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Regulatory Takings and the Contested Future for Dutch Planning

Harvey M. Jacobs 12 and Erwin van der Krabben

1 Professor, Department of Urban and Regional Planning and Nelson Institute for Environmental Studies, University of Wisconsin-Madison, USA, and Visiting Professor, Institute for Management Research, Department of Geography, Planning and Environment, Radboud University Nijmegen, Nijmegen, The Netherlands; [email protected]

2 Professor, Department of Geography, Planning and Environment, Radboud University Nijmegen, Nijmegen, The Netherlands, and Professor of Real Estate, School of the Built Environment, University of Ulster, Northern Ireland; [email protected]

Delivered to the 54th Annual Meeting of the Association of Collegiate Schools of Planning (ACSP), Philadephia, PA October 2014. -1-

I. Introduction mixed situation for regulatory takings among the countries of Europe (e.g. Dutch planning – in sectors such as Alterman 2010). A minority view is that urban, regional, environmental, transport, there is a broad form of regulatory takings and housing – is globally admired. Within emerging (e.g. Jacobs 2008b). the Dutch system planners appear to have authority and to be respected, and Dutch Land use planning in the Netherlands plans seem to be implemented. From an in the current period is structured by several American perspective, one of the reasons for recent changes, including: a crisis in the this seems to be the fact that Dutch planners traditional approach of public land operate within a social or legal climate with development, court decisions which very different attitudes about private decrease the role of the central government, property. In particular there does not appear an increasing interest in a new approach to to be anything equivalent to the American land development where the public sector social reverence afforded private property, will broadly define land use, but the private which can lead to intense social conflict over sector will act to realize land use private property’s management via planning, opportunities, a new, 2008, planning law, nor a legal tradition focused upon regulatory and preparations for again a new, but now takings which functions as a political brake more comprehensive planning law to be on the development and implementation of implemented after 2015 (van der Krabben planning policy. But the situation of Dutch and Jacobs 2013 discuss several of these planning is not quite what is seems and the factors in some detail). situation is changing. Part of that change is about regulatory takings. The Dutch system of planning law and practice has long had a mechanism for The literature evidences a conflict regulatory taking, but it has been little called about the status of regulatory takings in upon by landowners, it has resulted in Europe. (For the purpose of this paper modest yearly payments and it is little “regulatory takings” means the obligation of discussed by planning academics. The low government to compensate a landowner level of payment and the generally low level when governmental action is deemed to be of recognition of land-based property rights too onerous. This can be the result of as an issue for planners in the Netherlands is regulatory actions on a parcel or it can be in decided contrast to, for example, the from the spillover effects of other parcels situation in the U.S. (see for example the granted permission via governmental difference in discussion in van der Cammen action.1) The majority view is that there is a et al. 2012 versus Jacobs 2010; however, note the cautionary closing discussion in

1 Alterman (2010) defines these categories of takings actions as: major indirect takings (a decrease in an owner’s takings (where virtually all land value is lost value as a result of negative externalities as a result of a regulatory action), direct from neighboring land as a result of land use takings (a decrease, but not a total decrease, activity expressly permitted through in the value on an owner’s parcel), and government regulation) -2-

Needham 2014: 218; this discussion is private property and the appropriate role of expanded upon in section V of this paper).2 government are affecting planning, even in cultures where planning has long-standing The major questions that structure respect. this research are: a) is regulatory takings changing in the Netherlands, as planning in In subsequent sections we discuss the general is under pressure to change, b) if it is changing Dutch planning context, the global changing, what factors best explain the context for regulatory taking and social change in regulator takings that is occurring, conflict over property, regulatory takings in and c) what might be the impacts of this The Netherlands, and end with speculation change for plans and planning practice. on the future of regulatory taking and discussion of necessary research. The research uses institutional and qualitative methodologies. These include II. The Changing Dutch Planning the authors’ knowledge of Dutch planning, Context selected interviews with key planning and legal experts, and a discussion of relevant Dutch planning – in sectors such as court decisions, and an examination of the urban, environmental, transport and housing 2008 Spatial Planning Act. – is globally admired. The Dutch themselves note how to the outsider The We conclude that regulatory taking is Netherlands can seem to be “a planner’s likely to become a more significant paradise” (Faludi and van der Valk 1994). component of the Dutch institutional Buitelaar (2010: 349) begins his landscape. While we anticipated selecting examination of changes in Dutch land policy among a set of hypotheses to explain why (a key element of Dutch planning policy) by this was true, we find instead that we are asserting “in the international literature and most comfortable arguing that it is all the discussions on land management, Dutch hypotheses, taken together, which offer a land policy is often presented as a special way to understand the changes that are case, sometimes even as a role model for unfolding. other countries.” And in a similar vein, Needham (2014a: xv) in the very first As non-Dutch planners have long sentence of his preface offers up that “there looked to Dutch planning as a model, is a lot of interest by professionals, understanding how it is transforming and the politicians and the interested layperson . . . likely consequences of these changes could in the way the Dutch use their land. Those help in: a) further refining current thinking ‘foreigners’ make study trips to the about the form and consequences of a multi- Netherlands so that they can see and marvel actor negotiated planning system and b) at it . . . how do the Dutch achieve it?” understanding the way global debates about A partial answer has to do with Dutch attitudes. Faludi (2005: 285) notes in 2 Alterman (2010: xix) says of the a volume on comparative planning cultures, U.S. “(n)owhere else is the property rights the Dutch are “a culture with a soft spot for debate as intensive and high profile . . . ” -3- planning.” Within the Dutch system . . has reached almost mythical proportions” planners appear to have authority and to be (Buitelaar 2010: 351).4 Recent work both respected, and Dutch plans seem to be reflects on the Dutch successes in planning implemented. In this same volume, Faludi (in an almost self-congratulatory fashion) (2005: 292-293) explains that planners “. . . and seeks to clearly explain to an get the opportunity to operate as international audience how it is that the professionals,” and in general they “. . . are Dutch have accomplished what they have shielded from political interference.” This (van der Cammen et al. 2012 on the former, is so because the Dutch citizenry Needham 2014a on the latter). traditionally has not regarded the state (in this case public sector planners) as an alien Yet this traditional approach to and force, in fact “trust in the state is the basis success of planning is in the process of for the legitimacy of (all) Dutch change. Faludi (2005: 292) anticipated governmental action” (Faludi 2005: 294). such, even before the 2008 global economic crisis, when he noted that “. . . no guarantee The exceptionalism of the Dutch exists that the favorable conditions under with regard to spatial organization and social which Dutch planners operate will persist. . . order and the recognition of such (if not . So the future is open . . ..” Five years later always admiration for such) is long standing. Buitelaar (2010) goes further when he titles Roodbol-Mekkes et al. (2012) note a steady his article “Cracks in the Myth,” and stream of positive observations on Dutch Roodbol-Mekkes et al. (2012: 378) added to planning since the 1960s by British, this by suggesting that Dutch planning American and Israeli scholars. In a recent doctrine is in “disarray,” asserting that “the history of Amsterdam, Shorto (2013) talks long-undisputed position of spatial planning about how in the 1600s foreign visitors to in the Netherlands is under attack.”5 And the Netherlands were amazed by the Dutch these concerns about the future of Dutch attention to order, planfulness, social planning are now part of a broader literature cooperation and courtesy. Interestingly (to which this paper is a contribution) noting Shorto also points out that the Dutch have a challenges to the conceptualization, long-standing tradition where they skillfully approach and practice of planning (see, for blend social cooperation and individualism, especially with regard to land management.3 4 Buitelaar’s comments are The long-standing, but especially specifically about land policy. Yet it seems post World War II approach to planning, is reasonable to generalize it to all spatial an approach that “is often praised . . .” and “. planning, especially because of the key role of land for planning.

3 Here Shorto is referring 5 Buitelaar (2010: 355) ends his specifically to the social cooperation in article as follows: “. . . although the myth creating the polders, and yet the individual has not been laid to rest (yet), land policy in allocation of the land reclaimed, in decided the Netherlands, today, looks less deviant contrast to attitudes toward land tenure in from that in other advanced economies than other parts of Europe at the time. ever before.” -4- example, Janssen-Jansen 2011, Korthals that sufficient land would be Altes 2014, van der Krabben and Heurkens available municipalities took 2015, van der Krabben and Jacobs 2013). up the task themselves (776). Immediately below we briefly discuss three . . . As it is applied by Dutch sets of factors which we see as key elements cities a public land in this change: 1) a crisis in the traditional development strategy, approach of public land development, 2) involves public purchase, increasing interest in an approach to plan ownership and servicing of implementation where the public sector land and active planning for defines plans, but the private sector land use before land is implements them, and 3) the 2008 planning released for actual law, including a pulling away by central development to the private government from the planning process. sector. This guarantees building developments A crisis in the traditional approach according to public policies, of public land development. Perhaps the it realizes full cost recovery most significant change has to do with the of all public works via the traditional Dutch approach to land sale of building plots and it development. For much of the period since captures at least part of the the end of WW II the Dutch have engaged in surplus value of the land what is known as the public land (after a change in use)” (774). development strategy or model. To explain . . . The Dutch public land this model, and to explain why it is presently development model . . . in crisis, we draw from our recently encompasses a public published work (van der Krabben and developer – usually the Jacobs 2013). municipality . . . – who buys all the land to be developed, The ‘modern’ public land readjusts the parcels into development model came forms suitable for the desired into practice . . . when there development often many was a huge demand for new years prior to the housing and also land for implementation of the plan in industrial use.6 To assure a certain location, and sells those parcels. The income from the land development 6 Buitelaar (2010: 350) refers to this comes from selling the approach as “active land policy.” He notes building plots (776). that while it was originally conceived as an approach for the provision of social housing “its application was (eventually) extended to other public goods such as parks and N.B. This note is not part of the infrastructure, but also more commercial original text of van der Krabben and Jacobs uses such as market-rate housing, and (2013). industrial, retail and office development.” -5-

Even though most land development . . . around 1994, the situation was public in this 50-plus year period, it was quite suddenly changed. The not essential for it to be. changes on the land market since that time . . . came as a It is possible that private land shock to Dutch planners. developers or large building First, a strong increase in the construction firms could have demand for owner occupied taken over the land housing took place, as a development role – legally result of the combination of municipalities do not have a low interest rates, very monopoly position on the accessible mortgage land market – but the conditions, a large growth in situation remained as it was the number of households for a long time for several and delayed demand. This reasons. . . . To understand resulted not only in the strong better why all stakeholders in growth of housing prices, land and property because of a delayed response development have been more by the supply side, but it also or less pleased with the made this sector much more public land development in interesting for the the Netherlands, it is homebuilding industry. necessary to take a closer Because of the increase in look at the conditions under housing prices, the value of which public land building land increased development took place until greatly as well. Commercial the early 1990s. . . . most developers became, for the homebuilders were not first time, interested in interested in land strategically acquiring future development, because the building land . . . (780) costs of making the land available and servicing it was This was true in part because as Needham too high. In the Netherlands (2014a: 155) notes “(t)he development gain in particular the costs of land to be enjoyed by buying unserviced land drainage investments were became big enough to compensate for the often substantial. risks.” Municipalities because of economies of scale were able Buitelaar (2010: 353-354) also to carry out these works on a assesses these changes. He largely agrees large scale, which made the with the analysis presented above, especially costs acceptable for them” the demand for housing as a function of (777) rising national income and economic growth, and he adds some additional factors. So, what changed? Among these are: the introduction of a -6- neoliberal policy discourse in the 1980s and alternative approaches to plan development 1990s which shifted focus from the public to and implementation. van der Krabben and the private sectors for the production of Heurkens (2015) present three basic housing, a shift from greenfield to approaches that are under discussion and brownfield development, and the growing taking form at this time: (i) private sector led recognition at the Dutch and EU levels of incremental, piecemeal development, (ii) an the potential conflicts between the approach based on a concession from local traditional Dutch approach of public land governments to the private sector and (iii) a development and European rules on state - public-private cooperative model based on aid and public procurement, which urban land readjustment. “prescribe that land must not be sold below market price” (354).7 Private sector led incremental, piecemeal development is a strategy Finally, there is the systemic impact whereby the municipality develops a broad of the 2008 economic downturn. A public vision for an area and then invites the land development approach means that private sector to develop detailed plans for municipalities have invested substantial specific locations. Known as capital in land purchase and servicing on the uitnodigingsplanologie, planning by assumption of an ability to sell “at a profit,” invitation, this is not a new idea globally, including a reasonable time between nor for the Dutch.8 What is new is that it is purchase and sale. The downturn upended not how the Dutch have largely engaged in these assumptions. Between 2008 and 2013 planning and development in period since housing prices declined by nearly 20 the end of WW II. As such it requires percent. “All of a sudden, municipalities changes in the formal structure of Dutch began losing millions of euros on their planning (the basic law) and the role of the investments in land they had already bought public sector, particularly a shift “from for future development” (van der Krabben project management . . . to process and Heurkens 2015: xxx). It is now management. . . . informal relations with the expected that, all told, municipalities may development industry need to be built . . . lose upwards of four billion euros, bringing [including] developing negotiation skills . . . some of them close to bankruptcy. This is something that Dutch planners are not used to and will take time . . . due to the Increasing interest in an approach to established institutional culture of public-led plan implementation where the public sector development . . . ” (van der Krabben and defines plans, but the private sector Heurkens 2015: xxx). implements them. For the reasons noted above, there is increasing interest in

7 For the Dutch, “brownfield” 8 As van der Krabben and Heurkens development means development in already (2015) note this approach to development built-up areas. The term is not used as it is goes back to the Dutch Golden Age of the in the U.S. to connote environmentally 17th century relative to the building that contaminated land sites. occurred along Amsterdam’s canals. -7-

The second, concession based, In general Dutch observers are seeing approach is based on a contract between the that “(w)hereas, in the past, development public and private sectors. In this approach was simply a matter of hierarchical the public sector transfers much of the risk, implementation, programmes are now revenues and responsibilities for plan increasingly being dominated by the development, land preparation, land and real market.” Why? Because “(i)n many cases estate development, and future management market finance has replaced government to the private sector. A relatively new idea funding” (Roodbol-Mekkes et al. 2012: in the Netherlands, one of its challenges is 383). that this form of development requires the Dutch development industry to take up a The new 2008 planning law. In part long-term role in real estate projects. As van because of some problems in the public land der Krabben and Heurkens (2015: xxx) note development approach, and in part because “. . . there is no such tradition in the Dutch Dutch planning law was based on a 1965 development industry.” planning statute that had been amended and adjusted numerous times, in 2008 a new Urban land adjustment is a third planning act was made operational (Spatial component of the new approaches Planning Act 2008). The Act recognized the discussion in the Netherlands (van der changed circumstances with a number of Krabben and Needham 2008). It is an significant shifts in the planning process. approach common in Germany, Norway and One of the big changes was a shift in Spain, as well as in parts of Asia (, fundamental planning authority to local South Korea and Taiwan) (Hong and governments, over that of the central Needham 2007). And there is a precedent government. Now municipalities have the for it in Dutch agricultural land primary responsibility to draw up plans, readjustment, where it has been for almost municipalities develop zoning for 100 years. Urban land readjustment is an implementation of these plans, this zoning approach where property owners initiate the does not have to be reviewed and approved urban redevelopment process, and the at the provincial level, and while provincial municipality plays a facilitating role. and national authorities may indicate their Owners pool their land for unified planning, views on municipal zoning only in limited servicing and subsequent subdivision. Post instances may they instruct changes (The readjustment some plots are sold for cost Netherlands Ministry of Housing 2007: 3-4). recovery of investments, while other plots As noted in a brief explanation of the law are redistributed to original owners. The issued prior to its coming into effect “the crisis in the public land development model new law aims to achieve . . . more efficient has led the Dutch national government to decision making, improved enforcement and launch a pilot program to test the simplified legal protection in spatial effectiveness of this approach and to planning” (The Netherlands Ministry of consider preparing a new planning law to Housing 2007: 1). make this possible. Reflecting the shift towards a more private sector implementation approach, the -8- law maintained the right of municipalities to of the applicant. This implies a fundamental recover the cost of public works developed change in the foundation of planning during the development process, but compensation rights compared to the separated this recovery from the need for the previous case law” (Hobma 2010b: 9; municipality to be the land owner. It also emphasis in original). This is partially contains a provision to allow municipalities realized by a provision which requires that to require private developers to include land owners are responsible for the first two social (affordable) housing in their plans. percent of a claim (when what they are Overall, the law improved the bargaining seeking is compensation as a function of a position of municipalities vis-a-vis private negative spillover from neighboring developers (van der Krabben and Jacobs properties). 2013). And linked to all this is the reduced Several components of the law deal emphasis on the role and function of the directly with the matter of planning central spatial planning agency. Roodbol- compensation (regulatory takings). Under Mekkes et al. (2012: 382) note that “(t)he the former Spatial Planning Act, specifically remit of the National Spatial Planning article 49, “(a)n analysis of case law . . . Agency has changed considerably in recent demonstrated that over the years the scope decades. . . . [it] no longer oversees of compensation was gradually broadened territorially prudent spending by government by the Dutch courts.” “The complaint (of ministries and agencies. . . ; changes . . . municipalities) was that the number of have weakened the influence of the National requests for planning compensation had Spatial Planning Agency (DGR) on the risen considerably. The municipal costs of formulation and implementation of spatial dealing with the requests had, in their planning policies in the Netherlands.” As opinion, become unacceptably high” Bontje (2003) discusses, this is a process (Hobma 2010b: 4). that has been actively evolving at least since On the whole, the intent of the new law in the early 2000s. this area was to reduce the basis for claims. So now, there is a five year time limit under III. A Global Context for Regulatory which claims may be filed. And Takings and Social Conflict Over municipalities are not responsible for claims Property if such claims could be understood as “foreseeable.” So, for example, consultation In 2010 Alterman presented a by a municipality in the preparation of a comparative study examining the state of plan, including changes to a plan (which regulatory takings in a set of thirteen might result in reduced development developed countries. As she notes, most opportunities), if done transparently, slowly countries of the world have laws allowing and carefully will establish a basis for a plan for public regulation of private land use action being foreseeable. In addition, land activity. And as such invariably the matter owners must assume some of the risk in is raised about “how to deal with the shift in planning – “. . . losses falling within land values inevitably caused by land use standard social risk shall be for the account regulation?” In particular it is the -9- downward shift of land values – “reductions As is noted by Alterman and others, in current or future values” – that become the social and legal institution of private “one of “raw nerves” of planning law and property – that which is at the very core of practice” (Alterman 2010: 3). the debate about regulatory takings – is a focus of global debate (Alterman 2010, As a result of the research Jacobs 2014). This focus is present in undertaken by country-based authors and developed, transition, and developing subsequent integrative analysis, Alterman countries. It was the fall of the Berlin Wall divides her set of thirteen country cases into in the late 1980s and the dissolution of the three groups – those that provide minimal Soviet Union in the early 1990s which most compensation rights (Australia, , obviously contributed to the new global Greece, and the UK); those that provide interest in private property. When the Wall moderate or ambiguous compensation rights came down and the Soviet Union broke (Austria, Finland, and the U.S.), and those apart some prominent social commentators that provide for extensive compensation suggested that the grand social debates of rights (Israel, Germany, the Netherlands, the twentieth century were finished Poland, and Sweden). She also points out (Fukuyama 1989). According to this line of that planning compensation is provided for thinking, the twentieth century social, one or more of three types of regulatory political and economic debates had an east- impact – major takings, partial direct west structure focused on the relative merits takings, and partial indirect takings (see of conflicting macro political-economies – footnote 1). socialism versus capitalism, communism versus democracy. From the perspective of In examining the Dutch case, she the early 1990s, the new era (post Berlin characterizes it as one where there is “. . . Wall, post Soviet Union) would be one in protection of property in the Dutch which the major set of ideas that would be Constitution and especially the exaggerated debated would be about governance and perception of the Dutch Parliament of the markets. The new countries of central and protection mandated by the ECHR . . . ” eastern Europe and the former Soviet Union (Alterman 2010: 35; here Alterman is as well as other countries which were referring ot the European Court of Human undergoing their own, independent political Rights; see note 14 of this paper and the changes (such as ) began asking accompanying text). With regard to partial themselves and others how to become more direct takings she characterizes the integral to the global community. For a Netherlands as at “the extreme edge of the variety of reasons one of the answers to this compensation-rights scale” and yet in query centered on private property – private practice as recently as 1993 a major work on property was (is) understood as key to a land use planning could argue that planning substantial revision to governance and compensation was a non-issue and market structures. compensation was rarely paid (Alterman 2010: 57). Since the early 1990s developing and transition countries around the world have, with the counsel of the multi-lateral and bi- -10- lateral international aid agencies, political freedom, leading to global rankings aggressively moved to introduce the social of private property rights robustness. and legal institutions of private property (Deininger 2003). This tendency has been IV. Regulatory Takings in The further aided by advocacy suggesting that Netherlands the creation of private property is the central variable to alleviation of poverty in Regulatory takings as a concept, as a developing countries (De Soto 2000). In mechanism and as a component of Dutch this same period there has been a planning law has long existed. As Hobma rejuvenation of the social and legal debate (2010a: 348, 343) notes “(c)ompensation about private property in the rights for land use regulations have been in (Jacobs 2010). And in Western Europe, existence for a long time in the Netherlands, decades-old institutional arrangements that and “this right is quite broad.” The right to have structured the relationship of the compensation derives from the Dutch individual to the state over the scope of Constitution – “In the cases laid down by or private property have begun to shift pursuant to Act of Parliament there shall be significantly (see, e.g., Allen 2010, Jacobs a right to full or partial compensation if in 2008b, 2009). the public interest the competent authority destroys property or renders it unusable or In the last few years the extent and restricts the exercise of the owner’s right to substance of this trend has become clear. In it.” (Hobma 2010a: 344, referencing art. 14, few countries of the world is private para.3 2002; see his footnote 7). property not a topic of public policy and social debate. For example, two of the few While regulatory takings has long remaining communist-led countries in the existed, it has not been a significant world have moved to embrace private component of Dutch planning, for property. In the spring of 2007, made government, planners, or land owners. It has international news through its revision of been little called upon by landowners, it has national laws which established the resulted in only modest yearly payments and conditions for the ownership of private it is little discussed by planning academics.9 property in housing and, starting in spring But something is changing. Together with 2008 and accelerating in 2011, the structural changes to the Dutch planning introduced laws which would also allow the system outlined above (and discussed in private ownership of houses. more detail in the noted references) regulatory takings is taking shape in a way All told, this has led to heightened global discussion about private property and property rights. Leading legal scholars are 9 Hobma (2010a) is one source for noting a “global debate over constitutional these assertions. He presents data property” (Alexander 2006). And others suggesting that the total amount of suggest that the extent of private property compensated awarded annually is about €20 rights protections serves as a reliable million for the country as a whole, with an indicator of both economic strength and average approved claim of €10000, while over 50 percent of claims are rejected. -11- that appears to be one other way in which out opportunities for the Dutch planning system is evolving to be regulatory takings payments. closer in form to the planning systems of other developed countries (e.g. the U.S.), 4. That the change in the nature and less and less “the planner’s paradise.” of the development process, from strongly publicly led to In 2013-2014 nine semi-structured collaborative or even interviews were conducted with Dutch privately led, was affecting academics of planning and law, the perceived legitimacy of professionals employed either by the Dutch planning, and thus leading to ministries or the inter-provincial association, more challenges to it. and private-sector lawyers (see the section titled Interviews in the References section at 5. That there was an increase in the end of this paper for the names and a European-wide liberal positions of these interviewees). These discourse about the rights of individuals were identified for interviews the individual, including because of their knowledge of Dutch rights around private property planning or their involvement in the matter and property rights, and this of claims for regulatory takings as a result of created a climate friendly to planning processes. asserting regulatory takings claims. Drawing from the literature, interviewees were presented with a set of If we were correct and changes were hypotheses about what was happening in the occurring in Dutch planning vis-a-vis Netherlands (the principal literature included regulatory takings, we anticipated selecting Hobma 2010a, 2010b, Jacobs 2012, and van among these hypotheses for the principal der Krabben and Jacobs 2013). These explanation. Instead we are most hypotheses included: comfortable arguing that it is all the hypotheses, taken together, which offer a 1. That there had evolved and way to understand the changes that are was evolving a legal unfolding. Below is our detailed discussion, environment more friendly to drawing from the interviews about the claims of regulatory takings. hypotheses.

2. That there was an increase in There has evolved a legal spillover externalities as a environment more friendly to claims of result of more brownfield- regulatory takings. A discussion of the legal based, denser development. environment relative to regulatory takings must begin with the Bentham decision, as 3. That there was a rise of litigated before the European Court of contingent-fee advocacy on Human Rights (Benthem v The Netherlands behalf of property owners 1985). As noted by Efthymiou and de Wit which was actively seeking (2013: 81) the decision “. . . has had a very -12- far-reaching influence on the Dutch legal viewing cases. It took a nearly a decade for system . . . The result of this ruling was that the full impact of the case to be realized. an appeal to the Crown, an important form of administrative appeal, became de Wolff (2013) agreed and untenable.” The authors go on to explain elaborated this explanation. As he explained that “(t)he Crown was not an independent the Bentham decision eliminated the role of and impartial authority: the Royal Decree the Crown in cases having to do with claims with which (a) . . . dispute was resolved is an for compensation. Pre 1990s the discussion act of management originating from a on planning compensation was a Crown- Minister who is politically accountable to based, administrative process, where Parliament for this.” “The Benthem ruling outcomes were often negotiation based. led to . . . in 1994 the General After the 1990s it shifted away from this Administrative Law Act (Algemene wet process towards the courts and became more bestuursrecht) . . .. From that moment formal, with a right and wrong answer to onwards, . . . the appeal to the Crown totally conflicts. Initially the provincial disappeared and the Administrative government continued to play a role in the Jurisdiction Division of the Council of State administrative, non-legal, process, and then was called into being as an independent and more recently a similar decision eliminated impartial administrative judge” (Efthymiou the role of the provinces. and de Wit 2013: 82). For planning matters appeals relative to planning compensation And Hobma (2013), who articulated went from being handled by an this hypothesis along with some of the administrative body of the national others in Hobma (2010 a, b), was of the government to being framed as a legal opinion that this was the most significant matter to be resolved in court. This changed among the explanations for understanding everything about how regulatory takings is the change in the Dutch climate towards viewed. regulatory takings. And, as he noted, there are negligible financial barriers to beginning For the most part interviewees were procedures to-against a municipal in complete agreement with this assessment. government on regulatory takings (the court As explained by Lam (2013), from 1994 fee is €225 for individuals and no lawyer is forward there was an explosion of cases in required), and the courts are required to have the courts, which fit with a shift towards a a ruling within one year (and they often system of general administrative law begun issue a ruling even faster). in the early 1990s. This shift was directly a function of the Bentham case, which took In counterpoint, Bregman (2014) the Crown out of the decision making loop. offers up the position that law – especially The problem was that the Crown tended to the content of the 2008 Spatial Planning Act look at issues through the lens of an – has established clear borders, it has administrative body. The Crown’s view was established barriers, and if a municipality on effectiveness, substantive justice, as an follows the procedures in the Act then outcome. With the shift towards the courts, liability for planning compensation “cannot it was required that there be a new frame for be a problem.” -13-

There was an increase in spillover public law is breached, action is initiated by externalities as a result of more brownfield- a state agency.” So the sphere of private law based, denser development. Of the five impacts the relationship between landowners hypotheses this was the one that proved to with each other, and the nuisances they be the difficult to have direct discussion might be generated from a land use activity about. Rather there was discussion around (and thus indirect damages, as noted above), this point. As a context for understanding as well as the relationship between the hypothesis, it is necessary to clarify that developers and municipalities – the public- in the Dutch system of planning there are private partnerships that are made under two axes for understanding compensation – negotiated contracts. Public law impacts the direct and indirect damages, and as a plan making function of government, and function of public law and private law. the changes made to those plans.

Direct damages are analogous to the So, while there was a shift towards American concept of regulatory takings, more brownfield development, and this where a claim is due as a result of a change development was of a denser nature than in plan (or regulation) which reduces the greenfield development, and most allowable use of a property, and thus compensation claims are about indirect impacts the expectations of the landowner. impacts, and commentators acknowledge Indirect damages result from the spillover that “(s)ince the latter 1990s the number of effects of construction on a neighboring on claims has increased sharply,” still those the property making the claim. According to interviewed did not seem ready to fully Hobma (2010b: 7): “. . . the vast majority of endorse that the continuation of this trend claims for compensation relates to indirect would be a major factor in the continued rise damage.”10 of compensation claims (Hobma 2010a: 350). One reason may be that so much of The second axis is about public and the attention in the Netherlands is at present private law. As Needham (2014a: 122) focused on over-planning, over-designation, discusses, “(t)he distinction between private and the crisis in public land development law and public law . . . is not made in all discussed above. legal systems, but is central to the Dutch legal system ...... private law is intended There was a rise of contingent-fee to regulate the relations between private advocacy on behalf of property owners legal persons, public law to regulate the which was actively seeking out opportunities relations between state agencies and private for regulatory takings payments. Hobma legal persons. . . . If private law is breached, (2013) begins his explanation by noting that it is the task of the aggrieved legal person, contingency firms are a new phenomenon, not of the state, to initiate a legal action. If generally only fifteen years old (thus aligning with the Bentham decision and its legislative impacts). They are specific 10 Hobma (2010b) cites a report (his advisory firms, not lawyers, but rather tend footnote 12) estimating the 85% of cases to be real estate professionals in small firms brought before the highest administrative that know the local situation. For some of court were about indirect damages. -14- the interviewees, the rise of contingent- making a claim. However, he also wonders based advocacy best explained the new if there will be more nuisance suits between focus on regulatory takings. According to neighboring land owners. Likewise, Lam de Wolff (2013) they were most important (2013) does not necessarily see that the as they discovered and exploited an emergent development process will create opportunity. Nooteboom (2013) sees it the more claims. What he does think is that the same way and used almost the exact same overall institutional environment around language. From his perspective development and claims will become more contingency-based advocacy emerged complex. “because it was discovered.” There was an increase in a But there were also structural European-wide liberal discourse about the conditions which allowed contingent-based rights of the individual, including rights firms to exploit opportunities. So, for around private property and property rights, example, under the 2008 Spatial Planning and this created a climate friendly to Act a municipality can bill a developer for asserting regulatory takings claims. Hobma anticipated compensation claims. And if (2013) definitely agreed with this hypothesis there are legal actions against a municipality, as one component of an explanation. He the costs of preparing for a claim will be noted that beginning in the 1960s there covered by municipal insurance (Nooteboom began a shift from social solidarity towards 2013). So that, all-in-all, “(i)n the individualism; “there was a move towards Netherlands, municipalities do not find the individualism in society.” topic of planning compensation to be problematic” (Hobma 2013). And in fact, a Nooteboom (2013) spoke to the government bureau, the Compensation same historical shifts and drew from it a Claims Bureau, located in Rotterdam, related but somewhat different lesson – handles approximately 60 percent of the “there has been an emancipation of claims to be processed, doing its work on ownership; people are keen about behalf of municipalities. ownership.” Added to all this is specific advocacy by political conservatives who The change in the nature of the want both swifter planning, and more local development process, from strongly publicly planning (Korthals Altes 2013). led to collaborative or even privately led, was affecting the perceived legitimacy of Yet Buitelaar (2014) argues that planning, and thus leading to more overall there is “no indication that awareness challenges to it. Several interviewees were around property rights has increased.” As he skeptical about this assertion. Nooteboom (and others) notes the Dutch “have an (2013) believes that the trend towards the instrumental attitude about property rights, it new process of development may actually is a means to get something done; they are lead to less claims for planning not ideological about it. Land is to serve compensation. This may be so because social purposes.” And so, “even the planning will be more indicative and less neoliberal agenda is pragmatic, not specific, so there will less of a basis for political,” and for those on the radical right -15- in the Netherlands property rights “is not on In this swirl of change, there is the the agenda at all.” matter of regulatory takings. As a concept regulatory takings is not new to the Needham (2014b), however, sees it a Netherlands. It derives from explicit bit differently. He argued that there are protection embedded in the Dutch indications that skepticism toward Constitution (as in the U.S. and elsewhere) – government and municipal action is “. . . there shall be a right to full or partial increasing, and if trust in government were compensation if in the public interest the to decrease there is the possibility of competent authority destroys property or increasing conflict between propety owners renders it unusable or restricts the exercise and municipalities. of the owner’s right to it” (see the first paragraph of section III, citing Hobma V. Regulatory Takings and the 2010a). However, as Hobma (2010a) also Contested Future for Dutch notes, regulatory takings has resulted in only Planning modest yearly payments, it is little called upon by landowners, and in the past half of Dutch planning is changing. The the claims have been dismissed. It also post WW II public land development seems appears to be little discussed by planning as if it is no longer a feasible approach. academics. Unlike some of our Legal decisions have weakened the role of interviewees, we believe that, on the whole, national and provincial administrative the situation will change.12 Why? agencies and put Dutch planning – particularly challenges to that planning – At the beginning of section III we within more formal legalistic fora. The acknowledge that the title of this paper is a 1960s basic law for planning underwent (provocative, and intentional) substantial revision in 2008, shifting misrepresentation. More accurately, what planning authority more strongly towards we are working to understand is: a) if local governments (and even now debates regulatory takings is likely to become a more are ensuing about another revision with prominent part of Dutch planning, b) if it unclear implications for impact and will, why it will, and c) if it does, how that authority (Korthals Altes 2014)). The might affect the process of plan private sector is being provided with the development and implementation. opportunity, and is wanting, to take a more prominent role in the development process. And attitudes – about social solidarity versus in discussing the shift in their country and individualism and about property rights – are planning system. changing to be more in line with those of other developed countries.11 12 For example, Bregman (2014) sees the matter as largely a technical one, that has been and will be addressed through 11 This shift is similar to that which legislative and administrative changes that is occurring in Norway, see the discussion in have occurred or are likely forthcoming. His Jacobs (2008a); in fact, almost the same attitude towards the matter could best be words were used by Norwegian interviewees characterized as sanguine. -16-

With regard to the “if it is likely” asset is their property. To the extent this query, Needham (2014a: 124) has something property was increasing in value, individuals useful to share in this regard. First he notes were getting richer. This situation is one that the long-standing guarantor of the that Needham references as an “ . . . opportunity for planning compensation increasing monetary value of rights and (regulatory takings) has had little impact interests in landed property.” But as noted because “. . . most land-use plans have been above, the economic recession has led to a made to allow development which has a nearly 20 percent decline in home values. higher value than the existing use.” While As in the U.S. banks are less willing (or not this addresses much of what transpires in willing at all) to lend based on presumed Dutch planning, other provisions of the 2008 (rising) equity value in a home.14 The rather Spatial Planning Act in particular – the fact sudden shift in the circumstances of “(t)he that a claim has to be filed within five years, holders of those rights” means that they “are and the requirement that an owner assume a beginning to realise how valuable they [the degree of so-called “normal social risks”, rights] are, and to demand protection of their which for indirect damages includes rights, or compensation for loss of value shouldering a minimum percentage caused by land-use planning.” When threshold of damage – would seem to Needham draws in the decisions of the mitigate the contentiousness around European Court of Human Rights relative to regulatory takings. Yet, Needham ends his property and municipal planning action his section by reflecting that “(n)evertheless, the conclusion is “. . . the protection of property principle remains: loss of value caused by rights will win . . . ”15 land-use planning, if it is disproportionate in the sense of bearing more upon some So despite a Constitutionally defined property owners than others, must be and legally enabled position of regulatory compensated.” takings, traditionally it has had a low-profile in Dutch planning. But that appears to be What is this likely to mean in poised to change. In fact Needham (2014b) practice and why? Needham (2014a: 218) is argues the relative to the matter of planning wary, perhaps even worried.13 Social and compensation and planning practice, “it is economic conditions in the Netherlands have more than what the law says”, and he changed substantially. A nation of majority doesn’t believe that the proposition that the renters has, in the last few decades, become 2008 SPA solves everything is necessary a nation of majority owners: 59% of Dutch households live in a house owned by themselves (CBS 2013). As is true in other 14 Informal conversation with Fred developed countries, for many in the Dutch Klein Hemmink, proprietor, B&B middle class their most significant economic Burgerlust, Nijmegen, Netherlands.

15 In coming to this conclusion, 13 In this way he joins with Buitelaar Needham relies in part on the work of (2010), Roodbol-Mekkes et al. (2012) and Ploeger and Groetelaers (2007), which is others is being concerned about the also discussed in Jacobs (2009); see in uncertain future for Dutch planning. addition the work of Allen (2010). -17- true. While in the past it has been little In our introduction we suggested that called upon by landowners, in the future we one lesson to be learned from this expect it may be increasingly called upon. investigation could come from While in the past it has resulted in only understanding how the transformations in modest yearly payments, there is reason to Dutch planning – where there is an admitted expect that the scope and extent of these and long-standing “soft spot for planning” – payments will increase. While in the past, illuminate global debates about and social many of the filed claims have been conflict over private property. In our dismissed, the future may well see a trend opinion, the answer to this query is that this where the majority of claims are affirmed. preliminary investigation provides strong And while in the past regulatory takings as a evidence in support of the strength of this subject has been little discussed by planning global debate – that is, if even in the academics and practitioners, we expect that Netherlands the issue of property rights and it will, as in U.S., become a more normal the defense of those rights against actions of part of planning deliberations. the state is emerging as an area of social contention, then it appears to affirm that a We find it difficult to be precise new era for property rights in planning about why this is true. As we suggest above, policy and discourse has arrived in both we believe it to be a function of a developing and developed countries. combination of factors, including: the general crisis in Dutch planning driven by The Netherlands has, as we have the global economic downturn; legal demonstrated, a long-established decisions which have shifted planning constitutional and statutory position in favor review from an administrative, within of regulatory takings. Yet this position has, government process to a formal legal forum, for many reasons, had little consequence in combined with legal decisions that shift the planning practice. While its future focus on property, property rights and the consequence has yet to be determined, we role of government planning; the rise of believe the conditions exist where the long- contingent-fee advocacy; new private sector established provisions will be ever-more activism in land acquisition, development called into use, and Dutch planners may find and planning; and the rise, beginning in the that another significant change to the 1980s, of a neoliberal policy discourse about planning environment (in addition to all the housing provision, and which has continued others that have already occurred) is the into a broader neoliberal discourse about the need to think about, anticipate and manage rights of individuals. It is not that any one of these is or is not by itself an explanatory reason; rather it is their co-existence, their confluence which is significant. Taken together these factors form a social and policy tapestry which, to us, establish the conditions from which a more prominent form of regulatory takings will emerge. -18- the concerns of citizens about regulatory takings.16, 17

16 It is our plan to follow this research with case-based empirical research on if and how concerns for regulatory takings are affecting Dutch municipal planning practice.

17 Needham (2014b) argued, and we agree, that the future of planning compensation in the Netherlands is tied to the future of . That its understanding and resolution will evolve out of a social discussion about governmental authority in general, of which planning is one part. -19-

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Interviews person, position; place of interview, date of interview

Bregman, A.G. (Arjan), Institute for Building Law, and Special Professor for Area Development, Amsterdam School of Real Estate; The Hague, 01 April 2014.

Buitelaar, Edwin, Senior Researcher Land and Property Development, PBL Netherlands Environmental Assessment Agency; The Hague, 01 April 2014. -22-

Heeren, A.G.G. (Ton), Senior Advisor for Spatial Planning and Water Governance, Interprovinciaal Overleg (IPO); Nijmegen, 27 May 2013

Hobma, Fred, Associate Professor of Building Law, Department of Real Estate and Housing, Delft University of Technology; Delft, 24 May 2013.

Korthals Altes, W. K. (Willem), Professor, OTB Research Institute for the Built Environment, Delft University of Technology; Delft, 24 May 2013

Lam, T.E. P.A. (Tycho), Advocaat, Hekkelman, Advocaten & Notarissen; Nijmegen, 28 May 2013

Needham, Barrie, Professor Emeritus, Department of Geography, Planning and Environment, Radboud University Nijmegen; Nijmegen, 02 April 2014b.

Nooteboom, Leo, Senior Advisor Land Policy, Dutch Ministry of the Interior; The Hague, 23 May 2013. de Wolff, H. W. (Herman), Assistant Professor, OTB Research Institute for the Built Environment, Delft University of Technology; Delft, 24 May 2013.