Developer Bridge Aina Le‘a, LLC, purchased a huge swath of land in Hawaii on which it planned to build hundreds of new homes. Before the company ever got the chance, however, the Hawaii Land Use Commission re‐designated the land for agricultural use, stopping residential development dead in its tracks. Bridge Aina Le‘a sued to get its money’s worth and has asserted its constitutional right against uncompensated takings of property.
The land in question, over a thousand acres “of largely vacant and barren, rocky flow land,” could hardly support agricultural use. But existing Supreme Court doctrine could be read to defeat a takings claim in this case. This is despite the Land Use Commission’s subversion of Bridge Aina Le‘a’s “distinct investment‐backed expectations”—a crucial factor in determining whether a regulation “goes too far” (as Justice Oliver Wendell Holmes put it in 1922), violating the Fifth Amendment’s Takings Clause. That’s because in Penn Central Transportation Co. v. New York City (1978), the Court held that whether a regulation effects a taking in most cases involves “essentially ad hoc, factual inquiries.”
For over four decades, courts and developers have been left to ponder what these notoriously open‐ended words mean. In Lucas v. South Carolina Coastal Council (1992), the Court clarified that those words were not meant to apply to regulations that resulted in a total loss of a property’s value or usefulness; that losses of that magnitude, once proved, effect per se takings of the property (regardless of whether the owner retains physical possession of the now‐valueless or useless land). The problem with the Lucas doctrine is that even a 99% value‐loss will not cut it—at least not for most courts. And, to add insult to injury, Lucas’s “usefulness” factor has fallen nearly completely out of vogue.
Read more at https://www.cato.org/blog/when-government-destroys-all-smidge-property-value-it-should-pay-just-compensation
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