Senate Unit Passes Takings Bill

Nation's Cities Weekly, December 25, 1995 | Go to article overview
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Senate Unit Passes Takings Bill


The Senate Judiciary committee narrowly passed and sent to the full Senate NLC-opposed federal takings legislation. The bill, S. 605, the "Omnibus Property Rights Act of 1995," would mandate federal payments to property owners when any federal agency action resulted in a 33 percent reduction in the value of an affected portion of property. The bill, if enacted, could significantly increase the federal deficit as well as impact municipal land use and zoning authority. The bill, authored by Sens. Orrin Hatch (R-Utah.), Phil Gramm (R-Tex.) and Bob Dole (R-Kans.), proposes a "kitchen sink" approach to "takings" that broadly defines property as not only land and water, as in the House bill, but as buildings, fixtures, property defined by contract, intellectual property, securities and business profits. The bill would require that federal agencies prepare a "taking impact analysis" before issuing or promulgating any regulation, policy, or proposed legislation. Agencies would also have to review existing regulations and re-promulgate those that result in a "taking" under the bill.

Municipal Impact

The measure, S. 605, and similar "takings" compensation and assessment bills, if enacted at the federal and state level, could have the following negative impacts on cities and towns:

* The same groups that are pushing for legislative action at the federal level are also active in supporting state "takings" legislative proposals. Any legislation enacted at the federal level could set a precedent for state legislation which would impose similar requirements and restrictions on the actions of state and local governments. State Municipal Leagues in Colorado, Maine, Montana, New Hampshire and Wyoming, just to name a few, have opposed "takings" proposals in their states. The types of local government actions which might be substantially restricted by "takings" legislation include local zoning and planning classifications of land; local regulation of business activity; and local affordable housing programs.

* "Takings" legislation, both assessment and compensation, could create a new federal entitlement spending program with unforeseen consequences for the federal deficit. Taxpayers would be forced to pay for these new government expenditures, as well as for the burgeoning bureaucracy and cumbersome paperwork that would ensue. For example, a study done in New Harnpshire of similar "takings" bills pending in the state legislature found that such a bill could cost a town like Dunbarton around $2.8 million, or a city like Laconia around $8.5 million. A similar study done in the state of Washington on the state's property rights initiative estimated that the cost to local governments of the legislation would range between $3.8 and $11 million annually.

* The bill and similar bills could increase litigation among levels of government and private property owners. The bill would require compensation to a property owner by a federal agency for a reduction in the value of the property when a local law regulating the private property is the result of a federal mandate. However, the difficulty in determining whether a local law is actually required by federal law would likely cause substantial litigation among aU levels of government and private property owners. This could impose increased costs on cities and towns for litigation expenses, attorneys' fees, and, possibly, shared compensation awards.

* While most of the current proposals appear to apply only to federal government actions, success of these measures may create a political environment in which "takings" decisions of courts are more restrictive of governmental power, such as local government permitting and zoning.

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