Can Prohibiting Demolition Constitute a Taking?

While it is clearly a taking when the government institutes condemnation proceedings to acquire private property and demolish any improvements upon the land, it’s much less clear that the government has taken an owner’s property rights when it tries to prohibit demolition on the owner’s private property. This issue arose in a recent case decided by Ohio’s First District Court of Appeals on December 30, 2015. The short answer: In some cases, prohibiting demolition can constitute a taking of private property under the Fifth Amendment.

The Saga of the Gamble House

In State ex rel Greenacres Foundation v. City of Cincinnati, No. C-150038 (Dec. 30, 2015) – the “Gamble House”—a private residence in Cincinnati that was originally owed by James Norris Gamble – the court found that the City’s failure to issue a demolition permit constituted a regulatory taking. (Side bar: Mr. Gamble invented Ivory Soap, and is the son of the “Gamble” in the ubiquitous Proctor & Gamble brand.)

When the current owners of the Gamble House applied for a demolition permit in 2010, the home had been vacant for nearly 40 years. The Court of Appeals described it as being in “an extremely dilapidated state,” with extensive damage and numerous animal infestations. At the time, the property was zoned for single-family residential homes without any sort of historic designation.

Upon receiving the permit application, Cincinnati’s chief building official declined to issue a demolition permit, citing the historic significance of the Gamble House. While the owners sought approval through a series of administrative appeals, the Cincinnati City Council adopted an ordinance designating the property as historic. It then issued a “Notice of Violation-Vacant Building” to the owners and denied the owners’ request for a waiver of the requirement to obtain a Vacant Building Maintenance License.

Subsequently, the owners sought a “Certificate of Appropriateness” to move forward with the demolition—as required under the new historic designation. The Historic Conservation Board denied the request and the owners took their case to court.

Just Compensation for Refusal to Permit Demolition

Almost two years later, the Ohio First Circuit Court of Appeals ruled that the city had acted improperly by relying on the late-applied historic designation to prevent the demolition. With its hand forced, the city issued a demolition permit and the owner promptly demolished the Gamble House.

Based on the Court’s ruling, in 2014 the owner filed a second lawsuit seeking just compensation for a taking of private property under the Fifth Amendment. Specifically, they argued that the city’s refusal to grant the demolition permit constituted a regulatory taking because the city’s actions deprived them of all economically beneficial use of the property.  Perhaps unsurprisingly, the city challenged the owners’ claim, by asserting that the owners could have continued to “use” the dilapidated home as they had prior to applying for the permit.

Here, too, the Court sided with the owners.  It rejected the city’s appraisal assigning value to the property since the cost of repair “would vastly exceed the value of the home,” and it agreed with the owners that they could not make any economically-viable use of the home in its pre-demolition state. However, it also ruled that the owners were only entitled to compensation from the date that the Historic Conservation Board denied their request for a Certificate of Appropriateness. Based on the Court’s ruling in the earlier case, this was the date that the regulatory taking occurred.

Contact Owners’ Counsel of America to Speak with an Inverse Condemnation Attorney in Your State

The saga of the Gamble House demonstrates the lengths to which some property owners must go to protect their rights. If you are facing a similar issue, your local OCA attorney may be able to help. To speak with an inverse condemnation lawyer in your state, please contact us today or locate a lawyer here.

(Side bar #2: We learned about both this case and Mr. Gamble’s P&G/Ivory soap fame from OCA Hawaii member, property rights attorney, and self-described “takings nerd” Robert Thomas.  More analysis about this case can be found on his Inverse Condemnation blog here.)

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