Four Flagstaff residents on Wednesday sued the city in what is regarded as a test case of enforcement of a sweeping property-rights law approved by Arizona voters last year.

The lawsuit claims that a special historical designation approved by the city diminished property values, in one case by preventing a resident from making a planned addition to the house he bought in 2006.

The other plaintiffs also live in the same neighborhood covered by the historical designation and claimed similar damages because of rules imposing height limits and other construction restrictions.

The lawsuit, filed in Coconino County Superior Court in Flagstaff on behalf of the Flagstaff residents by the Sacramento, Calif.-based Pacific Legal Foundation, is said to be the first filed in connection with Proposition 207. The four residents are Jon Regner, Paul Turner, Bob Richards and Margaret Allen. Richards and Allen are married.

Along with imposing new restraints on use of eminent domain, Proposition 207 mandates that state and local governments generally provide compensation for people whose property lost value due to government action.

"If the government takes away your property rights, it should compensate you for that taking," said Timothy Sandefur, a Pacific Legal attorney. "Unfortunately the city of Flagstaff doesn't think it's necessary to comply with state law."

City Attorney Patricia J. Boomsma said the city contends that property values go up, not down, because of the historical designation.

"That is one of the benefits for those who live in the district, also to preserve historical heritage," she said.

Deciding whether the designations increase or decrease property values will be key outcome statewide for the case, said Ken Strobeck, executive director of the League of Arizona Cities and Towns.

Because of the possibility of litigation due to passage of Proposition 207, there's been a "chilling effect" in most cities regarding designations of new historical districts, Strobeck said.

"Everybody has kind of backed off except for Flagstaff so we've been watching that pretty carefully," Strobeck said. "It will help all the rest of the cities to know where the boundaries are."

Boomsma also said she was unaware of any other litigation involving Proposition 207.

"I know there's a lot of people who are watching this lawsuit," she said.

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On the Net:

Pacific Legal Foundation: http://www.pacificlegal.org

City of Flagstaff: http://www.flagstaff.az.gov

League of Arizona Cities and Towns: http://www.azleague.org

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