This issue paper was prepared by National Trust's State and Local Policy program for the National Trust for Historic Preservation .

Copyright 2003 National Main Street Center, National Trust for Historic Preservation.

Private property rights are among the most important rights enjoyed by Americans. They enhance our freedom. They give us financial security. They help to protect our personal investments. Without property rights, we would have little incentive to invest time, money, and labor in the improvement of Main Street buildings and businesses.

Our property rights come from the Fifth Amendment to the U.S. Constitutions, which states in part: ". . . nor shall private property be taken for public use, without just compensation." This language is generally called the Takings Clause because it is intended to prevent the government from "taking" or seizing a property owner's land without paying a fair price for it.

Too often, property rights are misunderstood. Some people erroneously believe that property rights are absolute. They think that they can do literally anything with their property, even if their actions harm the property rights of their neighbors or the public welfare.

Extensive and precious as they are, our property rights have never been - and are not now absolute. Like most other rights, property rights are tempered by responsibilities. The U.S. Constitution does not give property owners the right to abuse the land or to use their property in a way that hurts others. Indeed, zoning-based restrictions on land use were first created to the property rights and values of property owners against the potentially harmful actions of other property owners.

It is important to remember that the value of a parcel of land stems as much from nearby public improvements paid for by the community as a whole - and from the labor and investments of neighboring property owners - as from the activities and investments of the landowner. Private property values are typically enhanced by such taxpayer-funded projects as roads, water and sewer lines, libraries and schools.

Property rights and main street goals. It is not uncommon for Main Street revitalization advocates to propose such measures as design standards, curbs on sprawl, zoning restrictions and other policies intended to protect a downtown's appearance e and economic vitality. But in doing so, they are often told that these measures violate private property rights and are therefore illegal and unconstitutional.

Main street leaders should know that these measures are, in fact, constitutional. Literally thousands of American cities and towns have enacted historic preservation ordinances, design standards, and land-use laws that limit what property owners may do with their land. American courts, including the U.S. Supreme Court, have repeatedly upheld these laws when properly enacted and enforced.

To be sure, land-use restrictions must advance a public purpose, be fairly and reasonably applied, and leave property owners with an economically viable use of their land. When these standards are met, however, land use regulations will pass legal muster.

Sensible land-use laws almost always enhance, rather than depress, property values. One only needs to look at such vibrant Main Streets as those in Santa Barbara, Calif.; Hudson, Ohio; and Nantucket, Mass.; to see the positive impact of strong land-use and design standards on property values. The popularity of such places reflects two realities:

People flock to places that enforce good design standards and sensible growth management policies; and

The scarcity and popularity of well-designed, sensibly controlled commercial districts have increased their value.
We need more of these places so that they will not just be enclaves of the wealth and privileged. Everyone should be able to enjoy life in an attractive, livable community. The more we can do to create well-designed, livable communities, the more available and accessible they will be to everyone.

The owners and developers of regional shopping malls understand how design and other rules can enhance property values. That's why they routinely impose strict controls on the design, upkeep, and operation of mall businesses.

Answers to Common Questions

Some misunderstandings about property rights arise so often that they warrant responses here. Noted below are responses to some of the most widespread misunderstandings.

Question: If a farmer asks the city government to rezone his property from agricultural to commercial so that the land can be sold for use as a large shopping mall, must the application be approved on "takings" grounds?

Answer: No. The U.S. Constitution does not guarantee the highest and best use of the property. In fact, it is extremely difficult to establish a regulatory taking even if the property owner could have reaped a windfall if the property had been rezoned. To succeed on a takings claim, the farmer must prove that the city's actions did not further a valid public purpose or that the denial of the rezoning request made it impossible for him to use his property in an economically viable manner. Since farmland preservation is recognized as a valid governmental purpose, and agricultural use is generally considered to be economically viable, it is highly unlikely that the farmer would prevail on a takings claim.

Question: What if the developer of the mall purchases the land from the farmer and then applies for the zoning change? Would a taking result then?

Answer: No. The outcome should be the same because takings claims are analyzed by looking at the property rather than the property owner. While an owner's investment expectations are relevant, the Constitution does not serve as an insurance policy that protects property owners against speculative or unreasonable investments. As noted above, the burden of proof on the property owner is extremely high.

Question: What if it can be established that agricultural use is no longer economically viable?

Answer: To win on a takings claim, the property owner must prove that no use, not just farming, is economically viable without the government's approval of the proposed shopping mall.

Question: What if the government prohibits all development on one portion of the owner's property to address, for example, erosion or water drainage and pollution problems? Has a taking occurred there?

Answer: The focus of a takings inquiry is the entire property interest rather than the portion regulated. A severe impact on part of the property will not amount to a taking if the property as a whole continues to have a reasonable economic use. Also keep in mind that no one has the right to use his or her land in a way that may harm the public health and welfare of neighboring landowners or the general public.

Question: Won't land use restrictions always devalue private property?

Answer: No. In virtually every objective evaluation of the economic impact of land-use controls - and particularly of historic districts - the composite value of the affected properties was protected at worst and significantly enhanced at best.

Question: I always thought that if government regulation lowers property values or restricts how property can be used, by even a little bit, a taking has occurred and compensation is owed. Isn't this right?

Answer: No. This is a common misconception. The U.S. Constitution only guarantees that compensation be paid when government physically appropriates property (condemnation) or it takes all value or the reasonable use of privately-owned property through regulation. In other words, the takings clause protects against heavy-handed governmental actions that effectively confiscate private property for public use without compensation.

Question: Is "aesthetic regulation" i.e., design controls - legal?

Answer: Yes. Historically, "aesthetics" was not regarded as a legitimate use of the police power. This outdated view has changed over the last century and now design regulations and historic preservation laws are routinely upheld by federal and state courts. Indeed, aesthetic regulation has proven to be an effective tool for accomplishing economic growth and stability and promoting the public welfare.

Question: Aren't constitutional rights violated when a government purposefully limits commercial development on the outskirts of town in order to protect the downtown business core or promote other objectives?

Answer: No. Local jurisdictions may properly determine where particular business uses may be allowed and may seek to encourage the economic viability and aesthetic and historic values of a downtown business district. If outlying areas are "downzoned," then the property owner challenging the action must establish that no economically viable use in the property remains. As noted above, a diminution in value does not amount to a constitutional taking. Keep in mind, however, that affected property owners are entitled to basic due process rights including advance notice and a public hearing and state law issues may come into play such as whether a zoning action was in accordance with the town's comprehensive plan.

Resources

"Focus on Property Rights," a special issue of Historic Preservation Forum, the journal of the National Trust for Historic Preservation. July/August 1993/Volume 7/Number 4. Call 202/588-6296 or go to www.preservationbooks.org.

Takings Law in Plain English, an overview of "takings" law with suggestions for responding to the takings challenge. To order, go to www.preservationbooks.org and click on "Communities and Sprawl."

National Main Street Center - National Trust for Historic Preservation.
1785 Massachusetts Ave., NW
Washington DC, 20036
www.mainstreet.org