As the Supreme Court of Pennsylvania once put it, "The genius of our democracy springs from the bedrock foundation on which rests the proposition that offices are held by no one whose orders, commands or directives are not subject to review." Winger v. Aires, 89 A.2nd 521, 522 (Pa. 1952).
In City of Monterey v. Del Monte Dunes at Monterey, Ltd., 119 Supreme Court 624 (1999), the United States Supreme Court upheld a jury verdict in favor of the property owner and against the City of Monterey, reaffirming the rights of property owners to obtain money judgments in Civil Rights actions against municipalities and counties in cases involving takings and other violations of property rights. But the U.S. Supreme Court went further. In a unanimous statement of fact written by Justice Kennedy, the Supreme Court telegraphed its extreme displeasure with the City of Monterey's bad faith behavior in treating this property owner. The facts of the underlying case basically turned the Court's stomach, and they just aren't listening to the government anymore in a case like this.
In summary, this case is important because it further strengthened a line of regulatory taking decisions beginning in 1987 with the First Lutheran case, upheld the right to damages for regulatory taking, and identified the limited patience of the present Court with government officials who manipulate facts to accomplish a preferred alternative. Who can forget, for example, the Court's recognition that so called "legislative findings" are actually the product of back room staffers, rather than the officials doing the public voting, when it declared that such "findings" will always support what the regulators did unless they have "a stupid staff".
What happened is this. The site is 37.6 acres of previously zoned developable land in Monterey County abutting the Pacific Ocean at the northern end of the City of Monterey. Prior to its purchase by its present owner, Del Monte Dunes at Monterey, Ltd. (the Developer), Phillips Petroleum had a terminal and oil tank farm on the property, and there were various debris, broken pipes, and oil that had soaked into the soil. So the site was an abandoned, contaminated site that was also covered with trash from its neighbors. Phillips Petroleum also planted non-native iceplant which was taking over and impacting a native plant species called buckwheat. This last fact is important, because it turns out that native buckwheat is the only known habitat for an endangered insect known as the Smith's Blue Butterfly (SBB). Absent human intervention, the iceplant would, over time, totally displace the buckwheat, destroying all SBB habitat on the site.
During extensive environmental reviews of the property, no eggs, larvae or adults of the butterfly species were ever found until 1984; one larvae was located in 1984, and none in 1985. Since the SBB only lives for one week, and can travel a maximum of 200 feet, and must land on a mature, flowering buckwheat plant in order to survive, the chances of the isolated habitat providing any permanent habitat for the species was slim. (Additionally, the chances of natural survival of this species, given its limited life cycle, feeding patterns and transportation methods argues for natural selection.) The issue about the SBB comes up later because on all of the property, the area that would be the most likely area to replant buckwheat and encourage the "unlikely but required" reestablishment of the butterfly is in a natural bowl located in the center of the property.
The property at the time of Developer purchase was zoned multi-family residential for 29 units to the acre, to permit 1,000 homes for the entire parcel. The Developer went through five successive applications with the City Council and the City Planning Commission, the first application requesting 344 condos. The Planning Commission rejected the proposal but advised the owner on the record that they would accept a 264-unit application, which was redrawn, submitted and reviewed carefully with the City planners, and approved by the City planners. That application was rejected by the Planning Commission, however, at which time the Commissioners said that a 224-unit proposal "would be received favorably". Then the owner complied with that requirement, which was turned down. At that point, the owner appealed to the City Council, which remanded the matter to the City Planning Commission with instructions to consider a 190-unit development, which was an additional 15% reduction, both in the number of homes and in ground coverage.
The Developer redesigned the project, resubmitted, and the Planning Commission denied it again; and again it went up on administrative appeal to the City Council, who overruled the Planning Commission and approved the 190-unit development, showing the size and shape of the buildings. But this last approval, which was the fifth review, required all construction to be located on only 5.1 acres of the original 37.6 acres; required construction of 6.7 acres of public and private streets; and required the remainder of the property to be left open space. Especially keep in mind that the area located adjacent to the beach was to be dedicated as public beach, including public access and parking, the sand dunes at the top of the property (farthest from the beach) to hide the homes from motorists on the freeway.
The problem was that the only way the remaining development could meet all of the criteria would be to locate the development in the bowl, which the Developer was willing to do. But that would mean that the buckwheat plants located in the bowl would be destroyed. The only place the City Council would permit construction would be the location of the buckwheat, thereby forcing the property owner into a position of not having any entitlements to build at all. The City Council specifically refused to allow the Developer to shift its development to any of the other parts of the property, because the City had already earmarked the rest for public use or nonuse or acquisition; which meant that there was no place on the entire 37.6 acres on which the Developer could build anything. The wipeout was total. As the Ninth Circuit Court of Appeals would later summarize it, the City progressively denied use of portions of the Dunes until no part remained available for a use inconsistent with leaving the property in its natural state.
This case went to a jury on various claims, including Civil Rights violations, and the jury awarded $1.5 million in damages. The jury verdict was upheld by the Ninth Circuit Court, and the City of Monterey appealed. What is most important to remember about the Del Monte Dunes decision is that the U.S. Supreme Court looked at these facts and wanted to throw up. The one thing that was clear from the questions posed at oral argument was that the Justices were not pleased with the City's decision, and it didn't matter how they felt about the jury trial issue upon which various Justices wrote separate opinions. It came as no surprise when Justice Scalia opened the questioning by hotly criticizing the fact that the City ran the Developer through five difference plans, each successively smaller, before finally turning it down. He specifically referred to the City's conduct as "jerking the Developer around". His comment that, after the third denial one might begin to "smell a rat", was vintage Scalia. Both Chief Justice Renquist and Justice Kennedy, who wrote the final decision, commented on the evident bad faith displayed by the City's actions. Even those justices generally supportive of local government made reference to the bad faith in this case
Recognizing that the case before the Court was a federal civil rights actions (42 U.S.C. Section 1983), and that such actions are akin to tort actions, the majority of the Court concluded that tort actions for damages were entitled to juries, since our common law rights extend from England, and therefore we are entitled to a jury trial for damages in these types of cases as well. The Court also examined the jury determination and concluded that it properly applied the standards for regulatory takings that the Court had been laying down for the prior two decades.
The result of the Del Monte Dunes case is that courts and juries are free to examine the constitutionality of municipal land use regulation. This last point is the key, and it is the one that an honorable planning community should not fear. All the Court is requiring of planners and regulators is that they act fairly and honestly. If development isn't wanted, then that should be said up front, not after considering and rejecting five difference concepts and nineteen difference site plans. If property is coveted for public use as a public park, as a butterfly preserve, or as open space, then it should be purchased, not regulated to death.