A California Court of Appeal recently concluded that a city’s imposition of a one-dwelling-per- twenty-acre land use restriction on a 2.85 acre parcel of land located in the middle of a residential tract that allows for four dwellings per acre constituted spot zoning and a compensable taking by the city. (Avenida San Juan Partnership v. City of San Clemente, (— Cal.Rptr.3d —-, Cal.App. 4 Dist., December 14, 2011)).
When landowners (“Owners”) purchased a 2.85 acre parcel of land in 1980, the zoning code allowed six dwellings per acre of land. The City of San Clemente (“City”) approved Owners’ plans to subdivide the property into four single family lots in the early 1980s. The City found no geological obstacles to developing the property. A nearby landslide prompted neighbors to petition the City to keep Owners’ parcel as open space. The City resisted the call for rezoning at that time and the property remained zoned to allow six houses per acre. Owners, however, decided not to proceed with their development plans.
The City amended its general plan in 1993 to create residential, very low (“RVL”) zoning for Owners’ parcel. RVL zoning allows for one residence for every 20 acres. However, all parcels that surround Owners’ parcel were zoned residential, low (“RL”), which allows for four residences per acre. The City did not formally rezone Owners’ parcel until 1996. The general plan provides that the purpose of RVL zoning is to preserve open space in the canyons. However, Owners’ property is not in a canyon but on a slope and does not contain any sensitive biological resources.
Owners were not aware of the downzoning until 2004 after they hired a civil engineer to help them develop the property. Owners submitted a development application to build four dwellings on their property. Their application asked for an amendment to the general plan, a zoning amendment, a conditional use permit, a variance, a tentative parcel map, and a site plan permit. Upon the planning commission’s recommendation, the city council passed a resolution denying Owners’ application.
Owners filed a lawsuit against City claiming, among other things, inverse condemnation as a result of spot zoning. The trial court concluded the restrictions the City placed on Owners’ property constituted spot zoning and found in favor of Owners on their claim for inverse condemnation. The court concluded that the City had deprived Owners of all economically viable use of their property and awarded them $1.3 million. However, the trial court later found that the City had the option of either paying the award or rescinding the RVL land use restriction.
The Court of Appeal affirmed the trial court’s decision that the City’s refusal to lift the RVL zoning restrictions constituted inverse condemnation. The Court concluded that City’s downzoning of Owners’ property and its refusal to later change the zoning was arbitrary and capricious. Spot zoning occurs where restrictions on a small parcel are greater than the restrictions on surrounding properties. The essence of spot zoning, which usually occurs with small parcels of land, is irrational discrimination.
The Court found there is no question that the RVL zoning that only allows one house per 20 acres creates an island in the middle of the RL zoning, which allows two to six houses per acre. The topography of Owners’ property is not unusual and does not support the discriminatory treatment exercised by the City. Although the property is on a slope, many other houses in the area are built on slopes. The City’s stated reason for the RVL zoning—to protect the canyons—does not apply because the parcel is not in a canyon. The Court of Appeal upheld the trial court’s finding of spot zoning.
The Court of Appeal found the City’s regulation of Owners’ property constituted inverse condemnation even though it did not deny all economically viable use. The economic effect of the zoning was dramatic, the regulation wholly undermined the investment-backed expectation of Owners, and the City’s regulation appears to have been motivated by a desire to keep Owners’ parcel as open space. The City singled out Owners’ parcel for unequal treatment.
The Court held Owners’ lawsuit was not barred by the statute of limitations because it was an “as applied” challenge to the City’s refusal to even consider changing the RVL restrictions as they applied to Owners’ land. The Court rejected the City’s argument that Owners’ claim was not yet ripe for review.
The Court remanded the matter for a recalculation of damages because the trial court failed to take into account the property’s value with one house as allowed under the RVL zoning. However, the Court noted that if the City vacates the resolution denying Owners’ development application, it need not pay the recalculated judgment.
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Jon E. Goetz | 805.786.4302