Texas Supreme Court Gives, But Decides Not To 'Take'

From the same court that found a taking in Flower Mound (see this Issue, “Texas Takings Victory”), comes another recent decision where the court just couldn’t see fit to pull the trigger on a regulatory taking.

In Sheffield Development Company v. City of Glenn Heights, No. 02-0033 (March 5, 2004), a case involving NAHB-member Gary Sheffield, the Texas Supreme Court was confronted with three major issues: (1) whether a development moratorium imposed by the City of Glenn Heights amounted to an unconstitutional taking of Sheffield’s property; (2) whether a downzoning of Sheffield’s property amounted to an unconstitutional taking; and (3) whether Sheffield’s claim that his property rights had vested during a lapse in the moratorium was “ripe” for review.

As part of his due diligence, Sheffield had made an inquiry with the City of Glenn Heights about the zoning prospects for a piece of property that he wished to purchase for development as a residential subdivision. After gaining assurances from the City that the existing zoning would remain in place, Sheffield purchased the property. What he didn't know is that the City had secretly begun proceedings to downzone his property. Three days after Sheffield closed on the property, the City issued a one-month development moratorium, purportedly for the purposes of conducting a land use study. Even though the study was completed within the month, the City kept renewing the moratorium, which lasted over a year, as the City debated the recommendations of the land use study. While seizing upon a short hiatus in the "rolling" moratorium chain, Sheffield filed a subdivision plat, only to have the city manager reject it.  Ultimately, the City downzoned Sheffield's property, frustrating the purposes of his intended development project.

Sheffield sued, raising regulatory takings claims. He won in both the Texas trial and appellate courts. But the Texas Supreme Court, in a ruling issued March 5, 2004, found the development moratorium legal, holding that Glenn Heights had a "legitimate government purpose" for imposing the moratorium. 

Interestingly, the Court acknowledged the somewhat curious delay in the City's actions and the possible improper activity by at least one city council member. In a classic jurisprudential "give-and-take," the Court agreed that not all development moratoria are by implication legal and that it could easily imagine circumstances where delay, which is aimed more at one person, or is more protracted with less justification, is indicative of a taking. But, in rejecting Sheffield's claims that the subject moratorium too severely restricted his economic use and enjoyment of the property, the Court found that Sheffield did not demonstrate the necessary adverse economic impact suffered as a result of the moratorium so as to amount to a taking. 

On the downzoning issue, the Court, while again recognizing the City's possible misconduct, found nevertheless that Glenn Heights through its zoning powers was rightfully furthering a legitimate government purpose. Even though the impact of this rezoning was "unquestionably severe," the Court could not see its way to find an unconstitutional taking. On the positive side, the Texas Supreme Court did agree with Sheffield that his claim of vested property rights is at least ripe for court review. The Texas Supreme Court threw that issue back to a trial court for a determination as to whether Sheffield's development rights were fixed at the time of the subdivision plat filing (which occurred during a brief lapse in the moratorium). If Sheffield can prevail on that issue, he would at least be able to develop his property under the original zoning scheme. However, that still doesn’t make him whole for the several years that his property was idled during litigation. 

NAHB submitted a brief in support of Sheffield in this case and continues to monitor and litigate takings cases nationwide. [ return to top ]