In a recently decided case, Tobin v. Centre Township, the Commonwealth Court of Pennsylvania held that Centre Township’s (“Township”) fees imposed upon a developer for the review of a land development plan is not a “taking” under Pennsylvania law. In Tobin, Michael T. Tobin, Jr., Kenneth Styer and Michael T. Tobin, Jr., Contractors (“Tobin Contractors”) (collectively the “Landowners”) purchased a 42-acre parcel of agricultural land in Centre Township, Berks County. After Landowners purchased the parcel, they granted Tobin Contractors the exclusive right to develop the parcel.  

On June 24, 1990, Landowners and Tobin Contractors filed sketch plans with the Township, for the development of 369 homes, consisting of townhouses, duplexes and single-family residences. When the sketch plans were filed, the Township’s fee schedule for the review of land development plans (1989 schedule) was as follows:  $500.00 for review of a residential subdivision sketch plan; $500.00 plus $100.00 per dwelling unit for review of a residential preliminary plan; and $500.00 for a review of a final plan.  This fee schedule imposed a total fee upon Landowners in the amount of $38,400.00.  

On October 10, 1990, the Township revised its fees for reviewing land development plans (1990 schedule). Under the 1990 schedule, the Township charged developers $500.00 plus $250.00 per dwelling unit for review of a residential subdivision sketch plan, 500.00 plus $250.00 per dwelling unit for review of a residential preliminary plan; and $500.00 plus $100.00 for a review of a final plan. The fee imposed upon Landowners for review of their preliminary plan and their final plan totaled $130,150.00.  

On October 31, 1991, Landowners submitted a preliminary plan to the Township without including the fees chargeable under the 1990 schedule, and instead proffered the fees owed under the 1989 schedule, along with a letter disputing the 1990 schedule and offering to negotiate a reasonable fee. At a meeting on November 19, 1991, the Joint Planning Commission (“Commission”) (the Commission’s services are utilized by both the Township and Centerport Borough) voted not to accept the Landowner’s preliminary plan because it had not been accompanied by the proper fee. On December 23, 1991 Landowners filed an action requesting the court to order the Commission to review their preliminary plan while the parties negotiated a reasonable fee. After a series of rulings by the court, the Prothonotary terminated the Landowner’s action on April 1, 2002. 

On May 11, 1998, the Township again revised its fee schedule (1998 schedule), this time to reduce its fees. The 1998 schedule imposed a fee upon Landowners of $41,900.00 for review of their preliminary plan. On October 29, 1998, Tobin Contractors filed an action against the Township, alleging a de facto (actual) taking by the Township and requesting a determination of just compensation. After the parties engaged in extensive discovery on the issue, the trial court found that the 1990 fee schedule imposed oppressive and unreasonable fees upon Landowner and, further, the Township should have reviewed the Landowner’s preliminary plan when filed in 1991. Accordingly, the trial court found that a regulatory taking had taken place. The Township appealed the ruling, raising four arguments, one of which was that a landowner’s action was defective because a taking does not occur merely because regulation deprives the landowner of the most profitable use of the property.  

The Commonwealth Court explained that a de facto taking occurs when “the entity clothed with the power of eminent domain substantially deprives the owner of the beneficial use and enjoyment of his property.”  The Court went on to further explain that the burden for proving a regulatory taking of land is particularly stringent: “Property owners bear a heavy burden of proof and must show that exceptional circumstances exist which substantially deprive them of the use of their property, and further, that such deprivation is the direct and necessary consequence of the actions of the entity having the power of eminent domain.”   

The Court went on to explain the two types of regulatory takings as set forth by the United States Supreme Court. One test, referred to as the Lucas test, was developed in Lucas v. South Carolina Coastal Council. In Lucas, the United States Supreme Court explained that a regulatory taking is a regulation that deprives an owner of “all economically beneficial or productive use of land” and requires just compensation to be paid to the landowner. The second type of regulatory taking, commonly known as the Penn Central taking (from its origination in Penn Central Transportation v. New York City), is more traditional in nature. A Penn Central taking occurs where a regulation places limitations on land that fall short of eliminating all economically beneficial use, but a taking nonetheless may have occurred because of the regulation’s economic factors on the landowner, the regulation interferes with reasonable investment-backed expectations, and the character of the government action.  

The Commonwealth Court, in ruling in favor of the Township, held that losing one of several uses of land does not constitute a taking, relying upon an explanation from the Pennsylvania Supreme Court that “a taking does not result merely because a regulation…deprives the owner of the most profitable use of his property. Otherwise all zoning regulations could be categorized as “takings” in the sense that the owner is not completely free to use his property as he chooses.” 

In further justifying its ruling in Tobin, the Court stated that the Landowners’ loss of the “residential development interest” in their land is the loss of only one of several uses. The Landowners had been using the land in question for farming since the pendency of this action in 1990. Additionally, the Court held that there were other development opportunities available to Landowners that would have been less costly to review under the 1990 fee schedule. Finally, the Court held, in reference to the 1990 fee schedule that, at most, the 1990 fee schedule deprived the Landowners of their ability to put their land to its most profitable use, but that it was not a taking.  

The moral of the story: as a land developer, just because you own the land, does not mean you are completely free to develop it as you choose. So long as a municipality provides for other uses of the land, a “takings” claim will be unsuccessful, in most instances, if brought against the municipality.