When 29-year-old Jon Regner bought a small house in Flagstaff's oldest neighborhood last year, he already had plans for the property. He'd replace the 700 square-foot carriage house in the backyard with a two-story duplex. Then he'd live on one floor and rent out the other while he renovated the main house. He'd use the rental income to help make payments on his $380,000 mortgage.
That was the idea, anyway. But 10 months after Regner moved in, his neighborhood was designated a historic overlay district. The district limits the height of homes to 25 feet, and outbuildings to 16 feet. It also creates a Historic Preservation Commission with the power to deny permits for construction or renovation. Regner was stuck. Without making the improvements to his property, he says, he couldn't afford to stay.
But Regner had heard about Proposition 207, an initiative passed last November that allows Arizona property owners to demand compensation if a new government regulation reduces the value of their property. With help from the libertarian Pacific Legal Foundation, Regner filed a Proposition 207 claim against the city for $168,000, the amount he estimates his property has been devalued by the new district. "When I bought the property, I was also buying the rights to the property," he explains, "not just what was already on here. I was buying the rights to build within the current restrictions."
Flagstaff refused to pay, and in October Regner, along with three other homeowners in the district, sued the city. It's the first test case of Proposition 207 in Arizona, and could knock the legs right out from under Arizona cities' efforts to control growth. "At its macro level," says Ken Strobeck, head of the League of Arizona Cities and Towns, "Prop 207 says the individual property owner is supreme rather than the community is supreme. So it's really a change in philosophy."
Proposition 207 was one of six similar initiatives on Western states' ballots last November that were touted as ways to limit the ability of local governments to use the power of eminent domain to take private property. But language buried in the propositions also required governments to compensate property owners if they enacted land-use regulations that somehow reduced their property values.
Proposition 207 passed with 65 percent of the vote. Arizona was the only state to pass an initiative that simultaneously addressed both eminent domain and the issue of regulatory takings. It's similar to, though not as far reaching as, Oregon's Measure 37, passed in 2004. To date, Oregon landowners have filed more than $12 billion in claims. In virtually every case, local governments have relaxed their regulations, rather than pay property owners.
Duffie Westheimer has lived in Flagstaff's Townsite neighborhood for 20 years, just around the corner from Jon Regner's new home, in a house built in the 1940s using Army ammo boxes. She's a petite woman who walks purposefully through the neighborhood, pointing out some of the homes' common historic features: front porches, small garages tucked behind the homes, walls made of local volcanic rock.
Then she stops in front of a home that towers above the rest of the neighborhood. The owners have built a second story on top of the garage in back, about 30 feet high. There are just a few feet between the house in front and the new unit in back. "It's really quite shocking," says Westheimer, who lives directly behind the property. "We're stuck with this," she says, but "we're trying to stop this from happening anymore. It's not what we wanted to live around when we bought here."
About two years ago, Westheimer and a handful of her neighbors began meeting to draft building guidelines to stop what they felt was the growing "McMansionization" of their neighborhood. They drew up a petition, which won the support of more than 60 percent of the area's residents. That petition became the base of the neighborhood's designation as a historic overlay district.
Westheimer finds it difficult to believe that just four homeowners could potentially undo a historic district that a majority of the residents supported. But Tim Sandefur, an attorney with the Pacific Legal Foundation who represents Regner and the other property owners, says Proposition 207 is working exactly as intended. "The whole point of having a court system that respects individual rights," he argues, "is to ensure that the majority doesn't use its power to trample over the rights of Jon Regner."
But the practical effect is that governments simply won't change land-use laws unless every single person affected by the proposed regulation change agrees to sign a waiver. And as Phoenix land-use attorney Grady Gammage Jr. puts it, "All property owners never agree. Never!"
Gammage, who has consulted with the city of Flagstaff about its Proposition 207 case but hasn't yet been retained, says larger cities make literally hundreds of changes to their zoning ordinances every year. Phoenix, for example, wants to make wholesale zoning changes to give its downtown more of an urban, walkable feel. Gammage, who's been helping the city, says Proposition 207 has stalled that process and may even kill it. "Cities are spooked," he says.
What's still unclear is exactly how far-reaching the initiative will be. There is an exception in the measure for regulations linked to "health and safety." But would efforts to regulate wildcat subdivisions or protect groundwater supplies fall under that exception? Those decisions will most likely be made in the courts.
That means Arizonans will have to wait longer than Oregon voters did to see how their private property rights protection initiative plays out. "So there isn't likely to be a wave of horror stories emerging in the next six months," writes Eric de Place of the Sightline Institute, a Seattle-based environmental think tank. "What we'll see instead, I suspect, is that paralyzing Arizona's laws will be more like watching a disaster flick in slow motion. We're still on the first reel."
Daniel Kraker is a freelance writer and news director of KNAU in Flagstaff, Arizona.