The answer to this question is a qualified “yes,” but it is extremely difficult to prove.
In recent years, much attention has been focused on these so-called regulatory or “de facto” takings. These are situations where the regulatory authorities place such onerous restrictions on the use of the property that the property owner claims that the government has “de facto” (as opposed to formal or “de jure”) taken the property, entitling the property owner to just compensation. Traditionally, the remedy for a de facto taking was known as an “inverse condemnation.”
A recent spate of cases from the Supreme Court of the United States, in conjunction with a number of lower state and federal court cases, gave rise to the sense that a major change in the standards of de facto condemnation was being implemented by the courts. See, e.g., First English Evangelical Lutheran Church of Glendale v. Los Angeles County, 482 U.S. 304 (1987); Nollan v. California Coastal Commission, 483 U.S. 825 (1987); Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992); and Dolan v. City of Tigard, 512 U.S. 374 (1994).
The Supreme Court of the United States seemed to be moving toward a concept of requiring compensation (or at least recognizing a de facto condemnation requiring payment of compensation) whenever local regulations resulted in substantial market depreciation in the value of the property.
The New York courts are generally not receptive to de facto condemnation claims requiring a very powerful showing that the property has been destroyed by government action. Gazza v. New York State Dept. of Envtl. Cons., 89 N.Y.2d 603, 657 N.Y.S.2d 555 (1997).
However, in certain circumstances, New York’s statutory scheme does provide some relief to recover for a “de facto” condemnation where the government’s application of the environmental rules and regulations deprive a property owner of substantial value. See, ECL 24-0705(7) which provides:
“In the event that the court finds the action reviewed constitutes a taking without just compensation, and the land so regulated merits protection under this article, the court may, at the election of the commissioner, either (i) set aside the order or (ii) require the commissioner to proceed under the condemnation law to acquire the wetlands or such less than fee rights therein as have been taken.”
The statute requires a two-step analysis. It must first be determined whether the administrative denial of the permit is rational and supported by substantial evidence. Once this is established, it must be determined whether the denial of the permit constitutes an unconstitutional taking of petitioner’s property. See, Spears v. Berle, 48 N.Y.2d 254, 422 N.Y.S.2d 636 (1979).
A precautionary note. The law on the question of “de facto takings” is changing very rapidly. Decisions have come down even as this brochure was being prepared refining and redefining the legal standards. The above review should therefore be viewed as only the broadest outline of this area and any property owner who believes that they are the victim of a de facto condemnation must consult with their counsel to be assured that they are evaluating their situation under the most recent standards.
Posted in: Condemnation