No Taking in Seattle Relocation Ordinance
The Ninth U.S. Circuit Court of Appeals has ruled that Seattle's tenant relocation ordinance does not constitute a taking even though it requires landlords to pay a portion of moving expenses for low-income residents.
The court noted that the plaintiffs had stipulated that ordinance neither "physically invades their property, nor denies them all economically viable use of their property."
The three-judge panel criticized the plaintiffs, a group of landlords, for failing to produce necessary economic evidence to support their claims. In an opinion by Judge Melvin Brunetti, the court said: "We have been forced to uphold Seattle's relocation assistance ordinance in large part because of the way plaintiffs have chosen to litigate this case. We do not uphold the ordinance because we find it a wise solution to a difficult problem."
Brunetti was joined in his opinion by U.S. District Court Judge Spencer M. Williams, who was sitting by assignment. Ninth Circuit Judge Diarmuid F. O'Scannlain dissented on the taking questions.
The ordinance was adopted in 1990 under the terms of the state's growth management act. Known as the Tenant Relocation Assistance Ordinance, or TRAO, it required landlords to pay $1,000 and the city to pay another $1,000 for relocation costs of low-income tenants displaced by various gentrification activities. Those figures were based on expenses for such things as moving, deposits on new units, and increased rents for the first year. No one spoke against the ordinance when the city council held a public hearing in June of 1990.
Chief Presiding Judge Barbara J. Rothstein of the federal district court had granted Seattle's motion for summary judgment in the matter, while rejecting the plaintiffs' request for a similar ruling. The court found that TRAO was reasonably related to a legitimate state interest, and also rejected the plaintiffs' substantive due process claim.
The appeal looked at the denial of the takings claim and the lower court's discovery orders compelling the plaintiffs to produce financial documents, and the sanctions that followed after they failed to produce them.
The appellate panel upheld Judge Rothstein's decision. Judge Brunetti's opinion based its regulatory taking analysis on Agins v. City of Tiburon, 447 U.S. 255 (1980), where the court "must engage in an ad-hoc, factual inquiry to determine whether the governmental regulation goes too far." The court rejected the landlords' request that its taking analysis be based on Dolan v. City of Tigard, 512 U.S. 374 (1994), and Pollen v. California Coastal Commission, 483 U.S. 825 (1987).
The court found that by refusing to share economic data about its property before and after enactment of TRAO, they had failed to show the type of "extreme circumstances" necessary to sustain a regulatory takings claim, citing United States v. Riverside Bayview Homes Inc., 474 U.S. 121, 126 (1985).
"Plaintiffs have not met their burden of providing evidence that the enactment of TRAO effected a taking or harmed them at all," the court concluded. "We find the absence of any evidence of the economic impact of TRAO dispositive."
The court said that it found no support for plaintiff's taking claim based on either the Dolan or Pollen cases. The court applied a three-part test from these two cases: whether government imposition of an exaction is a taking; whether the government has a legitimate purpose in demanding the exaction (the "essential nexus" test); and whether the exaction demand is roughly proportional to the government's legitimate interest (the "rough proportionality" test).
The majority on the panel said the current case wasn't an "as-applied" challenge," so it didn't need to determine TRAO's effect on each parcel of land. "Because in a facial claim we do not analyze the exactions, Dolan's test for when the exaction costs too much does not apply," Judge Brunetti wrote.
The court said that "neither Pollen nor Dolan" look at the question of whether imposing a $1,000 per-tenant fee is a taking. "It is this first step in the analysis that plaintiffs have entirely ignored in litigating this case."
In the dissenting part of his decision, Justice O'Scannlain disagreed with the majority's dismissal of the claims under Pollen and Dolan analyses. He noted that $391 of the $1,000 went toward actual moving costs and utility hookups and deposits. "[T]he landlords' $1,000 share of each payment is assuredly not 'related both in nature and extent to the impact of the proposed development.' Dolan, 512 U.S. at 391," he wrote. "[T]he exactions in this case are impermissible because they are not roughly proportional to the harm caused by the landlords, regardless of the total amount of the exactions."
Finally, Justice O'Scannlain argued that "because the TRAO is not a 'user fee', but rather a device for compelling landlords to bear a public burden, the TRAO cannot pass constitutional muster."
Garneau v. City of Seattle, No. CV-94-00914-BJR, 98 Daily Journal D.A.R. 4562 (issued March 4, 1998).
For Garneau: Eric R. Hultman, (206) 223-0990.
For Seattle: Sandra M. Watson, City Attorney's Office, (206) 684-8200.