NAHB goes to federal court -- Taking "Takings" to federal court

NAHB goes to federal court...

Taking "Takings" to Federal Court

4/15/02 - Should private property owners be able to bring federal constitutional claims in federal courts-like other constitutional claimants-rather than being forced to have those claims decided by state court judges? That is the question that National Association of Home Builders (NAHB) member Frank Kottschade is asking the U.S. Court of Appeals for the Eighth Circuit in St. Louis, MO., to answer in Kottschade v. the City of Rochester, Minnesota.

"We intend to use every legal avenue possible to draw attention to the plight of property owners like Frank Kottschade who have little or no timely recourse to federal courts when it comes to takings claims," said NAHB President Gary Garczynski, a builder/developer from Woodbridge, Va. "For builders and other property owners, legal reform is necessary." NAHB is supporting Kottschade's legal effort and expects the Eighth Circuit appeal will draw considerable attention and "friend of the court" briefs from property rights advocates, municipal groups and environmental organizations.

Michael Berger of Berger and Norton in Los Angeles will be part of the team representing Kottschade as the case is appealed to the 8th Circuit. Berger is one of the country's preeminent property rights lawyers and has prevailed in three takings cases before the U.S. Supreme Court. Last January, he argued Tahoe-Sierra Preservation Council v. Tahoe Regional Planning Agency before the high Court. That case centered on whether a moratorium on development required the payment of compensation to landowners who were precluded from using their property. The Court's decision in Tahoe Sierra is expected this spring. George Ludcke of the Minneapolis law firm Kelly and Berens, P.C., will also continue to assist Kottschade as his case goes to appeal.

Kottschade owns approximately 16 acres of land in Rochester, Minn., zoned for single-family residences and townhomes. The City's Land Use Plan identifies the property as appropriate for higher density townhome development. Kottschade previously applied to re-zone the property to accommodate affordable housing at a greater density. Planning Commission staff in Rochester recommended that the property be "up-zoned" to accommodate the desired development as long as a general development plan for the property was submitted and approved.

Kottschade developed and submitted a General Development Plan to construct 104 townhomes on the property, consistent with all zoning laws. However, the City's Planning and Zoning Commission recommended nine onerous conditions that were adopted by the City Council and effectively killed the project. According to Kottschade, the City's nine conditions reduced the development potential of his property by more than 75 percent, shrinking the number of townhomes he could build from 104 to 26, and making the project economically infeasible. Following months of additional reviews, Rochester's City Council and its Zoning Board of Appeals upheld the onerous conditions.

Kottschade then filed suit in the U.S District Court for the District of Minnesota, arguing that the city's regulations took his property and that he was due "just compensation" under the requirements of the Fifth Amendment to the United States Constitution. Although Fifth Amendment takings claims provide a federal cause of action under the Bill of Rights, similar to free speech rights under the First Amendment or privacy rights under the Fourth Amendment, the district court decided that Kottschade needed to file his suit in state court. The district court dodged whether the City's conditions created liability for a taking, and Kottschade was denied a hearing in federal court on the merits of his claim.

To prove that they have the right to be heard in federal court-a right already guaranteed by the Fifth Amendment to the Constitution-property owners must navigate countless legal hurdles just to have the possibility that their case can be heard in federal court. The added bureaucracy and red tape works to the advantage of government officials who hold plans hostage in order to prevent review by an impartial federal tribunal. These administrative and judicial processes can take years and cost hundreds of thousands of dollars.

Studies show that lower federal courts routinely dismiss land use cases on jurisdictional grounds such as abstention and ripeness without hearing the merits of the case. This has led to a disconcerting legal trend for builders and other property owners. At best, they must wait eight to ten years just to have their case heard by a federal judge. At worst, they can be denied the right to litigate federal constitutional issues in a federal forum if the federal judge decides one trial was sufficient.

"We intend to support Frank Kottschade and take this case all the way to the U.S. Supreme Court if necessary," Garczynski added. "Our goal is to restore the U.S. Constitution Fifth Amendment rights of property owners who have been denied their right to a fair hearing in federal court on issues related to the use of their land."

NAHB will be assisting Kottschade with the preparation of his opening brief, which will be due on April 17. The parties anticipate a decision by the fall, and the losing party is expected to explore avenues for review by the U.S. Supreme Court later this year.

The National Association of Home Builders is a Washington-based trade association representing more than 205,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the almost 1.6 million new housing units projected for 2002, making housing one of the largest and most powerful engines of economic growth in the country.