While it has long been understood that private property cannot “be taken for public use without just compensation”, exactly what makes a regulatory taking may still be confusing. Since its 1978 decision in Penn Central Transportation Co. v New York City the Supreme Court has stated that the effect of the regulation to the parcel as a whole should be considered and lower courts have struggled with the meaning of “parcel as a whole.” This has also created what courts have described as the “denominator problem.” The Supreme Court has now considered the case of Murr v Wisconsin in which more than one parcel is involved and the regulation may have different impacts upon each parcel. How should a court consider the effect?
In Murr v Wisconsin, the Supreme Court has again been asked to provide guidance on this question.
The Murrs are four siblings owning what were two adjoining parcels in St. Croix County, Wisconsin one of which was owned by their parents and the other was owned by their parent’s business. In 1976 a zoning change made those lots “substandard” as neither was large enough for development however each lot was “grandfathered” under separate ownership. In 1994 and 1995 the Murr’s parents conveyed these lots to their children and as such the lots came under common ownership. When the children sought to sell one lot to finance improvements to the cabin on the other lot they requested a variance which was denied.
The Murrs argue the zoning impact upon each parcel, previously not under common ownership, is a regulatory taking as neither parcel is developable under the zoning change which, under the “denominator problem” may mean a regulatory taking. While the government (both St. Croix County and the State of Wisconsin) argue the Murrs may keep both lots or sell both lots and in both instances are not harmed. The government argues that the only thing the Murrs cannot do is treat each lot as a developable parcel and that such a restriction is not a regulatory taking.
In its decision, rendered on June 23, the Court held that the State Court of Appeals was correct in analyzing the property as a single unit when evaluating the impact of the zoning. The Supreme Court, in Murr set out various factors to be considered when evaluating whether an owner can anticipate their property will be treated as one parcel or multiple parcels. First, how it is divided under state and local law; second the property’s traits; and third the property’s value under the regulation at issue.
The opinion itself can be found here: https://www.supremecourt.gov/opinions/16pdf/15-214_f1gj.pdf