Eminent Domain Report

The California Coastal Act is a regulatory regime with many layers and complexities. Generally, however, the Act requires development within a designated coastal zone to obtain a coastal development permit. This permit may be issued by the local jurisdiction, the California Coastal Commission, or in rare cases, by both the local jurisdiction and the Coastal Commission. Even if the local jurisdiction has the authority to issue the permit in the first instance, the California Coastal Act may allow an aggrieved party to appeal the local jurisdiction’s decision to the California Coastal Commission.

Mindful of the potential impact that the Coastal Act could have on property owners within the coastal zone, the Legislature included a provision in the Coastal Act that is intended to avoid interpretations of the Act that would result in a taking without just compensation. Specifically, the Coastal Act states:

The Legislature hereby finds and declares that this division is not intended, and shall not be construed as authorizing the commission, port governing body, or local government acting pursuant to this division to exercise their power to grant or deny a permit in a manner which will take or damage private property for public use, without the payment of just compensation therefor.  (Cal. Pub. Resources Code, § 30010.)

In Ralston v. County of San Mateo, plaintiffs purchased undeveloped land in the County of San Mateo that all parties agree is within the designated coastal zone. In anticipation of building a house on the property, the plaintiffs made a formal inquiry with the County’s community development director regarding the potential application of the County’s local coastal program. After consulting with County counsel, the community development director allegedly stated that no home on the property would be allowed in light of restrictions in the County’s local coastal program. The plaintiffs then asked for a letter confirming that they would potentially be permitted to develop on the property, as the local water district required this letter in order to provide potable water to the property. The community development director allegedly refused to provide this letter, again citing the development restrictions under the County’s local coastal program.

In response, the property owners filed a lawsuit in federal court alleging a regulatory taking under 42 U.S.C. § 1983 and the Fifth Amendment to the U.S. Constitution. While acknowledging that under the Supreme Court’s decision in Knick v. Township of Scott (2019) 129 S. Ct. 2162, a property owner is no longer required to exhaust state court remedies before pursuing a federal takings case, the federal court reaffirmed that a final decision is still required in order for a federal takings case to be ripe. The federal court then found that based on the alleged facts and the applicable law, there was no final decision by the County in this case.

The federal court first found that under the alleged facts, the takings claim was not ripe because the County’s community development director did not have the authority under the County’s local coastal program or municipal code to issue a final decision regarding the interpretation of the County’s local coastal program. As a separate basis for its decision, the federal court also found that the takings claim would not be ripe until the plaintiffs submitted a coastal development permit application and the County had “the opportunity to review a sincere development proposal, apply its regulations to that proposal, and decide whether to approve, deny, or condition a [coastal development permit].” The federal court noted that even if the local coastal program might otherwise prohibit development on the property, it was possible that the County could decide to invoke section 30010 of the Coastal Act and allow for some type of residential development in order to avoid a taking.

In the coastal zone, obtaining a final decision can often be a time consuming and expensive process. Nevertheless, the federal court’s decision is a stark reminder to practitioners and property owners of the need to exhaust this process, even after Knick.