Anyone working in waterfront construction long enough has a story (or knows someone who does) about pulled permits or burdensome local rules and regulations which may turn a waterfront dream renovation into a nightmare. Recently, Florida’s Second District Court of Appeal confirmed that some waterfront construction is just not meant to be. But, the Court’s ruling as to waterfront construction, which seems patently unfair from a practical standpoint, is not the only takeaway from Bair v. City of Clearwater, Case No. 2d15-1210 (Fla. 2d DCA, August 5, 2016). On its surface, Bair is cautionary tale for waterfront property owners regarding the strict statutory interpretation of the Bert J. Harris, Jr., Private Property Rights Protection Act (the “Bert Harris Act”); however, it also contains a postscript for legal practitioners concerning equitable estoppel as a standalone claim.
By way of legal background, the Bert Harris Act was enacted on May 11, 1995 in order to create a separate and distinct cause of action for property owners where a government regulation “inordinately burdens” a property, but not to the extent that the burden constitutes a “taking” under the Florida or federal constitutions. In sum, under the Bert Harris Act, an owner may file suit against a governmental entity, notwithstanding sovereign immunity, to challenge its legislative acts which, when applied, inordinately burden an owner’s property. In Bair, new homeowners sought to do just that in relation to the City of Clearwater’s Development Code (the “Code”).
In 2008, the Bairs bought a home located within the City of Clearwater (the “City”), and thus subject to the Code as well as the Federal Emergency Management Agency’s (“FEMA”) regulations. Specifically, the City and FEMA require owners to move an existing home’s lowest horizontal point above the flood elevation level should “substantial improvements” be made to the existing structure. Both the City and FEMA define “substantial improvements” as modifications or improvements made over a one year period which equal or exceed fifty percent (50%) of the market value of the structure (the “Fifty Percent Rule”). In the instant case, because their home was located within the City, the Bairs eventually ran afoul of this Fifty Percent Rule in seeking to renovate their home.
After receiving an appraisal of their home, and consulting with City staff to confirm that their improvement plans did not exceed the Fifty Percent Rule, the City initially issued the Bairs a building permit in 2011. However, shortly after construction began, the City issued a stop-work order based on City Staff’s observation of extensive demolition at the property. The City believed that renovations would violate the Fifty Percent Rule.
In response to the stop-work order, the Bairs submitted a revised appraisal and revised renovation plans. Nonetheless, the City was convinced that the improvements violated the Fifty Percent Rule, and thus construction could only resume if the Bairs were to bring the property into compliance with the Code by raising the lowest horizontal point of the home above the flood line – a substantial cost, if at all feasible without a complete teardown.
Failing to resolve their issues with the City, the Bairs filed a two count lawsuit seeking: (I) relief under the Bert Harris Act; and (II) monetary damages under an equitable estoppel theory. After the trial court dismissed Count II of suit, and granted summary judgment for the City as to its argument that the stop-work order was predicated on the “application” of the Code which existed prior to May 11, 1995 (and thus, Bert Harris Act did not apply), the Bairs appealed.
The Bairs’ appeal was predicated on several arguments. First, the Bairs argued that the City was burdening the property through its application of grandfathered portions of the Code, and through its ongoing requests for additional information and revised plans. Next, the Bairs argued that the City relied on post-1995 flood maps and FEMA regulations in their application of the Code. Finally, the Bairs argued that the Bert Harris Act was never intended to bar claims as to building permits issued after 1995.
As to their first argument, the Court held that the limited exception to sovereign immunity in Fla. Stat. § 70.001(13) provides that an owner may file suit only in relation to a governmental entity’s application of a law, rule or regulation, not its requests for information. Thus, the Bairs’ attempt at broadening the Bert Harris Act to include requests for information failed. Likewise, their argument that the City relied on flood insurance maps issued after 1995 did not alter the fact that the City was applying the Code, not the maps it reviewed. Similarly, their argument that the City administered or applied FEMA regulations failed as the City never applied those regulations as to the Bairs’ property.
As to their final argument that the Bert Harris Act was never intended to apply to building permits issued after 1995, the Bairs again failed to persuade the Court. Specifically, the Bert Harris Act does not provide a remedy for property owners when their claims are based on an inordinately burdensome application of an ordinance that was in effect prior to May 11, 1995. This grandfather clause for existing legislation is without regard to when the application of the legislation occurs.
In conclusion, Bair tells a story of strict statutory construction. Courts will not sympathize with owners seeking to substantially improve their homes while simultaneously avoiding flood line requirements (or other inordinately burdensome requirements promulgated prior to 1995). Ultimately, a municipality is free to apply its pre-1995 laws, rules or regulations in a manner which inordinately burdens a property, even to the point of renovation infeasibility. Conversely, owners are free to use the Bert Harris Act to challenge those governmental applications of inordinately burdensome laws, rules or regulations which were enacted after 1995. However, the Court’s postscript may be the lasting impression of Bair for legal practitioners who should avoid standalone equitable estoppel claims in the Second District.
Because effective dates for local laws, rules and regulations are so critical in determining whether your next waterfront construction project is subject to a Fifty Percent Rule, and a challenge to same under the Bert Harris Act, we strongly suggest that owners and construction professionals consult with counsel before investing substantial time, money and resources into renovating property within a flood zone. Aligning your construction plans with governing realities upfront can avoid costly problems down the road.