:52,240 entirely clear if zoning was even constitutional. 147 00:06:52,240 --> 00:06:56,200 It was kind of a new idea. Ambler Realty owned 68 acres of 148 00:06:56,200 --> 00:07:00,200 land in Euclid. OH, it was beautiful, valuable 149 00:07:00,200 --> 00:07:03,160 land right on the edge of Cleveland, and Ambler expected 150 00:07:03,160 --> 00:07:05,160 to sell it for industrial use. Factories. 151 00:07:05,160 --> 00:07:06,560 Factories. That's where the money was. 152 00:07:06,720 --> 00:07:08,960 The Industrial Revolution was still in full swing. 153 00:07:09,000 --> 00:07:10,680 And then the village of Euclid stepped in. 154 00:07:10,680 --> 00:07:12,520 Right. They passed a comprehensive 155 00:07:12,520 --> 00:07:14,880 zoning ordinance that sliced up Ambler's land. 156 00:07:15,320 --> 00:07:18,400 They drew lines on the map and zoned a huge chunk of it for 157 00:07:18,400 --> 00:07:21,440 residential use only. So Ambler Realty did the math. 158 00:07:21,640 --> 00:07:25,080 They did the math and realized this regulation slashed the 159 00:07:25,080 --> 00:07:27,760 value of their land by about 75%. 160 00:07:28,000 --> 00:07:31,760 They sued, arguing this was an unconstitutional deprivation of 161 00:07:31,760 --> 00:07:33,840 liberty and property without due process. 162 00:07:34,400 --> 00:07:37,480 They said you can't just tell me I can't use my land for 163 00:07:37,480 --> 00:07:39,680 industry. I mean, that's a massive loss. 164 00:07:39,680 --> 00:07:42,000 You can see why they fought it all the way to the Supreme 165 00:07:42,000 --> 00:07:43,200 Court. Of course. 166 00:07:43,880 --> 00:07:46,160 But the Supreme Court sided with the village. 167 00:07:46,320 --> 00:07:47,920 And the reasoning is fascinating, isn't it? 168 00:07:47,920 --> 00:07:51,040 They didn't invent some brand new legal theory. 169 00:07:51,120 --> 00:07:55,080 No, they analogized it to something very old nuisance law. 170 00:07:55,720 --> 00:07:59,560 They use the famous maxim. A nuisance may be merely a right 171 00:07:59,560 --> 00:08:03,240 thing in the wrong place, like a pig in the parlor instead of the 172 00:08:03,240 --> 00:08:04,800 barnyard. A pig in the parlor. 173 00:08:04,800 --> 00:08:06,640 That's the classic property law analogy. 174 00:08:06,640 --> 00:08:08,280 I feel like I've heard that 1000 times. 175 00:08:08,280 --> 00:08:09,760 Exactly. And the court said, look, 176 00:08:09,760 --> 00:08:12,000 factories are great. We need them just like we need 177 00:08:12,000 --> 00:08:14,120 pigs. But we don't need them next to a 178 00:08:14,120 --> 00:08:18,480 kindergarten or a quiet home. The police power allows the 179 00:08:18,480 --> 00:08:23,160 state to separate incompatible uses to protect the quiet and 180 00:08:23,160 --> 00:08:24,920 safety of residential neighborhoods. 181 00:08:25,040 --> 00:08:27,360 So is basically preventative nuisance law. 182 00:08:27,480 --> 00:08:30,040 That's a great way to put it instead of waiting for the 183 00:08:30,040 --> 00:08:33,120 factory to spew smoke on the houses and then suing for 184 00:08:33,120 --> 00:08:35,400 nuisance. Zoning prevents the conflict 185 00:08:35,400 --> 00:08:39,760 from ever happening, and that decision, Euclid legitimize 186 00:08:39,760 --> 00:08:42,799 zoning across America. It caused a boom in zoning 187 00:08:42,799 --> 00:08:45,200 ordinances. And the structure of Euclidian 188 00:08:45,200 --> 00:08:48,440 zoning, the system that the court approved, is based on a 189 00:08:48,440 --> 00:08:51,560 specific hierarchy. We often visualize it as a 190 00:08:51,560 --> 00:08:53,560 pyramid. Let's walk the listener through 191 00:08:53,560 --> 00:08:56,160 that pyramid. Sure, a pyramid is the perfect 192 00:08:56,160 --> 00:08:58,240 visualization for traditional zoning. 193 00:08:58,760 --> 00:09:01,000 At the very top of the pyramid, the pointy end, you have the 194 00:09:01,000 --> 00:09:04,320 most protected use the crown jewel of American property 195 00:09:04,320 --> 00:09:07,480 policy, Single family residential or SFR. 196 00:09:07,520 --> 00:09:10,160 The white picket fence stream. Precisely. 197 00:09:10,480 --> 00:09:12,960 In an SFR zone, you can only build a single family home, 198 00:09:13,120 --> 00:09:15,200 nothing else. No apartments, no stores, 199 00:09:15,200 --> 00:09:17,360 certainly no factories. It is exclusive. 200 00:09:17,360 --> 00:09:20,680 OK, so that's the highest and best use according to this model 201 00:09:20,680 --> 00:09:22,800 and then below that. Below that you might have multi 202 00:09:22,800 --> 00:09:26,160 family residential apartments, duplexes now in a traditional 203 00:09:26,160 --> 00:09:29,720 cumulative zoning system and that's a key term cumulative. 204 00:09:30,280 --> 00:09:33,680 The lower zones allow the lower use plus the higher uses. 205 00:09:33,760 --> 00:09:36,000 So you can go down the pyramid, but not up. 206 00:09:36,200 --> 00:09:37,960 Exactly. So in an apartment zone, you 207 00:09:37,960 --> 00:09:40,160 could build an apartment building, or you could build a 208 00:09:40,160 --> 00:09:41,640 single family home. Why? 209 00:09:41,800 --> 00:09:45,320 Because the single family home is seen as less offensive than 210 00:09:45,320 --> 00:09:46,840 the apartment. Exactly. 211 00:09:46,840 --> 00:09:48,880 It's less dense, less traffic and so on. 212 00:09:49,240 --> 00:09:51,160 Then you go down another level to commercial. 213 00:09:51,240 --> 00:09:54,440 There you can have stores, but you could also have apartments 214 00:09:54,480 --> 00:09:56,600 or homes. And at the very bottom of the 215 00:09:56,600 --> 00:09:57,720 pyramid. Industrial. 216 00:09:58,240 --> 00:10:01,280 In a purely cumulative system, the industrial zone is the 217 00:10:01,280 --> 00:10:03,440 anything go zone. You could build a factory, a 218 00:10:03,440 --> 00:10:06,560 store or a house. Though practically speaking, 219 00:10:06,560 --> 00:10:10,040 living in a single family home inside an industrial park sounds 220 00:10:11,080 --> 00:10:12,280 terrible. It is. 221 00:10:12,280 --> 00:10:14,680 It's loud, it's smelly, and it's dangerous. 222 00:10:15,400 --> 00:10:18,120 And that's why modern codes often break this cumulative 223 00:10:18,120 --> 00:10:19,920 nature. They might say industrial zones 224 00:10:19,920 --> 00:10:22,080 are exclusive to industry because having homes there is 225 00:10:22,080 --> 00:10:25,280 bad for everyone. But the core Euclidean concept 226 00:10:25,280 --> 00:10:29,200 is this separation of uses. You put the pigs in the barnyard 227 00:10:29,200 --> 00:10:32,560 and the parlors in the suburbs. But Euclidean zoning has had a 228 00:10:32,560 --> 00:10:35,360 century to play out, and it has its critics, right? 229 00:10:35,360 --> 00:10:38,760 I mean, it's very rigid. By separating everything so 230 00:10:38,760 --> 00:10:42,080 strictly, it essentially mandates that you have to drive 231 00:10:42,080 --> 00:10:44,320 everywhere. That's the modern critique in a 232 00:10:44,320 --> 00:10:46,400 nutshell. Your house is miles away from 233 00:10:46,400 --> 00:10:48,960 the grocery store, which is miles away from your office. 234 00:10:49,120 --> 00:10:52,040 It creates sprawl, traffic and car dependency. 235 00:10:52,240 --> 00:10:54,240 It kills the walkability of a town. 236 00:10:54,680 --> 00:10:57,720 Some argue it also leads to socio economic segregation. 237 00:10:58,080 --> 00:11:01,480 It isolates people. So if you're looking at modern 238 00:11:01,480 --> 00:11:05,520 exam topics or you know, real world planning, you need to be 239 00:11:05,520 --> 00:11:09,360 aware of the modern zoning trends that try to fix the 240 00:11:09,360 --> 00:11:12,120 rigidity of Euclid. Yes, these are the fixes the 241 00:11:12,120 --> 00:11:14,440 patches on the system. Let's one through the big ones. 242 00:11:14,440 --> 00:11:17,800 First up, mixed-use zoning. This is the direct antidote to 243 00:11:17,800 --> 00:11:20,240 Euclidian separation. It allows residential and 244 00:11:20,240 --> 00:11:23,120 commercial uses in the same building or on the same block. 245 00:11:23,160 --> 00:11:25,720 Think of a building with a coffee shop or a bodega on the 246 00:11:25,720 --> 00:11:27,720 ground floor and apartments upstairs. 247 00:11:27,800 --> 00:11:30,600 Which is how cities were built for thousands of years before 248 00:11:30,600 --> 00:11:32,440 1926. Exactly. 249 00:11:32,440 --> 00:11:35,040 It's really returned to a more traditional urban form. 250 00:11:35,840 --> 00:11:38,760 Euclidean zoning made that illegal in many places. 251 00:11:39,360 --> 00:11:42,440 Modern zoning is trying to bring it back to create walkable, 252 00:11:42,440 --> 00:11:45,560 vibrant neighborhoods where you don't need a car for a quart of 253 00:11:45,560 --> 00:11:46,520 milk. OK. 254 00:11:46,520 --> 00:11:50,000 Second trend PU DS, planned unit developments. 255 00:11:50,000 --> 00:11:52,800 What are those? PU DS are all about flexibility. 256 00:11:53,120 --> 00:11:55,920 In a standard zone, every lot has strict rules. 257 00:11:56,520 --> 00:11:58,000 You must be 20 feet from the street. 258 00:11:58,120 --> 00:12:01,840 You must have 1/4 acre lot. It results in that cookie cutter 259 00:12:01,840 --> 00:12:04,600 subdivision look where everything is a uniform grid. 260 00:12:04,760 --> 00:12:06,520 Right, I can picture it perfectly. 261 00:12:06,680 --> 00:12:10,680 APU allows a developer to take a large tract of land, say 100 262 00:12:10,680 --> 00:12:12,920 acres, and propose a master plan. 263 00:12:13,560 --> 00:12:15,520 They might go to the city and say, hey, let us cluster. 264 00:12:15,520 --> 00:12:17,760 The house is really close together in one corner, 265 00:12:17,920 --> 00:12:21,600 violating your density rules. But in exchange, we'll leave the 266 00:12:21,600 --> 00:12:24,480 other 50 acres as a permanent nature preserve and walking 267 00:12:24,480 --> 00:12:26,600 trails for the whole community. So it's a trade off. 268 00:12:26,840 --> 00:12:29,720 Strict compliance is traded for site plan flexibility and 269 00:12:29,720 --> 00:12:31,560 community amenities. Exactly. 270 00:12:31,560 --> 00:12:34,480 It allows for more creative and often more environmentally 271 00:12:34,480 --> 00:12:36,000 friendly design. OK. 272 00:12:36,200 --> 00:12:39,080 Third trend, and this is politically very hot right now, 273 00:12:39,400 --> 00:12:42,240 inclusionary zoning. This is where zoning meets 274 00:12:42,240 --> 00:12:45,560 social justice. The city mandates that a 275 00:12:45,560 --> 00:12:48,960 developer must set aside a certain percentage of new units, 276 00:12:49,120 --> 00:12:53,880 say 15%, as affordable housing for lower income residents. 277 00:12:53,880 --> 00:12:57,320 So they are using the police power not just to separate uses 278 00:12:57,320 --> 00:13:00,680 but to shape the socio economic mix of the population. 279 00:13:00,680 --> 00:13:04,160 Yes, it's using zoning to achieve social policy goals. 280 00:13:04,360 --> 00:13:07,040 It's controversial because developers argue it acts like a 281 00:13:07,040 --> 00:13:10,280 tax on building, driving up costs for everyone else. 282 00:13:10,800 --> 00:13:12,560 But courts have generally upheld it. 283 00:13:12,680 --> 00:13:16,440 They have as part of the general welfare prong of the police 284 00:13:16,440 --> 00:13:18,120 power. And finally, a quick one, 285 00:13:18,440 --> 00:13:22,000 environmental overlays. Think of this as a transparency 286 00:13:22,000 --> 00:13:23,920 sheet laid over the main zoning map. 287 00:13:24,800 --> 00:13:27,360 You might be zoned for residential, but if there is a 288 00:13:27,400 --> 00:13:30,720 floodplain overlay or a wetlands overlay, that adds extra 289 00:13:30,720 --> 00:13:32,560 restrictions. So you have to check both maps. 290 00:13:32,640 --> 00:13:33,960 Right. You can't just build because the 291 00:13:33,960 --> 00:13:36,120 zoning says residential. You have to respect the 292 00:13:36,120 --> 00:13:39,800 environmental constraints first. OK, so that's the macro view of 293 00:13:39,800 --> 00:13:41,920 zoning the map, making the big picture. 294 00:13:42,400 --> 00:13:45,080 But let's zoom into the administrative side, Section 2. 295 00:13:45,320 --> 00:13:48,240 Because maps change, rules change. 296 00:13:48,440 --> 00:13:51,520 What happens when the ground shifts beneath your feet? 297 00:13:52,120 --> 00:13:54,600 This is where the rubber meets the road and where the lawsuits 298 00:13:54,600 --> 00:13:56,640 happen. It's a very testable area. 299 00:13:56,640 --> 00:13:59,080 So let's set up a hypo. I have a factory. 300 00:13:59,240 --> 00:14:01,360 I've been making widgets for 20 years. 301 00:14:01,560 --> 00:14:04,320 It's totally legal. I'm in an industrial zone. 302 00:14:04,840 --> 00:14:08,440 Then the City Council decides my neighborhood is up and coming 303 00:14:09,000 --> 00:14:11,600 gentrification. They rezone my district to 304 00:14:11,680 --> 00:14:15,120 residential only. Suddenly my factory is illegal. 305 00:14:15,120 --> 00:14:16,800 Do I have to shut down the next day? 306 00:14:16,800 --> 00:14:19,720 This is the doctrine of the non conforming use and the general 307 00:14:19,720 --> 00:14:23,760 rule is no, you do not have to shut down immediately if your 308 00:14:23,760 --> 00:14:26,880 use was lawful at its inception is grandfathered in. 309 00:14:26,880 --> 00:14:28,920 Grandfathered. You have a vested right to 310 00:14:28,920 --> 00:14:31,800 continue that existing use. Why is the government just being 311 00:14:31,800 --> 00:14:33,040 nice? Not really. 312 00:14:33,040 --> 00:14:34,760 It's constitutional self preservation. 313 00:14:34,960 --> 00:14:37,640 If they forced you to shut down a lawful multimillion dollar 314 00:14:37,640 --> 00:14:39,800 business overnight, that would almost certainly be a taking. 315 00:14:39,880 --> 00:14:41,760 They would have to pay you millions. 316 00:14:42,200 --> 00:14:44,680 So to avoid paying you, they let you stay. 317 00:14:44,760 --> 00:14:46,600 But. I'm sensing a but. 318 00:14:46,600 --> 00:14:50,080 Here there's always a but the courts in the cities hate non 319 00:14:50,080 --> 00:14:53,040 conforming uses. The goal of zoning is 320 00:14:53,040 --> 00:14:56,160 uniformity. You are a blemish on their 321 00:14:56,160 --> 00:14:59,720 perfect residential math. You are a pig in their parlor. 322 00:14:59,720 --> 00:15:02,520 So they tolerate me, but they don't like me. 323 00:15:02,600 --> 00:15:05,160 They tolerate you and they hope you die a natural death. 324 00:15:06,040 --> 00:15:09,440 So while they let you stay, they try to strangle the use slowly. 325 00:15:09,680 --> 00:15:11,920 OK, So what does that mean? I can't expand. 326 00:15:11,920 --> 00:15:15,080 Generally absolutely not. You are frozen in time. 327 00:15:15,080 --> 00:15:17,000 You cannot build a new wing on the factory. 328 00:15:17,000 --> 00:15:20,280 You usually cannot switch from a factory to a nightclub even if 329 00:15:20,280 --> 00:15:23,720 they are both non conforming. If your factory burns down, many 330 00:15:23,720 --> 00:15:25,280 statues say you cannot rebuild it. 331 00:15:25,280 --> 00:15:27,800 Wow, you lost your grandfather status in the fire. 332 00:15:27,840 --> 00:15:29,760 So it's a very fragile protection. 333 00:15:29,840 --> 00:15:33,280 And what if I take a break, say OK, business is slow so I closed 334 00:15:33,280 --> 00:15:36,160 the factory for 18 months? That brings up the doctrine of 335 00:15:36,160 --> 00:15:38,400 abandonment. This is a classic exam trap. 336 00:15:38,680 --> 00:15:42,240 If you stop the use for a specific statutory period off in 337 00:15:42,240 --> 00:15:45,680 a year and the city can show an intent to abandon, you lose the 338 00:15:45,680 --> 00:15:46,440 protection. Yeah. 339 00:15:46,520 --> 00:15:50,320 So it's two parts, non use plus intent. 340 00:15:50,400 --> 00:15:53,000 Correct. And once it's gone, it's gone 341 00:15:53,000 --> 00:15:55,680 forever. You have to conform to the new 342 00:15:55,680 --> 00:15:57,880 residential zoning. You can't just restart the 343 00:15:57,880 --> 00:16:00,800 factory five years later. Now, I've heard of something 344 00:16:00,800 --> 00:16:03,160 called amortization. That sounds like a financial 345 00:16:03,160 --> 00:16:06,240 term, but in zoning it sounds like a ticking clock. 346 00:16:06,640 --> 00:16:08,960 It is a death sentence with a delay. 347 00:16:09,400 --> 00:16:12,560 Amortization is a clause where the city says, OK, factory 348 00:16:12,560 --> 00:16:15,320 owner, you are non conforming, we won't shut you down today, 349 00:16:15,320 --> 00:16:20,280 OK, But we have calculated your initial investment and we think 350 00:16:20,280 --> 00:16:22,240 you need 10 years to make your money back. 351 00:16:22,480 --> 00:16:25,720 So you have 10 years to operate. On day one of year 11, you must 352 00:16:25,720 --> 00:16:27,640 close and. They don't pay you a dime. 353 00:16:27,720 --> 00:16:30,400 No check. The theory is that the time was 354 00:16:30,400 --> 00:16:32,560 your payment. You got a monopoly for 10 years 355 00:16:32,760 --> 00:16:34,880 to recoup your costs and transition your business. 356 00:16:34,880 --> 00:16:37,400 That sounds aggressive. It's very aggressive. 357 00:16:37,760 --> 00:16:40,640 It's a way for the city to terminate non conforming uses 358 00:16:40,640 --> 00:16:44,760 without using eminent domain. It's controversial and some 359 00:16:44,760 --> 00:16:48,000 states don't allow it, but many jurisdictions do if the time 360 00:16:48,000 --> 00:16:51,280 frame is deemed reasonable. That is a tough pill to swallow 361 00:16:51,280 --> 00:16:53,800 for a business owner. OK, let's look at the flip side. 362 00:16:54,040 --> 00:16:56,200 That was the city changing the rules on me. 363 00:16:56,360 --> 00:16:57,800 What if I want to change the rule? 364 00:16:57,800 --> 00:17:00,240 You want an exception. Yeah, what if I own a weird 365 00:17:00,240 --> 00:17:03,520 piece of land and the strict zoning rules just don't work for 366 00:17:03,520 --> 00:17:05,359 me? It's not my fault. 367 00:17:05,359 --> 00:17:08,680 The lot is just shaped funny. I need an exception. 368 00:17:08,800 --> 00:17:10,319 I need a variance. Right. 369 00:17:10,640 --> 00:17:13,160 A variance is an administrative safety valve. 370 00:17:13,920 --> 00:17:17,079 It's meant to prevent the zoning law from being tyrannical or 371 00:17:17,079 --> 00:17:20,839 absurd in specific unique cases. But you can't just get one 372 00:17:20,839 --> 00:17:23,480 because you want one. I can't just say I'd make more 373 00:17:23,480 --> 00:17:25,480 money if I could build closer to the street. 374 00:17:25,480 --> 00:17:27,960 No, no, the standard is hardship. 375 00:17:28,480 --> 00:17:30,160 You have to show that your land is unique. 376 00:17:30,200 --> 00:17:32,720 Maybe it's triangular or it has a ravine running through the 377 00:17:32,720 --> 00:17:35,040 middle and that's strictly complying with the setbacks 378 00:17:35,040 --> 00:17:39,160 would cause you undo hardship. Meaning I literally can't build 379 00:17:39,160 --> 00:17:40,680 a house here if I follow the rules. 380 00:17:40,680 --> 00:17:42,400 It's not just, it's inconvenient. 381 00:17:42,560 --> 00:17:44,800 Exactly. And critically, the hardship 382 00:17:44,800 --> 00:17:46,880 cannot be self-imposed. Explain that. 383 00:17:47,000 --> 00:17:50,400 That seems important. It's a huge bar if you build a 384 00:17:50,400 --> 00:17:53,600 massive swimming pool in your backyard and then run to the 385 00:17:53,600 --> 00:17:57,400 zoning board saying help I don't have room for a garage now give 386 00:17:57,400 --> 00:17:59,600 me a variance to build on the property line. 387 00:18:01,360 --> 00:18:02,840 They will laugh you out of the room. 388 00:18:02,880 --> 00:18:05,600 Because you created the problem. You created the problem. 389 00:18:05,760 --> 00:18:08,400 You don't get a variance for your own bad planning. 390 00:18:08,920 --> 00:18:11,600 Now there are two types of variances and the distinction is 391 00:18:11,600 --> 00:18:15,760 crucial for the exam area variances versus use variances. 392 00:18:15,760 --> 00:18:18,240 Yes, and area variance is about math and dimensions. 393 00:18:18,240 --> 00:18:20,840 It's about size, setbacks, frontage. 394 00:18:21,200 --> 00:18:24,440 I need to be 5 feet from the curb, but the code says 10 feet. 395 00:18:25,080 --> 00:18:27,880 Courts are relatively lenient with these, you just need to 396 00:18:27,880 --> 00:18:30,160 show practical difficulties. It's easier to get. 397 00:18:30,160 --> 00:18:33,120 Much easier, but a use variance. What's that? 398 00:18:33,200 --> 00:18:36,960 That is a different beast. That is, I want to open a bodega 399 00:18:37,160 --> 00:18:41,000 in a strictly residential zone. You are asking to change the use 400 00:18:41,000 --> 00:18:42,640 itself. Not just the dimensions. 401 00:18:42,640 --> 00:18:44,720 Right, you're trying to put a pig in the parlor yourself. 402 00:18:44,840 --> 00:18:47,320 Courts and zoning boards hate this because it borders on 403 00:18:47,320 --> 00:18:49,800 rezoning. If you change the use you are 404 00:18:49,800 --> 00:18:51,960 effectively rewriting the law for your lot. 405 00:18:52,520 --> 00:18:54,920 It's spot zoning. So the standard is higher. 406 00:18:54,920 --> 00:18:57,120 Much higher. You usually have to show that 407 00:18:57,120 --> 00:19:00,560 the land cannot yield a reasonable return with any of 408 00:19:00,560 --> 00:19:03,920 the permitted uses. Basically you have to prove if 409 00:19:03,920 --> 00:19:06,920 you don't let me build a store, this land is worthless. 410 00:19:07,560 --> 00:19:08,960 It's a very tough standard to meet. 411 00:19:09,480 --> 00:19:12,880 That brings us to a distinction that students mix up constantly 412 00:19:12,880 --> 00:19:15,200 on exams. What is the difference between 413 00:19:15,400 --> 00:19:17,680 getting a variance and getting a rezoning? 414 00:19:17,760 --> 00:19:20,400 They sound similar. Great question and it's a vital 415 00:19:20,400 --> 00:19:22,960 distinction. A variance is administrative. 416 00:19:23,680 --> 00:19:27,360 It's a quasi judicial decision by a board of adjustment for one 417 00:19:27,360 --> 00:19:29,360 specific plot due to unique hardship. 418 00:19:29,680 --> 00:19:32,400 It's a Band-Aid. It doesn't change the underlying 419 00:19:32,400 --> 00:19:34,120 law. OK, so it's an exception for one 420 00:19:34,120 --> 00:19:36,680 person. Yes, a rezoning is legislative. 421 00:19:36,920 --> 00:19:40,240 It's the City Council changing the actual law or the map for a 422 00:19:40,240 --> 00:19:42,880 whole district. If you're arguing about policy. 423 00:19:43,080 --> 00:19:44,680 This neighborhood needs more retail. 424 00:19:45,160 --> 00:19:47,840 You want to rezoning. If you are arguing about your 425 00:19:47,840 --> 00:19:50,240 specific weird lot, my lot has a Cliff on it. 426 00:19:50,320 --> 00:19:52,280 You want a variance. Legislative versus 427 00:19:52,280 --> 00:19:54,360 administrative, big picture versus small picture. 428 00:19:54,360 --> 00:19:57,160 Perfect, crystal clear. OK, let's move to the second 429 00:19:57,160 --> 00:19:59,440 bucket of our road map. We are leaving the world of 430 00:19:59,440 --> 00:20:01,960 regulation and entering the world of seizure. 431 00:20:02,480 --> 00:20:04,880 Eminent Domain. Section 3. 432 00:20:05,600 --> 00:20:08,840 The sovereign's ultimate power. It sounds medieval. 433 00:20:09,360 --> 00:20:11,880 It is, in a way. It stems from the idea that the 434 00:20:11,880 --> 00:20:14,960 state originally owns all the land and it reserves the right 435 00:20:14,960 --> 00:20:17,840 to take it back. The government has the power to 436 00:20:17,840 --> 00:20:20,120 compel you to sell your land to them. 437 00:20:20,320 --> 00:20:22,400 You cannot say no. You cannot say no. 438 00:20:22,400 --> 00:20:24,040 If they follow the rules, they get the title. 439 00:20:24,320 --> 00:20:26,560 But the Fifth Amendment puts up two hurdles. 440 00:20:26,560 --> 00:20:28,840 We call them the constitutional limitations. 441 00:20:28,840 --> 00:20:33,360 Right hurdle one, public use hurdle 2 just compensation. 442 00:20:33,480 --> 00:20:36,160 They have to clear both. Let's look at public use first. 443 00:20:36,160 --> 00:20:37,600 I think most people understand this. 444 00:20:37,600 --> 00:20:41,200 If the government takes land to build a road, a school, or a 445 00:20:41,200 --> 00:20:44,320 fire station that is clearly public use. 446 00:20:44,320 --> 00:20:45,920 The public will actually use it, right? 447 00:20:46,480 --> 00:20:48,520 Public work projects. No one disputes those. 448 00:20:48,520 --> 00:20:51,240 But it gets murky and politically explosive when we 449 00:20:51,240 --> 00:20:54,920 talk about economic development. This is the shadow of Kilo V 450 00:20:54,920 --> 00:20:58,240 City of New London. This 2005 case is probably the 451 00:20:58,240 --> 00:21:01,320 most headed property law decision of the last 50 years. 452 00:21:01,400 --> 00:21:03,920 So let's tell the story of Kilo. What happened there? 453 00:21:04,120 --> 00:21:06,600 New London, Connecticut, was a city that was struggling 454 00:21:06,600 --> 00:21:09,080 economically. Pfizer, the pharmaceutical 455 00:21:09,080 --> 00:21:12,440 giant, wanted to build a massive new research facility there. 456 00:21:13,040 --> 00:21:17,120 The city thought great jobs, tax revenue, this will save us. 457 00:21:17,120 --> 00:21:18,800 The Golden Ticket. They thought so. 458 00:21:19,160 --> 00:21:22,200 So the city decided to use eminent domain to seize an 459 00:21:22,200 --> 00:21:25,680 entire neighborhood of private homes, perfectly nice well kept 460 00:21:25,680 --> 00:21:29,480 homes in a working class area, including Suzette Kilo's famous 461 00:21:29,480 --> 00:21:33,720 pink house, and transfer that land to a private developer to 462 00:21:34,000 --> 00:21:35,880 build things to support the Pfizer project. 463 00:21:35,880 --> 00:21:38,240 Wait. They took land from private 464 00:21:38,240 --> 00:21:40,720 citizen A and gave it to private Company B. 465 00:21:40,800 --> 00:21:42,760 Yes. That's the heart of the issue, 466 00:21:42,960 --> 00:21:45,400 and the homeowners sued. They said that's not public use. 467 00:21:45,720 --> 00:21:47,520 Pfizer isn't a park. It's a private company. 468 00:21:47,520 --> 00:21:49,280 You can't take my house for their benefit. 469 00:21:49,440 --> 00:21:51,880 And the Supreme Court. The Supreme Court sided with the 470 00:21:51,880 --> 00:21:55,640 city in A5 four decision, a very narrow and controversial 471 00:21:55,640 --> 00:21:58,000 decision. They define public use broadly 472 00:21:58,000 --> 00:22:01,240 to mean public purpose. They said that economic 473 00:22:01,240 --> 00:22:05,760 rejuvenation, creating jobs and tax base is a valid public 474 00:22:05,760 --> 00:22:08,400 purpose. So federal constitutional law 475 00:22:08,680 --> 00:22:13,080 allows taking from A to give to B if it benefits the public 476 00:22:13,080 --> 00:22:14,800 economy. People went nuts. 477 00:22:15,000 --> 00:22:17,560 Absolute fury. It united the left and the 478 00:22:17,560 --> 00:22:18,640 right. Everyone hated it. 479 00:22:18,960 --> 00:22:22,800 The backlash was so intense that many states, something like 43 480 00:22:22,800 --> 00:22:26,760 or 44 states, pass their own laws or amended their state 481 00:22:26,760 --> 00:22:30,080 constitutions to ban kilo style takings. 482 00:22:30,240 --> 00:22:31,920 So that's the big practice tip here. 483 00:22:31,920 --> 00:22:34,400 That's the tip. While Kilo allows it under the 484 00:22:34,400 --> 00:22:36,840 federal constitution, you always have to check state law. 485 00:22:37,120 --> 00:22:38,640 It might be banned locally. OK. 486 00:22:38,680 --> 00:22:41,960 So public use is extremely broad, at least at the federal 487 00:22:41,960 --> 00:22:44,160 level. What about hurdle to just 488 00:22:44,160 --> 00:22:45,560 compensation? What does that mean? 489 00:22:45,640 --> 00:22:47,320 The standard is fair market value. 490 00:22:47,560 --> 00:22:51,880 FMV The court asks what would a willing buyer pay a willing 491 00:22:51,880 --> 00:22:53,840 seller in cash at the time of the taking? 492 00:22:53,920 --> 00:22:57,440 That sounds fair on paper, but there is a massive trap here for 493 00:22:57,440 --> 00:23:01,160 students and for real people. What is not included in FMV? 494 00:23:01,160 --> 00:23:03,720 This is where it feels tragic and where the just and just 495 00:23:03,720 --> 00:23:07,600 compensation feels hollow. FMV does not include sentimental 496 00:23:07,600 --> 00:23:09,160 value. It's not part of the equation. 497 00:23:09,280 --> 00:23:11,200 It doesn't matter if your grandmother was born in that 498 00:23:11,200 --> 00:23:14,040 house and you promised her on her deathbed, you'd never sell. 499 00:23:14,520 --> 00:23:17,640 The government pays you for the bricks and dirt, not the 500 00:23:17,640 --> 00:23:18,920 memories. Wow. 501 00:23:20,040 --> 00:23:22,560 What about business? It usually doesn't include the 502 00:23:22,560 --> 00:23:25,120 loss of goodwill. If you run a local diner and 503 00:23:25,120 --> 00:23:27,320 everyone knows you and the government moves you across 504 00:23:27,320 --> 00:23:29,520 town, you lose your customer base. 505 00:23:30,080 --> 00:23:33,880 That loss of business, that goodwill, is generally not 506 00:23:33,880 --> 00:23:36,640 compensated unless a specific statute adds it. 507 00:23:36,960 --> 00:23:39,920 So constitutionally, the government gets a discount on 508 00:23:39,920 --> 00:23:42,200 your pain. That's a harsh but accurate way 509 00:23:42,200 --> 00:23:44,240 to put it. What about a partial taking? 510 00:23:44,280 --> 00:23:47,680 Say the government just widens the road and takes 10 feet of my 511 00:23:47,680 --> 00:23:49,560 front yard. They pay me for the 10 feet, 512 00:23:49,560 --> 00:23:52,880 obviously, but now my house is right up against a highway. 513 00:23:52,880 --> 00:23:56,800 It's loud, it's dangerous, and the value of my house drops by 514 00:23:56,800 --> 00:23:59,440 $50,000. That's where severance damages 515 00:23:59,440 --> 00:24:01,080 come in. This is a key concept. 516 00:24:01,160 --> 00:24:03,120 You get paid for the slice of land they took. 517 00:24:03,320 --> 00:24:05,680 TLS. You get paid for the diminution 518 00:24:05,680 --> 00:24:08,280 in value to the remainder of the part you kept. 519 00:24:08,280 --> 00:24:11,720 So I get the value of the strip of land plus the 50 grand my 520 00:24:11,720 --> 00:24:14,920 house lost in value. Correct, if your house is now 521 00:24:14,920 --> 00:24:19,080 worth $50,000 less because of the proximity to the road, they 522 00:24:19,120 --> 00:24:21,720 owe you that 50,000 as severance damages. 523 00:24:21,880 --> 00:24:26,240 OK, we've covered zoning, which is regulation, and eminent 524 00:24:26,240 --> 00:24:30,520 domain, which is taking title. Now we arrive at the Beast, the 525 00:24:30,520 --> 00:24:33,720 area where students get lost and lawyers get rich. 526 00:24:34,240 --> 00:24:37,200 Regulatory takings. Section 4. 527 00:24:37,480 --> 00:24:40,280 This is the heart of the exam. This is the Gray area. 528 00:24:40,600 --> 00:24:43,000 The government says we aren't taking your land, we're just 529 00:24:43,000 --> 00:24:45,760 passing a regulation. But the regulation is so 530 00:24:45,760 --> 00:24:48,480 restrictive that the landowner says you might as well have 531 00:24:48,480 --> 00:24:49,800 taken it. You kill the value. 532 00:24:49,960 --> 00:24:53,080 And it all starts with Justice Holmes in 1922, a case called 533 00:24:53,080 --> 00:24:55,320 Pennsylvania Cole Covey Mahon. Right. 534 00:24:55,760 --> 00:24:58,600 And he wrote the famous quote that launched 1000 lawsuits. 535 00:24:59,200 --> 00:25:01,800 The general rule is that while property may be regulated to a 536 00:25:01,800 --> 00:25:05,560 certain extent, if regulation goes too far, it will be 537 00:25:05,560 --> 00:25:07,960 recognized as a taking. Too far? 538 00:25:07,960 --> 00:25:10,320 That is incredibly vague. What does that even mean? 539 00:25:10,320 --> 00:25:13,120 It is the Goldilocks standard. Not too hot, not too cold. 540 00:25:13,360 --> 00:25:16,120 And because it's so vague, the Supreme Court has spent the last 541 00:25:16,120 --> 00:25:19,320 century trying to build a framework, a series of tests to 542 00:25:19,320 --> 00:25:21,680 measure too far. And for the listener, the 543 00:25:21,680 --> 00:25:23,840 strategy here is all about sequencing. 544 00:25:24,000 --> 00:25:26,600 You can't just wing it. Do not just jump into a vibe 545 00:25:26,600 --> 00:25:28,600 check. You have to follow a checklist. 546 00:25:28,760 --> 00:25:31,240 You have to ask the questions in the right order. 547 00:25:31,320 --> 00:25:33,120 OK, let's build that checklist. Step one. 548 00:25:33,120 --> 00:25:34,400 What's the first question I asked? 549 00:25:34,400 --> 00:25:38,000 Step one is the Loretto rule. The question is, is there a 550 00:25:38,000 --> 00:25:41,800 permanent physical occupation? The case is Loretto V 551 00:25:41,800 --> 00:25:43,960 Teleprompter. I love this case because the 552 00:25:43,960 --> 00:25:46,560 stakes were so low, but the principal was so high. 553 00:25:47,080 --> 00:25:50,480 New York law required landlords to let cable companies bolt a 554 00:25:50,480 --> 00:25:54,000 small silver box and some wires onto their apartment buildings 555 00:25:54,120 --> 00:25:56,720 for cable access. Misses, Loretto sued. 556 00:25:56,760 --> 00:25:59,600 How big was this box? Was it a huge intrusion? 557 00:25:59,800 --> 00:26:02,240 Tiny. It took up almost no space. 558 00:26:02,680 --> 00:26:05,040 The descent in the case laughed at it, called it trivial. 559 00:26:05,320 --> 00:26:07,880 But the Supreme Court said it doesn't matter how small it is. 560 00:26:07,880 --> 00:26:09,600 Size doesn't matter. Not here. 561 00:26:09,880 --> 00:26:12,480 Doesn't matter if it's a cable box, a mailbox, or a single toe 562 00:26:12,480 --> 00:26:14,920 crossing the line. If the government mandates a 563 00:26:14,920 --> 00:26:18,440 permanent physical invasion of your property, it is a per SE 564 00:26:18,440 --> 00:26:20,760 taking. A per SE taking meaning 565 00:26:20,760 --> 00:26:22,520 automatic. Automatic, you get paid. 566 00:26:23,000 --> 00:26:26,120 End of analysis. And this is all about the right 567 00:26:26,120 --> 00:26:28,360 to exclude, isn't it? That fundamental stick in the 568 00:26:28,360 --> 00:26:29,520 bundle? Exactly. 569 00:26:29,600 --> 00:26:32,600 The right to exclude is the most essential stick in the bundle of 570 00:26:32,600 --> 00:26:34,760 property rights. If the government puts a 571 00:26:34,760 --> 00:26:38,880 stranger or a stranger's box on your land terminally, they have 572 00:26:38,880 --> 00:26:42,680 destroyed your right to exclude. It's an automatic win for the 573 00:26:42,680 --> 00:26:45,200 owner. And we have a modern update to 574 00:26:45,200 --> 00:26:49,080 this in our sources, Cedar Point Nursery V Hassid from 2021. 575 00:26:49,080 --> 00:26:50,920 This was a big deal. Huge. 576 00:26:50,920 --> 00:26:52,880 It really expanded our understanding of Loretto. 577 00:26:53,320 --> 00:26:57,560 In that case, California had a law allowing union organizers to 578 00:26:57,600 --> 00:27:02,080 enter agricultural farms for up to three hours a day, 120 days a 579 00:27:02,080 --> 00:27:04,840 year to talk to workers. So it wasn't permanent. 580 00:27:05,000 --> 00:27:07,320 That was the argument. The farm owner said this was a 581 00:27:07,320 --> 00:27:09,160 taking. The lower court said no, it's 582 00:27:09,160 --> 00:27:10,800 not permanent. They go home at night. 583 00:27:10,920 --> 00:27:12,760 It's just a regulation of your business. 584 00:27:12,840 --> 00:27:16,640 But the Supreme Court disagreed. Violently, the Supreme Court 585 00:27:16,640 --> 00:27:19,760 ruled that even though it was intermittent, not 24/7, it was 586 00:27:19,760 --> 00:27:22,240 still an appropriation of a right of access. 587 00:27:22,680 --> 00:27:25,200 It's like the government took an easement across the farm. 588 00:27:25,200 --> 00:27:27,040 An easement for the union organizers. 589 00:27:27,200 --> 00:27:30,080 Exactly, and an easement is a property interest so they said 590 00:27:30,080 --> 00:27:33,960 it was a physical taking. So Loretto has expanded any 591 00:27:33,960 --> 00:27:35,920 government mandated physical intrusion. 592 00:27:35,920 --> 00:27:39,400 Even a part time 1 is highly suspect and likely a taking. 593 00:27:39,400 --> 00:27:41,080 Correct. So that's step one on your 594 00:27:41,080 --> 00:27:43,280 checklist. Is there a physical invasion? 595 00:27:43,800 --> 00:27:47,040 If yes, pay the man OK? If no, if it's just a 596 00:27:47,040 --> 00:27:49,880 restriction on use, not an invasion, we move to Step 2. 597 00:27:50,160 --> 00:27:54,120 Step 2 is the Lucas rule, and the question is, is there a 598 00:27:54,120 --> 00:27:57,960 total economic wipeout? The case is Lucas V South 599 00:27:57,960 --> 00:28:01,720 Carolina Coastal Council. This is the sad story of David 600 00:28:01,720 --> 00:28:03,400 Lucas. Yeah, you have to feel for this 601 00:28:03,400 --> 00:28:05,480 guy. He bought 2 beachfront lots on 602 00:28:05,480 --> 00:28:08,240 an island, South Carolina for nearly $1,000,000. 603 00:28:08,480 --> 00:28:11,920 He planned to build 2 luxury homes, one for him, one to sell. 604 00:28:12,120 --> 00:28:14,760 The dream, the dream. Then two years later, the state 605 00:28:14,760 --> 00:28:17,600 passed a Coastal zone management act to stop erosion. 606 00:28:17,960 --> 00:28:21,240 They drew a line in the sand and said no Building C Word of this 607 00:28:21,240 --> 00:28:24,360 line and his lots were on the wrong side of the line. 608 00:28:24,400 --> 00:28:27,520 So his $1,000,000 lots were now effectively worthless. 609 00:28:27,680 --> 00:28:30,240 The trial court found the value had dropped to 0. 610 00:28:30,680 --> 00:28:32,600 He could picnic on them, but he couldn't build. 611 00:28:33,000 --> 00:28:34,880 He couldn't do anything economically productive. 612 00:28:35,040 --> 00:28:38,400 So the Supreme Court created a new per SE rule. 613 00:28:38,400 --> 00:28:41,480 What's the rule? If a regulation denies all 614 00:28:41,480 --> 00:28:45,120 economically beneficial or productive use of the land it is 615 00:28:45,120 --> 00:28:47,680 a taking the government must pay. 616 00:28:47,800 --> 00:28:49,760 It's like a constructive confiscation. 617 00:28:50,160 --> 00:28:53,040 They left him the title but took 100% of the value. 618 00:28:53,160 --> 00:28:55,240 Right. But and listen closely because 619 00:28:55,240 --> 00:28:57,640 this is the trick. There is a massive exception, 620 00:28:57,640 --> 00:28:59,200 the Background Principles exception. 621 00:28:59,200 --> 00:29:01,080 The government's Get out of jail free card. 622 00:29:01,120 --> 00:29:04,640 Yes, the court said. The government doesn't have to 623 00:29:04,640 --> 00:29:08,800 pay if the use they are banning was already prohibited by 624 00:29:08,800 --> 00:29:11,280 background principles of nuisance and property law. 625 00:29:11,440 --> 00:29:13,560 Explain that with an example that's a little abstract. 626 00:29:13,560 --> 00:29:17,040 OK, suppose I buy a lake and my business plan is to fill it with 627 00:29:17,040 --> 00:29:19,560 toxic waste. The government passes a law 628 00:29:19,560 --> 00:29:24,720 saying no toxic waste in lakes. That law destroys 100% of the 629 00:29:24,720 --> 00:29:27,200 value of my toxic waste dump business. 630 00:29:27,880 --> 00:29:29,840 Do I get paid under Lucas? No. 631 00:29:29,840 --> 00:29:31,720 Why not? Because you never had the right 632 00:29:31,720 --> 00:29:33,360 to poison your neighbors to begin with. 633 00:29:33,640 --> 00:29:36,280 Exactly. Under common law nuisance, I 634 00:29:36,280 --> 00:29:38,800 never had the right to do that. You can't take a right I never 635 00:29:38,800 --> 00:29:40,840 had. So if the regulation just 636 00:29:40,840 --> 00:29:44,560 codifies existing nuisance law, no compensation is due. 637 00:29:44,560 --> 00:29:47,120 Got it. Now there's a math trap in Lucas 638 00:29:47,120 --> 00:29:50,320 that you see on exams. What if the regulation reduces 639 00:29:50,320 --> 00:29:53,920 my value by 95%? I lost $950,000 out of a 640 00:29:53,920 --> 00:29:55,640 million. You lose. 641 00:29:56,040 --> 00:29:58,800 Just like that. Just like that, Lucas applies 642 00:29:58,800 --> 00:30:02,880 only to a 100% wipeout, a total deprivation. 643 00:30:03,360 --> 00:30:08,000 If your property retains even a sliver of value, 5 percent, 10%, 644 00:30:08,200 --> 00:30:11,840 you are not in Lucas territory. You have flunked Step 2 of the 645 00:30:11,840 --> 00:30:14,120 analysis. That feels incredibly cruel. 646 00:30:14,200 --> 00:30:17,680 So if I'm not physically invaded under Step 1 and I'm not 100% 647 00:30:17,680 --> 00:30:19,480 wiped out under Step 2, where do I go? 648 00:30:19,480 --> 00:30:22,360 I've lost 95% of my value. You go to the default setting. 649 00:30:22,640 --> 00:30:24,880 You go to the big murky balancing test. 650 00:30:25,280 --> 00:30:27,320 Step 3. The Penn Central Balancing test. 651 00:30:27,320 --> 00:30:29,760 To catch all. This is where 90% of cases end 652 00:30:29,760 --> 00:30:31,480 up and, frankly, where most plaintiffs lose. 653 00:30:31,600 --> 00:30:34,600 This comes from Penn Central Transportation Company V New 654 00:30:34,600 --> 00:30:37,080 York City. The owners of Grand Central 655 00:30:37,080 --> 00:30:40,600 Station wanted to build a massive office tower on top of 656 00:30:40,600 --> 00:30:43,960 the historic terminal, the city's Landmarks Preservation 657 00:30:43,960 --> 00:30:46,600 Commission said. No, you can't mess up the 658 00:30:46,600 --> 00:30:48,720 architecture. Penn Central sued. 659 00:30:49,000 --> 00:30:51,720 And the court established A3 factor balancing test. 660 00:30:52,520 --> 00:30:55,240 There is no clear formula. It's an ad hoc inquiry. 661 00:30:55,240 --> 00:30:57,120 You just weigh these three things in the hopper. 662 00:30:57,160 --> 00:30:58,360 OK. What's factor 1? 663 00:30:58,440 --> 00:31:00,560 Factor 1. The economic impact of the 664 00:31:00,560 --> 00:31:03,240 regulation on the claimant. How much value did you lose? 665 00:31:03,520 --> 00:31:06,320 10%, Fifty percent? 95%? 666 00:31:06,320 --> 00:31:08,640 The more you lose, the stronger your argument. 667 00:31:09,160 --> 00:31:12,600 But remember, the court has repeatedly said mere diminution 668 00:31:12,600 --> 00:31:16,560 and value isn't enough to win. So my 95% loss goes here and 669 00:31:16,560 --> 00:31:19,680 it's a strong point in my favor, but it's not a winner by itself. 670 00:31:19,680 --> 00:31:22,040 Correct, it's just one factor. What's factor 2? 671 00:31:22,120 --> 00:31:24,120 Factor 2. The extent to which the 672 00:31:24,120 --> 00:31:26,800 regulation is interfered with Distinct investment backed 673 00:31:26,800 --> 00:31:29,920 expectations, or IBES. IBES. 674 00:31:29,920 --> 00:31:31,240 What does that mean in plain English? 675 00:31:31,400 --> 00:31:33,880 It's crucial. It means did the regulation 676 00:31:33,880 --> 00:31:36,520 surprise you? Did you buy the land reasonably 677 00:31:36,520 --> 00:31:39,480 expecting to build a skyscraper based on the law at the time? 678 00:31:39,800 --> 00:31:43,240 Or did you buy a swamp knowing it was in a highly regulated 679 00:31:43,240 --> 00:31:46,080 wetland area? So if you bought purely on 680 00:31:46,080 --> 00:31:49,280 speculation, knowing the risks, the court has less sympathy. 681 00:31:49,320 --> 00:31:51,960 Exactly. You need a distinct expectation 682 00:31:51,960 --> 00:31:55,160 that the government thwarted. It's not just a vague hope. 683 00:31:55,200 --> 00:31:57,040 And factor 3. Factor 3. 684 00:31:57,600 --> 00:32:01,400 The character of the government action Is the government 685 00:32:01,400 --> 00:32:05,440 physically invading, which we know from Loretta was bad, or is 686 00:32:05,440 --> 00:32:08,440 it just a general public program adjusting the benefits and 687 00:32:08,440 --> 00:32:10,840 burdens of economic life for the common good? 688 00:32:11,320 --> 00:32:14,560 So a broad program to save landmarks or protect the 689 00:32:14,560 --> 00:32:16,640 environment is viewed more favorably. 690 00:32:16,640 --> 00:32:19,040 Much more favorably than an action that singles out one 691 00:32:19,040 --> 00:32:20,880 person. And the reality check here. 692 00:32:20,880 --> 00:32:22,960 What's the bottom line on Penn Central? 693 00:32:23,080 --> 00:32:26,000 The government almost always wins Penn Central cases unless 694 00:32:26,000 --> 00:32:29,200 the economic impact is massive and the expectations were 695 00:32:29,200 --> 00:32:32,440 crystal clear and reasonable, Courts are reluctant to find a 696 00:32:32,440 --> 00:32:34,400 taking here. They don't want to turn every 697 00:32:34,400 --> 00:32:36,240 zoning change into a federal lawsuit. 698 00:32:36,400 --> 00:32:40,040 So to recap the strategy, check Loretto for a physical 699 00:32:40,040 --> 00:32:43,720 occupation. If no, check Lucas for 100% 700 00:32:43,720 --> 00:32:46,080 wipeout. If no, you're in the Penn 701 00:32:46,080 --> 00:32:47,920 Central balancing test. Perfect. 702 00:32:47,960 --> 00:32:50,880 That is the Holy Trinity of regulatory takings analysis. 703 00:32:51,000 --> 00:32:53,080 But of course, law school isn't that simple. 704 00:32:53,080 --> 00:32:55,600 We have to talk about some advanced takings issues. 705 00:32:55,880 --> 00:32:59,080 Section 5. Let's start with a brain teaser. 706 00:32:59,320 --> 00:33:02,440 The denominator problem. Oh, the denominator problem. 707 00:33:03,240 --> 00:33:05,880 This sounds like math, but it's really about how we define the 708 00:33:05,880 --> 00:33:08,080 parcel. Remember how I said Lucas 709 00:33:08,080 --> 00:33:11,280 requires a 100% value loss? Right, it has to be total. 710 00:33:11,360 --> 00:33:14,600 Imagine I own 100 acres. The government passes a law 711 00:33:14,600 --> 00:33:17,680 protecting wetlands that covers just 10 of my acres. 712 00:33:17,840 --> 00:33:20,200 I can't build anything on those specific 10 acres. 713 00:33:20,800 --> 00:33:24,120 If I define my parcel as just those 10 acres, then I have 714 00:33:24,120 --> 00:33:26,600 suffered a 100% wipe out of that parcel. 715 00:33:26,760 --> 00:33:29,040 That's a Lucas taking I get paid. 716 00:33:29,040 --> 00:33:31,960 But if I define the parcel as the full 100 acres. 717 00:33:32,240 --> 00:33:34,480 Then you've only lost 10% of your total utility. 718 00:33:35,080 --> 00:33:37,200 That's a Penn Central case, and you probably lose. 719 00:33:38,040 --> 00:33:42,000 So the game becomes, what is the denominator in the fraction? 720 00:33:42,360 --> 00:33:44,640 Is it the sliver or is it the whole pie? 721 00:33:44,880 --> 00:33:48,360 And the Supreme Court gave us an answer, or at least a test, in 722 00:33:48,360 --> 00:33:51,400 Mervie, Wisconsin. They did in Myrrh, the court 723 00:33:51,400 --> 00:33:53,200 said. We have to look at the parcel as 724 00:33:53,200 --> 00:33:55,120 a whole. We don't let the owner 725 00:33:55,120 --> 00:33:57,480 gerrymander the property lines for litigation. 726 00:33:57,480 --> 00:34:00,800 We look at factors like how is the land treated under state 727 00:34:00,800 --> 00:34:03,120 law? Are the lots contiguous? 728 00:34:03,320 --> 00:34:04,920 Are they owned by the same person? 729 00:34:05,120 --> 00:34:07,240 What is the economic synergy between them? 730 00:34:07,480 --> 00:34:11,040 So they basically stopped land owners from artificially slicing 731 00:34:11,040 --> 00:34:14,159 up their land just to manufacture a Lucas claim? 732 00:34:14,480 --> 00:34:16,440 That's the take away. The court looks at the big 733 00:34:16,440 --> 00:34:18,960 picture. OK, next advanced topic 734 00:34:18,960 --> 00:34:21,280 exactions. This is where I go to the city 735 00:34:21,280 --> 00:34:24,199 for a permit and they say sure we will give you the permit, but 736 00:34:24,199 --> 00:34:25,639 you have to give us something first. 737 00:34:25,719 --> 00:34:28,040 The unconstitutional conditions doctrine. 738 00:34:28,639 --> 00:34:31,480 The government can't hold your permit hostage to extort things 739 00:34:31,480 --> 00:34:34,960 from you that are unrelated to your project, but they can ask 740 00:34:34,960 --> 00:34:37,639 for things if those things mitigate the impact of your 741 00:34:37,639 --> 00:34:39,880 development. And we have a two-part test here 742 00:34:39,880 --> 00:34:43,520 from 2 cases, Nolan and Dolan. Let's take them 1 by 1. 743 00:34:43,679 --> 00:34:46,080 Part 1. Essential Nexus from the Nolan 744 00:34:46,080 --> 00:34:50,719 case in Dolan, a guy wanted to rebuild a beachfront house, the 745 00:34:50,719 --> 00:34:52,320 California Coastal Commission said. 746 00:34:52,679 --> 00:34:56,440 OK, but you have to give us a public easement for people to 747 00:34:56,440 --> 00:34:59,480 walk across your private beach between the high and low tide 748 00:34:59,480 --> 00:35:00,920 lines. And their justification. 749 00:35:00,920 --> 00:35:04,000 The Commission argued the new, bigger house would block the 750 00:35:04,000 --> 00:35:07,040 view of the ocean from the street, creating a psychological 751 00:35:07,040 --> 00:35:09,880 barrier to the beach. Wait, how does letting people 752 00:35:09,880 --> 00:35:12,440 walk on the beach fix the view from the street? 753 00:35:12,440 --> 00:35:14,680 It doesn't. That's why the Supreme Court 754 00:35:14,680 --> 00:35:16,760 called it an out and out plan of extortion. 755 00:35:17,280 --> 00:35:21,600 There was no logical connection, no Nexus between the permit 756 00:35:21,600 --> 00:35:24,480 condition, which was beach access, and the harm the 757 00:35:24,480 --> 00:35:27,160 development supposedly caused, which was view blockage. 758 00:35:27,240 --> 00:35:29,200 So the solution didn't match the problem. 759 00:35:29,320 --> 00:35:32,040 Not even close. If the problem is view blockage, 760 00:35:32,080 --> 00:35:35,200 you ask for a viewing deck or height limits, not a beach path. 761 00:35:35,200 --> 00:35:37,480 OK, so there must be a Nexus. That's step one. 762 00:35:37,760 --> 00:35:39,840 Part 2 comes from Dolan. It's called rough 763 00:35:39,840 --> 00:35:43,400 proportionality. Right in Dolan, a hardware store 764 00:35:43,400 --> 00:35:46,040 owner, wanted to expand her store and pay for parking lot. 765 00:35:46,600 --> 00:35:49,800 So he said OK, but you have to dedicate a portion of your 766 00:35:49,800 --> 00:35:53,840 property for a public bike path and a massive Greenway for flood 767 00:35:53,840 --> 00:35:56,040 control. No, wait, expanding a parking 768 00:35:56,040 --> 00:35:58,640 lot does increase traffic and water runoff, So there was a 769 00:35:58,640 --> 00:36:01,160 Nexus there, right? Yes, unlike in Nolan, there was 770 00:36:01,160 --> 00:36:05,120 a connection, but the court said the demand was disproportionate. 771 00:36:05,720 --> 00:36:08,440 You can't demand a massive public park just for a small 772 00:36:08,440 --> 00:36:11,320 store expansion. The city has to make some sort 773 00:36:11,320 --> 00:36:14,360 of individualized determination that the cost to the developer 774 00:36:14,560 --> 00:36:17,200 is roughly proportional to the impact of the project. 775 00:36:17,280 --> 00:36:19,760 It can't be a wild overreach. Exactly. 776 00:36:19,760 --> 00:36:23,600 And does this apply to money if they ask for impact fees? 777 00:36:23,760 --> 00:36:26,360 Yes, thanks to a later case called Koontz. 778 00:36:26,720 --> 00:36:28,640 It used to be just about dedicating land. 779 00:36:29,160 --> 00:36:32,480 Now, if the city says give us $50,000 for a park fund in 780 00:36:32,480 --> 00:36:35,520 exchange for your permit, that monetary demand also has to 781 00:36:35,520 --> 00:36:38,600 satisfy Nolan Dolan. There must be a Nexus and rough 782 00:36:38,600 --> 00:36:41,320 proportionality. One last advanced tool mentioned 783 00:36:41,320 --> 00:36:45,760 in our sources Transferable Development Rights, or TDRS. 784 00:36:45,800 --> 00:36:47,280 This is a clever workaround, isn't it? 785 00:36:48,080 --> 00:36:51,440 Very clever. It's a market based solution to 786 00:36:51,480 --> 00:36:55,360 a regulatory problem. Let's go back to Penn Central. 787 00:36:55,840 --> 00:36:58,360 They couldn't build their tower. That feels like a big economic 788 00:36:58,360 --> 00:37:01,400 loss. But the city said don't worry, 789 00:37:01,640 --> 00:37:04,560 you have all these air rights above Grand Central that you 790 00:37:04,560 --> 00:37:06,760 aren't using. We will let you sell those 791 00:37:06,760 --> 00:37:08,880 rights to a developer of a nearby property. 792 00:37:08,920 --> 00:37:11,400 So a developer across the street could buy them. 793 00:37:11,400 --> 00:37:13,960 Exactly. And that developer across the 794 00:37:13,960 --> 00:37:17,680 street gets to build 20 stories higher than the zoning normally 795 00:37:17,680 --> 00:37:21,120 allows because he bought Penn Central's development credits. 796 00:37:21,920 --> 00:37:25,000 I get paid by the developer, the city gets its landmark 797 00:37:25,000 --> 00:37:27,480 preserved, and the developer gets more density. 798 00:37:27,800 --> 00:37:29,640 And does that defeat a takings claim? 799 00:37:29,960 --> 00:37:32,280 It helps a lot. And the Penn Central case 800 00:37:32,280 --> 00:37:33,960 itself. The court mentioned that these 801 00:37:33,960 --> 00:37:37,280 TDRS gave the owner some value, which helped the city win the 802 00:37:37,280 --> 00:37:39,640 argument that they hadn't wiped out the property's worth. 803 00:37:40,160 --> 00:37:42,680 It mitigates the economic impact, which is factor one of 804 00:37:42,680 --> 00:37:45,080 the balancing test. It's like a cap and trade system 805 00:37:45,080 --> 00:37:47,280 for concrete. That's a perfect analogy. 806 00:37:47,520 --> 00:37:50,520 All right, we have covered a massive amount of ground from 807 00:37:50,520 --> 00:37:54,000 the origin of zoning in Euclid to the intricacies of regulatory 808 00:37:54,000 --> 00:37:56,200 takings. Let's head to the outro and 809 00:37:56,200 --> 00:37:59,280 bring it all together. If I'm walking into an exam or a 810 00:37:59,280 --> 00:38:02,360 client meeting, what is my mental checklist? 811 00:38:02,360 --> 00:38:04,520 Give me the flow chart. OK, here's the drill, the step 812 00:38:04,520 --> 00:38:08,480 by step analysis. First ask is it zoning? 813 00:38:08,920 --> 00:38:12,600 If yes, apply rational basis. The city usually wins unless 814 00:38:12,600 --> 00:38:14,880 it's arbitrary. Check for non conformities. 815 00:38:14,880 --> 00:38:18,160 Are they grandfathered or is there a need for a variance 816 00:38:18,160 --> 00:38:19,480 because of a unique hardship step? 817 00:38:19,960 --> 00:38:21,520 2. Is it eminent domain? 818 00:38:21,840 --> 00:38:25,640 Is the government taking title? If yes, check public use, which 819 00:38:25,640 --> 00:38:27,600 is broad and includes economic development. 820 00:38:27,840 --> 00:38:30,200 And check just compensation, which is fair market value. 821 00:38:30,200 --> 00:38:32,280 But remember, no sentimental value. 822 00:38:32,480 --> 00:38:35,040 And then the big one. Then the big one, is it a 823 00:38:35,040 --> 00:38:38,160 regulatory taking? And here you run the sequence. 824 00:38:38,160 --> 00:38:41,400 First, is there a physical occupation that's Loretto and 825 00:38:41,400 --> 00:38:43,520 Cedar Point. If yes, they pay. 826 00:38:43,680 --> 00:38:46,840 It's a taking. Second, if not, is there a total 827 00:38:46,840 --> 00:38:48,880 economic wipeout? That's Lucas. 828 00:38:49,000 --> 00:38:52,200 If yes, they pay unless it was already a common law nuisance. 829 00:38:52,920 --> 00:38:56,320 3rd If it's neither of those, you balance the three Penn 830 00:38:56,320 --> 00:38:59,720 Central factors, the economic impact, the investment backed 831 00:38:59,720 --> 00:39:02,160 expectations, and the character of the government action. 832 00:39:02,160 --> 00:39:03,920 And remember, the government usually wins here. 833 00:39:04,040 --> 00:39:05,120 And one final. Check. 834 00:39:05,120 --> 00:39:07,920 One final check. Is it an exaction? 835 00:39:08,160 --> 00:39:10,160 Is the government demanding something for a permit? 836 00:39:10,360 --> 00:39:12,160 If so, apply the Nolan Dolan test. 837 00:39:12,520 --> 00:39:15,760 Is the demand logically connect to the projects, harm the Nexus? 838 00:39:16,360 --> 00:39:18,520 And is it roughly proportional in scale? 839 00:39:19,080 --> 00:39:21,560 And before we sign off, I want to leave our listeners with a 840 00:39:21,560 --> 00:39:24,720 provocative thought from the source material we touched on 841 00:39:24,720 --> 00:39:27,600 Tyler V Hennepin County. This is a fascinating recent 842 00:39:27,600 --> 00:39:28,920 development. It really is. 843 00:39:28,920 --> 00:39:31,560 It's about home equity. The government foreclosed on a 844 00:39:31,560 --> 00:39:34,480 94 year old woman's condo for unpaid taxes. 845 00:39:34,880 --> 00:39:37,840 She owed about $15,000 in taxes, penalties and fees. 846 00:39:38,280 --> 00:39:42,280 They sold the condo for $40,000. Historically, in many states, 847 00:39:42,720 --> 00:39:46,520 the government kept the surplus. They kept the whole $40,000. 848 00:39:46,600 --> 00:39:49,880 So they made a $25,000 profit. A huge profit. 849 00:39:50,280 --> 00:39:54,040 And the Supreme Court, in a unanimous decision, said no. 850 00:39:54,760 --> 00:39:59,120 That equity, that surplus $25,000 is private property 851 00:39:59,120 --> 00:40:02,720 protected by the takings clause. You can take what you are owed, 852 00:40:03,000 --> 00:40:05,960 but you can't take the rest. The court basically called it 853 00:40:06,000 --> 00:40:09,240 home equity theft. This suggests the definition of 854 00:40:09,240 --> 00:40:12,200 property is evolving, or at least being reaffirmed. 855 00:40:12,200 --> 00:40:14,760 It's not just land, it's value, it's equity. 856 00:40:15,280 --> 00:40:17,640 And as cities get more aggressive with regulations and 857 00:40:17,640 --> 00:40:20,440 four fighters, the court seems to be signaling it will look 858 00:40:20,440 --> 00:40:23,960 closely at the line between public interest and private 859 00:40:23,960 --> 00:40:25,680 theft. It connects back to Kilo. 860 00:40:26,320 --> 00:40:29,000 The pendulum swings. We went very pro government with 861 00:40:29,000 --> 00:40:31,280 Kilo and Penn Central in the last half century. 862 00:40:31,840 --> 00:40:34,880 Cases like Cedar Point and Tyler suggest the pendulum might be 863 00:40:34,880 --> 00:40:37,880 swinging back just a little toward the property owner. 864 00:40:38,000 --> 00:40:39,640 And that is where it gets really interesting. 865 00:40:39,720 --> 00:40:43,200 Law is not static. It's a living struggle over who 866 00:40:43,200 --> 00:40:46,080 owns the ground we stand on and the value we create. 867 00:40:46,120 --> 00:40:49,440 A constant negotiation. Thank you for joining us on this 868 00:40:49,440 --> 00:40:51,720 deep dive into land use controls. 869 00:40:52,200 --> 00:40:55,480 Good luck with your studies and we will see you on the next one. 870 00:40:55,640 --> 00:40:58,440 Happy studying. All right, class, welcome. 871 00:40:58,600 --> 00:41:02,080 Today we're doing a deep dive into land use controls. 872 00:41:02,360 --> 00:41:05,400 Now, I know what you might be thinking, but trust me, this is 873 00:41:05,400 --> 00:41:08,840 an absolutely critical topic not just for your property exam, but 874 00:41:08,840 --> 00:41:11,960 for the bar exam as well. So let's get into it. 875 00:41:12,600 --> 00:41:16,040 Let's just start with the big central question that really 876 00:41:16,040 --> 00:41:17,680 animates this entire area of law. 877 00:41:18,160 --> 00:41:19,920 You own property, you have rights. 878 00:41:20,160 --> 00:41:23,440 But can the government step in and say, Nope, you can't build 879 00:41:23,440 --> 00:41:26,720 that apartment building here? Can they limit your use of your 880 00:41:26,800 --> 00:41:29,640 own land? Well, the answer, as with so 881 00:41:29,640 --> 00:41:32,680 many things in the law, is a resounding It depends. 882 00:41:33,240 --> 00:41:36,640 And what it depends on is this fundamental tension, this 883 00:41:36,640 --> 00:41:39,320 constant tug of war. On one side, you've got the 884 00:41:39,320 --> 00:41:41,720 state's police power. This is its inherent authority 885 00:41:41,720 --> 00:41:44,120 to pass laws to protect the public health, safety and 886 00:41:44,120 --> 00:41:46,120 welfare. On the other side, you've got 887 00:41:46,120 --> 00:41:49,000 the 5th Amendment's takings clause, which acts as a check, 888 00:41:49,080 --> 00:41:51,520 saying, hey, if you're going to take private property for public 889 00:41:51,520 --> 00:41:54,600 use, you've got to pay for it. The whole game here is figuring 890 00:41:54,600 --> 00:41:56,880 out where regulation ends and a taking begins. 891 00:41:57,800 --> 00:42:01,120 OK, so let's see how this conflict actually plays out on 892 00:42:01,120 --> 00:42:02,840 the ground. We're going to start with 893 00:42:02,840 --> 00:42:06,320 zoning, which is far and away the most common form of land use 894 00:42:06,320 --> 00:42:09,120 regulation. Then we'll talk about the escape 895 00:42:09,120 --> 00:42:11,600 valves, the ways property owners can get some relief. 896 00:42:12,320 --> 00:42:15,200 So what is zoning? Well, it's pretty simple really. 897 00:42:15,400 --> 00:42:18,720 A city or town carves itself up into different districts, you 898 00:42:18,720 --> 00:42:21,200 know, residential over here, commercial over there, 899 00:42:21,200 --> 00:42:24,360 industrial way over there, and sets rules for each. 900 00:42:24,840 --> 00:42:27,560 Now, for your exam, you need to remember that zoning is a 901 00:42:27,560 --> 00:42:30,840 legislative act, an exercise of that police power we just talked 902 00:42:30,840 --> 00:42:32,880 about. And because of that, courts give 903 00:42:32,880 --> 00:42:35,280 it huge deference. They apply what's called a 904 00:42:35,280 --> 00:42:38,800 rational basis review, which frankly, is a very low bar for 905 00:42:38,800 --> 00:42:41,360 the government to meet. As long as the zoning plan is 906 00:42:41,360 --> 00:42:44,240 even arguably related to a legitimate public purpose, it's 907 00:42:44,240 --> 00:42:46,840 going to be upheld. But what happens when the rules 908 00:42:46,840 --> 00:42:49,000 change, right? Imagine you've been running a 909 00:42:49,000 --> 00:42:50,800 little corner store for 30 years. 910 00:42:50,880 --> 00:42:54,480 It's totally legal. Then one day the city rezones 911 00:42:54,480 --> 00:42:56,640 your entire neighborhood to be residential only. 912 00:42:56,960 --> 00:43:00,520 Suddenly your store is what we call a non conforming use. 913 00:43:01,000 --> 00:43:03,160 Now the good news is you generally get to keep it. 914 00:43:03,440 --> 00:43:05,920 The law protects this because you have what are called vested 915 00:43:05,920 --> 00:43:08,080 rights. But, and this is a very 916 00:43:08,080 --> 00:43:10,760 important but that protection isn't unlimited. 917 00:43:11,320 --> 00:43:13,480 And here are those limits for an exam. 918 00:43:13,680 --> 00:43:15,480 These are your key analytical points. 919 00:43:15,640 --> 00:43:18,080 First, the use had to be legal when it started. 920 00:43:18,280 --> 00:43:19,960 Seems obvious, but you'd be surprised. 921 00:43:20,440 --> 00:43:23,160 Second, you can lose that protection if you voluntarily 922 00:43:23,160 --> 00:43:25,600 abandoned the use. You can't just close up shop for 923 00:43:25,600 --> 00:43:27,440 five years and then decide to reopen. 924 00:43:27,680 --> 00:43:31,160 And 3rd, and this is a big one, you can't expand or 925 00:43:31,160 --> 00:43:34,280 substantially change the use. You can repair the roof of your 926 00:43:34,280 --> 00:43:37,200 corner store for sure, but you can't tear it down and build a 927 00:43:37,200 --> 00:43:38,640 Walmart. That's a no go. 928 00:43:39,520 --> 00:43:42,800 OK, so that's for uses that were there before the new zoning. 929 00:43:43,040 --> 00:43:45,680 But what if you want a piece of land and the existing zoning 930 00:43:45,680 --> 00:43:48,880 rules make it almost impossible to do anything with it? 931 00:43:49,480 --> 00:43:51,120 This is where the variance comes in. 932 00:43:51,520 --> 00:43:54,480 Think of it as an administrative safety valve, a way to get an 933 00:43:54,480 --> 00:43:57,960 exception to the rules. Now they don't just hand these 934 00:43:57,960 --> 00:44:00,600 out like candy. To get a variance, the owner has 935 00:44:00,600 --> 00:44:02,840 to pass a pretty tough two-part test. 936 00:44:03,200 --> 00:44:05,280 First you have to show undue hardship. 937 00:44:05,520 --> 00:44:07,760 This can't just be oh I can make more money if I could build a 938 00:44:07,760 --> 00:44:09,760 duplex. No, it has to be a hardship 939 00:44:09,760 --> 00:44:11,560 that's unique to your specific property. 940 00:44:11,800 --> 00:44:14,240 Like a bizarrely shaped lot where the normal set back rules 941 00:44:14,240 --> 00:44:16,520 just don't work. And critically, it can't be a 942 00:44:16,520 --> 00:44:19,960 hardship you created yourself. Second, you have to prove that 943 00:44:19,960 --> 00:44:22,520 giving you the variance won't hurt the public or undermine the 944 00:44:22,520 --> 00:44:25,600 overall zoning plan. OK everyone listen up because 945 00:44:25,600 --> 00:44:29,320 this is a classic exam trap. Do not confuse A variance with 946 00:44:29,320 --> 00:44:32,200 rezoning. A variance is administrative 947 00:44:32,200 --> 00:44:34,200 relief. It's a zoning board granting a 948 00:44:34,200 --> 00:44:37,520 special exception to 1 property owner based on their individual 949 00:44:37,520 --> 00:44:40,600 hardship. Rezoning is a legislative act. 950 00:44:40,800 --> 00:44:43,400 That's the City Council actually changing the law itself for a 951 00:44:43,400 --> 00:44:45,720 whole area. They are two completely 952 00:44:45,720 --> 00:44:47,720 different things, and you've got to keep them straight. 953 00:44:48,520 --> 00:44:52,160 All right, let's shift gears. So far, we've been talking about 954 00:44:52,160 --> 00:44:55,480 the government regulating how you use your land, but what 955 00:44:55,480 --> 00:44:57,160 about when they want to take it outright? 956 00:44:57,520 --> 00:45:00,000 Well, that brings us to the ultimate government power, 957 00:45:00,320 --> 00:45:03,640 eminent domain. The power of eminent domain is 958 00:45:03,640 --> 00:45:06,520 baked right into the 5th Amendment, but it comes with two 959 00:45:06,520 --> 00:45:10,080 very important strings attached. First, the taking has to be for 960 00:45:10,240 --> 00:45:12,960 a public use. And as we'll see in a second, 961 00:45:13,200 --> 00:45:16,000 courts have defined this very, very broadly. 962 00:45:16,400 --> 00:45:19,840 Second, the government has to pay just compensation. 963 00:45:19,960 --> 00:45:23,240 And what that means is fair market value, what a willing 964 00:45:23,240 --> 00:45:25,560 buyer would pay a willing seller for the property. 965 00:45:26,200 --> 00:45:29,400 And here's where that public use requirement gets interesting. 966 00:45:29,840 --> 00:45:32,520 For a long time, people thought it meant something like a road 967 00:45:32,520 --> 00:45:35,600 or a post office. But in the landmark case Kilo V 968 00:45:35,600 --> 00:45:38,520 City of New London, the Supreme Court said public use really 969 00:45:38,520 --> 00:45:41,640 just means a public purpose, and that can include economic 970 00:45:41,640 --> 00:45:44,080 development. So, yes, the government can take 971 00:45:44,080 --> 00:45:46,760 your house, give it to a private developer to build a shopping 972 00:45:46,760 --> 00:45:49,360 mall, all because it might create jobs and boost the tax 973 00:45:49,360 --> 00:45:51,640 base. This is a very low bar for the 974 00:45:51,640 --> 00:45:54,560 government to clear. OK, everybody take a deep 975 00:45:54,560 --> 00:45:56,360 breath. We are now entering the most 976 00:45:56,360 --> 00:46:00,080 complex, the most litigated and frankly the most heavily tested 977 00:46:00,080 --> 00:46:02,880 part of land use controls, regulatory takings. 978 00:46:03,320 --> 00:46:05,440 This is when the government doesn't physically take your 979 00:46:05,440 --> 00:46:09,360 land, but a new regulation is so restrictive, it's the functional 980 00:46:09,360 --> 00:46:12,480 equivalent of a taking. And our entire modern framework 981 00:46:12,480 --> 00:46:15,520 for this comes from the single famous line from Justice Holmes 982 00:46:15,520 --> 00:46:19,120 back in 1922. He said if regulation goes too 983 00:46:19,120 --> 00:46:21,400 far, it will be recognized as a taking. 984 00:46:21,640 --> 00:46:23,880 So for the last 100 years, the whole challenge has been to 985 00:46:23,880 --> 00:46:26,960 figure out what what exactly is too far. 986 00:46:27,520 --> 00:46:31,480 So on an exam, when you spot a potential regulatory taking, you 987 00:46:31,480 --> 00:46:33,800 can't just jump straight to balancing things. 988 00:46:34,120 --> 00:46:37,440 There is a precise analytical framework you have to follow, 989 00:46:37,720 --> 00:46:41,360 and your very first step always is to check for one of two 990 00:46:41,360 --> 00:46:44,880 bright line or per SE rules. Here they are. 991 00:46:44,880 --> 00:46:48,280 You must know these two cold. The 1st is a permanent physical 992 00:46:48,280 --> 00:46:49,920 occupation from the Loretto case. 993 00:46:50,200 --> 00:46:53,080 If the government authorizes a permanent physical invasion of 994 00:46:53,080 --> 00:46:55,960 your property, no matter how small, like a cable box on the 995 00:46:55,960 --> 00:46:58,240 roof, it's a taking. End of story. 996 00:46:58,560 --> 00:47:01,720 The second is a total economic wipeout from the Lucas case. 997 00:47:01,920 --> 00:47:05,080 If a regulation denies you all economically beneficial use of 998 00:47:05,080 --> 00:47:07,280 your land, making it worthless, it's a taking. 999 00:47:07,600 --> 00:47:10,600 If your fact pattern fits either of these two, your analysis 1000 00:47:10,600 --> 00:47:12,840 stops. It's a taking and compensation 1001 00:47:12,840 --> 00:47:15,760 is due. But what if it's not that clear? 1002 00:47:16,120 --> 00:47:19,240 What if it's not a physical invasion and the regulation 1003 00:47:19,240 --> 00:47:22,080 doesn't destroy all the value, just most of it? 1004 00:47:22,600 --> 00:47:26,080 Well, only if neither of the per SE rules applies do you move on 1005 00:47:26,080 --> 00:47:27,760 to the next step of the analysis. 1006 00:47:28,520 --> 00:47:32,080 And that next step is the famous Penn Central ad hoc balancing 1007 00:47:32,080 --> 00:47:34,120 test. If you get here on an exam, you 1008 00:47:34,120 --> 00:47:36,120 have to analyze all three of these factors. 1009 00:47:36,120 --> 00:47:39,760 One, the economic impact of the regulation on the owner. 1010 00:47:39,880 --> 00:47:41,560 Just how bad was the financial hit? 1011 00:47:41,840 --> 00:47:45,000 2, the extent to which the regulation interferes with the 1012 00:47:45,000 --> 00:47:48,120 owner's distinct investment backed expectations. 1013 00:47:48,320 --> 00:47:51,520 Basically, did the owner buy the property with a reasonable plan 1014 00:47:51,520 --> 00:47:53,560 in mind that the government has now thwarted? 1015 00:47:54,040 --> 00:47:57,240 And three, the character of the government action, is it more 1016 00:47:57,240 --> 00:48:00,120 like a general rule that benefits everybody, or does it 1017 00:48:00,120 --> 00:48:02,880 feel more like a physical invasion targeting one person? 1018 00:48:03,280 --> 00:48:06,880 You weigh all three to decide if the regulation has gone too far. 1019 00:48:07,720 --> 00:48:08,680 All right, we're on the homestretch. 1020 00:48:08,880 --> 00:48:11,120 We have one more special category to cover called 1021 00:48:11,320 --> 00:48:13,960 exactions, and then we're going to pull all of this together 1022 00:48:13,960 --> 00:48:16,360 into a final strategy you can use on exam day. 1023 00:48:17,160 --> 00:48:20,120 So what's an exaction? This is when a developer goes to 1024 00:48:20,120 --> 00:48:23,320 the city for a building permit and the city says, OK, we'll 1025 00:48:23,320 --> 00:48:26,520 give you the permit if you give us something in return, maybe 1026 00:48:26,520 --> 00:48:28,920 they want you to dedicate some of your land for a new public 1027 00:48:28,920 --> 00:48:32,520 park or build an access Rd. Because the government has so 1028 00:48:32,520 --> 00:48:35,280 much leverage here, there's a real potential for coercion. 1029 00:48:35,400 --> 00:48:38,000 So the court scrutinized these deals very closely. 1030 00:48:38,640 --> 00:48:41,120 And that heightened scrutiny comes in the form of the Nolan 1031 00:48:41,120 --> 00:48:43,880 slash Dolan test. It's a two-part test you need to 1032 00:48:43,880 --> 00:48:45,680 know. First, there must be an 1033 00:48:45,680 --> 00:48:48,280 essential Nexus, a logical connection between what the 1034 00:48:48,280 --> 00:48:50,720 government is demanding and the impact of the project. 1035 00:48:51,000 --> 00:48:53,280 Second, there has to be rough proportionality. 1036 00:48:53,760 --> 00:48:56,800 This means the size and scope of the demand can't be way out of 1037 00:48:56,800 --> 00:48:59,320 whack with the size and scope of the project's impact. 1038 00:48:59,640 --> 00:49:02,400 The government has to show that its demand is a fair response to 1039 00:49:02,400 --> 00:49:04,240 the burdens the new development will create. 1040 00:49:05,040 --> 00:49:07,880 OK, here it is. This table is your road map. 1041 00:49:08,080 --> 00:49:10,560 This is how you issue, spot, and structure your answer on the 1042 00:49:10,560 --> 00:49:12,920 exam. When you see a land use problem, 1043 00:49:12,920 --> 00:49:15,720 you walk through this checklist. Is it a general zoning law? 1044 00:49:15,840 --> 00:49:18,160 That's rational basis. Is someone asking for an 1045 00:49:18,160 --> 00:49:20,000 exception? That's a variance in the undue 1046 00:49:20,000 --> 00:49:22,440 hardship test. Is the government taking title 1047 00:49:22,440 --> 00:49:24,040 to the land? That's eminent domain. 1048 00:49:24,280 --> 00:49:26,480 Is it just a regulation? Then you have to run through the 1049 00:49:26,480 --> 00:49:29,880 regulatory takings tree, check Loretto, check Lucas, and if 1050 00:49:29,880 --> 00:49:32,600 neither applies, then do the Penn Central balancing test. 1051 00:49:32,960 --> 00:49:35,000 Finally, is the government demanding something for a 1052 00:49:35,000 --> 00:49:37,040 permit? That's an exaction, and you use 1053 00:49:37,040 --> 00:49:39,440 Nolan slash Dolan. Follow the structure. 1054 00:49:40,000 --> 00:49:42,760 And in the end, that's what all these doctrines are about. 1055 00:49:42,960 --> 00:49:45,920 They're all trying to answer this one fundamental policy 1056 00:49:45,920 --> 00:49:48,560 question. As we as a society move forward, 1057 00:49:48,760 --> 00:49:51,720 how do we make sure that the cost of progress isn't unfairly 1058 00:49:51,720 --> 00:49:54,120 forced under the shoulders of just one or a few property 1059 00:49:54,120 --> 00:49:56,080 owners? It's a question courts and 1060 00:49:56,080 --> 00:49:58,840 communities grapple with every single day, and it's what makes 1061 00:49:58,840 --> 00:50:02,120 this area of law so important. All right, that's it for today. 1062 00:50:02,240 --> 00:50:03,120 Good luck with your studies.