On December 17, 2010, the California Coastal Commission required the merger of three residentially-zoned legal lots of record into one lot as a condition of approving a permit for construction of a home on one of the lots. The Commission denied applications to build homes on the other two lots. Though all three lots were separately owned, the Commission justified its action on the grounds that the three owners were related in that they were controlled by the same person. The state and federal constitutions prohibit the government from “taking” property by applying regulations in a way that deprives the owner of all economically viable use of the property. The Commission’s action raises significant legal issues as to whether the denial of any development on two lots and their forced merger with the third lot constitutes such an unconstitutional “regulatory taking” of the two lots for which permits were denied.
No court has ruled on the precise legal issues raised by the Commission’s action. Determining what constitutes the “relevant parcel” for takings purposes is likely to be a key issue in whether the Commission’s action constitutes an unconstitutional taking. California’s Subdivision Map Act and cases interpreting it would suggest that the two lots on which development was prohibited should be treated as separate parcels for purposes of takings analysis. However, the Commission treated the three parcels collectively as the relevant parcel and concluded that, even though it prohibited development on two lots, its action was constitutional because it allowed development on the third.
At the Commission’s March 10, 2011 meeting, a Commission attorney outlined his legal theory for the constitutionality of the Commission’s action denying development on and forcing merger of lots in separate ownership. Under his analysis, a key factor affecting whether multiple lots can be treated as a single lot for takings purposes is whether there is “unity of ownership” of the lots. Relying on judicial precedent largely outside the takings context, the attorney contended that multiple lots with separate owners can have “unity of ownership” if there is a close relationship between the owners. He identified several factors affecting whether the relationship among different owners leads to “unity of ownership” of lots for takings purposes, including the degree of control of the separate owners over the property, the timing of the transfer from common to separate ownership, other events occurring near the time of transfer, to whom the common owner transferred the property, and the terms of the transfer.
With its novel “unity of ownership” theory, the Commission appears to be seeking to expand its authority to limit coastal development by prohibiting development on and forcing merger of surrounding lots where the Commission can establish a sufficient relationship between the applicant and owners of surrounding parcels. If this amorphous legal standard survives judicial scrutiny, it will create considerable uncertainty for related owners of contiguous property both in and out of the coastal zone. Under this theory, an application for a development permit by one such owner could result in the forced merger of and permanent denial of development rights on a nearby lot in separate but related ownership if a public agency determines that the owners are sufficiently related and that other circumstances exist to establish “unity of ownership” of the lots.
For more information on this or related topics,
contact David C. Sweigert at (831) 373-1241.
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