In response to Hurricane Harvey, the City of Houston increased the required elevation of foundation slabs from one foot above the 100-year floodplain to two feet above the 500-year floodplain.

A developer sued the City, asserting the revised ordinances constituted a regulatory “taking.”
The developer claims the revised ordinances will prevent issuance of permits and render worthless much of a valuable tract.

Regulatory Taking
A regulatory action is a taking when it is so restrictive or intrusive that it effectively “takes” the property for public use. Under Texas law, denial of a development permit may be a regulatory taking.

Texas law requires compensation in more circumstances than required under federal law. To require compensation, the government must have acted intentionally or with knowledge that the result was substantially certain to occur.

Ordinance Designed to Comply with NFIP May Still Be a Taking.
The City argued that the case should be dismissed. Its revised ordinances were a valid exercise of the City’s police power because the revisions were necessary to comply with the National Flood Insurance Program (NFIP). In rejecting this argument and allowing the case to proceed, the Supreme Court of Texas (SCOTX) said an exercise of police power can be compensable when it is “unduly harsh” or places a “disproportionate burden” on the developer.

Moreover, even an ordinance designed to meet the NFIP may still cause a compensable taking, especially in the manner the ordinance is applied in a specific case. SCOTX sent the case back to the trial court to give the developer the opportunity to show the ordinance, as applied to this property, unreasonably interfered with development. While this is ultimately a legal question, the trial court may need to determine certain underlying facts.

To see the opinion https://txcourts.gov/media/1460176/230474.pdf