Regulatory Takings

What Should a Developer Legally Expect?
By: Wayne K. Olson

Over the last two decades, the U.S. Supreme Court has given some guidance on how to determine whether a regulatory taking has occurred. Unfortunately, the court has not given clear, consistent answers in its land use decisions and lower courts are still struggling to apply the proper rules. The landowner's right to develop property is affected by both state and federal laws. State statutes often interplay with state and federal constitutional rights. However, a regulatory "taking" only occurs when there is a violation of the federal or state constitution.

1. The following are the applicable constitutional provisions for a takings analysis:

   Fifth Amendment, U.S. Constitution

   No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

   U.S. Const. Amend. V.

   Fourteenth Amendment, U.S. Constitution

   Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

   U.S. Const. Amend XIV, § 1.

   Article 1, Section 19, Texas Constitution

   Section 19. Deprivation of life, liberty, etc.; due course of law.

   Sec. 19. "No citizen of this State shall be deprived of life, liberty, property, privileges or immunities, or in any manner disfranchised, except by the due course of the law of the land."

   Tex. Const. Art. I, § 19.

   Article 1, Section 17, Texas Constitution

   Section 17. Taking, damaging or destroying property for public use; special privileges and immunities; control of privileges and franchises.

   Sec. 17. "No person's property shall be taken, damaged or destroyed or applied to public use without adequate compensation being made, unless by the consent of such person; and, when taken, except for the use of the State, such compensation shall be first made, or secured by a deposit of money; and no irrevocable or uncontrollable grant of special privileges or immunities, shall be made; but all privileges and franchises granted by the Legislature, or created under its authority shall be subject to the control thereof."

   Tex. Const. Art. I, § 17.

   Although similar in scope, there is an important distinction between the Texas and the U.S. Constitutions' takings clauses: only the Texas Constitution requires compensation when property is "damaged" or "destroyed" for a public purpose without compensation. City of Austin v. Teague, 570 S.W.2d 389, 393 (Tex. 1978).

   In order for there to be a taking of real property, a landowner must show that: 1) a property right existed, and 2) the property right was unreasonably interfered with. The Supreme Court has held that under the due process clause, property rights are not created by the constitution; they arise from an independent source such as state law. Board of Regents v. Roth, 408 U.S. 564, 577, 92 S. Ct. 2701, 2709, 33 L. Ed.2d 548 (1972). This independent source may be either statutory or case law. See, Memphis Light, Gas and Water Division v. Craft, 436 U.S. 1, 9, 98 S. Ct. 1554, 1560, 56 L. Ed.2d 30 (1978).

2. Statutory Provisions

   In Texas, several principal statutes affect a landowner's right to develop and use his property:

   The Zoning Enabling Act, Tex. Loc. Gov't Code Ann. § 211.001 - 211.0 15 (Vernon 1999 and Supp. 2000), gives municipalities local control over the use of land and vests in the governing body the discretion to place reasonable limitations on uses.

   The Platting Enabling Act, Tex. Loc. Gov't Code Ann. § 212.001 - 212.018 (Vernon 1999), gives municipalities control over the development of land and the construction of public infrastructure necessary to serve the public.

   The Impact Fee Act, Tex. Loc. Gov't Code Ann. § 395.001 - 395.081 (Vernon 1999 and Supp. 2000), authorizes the imposition of assessments or fees for the cost of providing certain public infrastructure.

   The Vested Rights Act, Tex. Loc. Gov't Code Ann. § 245.001 - 245.006 (Vernon Supp. 2000), gives property owners a vested right to develop based upon previously filed applications.

   The Private Real Property Rights Preservation Act, Tex. Loc. Gov't Code Ann. § 2007.001 - 2007.045 (Vernon 1999), provides for invalidation and/or compensation for regulatory actions taken by units of local government. (See HB 25, 2001 Legislative Session, proposing to extend application of the Act to municipalities.)

   The Municipal Annexation Act, Tex. Loc. Gov't Code Ann. § 43.002 (Vernon Supp. 2000) prohibits a municipality from interfering with a lawful use of land commenced prior to annexation.

3. What Constitutes a Taking?

   1. Reasonable Exercise of Police Power. The general rule is that while property may be regulated, when the regulation goes too far it becomes a taking. Pennsylvania Coal v. Mahon, 260 U.S. 393, 415, 43 S. Ct. 158, 160, 67 L. Ed. 322 (1922). There is no set formula that establishes where a regulation ends and a taking begins. Goldblatt v. Town of Hempstead, 369 U.S. 590, 594, 82 S. Ct. 987, 990, 8 L. Ed.2d 130 (1962).

   1. The purpose behind the takings clause is to bar the government from forcing some people alone to bear the public burdens which, in fairness and justice, should be borne by the public as a whole. Armstrong v. United States, 364 U.S. 40, 49, 80 S. Ct. 1563, 1569, 4 L.Ed. 2d 1554 (1960). The Texas Supreme Court has long held that police regulations are not unconstitutional merely because they operate as a restraint on private rights of persons or property or will result in loss to individuals. A city exercising its regulatory powers under state statute or the Texas Constitution is subject to limitations. However, damage to or loss of property resulting from a proper exercise of such power does not constitute a taking of property under the right of eminent domain, and compensation is not required to be made therefor. State v. Richards, 301 S.W.2d 597, 600 (Tex. 1957). (See also, Lombardo v. City of Dallas, 73 S.W.2d 475, 476 (Tex. 1934), upholding a municipality's right to zone property.) Whether a particular city regulation is unconstitutional must be determined by a review of both the state and federal constitutions. Id. at 478.

   2. Denial of Economically Viable Use. The application of general zoning regulations to a particular property are not considered to be a taking under the United States Constitution unless they fail to substantially advance a legitimate governmental interest or they deny an owner economically viable use of his property. Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S. Ct. 2138, 2141, 65 L. Ed.2d 106 (1980). It now appears that in order for a local regulation to constitute a taking, it must deprive the property owner of all economically viable use. Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S. Ct. 2886, 120 L.Ed.2d. 798 (1992); Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex. 1998); Penn Central Transportation Co. v. City of New York, 438 U.S. 104, 131, 98 S. Ct. 2646, 2663, 57 L. Ed.2d 631 (1978). A mere diminution of value in and of itself will not constitute a taking. Some examples include:

      1. Limiting use to one to five dwelling units per five acres was not a taking (Agins, 447 U.S. at 257, 100 S.Ct. at 2140);
      2. diminution in value from $495,000 to $52,000 is not a taking (Pace Resources v. Shrewsbury Township, 808 F.2d 1023, 1031 (3rd Cir. 1987));
      3. diminution in value from $800,000 to $60,000 (87 1/2%) is not a taking (Hadacheck v. Sebastian, 239 U.S. 394, 405, 36 S. Ct. 143, 143, 60 L. Ed. 348 (1915));
      4. Value diminished to 1/3 or 1/4 of pre-regulatory value is not a taking (Village of Euclid v. Ambler Realty Co. , 272 U.S. 365, 390, 47 S. Ct. 114, 119, 71 L. Ed. 303 (1926), cf. Eastlake v. Forest City Enterprises, Inc. , 426 U.S. at 674, n. 8, 96 S. Ct. at 2362, n. 8.);
      5. diminution in value from $2,000,000 to $100,000 is not a taking (William C. Haas & Co., Inc. v. City and County of San Francisco, 605 F.2d 1117, 1120 (9th Cir. 1979) cert. denied 445 U.S. 928, 100 S. Ct. 1315, 63 L. Ed.2d 761 (1980));
      6. diminution in value from $400,000 to $75,000 is not a taking (HFH Ltd. v. Superior Court, 15 Cal.3d 508, 520, 542 P.2d 237, 245, 125 Cal. Rptr. 365, 373 (1975), cert. denied 425 U.S. 904, 96 S. Ct. 1495, 47 L. Ed.2d 754 (1976)); and
      7. diminution in value from $15,000,000 to $2,400,000 is not a taking (Mayhew, 964 S.W.2d at 938).
   3. Investment Backed Expectations. In reviewing whether a regulatory taking has occurred, the courts will look at the nature of the governmental action and its economic effect. Penn Central, 438 U.S. at 124, 98 S. Ct. at 2659 . To determine whether economically viable use has been deprived, the court will look at whether the regulation interferes with the landowner's distinct, reasonable investment backed expectations. Id. The mere fact that a landowner will lose a profit on his investment is not important. Agins, 447 U.S. 255, 100 S. Ct. 2138; Williamson County Regional Planning Commission v. Hamilton Bank of Johnson County, 473 U.S. 172, 105 S. Ct. 3108; 87 L. Ed.2d 126 (1985).

      The Texas Supreme Court has adopted the Agins standard in determining whether a regulatory taking exists. In Mayhew, the Supreme Court noted that the application of a general zoning law to a particular piece of property may constitute a regulatory taking if it:

      1. does not substantially advance a legitimate state interest; or
      2. denies an owner of all economically viable use. Mayhew, 964 S.W.2d at 933.

      In regard to the first tier of the Agins test for determining whether a local regulation substantially advances a legitimate state interest, the Agins court upheld the City of Tiburon's regulations limiting the development of a five acre tract to single family development between one and five dwellings. The court relied on statewide goals to encourage local open space and discourage the premature and unnecessary conversion of open space land to urban areas, and found that the city's regulations were designed to protect the residents of Tiburon from the ill-effects of urbanization. Agins, 447 U.S. at 261-62, 100 S.Ct. at 2142.

      Similarly, the Mayhew court found that the Town of Sunnyvale's denial of a zoning application for the construction of 3600 dwelling units fulfilled a legitimate state interest in:

      1. protecting residents from the ill-effects of urbanization;
      2. enhancing the quality of life of the city;
      3. preserving desirable aesthetic features;
      4. preserving agricultural uses; and
      5. controlling both the rate and character of community growth.

      In spite of the noted distinction between the Texas and U.S. Constitutions, the Texas Supreme Court assumed, without deciding, that "the state and federal guarantees in respect to land-use constitutional claims are coextensive . . ." Mayhew, 964 S.W.2d at 932.

      In analyzing the second tier of the takings analysis, the Texas Supreme Court stated that all economically viable use must be taken in order for there to be an inverse condemnation claim. Id. at 933. The Texas Supreme Court focused on the Penn Central analysis of "reasonable investment backed expectations." The Mayhew court looked at the historical facts surrounding Mayhew's property to determine the investment backed expectations to which the property owner was legally entitled. The Supreme Court concluded that Mayhew had no reasonable investment backed expectation to build 3600 units on his property because he had originally purchased his property for ranching purposes several decades earlier. Later purchases of land by Mayhew occurred at a time when the city's zoning ordinance had restricted development to one unit per acre; therefore, Mayhew could not have reasonably expected to build 3600 units on his land. Id., at 935-38.

      Another important aspect of the Mayhew court's decision was that the court treated the review of investment backed expectations as only one element of the takings analysis. Id. , at 935. After determining that there was no deprivation of Mayhew's investment backed expectations, the court noted that Mayhew's property retained a value of $2.4 million after the denial of his application. Therefore, even though the value of Mayhew's property would have been $15 million if his zoning application had been approved, there was no taking since all economically viable use of the property had not been deprived. Id. , at 937.

      Developers and landowners often have difficulty in successfully asserting reasonable investment backed expectation arguments. Several circuit court decisions illustrate this difficulty. In District Intown Properties Ltd. Partnership v. District of Columbia, 198 F.3d 874, 883 (D.C. Cir. 1999), an owner of a parcel of land that had contained an apartment complex since 1961 failed to establish the existence of a reasonable investment backed expectation when the District denied permits to build townhouses after the owner subdivided the property in 1992. The denial was based on a historical landmark law that was adopted after the owner purchased the property. The court ruled that the denial of permits did not interfere with the owner's primary expectation concerning the parcel, because the owner could still use the property in the same manner as it had been used for the past 28 years. This decision presumably followed the precedent established in Penn Central, in which the U.S. Supreme Court similarly upheld a historical landmark law because it allowed the property owner to continue to use the property precisely as it had been used for the past 65 years. Penn Central, 438 U.S. at 136, 98 S.Ct. at 2665.

      In Good v. U.S. , 189 F.3d 1355, 1361- 62 (C.A. Fed. 1999), a developer lacked a reasonable investment backed expectation when he purchased land in 1973 that he would obtain the regulatory approval needed for residential development. Thus, the Army Corps of Engineers' denial of a permit in 1994 for fill of wetlands adjacent to navigable water was not a taking, even though the denial was based on the Endangered Species Act, which did not exist in 1973. The court reasoned that since the developer had difficulty in obtaining approval when he purchased the land, he could not have been oblivious in 1973 to rising environmental awareness. The court noted that the developer had reduced his ability to claim surprise by waiting several years to obtain a permit.

4. Substantive Due Process

   The Mayhew court also analyzed whether the town's actions denied Mayhew of substantive due process. The court noted the distinction between substantive due process and whether a regulation substantially advances a legitimate state interest. In determining whether a regulation substantially advances a legitimate state interest, a court must look at the practical effect of the regulation. In other words, is the regulation actually effective? Does it accomplish what it was intended to accomplish? Mayhew, 964 S.W.2d at 933-35.

   In reviewing a substantive due process challenge, however, the court looks merely at the objective of the regulation and determines if a rational relationship exists between the ordinance and its purpose. The court is not interested in the ultimate effectiveness of the ordinance under this analysis, but only on whether the governing body could have rationally believed at the time of the enactment of the ordinance that it would promote its objective. The Supreme Court utilized the Issuable Fact Doctrine, which says that if the action is "fairly debatable", the decision of the town must be upheld. Conversely, the court will invalidate a regulation only if it is clearly arbitrary and unreasonable. The court easily concluded that Sunnyvale's concerns regarding urbanization were legitimate governmental interests and that the denial of Mayhew's application was rationally related to those interests. (Stated differently, the decision was "substantially related" to the "public health, safety and welfare.") Id., at 938-39.

   Similar y, the U.S. Supreme Court noted this distinction in Nollan v. California Coastal Commission by stating:

   We have required that the regulation 'substantially advance' the 'legitimate state interest' sought to be achieved, not that the State could rationally have decided the measure adopted might achieve the State's objective.

   Nollan v. California Coastal Com'n, 483 U.S. 825, 836 n.3, 107 S.Ct. 3141, 3148 n.3, 97 L.Ed.2d 677 (1987), (citations omitted).

5. Ripeness

   Both federal and state courts respect the rights of local governments to make discretionary decisions with regard to the use of land. Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers, 2001 WL 15333, 8. As noted by the Texas Supreme Court in Mayhew, "Zoning decisions are vested in the discretion of municipal authorities; courts should not assume the role of a super zoning board." Mayhew, 964 S.W.2d at 933. (See also, Raskiewicz v. New Boston, 754 F.2d 38, 44 (1st Cir. 1985) a federal court will not sit as a zoning board of appeals; Shelton v. City of College Station, 780 F.2d 475, 483 (5th Cir. 1986), federal courts will not get involved in state zoning matters.) In this light, federal courts will not review a takings claim until all adequate state remedies are exhausted. Hamilton Bank, 473 U.S. at 195, 105 S.Ct. at 3121. Therefore, a state administrative mechanism for the payment of compensation must be exhausted before a takings claim may be brought in federal court. First English Evangelical Lutheran Church of Glendale Heights v. County of Los Angeles, 482 U.S. 304, 107 S. Ct. 2378, 96 L. Ed.2d 250 (1987).

   Barring a separate state remedy, a final decision by the appropriate authority is necessary before a takings analysis can proceed. Hamilton Bank, 473 U.S. at 186, 105 S.Ct. at 3116. This is the essence of the ripeness doctrine. In order for a regulatory takings claim to be ripe, the local government's final decision must define the extent to which the regulations affect the development and the use of the property at issue. Mayhew, 964 S.W.2d at 929. Further, for a land use decision to be ripe for review, typically more than one application for development must be brought, usually including applications for and denials of any applicable variances that would allow meaningful development. Hamilton Bank, 473 U.S. at 187-88, 105 S.Ct. at 3117. However, the Texas Supreme Court has noted that while a failure to reapply or seek a variance would normally preclude a takings challenge, under unique circumstances, a constitutional challenge to the denial of a zoning application may be ripe for review. Mayhew, 964 S.W.2d at 931. The ripeness doctrine does not require a property owner to seek permits for development that would be futile or that the property owner does not deem economically viable. Id. , at 932. (See also, Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1013 n.3, 112 S.Ct. 2886, 2892 n.3, 120 L.Ed.2d 798 (1992), futile variance requests or reapplications are not required.)

   Perhaps the most famous case exemplifying the importance of making numerous applications is City of Monterey vs. Del Monte Dunes at Monterey Ltd., 526 U.S. 687, 119 S.Ct. 1624, 143 L.Ed.2d 882, (1999). In Del Monte Dunes, the U.S. Supreme Court upheld a $1.45 million damage verdict against the City of Monterey, California for a wrongful denial of an application to build a multifamily housing complex. Id. , at 721, 1644. The facts in this case show that a municipality's continuous denial of a development project may amount to a taking of property and a denial of substantive due process. The developer owned 37 acres of beach front property that was zoned for multifamily use. The zoning on the property permitted 1000 residential units. The developer applied for only 344 residential units. The planning commission denied the application, but stated that a proposal for 264 units would receive favorable consideration. The developer revised the proposal for 264 units. The planning commission again denied the application, but said that a plan for 224 units would be approved. The land owner prepared a proposal for 224 units. The planning commission again denied it. The land owner appealed to the city council, which overruled the planning commission's denial and referred the project back to the planning commission with instructions to consider a proposal for 190 units. The planning commission again denied this proposal. The developer again appealed to the city council and the council granted a conditional use permit. The planning commission rejected the development plan based upon the conditional use permit. On appeal to the city council, the city council also denied the development plan, stating that the plan: 1) did not provide adequate access; 2) would damage the environment; and 3) would disrupt the habitat of the Smith's Blue Butterfly. The Supreme Court concluded that after five years, five formal decisions and the denial of nineteen different site plans, the city should be liable to the developer. Id., at 695-98, 1632-33.

   Even this exhaustive reapplication process was originally ruled to be "not ripe." However, on appeal, this decision was reversed, thereby allowing the Supreme Court to review this takings challenge. Id.

6. Downzoning

   Unlike the challenges to cities' development regulations that the courts reviewed in Mayhew and Del Monte Dunes, municipalities may also be challenged for affirmative land use decisions that result in downzoning or similar restrictions on the use of a developer's property.

   In Sheffield Development Company, Inc. v. City of Glenn Heights, 10-99-00232-CV, the Tenth Court of Appeals in Waco is currently reviewing a development application under a takings analysis to determine whether Sheffield, a development company, has been deprived of a constitutional right to develop its land. Sheffield sued the City over the City's extension of a development moratorium and the downzoning of Sheffield's property. Just days after Sheffield closed on the purchase of the property, the City adopted a moratorium preventing Sheffield from developing the property. The City continued to extend the moratorium for a period of nearly a year. The City also downzoned the property from minimum 6,500 square foot lots to minimum 12,000 square foot lots.

   The District Court in Ellis County bifurcated the liability and damages portions of the trial. The judge granted a directed verdict for the City on all of Sheffield's claims regarding the extension of the moratorium and the downzoning, except for Sheffield's claim concerning its investment-backed expectations. The judge did hold that the downzoning of the property was a permanent inverse condemnation of Sheffield's property, and the jury awarded $485,000 in damages to Sheffield.

   Sheffield appealed, making the following arguments:

   • the City did not have the right to extend the moratorium on developing the property without making further studies, plans, or hearings with regard to the zoning of the property, especially since each of the stated governmental interests for imposing the moratorium was satisfied at the time of the extension;
   • since the moratorium extension prohibited all development of the property and did not substantially advance a legitimate governmental interest, inverse condemnation occurred;
   • there is no evidence in the record that the downzoning substantially advanced a legitimate governmental interest; and
   • because the moratorium was not in effect between March 6, 1997 to March 17, 1997, and because Sheffield submitted a site plan / preliminary plat for development on March 11, 1997, the City's refusal to accept the application based on the moratorium was illegal and invalid; further, the plat was approved as a matter of law, pursuant to Tex. Gov't Code Ann. § 212.009(a) (Vernon 1999), upon the city council's inaction within 30 days after the plat was filed.

   Unlike the Sunnyvale situation, Sheffield's proposed development in the City of Glenn Heights was in accordance with the city's comprehensive plan and zoning regulations that were in effect at the time Sheffield purchased the property. This case does not involve the refusal to rezone property in accordance with the developer's wishes, but rather, a deliberate effort on the part of the City to change the applicable zoning regulations on property due to a change in philosophy about what type of land development would be in the public's best interest. It is likely that the City's action in rezoning the property did not destroy all economically viable use of the property; however, it would substantially deprive Sheffield of his out of pocket "investment." Although Sheffield was not continuing a use that had been in existence for years as in Penn Central, he had commenced construction of a portion of the subdivision prior to the city's rezoning The Court of Appeals will hopefully give us a sound pronouncement on whether this type of interference with a developer's investment backed expectations in and of itself is enough to require public compensation.

   In a separate case arising out of the same proposed development, the Fifth Court of Appeals in Dallas in City of Glenn Heights v. Sheffield Development Company, Inc., 05-00-01238-CV (Tex. App.- Dallas filed 2000), is hearing an appeal from Sheffield concerning the application of the Vested Rights Act, Tex. Loc. Gov't Code Ann. § 245.001 - 245.006 (Vernon Supp. 2000). Section 245.002(a) - (b) (Vernon Supp.2000), provides:

   1. Each regulatory agency shall consider the approval, disapproval, or conditional approval of an application for a permit solely on the basis of any orders, regulations, ordinances, rules, expiration dates, or other properly adopted requirements in effect at the time the original application for the permit is filed.
   2. If a series of permits is required for a project, the orders, regulations, ordinances, rules, expiration dates, or other properly adopted requirements in effect at the time the original application for the first permit in that series is filed shall be the sole basis for consideration of all subsequent permits required for the completion of the project. All permits required for the project are considered to be a single series of permits. Preliminary plans and related subdivision plats, site plans, and all other development permits for land covered by the preliminary plans or subdivision plats are considered collectively to be one series of permits for a project.

   At the time of the downzoning, Sheffield was in the process of developing approximately 40 acres of his 194 acre tract under the zoning regulations that were in effect at the time he purchased his property. In 1986, the property had been zoned as a planned development district, and the City had approved a Concept Site Plan, as well as a House Size Concept Plan and a Lot Concept Plan. Sheffield bought the property in 1996. In 1998, the City downzoned his property, as explained above. In 1999, the City denied Sheffield's Preliminary Plat / Detail Plan / Site Plan ("Preliminary Plat") because the lot sizes were smaller than the minimum 12,000 square foot lots authorized under the new zoning ordinance.

   Sheffield did not raise any Vested Rights issues in the Ellis County lawsuit and appeal because the Vested Rights Act was not in effect at the time that suit was filed and tried. However, Sheffield filed suit in the 192nd Judicial District Court in Dallas County, asserting that the City's denial of the Preliminary Plat violated the Vested Rights Act. The District Court granted summary judgment for Sheffield, holding that the site plan approved by the city council in 1986 was the first "permit" for the project proposed by Sheffield. The City appealed, and the case is currently pending.

7. Private Real Property Rights Preservation Act

   In 1995, the Texas Legislature adopted the Private Real Property Rights Preservation Act. Tex. Gov't Code Ann. § 2007.001 - 2007.045 (Vernon 1999). This Act requires a governmental entity to publish notice prior to engaging in governmental action that may result in a taking or deprivation of more than twenty-five percent (25%) of the market value of any landowner's property, and allows property owners to seek injunctive and compensatory relief. The types of governmental actions covered by the Act include:

   • the adoption or issuance of an ordinance, rule, regulatory requirement, resolution, policy, guideline, or similar measure;
   • an action that imposes a physical invasion or requires a dedication or exaction of private real property;
   • enforcement of a governmental action listed above whether the enforcement of the governmental action is accomplished through the use of permitting, citations, orders, judicial or quasi-judicial proceedings, or other similar means.

   This Act currently applies to a city only when the city enacts or enforces an ordinance, rule, regulation, or plan (excluding annexation) in the extraterritorial jurisdiction of the city that does not impose identical requirements or restrictions in the entire extraterritorial jurisdiction of the city.

   On January 22, 2001, Tex. H.B. 25, 77th Leg., R.S. (2001) was introduced to the Legislature to amend the Act to be fully applicable to municipalities. The definition of a "taking" in the Act includes any action that would require compensation under the Fifth and Fourteenth Amendments to the United States Constitution or Section 17 or 19, Article I, of the Texas Constitution. Applicable case law requires that all economically viable use be taken before compensation is required under these constitutional provisions. First English Evangelical Lutheran Church of Glendale Heights, 482 U.S. 304, 107 S.Ct. 2378; Mayhew, 964 S.W.2d at 933. It will be interesting to see how the provision of the Act which requires compensation for a diminution in value in excess of twenty five percent (25%), will be interpreted. The natural impact of substantially all of a municipality's land use regulations is to effect a diminution in value. To compel compensation when governmental regulation curtails some potential use or economic benefit would effectively compel the government to regulate by purchase. Andrus v. Allard, 444 U.S. 51, 65, 100 S. Ct. 318, 326, 62 L.Ed.2d 210 (1979); Mahon, 260 U.S. 393,413, 43 S.Ct. 158, 159.
   
   

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