Supreme Court’s Rejection of Ohio Case Paves the Way for Zoning Changes

On March 10, 2003, the United States Supreme Court declined to hear an appeal by the City of Mayfield Heights, Ohio , a decision that should dramatically affect zoning decisions across the state of Ohio.

The dispute began in 1992 when two local developers purchased an undeveloped 22.6 acre parcel of land in the City of Mayfield Heights, Ohio. The parcel is situated in a highly commercial area that borders Interstate 271, but was classified for residential use by the City. The developers filed an action arguing that the residential housing classification unconstitutionally restricted the use of the property. In 1995, the developers filed another action again asking that the residential zoning classification be declared unconstitutional. In addition, they sought to have the parcel rezoned as a local retail and wholesale district, and also alleged that the residential zoning classification denied them an economically viable use of the property without substantially advancing a legitimate interest in the health, safety or welfare of the citizens of Mayfield Heights. The trial court agreed with the developers, and the decision was later upheld by the Ohio Supreme Court.

The developers then filed an action to compel the city to start appropriation proceedings as a result of the city's temporary taking of their property from 1992 until 2002. The issue then became whether the developers had established that a compensable taking of their property had occurred. In such instances, the United States Supreme Court has consistently held that the application of land-use regulations to a particular piece of property is a taking only if: 1) the ordinance does not substantially advance legitimate state interests, or 2) denies an owner of the economically viable use of his land. The city argued that there could be no taking because the challenged residential zoning classification existed at the time the developers acquired the property, and that the city did not further restrict the developer's use of the property.

It was determined that a city's subsequent change or removal of a zoning restriction does not relieve it of its duty to provide compensation for the period during which the taking occurred. The effect of this decision is that the developers became entitled to recover damages for the diminution in value of the use of property during the period of temporary taking. In this instance, the developers purchased essentially un-developable property in 1992 and were ultimately able to build a 148,000 square foot warehouse on the site in 2002, setting the bar for damages quite high. The court ruled that they were entitled to damages accruing since 1995.

While it remains to be seen what impact this decision will ultimately have, it should affect future zoning decisions by municipalities throughout the state and will be used by developers in their attempts to have parcels of property re-zoned to suit their needs.

For more information concerning Municipal Zoning, please contact Joseph P. Fegen: jpfege@climacolaw.com

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