Transferable development rights in the constitutional landscape: Has Penn Central failed to weather the storm?

Natural Resources Journal

Volumn 39, Issue 3, 1999, Pages 454-510

  Miller, Andrew J ^a,b,c  

^a United States District Court for the Northern District of Texas ^*  (United States)

^b DUKE UNIVERSITY   (United States)

^c Department of Obstetrics Gynecology   (United States)

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EID: 22844454829     PISSN: 00280739     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (284)

1. PERSPECTIVES IN PROPERTY LAW (Robert C. Ellickson, et al. eds., 1995) (quoting 2 WILLIAM BLACKSTONE, COMMENTARIES *2).
2. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978).
3. See id. at 115.
4. See id. at 114.
5. Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725 (1997).
6. Many communities are currently considering incorporating TDR programs into local or regional land management plans. See, e.g., Leslie Brown, Is Lea Hill A Dumping Ground for Growth? Some Residents Fear New County Proposal Would Degrade Their Area, TACOMA MORNING NEWS TRIB., Mar. 1, 1998, at B1 (discussing a proposed TDR program for King County, Washington);
7. Trine Tsouderos, Blackman Proposes Growth Rights, TENNESSEAN-NASHVILLE, Feb. 1, 1998, at 1 (discussing a proposal for a TDR program in Rutherford County, Tennessee).
8. Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987).
9. Dolan v. City of Tigard, 512 U.S. 374 (1994).
10. See John J. Costonis, Development Rights Transfer An Exploratory Essay, 83 YALE L.J. 75 (1973).
11. See, e.g., Dana Clark & David Downes, What Price Biodiversity? Economic Incentives and Biodiversity Conversion in the United States, 11 J. ENVTL. L. & LITIG. 9, 73-83 (1996).
12. See, e.g., Richard B. Stewart, Models for Environmental Regulation: Central Planning Versus Market-Based Approaches, 19 B.C. ENVTL. AFF. L. REV. 547, 549-50 (1992).
13. See, e.g., G. Hardin, The Tragedy of the Commons, 162 SCI. 1243, 1244 (1968).
14. See id. Privatizing the commons can also result in the "tragedy of enclosure." Privatized land may be viewed by the landowner as an investment with an expected maximum return. The landowner seeks to maximize the return on his labor. In many cases, this means overexploiting land in the short run and then reinvesting in a fresh parcel elsewhere. See George Montbiot, The Tragedy of Enclosure, SCI. AM., JAN. 1994, at 159, 159. The most common example of the tragedy of enclosure is slash and burn agriculture.
15. See Hardin, supra note 12, at 1244.
16. See id.
17. See, e.g., Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926).
18. See generally Richard A. Epstein, A Conceptual Approach to Zoning: What's Wrong with Euclid, 5 N.Y. ENVTL. L.J. 277 (1996).
19. See, e.g., Jerold S. Kayden, Market-Based Regulatory Approaches: A Comparative Discussion of Environmental and Land Use Techniques in the United States, 19 B.C. ENVTL. AFF. L. REV. 565, 567 (1992).
20. See Costonis, supra note 9, at 75-85.
21. See Kayden, supra note 18, at 567.
22. See id.
23. See id.
24. See Epstein, supra note 17, at 288.
25. See Kayden, supra note 18, at 567.
26. See David A. Dana, Natural Preservation and the Race to Develop, 143 U. PA. L. REV. 655, 682-84 (1995). Dana suggests two reasons why landowners are encouraged to develop land in response to fears of land regulation. First, political awareness of natural resource protection has become so prominent as to increase the potential scope of land regulation to encompass almost any land. Second, measures to protect natural resources typically contain a lag period from conception until actual regulation, which typically allows landowners to exploit the development potential of their land before being subjected to regulation. See id.
27. See id.
28. See id. at 696.
29. See id. at 696-706. These methods work by providing compensation to landowners who have had their land significantly devalued by regulation. Id.
30. See id. at 707. Dana discusses the use of development taxes as a market incentive to discourage unchecked development. Id. Market incentives, such as TDRs, could also be used to provide compensation to affected landowners. See infra Part IV(B)(2).
31. See Costonis, supra note 9, at 85-86.
32. See id.
33. This assumes minimal transaction costs. How tradable allowance programs such as TDR schemes can be designed to minimize transaction costs is a subject of much debate. See generally DANIEL J. DUDEK & JONATHAN BAERT WIENER, ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT, OCDE/GD(96), JOINT IMPLEMENTATION, TRANSACTION COSTS, AND CLIMATE CHANGE 173 (1996); see also Kayden, supra note 18, at 578-79.
34. In the case of TDRs, one prominent mechanism for lowering transaction costs is the use of "banks" to act as intermediaries between buyers and sellers of TDRs. TDR banks buy development rights from sending zone landowners and then sell them to receiving zone developers. By facilitating centralized buying and selling, the banks minimize the high transaction costs associated with locating other participants and gathering information for price-setting. The banking concept has been extremely successful in New Jersey. See NEW JERSEY PINELANDS COMM'N & PINELANDS DEVELOPMENT CREDIT BANK, THE PINELANDS DEVELOPMENT CREDIT PROGRAM (1996) [hereinafter PDC PROGRAM]; see also Terrence D. Moore, New Jersey's Special Place: The Pinelands National Reserve, 168 N.J. LAW. 25, 28 (1995); Clark & Downes, supra note 10, at 54.
35. A similar banking approach is being considered in Maryland using the State's Rural Legacy Program as the banking agent. See Harold Jackson, Getting the Basics on Rural Legacy Plan, BALTIMORE SUN, Apr. 5, 1998, at B6. This is a very innovative idea that could be copied by other state and federal programs with similar conservation goals. One problem with the banking concept is that programs like the New Jersey Pinelands typically have only one bank. This creates a monopolistic environment that lacks the competition necessary to provide incentives for efficient price-setting. This type of market failure is demonstrated by the Pinelands Development Credit Bank. A recent study by the bank showed that the bank's valuation of $2,500 per TDR was well below the $3,950 average purchase price in the private market. See PDC PROGRAM supra, at App. A. Due to this, the bank had only purchased rights from one landowner between 1994 and 1996. See id.
36. See ROBERT N. STAVINS & BRADLEY W. WHITEHEAD, RESOURCES FOR THE FUTURE, DISCUSSION PAPER No. 97-10, THE NEW GENERATION OF MARKET-BASED ENVIRONMENTAL POLICIES 5 (1996); see also Stewart, supra note 11, at 553-54.
37. See Stewart, supra note 11, at 557-59.
38. TDRs may show the most promise in regional land management solutions. One example is the suggested use of TDRs as part of programs for restoration of the Chesapeake Bay. See James T.B. Tripp & Michael Oppenheimer, Restoration of the Chesapeake Bay: A Multi-State Institutional Challenge, 47 MD. L. REV. 425, 445 (1988).
39. TDRs have been suggested for use internationally in several contexts. See Antonio Herman Benjamin & Charles Weiss, Jr. Economic and Market Incentives as Instruments of Environmental Policy in Brazil and the United States, 32 TEX. INT'L L.J. 67, 85-89 (1997) (discussing the applicability of American land use techniques to Brazilian environmental policy);
40. Daniel J. Dudek et al., Environmental Policy for Eastern Europe: Technology-Based Versus Market-Based Approaches, 17 COLUM. J. ENVTL. L. 1, 43-44 (1992) (discussing TDRs as a possible environmental management tool for Eastern Europe).
41. Use of TDRs and other similar tradable land use rights has been suggested for managing the water and grazing allotments and timber sales on public lands. See Raymond Rasker, A New Look at Old Vistas: The Economic Role of Environmental Quality in Western Public Lands, 65 U. COLO. L. REV. 369, 394-95 (1994).
42. Additionally, TDRs may even be applied to help ease burdens on landowners caused by other environmental programs. See David Sohn & Madeline Cohen, Note, From Smokestacks to Species: Extending the Tradable Permit Approach from Air Pollution to Habitat Conservation, 15 STAN. ENVTL. L.J. 405 (1996) (discussing the extension of a TDR-like scheme to the Endangered Species Act).
43. See also John Pendergrass, Use of Institutional Controls as Part of a Superfund Remedy: Lessons from Other Programs, 26 ENVTL. L. REP. 10,109 (1996) (discussing the use of conservation easements and the purchase of development rights in the Superfund program);
44. Debbie Sivas, Groundwater Pollution from Agricultural Activities: Policies for Protection, 7 STAN. ENVTL. L.J. 117, 178-79 (1988) (recommending the use of TDRs to manage non-point source water pollution from agriculture).
45. See Stewart, supra note 11, at 556.
46. See id. at 553. See also James T.B. Tripp & Daniel Dudek, Institutional Guidelines for Designing SuccessfulTransferable Rights Programs, 6 YALE J. ON REG. 369, 371 (1989). "Government" may refer to federal, state, or local land management agencies depending on the scope and oversight of the specific TDR program.
47. See David Berry & Gene Steiker, An Economic Analysis of Transfer of Development Rights, 17 NAT. RES. J. 55, 61 n.21 (1977).
48. See Tripp & Dudek, supra note 37, at 371.
49. See id. at 373. See also Berry & Steiker, supra note 38, at 60. "Sending" zones are also referred to as "no-growth" or "protection" zones and "receiving" zones are also referred to as "growth" zones.
50. See generally THE MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMM'N, FUNCTIONAL MASTER PLAN FOR THE PRESERVATION OF AGRICULTURE AND RURAL OPEN SPACE IN MONTGOMERY COUNTY 41 (1980) [hereinafter MONTGOMERY COUNTY PLAN].
51. See id.
52. See id.
53. Another option is for conservation organizations or government agencies to purchase the development rights. Organizations such as the Nature Conservancy regularly purchase conservation easements over ecologically valuable land. See David Farrier, Conserving Biodiversity on Private Land: Incentives for Management or Compensation for Lost Expectations, 19 HARV. ENVTL. L. REV. 303, 350-52 (1995). Government agencies such as the U.S. Department of Agriculture already have well-established programs for acquiring conservation easements over farmland and wetlands. See, e.g., Clark & Downes, supra note 10, at 43-45;
54. KEITH WIEBE ET AL., U.S. DEP'T AGRIC., ECON. RESOURCES SERV., AGRIC ECON. REPORT NO. 744, PARTIAL INTERESTS IN LAND: POLICY TOOLS FOR RESOURCE USE AND CONSERVATION 11-14 (1996). Although development right acquisitions by conservation organizations and land management agencies may be highly beneficial from an environmental perspective, it may undermine programs by creating unanticipated competition for TDRs, driving prices up and hindering economic development in the region. Larger programs trading in higher volumes of TDRs will be less affected because the unanticipated competition will be diluted by the larger pool of TDRs being traded.
55. See Tripp & Dudek, supra note 37, at 373.
56. See id.
57. See id.
58. See infra Appendix A. This is not an exhaustive list. Many small TDR programs already exist or are being considered at the local level. See Brown & Tsouderos, supra note 6.
59. See infra Appendix B.
60. See FRANKLIN J. JAMES & DENNIS E. GALE, ZONING FOR SALE: A CRITICAL ANALYSIS OF TRANSFERABLE DEVELOPMENT RIGHTS PROGRAMS 9-11 (1977). See also Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 108-15 (1978).
61. See Moore, supra note 32. See generally Ellen M. Randle, The National Reserve System and Transferable Development Rights: Is the New Jersey Pinelands Plan an Unconstitutional "Taking"?, 10 B.C. ENVTL. AFF. L. REV. 183 (1982). The Pinelands is one of the few TDR programs on which significant economic research has been and continues to be performed.
62. See, e.g., W. Patrick Beaton, The Impact of Regional Land-Use Controls on Property Values: The Case of the New Jersey Pinelands, 67 LAND ECON. 172 (1991);
63. NEW JERSEY PINELANDS COMM'N, ECONOMIC & FISCAL IMPACTS OF THE PINELANDS COMPREHENSIVE MANAGEMENT PLAN (1983).
64. Additionally, plans are in place to carry out longer term ecological and economic studies in the region. See, e.g., NEW JERSEY PINELANDS COMM'N, LONG-TERM PINELANDS ECONOMIC MONITORING PROGRAM (1996);
65. NEW JERSEY PINELANDS COMM'N, LONG-TERM PINELANDS ENVIRONMENTAL MONITORING PROGRAM (1995).
66. See Moore supra note 32, at 26-28.
67. MONTGOMERY COUNTY PLAN, supra note 41, at 1-2.
68. Glisson v. Alachua County, 558 So.2d 1030, 1032-33 (Fla. Dist. Ct. App. 1989), review denied, 570 So.2d 1304 (Fla. 1990).
69. City of Hollywood v. Hollywood, Inc., 432 So.2d 1332, 1333 (Fla. Dist. Ct. App. 1989), review denied, 441 So.2d 632 (Fla. 1990).
70. Barancik v. County of Marin, 872 F.2d 834, 835 (9th Cir. 1987), cert. denied, 493 U.S. 894 (1989).
71. Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725, 729-30 (1997).
72. Michael R. Jung, The Pine Barrens: A New Model of Land Use Control for New York, 3 BUFF. ENVTL. L.J. 37, 38-40 (1995).
73. Equal protection claims may also be raised, but generally have not been successful. Procedural non-compliance would include claims brought under the National Environmental Policy Act or various other equivalent state acts. Improper tax assessment claims arise out of the difficulties in deciding how TDRs attach value to property, and whether TDRs constitute property that can be valued independently for tax assessment purposes.
74. U.S. CONST. amend. V. The Fifth Amendment is applicable to states through the Fourteenth Amendment. Dolan v. City of Tigard, 512 U.S. 374, 383-84 (1994) (citing Chicago, B. & Q.R. Co. v. Chicago, 166 U.S. 226, 239 (1897)).
75. Dana, supra note 25, at 659.
76. See, e.g., Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 239-41 (1984).
77. See, e.g., Loretta v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982). See also Dana, supra note 25, at 659.
78. See Dana, supra note 25, at 659.
79. Agins v. Tiburon, 447 U.S. 255, 260 (1980).
80. Nollan v. California Coastal Comm'n, 483 U.S. 825, 837 (1987).
81. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416 (1922).
82. See, e.g., United States v. General Motors Corp., 323 U.S. 373, 377 (1945).
83. Nollan, 483 U.S. at 843 n.2 ("[T]he right to build on one's own property - even though its exercise can be subjected to legitimate permitting requirements - cannot remotely be described as a 'governmental benefit.'").
84. See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1028 (1992) (stating "that title is somehow held subject to the 'implied limitation' that the State may subsequently eliminate all economically valuable use is inconsistent with the historical compact recorded in the Takings Clause that has become part of our constitutional culture."). See also RICHARD A. EPSTEIN, TAKINGS: PRIVATE PROPERTY AND THE POWER OF EMINENT DOMAIN 12-13 (1985) (describing Locke's theory of property as contained in the American Constitution). Epstein elaborates that "[t]he state can acquire nothing by simple declaration of its will but must justify its claims in terms of the rights of the individuals whom it protects: 'a State, by ipse dixit, may not transform private property into public property without compensation.'" Id. at 12 (quoting Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 164 (1980)).
85. See, e.g., Lucas, 505 U.S. at 1026-27.
86. See Randle, supra note 51, at 201-02, 209.
87. See Suitum v. Tahoe Reg'l Plan. Agency, 520 U.S. 725, 748 (1997) (Scalia, J., concurring) (arguing that TDRs essentially shift the burden of compensation to third parties); see also Douglas T. Kendall & James E. Ryan, "Paying" for the Change: Using Eminent Domain to Secure Exactions and Sidestep Nollan and Dolan, 81 VA. L REV. 1801, 1871 (1995) (arguing that TDRs can be designed to achieve the same goals as traditional exactions).
88. See Note, The Unconstitutionality of Transferable Development Rights, 84 Yale L.J. 1101 (1975) for a similar twofold analysis. The Note was written prior to several important decisions in takings jurisprudence that have significantly shaped how TDRs may be viewed in modern takings law.
89. See Kendall & Ryan, supra note 73, at 1802.
90. See id.
91. See, e.g., Agins v. Tiburon, 447 U.S. 255, 260-62 (1980) (holding scenic zoning within the police power); Penn Cent Transp. Co. v. New York City, 438 U.S. 104, 138 (1978) (holding landmark preservation within the police power); Euclid v. Ambler Realty Co., 272 U.S. 365 (1926) (holding residential zoning within the police power).
92. In the only case located in which a developer brought a takings claim on the exactions side of a TDR program, the Ninth Circuit distinguished the claim from other exactions takings claims on the basis that the fee was being paid to other landowners and not the government See Barancik v. County of Marin, 872 F.2d 834, 837 (9th Cir.), cert. denied, 493 U.S. 894 (1989).
93. Internal trading occurs where a firm is allocated development rights that it may only exercise on other properties it owns. External trading occurs where a firm may sell its share of development rights to third party landowners.
94. Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987).
95. Id. at 837; Kendall & Ryan, supra note 73, at 1803.
96. See Nollan, 483 U.S. at 827-28.
97. See id. at 828.
98. See id.
99. See id. at 828-29.
100. See id. at 831.
101. See id. at 836.
102. See id. at 835-36.
103. See id. at 836.
104. See id. at 837.
105. See id. at 838-42.
106. See id. at 842.
107. Id. at 841 (alteration in original).
108. See, e.g., John A. Humbach, Law and a New Land Ethic, 74 MINN. L. REV. 339, 352 n.39 (1989). It is dearly difficult to pass the essential nexus test for two of the most common types of TDR programs, protection of open space and preservation of agricultural land. Denying a permit to increase housing units on a tract of land already containing houses does not serve the same purpose as protecting open space since the tract is already developed. Likewise, denying a permit to build in a vacant lot does not serve the same purpose as preserving agricultural land. Similar problems may arise when trying to draw the nexus for protecting wildlife habitat or drinking water supplies.
109. Nollan, 483 U.S. at 865. In a separate dissent to Nollan, Justice Brennan, joined by Justice Marshall, states his apprehension to the majority's holding more strongly: State agencies...require considerable flexibility in responding to private desires for development in a way that guarantees the preservation of public access to the coast. They should be encouraged to regulate development in the context of the overall balance of competing uses of the shoreline. The Court today does precisely the opposite, overruling an eminently reasonable exercise of an expert state agency's judgment, substituting its own narrow view of how this balance should be struck. Its reasoning is hardly suited to the complex reality of natural resource protection in the 20th century. I can only hope that today's decision is an aberration, and that a broader vision ultimately prevails. Id. at 864.
110. Dolan v. City of Tigard, 512 U.S. 374, 379 (1994).
111. See id. at 377.
112. See id. at 387.
113. See id. at 391.
114. See id. at 388.
115. See id. at 391.
116. See id. at 395-96.
117. See id. at 391.
118. See id. at 391, 395.
119. In determining that the greenway could offset some of the new traffic created by the expansion of Dolan's store, the city had already calculated the number of additional trips that the expansion would generate. See id. at 395. Rehnquist would require the city to show that the greenway "will, or is likely to, offset some of the traffic demand." If all that Rehnquist requires is replacing the city's use of could before offset with will or likely, his argument seems pointless or, else, merely a play on words. See id. at 404 (Stevens, J., dissenting). It is far more likely that Rehnquist would require some sort of mathematical calculation, preciseness being debatable, to pass the "rough proportionality" test.
120. See id. at 391. Rehnquist acknowledges that in evaluating legislatively enacted zoning regulations affecting a class of landowners, the burden rests on the party challenging the regulations. Id. at 391 n.8. It is debatable which standard would be applied to a TDR challenge. TDR programs are typically implemented through legislative acts. However, the amount of the exaction is determined by the private market. Thus, the price paid for a TDR is determined on an individualized basis without any reliance on a general class formula, thus, closely resembling an adjudication.
121. See Berry & Steiker, supra note 38, at 62-65 (discussing valuation of development rights).
122. Defining conservation value in this case to mean the difference in the value of the land at full development and the value of land undeveloped. This does not reflect any value the land might have due to environmental benefits it bestows upon the community. Rather, it reflects the opportunity costs incurred by leaving the land to remain undeveloped.
123. This assumption is probably unrealistic. TDR prices will always be a function of supply and demand that is influenced most by the profitability of exercising development rights to increase the commercial value of land in a receiving zone.
124. See Kendall & Ryan, supra note 73, at 1814 ("The [Supreme] Court's tests for assessing whether a particular exaction is fair do not allow consideration of the benefit that the landowner will receive from the development").
125. See Nollan v. California Coastal Comm'n, 483 U.S. 825, 834-35 (1987).
126. See Dolan v. City of Tigard, 512 U.S. 374, 384-88 (1994).
127. See id. at 385 (alterations in original) (quoting Agins v. City of Tiburon, 447 U.S. 255, 260 (1980)).
128. See, e.g., Kendall & Ryan, supra note 73, at 1803. In light of Nollan and Dolan, Penn Central would have had a possible claim against the city on the exactions side of the issue if the city followed through and conditioned future development of Penn Central's adjacent lots on the exercise of the development rights allocated to Grand Central Terminal. See infra Part IV(A).
129. Nollan, 483 U.S. at 831-32; Dolan, 512 U.S. at 393.
130. See, e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426 (1982) ("[W]e have long considered a physical intrusion by government to be a property restriction of an unusually serious character for purposes of the Takings Clause.")
131. See, e.g., Zerbetz v. Municipality of Anchorage, 856 P.2d 777, 782-84 (Alaska 1993) (bifurcating a takings claim that contained a regulatory element and a physical invasion element).
132. Loretto, 458 U.S. at 426 (citing Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978)).
133. See id. at 435.
134. See, e.g., New Port Largo, Inc. v. Monroe County, 95 F.3d 1084, 1088 (11th Cir. 1996), cert. denied, 521 U.S. 1121 (1997).
135. See Dolan, 512 U.S. at 385 (using the deed restriction requirement to distinguish the exaction in that case from permissible uses of police power in land use regulation). A monetary development exaction is not considered a physical taking. See, e.g., Commercial Builders v. City of Sacramento, 941 F.2d 872, 875 (9th Cir. 1991), cert. denied, 504 U.S. 931 (1992) (citing United States v. Sperry Corp., 493 U.S. 52 (1989)).
136. See, e.g., New Port Largo, 95 F.3d at 1088 (not applicable where regulation restricts landowners profitable use of property rather than opening the property for public use); Sintra, Inc. v. City of Seattle, 935 P.2d 555, 571 (Wash. 1997) (en banc) (limited to physical invasions of private property and not applicable to the "doctrine of regulatory takings, which is concerned with the overly burdensome restrictions on the use of private property"); McCarthy v. City of Leawood, 894 P.2d 836, 845 (Kan. 1995) (not applicable to impact fees because there is no physical taking involved); Waters Landing Limited Partnership v. Montgomery County, 650 A.2d 712, 724 (Md. 1994) (not applicable to development impact tax that does not involve a physical taking). Some courts have applied heightened scrutiny to all takings claims. See, e.g., Azul Pacifico, Inc. v. Los Angeles, 948 F.2d 575, 583 (9th Cir. 1991), vacated on other grounds, 973 F.2d 704 (9th Cir. 1992), cert. denied, 506 U.S. 1081 (1993) ("We interpret Nollan as holding that in cases brought under the takings clause we must undertake a close analysis of the means of protecting the asserted governmental interest"). One court has applied heightened scrutiny based on the inclusion of a provision with similar intent in a state statute. See, e.g., Ehrlich v. Culver City, 911 P.2d 429 (Cal.1996), cert. denied, 519 U.S. 929 (1996). Other courts have applied a relaxed reading of Nollan to takings claims not involving a physical invasion. See, e.g., Commercial Builders of Northern Cal. v. City of Sacramento, 941 F.2d 872, 874-75 (9th Cir. 1991), cert. denied, 504 U.S. 931 (1992) ("[n]exus between the fee provision here at issue, designed to further the city's legitimate interest in housing, and the burdens caused by commercial development is sufficient to pass constitutional muster"); Outdoor Systems, Inc. v. City of Mesa, 997 F.2d 604, 616 (9th Cir. 1993) (vacant-lot provisions requiring the removal of nonconforming billboards whenever land supporting them is developed is within cities' interests in restricting billboards and eliminating nonconforming billboards); Naegele Outdoor Advertising, Inc. v. City of Durham, 844 F.2d 172, 178 (4th Cir. 1988) ("[P]rohibition of certain billboard advertising is directly related to the city's interest in aesthetics."); Garneau v. City of Seattle, 897 F. Supp. 1318, 1325-26 (W.D. Wash. 1995) (ordinance requiring landlords to pay one-half cost of relocating displaced low-income tenants was within the nexus of and roughly proportional to the state interest in protecting low-income tenants being displaced by private development); McNulty v. Town of Indialantic, 727 F. Supp. 604,606-07 (M.D. Fla. 1989) (restrictions on development reasonably related to town's goal of preserving sand dunes where development would harm vegetation and cause erosion of dunes on adjacent property).
137. See Nollan, 483 U.S. at 835-36 n.4; Dolan, 512 U.S. at 391-92 n.8.
138. Ehrlich v. Culver City, 911 P.2d 429, 439 (Cal.1996), cert. denied, 519 U.S. 929 (1996) (applying a heightened scrutiny standard based on its inclusion in California's Mitigation Fee Act).
139. In Home Builders Assoc v. City of Scottsdale, 930 P.2d 993, 1000 (Ariz.1997), cert. denied, 521 U.S. 1120 (1997) (en banc).
140. See id.
141. See, e.g., Texas Manufactured Housing Assoc., Inc v. City of Nederland, 101 F.3d 1095, 1105 (5th Cir. 1996), cert. denied, 521 U.S. 1112 (1997) (distinguishing general zoning ordinance applying to entire areas of city from individualized exactions levied in Nollan and Dolan); Parking Assoc. of Ga., Inc. v. City of Atlanta, 450 S.E.2d 200, 203 n.3 (Ga. 1994), cert. denied, 515 U.S. 1116 (1995), reh'g denied, 515 U.S. 1178 (1995) (Dolan not applicable where exaction is legislatively determined and applicable to many landowners); Waters Landing Ltd. Partnership v. Montgomery County, 650 A.2d 712, 724 (Md. 1994) (Dolan not applicable to development impact tax imposed by legislative enactment); Arcadia Dev. Corp. v. City of Bloomington, 552 N.W.2d 281, 286 (Minn. Ct. App. 1996) (Dolan does not apply to a city wide, legislative land use regulation).
142. See, e.g., Philip J. Tierney, Bold Promises But Baby Steps: Maryland's Growth Policy to the Year 2020, 23 U. BALT. L. REV. 461, 496 (1994);
143. Joseph D. Stinson, Transferring Development Rights: Purpose, Problems, and Prospects in New York, 17 PACE L. REV. 319, 337-38 (1996);
144. Jennifer L. Bradshaw, The Slippery Slope of Modern Takings Jurisprudence in New Jersey, 7 SETON HALL CONST. L.J. 433, 455-57 (1997).
145. Viewed this way, TDRs are partially legislative because the program is applied unilaterally to all landowners within a zoning classification. However, they are also partially adjudicative because the cost of purchasing a TDR is not unilaterally fixed and will most likely be unique for each landowner at the time of each transaction. Small volume trading will be subject to stronger influences from individual whims, resulting in a higher degree of arbitrariness in price-setting. As the volume of TDR trading increases, a program will tend to more closely resemble a legislative enactment because the price setting structure will be less influenced by individual decisions and will become more objectively applied across the board. Although a TDR exaction will never be an actual legislatively applied fixed-fee, high volumes of trading will tend to promote the same traits and will minimize fears of arbitrariness or unreasonableness (a fully informed market will never set an arbitrary or unreasonable price).
146. See, e.g., Kayden, supra note 18, at 577-78.
147. See, e.g., MONTGOMERY COUNTY PLAN, supra note 41, at 43. Even though the plan is voluntary it has experienced heavy trading, which has resulted in preservation of substantial amounts of farmland. See generally MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMM'N, STATUS REPORT ON THE MONTGOMERY COUNTY TRANSFERABLE DEVELOPMENT RIGHTS PROGRAM (1992).
148. See Leroy Land Dev. v. Tahoe Reg'l Planning Agency, 939 F.2d 696, 698-99 (1991) (Nollan not applicable because developer had entered into settlement voluntarily, parties negotiated in good faith, and the settlement was supported by consideration). Although, in Leroy, the court was deciding whether to apply the holding in Nollan retroactively to a settlement agreement, the decision is certainly indicative of a willingness to grant more deference when land use regulation is accepted voluntarily. See id. TDR program designers would be wise to fashion programs in a manner that is not rigidly unilateral and provides landowners with some alternative avenue to proceed with development plans if the TDR program is viewed by the developer as wholly unacceptable.
149. See, e.g., Commercial Builders of Northern Cal. v. City of Sacramento, 941 F.2d 872, 875 (9th Cir. 1991), cert. denied, 504 U.S. 931 (1992); Azul Pacifico, Inc. v. Los Angeles, 948 F.2d 575, 583 (9th Cir. 1991), vacated on other grounds, 973 F.2d 704 (9th Cir. 1992), cert. denied, 506 U.S. 1081 (1993); Adolph v. FEMA, 854 F.2d 732, 737-38 (5th Cir. 1988); Sudarsky v. New York, 779 F. Supp. 287, 299 (S.D.N.Y. 1991), aff'd, 969 F.2d 1041 (2d Cir. 1992), cert. denied, 506 U.S. 1084 (1993), reh'g denied, 507 U.S. 980 (1993); Outdoor Systems, Inc. v. City of Mesa, 997 F.2d 604, 616 (9th Cir. 1990); Naegele Outdoor Adver., Inc. v. City of Durham, 844 F.2d 172, 178 (4th Cir. 1988); Gameau v. City of Seattle, 897 F. Supp. 1318, 1325-26 (W.D. Wash. 1995); McNulty v. Town of Indialantic, 727 F. Supp. 604, 606-07 (M.D. Fla. 1989).
150. See, e.g., Commercial Builders, 941 F.2d at 874-76 (rejecting the argument that monetary exactions should fall under the same analysis as physical takings). Cf. Ehrlich v. Culver City, 911 P.2d 429, 439 (Cal. 1996), cert. denied, 519 U.S. 929 (1996).
151. See Ehrlich, 911 P.2d at 439 ("[T]he heightened standard of scrutiny is triggered by a relatively narrow class of land use cases - those exhibiting circumstances which increase the risk that the local permitting authority will seek to avoid the obligation to pay just compensation.").
152. Commercial Builders of Northern Cal. v. City of Sacramento, 941 F.2d at 837. But see William J. (Jack) Jones Ins. Trust v. City of Fort Smith, 731 F. Supp. 912, 914 (W.D. Ark. 1990) (rejecting testimony of expert civil engineer alleging that construction of convenience store will create additional burdens on public street and finding exaction requiring dedication of expanded right-of-way constituted a taking).
153. Sudarsky v. New York, 779 F. Supp. 287, 299 (S.D.N.Y. 1991), aff'd, 969 F.2d 1041 (2d Cir. 1992), cert. denied, 506 U.S. 1084 (1993), reh'g denied, 507 U.S. 980 (1993).
154. The keystone to the "rough proportionality" argument will always be that the exaction is not overly burdensome on the receiving zone landowner. A TDR scheme will have serious difficulty proving a concrete connection between TDR price and development impact, but Dolan probably does not require such concreteness so long as the developer is not overly burdened. When designing a program, planners must be aware of how outside organizations such as conservation organizations or other government agencies may impact the TDR market. See Dolan v. City of Tigard, 512 U.S. 374 (1994).
155. The economics of TDR schemes are far too complex to simply perform this function, but given the large number of variables inherently present in valuing land, a TDR should be nearly as accurate and efficient as any other system. See Berry & Steiker, supra note 38, at 57-59.
156. Generally, these will be procedural due process concerns of any zoning ordinance. Procedural due process claims are beyond the scope of this article.
157. See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015 (1992).
158. See, e.g., Euclid v. Ambler Realty Co., 272 U.S. 365, 387 (1926).
159. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922).
160. See Andrea L. Peterson, The Takings Clause: In Search of Underlying Principles Part I - A Critique of Current Takings Clause Doctrine, 77 CAL. L. REV. 1299, 1304 (1989).
161. See, e.g., Dolan v. City of Tigard, 512 U.S. 374, 385 (1994) (quoting Agins v. City of Tiburon, 447 U.S. 255, 260 (1980)); Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 485 (1987).
162. Euclid, 272 U.S. at 387.
163. Agins v. City of Tiburon, 447 U.S. 255 (1980).
164. See id. at 261.
165. See id. at 262.
166. See id.
167. See id. In Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922), Justice Holmes referred to this as the "reciprocity of advantage." In Keystone Bituminous Coal Assoc. v. DeBenedictis, 480 U.S. 470, 491 (1987), Justice Stevens explains Holmes' concept, stating "[u]nder our system of government, one of the State's primary ways of preserving the public weal is restricting the uses individuals can make of their property. While each of us is burdened somewhat by such restrictions, we, in turn, benefit greatly from the restrictions that are placed on others."
168. Pennyslvania Coal 260 U.S. at 415.
169. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978).
170. Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 495 (1987).
171. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1007-09 (1992).
172. See id. at 1007-09.
173. See id. at 1015.
174. See id. at 1027. In other words, the State's police power must originate in existing state law of property or nuisance.
175. See id. at 1019. But see Florida Rock Industries, Inc. v. United States, 18 F.3d 1560, 1568-73 (Fed. Cir. 1994), cert. denied, 513 U.S. 1109 (1995) (rejecting a bright-line rule for less than total takings).
176. See Lucas, 505 U.S. at 1019 n.8.
177. Id. at 1015.
178. See id. at 1031.
179. The takings equation may be stated as follows: Diminution in value = (value of land before regulation - value of land after regulation) ÷ Total value of land.
180. See, e.g., Loveladies Harbor, Inc. v. United States, 28 F.3d 1171, 1180 (Fed. Cir. 1994).
181. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 130-31 (1978); accord Keystone Bituminous Coal Assoc. v. DeBenedictis, 480 U.S. 470, 497 (1987).
182. Andrus v. Allard, 444 U.S. 51, 65-66 (1979); accord Keystone, 480 U.S. at 497.
183. See, e.g., Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 602, 644 (1993) (reaffirming the analysis adopted in Penn Central); Keystone, 480 U.S. 470, 497 (1987).
184. See, e.g., Lucas, 505 U.S. at 1016 n.7 (characterizing the formulation in Penn Central as "an extreme - and, we think, unsupportable - view of the relevant calculus").
185. Florida Rock Industries, Inc. v. United States, 18 F.3d 1560 (Fed. Cir. 1994), cert. denied, 513 U.S. 1109 (1995).
186. See id. at 1568-73.
187. Loveladies Harbor, Inc. v. United States, 28 F.3d 1171 (Fed. Cir. 1994).
188. See id. at 1180-83. The Ninth Circuit seems to have suggested a similarly flexible approach to the denominator analysis specifically in the context of TDRs. Without reaching a decision on the issue, the Ninth Circuit, in American Savings & Loan Assoc. v. County of Marin, suggested using the criteria from eminent domain severance damage proceedings for determining whether a parcel should be divided for takings analysis. American Savings & Loan Ass'n v. County of Marin, 653 F.2d 364, 369 (9th Cir. 1981). These criteria consist of (1) physical contiguity; (2) unity of ownership; and (3) unity of use. Id. (citations omitted); accord Broadwater Farms Joint Venture v. United States, 35 Fed. Cl. 232, 239 (1996); Ciampetti v. United States, 22 Cl.Ct. 310, 318 (1991); Riviera Beach v. Shillingburg, 659 So.2d 1174, 1183 (Fla. Dist. Ct. App. 1995).
189. Loveladies Harbor, 28 F.3d at 1180-83.
190. Loveladies Harbor can be harmonized with Penn Central on the basis that the developer in Loveladies Harbor had effectively relinquished title to all but the 12.5-acre parcel. Therefore, the developer was not in de facto possession of the larger parcels.
191. See, e.g., Clajon Production Corp. v. Petera, 70 F.3d 1566, 1577 (10th Cir. 1995) (diminution in value of full bundle of rights must serve as the denominator for takings analysis rather than just denial of right to hunt); Tabb Lakes, Ltd. v. United States, 10 F.3d 796, 802 (Fed. Cir. 1993) (refusing to divide plaintiffs combined parcel into portion containing regulated wetlands and portion free of wetlands regulation); Marshall v. Board of County Comm'rs, 912 F. Supp. 1456, 1472-73 (D. Wyo. 1996) (diminution to value of parcels of land as a whole must serve as the denominator in takings analysis rather than diminution in value of individual parcels); Karam v. State Dep't Env't Protection, 705 A.2d 1221, 1227 (N.J. Super. Ct. App. Div. 1998) (denominator consists of landowner's "contiguous acreage in the same ownership"); Zealy v. City of Waukesha, 548 N.W.2d 528, 532-533 (Wis. 1996) (entire 10.4 acres of plaintiff's property used as denominator, even though only 8.2 acre parcel was subject to regulation).
192. See, e.g., David L. Callies, Taking the Taking Issue into the Twenty-first Century, in AFTER LUCAS: LAND USE REGULATION AND THE TAKING OF PROPERTY WITHOUT COMPENSATION 1, 9 (David L. Callies ed., 1993).
193. Loveladies Harbor, 28 F.3d 1171, 1179 (Fed. Cir. 1994).
194. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104 (1978).
195. See id. at 115.
196. See id.
197. See id. at 137.
198. See id.
199. See id. at 130-31.
200. See id. at 136.
201. See id. at 137.
202. City of Hollywood v. Hollywood, Inc., 432 So. 2d 1332 (Fla. Dist Ct. App. 1983), review denied, 441 So.2d 632 (Fla. 1983).
203. Id. at 1333.
204. See id. at 1334.
205. Id. at 1335.
206. See id. at 1337-38.
207. See id. at 1338.
208. Glisson v. Alachua County, 558 So. 2d 1030 (Fla. Dist. Ct. App. 1990), review denied, 570 So. 2d 1304 (Fla. 1990).
209. Id. at 1037.
210. Gardner v. New Jersey Pinelands Comm'n, 593 A.2d 251, 253 (N.J. 1990). A similar takings claim was brought against the New Jersey Plan in Federal Court, but the Third Circuit Court of Appeals abstained from deciding the issue based on the Pullman Doctrine. See Hovsons, Inc. v. Secretary of the Interior, 519 F. Supp. 434, 450-51 (D.N.J. 1981), aff'd, 711 F.2d 1208 (3d Cir. 1983).
211. See Gardner, 593 A.2d at 254.
212. See id. at 261.
213. See id. at 257.
214. Id. at 257-58.
215. Id. at 261.
216. Fred F. French Investing Co. v. City of New York, 350 N.E.2d 381 (N.Y. 1976), cert. denied, 429 U.S. 990 (1976).
217. Id. at 386. The area in dispute was already a park. Plaintiff purchased the area and announced plans to erect a 50-story building where the park was located. In response, the City Planning Commission passed a special amendment designating the area a "special parks district" and requiring that the parks be open to the public from 6:00 AM to 10:00 PM daily. Id. at 383-84. However, the city never acquired title to the parks or physically occupied the parks, so the court did not feel a takings claim was sustainable. Id. at 386.
218. Id. at 386.
219. Id. at 387.
220. See id. at 387-88.
221. Id. at 388.
222. See id.
223. Id. at 387.
224. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 138 (1978) (Rehnquist, J., dissenting).
225. See id. at 150-52.
226. Id. at 151.
227. Corrigan v. City of Scottsdale, 720 P.2d 528 (Ariz. Ct. App. 1985), aff'd on other grounds, 720 P.2d 513 (Ariz. 1986).
228. See id. at 531-32.
229. See id.
230. Id. at 536.
231. Id. Corrigan never asserted on appeal or at the trial level that the zoning ordinance did not substantially advance legitimate state interests. The trial court did find that the ordinance was "reasonably related to public health, safety, morals, and general welfare." Id. at 533. However, on appeal, the court applies a more demanding standard to strike down the ordinance under this prong of the test. Corrigan, 720 P.2d at 515-18. This seems to be in direct conflict with the Supreme Court's application of the rational basis standard in Agins v. Tiburon, 447 U.S. 255, 261 (1980) (holding that "[scenic] zoning ordinances substantially advance legitimate governmental goals").
232. Corrigan, 720 P.2d at 539. The court also later states this explicitly: "In the case before us it is clear that the Hillside Ordinance prevents any development whatsoever on the largest parcel of Corrigan's land. This is a taking." Id. at 539. However, a factual examination of the case reveals that evaluated as a whole, Corrigan's land would have only experienced a decrease in value of approximately 50% at most. See id. Although, it was not disputed that Corrigan's property lying in the conservation zone would be worth nothing. See id.
233. Id. at 538.
234. Id.
235. Id. at 540 (citing ARIZ. CONST. art. II, § 17).
236. Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725 (1997).
237. See id. at 727-732.
238. Id. at 739.
239. See id. at 732.
240. See id. Suitum was immediately granted a Residential Development Right and was entitled to up to three more, each having a market value between $1,500 and $2,500. Additionally, she was given Land Coverage Rights having a market value between $1,098 and $2,196. Finally, Suitum could apply for a Residential Allocation, which, if sold with a Residential Development Right, had a market value of between $30,000 and $35,000. Id.
241. Id. at 731.
242. See id. at 732-33.
243. See id. at 733.
244. See id. at 728. At least one court has read the majority's decision as an endorsement of the Brennan approach from Penn Central. In Good v. United States, 39 Fed. Cl. 81, 108 (1997), the Court of Federal Claims addressed an argument by the plaintiff that TDRs were to be considered on the just compensation side of takings analysis by stating "the Supreme Court in Suitum reaffirmed the relevance of TDRs to determining takings liability." The Good court later re-emphasizes this belief when denying the plaintiff's position: While the concurring Justices in Suitum dearly indicate opposition to this proposition, their opinion underscores the Court's reaffirmance of the Penn Central holding that the value of TDRs is to be considered to answer the threshold question of whether a taking has occurred. Accordingly, plaintiff's legal challenge to the consideration of TDRs in this case is rejected. Id. However, this conclusion is tenuous at best, since the majority was very specific in stating that their decision did not decide this issue.
245. Suitum, 520 U.S. at 741.
246. Id. at 747.
247. See id.
248. Id. at 748.
249. Id.
250. See id. at 749.
251. See id.
252. See id.
253. Id.
254. See id.
255. For a good discussion of how these factors are applied, see Creppel v. United States, 41 F.3d 627, 631-32 (Fed. Cir. 1994).
256. See Brief of Dr. James Nicholas, et al. as Arnici Curiae in Support of Respondent at 8-12, Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725 (1997) (No. 96-243) (discussing existing TDR markets).
257. See, e.g., Mitsui Fudosan (U.S.A.), Inc. v. County of Los Angeles, 219 Cal. App. 3d 525 (Cal. Ct. App. 1990) (TDRs are real property and are properly considered as a portion of property to which they are attached for purposes of property tax assessment); Wilkinson v. St. Jude Harbors, Inc., 570 So. 2d 1332 (Fla. Dist. Ct. App. 1990), review denied, 576 So. 2d 295 (Fla. 1990) (TDRs are not real property subject to assessment for ad valorem taxation); Lorenc v. Bernards Township, 5 N.J. Tax 39 (N.J. Tax Ct.1982), aff'd sub nom., Sage v. Bernards Township, 6 N.J. Tax 349 (N.J. Super. Ct. App. Div. 1984) (TDRs properly assessed as part of value of vacant land they are incident to).
258. Fred F. French Investing Co. v. City of New York, 350 N.E.2d 381, 388 (N.Y. 1976), cert. denied, 429 U.S. 990 (1976) (holding a New York City TDR program unconstitutional because the program failed to define properties where TDRs could be transferred to).
259. See Brief of the Institute for Justice as Amicus Curiae in Support of Petitioner at 9-10, Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725 (1997) (No. 96-243).
260. Kayden, supra note 18, at 578.
261. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1014 (1992) (alteration in original) (quoting Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922)).
262. Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725, 731 (1997).
263. See id. at 734.
264. Another major element to be considered in Ms. Suitum's case is that in order to sell her TDRs and recoup the value, she is being required to record a deed restriction permanently proscribing any possible development on her land. See Brief Amicus Curiae of the Tahoe-Sierra Preservation Council, Inc. in Support of Petitioner at 21 n.9, Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725 (1997) (No. 96-243). This increases the severity of the TRPA's restrictions and should be a factor in any judicial decision. Requiring a deed restriction makes the government act appear even more like an exercise of eminent domain power, since the landowner is required to make a significant change in title to the land. Absent the deed restriction, Ms. Suitum's land could be rezoned in the future to allow some form of development, especially if the TRPA determines that Ms. Suitum's proposed development does not actually pose a serious environmental threat, or Ms. Suitum finds a less damaging form of development to undertake. With the deed restriction, the land is permanently retired from service, leaving no chance of future use. Additionally, Ms. Suitum is still burdened with the responsibilities of private ownership, such as taxes and liability risks. Id. at 27. Thus, court's should view TDR programs requiring deed restrictions with some wariness in performing a takings analysis.
265. Pennyslvania Coal Co., 260 U.S. at 416.
266. See, e.g., Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470 (1987) (holding no taking had occurred where law prevented coal companies from mining less than 2% of total supply of coal); Southview Assoc. v. Bongartz, 980 F.2d 84 (2d Cir. 1992), cert. denied, 507 U.S. 987 (1993) (holding no taking had occurred where 44 acres of an 88 acre parcel as designated as a deeryard, thus preventing residential development); Marshall v. Board of County Commissioners, 912 F. Supp. 1456 (D. Wyo. 1996) (holding no taking had occurred where zoning ordinance increased minimum size for residential lots to five acres, thus reducing developers possible number of lots from 23 to as few as 7); Rivervale Realty Co. v. Town of Orangetown, 816 F. Supp. 937 (S.D.N.Y. 1993) (holding no taking had occurred where zoning ordinance increased lot size requirements from one to two acres); Carpenter v. Tahoe Reg'l Planning Agency, 804 F. Supp. 1316 (D. Nev. 1992) (holding no taking had occurred where landowner could still apply for and obtain a permit to build a single-family dwelling); Stephans v. Tahoe Reg'l Planning Agency, 697 F. Supp. 1149 (D. Nev. 1988) (holding no taking had occurred where zoning restriction still permitted owner to use land for single-family residences); Broadwater Farms Joint Venture v. United States, 35 Fed. Cl. 232 (1996) (holding no taking had occurred where federal wetlands regulations reduced plaintiff's gross sales of land for residential development by 28%); Zerbetz v. Municipality of Anchorage, 856 P.2d 777 (Alaska 1993) (holding no taking had occurred where designation of property as "conservation wetlands" still permitted the landowner to apply for a development permit); Zealy v. City of Waukesha, 548 N.W.2d 528 (Wis. 1996) (holding no taking had occurred where landowner was still permitted to farm wetlands, which was the existing use).
267. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1027 (1992).
268. Alamota Farmen Elevator and Warehouse Co. v. United States, 409 U.S. 470, 473-74 (1973).
269. Id. at 474.
270. See United States v. 50 Acres of Land, 469 U.S. 24, 33 (1984). The "substitute-facilities" doctrine allows the federal government to compensate local or state governments with similar facilities where the federal government has caused a taking and the state or local government must replace the facility that was taken. Id. at 32-33.
271. See Kendall & Ryan, supra note 73, at 1837-43. Some state constitutions specifically require that compensation be paid in money. See id. at 1842-43. TDRs considered under the Rehnquist analysis are not doomed in this case. One way to operate a TDR program under such restraints is through a TDR bank. The bank would buy and sell TDRs and in this way could buy TDRs from landowners unwilling to voluntarily waive the right to monetary compensation, thus side-stepping the problem.
272. See id. at 1841. See also Bradshaw, supra note 128, at 462-63; John J. Costonis, "Fair" Compensation and the Accomodatian Power: Antidotes for the Taking Impasse in Land Use Controversies, 75 COLUM. L. REV. 1021 (1975).
273. Suirum v. Tahoe Reg'l Planning Agency, 520 U.S. 725, 750 (1997) (Scalia, J., concurring). But see Brief of the Institute for Justice as Amicus Curiae in Support of Petitioner at 24-29, Suitum v. Tahoe Reg'l Planning Agency, 520 U.S. 725 (1997) (No. 96-243) (arguing that allowing TDRs to serve as compensation will "inaugurate a whole host of other programs to circumvent their obligation to pay compensation for either physical or regulatory takings"). The New York Supreme Court, in W.J.F. Realty Corp. v. State, 672 N.Y.S.2d 1007 (N.Y. 1998) supported Justice Scalia's proposition in dicta. After finding New York's Pine Barrens Act constitutional on a facial challenge the court discussed Pine Barrens TDRs in light of Justice Scalia's concurrence in Suitum. The court found Suitum distinguishable because the Pine Barrens Act required condemnation/compensation by eminent domain or permission to develop but suggested, in agreement with Justice Scalia, that "Pine Barrens TDRs may be adequate compensation for the plaintiffs property [under the 5th Amendment]." W.J.F. Realty, 672 N.Y.S.2d at 1010.
274. See, e.g., Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 151-52 (1978) (Rehnquist, J., dissenting).
275. However, where TDRs have lost all or nearly all value the landowner may be able to demonstrate a taking under the Brennan approach and the Rehnquist approach would be no better in this case. The Rehnquist approach would be better, for example, where TDR price has dropped 80%. In this case, the Brennan approach affords no protection because there is still enough value in the TDRs to survive a takings challenge. The Rehnquist approach would protect the landowner in this case because the Just Compensation Clause would force the government to compensate the landowner for the 80% price drop with some form of supplemental payment.
276. An ancillary issue arises when one considers the case of the landowner that decides to speculate on the price of TDRs and then when TDR prices have fallen brings a takings claim alleging the deflated TDR price should be used in diminution of value calculations. TDR programs may survive such claims on an assumption of risk theory. If the landowner decides to speculate on the TDR market, she assumes the risk that TDR prices will change to her detriment. Therefore, a court could apply a TDR valuation method based on the price of TDRs over time and how a reasonable investor would behave in the TDR market.
277. Presault v. Interstate Commerce Comm'n, 494 U.S. 1, 11 (1990).
278. National Trails System Act, 16 U.S.C. § 1241 (1994).
279. Presault, 494 U.S. at 11 (citations omitted) (quoting Regional Rail Reorganization Cases, 419 U.S. 102, 124-25 (1974)).
280. Assuming that nonmonetary compensation is found to be acceptable under the Constitution.
281. See, e.g., Jung, supra note 59, at 60-63; MONTGOMERY COUNTY PLAN, supra note 42, at 39-40; Randle, supra note 52, at 197. TDR programs have many different types of funds available to them. Conservation organizations, such as the Nature Conservancy and the Trust for Public Land, could provide land acquisition funds for well-designed programs. Additionally, government support is available from a variety of federal and state conservation programs. See generally WIEBE ET AL., supra note 44.
282. This is not an endorsement of private landowner rights at the exclusion of natural resource protection. It is simply an acknowledgement that private market concepts will not work where private parties do not support or trust them. If the end goal is a functional step away from traditional zoning's command-and-control approach, then conservativism on the side of private landowners is probably necessary to gain the cooperation and support from them that is necessary to create successful market-based programs.
283. See Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 137 (1978).
284. See id. at 150-52 (Rehnquist, J., dissenting).