The dispute here concerns how courts should measure compensation to a landowner when the government reclassifies a portion of the landowner's parcel as conservancy in order to protect diminishing wetlands. The challenging landowner in this case primarily claims that when part of a parcel's zoning classification is changed to conservancy, the courts should treat that portion as though it has been constructively taken and the government should pay acсordingly. The government responds that a taking *706 does not occur when a zoning reclassification restricts the use of only a portion of the parcel if the parcel as a whole retains substantial value. For reasons hereafter explained, we reject both arguments and hold that compensation depends upon a case-by-case analysis of the landowner's reasonably anticipated use of the property. Since this test differs from the law declared by the trial сourt, we reverse for a new trial consistent with the analysis in this opinion.
The challenging landowner is Alfred A. Zealy. He owns a 10.1 acre parcel in the City of Waukesha. When the land was annexed by the City in 1967, it was classified R-l residential. Later, a small portion of the land was upgraded to the B-4 business classification. In 1982, Zealy granted the City an easement allowing the municipality to place storm and sanitary sewers on a portion of his property. He alleges that he granted the easement becausе city officials led him to believe it would expedite future residential development by providing easier hookup to the water system. Three years later, however, the City rezoned 8.2 acres of the R-l property to C-l conservation. The change effectively precluded further development on this subparcel. Based on a 1990 appraisal, Zealy alleges that the sub-parcel value has been reduced from $200,000 to $4000, a ninety-nine percent devaluation. He concedes, however, that when all 10.1 acres are viewed together, the effect of the zoning change is not severe enough to support a constructive taking claim because of the value of his commercial property.
The trial court dismissed Zealy's inverse condemnation action brought pursuant to § 32.10, STATS., as well as his claim of estoppel. The trial court viewed the applicable law to be that parcels may not be segmented for purposes of constructive taking law. Zеaly seeks
*707
review of these two issues addressed by the trial court. First, he alleges that the City took the 8.2 acres of his land when it promulgated a zoning change resulting in a loss of almost all of its economic value.
1
This claim rests on a line of cases in which state regulation resulting in a substantial devaluation of privately held property was found to be a taking requiring just compensation.
See, e.g., State v. Herwig,
We will first address the appropriate standard of review. With regard to the constructive taking claim, the central issue is whether government regulation has rendered the property practically useless for all reasonable purposes.
See Howell Plaza, Inc. v. State Highway Comm'n,
The Fifth Amendment commands the government to pay for private property when it converts it to public use. This compels the state to act rationally when it reallocates private resources to the general public.
See Pennsylvania Coal Co. v. Mahon,
Thus far, two lines of analysis have emerged. If the state acquires the sum total of the legal rights to any
*709
component of privately held property, then it must compensate. For instance, in
Loretto v. Teleprompter Manhattan CATV Corp.,
*710
As the United States Supreme Court recently explained in
Concrete Pipe and Prods., Inc. v. Construction Laborers Pension Trust,
508 U.S. —, —,
Alternatively, a state may rely upon its police power to impose substantial restrictions on private land in order to promote the public interеst in the efficient use of natural resources. In these circumstances, however, the government must compensate the private landowner if that landowner is unduly burdened by such regulation. Landowners become unduly burdened when their property is deprived of all, or substantially all, of its beneficial use.
See Concrete Pipe,
508 U.S. at —,
Here, it is evident that the City's conservancy zoning, which is intended to protect existing wetlands, falls under this latter category of land use control.
See Just,
The second guidepost gauges the severity of economic impact. We view this criterion to be nothing *712 more than proof from an appraiser that, on paper, the landowner has sufferеd a reduction in value from the property's highest and best use. Because of the underlying dispute in this case, however, resolution of this criterion cannot be easily determined. If, as Zealy contends, we should look to only that part of the property which has been zoned as a conservancy, then Zealy can presumably show a loss of $196,000. If, on the other hand, the whole parcel is examined, then Zealy cannot show any severity of economic impact due to the zoning change and the second criterion must be resolved against him. Thus, resolution of this case depends upon examination of the third guidepost.
To restate the third guidepost, we measure the degree of interference with the landowner's anticipated and distinct investment opportunities. This analysis entails a balancing between the public interest in efficient land use against the burden placed on the challenging landowner. Courts traditionally have required landowners to demonstrate that there has beеn a substantial impact on the actual use, or a reasonably anticipated use, of their land before finding that a taking has occurred.
See, e.g., Village of Euclid v. Ambler Realty Co.,
The rationale for this stringent burden is to prevent frivolous assertions by landowners. Without these requirements, every zoning change for conservancy purposes would provide an opportunity for the owner to bring a claim for compensation. Government would be crippled.
See Pennsylvania Coal,
On the other hand, if the landowner has an anticipatеd use taken away, then it may be that, despite the regulatory good which comes from conservancy, compensation must be made. The law recognizes that intensive regulation may render private property effectively useless even though legal title remains in the hands of the citizen. In Pennsylvania Coal, the Supreme Court warned: "The general rule, at least, is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." Id. at 415. The government goes too far when, according to Concrete Pipe, an anticipated investment is taken away.
The criterion which explores anticipated investment takes on special importance when a landowner alleges, as Zealy does here, that only a portion of the property should be considered in the takings analysis. The question is, always: Is the nonaffected part of the parcel relevant to the anticipated use of the affected parcel? If the answer to that question is "yes," then the whole parcel should be considered in determining whether there has been a taking. If the answer is "no," then only the antiсipated investment opportunity of the affected parcel should be considered.
*714
We come to this conclusion after reviewing a case cited to us by the City,
Ciampitti v. United States,
Factors such as the degree of contiguity, the dates of acquisition, the extent to which the parcel has been treated as a single unit, the extent to which the protected lands enhance the value of the remaining lands, and no doubt many others would enter the calculus.
Id. at 318. In our view, these factors travel to whether that part of the parcel unaffected by regulation is relevant to the anticipated use of the affected part of the parcel. For example, a portion of the parcel that is very minimally contiguous to the affected parcel may not have been considered by the landowner to be part of the anticipated use of the remaining part. As well, the dates of acquisition and the circumstances of acquisition may well inform the court about how the landowner may have viewed the land. Additionally, the extent to which the rezoning of certain lands to a pro *715 tected status actually enhances rather than harms the landowner's anticipated investment opportunity could demonstrably affect the calculus. For examрle, a residential parcel surrounded by conservancy lands might be more valuable than a parcel surrounded by other homes.
No doubt there are other factors which may be relevant. But we cannot underestimate the importance of analyzing a constructive taking by resort to the third
Concrete Pipe
criterion. It does away with bright-line rules favored by Zealy on the one hand (always segment the affected property)
5
and the trial court, the
*716
City, the state and the public intervenor on the other hand (never segment the property).
6
The focus on anticipated use teaches us that sometimes the whole
*717
property must be considered and sometimes not. We prefer the type of undertaking used by the court in
Loveladies Harbor, Inc. v. United States,
We believe that the concern of the government in Loveladies is valid and can be met by the same careful assessment of the facts as wаs conducted by the court in that case. We cite Loveladies to accent our belief that *718 this case cannot be resolved simply by announcing a bright-line rule that parcels either can or cannot be separated for purposes of constructive taking analysis. Rather, the Concrete Pipe criteria — especially the third criterion — are the correct focal point upon which to make a record. Because this was not done at trial and because the trial court ruled against Zealy simply on the incorrect basis that the law requires the whole parcel to be factored, we reverse. We remand for a new trial at which time the. parties may submit whatever evidence the court deems relevant to resolving the third Concrete Pipe criterion. 8
We now turn to the second claim presented in this appeal, which involves the doctrine of equitable estop-pel. We reach this issue because it is a separate and independent ground raised by Zealy. We reject this claim for the reasons that follow, but note that if we had aсcepted this claim, then there would have been no need to remand on the first issue. We now discuss this issue.
Zealy alleges that in 1982 the City promised him that if he granted an easement across his property, the City would not assess any charges on sewers which may be sited on the property and that the residential development of his property would be expedited. In *719 substance, he asks this court to enforce this agreement by ordering the City to withdraw the rezoning plan as it pertains to his property. The trial court dismissed this claim because it found that Zealy had failed to make "substantial expenditures" in reliance upon this agreement. While we agree with the trial court's ultimate conclusion, we find that it is supported by a different analysis.
The application of equitable estoppel in matters of land use regulation rests on a series of cases where courts have enjoined regulatory changes because a landowner had already acted upon the original ordinances. The landowner is described as having "vested rights" in the prior plan.
See State ex rel. Schroedel,
The City argues that these cases are inapplicable since Zealy has failed to present a factual basis for his assertion that he relied upon the original zoning classification. Zealy contends, however, that he granted the easement only for the purpose of expediting residential development. He argues that the dispute centers on the scope of the agreement and should be presented to a trier of fact;
Zealy's claim for relief based on equitable estoppel depends upon his proof that he relied upon the agreement with the City to his detriment.
See Mowers v. City of St. Francis,
Moreover, we find that this equitable estoppel analysis embodies, in substance, the same issues to be considered in Zealy's constructive taking claim. Both require proof that Zealy intended to develop the 8.2 acres for residential use. In the constructive taking analysis, it establishes what his reasonable expectations were about the subparcel, and in the equitable estoppel cоntext, these facts would be required to demonstrate that he acted in reliance on the City's promise to his detriment.
The constructive taking claim, however, is his only means of seeking relief. Even if the City breached an agreement that earmarked the subparcel for residential development, a court could not order specific performance and make the City rezone the subparcel. The court cannot compel a political body to adhere to an agreement involving land use regulations when it has legitimate reasons for breaching.
See City of Milwaukee v. Leavitt,
No costs awarded to either party.
*721 By the Court. — Judgment and order affirmed in part; reversed in part and cause remandеd with directions.
Notes
An inverse condemnation action brought pursuant to § 32.10, STATS., enables a landowner to challenge a legal restraint imposed by a government authority in instances when the government has not invoked its power of eminent domain.
See Howell Plaza, Inc. v. State Highway Comm'n,
State v. Herwig,
At oral argument, Zealy suggested that there may be a difference between Wisconsin and federal takings law. This issue, however, was not briefed by any of the parties. Of course, thе Fifth and Fourteenth Amendments set the minimum standards for the protection of private property against intrusions by the State of Wisconsin.
See Chicago, B. & Q. R.R. v. City of Chicago,
At oral argument, Zealy suggested that this court should adopt a three-part test for analyzing whether a constructive taking has occurred. First, the purpose of the regulation should be considered. Next, the intent of the public authority must be analyzed. Finally, the effects of the regulation on the affected landowner must be ascertained. This suggestion appears to be a fair means of describing the factors that should be relied upon by a court to resolve a constructive taking question. This proposed test, however, does not provide a clear indication of how the reviewing court should segment, or characterize, the challenging landowner's property.
We reject Zealy's argument that the analysis in
Howell Plaza II
supports a conclusion that only the affected subparcel is considered in a constructive taking analysis. The plaintiff landowner in
Howell Plaza II
alleged that sixteen acres of a sixty-acre parcel had been constructively taken because a planned highway prevented it from developing the subparcel.
Howell Plaza II,
For example, in the recent exploration of these issues in Lucas, Justice Scalia noted:
The rhetorical force of... [the deprivation of all beneficial use] rule is greater than its precision, since the rule does not make clear the "property interest" against which the loss of value is to be measured. When, for example, a regulation requires a developer to leave 90% of a rural tract in its natural state, it is unclear whether we would analyze the situation as one in which the owner has been deprived of all . . . beneficial use of the burdened portion of the tract, or as one in which the owner has suffered a mere diminution in value of the tract as a whole.
Lucas,
505 U.S. at — ,
Justice Scalia then went on to criticize the analysis applied by the Court in
Penn Cent. Transp. Co. v. City of New York,
We are of the opinion that when reading these cases together, the Supreme Court has not stated that courts may never segment. Rather, the courts should use a flexible *717 approach. Nonsegmentation was found to be proper in Key stone and Penn Central based on the facts in those cases.
For example, if a landowner knows that a wetlands restriction is imminent, dividing the wetland portions into separate and distinct parcels would seem to be a wise course. The landowner would be able to demonstrate a greater
percentage
devaluation because only the now undevelopable component wоuld be in the denominator of the calculus.
See Lucas,
505 U.S. at —,
The ultimate conclusion about whether there has been a constructive taking is an issue of law.
Mentzel v. City of Oshkosh,
