Eminent Domain FAQ

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Eminent Domain FAQs about Eminent Domain Condemnation Law.

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III - “TYPE 3" DE FACTO TAKING: PLACING AN INORDINATE BURDEN ON THE PROPERTY OWNER

If the governmental action results in the destruction of one of the fundamental aspects of property ownership – which is loosely defined as the loss of an essential property attribute which the courts have characterized as those property attributes which are “investment backed expectations” – the regulation is constitutionally defective especially where the burden of the government action falls disproportionately on a small group or only one property owner.

Here, the case law is anything but clear. The Supreme Court of the United States in some cases has found that the constitutional defect lies in the fact that there is no “close causal relationship” (i.e., no “nexus” or does not “substantially advance”) between the governmental action and the public good. However, this situation, as recently noted by the Supreme Court of the United States in Lingle, is not really a “de facto” taking. The Lingle Court conceded that the distinction becomes blurred, with the Courts applying essentially a “balancing test” as well as the “causal test.”3 Even where the governmental action may serve some public good, the disproportionate burden (i.e., deprivation of “investment backed expectations”) on one or a small group of property owners can render the action as constitutionally defective. See, First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S.304, 107 S.Ct. 2378 (1987):

"It is axiomatic that the Fifth Amendment's just compensation provision is “designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United States, 364 U.S., at 49, 80 S.Ct., at 1569. See also Penn Central Transportation Co. v. New York City, 438 U.S. 104, 123-125, 98 S.Ct. 2646, 2658-2659, 57 L.Ed.2d 631 (1978); Monongahela Navigation Co. v. United States, 148 U.S., at 325, 13 S.Ct., at 625."

A good example of where a court proceeded down both lines of reasoning was the New York Court of Appeals in Manocherian v. Lenox Hills, 84 N.Y.2d 385, 618 N.Y.S.2d 857 (1994), where the Court both questioned the “nexus” between the regulation and also applied this disproportionate concept:

“Elementary and strong constitutional principles protect private property rights and govern takings of property for public use without just compensation. They evolved “'to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole' ” (Penn Cent. Transp. Co. v New York City, 438 US 104, 123, quoting Armstrong v United States, 364 US 40, 49; Seawall Assocs. v City of New York, 74 NY2d 92, 101, cert denied sub nom. Wilkerson v Seawall Assocs., 493 US 976, supra)."

To the same effect is Seawall Assocs, v. City of New York, supra. Here, the New York Court of Appeals, applying the “nexus” or “substantially advance” test, found the challenged law unconstitutional. The Court stated:

"The heavy exactions imposed by Local Law No. 9 must “substantially advance” its putative purpose of relieving homelessness. No such showing of this required “close nexus” has been made. Rather, the nexus between the obligations placed on SRO property owners and the alleviation of the highly complex social problem of homelessness is indirect at best and conjectural. Such a tenuous connection between means and ends cannot justify singling out this group of property owners to bear the costs required by the law toward the cure of the homeless problem. Indeed, by equating the “cure” with dollars -- i.e., permitting “buy-out” payments of $45,000 per SRO unit in lieu of keeping the units available for rent (see, discussion of “buy-out” exemption, infra) -- the terms of Local Law No. 9 itself demonstrate that the obligations placed on a few property owners are just the kind which could, and should, be borne by the taxpayers as a whole.”

The reasoning of the Manocherian and Seawall Courts combine both analytic tests (i.e., disproportionate burden and absence of nexus) in analyzing the constitutional validity of the government action.