Testimony

of

Richard Goodwin

on behalf of the

National Association of Home Builders

Before the House Judiciary Committee

Subcommittee on the Constitution

of the

United States House of Representatives

on

H.R. 2372, The Private Property Rights Implementation Act of 1999

September 15, 1999

Thank you Mr. Chairman and members of the subcommittee:

I am Richard Goodwin, a real estate developer and builder from Mount Laurel, New Jersey. I own a business started by my father and brother in 1950. My company has built over 5,000 housing units, including low-income HUD projects. Today, I work primarily as a land developer. In my professional capacity, I have acquired substantial experience with those who regulate land use at every level of government--local, state and federal. They are, for the most part, competent professionals who responsibly implement programs to protect our health, safety and environment.

I think we all recognize, however, the unequal bargaining position government entities hold over private citizens. We have limited resources. They, generally, have fewer limits. In some circumstances they can defer decisions and simply wear us out by forcing us through a maze of procedures. The cumulative effect of this sometimes causes a taking of private property without compensation. This is, of course, in violation of the Fifth Amendment to the Constitution.

Unfortunately, I can illustrate this point from my own experience. In 1988 I tried to develop a fifty-five acre tract in Washington, New Jersey, for myself and Neve Shalom-Wahat Al-Salem, a charity that promotes peace in the Mid-East and owns an eighty percent share of the property. The property is oddly shaped in that it is one mile long and only two lots wide. Our original application called for 86 lots on the property, well within the original zoning plan. Access to the property is limited to either end, which mandated that our plan have a road running the length of the tract with lots along either side.

We ran into trouble when we discovered that we had a few acres of wetlands at each end of the tract, five acres in all. Without filling some of these wetlands we had no way to access the remaining acres in the middle of the tract. We turned to the New Jersey Department of Environmental Protection (DEP) for a mitigation permit. The DEP denied our application and instructed us to come up with another plan.

Given the constraints of our property, we were fairly limited in our options. At the time of our first application, DEP had strongly hinted that it would approve a project that had only 46 lots. As a result, we redrafted the project and submitted a plan calling for only 46 lots. But, despite the hints, DEP told us our changes would still not get us a permit.

We spent several years in a one-sided discussion with the DEP, asking how we could alter our project to mitigate for the wetlands. No answer. So we asked for a flat out denial--a ruling that in effect would state that because of the wetlands no development could occur on the property. Still, we heard nothing. We went through all the administrative requirements required by law to appeal--ultimately appearing before a DEP administrative judge. He ruled that DEP properly denied our permit. Given this ruling, we thought we had a final ruling and could proceed to state court with our takings claim.

But once we got to court, the state attorneys did not argue the merits of the case. They simply argued that we had not exhausted all our remedies, although we had no indication what those remedies might be. The judge agreed with DEP. We asked the judge "what remedy did we fail to exhaust?" He simply stated "ask DEP" because they never told him. Of course, we already had asked DEP and made many suggestions about how to draft a project they might approve. But we still had no indication from the DEP what might be acceptable. We appealed, but the appellate courts also agreed with DEP.

A little over a year ago, DEP hinted that it might approve a project with only fourteen lots. However, to gain access to these lots we would have to access them from a nearby, developed cul-de-sac. This suggestion, however, was ludicrous. As DEP knew, the cost of developing is significantly higher than the reasonable price we could sell the lots for. Moreover, we would be forced to attach a new cul-de-sac to an existing cul-de-sac--a plan that the Township had already rejected in a public hearing that DEP attended. In other words, the only suggestion DEP has made is one it knows is financially unfeasible and politically impossible.

Now, after ten futile years of state administrative and legal procedures, we are trying to go to federal court: after all, the DEP has violated my constitutional rights. But I am very afraid that the federal courts will also turn a deaf ear to our complaint. According to a study by Linowes and Blocher, over 80% of all compensation claims in federal district court never get a hearing on the merits. I know the study also shows that the average case requires almost 10 years to gain a hearing on the merits. Of course, in my case I have already spent ten years and have little hope of a hearing on the merits within the near future. Given these facts, there is little wonder regulators see few incentives to seek accommodations that will accomplish their policy purpose without unduly injuring individual property owners.

Meantime, our project in Washington, New Jersey, is left in suspended animation. We have no idea how to redesign the project or even what criteria to use in doing so. Moreover, we have no idea what remedies there are that we have not exhausted. I have come to believe that exhausting remedies means exhausting my bank account, exhausting my patience and exhausting my belief in the justice system.

As a real estate professional, I accept--indeed support--government's role in protecting our health and safety through a variety of land use and environmental measures. Further, I accept that government agencies can order the cessation of any activity thought to violate the laws and regulations intended to give us that protection.

But even as I accept the legitimacy of such regulations, I have experienced dramatic inequities and the need to guard against them. The current system does not provide such protection, even though the Fifth Amendment mandates it.

H.R. 2372 simply puts property owners on a level playing field with other individuals asserting constitutional rights. If a local police force breaks into my home without a search warrant, and I chose to go to federal court to allege that my Fourth Amendment rights have been violated, there would be no question that I could have the merits of my case heard.

Would anyone argue that having Fourth Amendment rights protected in federal court forces local law enforcement decisions to be made at the federal level? Does my right to go to federal court with that claim pose a threat to states' rights?

Supreme Court Justices William Brennan and Thurgood Marshall wrote in 1981 in the San Diego Gas & Electric Company v. City of San Diego dissenting opinion (which six years later became the majority view):

"Indeed, land-use planning commentators have suggested that the threat of financial liability for unconstitutional police power regulations would help to produce a more rational basis of decisionmaking that weighs the costs of restrictions against their benefits. Such liability might also encourage municipalities to err on the constitutional side of police power regulations, and to develop internal rules and operating procedures to minimize overzealous regulatory attempts.

After all, a policeman must know the Constitution, then why not a planner?"

Indeed, why not all state officials?

If you will forgive my cynicism, I must say that the planners do indeed know the Constitution. That is precisely why the DEP has remained silent every time we have asked what remedies we have failed to exhaust. The DEP knows quite clearly that as long as it promises a new remedy for our situation but never delivers, the protections given us by the Constitution are simply words on a page. What's worse, I have observed a strong tendency among state courts to protect state bureaucrats.

H.R. 2372 is intended to reform the system so that citizens like me have some protection against the use of convoluted procedures to deny us our "day in court." This bill simply opens the door to the courts; it does not change the standards by which the courts will then consider the claim.

In allowing claimants their "day in court," H.R. 2372 in no way alters the standards that property owners must satisfy in order to qualify for compensation. Those who argue that simply by granting citizens timely access to the judiciary H.R. 2372 will increase takings payments implicitly admit that citizens' rights are currently being violated.

Under the current circumstances, why should we expect otherwise? What incentive exists to encourage sensitivity to the impacts on private property owners? If injured parties are denied timely access to the courts, where are the checks and balances to ensure equitable and efficient regulations?

Mr. Chairman, H.R. 2372 provides much needed balance to our system of regulating private property. It in no way diminishes government's ability to protect our health or safety; it changes no environmental program; it alters no land use or zoning authority.

H.R. 2372 simply assures that all of these legitimate functions are pursued equitably, so that all citizens share their costs and benefits.

Thank you, Mr. Chairman, for the opportunity to speak in support of H.R. 2372.