Tahoe landowners eye high-court case

Reno Gazette-Journal
Tuesday February 27th, 2001

Lake Tahoe homeowners are closely watching a U.S. Supreme Court land-use case in Rhode Island for help in taking their similar dispute to the highest court, a lawyer said Monday.

On Monday, the high court heard arguments in the Rhode Island case, in which developer Anthony Palazzolo sought state approval to fill in 18 coastal wetland acres in Westerly, R.I. He was turned down each time, and in 1988 he sued for about $3.1 million he says he would have earned by building 74 houses on the land.

“I’m optimistic that the landowner will prevail in this case,” said Larry Hoffman, attorney the Tahoe Sierra Preservation Council, which has filed a petition requesting the U.S. Supreme Court to rule on its 17-year-old lawsuit.

Hoffman said that at least five Supreme Court justices have demonstrated support for landowners’ rights.

On Monday, Palazzolo’s lawyer argued that the landowner had been deprived unjustly of control of his property. “Mr. Palazzolo can make no use whatsoever of any of his wetland,” his lawyer, James Burling, told the justices.

The Constitution’s Fifth Amendment bars the government from taking property without fair payment. In 1992, the justices bolstered property owners’ right to payment when government regulations strip their land of economic value.

The issue in the case is similar to the debate surrounding to a Tahoe City legal action. Last month, the Tahoe Sierra Preservation Council filed a petition requesting the U.S. Supreme Court to rule on its 17-year-old lawsuit, which alleges that regulations imposed by the Tahoe Regional Planning Agency illegally robbed its clients of their property rights.

The property group contends a series of regulations imposed by TRPA in the early 1980s precluded any economic use of single-family lots owned by 449 people without compensation. Landowners seek some $27 million in damages against the bistate agency established by Congress in 1969 to protect Lake Tahoe.

Hoffman said he expects the high court to decide whether to hear the Tahoe case by this summer. Hoffman said the high court has agreed to look at one major land-use case in each of the last several years. He said he hopes the justices will agree to examine the Tahoe case in its next term.

In a convoluted argument session on Monday, the justices considered several questions in the Rhode Island case:

o Was Palazzolo’s case ready to be heard by a court, since he had never sought permission to build the 74-lot subdivision that was the focus of his lawsuit?

o In deciding whether government limits on filling in wetlands harmed Palazzolo economically, should courts look only at the 18 acres of wetland or the full piece of land, which includes a higher-ground area on which a house could be built?

o Did he lose his right to sue since the limits on filling wetlands predated his acquisition of the property in 1978?

Burling contended Palazzolo could sue because a prior owner of the land had the right to reclaim the wetland. Justice David H. Souter expressed doubts. “If rights to land use pass from owner to owner, … how far back does the chain go?” he asked. “It seems there is no logical stopping place until you get to Roger Williams and the 17th-century settlement” of Rhode Island.

But Justice Sandra Day O’Connor wondered about a “poor little old widow woman” who cannot develop her land and sells it to a new owner who challenges the land-use regulation. “What’s the matter with that?” she asked.

State Attorney General Sheldon Whitehouse contended “there is value in this property” because a home could be built on the higher-ground area of the land.

Palazzolo had sought to build a beach club on the wetland and had filed an earlier application to fill in the land without specifying how the land would be used.

“Do you know any zoning authority in the United States that would allow a major filling without knowing what would be constructed on it?” Justice Anthony M. Kennedy asked the man’s lawyer. Later, however, Kennedy told Whitehouse that at some point the state had an obligation “to come forward and say what it will allow.”

The Rhode Island Supreme Court ruled against Palazzolo, saying his claim was not ready to be heard by a court because he never sought permission to build the 74-home development.

The court also said he had no “reasonable investment-backed expectation” because the regulations were in place before he acquired the property.

The case is being closely watched by organizations on both sides of the property-rights debate. Among those supporting Palazzo are Defenders of Property Rights, the National Association of Home Builders and the American Farm Bureau Federation.

Supporters of Rhode Island include the National Wildlife Federation, the National Conference of State Legislatures and 18 states.

The case is Palazzolo v. Rhode Island, 99-2047.

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