Academic journal article Journal of the International Academy for Case Studies

The Use of Building Moratoria to Control Growth in Rural communities.(Instructor's Note)

Academic journal article Journal of the International Academy for Case Studies

The Use of Building Moratoria to Control Growth in Rural communities.(Instructor's Note)

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns Business Law and Real Estate. Secondary issues examined include issues commonly experienced by local governments and real estate developers. The case is appropriate for junior level. The case is designed to be taught in two to three class hours and is expected to require three to five hours of outside preparation by students.

CASE SYNOPSIS

Today, many rapidly growing communities find that their infrastructure is not capable of keeping up with the pace of development. Imposing building moratoria gives communities time to plan without the pressure of impending growth, however their legality is often aggressively challenged. This case addresses the issue from a legal and public policy perspective and examines when, and under what circumstances, municipalities may legally employ this planning tool.

INSTRUCTORS' NOTES

Case Overview

The Town of Pleasant Oaks faces a problem that many local governments must deal with as they encounter growth pressure from real estate developers. While the local government attempts to plan for its community's future, it may be flooded with requests from those who seek to develop land under the current, relatively lax, laws that in many instances encourage random, unplanned development. To prevent such a flurry of development activity, the local government may often be able to take advantage of a planning tool that will allow it some breathing room in its efforts to effectively plan for desired growth. This tool is often called an interim development control or an uncompensated development moratorium (hereinafter referred to as "moratorium").

TEACHING OBJECTIVES

The teaching objectives of this case are to provide students with a background for:

1. Correctly identifying and appreciating the tension between local government planning and real estate developers' interest in growth

2. Demonstrating an understanding of the legal cases and a legal tool that may be used by local governments to temporarily delay development and provide for the opportunity to plan for growth

3. Interpreting, evaluating and analyzing the legal materials to determine if the moratorium may be used in this particular case

4. Recommending a solution to the local government that provides for orderly growth and development

QUESTIONS/ANSWERS

1. Does pleasant Oaks have a solid legal foundation for stopping all development, and would such action be considered a regulatory "taking", requiring compensation to the landowners being temporarily denied the right to develop their property?

The United States Supreme Court in Tahoe-Sierra Preservation Council, Inc. v Tahoe Regional Planning Agency, 122 S Ct 1465 (2002) has recently approved of the use of moratoria, at least under certain circumstances. In this landmark case, the local planning organization imposed a 32-month moratorium on development in a specific geographical area under its authority, while it sought to create a comprehensive plan to provide for orderly and environmentally sound growth. The developers claim that the moratorium on development, ordained by the local government, constituted a taking of their property without compensation in contravention of the Constitution of the United States (Fifth and Fourteenth Amendments).

The Court analyzed this case by first noting the distinction between the physical taking of property by the government (compensable) and a regulatory taking of the property by the government (not necessarily compensable). The court stated in Tahoe at 1478-1480:

   The text of the Fifth Amendment itself provides a basis for drawing
   a distinction between physical takings and regulatory takings. Its
   plain language requires the payment of compensation whenever the
   government acquires private property for a public purpose, whether
   the acquisition is the result of a condemnation proceeding or a
   physical appropriation. … 
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