What is the "Relevant Parcel" in a Regulatory Takings Case?
Posted in Court Decisions

In Lost Tree Village Corporation v. United States, the Federal Circuit addressed this question head on, concluding, to the surprise of no one, that the answer will largely depend upon the unique facts in each case. 

The question arose because the Army Corps of Engineers denied Lost Tree Village Corporation (Lost Tree), a commercial and real estate developer, a permit to fill wetlands on a 4.99 acre plat.  The 4.99 acre plat (Plat 57), along with one other plat (Plat 55) and some scattered wetlands, were holdovers from various properties totaling approximately 1,300 acres that Lost Tree purchased and developed from 1969 through the mid-1990s.  Although Lost Tree constructed a number of residential homes around Plat 57, it was not until 2002 that Lost Tree first considered developing the small plat.  The stated impetus for this development was the receipt of mitigation credits that accrued as a result of improvements made by a neighboring landowner.  Shortly after receiving these mitigation credits, Lost Tree obtained all state and local approvals necessary to fill 2.13 acres of wetland and develop a residential home on the property.  The Army Corps, however, denied the federal permit necessary to commence the construction.  

In the Court of Federal Claims, Lost Tree argued that the relevant parcel for purposes of the takings analysis was just the 4.99 acre plat.  The trial court, however, rejected this argument, finding that the relevant parcel was Plat 57, Plat 55, and the scattered wetlands still owned by Lost Tree.  Applying this relevant parcel analysis, the trial court found that the denial of the federal permit diminished the value of Lost Tree's property by approximately 58.4%, and that this diminution in value was not sufficient to support a takings claim.  Lost Tree appealed.

On appeal, the Federal Circuit noted that although "the definition of the relevant parcel of land is a crucial antecedent that determines the extent of the economic impact wrought by the regulation," the "Supreme Court has not settled the question of how to determine the relevant parcel in regulatory takings cases[.]"  Instead, the Supreme Court has merely provided "some helpful guideposts."  Specifically, the Supreme Court has instructed that the takings analysis must focus "on the parcel as a whole," but the parcel as a whole does not necessarily "extend to all landowner's disparate holdings in the vicinity of the regulated property."  Turning to its own precedent, the Federal Circuit then explained that this requires "a 'flexible approach, designed to account for factual nuances[.]'"  And the critical inquiry is the "economic expectations of the claimant with regard to the property."

Applying this flexible approach, the Federal Circuit found that "Lost Tree did not treat Plat 57 as part of the same economic unit as other land it developed[.]"  Therefore, the trial court erred by aggregating Plat 57, Plat 55, and the scattered wetlands: Plat 57 by itself was the "relevant parcel."  Accordingly, the Federal Circuit reversed the decision and remanded the case back to the trial court to determine the loss suffered by the denial and whether that loss rises to the level of a taking.

  • Benjamin Z. Rubin
    Partner

    Ben Rubin is chair of Nossaman’s Environment & Land Use Group. Ben assists developers, public agencies, landowners and corporate clients on a variety of complex land use and environmental matters. He counsels clients on matters ...

California Eminent Domain Report is a one-stop resource for everything new and noteworthy in eminent domain. We cover all aspects of eminent domain, including condemnation, inverse condemnation and regulatory takings. We also keep track of current cases, project announcements, budget issues, legislative reform efforts and report on all major eminent domain conferences and seminars in the Western United States.

Stay Connected

RSS RSS Feed

Categories

Archives

View All Nossaman Blogs
Jump to Page

We use cookies on this website to improve functionality, enhance performance, analyze website traffic and to enable social media features. To learn more, please see our Privacy Policy and our Terms & Conditions for additional detail.