The Senate today passed Sen. Jim Hendren's bill to hamstring regulation and zoning by state and local governments.
This hasn't been getting a lot of attention but it's a very big deal. Under the bill, if a state or local law or rule reduces a property value by 10 percent, the property owner — or even a property user such as a lessee — would have a claim to compensation. Whether it was an environmental protection or some rinky-dink parking regulation, a property owner could get an appraisal and if they could show a decrease in value of 10 percent (not all that hard to do), they could take the governmental unit to court. If they convinced a jury, the landowner could either collect the difference in property value from the government or they could unilaterally condemn the property and collect its full value from the governmental unit, which would become the owner of the property.
"The bill will have a freezing effect on community development as we know it in cities and counties," Sen. David Johnson said. Frankly, that's an understatement. Regulation would become nearly impossible. State and local governments would be under landowners' thumbs. (Johnson notes that Arkansas already has the greatest legal protections for property owners in the country.)
Let's use the Lake Maumelle Watershed land-use ordinance as an example. If it passed, a significant number of landowners could plausibly argue that property values fell by ten percent, and they would certainly take it to court. My reading of the bill is that the county would be on the hook, but County Attorney Karla Burnett told me it would be Central Arkansas Water. Either way, we'd be talking about millions of dollars. Or the governmental unit can simply rollback the regulations. This bill would leave the land-use ordinance — or any significant attempt to regulate the watershed to protect drinking water — dead on arrival.
There is some dispute about what kind of retroactive force the bill would have (see Burnett's points below), but it's at least possible that any hope for limits on development in the watershed face a now-or-never sprint. The emergency clause failed in the Senate, so if it passes the House, the bill would likely go into affect this summer. A land-use ordinance seemed set to pass last week but was delayed by an amendment from JP Tyler Denton. I take Denton at his word that he had idealistic reasons for his amendment, though questions linger about the influence of landowners that don't want to see zoning at all. Either way, in practice, if this law passes and a land-use ordinance isn't passed before it goes into affect, we may end up viewing the Quorum Court's meeting last week as the day that regulating the watershed died.
Meanwhile, the bill could complicate the ability of local governments to regulate anything, large or small. Sen. Robert Thompson made the point that the law could apply to recent rules passed in his native Paragould about closing times and noise levels of bars. Personally, I like to party late when I'm in Paragould, but this bill would appear to make almost any effort at any sort of zoning at all prohibitively expensive for a community.
I wonder about blue laws. There is an exception for regulating "public nuisance" which looks incredibly vague to my non-lawyer eyes.
The bill heads to House Judiciary next (more hope of it getting killed there than State Agencies).
Responding to an FOIA request, Burnett provided me with a copy of a memo she sent regarding problems with the bill. After the jump, what she calls "the most disturbing issues." Read the whole thing here: SB367.pdf
• It applies not only to owners of real property, but to users as well.
• Despite comments to the contrary the bill could have retroactive application to programs already in place. It applies to the "implementation" of a state or local government regulatory program. A program is "implemented" with respect to an owner's or user's property when actually applied to that property, and the statute of limitations begins upon "the final administrative decision implementing the regulatory program affecting plaintiffs' property."
• It only exempts regulatory programs that prevent "public nuisances."
• It does not exempt land use laws that are required by federal law.