Supreme Court rejects regulatory takings challenge to zoning merger provision

In Murr v. Wisconsin, 2017 WL 2694699 (U.S. 2017), the Supreme Court held that a zoning law that treated two contiguous parcels owned by the same persons as one parcel to determine minimum developable lot size was not an unconstitutional taking of property without just compensation. The merger law provided for variances that might allow development for lots that contained less than one acre of developable space but did not provide for such a variance if two lots were merged.

One lot had a house on it and the other was vacant. The owners claimed that the vacant lot had no economically beneficial use since it could not be separately developed. However, the Supreme Court held that the denominator to determine the economic impact of the regulation was the "parcel as a whole" and that in this case that meant the merged parcels. Moreover, even if the two lots could be developed separately, the economic impact of the regulation was less than ten percent because merging the two lots actually had a positive impact on the market value of the vacant lot, partly because the combined lots allowed a larger building than could be constructed on either lot by itself and the merged lots had greater privacy and space. That meant that the economic impact of the regulation was small.

In addition, merger provisions like this are common across the country and of longstanding presence. The one here was in place before the owners acquired title to the lots. Those facts together meant that the owners had no reasonable investment-backed expectations that they could develop the lots separately; their ignorance of the merger provision was no excuse.

The Court found the character of the government action reasonable since it both allowed development (protecting property rights and expectations) and enabled regulation designed to protect the environment and promote public interests.

Finally, the Court clarified (or changed?) the law by (a) clearly recognizing legitimate public interests in protecting the environment and (b) affirming that regulatory takings law requires consideration of "a complex of factors" and treats the the three Penn Central factors as important but not exclusive considerations, given the fact that the doctrine attempts to reconcile competing norms (property rights and public interests).