Early last summer the U.S. Supreme Court released its long-awaited, and deeply flawed decision in Murr v. Wisconsin, __ U.S. __ (2017). We wrote about this unfortunate new takings case here and in “Missed Opportunity In Takings Decision,” Daily Journal (July 13, 2017).
The short story is that the Murr family bought two adjacent parcels at separate times in the early 1960s near the St. Croix River in Wisconsin, a designated wild and scenic river. They built a small, 950-square foot cabin on one of the parcels and kept the other parcel vacant as an investment. The Murr children later acquired both parcels and sought to sell the vacant parcel in the 1990s to finance improvements to the rustic, 57-year old, cabin. But a Wisconsin statute and county zoning ordinance, enacted in the 1970s, prevented the Murrs from selling or developing the vacant parcel because it was smaller than the minimum size deemed suitable for development even though it has a half acre of developable land, meets all environmental regulations and setbacks, and is surrounded by development on similarly sized parcels. Because the parcel was still undeveloped, now held in common ownership, and deemed substandard, it was treated as “merged” with the developed parcel.
The regulations also contained a variance provision to allow property owners such as the Murrs to sell or separately develop a substandard parcel, but the county denied the Murr’s variance application. The Murrs then sued, claiming a taking.
The issue before the Court was how to define the “property” that should be the subject of the takings analysis. Was the relevant property the undeveloped parcel only, or was it both parcels together?
In a 5-3 decision, the Court ruled against the Murrs, holding that the denominator, or relevant parcel question, like the overall takings inquiry, turns on another multi-part analysis. “Like the ultimate question whether a regulation has gone too far,” Justice Kennedy wrote, “the question of the proper parcel in regulatory takings cases cannot be solved by any simple test.”
Instead, according to the Court, to determine the relevant parcel in a takings analysis courts must consider at least three highly subjective factors. First, they must consider the “treatment of the land” and how it is bounded or divided under state and local law. In particular, they must consider the landowner’s “reasonable expectations” and the “background customs and the whole of our legal tradition.” Second, they must consider the “physical characteristics” of the property. These include such nebulous factors as the physical relationship of any distinguishable tracts, the parcel’s topography, and the surrounding human and ecological environment. Third, they must consider the “value of the property under the challenged regulation,” including the effect of the burdened land on the value of other holdings.
Shortly after the Supreme Court’s decision was published, two Wisconsin lawmakers proposed legislation referred to as the Homeowners Bill of Rights, which includes provisions that provide direct relief to the Murrs by preventing government entities from stripping landowners of their rights because they happen to own adjacent parcels. The bills will now go to Governor Scott Walker, for signature. When signed, the bills will allow Wisconsin landowners to build on and sell substandard lots, so long as they were legal when created. The bills will also prohibit the merger of adjacent lots that happen to be held in the same ownership without the owner’s permission. In addition, the bills include various more expansive property rights protections by making it easier to obtain conditional use permits, variances, and vested rights, among other things.
Wisconsin’s Homeowners Bill of Rights is landmark legislation that restores fundamental property rights wiped out in Murr due to the inconvenient fact they have common ownership. This legislative response is a good reminder that state and local lawmakers can proactively protect private property rights even when those rights are barely recognized by the nation’s highest court.
Questions? Please contact Bryan W. Wenter, AICP of Miller Starr Regalia.
For more than 50 years, Miller Starr Regalia has served as one of California’s leading real estate law firms. Miller Starr Regalia has expertise in all types of real property matters, including full-service litigation and dispute resolution, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, exactions, title insurance, environmental law, and land use. Miller Starr Regalia attorneys also write Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. For more information, visit www.msrlegal.com.