July 27, 2021
United States 10th Circuit Court of Appeals
6 F.4th 1216 (click for full text of opinion)
The 10th Circuit denied a regulatory takings claim under the 5th amendment of the federal constitution as unripe because despite the City’s denial of a rezone application, the property owner had not alternatively sought a planned development review that would have otherwise allowed the city to a final, definitive position regarding how it would apply the regulations to the particular land in question as it relates to a particular type of land use.
North Mill Street LLC (NMS) owns Mill Street Plaza, a parcel of commercial real estate in Aspen Colorado, located within a Service Commercial Industrial (SCI) zoning district. When NMS acquired the property, a certain type of resident unit–Free Market Residential (FMR)–was allowed as a conditional or ancillary use in the zone. However, the city amended its land use code to eliminate FMR units as an allowed conditional use in the SCI zoning district. Without FMR units, NMS alleges that future development of Mill Street Plaza is not economically viable.
NMS filed a rezone application to rezone to another mixed use zoning district that allowed the combination of commercial uses with FRM and affordable housing units, but the City Council denied the rezone. Alternatively, city code provides for Planned Development (PD) review, a process that allows for site-specific development of mixed land uses that warrant variation from standard permitted zone district land uses. Rather than seek PD review, NMS sued the city in federal district court following the rezone denial, asserting a regulatory takings claim. The city moved to dismiss as unripe because the city had not definitively determined if free market residential uses are permissible at Mill Street Plaza because NMS had not yet pursued PD review; the district court agreed and dismissed the complaint, and NMS appealed.
The 10th circuit held that until recently, the Supreme Court recognized two independent prudential hurdles to a regulatory takings claim. In Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City (1985), the Court held that a claim is not ripe until the plaintiff (1) received a final decision regarding the application of the challenged regulations to the property at issue, and (2) sought compensation through available state procedures. In 2019, the Court overruled the second requirement in Knick v. Township of Scott, but Williamson County’s “finality” requirement remains. The finality requirement is satisfied when there is “no question” about how the regulations at issue apply to the particular land in question. Here, the 10th circuit found that the city’s ordinance amendment did nothing to alter the PD review process otherwise made available in city code to consider site-specific variations to zone district uses for particular mixed use proposals. Because the City retains discretion to approve a use variation from the SCI zoning for FMR units through the PD process, a regulatory takings claim is not ripe.