In Employment Division, Dept. Of Human Resources of Oregon vs. Smith, 494 U.S. 872 (1990), the United States Supreme Court, in the famous peyote case, held that non-discriminatory laws of general applicability may restrict certain activities associated with the practice of religion without violating the 1st Amendment. In reaction to Smith, Congress enacted the Religious Freedom Restoration Act (RFRA) in 1993. Since the enactment of RFRA claims by religious organizations typically have been based on this federal statute, and not the free exercise clause of the 1st Amendment. RFRA restored the compelling government interest-least restrictive means test that the Supreme Court had employed prior to Smith. The practical effect of RFRA is to make it more difficult for the government to justify laws affecting religion.
In October 1996, the United States Supreme Court agreed to consider the constitutionality of RFRA in the case of Boerne vs. Flores (1996 WL 689630). Arguments in the case were presented to the Court on February 19, 1997, and a final decision by the Court is expected in the near future. If RFRA is found unconstitutional, one can predict that fewer free exercise of religion challenges will be successful. If RFRA is upheld, more successful challenges are likely. The taking claim of the church is not before the Supreme Court in Boerne, but it has been preserved as a legal argument by the church when the matter is decided on remand by the federal district court.
This paper focuses on federal due process-taking principles, not on the 1st Amendment or RFRA. Although most state constitutions expressly prohibit the taking of property for a public use without paying just compensation, and the few states that do not expressly contain this constitutional protection have reached the same result through judicial interpretation, state law taking claims are also beyond the scope of this paper. The focus on federal taking concepts is not serious limitation, however, because state taking cases typically echo the federal taking law. Nevertheless, it should be recognized that the states are empowered to interpret the protections available under state constitutional law independent of federal dictates.
The terminology used by the courts and lawyers can be confusing in the due process-taking area. It is useful to distinguish several types of claims that may be presented by a property owner under the 14th Amendment. One category involves a just compensation taking claim, which is perhaps the most familiar type. In this situation the property owner wants money for the taking--just compensation. A second category is a due process-taking claim that asks for invalidation of the regulation, not compensation. It s a plea by the owner to leave me alone. A final category is an arbitrary and capricious substantive due process claim which also asks for the invalidation of the law. The owner s argument in this situation is that the historic designation does not bear a substantial relation to the public health, safety, or general welfare. This type of claim is essentially one that says government, you don t have a proper purpose and therefore don t have the power to act as you have.
Three types of situations can be identified that implicate a due process-taking claim under the 14th Amendment: 1) A religious organization may want to build or remodel a landmark without having to comply with imposed landmark restrictions; 2) A religious organization may be required to maintain or repair a landmark, expending monies that might otherwise have been devoted to religious activities; and, 3) A religious organization owner may want to demolish a landmark so that the property may be put to a more profitable use, but is prevented or limited in doing so. This last situation, for example, was unsuccessfully litigated by the Church on both a taking and free exercise claim in St. Bartholemew s Church v. City of New York, 728 F.Supp. 958 (S.D.N.Y. 1989), aff d, 914 F.2d 348 (2d Cir. 1990), cert. denied, 499 U.S. 905 (1991). The same type of claim is presently in litigation in the Superior Court in Los Angeles, California. The Catholic Archdiocese wants to demolish St. Vibiana s Cathedral to make way for a $45 million church complex. Its efforts are being thwarted by the requirement that it must comply with the California Environmental Quality Act.
Probably the first historic preservation effort in the United States was to prevent the destruction of Independence Hall, which was then known as the Old State House. In 1816, a group of private individuals convinced the city of Philadelphia to buy the Independence Hall from the state for $70,000. Without this action, Independence Hall undoubtedly would have been destroyed and the property used for other purposes.
The next major preservation effort occurred in the 1850s. Mount Vernon had fallen into a serious state of disrepair, and it appeared likely that the home and surrounding grounds originally owned by George Washington would be sold to private investors. It is not clear what would have then happened, but it is likely that the property would not have been preserved. The state of Virginia and the federal government had refused to buy the property at the asking price of $200,000. Through the determined efforts of Ann Pamela Cunningham, the Mount Vernon Ladies Association purchased the mansion and grounds in 1858 for preservation purposes.
In the 1890s, the federal government was a party to the first preservation-related litigation in the United States. The litigation involved the authority of Congress to establish a national memorial at the Gettysburg battlefield site through the power of condemnation. In United States vs. Gettysburg (160 U.S. 668 (1896)) the United States Supreme Court held that the preservation of the site by Congress served a legitimate public purpose. In doing so, the Supreme Court approved the idea that historic preservation was an activity properly within the power of the federal government: Such a use seems necessarily not only a public use, but one so closely connected with the welfare of the republic itself as to be within the powers granted congress by the constitution for the purpose of protecting and preserving the whole country. By reasonable extension of public purpose concepts, the states have also engaged in historic preservation.
Starting with the 1920s, the planning techniques used to preserve historic landmarks changed dramatically. Local and state governments began to use their regulatory power to achieve this public purpose. Zoning laws were used to protect buildings, districts, and landmarks.
More recently, historic preservation controls have become an overlay on traditional zoning. This is significant because these controls often have their own statutory authorization contained in separate local ordinances. Thus, the legal validity of the controls must be assessed independently from zoning. California, for example, has adopted historic landmark legislation that authorizes the use of a separate ordinance. Cal. Gov t Code 25373, 37361. A more complete study of the history of landmark law may be found in an article The History of Historic Preservation by C. Rose in 33 Stan. L Rev. 473, 479-94 (1981).
New York City s Landmarks Law was enacted to protect historic landmarks and neighborhoods from precipitate decisions of an adverse nature. It is administered through a Landmarks Preservation Commission consisting of 11 Commissioners and a fullÄtime staff. The Commission is responsible for identifying and designating the City's landmarks, which may include properties, buildings, interior spaces, and landscape features. Any improvement or landscape feature 30 years or older "which has a special character or special historical or aesthetic interest or value as part of the development, heritage or cultural characteristics of the city, state or nation" may be designated as a landmark by the Commission.
Pursuant to this law, historic districts may also be designated. When an area is considered to have a special character or a special aesthetic or historical interest, it may be designated as an historic district by the Landmarks Commission. Each historic district represents one or more styles or periods of architecture typical of at least one era from New York City's history.
The Board of Estimate may modify or disapprove the designation, and the owner may seek judicial review of its administrative decision. Once the property is designated, the owner is subjected to certain restrictions designed to preserve the landmark. The owner may not alter, restore, reconstruct, or demolish the building without receiving a permit from the Landmarks Commission. However, ordinary maintenance and repairs are permitted. Upon submission of a permit application by the owner, the proposal is reviewed to determine what effect, if any, the proposed changes will have on the historical and architectural character of the building or, if applicable, the historic district. A public hearing is required. The applicant and the public may comment on any proposal that affects significant protected architectural features and requires a building permit.
If the owner is denied a permit, the law contains a hardship exception that is incorporated into the law as a safety valve to avoid taking issues. It is available only when the owner proves the property is not capable of earning a reasonable return. In such a case, the Landmarks Commission is required to develop a plan to ameliorate the economic hardship to the owner through various options, such as new construction, tax abatements, structural alterations, and sale of the property. If the Landmarks Commission can provide a reasonable rate of return through tax abatements alone, the owner must accept the plan. If the other options are necessary, however, the owner may reject the Landmarks Commission's plan. The city then has the option of either initiating a condemnation proceeding or allowing the owner to proceed with the proposal. Transfer development rights are also available to ameliorate the financial impact of the landmark designation.
The preservation of a single historic building also has been approved as a valid public purpose. The seminal case is the U.S. Supreme Court decision in Penn. Central Transportation Co. vs. City of New York, 438 U.S. 104 (1978), which considered the New York City s 1965 Landmarks Preservation Law that was discussed above.
The taking argument in Penn. Central was that the Landmark Law completely deprived the owner of any gainful use of its air rights above the terminal. The Supreme Court rejected the claim. It reasoned that taking jurisprudence does not divide a single parcel into discrete segments and attempt to determine whether rights in a particular segment have been abrogated. The Court focused on the economic value of the whole-parcel, not on discrete parts, such as the air rights. Interestingly, this whole-parcel approach was a restatement of Justice Brandeis dissent in the Pennsylvania Coal vs. Mahon (260 U.S. 393 (1922)), the first case to recognize regulatory takings. The Supreme Court may have breathed new life into the idea of the conceptual severance of property interests in 1987 when it analyzed the taking issue in terms leasehold interests. First English vs. County of Los Angles, 482 U.S. 304 (1987).
In applying the principles of Penn. Central to other taking situations, the distinguishing features of the case must be understood. The owner in Penn. Central was a secular owner, not a religious organization. In addition, the owner conceded that the station could earn a reasonable rate of return. The Supreme Court rejected the argument that the landmark law was inherently incapable of producing the fair and equitable distribution of benefits and burdens of government action. The Court reasoned that the owners benefitted as citizens of New York and thus received an average reciprocity of advantage. Finally, the issue before the Court was not the proposed demolition of a historic building. Thus, the case provides no certain guidance on this type of problem. V. Religion and Taking Law
First, the character of the government action is considered. Does the action abate a non-compensable nuisance, or does it effect a physical invasion? If the former, the 5th amendment just compensation requirement is not triggered. If the later, compensation is required. The problem for lawyers and planners is that there isn t any clear guidance to confidently assess those landmark regulations that fall between these two extremes. One can say, however, that if the historic designation does not provide some arguable average reciprocity of advantage, the landmark designation is more vulnerable to a successful taking challenge. A basic principle of the taking clause is that it is designed to protect property owners from being subjected to disproportionate burdens that benefit society generally.
Second, the regulation s interference with investment-backed expectations is assessed. Is the loss prospective only or is the owner going to lose irretrievable investments in the project? The latter is more likely to trigger a taking requiring just compensation, whereas the former is less likely. If the property owner has purchased a historic landmark that already has been designated, most courts would presumably find no interference with investment-backed expectations because the purchaser s expectations would not be affected adversely by the designation. An owner who claims a taking of an expectancy rooted in a property right must show that the expectancy is reasonable in order to receive compensation.
One significant difficulty in applying investment-backed expectations to a religious organization is the idea itself. Investment-backed expectations may not be relevant to their purposes or objectives. One federal court of appeals, in rejecting the taking claim of a religious organization that was challenging the New York landmark law, reformulated this consideration: The constitutional question is whether the land use regulation impairs the continued operation of the property in its originally expected use. St. Bartholemew s Church v. City of New York, 728 F.Supp. 958 (S.D.N.Y. 1989), aff d, 914 F.2d 348 (2d Cir. 1990), cert. denied, 499 U.S. 905 (1991).
Finally, the extent of the regulation s effect on the diminution of the property s value is considered. If there is a reasonable residual profitability left, a court is less likely to find a compensable taking. In measuring the degree of an alleged diminution, the courts ordinarily look to the value of the affected property before and after the government action.
It seems awkward to apply the notion of profitability to a religious organization. Diminution in value is usually assessed through a comparable sale test between a willing seller-buyer. This test is not likely to be sensible when applied to a religious organization, especially when there are not adequate sales to support this approach. Is there really a market for a church that has been designated a historic landmark that will help us assess diminution in value? Should some type of replacement value test be used in its place?
In cases of destruction of economic value claimed to be a taking, it has been clear since 1926 (Village of Euclid vs. Ambler Realty Co., 272 U.S. 365) that an owner s inability to maximize profit from the use of land does not trigger a compensable taking under the 5th Amendment. This principle seems equally applicable to religious uses. Moreover, it should be appreciated that the availability of transfer development rights (TDR) reduces the severity of the financial impact to the owner, providing, of course, that the TDR has real economic value. This makes it less likely that a court would find a taking.
In addition to the specific problems of applying Penn. Central to religious organizations, there are several general problems that also should be noted. First, the three identified considerations are vague and malleable. They do not provide lawyers or planners with much by way of concrete guidance. Second, there is no suggestion by the Supreme Court as to the weight that each consideration is to be given. Are they, for example, to be treated as having equal weight?
Permanent physical occupations (PPO): If the government action can be characterized as a PPO, the action is considered a per se taking. In this case, the only issue is measuring just compensation. Loretta vs. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982). I believe there is some potential for making a taking claim on this theory, although I have not seen it developed in the literature or advanced by a litigant in a reported case. More than half the states have legislation authorizing easements for conservation or historic purposes. In such a state, the government action designating the landmark or applying the law to it might be argued to be the constructive taking of a historic easement without compensation.
Destruction of all economic value: If the government action can be characterized as having destroyed all economic value, or perhaps substantially all value, the action is likely to be considered a per se taking. Lucas vs. South Carolina Coastal Council,112 S.Ct. 2886 (1992). The nuisance exception stated in Lucas, which can be used to avoid having to pay for the per se taking, is not likely to be applicable. For the nuisance exception to be applicable, the historic designation would have to be considered a restriction on property inherent in the state s law of property or nuisance law, which in my view is highly unlikely.
A historic landmark designation is vulnerable to successful challenge after Lucas if the building does not have an economically viable use. Consider, for example, a church designated as a historic landmark that was significantly damaged in an earthquake. The religious authorities want to raze the church because it is too expensive to repair it, but the landmark commission wants the church repaired and refuses to permit the razing of the church. This looks like the destruction of all economic value.
Unconstitutional conditions: Exactions that do not advance a substantial government purpose and that are not proportional. This approach would be based on Dolan vs. City of Tigard, 114 S.Ct. 2309 (1994). The Supreme Court seems to be in the process of elevating the protection accorded to property rights, at least in certain contexts: We see no reason why the Takings Clause if the Fifth Amendment, as much a part of the Bill of Rights as the First Amendment or Fourth Amendment, should be relegated to the status of a poor relation in these comparable circumstances.
The property rights of an owner do not and should not vary depending on whether the owner is a religious or secular organization. For purposes of 5th Amendment analysis, a religious organization is not the beneficiary of a special category of property rights. Thus, the property rights of the owner of a church that has been designated as a landmark are fundamentally the same as the property rights of the owner of a commercial building that has been designated a landmark.
Not surprisingly, landmark preservation through regulatory mechanisms has resulted in a great deal of litigation. The overwhelming majority of 5th amendment claims have been unsuccessful. However, the United States Supreme Court has not yet decided a religious landmark taking claim. The Court has decided a number of taking cases that have not involved religious organizations. The general framework that the Court has developed in these cases is insufficient to be helpful in analyzing most historic designation cases involving a religious organization. The challenge is to develop a more constitutionally sensitive approach.
Professor John H. Minan
University of San Diego School of Law