Eminent Domain in Minnesota

Presentation to [insert]

What’s the Issue?

In a 5-4 split decision, the U.S. Supreme Court held that economic development is a valid “public use” under the Takings Clause of the Fifth Amendment.

Critics have implied that this decision expanded eminent domain powers and that no one’s home or business is safe.

What’s the Reality?

The Kelo decision did not expand local government eminent domain powers.

This decision did not empower cities to indiscriminately seize residential and business properties.

What Kelo Did Do

The Kelo decision reaffirmed cities’ authority to use eminent domain to acquire property for economic development.

The court found that the acquisition was part of a well-conceived development plan.

The court also affirmed that local officials are best suited to determine what local needs justify the use of eminent domain.

Eminent Domain in Minnesota

Cities may acquire private property through eminent domain for a public purpose, as long as the landowner is paid just compensation.

An acquiring authority must establish that the property is needed for a particular, identified public purpose within a reasonable time period.

Courts defer to local officials to determine whether an acquisition is for a public purpose.

Public Purposes Authorized in Minnesota Law

Minnesota law explicitly authorizes the use of eminent domain to:

Eliminate substandard, slum or blighted areas

Create affordable housing opportunities Promote jobs Clean-up contaminated areas

Minnesota Statutory Law

Minn. Stat. 469.012 gives HRAs the power to acquire property to eliminate “substandard, slum or blighted areas” or to provide affordable housing.

Minnesota Statutory Law

Minn. Stat. 469.101 gives economic development authorities the power of eminent domain to acquire property needed to create “economic development districts.”

Minnesota Statutory Law

Minn. Stat. 469.124 states that the legislature believes that providing “employment opportunities” and improving the “tax base” are important and that the “execution and financing” of programs to accomplish these purposes are a “public purpose.”

Eminent Domain Process in Minnesota

Condemning authorities must follow the general eminent domain process in Minn. Stat. Chapter 117.

Minnesota’s eminent domain process provides several protections for property owners.

Protections for Property Owners

In general, the acquiring authority must: Get an appraisal of the property Negotiate in good faith with the property owner Notify the property owner of his/her right to

payment of relocation expenses Reimburse up to $1,500 for appraisals for property

owner’s own appraisal

Protections for Property Owners

Once condemnation has been initiated: The acquiring authority must notify the property

owner in writing at least 20 days prior to the initial court hearing

An independent commission determines compensation

The property owner may appeal the commissioners’ award to district court

Use of Eminent Domain in Minnesota

Eminent domain is used sparingly, and as a tool of last resort.

535 cities (84% of respondents) did not use eminent domain for any purpose from January 1999 through June 2005.

Use of Eminent Domain in Minnesota

Only 100 cities (16%) have used eminent domain, for any reason, since January 1999.

Only 34 of these cities (5%) have used eminent domain to acquire property that is turned over to another private owner during that 6½ year time period.

Use of Eminent Domainin Minnesota

Throughout Minnesota, eminent domain was used an average of 78 times a year since 1999--only 27 times a year for uses in which the land would be turned over to another private owner.

Over the same period there was an average of more than 81,000 real estate sales each year in Minnesota.

Brooklyn Park Examples

The City utilized eminent domain seven (7) times for public road easements.

Brooklyn Park exercised eminent domain six (6) times since 1999 to implement the Village Creek Master Plan/Shingle Creek Corridor Plan.

What was acquired?

Examples of Current Local Problem Properties

Other Cities’ Examples

See attached case studies

2006 Legislative Session

Auto Dealers and Institute for Justice will introduce a new bill in 2006.

The League is working with local government groups and other stakeholders, including EDAM, to preserve the responsible use of eminent domain.

MADA/IJ Legislation

Hampers public-private partnerships that create jobs, alleviate blighted neighborhoods, promote affordable housing, clean-up polluted land, and revitalize distressed areas.

MADA/IJ Legislation

Takes decision-making out of the hands of the elected officials most familiar with local needs.

Undermines the negotiation process and significantly increases the cost to taxpayers for public projects.

Local Government Bill

Procedural changes to provide a more transparent and predictable process

Tighter definition of “blight” with a possible exception for economic development and affordable housing development projects that involve state financial assistance

Provisions requiring increased compensation

What’s Next?

The legislature is poised to act. First public hearing was in the House Civil

Law Committee on January 11. The League and other stakeholders,

including EDAM, are working to defend and preserve the responsible use of eminent domain.

Conclusion

The power of eminent domain has been used as a last resort and very rarely.

It remains a critical tool for achieving the citizens goals for a healthy, financially strong community.

Additional InformationRe: Case Law

[The following slides are just extra info for those who want case law if you have a group that’s lawyer heavy.]

Minnesota Case Law

St. Paul HRA v. Schapiro (1973) MN Supreme Court upheld the acquisition of

private property that would be cleared and turned over to a private developer.

Specific property acquired was not substandard, but was located on a block with many substandard buildings.

Minnesota Case Law

Minneapolis v. Wurtele (1980) MN Supreme Court affirmed state law that

allows municipalities to designate areas that are not blighted—but that show a trend toward blight—as development districts, and to acquire property in these districts through eminent domain.

Minnesota Case Law

Duluth v. Paulucci (1986) MN Supreme Court upheld the city’s use of

eminent domain to acquire industrial property to construct a paper mill.

The acquisition was not based on a claim of blight.

Minnesota Case Law

Minneapolis Community Development Agency v. Opus (1998)

MN Court of Appeals upheld the acquisition of property in downtown Minneapolis for a mixed-use development.

The court rejected the argument that it should apply a heightened scrutiny test to acquisitions that benefit a private interest.

Minnesota Case Law

Lino Lakes Economic Development Authority v. Reiling (2000)

MN Court of Appeals upheld the condemnation of land to create an “economic development district.”

The city had found that many of the parcels were “small, oddly shaped, and encumbered by rights of way and access restrictions.”

Minnesota Case Law

Richfield HRA v. Walser Auto Sales (2002) In 2001, the MN Court of Appeals affirmed state

law when it found that Richfield’s condemnation of property in order to facilitate redevelopment and to make way for the new Best Buy headquarters constituted a legitimate public purpose.

In 2002, the MN Supreme Court, in a 3-3 split decision, let the Court of Appeals’ decision stand.