Land Development Code – Another Example of the Law of Unintended Consequences

Things done with good intentions sometimes have bad results. Nobody proves this better than the government.

July 19, 2007 – Palm Coast, Florida – The City of Palm Coast is in the process of foisting a 350+ page Land Development Code (LDC) on its citizens. It’s full of lots of feel good changes designed to appeal to the demographics of the city’s voters, but it’s the voters themselves who will pay the price. Few would be willing to stand up and speak out against any of the following well intended changes? 

• Increased setbacks – Buildings shouldn’t be too close to property lines.
• Increased buffers and plantings – Who can be against trees?
• Increased minimum road width – We won’t have to drive so close to the center line.
• Wider parking spaces – It will be easier to park.
• Decreasing the percentage of a parcel that can be covered by buildings and paving.
• Street lights required on all public streets.
• And more…….

But if adopted as currently drafted, the new LDC would have prevented several recent welcome additions to the city, either by code restrictions or by making the projects financially impractical. It will have a negative effect on all of us. It’s easy to see why how developers will be effected, but "so what,” many would say. Developer is a four letter word to them. (Palm Coast may make "Centexing" a verb, just like "swiftboating.") Little do most people realize how wrong they are.

• Their property taxes will rise to pay for the increased cost of maintaining wider roads and lighting more streets.
• Their property taxes will rise because commercial and industrial development will be severely restricted, continuing the present trend of relying solely on the residential sector for tax revenue.
• Palm Coast will not have the retail stores, services, and restaurants people have been crying for.
• The rise in residential property taxes will inhibit the residential growth that has been funding the city’s growing budget.
• Sufficient affordable housing will be unavailable. 

These are all unintended consequences, but they will happen. Another unintended consequence is that the new code, by greatly restricting development rights, will substantially devalue a lot of property. The 1995 Florida Legislature enacted the "Bert J. Harris, Jr., Private Property Rights Protection Act." The act provides in part that when a specific action of a governmental entity has inordinately burdened an existing use of real property or a vested right to a specific use of real property, the property owner of that real property is entitled to relief that may include compensation for the actual loss to the fair market value of the property caused by the action of government, as provided in the statute. This cause of action is separate and distinct from any cause of action that might arise under the law of takings. The new LDC, as drafted, will beg Bert Harris suits with the resulting financial burden to plaintiffs and the city as defendant.

Along these lines, a defining example of government starting out with good intentions but ending up with mud on its face is “Lucas v. South Carolina Coastal Council.” I know this case well since I lived only a block away at the time.

In 1986, David Lucas paid $975,000 for two residential oceanfront lots in Wild Dunes, located on a barrier island just north of Charleston. At the time, a single family home would have been allowed on each lot without any additional permits required by the S.C. Coastal Council. South Carolina subsequently passed a Beachfront Management Act which directed the Coastal Council to establish a “baseline” along the shoreline beyond which any homes were prohibited. Lucas filed suit claiming that ban on construction effected a taking of his property without just compensation. Appealing all the way to the US Supreme Court, Lucas won. The state had to purchase his property.

Saddled with the cost of owning two worthless oceanfront properties, the state changed its restriction, allowing them to sell the lots. Two multi-million dollar houses now occupy these worthless lots. (See Map) And that’s the rest of the story.