TEXAS PRIVATE REAL PROPERTY RIGHTS PRESERVATION ACT GUIDELINES
T
ABLE OF CONTENTS
1. Introduction
1.1. The Private Real Property Rights Preservation Act
1.11. Purpose
1.12. Texas Attorney General Guidelines
1.13. Takings Impact Assessment Requirement
1.2. Takings
1.21. What are takings?
1.22. Property Rights Act Definition of “Taking”
1.23. Incorporated Constitutional Definitions of “Taking”
1.24. “Regulatory Takings” or “Inverse Condemnation” Takings
1.3. Constitutional Regulatory Takings Analysis
1.31. Introduction
1.32. Federal Law
1.33. State Law
2. Applicability
2.1. Governmental Actions Covered and Exempted
2.11. Actions Covered
2.12. Actions Exempted
2.2. TIA Procedures
3. Guide to Promulgating TIAs
3.1. Requirements for Promulgating TIAs
3.2. Guide to Evaluating Proposed Governmental Actions
3.21. Burden Analysis
3.22. Takings Impact Analysis
Endnotes
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1. INTRODUCTION
1.1. The Private Real Property Rights Preservation Act
1.11. Purpose
“The Private Real Property Rights Preservation Act,” Texas Government Code chapter
2007 (the Property Rights Act), represents a basic charter for the protection of private
real property rights in Texas.
1
The Property Rights Act is the Legislature’s
acknowledgment of the importance of protecting private real property interests in
Texas. The purpose of the act is to ensure that certain governmental entities
2
make a
careful evaluation of their actions regarding private real property rights, and that those
entities act according to the letter and spirit of the Property Rights Act. In short, the
Property Rights Act is another instrument to ensure open and responsible government
for Texans.
1.12. Texas Attorney General Guidelines
The Property Rights Act section 2007.041 requires the Texas Attorney General’s Office
to take the following steps:
1) prepare guidelines to assist governmental entities in identifying and evaluating those
governmental actions described in Property Rights Act section 2007.003(a)(1)–(3) that
may result in a taking;
2) file the guidelines with the Secretary of State for publication in the Texas Register in
the manner prescribed by chapter 2002 of the Government Code; and
3) review the guidelines at least annually and revise those guidelines as necessary to
ensure consistency with the actions of the Legislature and the decisions of the United
States Supreme Court and the Texas Supreme Court.
*Please Note: These Property Rights Act guidelines do not represent a formal Attorney General
Opinion and should not be construed as an Opinion of the Texas Attorney General as to whether a
specific governmental action constitutes a taking. The Property Rights Act raises complex and difficult
issues in emerging areas of law, public policy, and government. Should you need more specific advice,
you are encouraged to hire counsel to address your specific concerns. These Guidelines are intended to
provide guidance for governmental entities as they seek to conform their activities to the Property Rights
Act’s requirements.
3
1.13. Takings Impact Assessment Requirement
Some governmental actions taken pursuant to these Property Rights Act guidelines (the
Guidelines) require the governmental entity to promulgate “Takings Impact
Assessments” (TIAs).
TIAs ensure that information regarding the private real property implications of
governmental actions is considered before decisions are made and actions taken.
3
This
information and analysis must be accurate, concise, and legally sound. TIAs must
concentrate on the truly significant real property issues—not merely amass needless
detail and meaningless data. Nevertheless, the public is entitled to more than mere pro
forma analyses by the governmental entities covered by the Property Rights Act. TIAs
serve as the means of assessing the impact on private real property, rather than justifying
decisions already made. The failure of a governmental entity to promulgate a TIA
when one is required may subject that entity to a lawsuit to invalidate the
governmental action.
4
The TIA is a critical mechanism in ensuring that requisite
attention is paid to the impact of a covered governmental action on real property
interests.
1.2. Takings
1.21. Governmental Entities Must Consider Takings
Under the Property Rights Act a governmental entity undertaking a governmental
action must expressly consider or assess whether takings of private real property may
result. Governmental entities need to be aware of the criteria set forth in the Property
Rights Act defining the scope of what actions may constitute a taking.
1.22. Property Rights Act Definition of “Taking”
Property Rights Act section 2007.002(5) defines “taking” as:
(A) a governmental action that affects private real property, in whole or in part or
temporarily or permanently, in a manner that requires the governmental entity
to compensate the private real property owner as provided by the Fifth and
Fourteenth Amendments to the United States Constitution or Section 17 or
19, Article I, Texas Constitution; or
(B) a governmental action that:
(i) affects an owner’s private real property that is the subject of the
governmental action, in whole or in part or temporarily or permanently,
in a manner that restricts or limits the owner’s right to the property that
would otherwise exist in the absence of the governmental action; and
4
(ii) is the producing cause
5
of a reduction of at least 25 percent in the
market value of the affected private real property, determined by
comparing the market value of the property as if the governmental action
is not in effect and the market value of the property determined as if the
governmental action is in effect.
6
This Property Rights Act definition of “taking” incorporates current jurisprudence on
takings under the United States and Texas Constitutions. These definitions are
discussed in greater detail below along with the statutory definition of taking.
1.23. Incorporated Constitutional Definitions of “Taking”
The Fifth Amendment to the United States Constitution (the “Takings Clause”)
provides: “[N]or shall private property be taken for public use, without just
compensation.” The Takings Clause applies to the states by virtue of the Fourteenth
Amendment.
7
Article I, § 17 of the Texas State Constitution provides as follows: “No person’s
property shall be taken, damaged, or destroyed for or applied for public use without
adequate compensation being made, unless by the consent of such person.”
1.24. “Regulatory Takings” or “Inverse Condemnation Takings”
There is usually little question that a taking has occurred when the government
physically seizes or occupies private real property. However, when the government
regulates private real property, when government activities occur on private real
property, or when the government undertakes a physically non-intrusive action that
may have an impact on real property rights, the situation may be less clear. These
Guidelines pertain, for the most part, to these less obvious situations.
8
The Takings Clause “does not bar government from interfering with property rights,
but rather requires compensation ‘in the event of otherwise proper interference
amounting to a taking.’”
9
Condemnation is not prevented by the Takings Clause,
where a government exercises the power of eminent domain to condemn real property
in exchange for adequate compensation. But when a government takes real property
without adequate compensation, it is sometimes called “inverse condemnation” or a
“taking.”
10
Likewise, a physically non-intrusive governmental regulation or action that
affects the value, use, or transfer of real property may constitute a “regulatory taking”
if it “goes too far.”
11
If a governmental action diminishes or destroys a fundamental
real property right—such as the right to possess, exclude others from, or dispose of real
property—it could constitute a “taking.”
12
Similarly, if a governmental action imposes
substantial and significant limitations on real property use, there could be a “taking.”
13
5
Regulatory or governmental actions are sometimes difficult to evaluate for “takings”
because government may properly regulate or limit the use of private real property,
relying on its “police power” authority and responsibility to protect the public health,
safety, and welfare of its citizens. Accordingly, government may abate public
nuisances, terminate illegal activities, and establish building codes, safety standards, or
sanitary requirements without creating a compensatory “taking.” Government may also
limit the use of real property through land use planning, zoning ordinances, setback
requirements, and environmental regulations.
Governmental actions taken specifically for the purposes of protecting public health
and safety may be given broader latitude by courts before they are found to be
“takings.” However, the fact a public health and safety determination is made does
not mean the action is not a taking. Actions that are asserted to be for the protection
of public health and safety should be undertaken only in response to real and substantial
threats to public health and safety, designed to significantly advance the health and
safety purpose. These actions should impose no greater burden than necessary to
achieve the health and safety purpose. Otherwise, the exemptions or exceptions for
these actions may swallow the rules set forth by the Property Rights Act to protect
private real property.
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1.3. Constitutional Regulatory “Takings” Analyses
1.31. Introduction
A governmental action may result in the “taking” of private real property requiring the
payment of compensation if that action denies an owner of the economically viable use
of her land. Deprivation of economic viability may occur through the denial of
development permits, as well as through the application of ordinances or state laws.
15
“[A] plaintiff seeking to challenge a government regulation as an uncompensated taking
of private property may proceed . . . by alleging a ‘physical’ taking, a Lucas-type ‘total
regulatory taking,’ a Penn Central taking, or a land-use exaction violating the standards
set forth in Nollan and Dolan.”
16
Prior to 2005, the perception existed that a regulation that did not “substantially
advance legitimate state interests” could result in a “taking.” The United States
Supreme Court has since rejected that argument in Lingle v. Chevron U.S.A., Inc. The
Court concluded that the “substantially advances” test no longer has a place in “takings”
jurisprudence and observed that “[a]n inquiry of this nature has some logic in the
context of a due process challenge, for a regulation that fails to serve any legitimate
governmental objective may be so arbitrary or irrational that it runs afoul of the Due
Process Clause.”
17
6
Governmental actions requiring exactions of property (e.g., a green space dedication,
payment, or assumption of a contingent liability
18
required for permitting approval)
must meet the “rough proportionality test.” This test requires a governmental entity
to make “some sort of individualized determination that the required dedication is
related both in nature and extent to the project’s anticipated impact, though a precise
mathematical calculation is not required.”
19
The definition of exaction is broad enough
to include a demand that the owner assume a contingent liability.
1.32. Federal Law
The governmental entity must consider whether there is a taking under federal
constitutional law. A proper regulatory taking analysis considers the economic impact
of the regulation, in particular whether the proposed governmental action interferes
with a real property owner’s reasonable investment-backed development expectations.
20
For instance, in determining whether a taking has occurred, a court, among other things,
might weigh the governmental action’s impact on vested development rights against the
government’s interest in taking the action. Defining reasonable investment-backed
expectations is a complex, fact-intensive undertaking.
In Reahard v. Lee County,
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the United States Court of Appeals for the Eleventh Circuit
set forth the following eight-factor list to consider when determining whether a private
real property owner’s investment-backed development expectations have been
negatively impacted and a regulatory taking thereby effected:
1) history of the property (When was it purchased? How much land was
purchased? Where was the land located? What is the nature of title? What
is the composition of the land? How was the land initially used?);
2) history of the development (What was built on the land? Who built it? How
was the land subdivided? Who bought the property? What plats were filed?
What roads were dedicated?);
3) history of zoning and regulation (How and when was the land classified? How
was use proscribed? Were there changes in zoning classification?);
4) how did development change when title passed;
5) present nature and extent of the property;
6) owner’s reasonable expectations under state common law;
7) neighboring landowners’ reasonable expectations under state common law; and
8) diminution of owner’s investment-backed expectations, if any, after passage of
the regulation or the undertaking of a governmental action.
7
A governmental action that prohibits all economically viable or beneficial uses of real
property is a “taking”—unless the governmental entity can demonstrate that laws of
nuisance or other pre-existing limitations on the use of the real property prohibit the
proposed uses, or there is no interest at stake protected or defined by common law.
22
The United States Supreme Court has acknowledged that the Court has never clarified
the “property interest” against which the loss of value is to be measured. The Court
suggested that a real property owner’s “investment-backed development expectations”
as shaped by state property law may provide the answer.
23
Additionally, the United States Supreme Court has held that temporary development
moratoria are not per se “takings” of property under the Takings Clause. The Court
reasoned that “the answer to the abstract question whether a temporary moratorium
effects a taking is neither ‘yes, always’ nor ‘no, never’; the answer depends upon the
particular circumstances of the case.”
24
1.33. State Law
The governmental entity must also consider whether there is a “taking” under state
constitutional law. In cases of non-physical intrusion, Texas courts, on a case-by-case
basis, have employed several general tests to determine whether a compensable
governmental taking has occurred under the provisions of the Texas Constitution.
These general tests include the following:
1) Whether the governmental entity has imposed a burden on private real
property, which creates a disproportionate diminution in economic value or
renders the property wholly useless;
25
2) Whether the governmental action against the owner’s real property interest is
for its own advantage;
26
3) Whether the governmental action constitutes an unreasonable and direct
physical or legal restriction or interference with the owner’s right to use and
enjoy the property;
27
4) Whether the governmental action is a constitutionally cognizable injury that
results in diminished value of a property;
28
5) Whether the governmental action accords with substantive due process
principles through a rational relationship to a legitimate governmental interest;
or
29
6) Whether the ordinance renders the entire property “wholly useless” or
otherwise causes “total destruction” of the entire tract’s economic value.
30
To distinguish a “taking” from a cause of action under tort law (e.g., negligence or
nuisance), contract, or some other law, the Texas Supreme Court has emphasized intent
8
as a factor among the elements comprising a state constitutional taking claim. These
elements include the following:
1) the government intentionally performed certain acts;
2) that resulted in a taking of property; and
3) that taking is for public use.
31
Thus, private economic loss from a contract dispute with the government does not give
rise to a constitutional “taking.” In that case, the government is acting in its capacity
as a contracting party and not in its capacity as a sovereign intending to act upon private
property for a public purpose.
32
In other contexts, Texas courts examine whether the
government knows that its specific act caused identifiable harm or that private property
damage was substantially certain to result from the act.
33
2. A
PPLICABILITY OF THE PROPERTY RIGHTS ACT
2.1. Governmental Actions Covered and Exempted
2.11. Actions Covered
Property Rights Act section 2007.003(a) provides that the Property Rights Act applies
only to the following governmental actions:
1) the adoption or issuance of an ordinance, rule, regulatory requirement,
resolution, policy, guideline, or similar measure;
2) an action that imposes a physical invasion
34
or requires a dedication or exaction
of private real property;
3) an action by a municipality that has an effect in the extraterritorial jurisdiction
of the municipality,
35
excluding annexation, and that enacts or enforces an
ordinance, rule, regulation, or plan that does not uniformly
36
impose identical
requirements or restrictions on the entire extraterritorial jurisdiction of the
municipality; and
4) enforcement of a governmental action listed in Subdivisions (1) through (3),
whether the enforcement of the governmental action is accomplished through
the use of permitting, citations, orders, judicial or quasi-judicial proceedings, or
other similar means.
Of these actions governed by the Property Rights Act, governmental entities are
required to prepare a TIA only for those listed in subsections (1)–(3) above.
37
9
2.12. Actions Exempted
Pursuant to Property Rights Act section 2007.003(b), the following actions are explicitly
exempted from Property Rights Act coverage:
1) an action by a municipality except as provided by subsection (a)(3);
2) a lawful forfeiture or seizure of contraband as defined by Article 59.01, Code
of Criminal Procedure;
3) a lawful seizure of property as evidence of a crime or violation of law;
4) an action, including an action of a political subdivision, that is reasonably taken
to fulfill an obligation mandated by federal law, or an action of a political
subdivision that is reasonably taken to fulfill an obligation mandated by state
law;
5) the discontinuance or modification of a program or regulation that provides a
unilateral expectation that does not rise to the level of a recognized interest in
private real property;
6) an action taken to prohibit or restrict a condition or use of private real property
if the governmental entity proves that the condition or use constitutes a public
or private nuisance as defined by background principles of nuisance and
property law of this state;
7) an action taken out of a reasonable, good faith belief that the action is necessary
to prevent a grave and immediate threat to life or property;
8) a formal exercise of the power of eminent domain;
9) an action taken under a state mandate to prevent waste of oil and gas, protect
correlative rights of owners of interests in oil or gas, or prevent pollution
related to oil and gas activities;
10) a rule or proclamation adopted for the purpose of regulating water safety,
hunting, fishing, or control of nonindigenous or exotic aquatic resources;
11) an action taken by a political subdivision:
(A) to regulate construction in an area designated under law as a floodplain;
(B) to regulate on-site sewage facilities;
(C) under the political subdivision’s statutory authority to prevent waste or
protect rights of owners of interest in groundwater; or
(D) to prevent subsidence;
10
12) the appraisal of property for purposes of ad valorem taxation;
13) an action that:
(A) is taken in response to a real and substantial threat to public health and
safety;
(B) is designed to significantly advance the health and safety purpose; and
(C) does not impose a greater burden than is necessary to achieve the health
and safety purpose; or
14) an action or rulemaking undertaken by the Public Utility Commission of Texas
to order or require the location or placement of telecommunications equipment
owned by another party on the premises of a certificated local exchange
company.
When a government defendant merely enforces another governmental action, the TIA
requirement does not apply. Id. § 2007.043(a); see id. § 2007.003(a)(4).
38
The Property Rights Act section 2007.003(c) contains further exclusions for
governmental actions enforcing or implementing certain statutes, rules, or agency
policies. For example, the Property Rights Act does not authorize suits to determine
whether a taking is caused by the enforcement or implementation of a statute,
ordinance, order, rule, regulation, requirement, resolution, policy, guideline, or similar
measure that was in effect September 1, 1995 and that prevents the pollution of a
reservoir or an aquifer designated as a sole source aquifer under the federal Safe
Drinking Water Act (42 U.S.C. § 300h–3(e)).
The Property Rights Act section 2007.003(e) further excludes statutory taking suits
concerning the enforcement or implementation of the Open Beaches Act,
Subchapter B, chapter 61, Natural Resources Code, as it existed on September 1, 1995,
or to the enforcement or implementation of any rule or similar measure that was
adopted under that subchapter and was in existence on September 1, 1995.
39
2.2. TIA Procedures
Governmental Entity Specific Guidelines. In order to ensure that the Property
Rights Act is not read either too broadly or too narrowly and to ensure the intent of the
Texas Legislature behind the statute, each governmental entity covered by the Property
Rights Act should promulgate a set of procedures specific to the governmental entity
(“Governmental Entity-Specific TIA Procedures”) that defines which of its activities,
programs, or policy, rule, or regulation promulgation activities trigger the need for a
TIA.
40
Such promulgation of the Governmental Entity-Specific TIA Procedures
should be completed as soon as possible after the publication of these Guidelines.
11
However, the promulgation of these TIA procedures must not delay conformance with
the Property Rights Act or these Guidelines.
Establish Categorical Determinations. In promulgating the Governmental Entity-
Specific TIA Procedures, the entity should establish 1) “Categorical Determination”
categories that indicate that there are no private real property rights affected by certain
types of proposed governmental actions, as well as 2) a quick, efficient, and effective
mechanism or approach to making “No Private Real Property Impacts
Determinations” (“No Impact Determinations”) associated with the proposed
governmental action.
Categorical Determinations that no private real property interests are affected by the
proposed governmental action would obviate the need for any further compliance with
the Property Rights Act. Without limitations the following are examples of the types
of activities that might fall into such a Categorical Determination category: 1) student
policies established by state institutions of higher education; and 2) professional
qualification requirements for licensed or permitted professionals.
No Impact Determinations obviate the need for any further compliance with the
Property Rights Act once it is determined that there are no private real property
interests impacted by a specific governmental action. In such cases, there would be no
established Categorical Determination category in which the proposed governmental
action fits; yet, after consideration and preliminary analysis of the specific proposed
governmental action, the governmental entity would be satisfied that there would be no
impact to private real property interests.
Until and unless a covered governmental entity develops Governmental Entity-Specific
TIA Procedures, it will have to determine on an ad hoc basis whether any private real
property interests are impacted (including to what extent) by its proposed actions.
Furthermore, because the TIA necessarily depends on the type of governmental action
being proposed and the specific nature of the impacts on specific private real property,
the governmental entity promulgating a TIA has discretion (within the parameters of
Property Rights Act section 2007.043(b)) to determine the precise extent and form of
the assessment, on a case-by-case basis.
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3. GUIDE TO PROMULGATING TIAS
3.1. Requirements for Promulgating TIAs
Under the Property Rights Act section 2007.043(c), a TIA is public information. The
Property Rights Act section 2007.043(b) requires that the TIA prepared by covered
government entities contain the following information:
1) describe the specific purpose of the proposed action and identify:
(A) whether and how the proposed action substantially advances its stated
purpose; and
(B) the burdens imposed on private real property and the benefits to society
resulting from the proposed use of private real property;
2) determine whether engaging in the proposed governmental action will
constitute a “taking;” and
3) describe reasonable alternative actions that could accomplish the specified
purpose and compare, evaluate, and explain
(A) how an alternative action would further the specified purpose; and
(B) whether an alternative action would constitute a “taking.”
3.2. Guide to Evaluating Proposed Governmental Actions
3.21. Burden Analysis.
Governmental entities covered by the Property Rights Act should use the following
guide in reviewing the potential impact of a proposed governmental action covered by
the Property Rights Act. While this guide may provide a framework for evaluating the
impact on private real property that a proposed governmental action may have,
generally, “takings” questions normally arise in the context of specific affected real
property. This guide for evaluating governmental actions covered by the Property
Rights Act is a tool that a governmental entity should aggressively use to safeguard
private real property owners.
Question 1: Is the Governmental Entity undertaking the proposed action a
governmental entity covered by the Property Rights Act (i.e., is it a “Covered
Governmental Entity”)? See Property Rights Act § 2007.002(1).
• If the answer is “No” → no further compliance with the Property Rights Act is
necessary.
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• If the answer is “Yes,” continue to Question 2.
↓
Question 2: Is the proposed action to be undertaken by the covered governmental
entity an action covered by the Property Rights Act (i.e., a “Covered Governmental
Action”)? See section 2.1 of these Guidelines; and Governmental Entity-Specific TIA
Procedures for “Categorical Determinations” as developed by the respective Covered
Governmental Entities.
In addition, governmental entities may develop categorical determinations and specific
procedures for developing TIAs.
41
See, supra, section 2.2.
• If the answer is “No” → no further compliance with the Property Rights Act is
necessary.
• If the answer is “Yes,” continue to Question 3.
↓
Question 3: Does the covered governmental action result in a burden on “private real
property” as that term is defined under Property Rights Act section 2007.002(4)? This
question may be resolvable by reference to the governmental entity’s preexisting list of
Categorical Determinations.
• If the answer is “No” → a No Impact Determination should be made, and no
further compliance with the Property Rights Act is necessary.
• If the answer is “Yes,” then a TIA is required. Continue with Questions 4-8.
↓
3.22. Takings Impact Analysis.
As explained in section 3.1, the Property Rights Act sets forth explicit elements that
must be evaluated by the governmental entity proposing to undertake an action covered
by the Property Rights Act.
Question 4: What is the specific purpose of the proposed covered governmental
action?
The TIA must clearly show how the proposed governmental action furthers its stated
purpose. Thus, it is important that a governmental entity clearly state the purpose of its
proposed action in the first place, and whether and how the proposed action
substantially advances its stated purpose.
Question 5: How does the proposed covered governmental action burden private
real property?
42
Question 6: How does the proposed covered governmental action benefit society?
14
Question 7: Does the proposed covered governmental action result in a taking?
Whether a Proposed Covered Governmental Action “burdens,” in the first analysis,
and ultimately results in a taking must be measured against all three prongs of the
takings analysis (statutory, federal constitutional, and state constitutional) outlined in
sections 1.2–1.3 of these Guidelines. In addition, the proposed governmental action
must be a final and authoritative determination.
43
The Covered Governmental Entity
proposing to engage in a Covered Governmental Action should consider the following
subquestions:
1) Does the proposed covered governmental action result indirectly or directly in
a permanent or temporary physical occupation of private real property?
Regulation or action resulting in a permanent or temporary physical occupation
of all or a portion of private real property will generally constitute a “taking.”
For example, a regulation that required landlords to allow the installation of
cable television boxes in their apartments was found to constitute a “taking.”
44
2) Does the proposed covered governmental action require a property owner to
dedicate a portion of private real property or to grant an easement?
Carefully review all governmental actions requiring the dedication of property
or grant of an easement. The dedication of real property must be reasonably
and specifically designed to prevent or compensate for adverse impacts of the
proposed development. Likewise, the magnitude of the burden placed on the
proposed development should be reasonably related to the adverse impacts
created by the development. A court will also consider whether the action in
question substantially advances a legitimate state interest.
For example, the United States Supreme Court determined in Nollan that
compelling an owner of waterfront property to grant a public easement across
his property that does not substantially advance the public’s interest in beach
access, constitutes a “taking.”
45
Likewise, the Court held that compelling a
property owner to give public access to a green way, as opposed to keeping it
private, did not substantially advance protection of a floodplain, and was a
“taking.”
46
3) Does the proposed covered governmental action deprive the owner of all
economically viable uses of the property?
If a governmental action prohibits or somehow denies all economically viable
or beneficial uses of the land, it will likely constitute a “taking.” In this
situation, however, the governmental entity should consider whether it can
15
demonstrate that the proposed uses are prohibited by the laws of nuisance or
other preexisting limitations on the use of the property.
47
It may be important to analyze the action’s impact on the property as a whole,
and not just the impact on a portion of the property. It is also important to
assess whether there is any profitable use of the remaining property still
available.
48
The remaining use does not necessarily have to be the owner’s
planned use, a prior use, or the highest and best use of the property. One
factor in this assessment is the degree to which the governmental action
interferes with a property owner’s reasonable investment-backed development
expectations.
Carefully review governmental actions requiring that all of a particular parcel
of land be left substantially in its natural state. A prohibition of all
economically viable uses of the property is vulnerable to a “takings” challenge.
In some situations, however, there may be pre-existing limitations on the use
of property that could insulate the government from “takings” liability.
4) Does the proposed covered governmental action have a significant impact on
the landowner’s economic interest?
Carefully review governmental actions that have a significant impact on the
owner’s economic interest. Courts will often compare the value of property
before and after the impact of the challenged action. Although a reduction in
property value alone may not be a “taking,” a severe reduction in property value
often indicates a reduction or elimination of reasonably profitable uses.
Another economic factor courts will consider is the degree to which the
challenged action impacts any development rights of the owner.
Two factors are considered to determine whether a governmental action has
unreasonably interfered with a property owner’s right to use and enjoy
property. The first factor compares the value that has been taken with the
remaining value in the property, without considering any anticipated gains or
future profits.
49
The second factor examines investment-backed expectations,
including knowledge of existing regulations.
50
“Historical uses of the property
are critically important when determining the reasonable investment-backed
expectations of the landowner.”
51
When access to a property may be impaired as the result of a governmental
action, compensation is owed only when access is materially and substantially
impaired.
52
Roadways are for the benefit of the traveling public, and those
doing business along public roadways must assume the risk that future
improvements of the roadway system may divert traffic away from their
16
businesses.
53
Consequently, impairment that results only in increased circuity
of travel is not compensable.
54
In addition, “partial, temporary disruption of
access is not sufficiently ‘material and substantial’ to constitute a compensable
taking.”
55
“The obstruction of streets and highways . . . must be reasonable
and necessary for the public improvement which is being made.”
56
Similarly,
a property owner has no vested right that his premises must be visible from a
public roadway.
57
5) Does the covered governmental action decrease the market value of the
affected private real property by 25 percent or more? Is the affected private
real property the subject of the covered governmental action? See Property
Rights Act § 2007.002(5)(B).
Compensation is not required for every decrease in market value attributable
to governmental action.
58
Historically, courts have only allowed recovery if
the injury is not one suffered by the community in general.
59
“Community
damages are not connected with the landowner’s use and enjoyment of
property and give rise to no compensation.”
60
Whether governmental action
results in community damages is determined by the nature of the alleged injury
rather than the location of the property.
61
6) Does the proposed covered governmental action deny a fundamental attribute
of ownership?
Governmental actions that deny the landowner a fundamental attribute of
ownership–including the right to possess, exclude others and dispose of all or
a portion of the property–are potential “takings.”
In Dolan, the United States Supreme Court held that a taking resulted when a
city required a public easement for recreational purposes where the public
interest asserted was conservation of the flood plain.
62
The Court found that
the city had not established “why a public greenway, as opposed to a private
one, was required in the interest of flood control.”
63
The Court emphasized
that the right to exclude others is “one of the most essential sticks in the bundle
of rights that are commonly characterized as property.”
64
These denials of fundamental attributes may be takings even if the taking was
merely temporary. In Cedar Point Nursery, the United States Supreme Court
held that a regulation granting labor organizations a “right to take access” to an
agricultural employer’s property in order to solicit support for unionization
effected an unconstitutional per se physical taking even though the access was
limited and intermittent.
65
17
The United States Supreme Court has also held that barring the inheritance (an
essential attribute of ownership) of certain interests in land held by individual
members of an Indian tribe constituted a “taking.”
66
Question 8: What are the alternatives to the proposed covered governmental action?
Lastly, the governmental entity must describe reasonable alternative actions to the
proposed governmental action that could accomplish the specified purpose and
compare and evaluate the alternatives. The governmental agency must also evaluate
the “takings” implication of each reasonable alternative to the proposed action pursuant
to the applicable provisions of these Guidelines.
1
Private real property is defined in Property Rights Act § 2007.002(4) to mean “an
interest in real property recognized by common law, including a groundwater or surface
water right of any kind, that is not owned by the federal government, this state, or a
political subdivision of this state.”
2
Property Rights Act § 2007.002(1) defines “governmental entity” as: “(A) a board,
commission, council, department, or other agency in the executive branch of state
government that is created by constitution or statute, including an institution of higher
education as defined by Education Code Section 61.003; or (B) a political subdivision
of this state.”
3
Property Rights Act § 2007.043(a) provides: “A governmental entity shall prepare a
written takings impact assessment of a proposed governmental action described in
Section 2007.003(a)(1) through (3) that complies with the evaluation guidelines
developed by the attorney general under Section 2007.041 before the governmental
entity provides the public notice required under Section 2007.042.”
Property Rights Act § 2007.042 provides: “(a) A political subdivision that proposes to
engage in a governmental action described in Section 2007.003(a)(1) through (3) that
may result in a taking shall provide at least 30 days’ notice of its intent to engage in the
proposed action by providing a reasonably specific description of the proposed action
in a notice published in a newspaper of general circulation published in the county in
which affected private real property is located. If a newspaper of general circulation is
not published in that county, the political subdivision shall publish a notice in a
newspaper of general circulation located in a county adjacent to the county in which
affected private real property is located. The political subdivision shall, at a minimum,
include in the notice a reasonably specific summary of the takings impact assessment
that was prepared as required by this subchapter and the name of the official of the
political subdivision from whom a copy of the full assessment may be obtained. (b) A
state agency that proposes to engage in a governmental action described in Section
18
2007.003(a)(1) or (2) that may result in a taking shall: (1) provide notice in the manner
prescribed by Section 2001.023; and (2) file with the secretary of state for publication
in the Texas Register in the manner prescribed by Chapter 2002 a reasonably specific
summary of the takings impact assessment that was prepared by the agency as required
by this subchapter.”
4
Property Rights Act § 2007.044 provides: “(a) A governmental action requiring a
takings impact assessment is void if an assessment is not prepared. A private real
property owner affected by a governmental action taken without the preparation of a
takings impact assessment as required by this subchapter may bring suit for a declaration
of the invalidity of the governmental action. (b) A suit under this section must be filed
in a district court in the county in which the private real property owner’s affected
property is located. If the affected property is located in more than one county, the
private real property owner may file suit in any county in which the affected property is
located. (c) The court shall award a private real property owner who prevails in a suit
under this section reasonable and necessary attorney’s fees and court costs.”
5
The Texas Supreme Court clarified that “the essential components of [a] producing
cause [are] that (1) the cause must be a substantial cause of the event in issue and (2) it
must be a but-for cause, namely one without which the event would not have occurred.”
Ford Motor Co. v. Ledesma, 242 S.W.3d 32, 46 (Tex. 2007). An element of “producing
cause” is causation in fact which requires that the defendant’s conduct be a substantial
factor in bringing about the plaintiff’s injuries, and that the injuries would not have
occurred without defendant’s conduct. Doe v. Boys Clubs of Greater Dallas, Inc., 907
S.W.2d 472, 481 (Tex. 1995). A “producing cause” need not be foreseeable.
6
Property Rights Act § 2007.002(5)(B)(ii).
7
See Chicago, B. & Q.R. Co. v. City of Chicago, 166 U.S. 226 (1897).
8
The most easily recognized type of taking occurs when the government physically
occupies private property or grants the public the right to do so. Clearly, when the
government seeks to use private property for a public building, a highway, a utility
easement, or some other public purpose, it must compensate the property owner.
Physical invasions of property, as distinguished from physical occupancies, may also
give rise to a taking where the invasions are of a recurring or substantial nature.
Examples of physical invasions include, among others, flooding and water related
intrusions and overflight or aviation easement intrusions. See, e.g., Griggs v. Allegheny
Cty., Pa., 369 U.S. 84 (1962) (recurrent overflights); Tarrant Reg’l Water Dist. v. Gragg, 151
S.W.3d 546 (Tex. 2004) (recurrent flooding); City of Houston v. McFadden, 420 S.W.2d
811 (Tex. App.—Houston [14th Dist.] 1967, writ ref’d n.r.e) (overflights).
9
Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 543 (2005) (quoting First English Evangelical
Lutheran Church v. Cty. of Los Angeles, 482 U.S. 304, 315 (1987)) (emphasis in original).
19
The Court went on to note that “if a government action is found to be impermissible—
for instance because it fails to meet the ‘public use’ requirement or is so arbitrary as to
violate due process—that is the end of the inquiry.” Id.
10
Town of Flower Mound v. Stafford Estates Ltd. P’ship, 135 S.W.3d 620, 646 (Tex. 2004).
11
“The general rule at least is, that while property may be regulated to a certain extent,
if regulation goes too far it will be recognized as a taking.” Pa. Coal Co. v. Mahon, 260
U.S. 393, 415 (1922).
12
Dolan v. City of Tigard, 512 U.S. 374, 386 (1994).
13
Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1025 n.12 (1992).
14
See Property Rights Act § 2007.003(b), exemptions (6), (7), and (13) (set forth infra in
section 2.12 of these Guidelines).
15
Lucas, 505 U.S. at 1019; Dolan, 512 U.S. at 385 n.6.
16
Lingle, 544 U.S. at 548 (referring to Penn Cent. Transp. Co. v. City of New York, 438 U.S.
104 (1978)); see also Nollan v. Cal. Coastal Comm’n, 483 U.S. 825 (1987).
17
Lingle, 544 U.S. at 542. Although the Texas Supreme Court adopted the “substantial
advancement” test, see Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933–35 (Tex. 1998),
the Court has had no opportunity to address whether the test still applies in Texas
“takings” law post-Lingle. See, e.g., Park v. City of San Antonio, 230 S.W.3d 860, 868 n. 6
(Tex. App.—El Paso 2007, pet. denied). At least one state court of appeals has
predicted the Texas Supreme Court will likewise abandon the substantial advancement
test. See 2800 La Frontera No. 1A, Ltd. v. City of Round Rock, No. 03-08-00790-CV, 2010
WL 143418, at *7 (Tex. App.—Austin Jan. 12, 2010, no pet.) (mem. op.).
18
Selinger v. City of McKinney, No. 05-19-00545-CV, 2020 WL 3566722, at *5 (Tex.
App.—Dallas July 1, 2020, no pet.).
19
Dolan, 512 U.S. at 391. The rough-proportionality test, however, has not been
extended beyond the special context of exactions. City of Monterey v. Del Monte Dunes at
Monterey, Ltd., 526 U.S. 687, 702 (1999).
20
Penn Central, 438 U.S. at 124.
21
Reahard, 968 F.2d 1131 (11th Cir. 1992), supplemented, 978 F.2d 1212, rev’d, 30 F.3d
1412 (1994).
22
Cedar Point Nursery v. Hassid, 141 S. Ct. 2063, 2079, 210 L. Ed. 2d 369 (2021).
23
Lucas, 505 U.S. at 1016 n.7.
24
Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 321 (2002).
The Court went on to analyze the circumstances in Tahoe-Sierra within the Penn Central
framework. Id.; see Penn Central, 438 U.S. at 124 (regulatory takings jurisprudence
20
characterized by “essentially ad hoc, factual inquiries”).
25
Town of Flower Mound, 135 S.W.3d at 643. In Town of Flower Mound, the Texas Supreme
Court “restate[d] the rule of Nollan and Dolan generally as follows: conditioning
government approval of a development of property on some exaction is a compensable
taking unless the condition (1) bears an essential nexus to the substantial advancement
of some legitimate government interest and (2) is roughly proportional to the projected
impact of the proposed development.” Id. at 634. The U.S. Supreme Court, however,
has since done away with the first prong of that test. See Lingle, 544 U.S. at 545; see
supra section 1.41. The Town of Flower Mound court went on to find that “[t]he
requirement that a developer improve an abutting street at its own expense is in no
sense a use restriction; it is much closer to a required dedication of property–that being
the money to pay for the required improvement.” Town of Flower Mound, 135 S.W.3d at
635. The court then held that “[f]or purposes of determining whether an exaction as
a condition of government approval of development is a compensable taking, we see
no important distinction between a dedication of property to the public and a
requirement that property already owned by the public be improved.” Id. at 639–640.
The court also followed the U.S. Supreme Court in agreeing “that the burden should
be on the government to ‘make some sort of individualized determination that the
required dedication is related both in nature and extent to the impact of the proposed
development.’” Id. at 643.
26
City of Austin v. Teague, 570 S.W.2d 389, 393 (Tex. 1978).
27
In Westgate, Ltd. v. State, the Texas Supreme Court held that in order for there to be
an inverse condemnation there must be a “direct restriction” on the landowner’s use of
his property and not merely an announcement of future restrictions. Westgate, 843
S.W.2d 448, 452–53 (Tex. 1992). As used, “direct restriction” is the “actual physical
or legal restriction on the property’s use such as a blocking of access or denial of a
permit for development.” Id. at 452. In Westgate, since the court found that the
condemnor’s unreasonable delay of condemnation proceedings did not rise to the level
of a “direct restriction” on the landowner’s use of his property, the landowner could
not recover damages in a suit for inverse condemnation; but, the court reserved the
question of whether a cause of action might exist where there is bad faith on the part
of the condemnor. Westgate, 843 S.W.2d at 452–54.
28
State v. Dawmar Partners, Ltd., 267 S.W.3d 875, 878 (Tex. 2008).
29
City of San Antonio v. TPLP Office Park Props., 218 S.W.3d 60, 64–65 (Tex. 2007). In
prior decisions, the Supreme Court had already applied the rational basis standard of
review to a substantive due process challenge to the denial of a development application
by a city. Mayhew, 964 S.W.2d at 938–39. In City of San Antonio, the Texas Supreme
Court applied the rational basis standard of review from Nollan to determine whether
the exercise of police power by a local government was in accord with substantive due
21
process principles, and held that “[u]nder the rational relationship standard, the City’s
decisions must be upheld if evidence in the record shows it to be at least fairly debatable
that the decisions were rationally related to a legitimate governmental interest.” TPLP
Office Park, 218 S.W.3d at 64–65.
30
In City of College Station v. Turtle Rock Corporation, the Texas Supreme Court recognized
that in order to be a compensable taking, the ordinance must render the entire property
“wholly useless” or otherwise cause “total destruction” of the entire tract’s economic
value. Turtle Rock, 680 S.W.2d 802, 806 (Tex. 1984). The court further held that there
must be a reasonable connection between an exaction and the need for the property by
the government; and, in order to show there is a taking, the landowner must show that
the ordinance is unreasonable or arbitrary in that particular application. Id. The Turtle
Rock holding was cited by the United States Supreme Court in Nollan, 483 U.S. at 840,
and is consistent with the holding of that opinion.
31
Gen. Servs. Comm’n v. Little-Tex Insulation Co., 39 S.W.3d 591, 598 (Tex. 2001).
32
See, e.g., State v. Holland, 221 S.W.3d 639 (Tex. 2007) (holding no taking liability for
government’s refusal to pay patent holder as part of its contract for oil spill cleanup
technology).
33
See, e.g., City of San Antonio v. Pollock, 284 S.W.3d 809, 820–21 (Tex. 2009) (finding no
taking intent in city’s negligent failure to prevent landfill gas migration to private
houses); City of Dallas v. Jennings, 142 S.W.3d 310 (Tex. 2004) (distinguishing nuisance
from taking to find no taking liability for city’s unintended sewage backup into private
homes); but see Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546 (Tex. 2004) (affirming
taking verdict against water district for downstream flooding that was substantially
certain to occur by the district’s actions).
34
San Jacinto River Auth. v. Medina, 627 S.W.3d 618, 631 (Tex. 2021) (statutory takings
claim under the Property Rights Act “may include a physical taking, such as the flooding
alleged by the property owners, and is not limited solely to regulatory takings” that
effect a physical invasion).
35
“Extraterritorial jurisdiction” means the unincorporated area, not part of any other
city, that is contiguous to the corporate limits of a city, and the extent of an
extraterritorial jurisdiction depends on the population of the city. See Tex. Local Gov’t
Code § 42.021.
36
Selinger, 2020 WL 3566722 at *7.
37
Property Rights Act § 2007.043(a).
38
Texas Gen. Land Off. v. La Concha Condo. Ass’n, No. 13-19-00357-CV, 2020 WL
2610934, at *8 (Tex. App.—Corpus Christi May 21, 2020, no pet.) (citing Property
Rights Act §§ 2007.043(a), 2007.003(a)(4)).
22
39
See 31 Tex. Admin. Code §§ 15.1-15.10.
40
Governmental entities are reminded that the Property Rights Act applies to the
following governmental actions: “(1) the adoption or issuance of an ordinance, rule,
regulatory requirement, resolution, policy, guideline, or similar measure.” Property
Rights Act § 2007.003(a).
41
In 2002, the Texas Supreme Court decided its first case under the Property Rights
Act. In Bragg v. Edwards Aquifer Authority, the Court concluded that the adoption of
well permitting rules by an aquifer authority is excepted from the Property Rights Act
as an action “taken under a political subdivision’s statutory authority to prevent waste
or protect rights of owners of interest in groundwater.” 71 S.W.3d 729, 730 (Tex.
2002). The Court also concluded that “the Authority’s proposed actions on the
Braggs’ permit applications constitute ‘enforcement of a governmental action,’ to which
the TIA requirement does not apply.” Id. at 731.
42
See discussion of relevant issues under section 3.22(d), infra.
43
Mayhew, 964 S.W.2d at 929. “A court cannot determine whether a regulation has
gone ‘too far’ unless it knows how far the regulation goes.” Id.
44
See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982).
45
Nollan, 483 U.S. at 825.
46
Dolan, 512 U.S. at 394–96.
47
Lucas, 505 U.S. at 1029–32.
48
Fla. Rock Indus., Inc. v. United States, 18 F.3d 1560 (Fed. Cir. 1994).
49
Mayhew, 964 S.W.2d at 935–36.
50
Id. at 936.
51
Id. at 937.
52
Dawmar Partners, 267 S.W.3d at 878.
53
State v. Schmidt, 867 S.W.2d 769, 773 (Tex. 1993).
54
Dawmar Partners, 267 S.W.3d at 880; State v. Bristol Hotel Asset Co., 293 S.W.3d 170,
174 (Tex. 2009).
55
Bristol Hotel, 293 S.W.3d at 173 (citing City of Austin v. Avenue Corp., 704 S.W.2d 11,
13 (Tex. 1986)).
56
Avenue Corp., 704 S.W.2d at 13.
57
Schmidt, 867 S.W.2d at 774.
58
Felts v. Harris Cty., 915 S.W.2d 482, 484 (Tex. 1996).
23
59
Id.
60
Id. at 485. In Felts, the Supreme Court found that highway noise was a community
damage and thus non-compensable.
61
Schmidt, 867 S.W.2d at 781.
62
Dolan, 512 U.S. at 392–96.
63
Id. at 393.
64
Id.
65
Cedar Point Nursery, 141 S. Ct at 2074.
66
Hodel v. Irving, 481 U.S. 704 (1987).
Burden Analysis
Governmental entities covered by the Property Rights Act should use the following guide in reviewing the potential impact
of a proposed governmental action covered by the Property Rights Act. While this guide may provide a framework for
evaluating the impact on private real property a proposed governmental action may have generally, “takings” questions
normally arise in the context of specific affected real property. This guide for evaluating governmental actions covered by the
Property Rights Act is a tool that a governmental entity should aggressively use to safeguard private real property owners.
NO
No further
compliance
with the Property
Rights Act is necessary
continue to
Question 2
YES
NO
No further
compliance
with the Property
Rights Act is necessary
YES
TIA is required.
Continue with
Questions 4-8.
NO
No Impact
Determination
should be made and no further
compliance with the Property Rights
Act is necessary.
Question 1
Is the Governmental Entity
undertaking the proposed
action a governmental
entity covered by the
Property Rights Act (i.e., is it
a “Covered Governmental
Entity”)? See Property
Rights Act § 2007.002(1).
continue to
Question 3
Question 2
Is the proposed action to
be undertaken by the
covered governmental
entity an action covered by
the Property Rights Act, i.e.,
a “Covered Governmental
Action”? See, supra, section
2.1 of these Guidelines; and
Governmental
Entity-Specific TIA
Procedures for “Categorical
Determinations” as
developed by the
respective Covered
Governmental Entities. In
addition, governmental
entities may develop
categorical determinations
and specific procedures for
developing TIAs. See,
supra, section 2.2.
Question 3
Does the covered
governmental action result
in a burden on “private real
property” as that term is
defined under Property
Rights Act § 2007.002(4)?
This question may be
resolvable by reference to
the governmental entity’s
preexisting list of
Categorical
Determinations.
YES
