As you may already know, Initiative 933 (the "Property Fairness Act") probably will make it to the November ballot. I-933 is a property rights initiative that generally requires compensation for regulations that devalue private property.
Cities and counties had to go through exactly the same turmoil 11 years ago when Washington voters were presented with the same type of property rights legislation in the form of a referendum. Voters rejected that measure, but Oregon's recent passage of a similar initiative (Measure 37) has given property rights activists in Washington renewed hope. From my perspective as a city attorney, this is an unwise course.
The underlying concept of I-933, Oregon's Measure 37 and the 1995 referendum is the same: If a government regulation affects private property value or use, government (i.e., taxpayers) must reimburse the property owner for the loss. I-933 contains some narrow exceptions and takes the stance that property value or use will only be considered damaged if the burden of a regulation should be "in all fairness and justice borne by the public as a whole."
On its surface, this limitation resembles current takings and due process jurisprudence, but the initiative includes components defining "damaging the use or value" of property and other provisions that go much farther. The first defining subpart of "damaging the use or value" takes a big swipe at the zoning authority of government agencies, most directly at cities and counties. It would provide compensation for property devaluation caused by regulations "prohibiting or restricting any use or size, scope, or intensity of any use legally existing or permitted as of January 1, 1996."
In short, I-933 would not apply only to newly enacted restrictions. It would require compensation where "[a]n agency . . . decides to enforce or apply any ordinance, regulation, or rule" that comes within the subpart quoted above, i.e., ordinances that are as much as 10 years old that, if enforced, "would result in damaging the use or value of private property."
Suppose that the back of your home abuts a quiet, small convenience store. Suppose, too, that county zoning regulations used to allow convenience stores in your area, but in 1997 this changed when the county found your neighborhood incompatible with commercial use. As a result, the county adopted zoning amendments that prohibit commercial use, but existing uses such as the convenience store may continue to operate provided they do not expand in size or intensity.
Under I-933, if the convenience store owner wants to quadruple the size of her store and expand its hours from 12 hours a day to 24, the county must either allow the expansion and increase in hours or pay the convenience store owner for any reduction in property value resulting from a denial.
If you don't know much about the state of municipal finances in Washington, you may be thinking that under such post-I-933 circumstances your county will just pay off your neighbor and you don't have to worry about the convenience store. That's not going to happen. Cities and counties are going to do exactly what they were ready to do in 1995. They're going to adopt processes to waive regulations every time a hint of liability arises. In short, if the convenience store owner demands her expansion, your county won't be paying her $600,000 in property devaluation. The owner is going to be allowed to expand her convenience store.
The statistics from Oregon's similarly worded Measure 37 bear this out. Since Measure 37's adoption in 2004, property owners have filed more than 1,000 claims seeking more than $3 billion in damages. Ninety percent of the claims have resulted in waivers of regulations and 10 percent have been denied. No Oregon governmental entity has yet paid a dime for diminished property value.
In 1995, when Washington cities and counties were setting up waiver processes in anticipation of that year's property rights legislation, the idea was to have the waiver applicants pay for the costs of review. This keeps in line with the popular Washington credo that "growth should pay for growth" or, more cynically, "make developers pay for everything you can." That's not allowed under I-933, which would prohibit a government agency from charging a fee to cover the costs of waiving regulations in order to avoid I-933 liability.
The added bureaucratic costs don't stop there. Prior to adopting any regulation that could damage the use or value of property, the responsible government agency must document a detailed consideration of those property impacts, including less restrictive alternatives. Further, "property" is defined in the initiative to include any property interests protected by the due process and takings clauses of the state and federal constitutions. We're not just talking about real estate here.
The neighborhood convenience store example is actually fairly benign.
I-933 opponents assert much more extreme consequences. Their Web site is www.noon933.org. The Web site for the sponsors of I-933 is at www.propertyfairness.com.
