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Land use covenant case

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130
Points
6
On page 28 of this month's Planning, there is a ruling by the 7th U.S. Circuit Court of Appeals on a land use covenant case in Allen County, Indiana. I was staff to the Allen County Planning Commission in 1999 and recommended approval of the project and the vacation of the subdivision covenants to the Commission. After several lawsuits, the 7th Circuit has overturned the decision.

What do you think?

Pitched this month's issue already? Here's a link to the story which you can access if you have your APA membership number handy. Look for the headline "Covenant Upheld, Prevents Taking for Private Purposes"

http://www.planning.org/planning/member/2002nov/news.htm
 

Chet

Cyburbian Emeritus
Messages
10,624
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34
Very interesting indeed...

From the completely unbiased reporting (snottiness towards Planning magazine added intentionally) I would have to agree with the Courts on this one. The Daniels bought into a deed restricted environment and had reasonable expectation for those restrictions to be enforcable.

While blight elimination may have a demonstrated public benefit, it doesn't outweigh the rights of the property owner, nor does it give the County reason to condemn land for private benefit.

I guess Mr. Gordon's FAICP exam didn't include a section on takings. ;)
 
Messages
130
Points
6
But....

...the county didn't condemn the land, and never intended to. They vacated the subdivision lots, which I think then releases them from the covenants. Thought it then, think it now. The vacation hearing I think provided due process coverage for anyone else in the subdivision who had an arguement with vacating the lots and covenants (and boy, did they...).

I appears that the "taking" in this case is the Daniels' interest in all properties in the subdivision beholden to the restrictive covenants. I can see their beef with that.

Out on the ground though, the proposed use was clearly an appropriate one, with precedent after precedent for similar uses all around. It is difficult to make the case for turning one development proposal down when lots of nearby properties are under the same kind of use.
 

Jeff

Cyburbian
Messages
4,161
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27
Oh come on...someone cut and paste the article already....

Who the hell pays APA dues anymore...
 
Messages
130
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6
Mike DeVuono said:
Oh come on...someone cut and paste the article already....

Who the hell pays APA dues anymore...
Well, I thought of that originally, but I didn't want a huge post.

Here goes:

Covenant Upheld, Prevents Taking for Private Purposes

The 7th U.S. Circuit Court of Appeals in Chicago has rejected an Indiana planning commission's decision to replace residential property with commercial development, declaring it an unconstitutional taking of the neighbors' property rights.

The court handed down its decision in Daniels v. Allen County Plan Commission on September 11. The developer and the plan commission are having discussions, but no decision has been made on how to proceed, says Dennis Andrew Gordon, FAICP, executive director of the planning services department of Allen County, Indiana (pop. 332,000).

The 80-lot Broadmoor Addition subdivision in Fort Wayne is subject to a restrictive covenant stating that "no building other than a single-family dwelling and a private garage shall be built on any one lot." Five of the lots front on Lima Road, a major north-south corridor into Fort Wayne.

Three of the lots on Lima Road are owned by a developer, HNS Enterprises. In 1999, the plan commission granted the developer's request to vacate its lots and the associated restrictive covenants from the Broadmoor plat. It also asked for a rezoning of the lots to C-2A/neighborhood shopping center. HNS proposed to build a 12,000-square-foot shopping center on the lots, each of which contained a vacant house.

Neighbors object. There was local opposition from the start, Gordon says. Homeowners William and Judy Daniels argued that vacation and rezoning of the lots would be an unconstitutional taking of private property for private use. But the plan commission approved the vacation and rezoning, saying it was in the public interest — it would allow the site to be redeveloped with commercial uses which "could be a more appropriate use for the property and could be a benefit to the immediate neighborhood." The Danielses sued in federal court for a declaratory judgment and an injunction against the vacation. The court granted their motion for summary judgment.

The appeals court said that a restrictive covenant is a constitutionally protected property interest. Because the plan commission dispossessed the Daniels's of the ability to enforce that covenant, it took a property right by state action. Implicit in the Fifth Amendment is a requirement that the government not take property for private purposes, the court said.

The state legislature has not, however, made a specific determination of what constitutes a public use under the vacation statute, instead delegating that duty to the commission, the court said. The commission determined that vacation was in the public interest because it would allow redevelopment of the site with commercial uses.

But any public benefit from the vacation and rezoning would not materialize without commercial development of the lots by HNS or a subsequent owner, the court said. HNS was the primary beneficiary of the commission's action, not the public. While this private benefit does not necessarily doom the covenant vacation, in this case there was no rationally related public purpose, as defined by either the legislature or the plan commission, that would support the taking, the court said.

Blighted property? An Indiana plan commission may not condemn property if commercial development is the sole public purpose, the court observed. The redevelopment commission would have to treat an area as "blighted" to use eminent domain for commercial development. But blight is more than a few vacant houses, the court said. Even if the structures were blighted, a plan commission must follow a specific and detailed process to make a determination of blight. But the Allen County commission did not do so, the court said.

Moreover, there was no determination that commercial development in and of itself would serve some overriding public purpose. The only common feature of the potential commercial uses of the lots would be to confer a private benefit on HNS, the court said; any public benefit would be incidental and speculative at best.

Gordon says, however, that because of early opposition to the development, the commission took considerable pains to develop findings of fact that would justify the vacation and rezoning. He describes the area as "wall-to-wall commercial," with this single residential enclave. The houses had been rental properties before sale to the developer, and were in run-down, seedy condition, he says.

James Lawlor

Lawlor, a lawyer in Silver Spring, Maryland, is a regular contributor to Planning.
 

Linden Smith

Cyburbian
Messages
141
Points
6
I read that article and I too, was suprised that a planning agency would do something like that.

It is up to the courts to vacate a legal contract, which is just what a restrictive covenant is. The planning commission does not have the authority to enforce, or even to review and approve such things. The commission should have said to the developers that they would hear an application to vacate the lots when the court had finished vacating the covenants.
 

NHPlanner

Forums Administrator & Gallery Moderator
Staff member
Moderator
Messages
9,879
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38
I'm with Linden on this one. The courts need to vacate the covenants before anything is done. Covenants are always something we're on the lookout for, and we require them to be submitted with any application (if there are any) so that these kind of issues can be addressed early on, and if need be, we can direct the applicants toward the proper procedures.
 

Cardinal

Cyburbian
Messages
10,080
Points
34
We will sometimes require covenants on property running in favor of the city, and in such cases, the city must agree to vacate them after the owner(s) have agreed to do so. Assuming this is not the case here, Linden seems to have summed it up very well.
 
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