Regulatory Takings

The Facts

* Article I, Section 17, of the Texas Constitution states, “No person’s property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made, unless by the consent of such person.”

* The Texas Real Private Property Rights Preservation Act does not apply this constitutional protection to municipal actions—like zoning—that result in a reduction of property value, i.e., a taking. Section 2007.003(a) exempts the actions of municipalities from the provisions of the Act.

* The Texas Real Private Property Rights Preservation Act, in Section 2007.002, excludes from the compensation requirement any government action that reduces the market value of private property up to 25%. 

* Texas case law also makes it very difficult for property owners to receive compensation for regulatory takings. The Texas Supreme Court has stated that property owners do not acquire a constitutionally protected vested right in property uses.

* Dallas opted to re-zone around Ross Avenue to increase the number of luxury condominiums and improve the aesthetic beauty of its eastern gateway to downtown. The practical effect was to prevent many of the property owners already working on Ross from continuing to operate their businesses. One operator was allowed to continue operating his auto body shop, but at a cost of close to $100,000 in legal fees and property modifications. 

Recommendations

* The Texas Real Private Property Rights Preservation Act should be amended to apply to municipalities. 

* The numerical threshold of what qualifies as a taking under the Act—a 25% reduction of the market value of the affected private real property—is an arbitrary number that should be reduced or eliminated.

* Condemnors should have the ability to issue waivers as an alternative to financial compensation. Those waivers should specifically mention which property rights are being reinstated per the waiver. Doing so will allow the waiver to “run with the land” for future owners, as well as prevent municipalities from spending more.