When a State or local government law, regulation or ordinance in Florida decreases the value of the land at which it is directed, the affected landowner can invoke the Bert J. Harris, Jr., Private Property Rights Protection Act (the “Bert Harris Act”), § 70.001, Florida Statutes , to obtain compensation for the actual loss to the fair market value of the real property. But what if the government action does not directly apply to the landowner’s dirt, but instead only applies to the property lying adjacent to the landowner’s? If the government action decreases the fair market value of the adjacent landowner’s property, can the landowner claim relief as if the government action directly applied to her land? An amendment to the Bert Harris Act set to take effect on October 1, 2015, resolves a conflict in the courts that emerged last month by clarifying that only the owner of real property that is the subject of the government action can invoke the act to obtain relief.
What is the Bert Harris Act?
The Bert Harris Act provides that “[w]hen a specific action of a governmental entity has inordinately burdened an existing use of real property . . . the property owner of that real property is entitled to relief. . . .” The Act defines an “action of a governmental entity” as any specific governmental act which affects real property, compensating a landowner for any decrease in the property’s fair market value caused by the government action. To recover under the Act, a landowner must prove the government action “inordinately burdened” the property, meaning that the action “directly restricted or limited the use of real property” to such an extent that the action permanently eliminated the landowner’s reasonable expected return on the land.
Conflict Emerges in the Courts
Florida courts agree that if a landowner purchases property based on the ability to improve the land, but a subsequent government action permanently restricts that ability, the landowner may invoke the Bert Harris Act. This past spring, the First and Second District Courts of Appeal reached opposite conclusions on whether the Act, in its current form, provides relief where a landowner claims that a government action, enacted and applied after the landowner’s purchase, affects an adjacent property in such a way that the landowner’s own property suffers a decrease in its fair market value.
When that Quiet Park Next Door Becomes a Fire Station:
The Smiths purchased an undeveloped riverfront tract of land that lay adjacent to an empty plot zoned “residential low density.” A deed further restricted the empty adjacent plot by limiting its use to the leisure and recreation of county employees. The Smiths purchased their land expecting to build a luxury home on the property given its scenic location. Two years after the Smiths’ purchase, the City of Jacksonville canceled the deed restriction on the adjacent plot and rezoned the land to allow construction of a two-story, 13,000 square-foot fire station housing multiple fire trucks. An appraisal of the Smiths’ property determined that the fire station’s presence decreased the fair market value of their land by $470,000, and the Smiths sought relief under the Bert Harris Act.
In City of Jacksonville v. Smith , the First District Court of Appeal determined the Act failed to provide any relief for the Smiths because the government action did not apply directly to their land. Because the rezoning only modified the permissible use of the adjacent property, and the Smiths were still free to build the luxury home, the court found relief unavailable under the Act. The Court feared that providing the Smiths relief would cause a “cataclysmic change” in the law, anticipating that such a decision would encourage property owners to invoke the Act every time the government rezoned a piece of property to permit a school, courthouse or other building to be built in the surrounding area and a property appraiser was willing to opine that such construction decreased the value of the surrounding land.
When a Phosphate Mine Moves Next to a Veterans Rehab Center:
A Florida corporation purchased property to construct a neurological rehabilitation center serving veterans and brain injury survivors. Designated as a “rural center” by the county, the land’s classification prevented any phosphate mining within a quarter-mile of the property line. Five years after the rehabilitation center’s designation as a rural center, the county approved a special exception to the mining restriction, allowing the property adjacent to the rehabilitation center to operate a phosphate mine within 150 feet to the west and north and 207 feet to the east of the property line. The owner of the rehabilitation center property claimed the excessive noise, vibration and dust decreased the land’s fair market value by a staggering $38,000,000 and relegated the property to agricultural and recreational uses. Like the Smiths, the owner of the rehabilitation center turned to the Bert Harris Act for relief.
Contrary to the outcome in Smith , the Second District Court of Appeal in FINR, II Inc. v. Hardee County said a plain reading of the Act included the rehabilitation center among the parties entitled to compensation. The court found that even though the county’s action only modified the permissible use of the adjacent property, the county’s decision directly burdened the rehabilitation center by preventing, for all intents and purposes, the owner’s intended use. In declining to follow Smith , the court disagreed with the conclusion in Smith that this application of the Bert Harris Act would cause a cataclysmic change in the law, finding that relief under the Act would still be unavailable to those only incidentally affected by a governmental action or those who the government could not reasonably anticipate would be negatively impacted.
Florida Legislature Promptly Amends Act
The day after the Second District Court of Appeal reached its conclusion in FINR, II Inc. , Governor Rick Scott signed into law House Bill 383 (2015), amending the Bert Harris Act to clarify that only those property owners whose land is the subject of and directly impacted by a governmental action may bring a claim under the Act. An analysis of the amendment by the Florida House of Representatives expressly supports the Smith decision; in doing so, the legislature rejected the Act’s application to adjacent landowners as supported by the Second District Court of Appeal in FINR, II Inc .
Prior to the Act’s amendment, the Florida Supreme Court agreed to hear an appeal of Smith . Notwithstanding the change in the law set for October, the Court may still address the case and the conflict between the First and Second District Courts of Appeal. Because the amendment is set to take effect on October 1, the Supreme Court’s decision on Smith could impact all Bert Harris Act claims currently pending in the courts and any suits filed prior to October 1. Rogers Towers, P.A. will continue to monitor the Act’s development and the Florida Supreme Court’s action. Check back in for an update as more information becomes available.