Nolen v. Newtown Twp., 854 A.2d 705 (Pa. Cmwlth. 2004).
In this case, a developer purchased two tracts of property containing over a hundred acres in total. He purchased the land with the intent to eventually develop the properties. In the meantime, a tenant farmer rented the land for $2,000 a year. Four years after he purchased the land, the township put a temporary moratorium on the development of subdivisions during revisions to the comprehensive plan. The halt to development lasted almost two years.
During this moratorium, the developer was prohibited from building a residential development on his tracts of land; however, he could have built one house on each tract and sell each tract as a single property, or he could have built a school, or he could have built for religious or philanthropic use. The developer brought suit claiming that the township’s actions constituted a de facto taking because he was unable to develop his property and that he suffering an economic loss because he was unable to build a neighborhood- his investment-back expectation.
The developer rested his case on a recent PA Supreme Court decision that held that it was beyond the townships power to issue a moratorium. He claimed that because the moratorium was invalid, the township’s actions should constitute a de facto taking. The court disagreed with him.
The court stated that a de facto taking does not arise just because an ordinance is declared invalid. Pennsylvania uses the factors from the U.S. Supreme Court case Penn Central Transportation Co. v. City of New York, 438 U.S. 104 (1978). The plaintiff must show that (1) he had a legitimate investment-backed expectation, (2) he suffered a negative economic impact, and (3) the ordinance was not reasonably related to promotion of the public’s general welfare.
The court found the developer’s investment-backed expectations unpersuasive because he showed no signs that he was going to develop the tracts during the four years after purchasing the properties. The court also found that he did not suffer an economic impact where the real estate market after the moratorium expired was the same as it was during the moratorium. Finally, the court held that the moratorium was reasonably related to the promotion of the public’s general welfare because it was to prevent unplanned growth that might negatively impact the community.
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