TEXAS PRIVATE REAL PROPERTY RIGHTS PRESERVATION ACT GUIDELINESTABLE OF CONTENTS1. Introduction1.1.The Private Real Property Rights Preservation Act1.11. Purpose1.12. Texas Attorney General Guidelines1.13. Takings Impact Assessment Requirement1.2.Takings1.21. What are takings?1.22. Property Rights Act Definition of “Taking”1.23. Incorporated Constitutional Definitions of “Taking”1.24. “Regulatory Takings” or “Inverse Condemnation” Takings1.3.Constitutional Regulatory Takings Analysis1.31. Introduction1.32. Federal Law1.33. State Law2. Applicability2.1.Governmental Actions Covered and Exempted2.11. Actions Covered2.12. Actions Exempted2.2.TIA Procedures3. Guide to Promulgating TIAs3.1.Requirements for Promulgating TIAs3.2.Guide to Evaluating Proposed Governmental Actions3.21. Burden Analysis3.22. Takings Impact AnalysisEndnotes

1.INTRODUCTION1.1.The Private Real Property Rights Preservation Act1.11. Purpose“The Private Real Property Rights Preservation Act,” Texas Government Code chapter2007 (the Property Rights Act), represents a basic charter for the protection of privatereal property rights in Texas. 1 The Property Rights Act is the Legislature’sacknowledgment of the importance of protecting private real property interests inTexas. The purpose of the act is to ensure that certain governmental entities 2 make acareful evaluation of their actions regarding private real property rights, and that thoseentities act according to the letter and spirit of the Property Rights Act. In short, theProperty Rights Act is another instrument to ensure open and responsible governmentfor Texans.1.12. Texas Attorney General GuidelinesThe Property Rights Act section 2007.041 requires the Texas Attorney General’s Officeto take the following steps:1) prepare guidelines to assist governmental entities in identifying and evaluating thosegovernmental actions described in Property Rights Act section 2007.003(a)(1)–(3) thatmay result in a taking;2) file the guidelines with the Secretary of State for publication in the Texas Register inthe manner prescribed by chapter 2002 of the Government Code; and3) review the guidelines at least annually and revise those guidelines as necessary toensure consistency with the actions of the Legislature and the decisions of the UnitedStates Supreme Court and the Texas Supreme Court.*Please Note: These Property Rights Act guidelines do not represent a formal Attorney GeneralOpinion and should not be construed as an Opinion of the Texas Attorney General as to whether aspecific governmental action constitutes a taking. The Property Rights Act raises complex and difficultissues in emerging areas of law, public policy, and government. Should you need more specific advice,you are encouraged to hire counsel to address your specific concerns. These Guidelines are intended toprovide guidance for governmental entities as they seek to conform their activities to the Property RightsAct’s requirements.2

1.13. Takings Impact Assessment RequirementSome governmental actions taken pursuant to these Property Rights Act guidelines (theGuidelines) require the governmental entity to promulgate “Takings ImpactAssessments” (TIAs).TIAs ensure that information regarding the private real property implications ofgovernmental actions is considered before decisions are made and actions taken. 3 Thisinformation and analysis must be accurate, concise, and legally sound. TIAs mustconcentrate on the truly significant real property issues—not merely amass needlessdetail and meaningless data. Nevertheless, the public is entitled to more than mere proforma analyses by the governmental entities covered by the Property Rights Act. TIAsserve as the means of assessing the impact on private real property, rather than justifyingdecisions already made. The failure of a governmental entity to promulgate a TIAwhen one is required may subject that entity to a lawsuit to invalidate thegovernmental action. 4 The TIA is a critical mechanism in ensuring that requisiteattention is paid to the impact of a covered governmental action on real propertyinterests.1.2.Takings1.21. Governmental Entities Must Consider TakingsUnder the Property Rights Act a governmental entity undertaking a governmentalaction must expressly consider or assess whether takings of private real property mayresult. Governmental entities need to be aware of the criteria set forth in the PropertyRights Act defining the scope of what actions may constitute a taking.1.22. Property Rights Act Definition of “Taking”Property Rights Act section 2007.002(5) defines “taking” as:(A) a governmental action that affects private real property, in whole or in part ortemporarily or permanently, in a manner that requires the governmental entityto compensate the private real property owner as provided by the Fifth andFourteenth Amendments to the United States Constitution or Section 17 or19, Article I, Texas Constitution; or(B) a governmental action that:(i) affects an owner’s private real property that is the subject of thegovernmental action, in whole or in part or temporarily or permanently,in a manner that restricts or limits the owner’s right to the property thatwould otherwise exist in the absence of the governmental action; and3

(ii) is the producing cause 5 of a reduction of at least 25 percent in themarket value of the affected private real property, determined bycomparing the market value of the property as if the governmental actionis not in effect and the market value of the property determined as if thegovernmental action is in effect. 6This Property Rights Act definition of “taking” incorporates current jurisprudence ontakings under the United States and Texas Constitutions. These definitions arediscussed in greater detail below along with the statutory definition of taking.1.23. Incorporated Constitutional Definitions of “Taking”The Fifth Amendment to the United States Constitution (the “Takings Clause”)provides: “[N]or shall private property be taken for public use, without justcompensation.” The Takings Clause applies to the states by virtue of the FourteenthAmendment. 7Article I, § 17 of the Texas State Constitution provides as follows: “No person’sproperty shall be taken, damaged, or destroyed for or applied for public use withoutadequate compensation being made, unless by the consent of such person.”1.24. “Regulatory Takings” or “Inverse Condemnation Takings”There is usually little question that a taking has occurred when the governmentphysically seizes or occupies private real property. However, when the governmentregulates private real property, when government activities occur on private realproperty, or when the government undertakes a physically non-intrusive action thatmay have an impact on real property rights, the situation may be less clear. TheseGuidelines pertain, for the most part, to these less obvious situations. 8The Takings Clause “does not bar government from interfering with property rights,but rather requires compensation ‘in the event of otherwise proper interferenceamounting to a taking.’” 9 Condemnation is not prevented by the Takings Clause,where a government exercises the power of eminent domain to condemn real propertyin exchange for adequate compensation. But when a government takes real propertywithout adequate compensation, it is sometimes called “inverse condemnation” or a“taking.” 10 Likewise, a physically non-intrusive governmental regulation or action thataffects the value, use, or transfer of real property may constitute a “regulatory taking”if it “goes too far.” 11 If a governmental action diminishes or destroys a fundamentalreal property right—such as the right to possess, exclude others from, or dispose of realproperty—it could constitute a “taking.” 12 Similarly, if a governmental action imposessubstantial and significant limitations on real property use, there could be a “taking.” 134

Regulatory or governmental actions are sometimes difficult to evaluate for “takings”because government may properly regulate or limit the use of private real property,relying on its “police power” authority and responsibility to protect the public health,safety, and welfare of its citizens. Accordingly, government may abate publicnuisances, terminate illegal activities, and establish building codes, safety standards, orsanitary requirements without creating a compensatory “taking.” Government may alsolimit the use of real property through land use planning, zoning ordinances, setbackrequirements, and environmental regulations.Governmental actions taken specifically for the purposes of protecting public healthand safety may be given broader latitude by courts before they are found to be“takings.” However, the fact a public health and safety determination is made doesnot mean the action is not a taking. Actions that are asserted to be for the protectionof public health and safety should be undertaken only in response to real and substantialthreats to public health and safety, designed to significantly advance the health andsafety purpose. These actions should impose no greater burden than necessary toachieve the health and safety purpose. Otherwise, the exemptions or exceptions forthese actions may swallow the rules set forth by the Property Rights Act to protectprivate real property. 141.3.Constitutional Regulatory “Takings” Analyses1.31. IntroductionA governmental action may result in the “taking” of private real property requiring thepayment of compensation if that action denies an owner of the economically viable useof her land. Deprivation of economic viability may occur through the denial ofdevelopment permits, as well as through the application of ordinances or state laws.15“[A] plaintiff seeking to challenge a government regulation as an uncompensated takingof private property may proceed . . . by alleging a ‘physical’ taking, a Lucas-type ‘totalregulatory taking,’ a Penn Central taking, or a land-use exaction violating the standardsset forth in Nollan and Dolan.” 16Prior to 2005, the perception existed that a regulation that did not “substantiallyadvance legitimate state interests” could result in a “taking.” The United StatesSupreme Court has since rejected that argument in Lingle v. Chevron U.S.A., Inc. TheCourt concluded that the “substantially advances” test no longer has a place in “takings”jurisprudence and observed that “[a]n inquiry of this nature has some logic in thecontext of a due process challenge, for a regulation that fails to serve any legitimategovernmental objective may be so arbitrary or irrational that it runs afoul of the DueProcess Clause.” 175

Governmental actions requiring exactions of property (e.g., a green space dedication,payment, or assumption of a contingent liability 18 required for permitting approval)must meet the “rough proportionality test.” This test requires a governmental entityto make “some sort of individualized determination that the required dedication isrelated both in nature and extent to the project’s anticipated impact, though a precisemathematical calculation is not required.” 19 The definition of exaction is broad enoughto include a demand that the owner assume a contingent liability.1.32. Federal LawThe governmental entity must consider whether there is a taking under federalconstitutional law. A proper regulatory taking analysis considers the economic impactof the regulation, in particular whether the proposed governmental action interfereswith a real property owner’s reasonable investment-backed development expectations. 20For instance, in determining whether a taking has occurred, a court, among other things,might weigh the governmental action’s impact on vested development rights against thegovernment’s interest in taking the action. Defining reasonable investment-backedexpectations is a complex, fact-intensive undertaking.In Reahard v. Lee County, 21 the United States Court of Appeals for the Eleventh Circuitset forth the following eight-factor list to consider when determining whether a privatereal property owner’s investment-backed development expectations have beennegatively impacted and a regulatory taking thereby effected:1)history of the property (When was it purchased? How much land waspurchased? Where was the land located? What is the nature of title? Whatis the composition of the land? How was the land initially used?);2)history of the development (What was built on the land? Who built it? Howwas the land subdivided? Who bought the property? What plats were filed?What roads were dedicated?);3)history of zoning and regulation (How and when was the land classified? Howwas use proscribed? Were there changes in zoning classification?);4)how did development change when title passed;5)present nature and extent of the property;6)owner’s reasonable expectations under state common law;7)neighboring landowners’ reasonable expectations under state common law; and8)diminution of owner’s investment-backed expectations, if any, after passage ofthe regulation or the undertaking of a governmental action.6

A governmental action that prohibits all economically viable or beneficial uses of realproperty is a “taking”—unless the governmental entity can demonstrate that laws ofnuisance or other pre-existing limitations on the use of the real property prohibit theproposed uses, or there is no interest at stake protected or defined by common law.22The United States Supreme Court has acknowledged that the Court has never clarifiedthe “property interest” against which the loss of value is to be measured. The Courtsuggested that a real property owner’s “investment-backed development expectations”as shaped by state property law may provide the answer. 23Additionally, the United States Supreme Court has held that temporary developmentmoratoria are not per se “takings” of property under the Takings Clause. The Courtreasoned that “the answer to the abstract question whether a temporary moratoriumeffects a taking is neither ‘yes, always’ nor ‘no, never’; the answer depends upon theparticular circumstances of the case.” 241.33. State LawThe governmental entity must also consider whether there is a “taking” under stateconstitutional law. In cases of non-physical intrusion, Texas courts, on a case-by-casebasis, have employed several general tests to determine whether a compensablegovernmental taking has occurred under the provisions of the Texas Constitution.These general tests include the following:1)Whether the governmental entity has imposed a burden on private realproperty, which creates a disproportionate diminution in economic value orrenders the property wholly useless; 252)Whether the governmental action against the owner’s real property interest isfor its own advantage; 263)Whether the governmental action constitutes an unreasonable and directphysical or legal restriction or interference with the owner’s right to use andenjoy the property; 274)Whether the governmental action is a constitutionally cognizable injury thatresults in diminished value of a property; 285)Whether the governmental action accords with substantive due processprinciples through a rational relationship to a legitimate governmental interest;or 296)Whether the ordinance renders the entire property “wholly useless” orotherwise causes “total destruction” of the entire tract’s economic value. 30To distinguish a “taking” from a cause of action under tort law (e.g., negligence ornuisance), contract, or some other law, the Texas Supreme Court has emphasized intent7

as a factor among the elements comprising a state constitutional taking claim. Theseelements include the following:1)the government intentionally performed certain acts;2)that resulted in a taking of property; and3)that taking is for public use. 31Thus, private economic loss from a contract dispute with the government does not giverise to a constitutional “taking.” In that case, the government is acting in its capacityas a contracting party and not in its capacity as a sovereign intending to act upon privateproperty for a public purpose. 32 In other contexts, Texas courts examine whether thegovernment knows that its specific act caused identifiable harm or that private propertydamage was substantially certain to result from the act. 332.APPLICABILITY OF THE PROPERTY RIGHTS ACT2.1.Governmental Actions Covered and Exempted2.11. Actions CoveredProperty Rights Act section 2007.003(a) provides that the Property Rights Act appliesonly to the following governmental actions:1)the adoption or issuance of an ordinance, rule, regulatory requirement,resolution, policy, guideline, or similar measure;2)an action that imposes a physical invasion 34 or requires a dedication or exactionof private real property;3)an action by a municipality that has an effect in the extraterritorial jurisdictionof the municipality, 35 excluding annexation, and that enacts or enforces anordinance, rule, regulation, or plan that does not uniformly 36 impose identicalrequirements or restrictions on the entire extraterritorial jurisdiction of themunicipality; and4)enforcement of a governmental action listed in Subdivisions (1) through (3),whether the enforcement of the governmental action is accomplished throughthe use of permitting, citations, orders, judicial or quasi-judicial proceedings, orother similar means.Of these actions governed by the Property Rights Act, governmental entities arerequired to prepare a TIA only for those listed in subsections (1)–(3) above. 378

2.12. Actions ExemptedPursuant to Property Rights Act section 2007.003(b), the following actions are explicitlyexempted from Property Rights Act coverage:1)an action by a municipality except as provided by subsection (a)(3);2)a lawful forfeiture or seizure of contraband as defined by Article 59.01, Codeof Criminal Procedure;3)a lawful seizure of property as evidence of a crime or violation of law;4)an action, including an action of a political subdivision, that is reasonably takento fulfill an obligation mandated by federal law, or an action of a politicalsubdivision that is reasonably taken to fulfill an obligation mandated by statelaw;5)the discontinuance or modification of a program or regulation that provides aunilateral expectation that does not rise to the level of a recognized interest inprivate real property;6)an action taken to prohibit or restrict a condition or use of private real propertyif the governmental entity proves that the condition or use constitutes a publicor private nuisance as defined by background principles of nuisance andproperty law of this state;7)an action taken out of a reasonable, good faith belief that the action is necessaryto prevent a grave and immediate threat to life or property;8)a formal exercise of the power of eminent domain;9)an action taken under a state mandate to prevent waste of oil and gas, protectcorrelative rights of owners of interests in oil or gas, or prevent pollutionrelated to oil and gas activities;10) a rule or proclamation adopted for the purpose of regulating water safety,hunting, fishing, or control of nonindigenous or exotic aquatic resources;11) an action taken by a political subdivision:(A) to regulate construction in an area designated under law as a floodplain;(B) to regulate on-site sewage facilities;(C) under the political subdivision’s statutory authority to prevent waste orprotect rights of owners of interest in groundwater; or(D) to prevent subsidence;9

12) the appraisal of property for purposes of ad valorem taxation;13) an action that:(A) is taken in response to a real and substantial threat to public health andsafety;(B) is designed to significantly advance the health and safety purpose; and(C) does not impose a greater burden than is necessary to achieve the healthand safety purpose; or14) an action or rulemaking undertaken by the Public Utility Commission of Texasto order or require the location or placement of telecommunications equipmentowned by another party on the premises of a certificated local exchangecompany.When a government defendant merely enforces another governmental action, the TIArequirement does not apply. Id. § 2007.043(a); see id. § 2007.003(a)(4). 38The Property Rights Act section 2007.003(c) contains further exclusions forgovernmental actions enforcing or implementing certain statutes, rules, or agencypolicies. For example, the Property Rights Act does not authorize suits to determinewhether a taking is caused by the enforcement or implementation of a statute,ordinance, order, rule, regulation, requirement, resolution, policy, guideline, or similarmeasure that was in effect September 1, 1995 and that prevents the pollution of areservoir or an aquifer designated as a sole source aquifer under the federal SafeDrinking Water Act (42 U.S.C. § 300h–3(e)).The Property Rights Act section 2007.003(e) further excludes statutory taking suitsconcerning the enforcement or implementation of the Open Beaches Act,Subchapter B, chapter 61, Natural Resources Code, as it existed on September 1, 1995,or to the enforcement or implementation of any rule or similar measure that wasadopted under that subchapter and was in existence on September 1, 1995. 392.2.TIA ProceduresGovernmental Entity Specific Guidelines. In order to ensure that the PropertyRights Act is not read either too broadly or too narrowly and to ensure the intent of theTexas Legislature behind the statute, each governmental entity covered by the PropertyRights Act should promulgate a set of procedures specific to the governmental entity(“Governmental Entity-Specific TIA Procedures”) that defines which of its activities,programs, or policy, rule, or regulation promulgation activities trigger the need for aTIA. 40 Such promulgation of the Governmental Entity-Specific TIA Proceduresshould be completed as soon as possible after the publication of these Guidelines.10

However, the promulgation of these TIA procedures must not delay conformance withthe Property Rights Act or these Guidelines.Establish Categorical Determinations. In promulgating the Governmental EntitySpecific TIA Procedures, the entity should establish 1) “Categorical Determination”categories that indicate that there are no private real property rights affected by certaintypes of proposed governmental actions, as well as 2) a quick, efficient, and effectivemechanism or approach to making “No Private Real Property ImpactsDeterminations” (“No Impact Determinations”) associated with the proposedgovernmental action.Categorical Determinations that no private real property interests are affected by theproposed governmental action would obviate the need for any further compliance withthe Property Rights Act. Without limitations the following are examples of the typesof activities that might fall into such a Categorical Determination category: 1) studentpolicies established by state institutions of higher education; and 2) professionalqualification requirements for licensed or permitted professionals.No Impact Determinations obviate the need for any further compliance with theProperty Rights Act once it is determined that there are no private real propertyinterests impacted by a specific governmental action. In such cases, there would be noestablished Categorical Determination category in which the proposed governmentalaction fits; yet, after consideration and preliminary analysis of the specific proposedgovernmental action, the governmental entity would be satisfied that there would be noimpact to private real property interests.Until and unless a covered governmental entity develops Governmental Entity-SpecificTIA Procedures, it will have to determine on an ad hoc basis whether any private realproperty interests are impacted (including to what extent) by its proposed actions.Furthermore, because the TIA necessarily depends on the type of governmental actionbeing proposed and the specific nature of the impacts on specific private real property,the governmental entity promulgating a TIA has discretion (within the parameters ofProperty Rights Act section 2007.043(b)) to determine the precise extent and form ofthe assessment, on a case-by-case basis.11

3.GUIDE TO PROMULGATING TIAS3.1.Requirements for Promulgating TIAsUnder the Property Rights Act section 2007.043(c), a TIA is public information. TheProperty Rights Act section 2007.043(b) requires that the TIA prepared by coveredgovernment entities contain the following information:1)describe the specific purpose of the proposed action and identify:(A) whether and how the proposed action substantially advances its statedpurpose; and(B) the burdens imposed on private real property and the benefits to societyresulting from the proposed use of private real property;2)determine whether engaging in the proposed governmental action willconstitute a “taking;” and3)describe reasonable alternative actions that could accomplish the specifiedpurpose and compare, evaluate, and explain(A) how an alternative action would further the specified purpose; and(B) whether an alternative action would constitute a “taking.”3.2.Guide to Evaluating Proposed Governmental Actions3.21. Burden Analysis.Governmental entities covered by the Property Rights Act should use the followingguide in reviewing the potential impact of a proposed governmental action covered bythe Property Rights Act. While this guide may provide a framework for evaluating theimpact on private real property that a proposed governmental action may have,generally, “takings” questions normally arise in the context of specific affected realproperty. This guide for evaluating governmental actions covered by the PropertyRights Act is a tool that a governmental entity should aggressively use to safeguardprivate real property owners.Question 1: Is the Governmental Entity undertaking the proposed action agovernmental entity covered by the Property Rights Act (i.e., is it a “CoveredGovernmental Entity”)? See Property Rights Act § 2007.002(1). If the answer is “No” no further compliance with the Property Rights Act isnecessary.12

If the answer is “Yes,” continue to Question 2. Question 2: Is the proposed action to be undertaken by the covered governmentalentity an action covered by the Property Rights Act (i.e., a “Covered GovernmentalAction”)? See section 2.1 of these Guidelines; and Governmental Entity-Specific TIAProcedures for “Categorical Determinations” as developed by the respective CoveredGovernmental Entities.In addition, governmental entities may develop categorical determinations and specificprocedures for developing TIAs. 41 See, supra, section 2.2. If the answer is “No” no further compliance with the Property Rights Act isnecessary. If the answer is “Yes,” continue to Question 3. Question 3: Does the covered governmental action result in a burden on “private realproperty” as that term is defined under Property Rights Act section 2007.002(4)? Thisquestion may be resolvable by reference to the governmental entity’s preexisting list ofCategorical Determinations. If the answer is “No” a No Impact Determination should be made, and nofurther compliance with the Property Rights Act is necessary. If the answer is “Yes,” then a TIA is required. Continue with Questions 4-8. 3.22. Takings Impact Analysis.As explained in section 3.1, the Property Rights Act sets forth explicit elements thatmust be evaluated by the governmental entity proposing to undertake an action coveredby the Property Rights Act.Question 4: What is the specific purpose of the proposed covered governmentalaction?The TIA must clearly show how the proposed governmental action furthers its statedpurpose. Thus, it is important that a governmental entity clearly state the purpose of itsproposed action in the first place, and whether and how the proposed actionsubstantially advances its stated purpose.Question 5: How does the proposed covered governmental action burden privatereal property? 42Question 6: How does the proposed covered governmental action benefit society?13

Question 7: Does the proposed covered governmental action result in a taking?Whether a Proposed Covered Governmental Action “burdens,” in the first analysis,and ultimately results in a taking must be measured against all three prongs of thetakings analysis (statutory, federal constitutional, and state constitutional) outlined insections 1.2–1.3 of these Guidelines. In addition, the proposed governmental actionmust be a final and authoritative determination. 43 The Covered Governmental Entityproposing to engage in a Covered Governmental Action should consider the followingsubquestions:1)Does the proposed covered governmental action result indirectly or directly ina permanent or temporary physical occupation of private real property?Regulation or action resulting in a permanent or temporary physical occupationof all or a portion of private real property will generally constitute a “taking.”For example, a regulation that required landlords to allow the installation ofcable television boxes in their apartments was found to constitute a “taking.” 442)Does the proposed covered governmental action require a property owner todedicate a portion of private real property or to grant an easement?Carefully review all governmental actions requiring the dedication of propertyor grant of an easement. The dedication of real property must be reasonablyand specifically designed to prevent or compensate for adverse impacts of theproposed development. Likewise, the magnitude of the burden placed on theproposed development should be reasonably related to the adverse impactscreated by the development. A court will also consider whether the action inquestion substantially advances a legitimate state interest.For example, the United States Supreme Court determined in Nollan thatcompelling an owner of waterfront property to grant a public easement acrosshis property that does not substantially advance the public’s interest i

The Private Real Property Rights Preservation Act . 1.11. Purpose. 1.12. Texas Attorney General Guidelines . 1.13. Takings Impact Assessment Requirement . 1.2. Takings . 1.21. What are takings? 1.22. Property Rights Act Definition of "Taking" 1.23. Incorporated Constitutional Definitions of "Taking" 1.24.