Windfalls, wipeouts, givings, and takings in dramatic redevelopment projects: bargaining for better zoning on density, views, and public access

Abstract:

Large-scale redevelopment projects such as Boston's "Big Dig" bestow numerous public benefits-often without charge-to nearby property owners. In the case of the Big Dig, these benefits include twenty-seven acres of newly created parkland, where once an elevated freeway stood. Beyond the immediate and obvious beneficiaries are nearby landowners seeking "better zoning" that might include a relaxation of maximum height or floor area ratios to enjoy the new view. This Article explores the often hidden impact of the nearby landowners' means of accomplishing their desired result: bargaining with municipalities for private, derivative benefits. The Article compares legislative and judicial responses to land use bargaining in California and Massachusetts, states with dramatically different approaches to land use planning. The Article concludes that bargaining in the absence of a guiding land use plan-the Massachusetts "model"-results in a chaotic land use policy and unpredictable development.

INTRODUCTION

Consider, for example, the cylindrical office towers One and Two International Place, built on the edge of Boston's financial district in the late 1980s. Until the spring of 2004, these structures stood within forty feet of the elevated highway. The offices of several of Boston's most prominent firms-at least those situated on floors six through forty-six-overlooked traffic so dense and continuous that the Central Artery was labeled as "one of the most congested highways in the United States."3 Occupants below floor six had views of rusting steel beams and support pylons for the elevated highway.

Today, however, all of these office floors overlook what will shortly become a public park, greenway, botanical garden, and open space festooned with public art.4 The noise and visual assault of the elevated highway is, literally, out of mincl and sight, having been "depressed" fifty to seventy feet beneath its former location.5 This seemingly magical transformation from blight to beauty has granted an enormous public benefit to the owners and tenants of One and Two International Place, as well as those of hundreds of similarly situated properties.

This type of "giving" has been the focus of several excellent articles over the past thirty years, spurred by Professor Donald Ragman's work, Windfalls for Wipeouts: Land Value Capture and Compensation.6 More recent articles have sought to analogize "givings" with regulatory takings.7 The argument made by givings advocates is that if a court can order compensation due when it concludes that a regulatory taking has occurred, the same fact pattern-only in reverse-should support an order requiring the beneficiary of a "giving" to pay the government for the benefits bestowed upon it. Simply put, givings theory argues that instead of government compensating the land-owner for that which was taken, the landowner should pay the government for that which was given.

While requiring individual beneficiaries of projects such as the Big Dig to pay for the benefits directly bestowed has some appeal because the reciprocity of advantage is complete,8 we recommend against adoption of this theory. Our principal concern, and that expressed by others before us, is that givings awards likely would lead to increased approvals of regulatory takings claims; such an outcome could easily upset the delicate balance currently preserved by the absence of anything beyond basic ad hoc factual inquiries for each and every takings claim.9

And while we decline to advocate for the adoption of formalized givings jurisprudence for projects such as the Big Dig, we believe a derivative issue is of concern: the temptation to bargain away local land use controls in proximity to the newly created public benefit.

The bargaining away is tantamount to a giving, but more subtle and more destructive to the basic tenets of land use planning.10 Whereas an overt giving such as the creation of twenty-seven acres of public open space across from an office building is a transparent gift, the beneficiaries of this gift are not limited to immediate neighbors. Indeed, while the owners and tenants of One and Two International Place clearly are beneficiaries, perhaps they are merely incidental beneficiaries. Perhaps instead, the residents of the city of Boston and the Commonwealth of Massachusetts are the true winners in measuring benefit.

A different conclusion results where subsequent to the "public" giving, incremental petitions for rezoning or other private land use entitlements occur within proximity to the public works project. For example, only time will tell how many property owners that could have a view of the new greenway and public parks but for a zoning change will now petition the City Council for zoning relief.

Our concern for the derivative impacts of projects such as the Big Dig is particularly acute in non-plan states, such as Massachusetts, which do not require any rational connection between planning and land use controls.11 For example, the Massachusetts Supreme Judicial Court (SJC) recently approved a town's decision to rezone land for an energy facility where the rezoning was contingent upon the payment to the town of $8 million.12 Using this logic, property owners within feet, blocks, or even greater distances could simply purchase more beneficial zoning.13 There is every indication that property owners are lining up to purchase more attractive zoning in the wake of this 2003 SJC ruling.14

The result can be noticeably different in plan states, which require a level of consistency between a plan and resulting regulatory instruments such as zoning and subdivision control.15 A plan state requires an amendment to the comprehensive plan as a condition precedent to the adoption of the new and beneficial zoning.16 Thus, while the results of bargaining in plan versus non-plan states may be the same-the zoning is changed-the process is very different.17 In a non-plan state, the municipality has sold-bargained-some aspect of its land use controls in exchange for some promise.18 This transaction is completed outside of a plan and has no relationship to a plan.19 In a plan state, however, while the end result may be identical, the process ensures that the bargaining is in accordance and consistent with a plan or planning analysis.20

The result of the bargaining, whether in non-plan states or in plan states, is derivative of the public giving, which in many ways defines land use planning-or lack of it-in the United States. Rather than plan for the derivative uses or demands that would logically follow a public project-for example, gasoline service stations at exits off a state highway system-these needs develop independently and haphazardly following the completion of the project. This predictable outcome, however, need not follow large-scale projects such as the Big Dig; the result can be avoided by careful attention to, and respect for, the integrity of planning and zoning, and the rejection of the sale or bargaining away of land use control, which is an insidious form of givings.

As discussed below, while bargaining may be a basic human behavioral characteristic carried forward from the days of bartering and exchange in the public marketplace, bargaining without a plan against which the legitimacy of the bargain can be measured will lead to chaotic development.21 This simple requirement-having a plan which guides growth, against which decisions regarding land use can be evaluated-is what separates plan states from non-plan states.22 Plan states impose the guidance requirement; non-plan states do not.23

We discuss below the clear distinction between plan and non-plan states using two extreme examples. In California, a true plan state, the courts have consistently ruled that land use ordinances, entitlements, requests, approvals, or the like, when inconsistent with the plan, are void ab initio.24 In Massachusetts, a non-plan state, the courts have regularly ruled that ordinances need not be in accordance with a plan and that, as a legal or practical matter, a plan has 110 meaning.25