## Facts

- Wild Rice River Estates, Inc. owned and developed a 38-lot rural residential subdivision along the Wild Rice River south of Fargo, North Dakota.
- The developer invested substantial funds in infrastructure and marketing and sold one lot before 1997.
- The area had a well-known history of flooding; a severe flood in 1997 submerged the undeveloped lots.
- After the 1997 flood, Fargo worked with FEMA during preparation of preliminary flood studies and a preliminary floodway delineation that included some of Wild Rice’s lots.
- In August 1998, Fargo adopted a temporary moratorium on issuing building permits for new construction within the FEMA-designated preliminary floodway, to remain until FEMA finalized mapping and the city adopted implementing regulations.
- The moratorium lasted about 21 months and prevented permitting and development for lots within the preliminary floodway during that period.
- Wild Rice received interest from potential buyers during the moratorium but could not proceed with development requiring permits.
- Fargo lifted the moratorium about one month after Wild Rice filed an inverse-condemnation action.
- After the moratorium ended, Wild Rice sold multiple lots at prices higher than the pre-moratorium sale.

## Issues

1. Whether Fargo’s 21-month moratorium on building permits within a FEMA-designated preliminary floodway effected a taking under the United States and North Dakota Constitutions.
2. Whether the moratorium was a categorical (per se) taking or instead required a fact-specific regulatory-takings analysis.

## Decision

- The North Dakota Supreme Court affirmed judgment for Fargo and held the moratorium did not constitute a compensable taking.
- The court rejected per se takings treatment for the temporary moratorium and applied a Penn Central analysis.
- Under Penn Central, the court found the moratorium’s economic impact was temporary and not tantamount to appropriation, given that the property retained value and later sold at higher prices.
- The court held the moratorium did not unreasonably interfere with investment-backed expectations because flood-related restrictions were foreseeable in a known flood-prone area.
- The court viewed the moratorium’s character as a time-limited, safety- and planning-based land-use control tied to completion of FEMA mapping and adoption of compliant local regulation.
- The court concluded there was no taking under either the federal or state constitution on these facts.

## Legal Principles

- A temporary development moratorium is not automatically a per se taking; temporary restrictions generally require an ad hoc, factual inquiry.
- A categorical taking requires a regulation that denies all economically beneficial use; temporary limits that leave property with value typically do not satisfy this standard.
- Regulatory-takings claims are commonly evaluated under Penn Central, considering economic impact, interference with reasonable investment-backed expectations, and the character of the governmental action.
- Land-use controls adopted for flood safety and planning, limited in duration and scope and applied generally to affected areas, weigh against finding a compensable taking.
- State inverse-condemnation analysis may track federal takings doctrine where state protections are treated as coextensive on the issues presented.

## Conclusion

A 21-month moratorium on building permits in a FEMA-identified preliminary floodway, adopted as a temporary planning and public-safety measure pending final flood mapping and local ordinance implementation, did not effect a compensable taking because it did not deprive the property of all value and did not, under Penn Central, impose a constitutionally significant burden on the owner’s property interests.


Wild Rice River Estates, Inc. v. City of Fargo, 705 N.W.2d 850 (N.D. 2005)