HOUSE BILL REPORT
SHB 2223
As Passed House:
February 8, 1996
Title: An act relating to the protection of private property.
Brief Description: Protecting private property.
Sponsors: By House Committee on Government Operations (originally sponsored by Representatives Foreman, Schoesler, Mastin, Mulliken, Sheldon, Grant, D. Sommers, Honeyford, Koster, Robertson, Campbell, Smith, Huff, L. Thomas, Sheahan, Fuhrman, Thompson, McMorris, Stevens, Boldt, Backlund, Hargrove, Benton and McMahan).
Brief History:
Committee Activity:
Government Operations: 1/12/96, 1/31/96 [DPS].
Floor Activity:
Passed House: 2/8/96, 68-30.
HOUSE COMMITTEE ON GOVERNMENT OPERATIONS
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 8 members: Representatives Reams, Chairman; Cairnes, Vice Chairman; Goldsmith, Vice Chairman; Honeyford; Hymes; Mulliken; D. Schmidt and Van Luven.
Minority Report: Do not pass. Signed by 6 members: Representatives Rust, Ranking Minority Member; Scott, Assistant Ranking Minority Member; Conway; R. Fisher; Scheuerman and Wolfe.
Staff: Steve Lundin (786-7127).
Background:
A.Constitutional provisions relating to "takings" of private property.
The state constitution includes several provisions relating to government actions and property.
One type of state constitutional provision generally precludes governments from giving or lending anything of value to persons or private entities. (See Article VIII, Sections 5 and 7, Washington State Constitution.) The federal constitution does not include similar provisions.
Another type of state constitutional provision prohibits governments from taking property for public use without paying just compensation and prohibits governments from depriving a person of property without due process of law. (See Article I, Section 16, Washington State Constitution, which relates to eminent domain and actions that are commonly called "takings" of private property; and Article I, Section 12, Washington State Constitution, which is the Privileges and Immunities provision and includes what is commonly known as the Due Process and Equal Protection provisions.) The federal constitution includes similar provisions.
In a variety of lawsuits, courts have determined whether a particular government action is an unconstitutional taking of private property. Initially, courts only considered an actual physical occupation of land to constitute an unconstitutional taking of private property. However, in various decisions this century, courts have expanded restrictions contained in these constitutional provisions and have held that a regulation of private property could constitute an unconstitutional taking of private property. This newer type of taking is called a "regulatory taking" of private property or an "inverse condemnation."
Among other factors, a court considers the following when determining if a regulation is an unconstitutional taking of private property:
!Whether the regulation destroys a fundamental property right, such as the right to possess the property, exclude others from the property, or dispose of the property.
!Whether the regulation imposes substantial limitations on the use of property and, if so, the balance between the purpose of the regulation and the extent of the reduction in use of and the economic impact on the property.
!The balance between the extent to which the regulation interferes with the property owner's reasonable investment-backed development expectations and the government's interest in promulgating the regulation.
!If the regulation prohibits all economically viable or beneficial uses of the property, whether the regulation enforces nuisance law or other preexisting limitations on the use of the property.
Generally, the entire parcel as a whole is considered in the analysis and not individual portions of the parcel.
B.Land use regulations.
Counties and cities are authorized by state law to adopt land use regulations on private property restricting land uses. All counties and cities are required by the Shoreline Management Act to adopt shoreline master programs establishing land use regulations in shoreline areas. Many counties and cities are required by the Growth Management Act to adopt comprehensive plans and development regulations establishing land use regulations throughout their boundaries.
Land use regulations frequently establish
!zones or areas within which only certain types of development is authorized (e.g., single family or multi-family residential);
!densities or the smallest size of a lot that may be created by dividing a parcel of land; and
!other conditions, such as (1) design standards; (2) minimum set-back requirements or distances from a boundary line where structures may be located; (3) limitations on the height of a structure that may be constructed; and (4) buffer areas based on natural environmental conditions, such as buffer areas around wetlands, bodies of water, or wildlife habitat areas, within which certain activities are restricted or limited, including the harvesting of timber or construction of improvements.
Under the requirements of various planning enabling laws, the governing body of a county or city must receive recommendations from its planning commission on a proposed comprehensive plan or zoning ordinance, or amendments thereto, prior to adopting or modifying and adopting the recommendations. The planning commission is required to hold a public hearing, with published notice, prior to making its recommendations. In most instances, the governing body is required to hold an additional public hearing, with published notice, prior to taking action on the matter.
However, a governing body may adopt a moratorium or interim zoning ordinance without holding a public hearing, but must hold a public hearing on the matter within 60 days of taking the action. A moratorium or interim zoning ordinance is effective for no more than six months, but may be made effective for one year if a work plan on the matter has been prepared, or may be renewed for a subsequent six-month period after holding another public hearing on the matter.
C.Permit requirements.
Various local government regulations require permits to be issued, or approvals to be made, prior to constructing improvements or engaging in other land use activities. For example, building permits must be obtained to construct buildings, and approval must be obtained for many divisions of land into smaller lots or parcels.
Summary of Bill:
A.Procedural requirements to adopt land use legislation.
New procedural requirements are established for local governments to adopt land use legislation, other than emergency situations requiring the imposition of moratoria, or prohibitions on development for a period not to exceed 60 days to protect life or to protect damage to property. Existing laws establishing procedural requirements for adopting land use legislation are not amended.
1.Notice of specific land use legislation.
A local government may not enact land use legislation without holding a public hearing on the proposed land use legislation, except for emergency situations requiring the imposition of moratoria, or prohibitions on development with a duration not exceeding 60 days. The public hearing may be held by the governing body or a planning commission, or both.
Notice of the public hearing must be published in the newspaper with the widest circulation in the jurisdiction of the local government at least 30, but no more than 40, days in advance of the public hearing. The advertisement must be intentionally designed to attract public attention, must be at least four inches by four inches in size, and must be placed consistently in the same section or location in the paper other than with classified advertisements.
The notice must include (a) a general description of the proposal; (b) the time, date, and location of the public hearing; (c) where the public may inspect the proposal; (d) all the purposes of the proposal; (e) the right of persons to propose alternatives, which must be submitted in writing prior to the public hearing; and (f) the obligation of the local government to respond in writing to each alternative.
2.Submission of alternatives.
Any resident or owner of real property subject to the proposal, or owner of property adjacent to the property subject to the proposal, may offer written alternatives prior to the public hearing on the proposal. Prior to adopting the land use legislation, the local government must consider all proposed alternatives and must respond in writing, stating the reason each alternative was rejected or accepted in whole or in part. The written responses must be available to the public.
3.Enforcement of new procedure.
Any resident or owner of real property subject to the proposal, or owner of property adjacent to the property subject to the proposal, may enforce the new procedural requirements in Superior Court in the county in which the local government is located by filing a petition for a writ of prohibition. The court may not substitute its judgment for the judgment of the local government in deciding to enact the land use legislation or to reject or accept any alternatives, and may consider only whether the local government complied with the procedural requirements.
B.New statutory standard for "damages" when project permits are denied or conditioned.
A new statutory standard is established requiring governments to pay compensation in certain instances when regulations establish restrictions on land use. This new statutory standard is broader than the court-established standards determining whether regulations constitute an unconstitutional regulatory taking of private property. Some regulations that do not constitute an unconstitutional regulatory taking of private property would appear to require compensation to be paid under this new statutory standard.
1.Compensation must be paid if some restrictions are imposed.
A government is obligated to pay compensation if it applies a restriction on any portion of real property, in response to a request for a permit, and the restriction decreases the fair market value of the affected property. However, the requirement to pay compensation does not apply if
!traditional zoning restrictions are applied to the property limiting the types of permitted uses or densities throughout a zone, unless the restrictions either (a) preclude a land use or forest practice, that is not a nuisance, and the land use or forest practice currently exists on the property or existed on the property within the last six years; or (b) substantially preclude all reasonable economically beneficial or productive uses of a portion of the property.
!Traditional zoning restrictions are applied to the property in the form of property line setbacks or height and bulk limitations applicable to all properties in the zone to the same degree, if these restrictions increase the value of the restricted properties and are not based on natural environmental conditions such as protections of wetlands or wildlife habitat.
!Restrictions are applied that only prevent or mitigate injuries to another person or property, if the government can demonstrate the injuries are likely to arise from a land use that constitutes a nuisance.
!Restrictions are applied that merely comply with a specific federal law, but only if the restrictions do not exceed the minimum requirements of federal law.
A government has the burden of demonstrating by clear and convincing evidence that any restriction it imposes on a permit request meets one of these exceptions from the requirement that compensation must be paid.
If a government applies a restriction to a permit that reduces the fair market value of a portion of the property, and does not meet one of the exceptions, the government must offer to mitigate the burden to the property or pay compensation to the owner, together with interest at the maximum usury rate compounded annually from the date of the application of the restriction. If a property owner rejects the mitigation that is offered, any compensation that is required to be paid is reduced by the fair market value of the mitigation offer. A property owner may accept a mitigation offer and still seek compensation for the remaining loss in fair market value.
2.Procedure to request compensation.
A form is provided for property owners to file requests for compensation under these provisions. A government has 60 days to reject the request, choose to not apply the restriction, grant a variance, pay compensation, or offer to mitigate the burden.
At any time, the government may choose not to apply the restriction and pay the property owner for the temporary restriction on his or her property, including interest at the maximum usury rate compounded annually from the date the restriction was applied to the property.
A property owner may file an action in Superior Court against a government claiming damages under these provisions. A property owner may also raise other state or federal claims arising from the government's application of the restriction or rejection of the request for compensation. The Superior Court rules on all issues de novo. A property owner has a right to a jury trial on the amount of the compensation. A two-year statute of limitations is established for filing such lawsuits.
A prevailing plaintiff is entitled to recover costs, including reasonable attorneys' fees.
Claims for compensation are subject to mandatory arbitration if the sole issue is the amount of compensation required to be paid.
3.State liability for a local government applying a restriction.
The state is liable to pay compensation arising from restrictions a local government applies to a permit request, that so decreases the market value of property, if the restrictions are applied under a plan that is required by state law to be approved by a state agency and the state agency approved the plan. Such plans include a shoreline master program, watershed management action plan, and groundwater management program.
State agencies may issue interpretive rulings identifying the extent to which a local government's plans, that were approved by the state agency, exceed the requirements of state law. If an interpretive ruling is issued finding the regulations exceed the minimum requirements of state law, the local government is responsible for compensation and costs arising from the restriction. However, the state agency is responsible to pay compensation for a regulation that merely meets the minimum requirements of state law.
A local government seeking to establish the state's responsibility to provide such compensation must deliver a copy of the property owner's request for compensation to the applicable state agency within 30 days of when the request for compensation was filed with the local government. The state agency determines whether the restrictions should continue to be imposed and, if so, shall provide compensation within 20 days of receiving the request for compensation. Compensation is paid by the state out of the tort claims revolving fund. The agency must request sufficient funds be included in its budget to reimburse the tort claims revolving fund.
A local government may grant a variance from any restriction imposed under a plan it adopted, that was approved by a state agency, if a likelihood exists that compensation will have to be paid and the state chooses not to pay compensation.
If the property owner files a lawsuit against the local government seeking compensation under these new provisions, the local government must join the state as a defendant within 30 days of when it is served with an original complaint seeking compensation.
4.Acquisition of the property interest if compensation paid.
If a government pays compensation under these provisions, it is vested with ownership of the property interest for which compensation was paid. The property owner must deliver a deed to the government for such a property interest. If the property owner and government cannot agree on the property interest that is so acquired, the Superior Court determines the extent of the property interest. Filing costs are the responsibility of the government.
Appropriation: None.
Fiscal Note: Requested on January 7, 1996.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Testimony For: This is much narrower than Referendum 48. The uncertainties are cleared up. This does not retroactively apply to the adoption of zoning ordinances. Over the last 20 years the Legislature has systematically ignored the constitutional restriction on taking property rights. The essence of this law is for government to negotiate with property owners. Neighborhood zoning is exempt. This is a compromise. The essence is affordable housing, economic prosperity, and protection of property rights. This is a moderate first step. I should be able to park my RV in front of my house. I'm in favor, but reluctantly oppose the provision requiring property owners to give a property interest if they receive compensation. Any downzone should be compensated.
Testimony Against: Referendum 48 was overwhelmingly rejected by voters. This is special interest legislation. This is just as flawed as Referendum 48. The intent is to intimidate officials to keep them from acting in the public interest. An indeterminate liability will arise. The voters spoke. This does not make sense. Land use regulations enhance property values.
Testified: Skip Richards, Whatcom Coalition for Land Use Education; Rose Bowman, Washington Association of County Treasurers; Steve Appel, Washington Farm Bureau; Maryanne Tagnet Jones, No on 48; Steve Clagett, No on 48; Todd Woolsey, East King County Chamber of Commerce; Harvey LaBorn, citizen; Steve Kelley, Bellevue RV and Boat Association; Dan Wood, Farm Bureau; Karl Lebsack, Washington Cattlemen's Association; Tom Bjorgen and Scott Merriman, Washington Environmental Council; Dave Williams, Association of Washington Cities; Peggy Britton, League of Women Voters; Vern Rutter, Hood Canal Environmental Council; Michael Davolio, American Planning Association; Elizabeth Schrag, Sierra Club; Reode Brown, citizen; Bill Stauffacher, Washington State Dairy Federation; Maxine Keesling, rural King County landowner; Ken Johnson, Association of Washington Business; Tim Boyd, Washington Forest Protection Association; Carolyn Logue, National Federal of Independent Business; and Walter Isaac, citizen.