Ownership of real property is a protected constitutional right. Yet when a local government enacts a development moratorium depriving a landowner of the use of their land for potentially a year or more, the response from public officials is often deafening silence. To make matters worse, cities, counties and townships can enact development moratoria with no advance public notice or opportunity for affected parties to raise objections at a public hearing. It is not unusual for landowners or business owners to read about a new moratorium in the local newspaper or by receiving a phone call advising that their land use application is on hold or been rejected outright due to enactment of a new moratorium.
The U.S. Supreme Court and state courts have upheld the constitutionality of development moratoria for a limited duration and for a specific purpose. In California a moratorium up to three years in length was found lawful; counties in Minnesota can enact moratoria that last more than two years. As long as the stated purpose of the moratorium is to allow for a study of applicable land use regulations, and is not being used for a punitive purpose, it is not subject to legal challenge. Cities and counties have learned how to carefully navigate the standard to avoid the allegation they are acting for an unauthorized, i.e. punitive, purpose.
So what happens while the moratorium is in effect? Ostensibly, the local government is required to use the “breathing space” created by the moratorium to study its land use regulations to determine if they are appropriate for a given location or type of use. Too often, however, the moratorium is simply a way to block a project through the passage of time, causing the development opportunity to be lost through an expired contract, financing or change in the market. To make matters worse, local governments have unlimited discretion to amend their comprehensive plans and/or zoning ordinances to entirely block a proposed project by rendering it non-compliant.
You might be thinking that the affected landowner or business owner has some constitutional protections to ensure just compensation for the loss of use of their land; you would be wrong. Unless there is direct evidence that a moratorium was enacted to specifically block a project (very hard to demonstrate), local governments have virtually unchecked discretion to impose moratoria with no legal exposure. It doesn’t matter that you just acquired property at a premium to construct a new convenience retail use; the use of a moratorium to change the zoning code to preclude or limit the use is not a compensable action.
There have been numerous attempts over the years to amend Minnesota’s interim ordinance statute to build in some procedural protections for property owners and others. These efforts are met with fierce opposition by local government representatives who don’t want to be told how to govern their communities. Environmental protection organizations also strongly oppose changes because moratoria are a politically expedient means of preventing land from being developed. And, of course, NIMBYs love moratoria as a way to prevent change from occurring in their back yard. Suffice to say that when state legislators hear from these groups at the “local” level, even the most ardent “property rights” conservative runs for cover; no legislator wants to get crosswise with their local elected officials. The homebuilding industry in Minnesota did recently secure a modest change to the interim ordinance statute by requiring 10-day prior notice and a public hearing before a city enacts a moratorium relating to housing; the thought of extending the elemental due process change to counties or townships was a political virtual non-starter.
To add the final piece of salt to the wound, notwithstanding that a moratorium halts the use of affected property, the obligation to pay property taxes based on an assessment of highest and best use remains intact. So, not only does the local government win by enacting a moratorium, it wins twice by collecting property taxes on the same property. Go figure.
The old adage about “all politics being local” is especially true with regard to development moratoria; some cities have a philosophical aversion to using them or at least take pains to protect any project that is being actively considered at that time. Unfortunately, not enough communities show this type of consideration.