Memorandum

TO : Colorado Concern Board of Directors

Mike Kopp
FROM: Tom Ragonetti
Jim Johnson
Brian Connolly
DATE: September 18, 2018
RE: Amendment 74 Legal Analysis and Review

Government hardly could go on if to some extent values incident to property could

not be diminished without paying for every change in the general law.

–Justice Oliver Wendell Holmes, writing for the majority in

Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413 (1922).

Colorado Concern has asked our firm to review the legal and policy implications of Amendment
74, a Colorado statewide initiative that will appear on the November 2018 ballot. Amendment 74
proposes amending the Colorado Constitution to require that owners receive “just compensation”
when their property is “reduced in fair market value by government law or regulation.”1
Unfortunately, Amendment 74 is poorly conceived and drafted. It will hamstring local
governments, thwart meritorious legislation, and prompt excessive litigation. This Memorandum
briefly reviews the current state of takings law and considers other states’ experiences with
enactments similar to Amendment 74. We have also attached a lengthier analysis of Amendment
74 performed by Robinson & Cole LLP, a firm with which we work regularly, for your
consideration.

A. Regulatory Takings Law Generally

The Fifth Amendment to the U.S. Constitution provides: “nor shall private property be taken for
public use, without just compensation.”2 The Colorado Constitution contains a similar prohibition,
and also requires compensation when an action of the government damages private property. 3
These provisions most commonly require the government to pay landowners for the fair market

1
Colorado Secretary of State, Initiative 108 Text of Measure, Final Draft, available at
https://www.sos.state.co.us/pubs/elections/Initiatives/titleBoard/filings/2017-2018/108Final.pdf.
2
U.S. Const., amend. V.
3
See Colorado Const. Art. II, § 15; Thompson v. City and Cnty. of Denver, 958 P.2d 525, 528 (Colo. App. 1998).
value of property that is condemned for public purposes—such as road construction, utility
installation, or public park land—through the use of eminent domain.

Courts have also recognized that a taking of property may occur by regulation, when a regulation
goes “too far” in burdening private property.4 Compensable “regulatory takings” have been found
to occur where government action requires a permanent physical occupation of private property,5
or eliminates all productive uses of private property.6 Beyond these two scenarios, however, it is
extraordinarily difficult to prove a regulatory taking. A regulation that simply reduces a property’s
value or eliminates some of its use, does not generally require compensation.7

B. Amendment 74’s Proposed Approach

Under Amendment 74, any law that reduces the value of any property in any amount triggers the
payment requirement.

The approach proposed by Amendment 74 has been repeatedly rejected by courts. As the Supreme
Court observed in 1922, requiring government to pay for the private impact of every regulation
would virtually destroy government itself.8 “[I]n a wide variety of contexts, . . . government may
execute laws or programs that adversely affect recognized economic values.”9 Taxes harm a
property’s economic value, for example, but do not create a right to compensation.10 Regulatory
takings law thus balances compensating landowners for “significant” burdens and allowing
government to enact needed regulations that impose diffuse burdens.11 The law “assures that the
government may not force ‘some people alone to bear public burdens which, in all fairness and
justice, should be borne by the public as a whole.’”12

Under Amendment 74, any regulation creating a public good greater than its private benefit would
require compensation. While general regulations almost always impose some reduction in value,
courts have consistently held that those reductions are the costs of a functioning government and
are not compensable. Amendment 74 would produce an absurd result.

C. Oregon’s Experience: Reason for Concern

In 2004, Oregon voters passed Measure 37 entitling property owners to just compensation for land
use laws that adversely affected property values.13 It specifically excluded some regulation, such
as fire and building codes, restrictions on public nuisances, and regulations adopted before the
landowner acquired the property.14 Measure 37 faced legal challenges almost immediately, ignited
4
Pennsylvania Coal, 260 U.S. at 415.
5
See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 434–35 (1982).
6
See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992).
7
See Animas Valley Sand & Gravel Co. v. Bd. of Cnty. Comm’rs, 38 P.3d 59, 65-66 (Colo. 2001).
8
See Pennsylvania Coal, 260 U.S. at 413.
9
Penn Cent. Transp. Co. v. City of New York, 438 U.S. 104, 124, (1978).
10
Id.
11
Animas Valley, 38 P.3d at 63.
12
Krupp v. Breckenridge Sanitation Dist., 19 P.3d 687, 695 (Colo. 2001) (quoting Dolan v. City of Tigard, 512 U.S.
374, 384 (1994).
13
2004 Voters’ Pamphlet, Oregon Secretary of State, at 103, available at
https://sos.oregon.gov/elections/Documents/pamphlet/pamphlet-11-2004a.pdf.
14
Id.

1707800.2 2
a legislative backlash, and in just three years produced 7,000 lawsuits alleging $19.8 billion in
losses.15 Although the measure intended to protect property rights, its uncertainty hindered
development.16 Because of these problems, voters subsequently approved Measure 49, which
limited Measure 37’s scope.17

During its brief existence, Measure 37 produced “virtually no compensation” and “failed to create
an effective system of compensation for regulatory takings.”18 Not only did the measure throw
regulation into disarray, it failed to deliver on its fundamental promise of compensation.

D. An Unfeasible Solution

While Amendment 74 may seem attractive at face value, it cannot work in practice. Some concrete
examples of the problems that would be created including the following:

 Amendment 74 does not exempt fire or building codes, or other public safety regulations.
Because fire and building codes (as well as storm drainage regulations and utility
requirements) necessarily reduce properties’ fair market value, local governments will face
incalculable liability for these necessary public safety regulations. To the extent the
government reduced or eliminated such safety regulations, all properties would be harmed.

 Amendment 74 applies to any governmental action that reduces property values. If a local
government rezoned property in order to attract a major employer, neighbors could file a
claim that their properties were devalued. Local governments would have serious
disincentive to rezone property for economic development purposes to avoid that liability.

 Amendment 74 is not limited to zoning or effects on real property. For example, car
manufacturers could be entitled to the cost of required emissions equipment. Amendment
74’s reach is virtually unlimited.

 Amendment 74 does not include a minimum threshold for bringing a claim, does not
specify who may bring a claim, and provides no guidance as to whether the law will apply
retroactively. Colorado courts would be overwhelmed with litigation, which would take
decades to sort out.

 Once enacted, Amendment 74 cannot be further modified, except with the approval of more
than 55% of the state’s electors, or repealed, except with a majority of electors.

No state has ever incorporated a reform as broad as Amendment 74 into its constitution.
Amendment 74 threatens to freeze government functions and trap property in litigation without
providing tangible benefit. We therefore recommend opposing Amendment 74.

15
Alex Potapov, Making Regulatory Takings Reform Work: The Lessons of Oregon’s Measure 37, 39
Environmental Law Reporter 10516, 10517, 10527 (2009) [hereinafter Lessons] available at
https://elr.info/sites/default/files/articles/39.10516.pdf.
16
Id. at 10517.
17
2007 Voters’ Pamphlet, Oregon Secretary of State, at 7, available at
https://sos.oregon.gov/elections/Documents/pamphlet/nov07_vp.pdf.
18
Lessons at 10517.

1707800.2 3