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Investment Fund II v. Municipality of Anchorage (7/23/93), 856 P 2d 777
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NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors to
the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, in order that corrections
may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
GORDON ZERBETZ, Trustee for RSB)
INVESTMENT FUND II, LTD., a )
Limited Partnership, ) Supreme Court File
)
Appellant/ ) Nos. S-4937/4970
Cross-Appellee. )
) Superior Court File
v. ) No. 3AN 89 5843 CI
)
MUNICIPALITY OF ANCHORAGE, ) O P I N I O N
)
Appellee/ ) [No. 3976 - July 23, 1993]
Cross-Appellant. )
________________________________)
Appeals from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Karen L. Hunt, Judge.
Appearances: Paul J. Nangle, Lawrence A.
Pederson, Paul J. Nangle & Associates,
Anchorage, for Appellant/Cross-Appellee. Ann
Waller Resch, Deputy Municipal Attorney,
Anchorage, for Appellee/Cross-Appellant.
Before: Moore, Chief Justice, Rabinowitz,
Burke, Matthews and Compton, Justices.
BURKE, Justice.
RSB Investment Fund II, Ltd. ("RSB") alleges inverse
condemnation of its property by the Municipality of Anchorage
("Municipality"). The questions presented are whether the
Municipality's designation of RSB's property as "conservation
wetlands"constituted a regulatory taking, and whether the
Municipality's construction of the North Klatt Road Extension
resulted in a physical invasion of RSB's property. The superior
court granted the Municipality's partial summary judgment motion1
on the regulatory takings question, holding that the
"conservation wetlands"designation did not amount to an inverse
condemnation of RSB's property. A jury determined that no
physical taking occurred as a result of the construction of the
North Klatt Road Extension. We affirm both the superior court's
grant of partial summary judgment and the jury's verdict.
I. FACTS AND PROCEEDINGS BELOW
A. Facts relevant to the regulatory takings issue.
In May 1978 RSB purchased a 39.02 acre tract of real
property in the Klatt Bog area of South Anchorage for $250,000.
The property was, and still is, zoned R-1A.2
In 1979 the Municipality adopted the Anchorage Coastal
Management Plan or "ACMP." The ACMP states in part:
One of ACMP's primary goals is
complementing and strengthening local and
areawide planning and management
capabilities, in coordination with State and
Federal agency and private sector activities.
In so doing, ACMP is intended to furnish
coastal area citizens with improved
opportunities to constructively influence the
land and water management decisions which
affect their lives. District coastal
management programs are not designed to
impose additional impediments to various uses
of coastal lands and waters, but rather to
more equitably and efficiently apply the
diverse array of existing Federal, State and
local authorities governing such uses, and to
ensure the balanced consideration of a broad
range of competing interests.
In 1982 the Municipality implemented the Anchorage
Wetlands Management Plan, which classifies property in the
Anchorage Bowl as either "Preservation," "Conservation,"
"Developable," or "Special Study." The Plan designated RSB's
property as "Conservation/Development," which means that
development could "selectively proceed on portions of this
wetland following presentation of data and review of these data
by the Municipal Platting Board." The data required included
"representative soil borings,""hydrologic information specifying
the quality, amount and direction of flow of surface and
subsurface water," "vegetative information," and "habitat
information."3 AMC 21.15.030(C)(3)(a-d).
In 1985 the Municipality adopted the Anchorage Park,
Greenbelt and Recreational Facility Plan. This Plan provides in
part:
In South Anchorage, a linear park should
be set aside around Klatt Bog. The linear
park should include a trail for recreational
purposes and buffer space to protect habitat
within the bog.
Recommendations: Campbell Lake,
Bayshore, Klatt and Oceanview areas
A Klatt Bog greenbelt system should be
set aside to provide open space and trails in
the new Southport-Klatt area development.
There is no evidence in the record that these proposals were ever
adopted.4
Between August 1982 and December 1988 the Municipality
received twenty-eight platting applications for properties
designated "conservation wetlands"within the Campbell/Klatt Bog.
The Municipal Platting Board and the Planning Commission granted
development permission to twenty-six of these applications. To
date, RSB has never filed an application for plat approval.
At the summary judgment stage, RSB submitted an
affidavit from Robert Bannon, an Anchorage real estate broker who
helped develop several of the subdivisions in the Klatt Bog.
Bannon averred that "any time the Municipality or other
governmental entity imposes new restrictions or additional
procedures, or designates property to be included within a study
relative to developability, that action will have an adverse
effect on the marketability of the property." He also stated
that Municipality "representatives" had told him that "no
development would be permitted [on RSB's property] without
extensive study and special research and engineering."
RSB also submitted an affidavit from Priscilla Post
Wohl, a former senior planner with the Municipality's Community
Planning Department. She stated that RSB's property was located
approximately in the center of the Klatt Bog wetlands complex.
She averred that "it was generally agreed by the various resource
management agencies that the highest and best use for the central
portion of the bog was as an open area/undeveloped wetlands
areas." However, she also opined that development was still
possible within the Klatt Bog if "state of the art technology is
utilized to protect the resource values of the bog."
To prove that the "conservation wetlands"designation
had affected the value of its property, RSB submitted the
Municipality's tax assessments. The property's assessed
valuation in 1985 was $1,489,500, in 1986 it was $1,089,000, in
1987 it was $591,500, in 1988 it was $202,800, and in 1989 it was
$100. This precipitous drop resulted from the Municipal
Assessor's policy of valuing all parcels classified as
"conservation"or "preservation"wetlands at $100, regardless of
the property's size or location. In his affidavit, the Municipal
Assessor stated,
It is inaccurate to conclude that the
assessed value of plaintiff's property is a
result of the Municipality's designation of
that property as Conservation wetlands. The
low valuation is a result of several factors,
including the necessity of the Federal
permitting process before the property can be
developed and the lack of comparable wetland
sales to use in evaluating the property's
value.
B. Facts relevant to the physical takings issue.
To meet the growing traffic demands of South Anchorage,
the Municipality built the North Klatt Road Extension in the late
1980's. This road runs along the southerly side of Klatt Bog and
connects "C"Street with the Southport Parkway. RSB's property
lies to the north of this road. Because the road crosses the
Klatt Bog wetlands, the Municipality was required to obtain a
construction permit from the federal Army Corps of Engineers
("Corps"). The Corps saw the road "as the means to establish a
permanent dike along the south side of Klatt bog to prevent
further water loss to surrounding development."
As part of its permit application, the Municipality
appended a "Drainage Report"written by the project's contractor,
Century Engineers and Planners, Inc. The report contains the
following paragraph:
During our Corps Permit pre-application
meeting in November 1985, it was the
expressed concern of the Corps of Engineers
and the Environmental Protection Agency
representatives that the surface water that
is presently finding its way into the Klatt
Bog (i.e. north of the proposed alignment)
would not be substantially impeded by the
proposed road construction. Furthermore, it
would be a desirable feature of the proposed
construction if the roadway could act as a
dam along the southerly side of Klatt Bog to
assist in raising the water table in the bog.
The project proposal called for culverts, storm drains, and water
diversions to ensure the existing drainage pattern would be
disturbed as little as possible. An impermeable barrier would
also be constructed along the north side of the road. The
barrier would extend from just above the existing surface level
to below the roadbed non-frost material. Its purpose would be to
prevent a significant loss of subsurface water from the bog
through the proposed road prism and to assist in raising the
water level in the bog. The Municipality also proposed the
construction of a "weir structure"along the north part of the
road, set to impound water at a level approximately two feet
below the road surface. Its purpose was also to raise the water
level in Klatt Bog.
In a 1987 study entitled "Potential Impacts on the
Water Table in Klatt Bog Resulting From Construction of the North
Klatt Road Extension,"Ott Waters Engineers Inc. reported that
the impermeable barrier would only have a "minor influence" on
the water table in the Bog. Similarly, it said that the culvert
system "is designed to minimize any disturbance of the natural
runoff patterns, and any influence is expected to be minor." As
for the weir, the report concluded that:
[t]he effect of this structure depends
on the relative elevations of the impounded
water and the water table. It is assumed
that the impoundment will be higher than the
water table, in which case the groundwater
will be recharged locally by the impoundment.
This will raise the water table locally to an
elevation near but less than the elevation of
the impoundment. The effect will decrease
with increasing distance from the
impoundment.
In September 1987 the attorney representing the
Municipality sent a letter to the Corps in which he stated:
[i]t is the understanding of the
Municipality that the construction of the
road as currently designed will not raise the
overall Klatt Bog water table. . . . The
[Corps] permit requirement not to lower the
water table is not construed by the
Municipality to be an obligation to use the
project to raise water table levels in the
Klatt Bog. . . . Such a mandate by the Corps
could give rise to collateral inverse
condemnation litigation against the
Municipality by landowners with holdings in
the Klatt Bog. . . . Accordingly, it is the
Municipality's position at this time that the
North Klatt Road Extension Project will not
raise surrounding water table levels in the
Klatt Bog.
At trial, Robert Bannon, who, as previously mentioned,
developed several of the subdivisions in the Klatt Bog, testified
that the volume of water which used to enter the Bog over a 90
day to two year period would now enter the bog within 30 minutes.
He stated that a subdivision could still be built on RSB's
property, but "the costs of construction exceed the anticipated
costs of sales." On cross-examination he admitted that he did
not know how much additional costs were required to deal with the
additional water.
Francis Gallela testified as an expert in business
economic development. Gallela testified that RSB's property is
not marketable or financeable mainly because of the amount of
water on the property. RSB also called Harry Lee, a civil
engineer, who testified that in 1984 the water table was an
average of nine feet below the surface; by 1991, it had risen to
2.8 feet below the surface. He attributed the increase to the
North Klatt Road Extension.
The Municipality countered with the testimony of Scott
Wheaton, an expert on engineering geology and hydrology. He
stated that the water table was five feet, not nine feet, below
the surface in 1983. He opined that the North Klatt Extension
"doesn't dam up the Klatt ground water flow at all." Wheaton
added that the weir structure would have no impact on the water
table, except for "very locally"in the ditches just upstream
from the weir itself. Wheaton stated that, based on the data he
examined and the evidence he collected, he felt that the North
Klatt Road Extension, the weir, the ditches and the culverts were
actually "serving to dry up the system."
In a special verdict, the jury determined that no
taking had occurred. RSB's request for a new trial was denied.
RSB now appeals.
II. DISCUSSION
RSB first argues that the superior court improperly
bifurcated its claim into a regulatory takings claim and a
physical takings claim. RSB urges this court to adopt its theory
of a "cumulative"taking. That is, we are urged to determine
whether a taking has occurred considering the "conservation"
wetlands designation (and related studies and reports) in tandem
with whatever adverse effects the construction of the North Klatt
Extension had on RSB's property.
RSB has offered no authority for its "cumulative
takings" theory. Moreover, the wetlands designation and the
alleged flooding caused by the construction of the North Klatt
Extension are factually unrelated and conceptually distinct.
Whether the Municipality inversely condemned RSB's property by
designating it as "conservation wetlands"can only be understood
and analyzed as a regulatory taking. Conversely, excess water
created by a newly constructed road is either a physical taking
or it is nothing at all. In other words, whether the new road
caused a water invasion is entirely unrelated to whether RSB's
property was damaged by the "conservation wetlands"designation.
The superior court properly divided the issues, and we will
analyze RSB's claims in the same manner.
1. The regulatory takings issue.
"Private property shall not be taken or
damaged for public use without just
compensation." Alaska Const. Art. I, 18.
Article I, section 18 is to be liberally
construed in favor of the property owner.
The requirement that the condemnor pay just
compensation when property is damaged
provides broader protection for private
property rights than the fifth amendment to
the United States Constitution.
Private property is taken or
damaged for constitutional purposes if the
government deprives the owner of the economic
advantages of ownership.
Homeward Bound, Inc. v. Anchorage School District, 791 P.2d 610,
614 (Alaska 1990) (citations omitted) (holding that Municipal
Assembly's designation of property as potential school site did
not constitute a compensable taking since such designation did
not amount to a "concrete indication that [the Assembly]
intend[ed] to acquire the property by condemnation."). We have
defined the "economic advantages incident to ownership" of
unimproved property to be "the potential for appreciation and the
opportunity for development." Id. at 614 n.6.5
The Municipality's designation of RSB's property as
"conservation wetlands"did not deprive RSB of the "economic
advantages of ownership." Property designated as "conservation
wetland"under the Anchorage Coastal Management Plan can still be
developed. All the Plan requires is that a developer submit
water flow data, soil samples, and vegetative and habitat
information. AMC 21.15.030(C)(3)(a-d). The findings the
Planning and Zoning Commission must make prior to development
approval of "conservation wetlands"do not place a significant
burden on a landowner's opportunity to develop his property. See
footnote 3, supra. Indeed, the Municipality has approved twenty-
six of the twenty-eight subdivision platting applications it has
received for property designated "conservation wetlands" within
the Klatt Bog. The conclusory statements of Bannon,
that government regulations always affect marketability, and of
Wohl, that "various resource management agencies" wanted the
central Klatt Bog area to remain undeveloped, do not prove that
the Municipality would reject an RSB plat application, if one
should ever be tendered, merely because its property is
designated "conservation wetlands." Without an application, such
a conclusion would be unwarranted conjecture, considering the
plat approvals for other "conservation wetlands."
RSB's reliance on the Municipality's tax assessments to
show "diminished value" is misplaced. RSB argues that the
"dramatic drop in value should have been considered by the trial
court as an admission on the part of the City that all of its
actions with regard to the property had dramatically decreased
its value, damaged the property." However, as RSB itself
recognizes, this court has previously held that tax assessments
are not admissible as proof of value in condemnation proceedings.
State v. 45,621 Sq. Feet of Land, 475 P.2d 553, 557-58 (Alaska
1970). The rationale for such a rule, i.e. that tax assessments
are "notoriously unreliable as a criterion of true value,"id. at
557, is borne out in this case. The record reveals that it was
the Municipal Assessor's practice to assess all land designated
as "conservation wetlands"at $100, regardless of the property's
size or location. The Assessor also averred that it would be
inaccurate to conclude that the assessed value of RSB's property
is a result of the Municipality's designation of that property as
"conservation wetlands," citing other factors, such as the
necessity of obtaining a federal permit, as the real cause of the
low appraisal. Because the unrebutted evidence in the record
shows that the property's assessed value bears no relationship to
its fair market value, and that the Municipality's "conservation
wetlands" designation did not "cause"the low assessment, RSB
cannot rely on the tax assessments to argue that the
"conservation wetlands"designation damaged RSB's property.6
Had RSB applied for a plat approval, and had that
application been denied due to the property's special status,
then RSB's argument would have greater weight. But, as it stands
now, there is no concrete evidence that RSB was deprived of
either "the potential for appreciation"or the "opportunity for
development" by the "conservation wetlands" designation. See
Homeward Bound, 791 P.2d at 614 n.6. Thus, the superior court's
granting of the Municipality's summary judgment motions on the
regulatory takings issue are affirmed.
2. The physical takings issue.
After the superior court granted the Municipality's
partial summary judgment motion, the case proceeded to trial on
the issue of whether RSB's property suffered a physical invasion
of water as a result of the Municipality's construction of the
North Klatt Road Extension.7 As noted, the jury determined that
no taking had occurred. RSB's motion for a new trial was denied.
RSB now asks this court to find that the jury's verdict was in
error, and that the superior court erred in denying its motion
for new trial. For a new trial to be appropriate, the evidence
supporting the verdict must be "completely lacking or [] so
slight and unconvincing as to make the verdict plainly
unreasonable and unjust." Ahlstrom v. Cummings, 388 P.2d 261,
262 (Alaska 1964); see also Municipality of Anchorage v. Baugh
Construction, 722 P.2d 919, 927 (Alaska 1986) (a jury's findings,
if supported by evidence in the record, will be upheld where
"there is room for diversity of opinion among reasonable
people.").
The jury heard conflicting testimony as to whether the
water level on RSB's property had increased after the
construction of the North Klatt Road Extension. RSB's expert,
Harry Lee said it did, while the Municipality's expert, Scott
Wheaton, said it did not. Wheaton's testimony is consistent and
credible. Since there is credible evidence in the record to
support the verdict, it must stand. The evidence is not so
slight as to make the verdict unreasonable; therefore, we affirm
the superior court's denial of RSB's motion for a new trial.8 As
a result of our holding today, the Municipality's appeal of the
superior court's denial of its motion for directed verdict is
rendered moot.
AFFIRMED.
_______________________________
1. The Municipality moved for partial summary judgment
twice; after RSB filed its complaint, and after RSB filed its
amended complaint. Both times the Municipality requested that
the superior court dismiss RSB's regulatory takings claim, and
both times the superior court complied.
2. Property zoned R-1A is restricted to single family
residences.
3. Once these data are submitted, the platting authority
or the Planning and Zoning Commission must make certain findings
before approving a plat application. AMC 21.05.115(B)(4) reads
in part:
In order to maximize protection of
wetlands designated "conservation," in
addition to the criteria normally considered
in subdivision and conditional use
applications, the platting authority or the
Planning and Zoning Commission must, prior to
approval [of any development proposal], make
explicit findings that:
a. the proposed design and
placement of roadways, utility lines and
structures will not interfere with the
natural drainage function indicated in
the required hydrologic studies or that
such interference can be adequately
mitigated to maintain the natural
drainage function;
b. the soils in the area proposed
for development will adequately support
roadways and structures, or that
properly designed roads and foundations
will be provided;
c. habitat areas identified in
the required habitat studies will be
adequately protected.
Maintenance of open space in its natural
state shall be required where the platting
authority or the Planning and Zoning
Commission determines that such is necessary
to protect the hydrologic and habitat values
of wetlands on the property being developed
or on adjacent property. Areas where open
space is to be preserved in its natural state
shall be indicated on the plat or approved
site plan. The platting authority and the
Planning and Zoning Commission may require
such land development techniques and such
additional conditions as may be appropriate
to carry out the intent of the wetlands plan
. . . .
4. RSB points to several other "studies and reports"which
it says affected its capacity to develop its property. These
include an early draft of the aforementioned Anchorage Wetlands
Management Plan, the Municipality's Comprehensive Development
Plan, an unimplemented 1985 Planning and Zoning Resolution
calling for a master plan to allow for a "rational approach to
development in portions of Klatt Bog while protecting and
possibly enhancing the wildlife habitat value of the area," an
unapproved 1987 draft study allowing for selective development
after a permit review process, and an unapproved 1989 study
entitled "Southwest Anchorage Tomorrow: Growth and Development
Which Works."
However, the uncontradicted statements of both the
Platting Officer and the Senior Planner for the Municipality's
Department of Economic Planning and Development were that these
documents did not affect the Municipality's treatment of RSB's
property. The Platting Officer averred that only three plans,
the Anchorage Coastal Management Plan, the Anchorage Wetlands
Management Plan, and the Anchorage Park, Greenbelt and
Recreational Facility Plan, were used in the municipal platting
process when considering whether designated conservation wetlands
should be approved for subdivision.
5. Commentators note that the "trend of the law"in the
area of wetlands protection regulations is to reject landowners'
takings claims and to uphold such regulations as a lawful
exercise of police power. Julius L. Sackman & Patrick J. Rohan,
2 Nichols' The Law of Eminent Domain, 6.17, at 6-113 to 6-114
(1993). See, e.g., Just v. Marinette County, 201 N.W.2d 761, 771
(Wis. 1972) (ordinance prohibiting landowner from filling
wetlands without a permit was not a taking requiring just
compensation; while loss of value is to be considered in
determining whether a restriction is a constructive taking, value
based upon changing the character of the land at the expense of
harm to public rights is not controlling); Albano v. Township of
Washington, 476 A.2d 852 (N.J. 1984) (rezoning to protect lake
from further pollution upheld as a valid exercise of police
power); Glisson v. Alachua County, 558 So. 2d 1030, 1037 (Fla.
Dist. Ct. App. 1990) (regulations designating 3100 acres of real
estate as a "special study area"did not constitute a taking
because the regulations, which allowed owners to apply for a
variance or a transfer of development, did not deny landowners
all economically viable uses of their property); see generally
Charles C. Marvel, Annotation, Local Use Zoning of Wetlands or
Flood Plain as Taking without Compensation, 19 A.L.R. 4th 756
(1983 & Supp. 1992). The rule under the United States
Constitution is that "environmental"statutes, ordinances, or
regulations which limit a landowner's use of his property do not
accomplish a taking requiring compensation unless the owner has
been deprived of all economically beneficial uses of his
property. See Lucas v. South Carolina Coastal Council, U.S.
, 112 S. Ct. 2886, 2895 (1992).
6. For these same reasons, we hold that the superior court
did not abuse its discretion in excluding the tax assessments at
trial. There is no merit to RSB's argument that the assessments
should have been admitted because they would have been used not
to establish set values, but as evidence of the severe damage to
the property values.
7. RSB places great emphasis on the documents in the
record which indicate that the Municipality thought the North
Klatt Road Extension, the weir, and the impermeable barrier would
raise the water level in the bog, as if to imply that a
compensable taking could arise from the mere intent to fill the
bog with water. The appropriate takings focus, however, is on
whether water actually invaded RSB's property as a result of the
North Klatt Road construction. Even if intent were an issue, the
record indicates that the Municipality did not intend to raise
the bog's water level.
8. On RSB's remaining evidentiary issue, the superior court
did not abuse its discretion by preventing the jury from seeing
three RSB exhibits. These exhibits, a 1985 City Planning and
Zoning Resolution, a 1985 City Planning and Zoning memo, and a
1983 Department of Interior study entitled, "Vegetation Types and
Bird Use of Anchorage Wetlands,"were not relevant to whether a
water invasion occurred as a result of the North Klatt Road
Extension.
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