The First District Court of Appeal has rejected a property owner’s claim that an Alameda County ballot measure rendered any application for development futile and, therefore, effected an unconstitutional taking.

The property owner has not submitted a development application to the county since Alameda County voters approved Measure D in November 2000, the court noted. And without the county’s “elucidation of the precise extent of the regulation,” the First District ruled, “a court simply cannot decide whether Measure D has effected a regulatory taking.”

Measure D was a complex initiative backed by the Sierra Club. It established urban growth boundaries in portions of the county and imposed a number of restrictions to protect agricultural land and open space (see CP&DR December 2000, October 2000).

San Leandro Rock owns 58 acres off Lake Chabot Road where the company operated a quarry for almost a century until 1986, when a use permit expired. During this litigation, company co-owner Robert E. Lee filed a declaration stating that the county told him the property, although zoned agricultural, would be suitable for a residential subdivision, and Lee apparently explored the possibility with developers during the 1990s. In 1994, the county approved a conditional use permit for a golf driving range on the property.

Measure D rezoned the property from agricultural to resource management, a designation that permits agriculture and grazing, recreational and environmental uses, certain quarries, and very low-density residential development. Only voters may change the land use designation.

In November 2002, San Leandro Rock filed an inverse condemnation complaint arguing that Measure D constituted a taking under the federal and state constitutions. The property owner argued that it was excused from the usual requirement of having to file a development application because Measure D made clear that any application would be futile.

Alameda County Superior Court Judge Steven Brick rejected the county’s motion for summary judgment. Judge Brick ruled in March 2005 that the county had not disproved San Leandro Rock’s contentions that none of the permitted uses of the property was viable, that no land use agency could permit any economically viable uses, and that all permissible uses were known.

The county appealed, and the First District, Division Five, disagreed with the lower court. The First District panel pointed to its own decision in Shea Homes Limited Partnership v. County of Alameda, (2003) 110 Cal.App.4th 1246 (see CP&DR Legal Digest, September 2003), in which the court ruled that a property owner’s “as applied” challenge to Measure D was not ripe for a judicial decision because the property owner had not submitted a development application. The three-judge appellate panel directed Brick to defend his decision.

Brick responded that the Shea Homes decision did not apply because it was undisputed in the record that the only economically viable use of San Leandro Rock’s property was a residential subdivision, and because the normal application process “cannot result in any variance or exemption from the strict limitations of Measure D.”

The appellate court, however, was not persuaded by the record or by Brick’s reasoning.

“[U]nder both federal and California law, before a plaintiff may establish a regulatory taking, it must first demonstrate that it has received a final decision from the land use authority regarding application of the challenged land use regulation to its property,” Justice Linda Gemello wrote for the court.

Federal and state law does provide a “futility exception,” though, and it was the basis for San Leandro Rock’s lawsuit. The company argued that Measure D left the county without discretion to permit any economically viable use of the property — an argument the First District rejected, citing numerous cases, including Milagra Ridge Partners, Ltd. v. City of Pacifica, (1998) 62 Cal.App.4th 108 (see CP&DR Legal Digest, April 1998).

“In Milagra Ridge, this Division stated that ‘the futility exception … relieves a developer from submitting’ multiple applications when the manner in which the first application was rejected makes it clear that no project will be approved,” Gemello wrote. “San Leandro Rock cannot claim the exception because it has not satisfied the requirement imposed by California case law that it first submit a development proposal.”

“Courts require taking claimants to resort first to administrative procedures to give the implementing agency ‘the opportunity … to decide and explain the reach of the challenged regulation,’” Gemello wrote, citing Palazzolo v. Rhode Island, (2001) 533 U.S. 606 (see CP&DR Legal Digest, August 2001). “Here, the county has not had the opportunity to explain the reach of the challenged regulation, and we are not persuaded that all permissible uses of the property are in fact known. Although Measure D restricts the permissible uses of the property, it allows certain general categories of uses, such as recreational and agricultural uses, as well as others.”

Both Judge Brick and San Leandro Rock relied heavily on Lee’s declaration regarding permissible uses that are economically viable. The First District, however, refused to give such weight to Lee’s statement because doing so would require speculation.

“Because the county had not had ‘the opportunity to exercise its full discretion in considering the landowner’s plans for the property in light of the measure,’ the takings claim was not ripe,” Gemello wrote, again citing Palazzolo.

The Case:
County of Alameda v. Superior Court, No. A109576, 05 C.D.O.S. 9136, 2005 DJDAR 12439. Filed October 18, 2005.

The Lawyers:
For the county: Richard Winnie, county counsel , (510) 272-6700.
For San Leandro Rock: James Whitaker, (415) 789-9720.