A Pima County Superior Court judge refused this week to throw out a lawsuit by a Tucson mini-dorm developer who sued the city claiming city demolition rules lowered his property values.
The city argued that because another Pima County Superior Court judge later struck down the city's demolition rules, mini-dorm developer Michael Goodman could not receive damages because the law is now no longer in effect.
However, Judge Paul Tang rejected the city's argument, allowing for the damages portion of the lawsuit to continue.
If Goodman wins damages, it would be the first case in which damages were awarded under Proposition 207, a state ballot initiative passed in 2006 requiring governments to compensate landowners if land-use rules lower their property values.
Clint Bolick, director of the Goldwater Institute's Scharf-Norton Center for Constitutional Litigation, said the judge's ruling shows "Prop. 207 does have teeth."
Bolick said the next step is to ask the court to schedule a trial to determine the damages done to Goodman's property values while the ordinance was in effect from June 2007 to November 2008. The demolition ordinance prevented or delayed the demolition of older houses near the University of Arizona.
In a separate case funded by the Tucson Association of Realtors, Pima County Superior Court Judge John F. Kelly struck down the city's demolition ordinance, which created new requirements on demolishing a structure that is more than 45 years old and within the city limits in 1953.
Kelly said in November 2008 the ordinance was not a reasonable exercise of the city's power, adding the city was regulating zoning through a demolition ordinance, a violation of state law.
Before the demolition ordinance was struck down, Goodman filed a $12.5 million lawsuit against the city in March 2008, seeking either the $12.5 million or a waiver to develop his properties.
Assistant City Attorney Michael McCrory said "all the court did was rule the case was not moot" and said the city is still a long way — possibly years — away from paying out any damages. That will be what's argued in the next part of the case, he said.
"We're a long way from paying damages," McCrory said.