Eminent Domain: Redevelopment p Challenges for Local Government - - PowerPoint PPT Presentation

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Eminent Domain: Redevelopment p Challenges for Local Government

Navigating Federal Funding Requirements, Challenges for Public Utilities in Right‐of‐Way Projects, and Objections to Taking for Public Use

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific THURS DAY, DECEMBER 1, 2011

Today s faculty features:

• J. Casey Pipes, Partner, Helmsing Leach Herlong Newman & Rouse, Mobile, Ala.

Anthony Della Pelle, Partner, McKirdy & Riskin, Morristown, N.J. Rick E. Rayl, Partner, Nossaman, Irvine, Calif. Bradford B. Kuhn, Attorney, Nossaman, Irvine, Calif. Robert H. Thomas, Director, Damon Key Leong Kupchak Hastert, Honolulu Mark M. Murakami, Director, Damon Key Leong Kupchak Hastert, Honolulu

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FEDERAL MONEY FEDERAL MONEY FEDERAL CONDITIONS FEDERAL CONDITIONS

____________

Casey Pipes H l i L h H l N & R P C Helmsing, Leach, Herlong, Newman & Rouse, P.C. Mobile, Alabama jcp@helmsinglaw.com

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Spending Clause Spending Clause

“The Congress shall have power to pay The Congress shall have power … to pay the debts and provide for the common defense and general welfare of the United defense and general welfare of the United States...” U.S. Const., Art. I, § 8.

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Sources of Federal Conditions Sources of Federal Conditions

• Federal Grant Terms and Conditions

Federal Grant Terms and Conditions

• Federal Appropriation Bills

C t t

• Contracts
• Federal Laws and Regulations
• State Regulations

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“The Uniform Act” The Uniform Act

The Uniform Relocation Assistance and The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 1970

• 42 U.S.C. Sections 4601, et seq.
• 49 C.F.R. Part 24

49 C.F.R. Part 24

• Relocation Assistance

Relocation Assistance

• Real Property Acquisition Policies

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Applicability Applicability

Whenever any federal dollars are utilized Whenever any federal dollars are utilized in any phase of a project that involves real property acquisition property acquisition

N f d l d t i t – No federal money used to acquire property – Any agency using federal money A f f d l – Any percentage or amount of federal money

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Property Acquisition Policy Goals Property Acquisition Policy Goals

Balancing competing government interests: Balancing competing government interests:

– 5th Amendment Compliance

• Due Process to Owner
• Due Process to Owner
• Just Compensation to Owner

– Project completion Project completion

• Timely Agency access to property

– Efficient use of government money Efficient use of government money

• Fair price for Agency (public)
• Lawsuit avoidance

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Notice to Owner Notice to Owner

You must advise the property owners and You must advise the property owners and

• ccupants of your intent to acquire the

property and of their rights under the p p y g Uniform Act in writing

– Brochures are available for this purpose – Do it in a way that compliance can be proved later at trial or in an audit

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Appraisals Appraisals

Required except when: Required except when:

– property value is expected to be $10,000 or less and if the valuation determination is not less and if the valuation determination is not complicated – property will be donated and owner waives property will be donated and owner waives appraisal requirement

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Appraisal Reports Appraisal Reports

• Only “Complete” or “Summary” appraisals

Only Complete or Summary appraisals are acceptable

“Restricted Use” appraisals are unacceptable – Restricted Use appraisals are unacceptable

• Must be developed and reported in

compliance with the Uniform Standards for f ( S ) Professional Appraisal Practices (USPAP) and must be in writing

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Review Appraisals Review Appraisals

A Review Appraisal is required every time A Review Appraisal is required every time an appraisal is required. This means you need two different i appraisers

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Opportunity to Accompany Opportunity to Accompany

You must give the owner an opportunity to You must give the owner an opportunity to accompany the appraiser during the property inspection property inspection

– Document compliance in a way that it can be proved later at trial or in an audit proved later at trial or in an audit

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Written Offer Written Offer

A breakdown of the offer, but not necessarily the A breakdown of the offer, but not necessarily the appraisal report, must be submitted with the written offer

• If appraised:

– “We have had your property appraised by a qualified independent or staff real estate appraiser.”

If t i d

• If not appraised:

– “We have estimated the value of your property that is needed for this project ” needed for this project.

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90 Day Displacement Notice 90 Day Displacement Notice

Occupants who will be displaced by the Occupants who will be displaced by the taking must be given at least 90 days notice prior to the date they are required to notice prior to the date they are required to vacate

Send it early – Send it early – Document it in a way that can be proved later at trial or in an audit at trial or in an audit

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No Coercion Allowed! No Coercion Allowed!

• Give owner sufficient notice

Give owner sufficient notice

• Give the owner a sufficient opportunity to

consider the written offer consider the written offer

• Negotiations encouraged
• Advance or delay negotiations or

acquisition date for improper purpose

• Cannot assess the remainder simply to

recover acquisition costs (forced donation) q ( )

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Pay for Property Pay for Property

Prior to taking possession you must pay Prior to taking possession, you must pay the Owner for the property Deposit it in Court for Owner’s benefit

• Deposit it in Court for Owner s benefit
• Interest for delay in receipt

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Withdrawal of Deposit Withdrawal of Deposit

• No waiver of defenses to taking

No waiver of defenses to taking

– 49 CFR 24.102(h)

Full amount deposited prior to possession

• Full amount deposited prior to possession

– 49 CFR 24.102(j) "for the benefit of the

• wner”
• wner

– Mandatory deposit may be more than Offer

Non-regulatory Supplement for Part 24, Subpart B, Section 24.102 Section 24.102

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Settlement Authority Settlement Authority

Administrative Settlements above Offer Administrative Settlements above Offer

– reasonable, prudent and in the public interest written justification required – written justification required – all relevant factors can be considered

State Guidelines may be more specific

• safe harbors (10% above offer)

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Certification Certification

• Agency must certify that it has acquired all

Agency must certify that it has acquired all the property and that it complied with the Uniform Act prior to letting construction Uniform Act prior to letting construction contract

• Agency must promise to comply with the
• Agency must promise to comply with the

Uniform Act as part of appropriation A dit

• Audit

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Violations Violations

• Loss of federal money

Loss of federal money

– for project in general – in general

• Possible dismissal of condemnation action

f f – Lack of Necessity or Public Use if project cannot be built without federal aid N t d f t t ki b it lf – Not a defense to taking by itself

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Attorney’s Fees Attorney s Fees

If a condemnation action is dismissed the If a condemnation action is dismissed the Owner is entitled to recover attorney’s fees and litigation expenses and litigation expenses

– Sovereign Immunity issues

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Single Audit Act Single Audit Act

Audits for those who administer Federal Audits for those who administer Federal aid programs, including local agencies spending federal money spending federal money

– OMB Circular A-133 OMB Circular A 102 – OMB Circular A-102 Ensures compliance with the Uniform Act after Ensures compliance with the Uniform Act after the fact

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Uniform Act Overview Uniform Act Overview

• Written notice of intent to acquire property

q p p y

• Owner allowed to accompany appraiser
• Written Appraisal and Review Appraisal

pp pp

• Written offer with breakdown to Owner
• No coercion
• 90 day notice before displacement
• Pay for property before taking possession
• Pay Owner’s expenses for the transfer of title
• Keep records of everything

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Em inent Dom ain: Redevelopm ent Challenges for Local Governm ent

Public Utility Ta kings a nd Right-of-W a y Projects

Anthony F. Della Pelle, Esq.

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HISTORY

• Public utilities are required infrastructure
• Public utilities are required infrastructure
• Older developed areas require

upgrades/ expansion

• Newer developing areas need services
• Local agencies can be condemnors AND
• Local agencies can be condemnors AND

condemnees

HOT ISSUES 1.

Keystone Pipeline y p 2. Wind Farms 3. Solar Farms 4. Gas Pipelines 5. Water Rights 5 g

Public Utilities and the Em inent Dom ain Power Public Utilities can exercise em inent dom ain

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• 1. Statutory Grant

a) Natural Gas Act (NGA), 15 U.S.C. 717F(h) b) b) New Jersey -- N.J.S.A. 48:3-17.7 c) Local authorities normally created by state legislation

• 2. Requires Administrative/ Regulatory Approval
• 3. Limited Authority
• 4. Prior Public Use Doctrine

Public Utilities and the Em inent Dom ain Power Public Utilities can exercise em inent dom ain

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1. Statutory Grant

• 2. Requires Adm inistrative/ Regulatory Approval

a) Application for certificates shall be made in writing to the Commission, be verified under oath, and shall be in such form, contain such information, and notice thereof shall be served upon such interested parties and in such manner as the Commission shall, by regulation, require. Natural Gas Act (NGA), 15 as the Commission shall, by regulation, require. Natural Gas Act (NGA), 15 U.S.C. 717F(h) b) The power of condemnation shall not be used or enforced by any such public utility . . . [e]xcept where a governmental agency having jurisdiction has granted the utility the permission to take or acquire property or any interests for the utility's purposes the power of condemnation shall not be used or enforced by utility s purposes the power of condemnation shall not be used or enforced by any public utility until and unless such utility shall have applied to the Board of Public Utility Commissioners. . . . N.J.S.A. 48:3-17.7.

• 3. Limited Authority
• 4. Prior Public Use Doctrine

Public Utilities and the Em inent Dom ain Power Public Utilities can exercise em inent dom ain

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1. Statutory Grant

• 2. Requires Administrative/ Regulatory Approval
• 3. Lim ited Authority

a) Limited to designated area and properties. b) Subject to restrictions imposed by statute ) j p y and/ or regulation

• Must compensation precede the taking?
• Is preliminary entry authorized?

c) Consideration of jurisdictional issues for c) Consideration of jurisdictional issues for regional, interstate and international projects

• 4. Prior Public Use Doctrine

Public Utilities and the Em inent Dom ain Power Public Utilities can exercise em inent dom ain

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1. Statutory Grant

• 2. Requires Administrative/ Regulatory Approval

Li it d A th it

• 3. Limited Authority
• 4. Prior Public Use Doctrine

a) The general rule is that a private company that has been authorized to exercise general eminent domain powers cannot d l d th t h l d b d t d t bli St t do so on land that has already been devoted to public use. State Highw ay Com m ission v. Hoester, 362 S.W. 2d 519 (Mo. 1962) b) See U.S. v. Carm ack, 329 U.S. 230 (1946), which contains dictum suggesting that eminent domain authority delegated to private entities (such as utility companies) is limited and p y p therefore subject to a more stringent standard of review than similar delegations to governmental actors. c) Examples and exceptions :

• Will a balancing test be used? See Texas Eastern v.

Wildlife Preserves Inc 225 A 2d 130 (N J 1966) Wildlife Preserves, Inc., 225 A. 2d 130 (N.J. 1966)

• Water company’s rights not exclusive. City of Raton v.

Raton Ice Co. 191 P. 518 (N.M. 1920)

Public Utilities and the Em inent Dom ain Power Valuation Issues

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Valuation Issues

• 1. Partial Takings

a) Value of property actually acquired. b) Difference between property value “before b) Difference between property value before and after “taking. c) Route selection and location of taking within remainder of properties can be critical critical d) Just compensation vs. public relations e) Question: Is a property with a sewer or gas connection more valuable, or does the easement burden devalue the property? easement burden devalue the property? Consider project influence implications.

• 2. View

3 Fear

• 3. Fear

Public Utilities and the Em inent Dom ain Power Valuation Issues

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1. Partial Takings Valuation Issues

• 2. View

a) Requires at least partial taking - PSE & G v. Oldw ick Farm s, 308 A. 2d 362 (N.J. App.

• Div. 1973).

b) C l f i l f i ibilit b) Compare loss of view vs. loss of visibility. Keinz v. State, 156 N.Y.S. 2d 505 (N.U. 1956)(damages may be awarded when

• wner’s view out from property has been

impaired but not when visibility into p y property is diminished)

• 3. Fear

Public Utilities and the Em inent Dom ain Power Valuation Issues

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1. Partial Takings

• 2. View

Valuation Issues

• 3. Fear
• Appeal of Giesler, 622 A. 2d 408 (Pa.

1993)(despite lack of scientific evidence that l t i li t h lth i k bli electric lines may create health risk , public perception is relevant in determining damages)

• Criscuola v. Pow er Auth. 621 N.E. 2d 1195

(N.Y. 1993)(public fear and subjective ( 993)(p j believes of buyers regarding power lines is irrelevant unless objective market evidence exists )

Nobody wants them :

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But everyone is unhappy when:

Questions?

Anthony F. Della Pelle, Esq. adellapelle@m ckirdyriskin com adellapelle@m ckirdyriskin.com www.njcondem nationlaw.com www.facebook.com / m ckirdyriskin www.twitter.com / em inentdom ainNJ 37 McKirdy & Riskin, PA 136 South Street Morristown, New Jersey 07960 973.539.8900 www.mckirdyriskin.com

Redevelopment i th P t K l E in the Post-Kelo Era

December 1, 2011

Presented by

Rick E. Rayl and Bradford B. Kuhn

Background: The Kelo Decision Background: The Kelo Decision

The Broad View of Eminent Domain Prevails and Prompts a Popular Backlash

Susette Kelo “This has nothing to do with me. I’m nothing, I’m a nobody. This is every U.S. citizen, every American. No homes, no properties, no farms.

39

, p p , Nothing is safe anymore.”

The Kelo Decision: The Kelo Decision: The Broad View Prevails

Kelo decided two questions:  Is economic revitalization without blight a  Is economic revitalization, without blight, a constitutional public use for private property taken by eminent domain?

• Answer, YES.

 H h ti h ld th C t i t  How much scrutiny should the Court give to a legislative determination of public use?

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• Answer, VERY LITTLE.

Justice Stevens Invites Justice Stevens Invites Reform?

– From the Majority Opinion: “Nothing in our opinion precludes any State from placing g p p y p g further restrictions on its exercise of the takings power.” – Speaking at a bar association two months later: Speaking at a bar association two months later: Justice Stevens called eminent domain for economic purposes “unwise” and said he would have opposed it had he been a legislator and not a federal judge bound by precedent.

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Justice O’Connor Justice O Connor

– “[T]he words ‘for public use’ do not realistically exclude t ki d th d t t t i t th any takings, and thus do not exert any constraint on the eminent domain power.” “Th t f d ti h ll t – “The specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall or , y pp g any farm with a factory.” – “The government now has license to transfer property g p p y from those with fewer resources to those with more. The founders cannot have intended this perverse result ”

42

result.

Kelo v New London: The Reaction Kelo v. New London: The Reaction

• In most states, Kelo DID NOT CHANGE the law:

,

– Eminent domain for purely economic motives already prohibited – Blight findings needed to justify eminent domain for redevelopment purposes

• But, PUBLIC PERCEPTION was that Kelo represented a

major change in the law major change in the law

• THE RESULT:

– Media firestorm Media firestorm – Increased scrutiny of all eminent domain use by local agencies – Gave property rights advocates a platform

43

– Legislation/Initiatives

44

45

Kelo’s Immediate Aftermath, Election 2006: Eminent Domain and Land Use Reform Measures

State Type of Reform Result Arizona Eminent domain & regulatory takings Pass (65%) California Eminent domain & regulatory takings Fail (48%) Florida Eminent domain Pass (69%) Florida Eminent domain Pass (69%) Georgia Eminent domain Pass (82%) Idaho Eminent domain & regulatory takings Fail (26%) L i i E i t d i P (55%) Louisiana Eminent domain Pass (55%) Michigan Eminent domain Pass (84%) Nevada Eminent domain Pass (63%) N H hi E i t d i P (86%) New Hampshire Eminent domain Pass (86%) North Dakota Eminent domain Pass (68%) Oregon Eminent domain Pass (67%)

46

South Carolina Eminent domain Pass (84%) Washington Regulatory takings Fail (42%)

As of December 2011 As of December 2011

• 44 States have passed some form of legislative

44 States have passed some form of legislative reform in response to Kelo

• Most recent: Mississippi in November 2011
• Most recent: Mississippi in November 2011
• Many reforms not really directed at Kelo facts
• The real battleground lies with defining “blight”

R dl f l i l i ff bli i

• Regardless of legislative efforts, public perception

has an impact on local agencies’ willingness to use eminent domain for redevelopment purposes

47

eminent domain for redevelopment purposes

Five Types of Reforms Five Types of Reforms

• 1. True, “Kelo” reforms designed to prevent eminent

g domain for purely economic motives

• Connecticut, Florida, South Dakota, Michigan, Arizona
• 2. Opportunistic reforms using Kelo as cover for

another agenda

• California’s failed Proposition 90

3 Modest reforms designed to tighten “blight”

• 3. Modest reforms designed to tighten blight

definition, etc.

• This is the bulk of what we’ve seen

48

• E.g., Mississippi, Minnesota, Colorado, Wisconsin

Five Types of Reforms (cont ) Five Types of Reforms (cont.)

4 “Fake reform” designed to appease the public but 4. “Fake reform designed to appease the public, but

without effecting real change

• Maryland Kentucky
• Maryland, Kentucky

5 R f th t t t ll li i t d l t 5. Reforms that totally eliminate redevelopment

• Current California laws

49

“Reform” in California: The Budget Reform in California: The Budget Crisis

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51

52

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Will Result in California Have Will Result in California Have National Implications?

• Depends on the outcome and the Court’s

reasoning

• May serve as a template for other cash-

strapped states strapped states

• Some unique aspects of California’s

process that may not translate elsewhere

54

A Final Big-Picture Thought for A Final, Big Picture Thought for Post-Kelo Eminent Domain Trials

• Threat of Jury Anger and Backlash

– Why is land being taken? – Is the project appealing?

• Focus on Recurring Emotional Themes

– Has the agency treated the owner fairly/sensitively? D f i k t l bj ti t d d f ll – Does fair market value, an objective standard, fully compensate the owner?

• Unique Tactics in Voir Dire, Opening Statements and

55

U que act cs

• e, Ope

g State e ts a d Closings

Questions? Questions?

N LLP Nossaman LLP 18101 Von Karman Ave., Suite 1800 Irvine CA 92612 Irvine, CA 92612 949.833.7800

Rick Rayl Brad Kuhn rrayl@nossaman.com bkuhn@nossaman.com nossaman.com/eminentdomain californiaeminentdomainreport com

56

californiaeminentdomainreport.com

Schlimmbesserung: Schlimmbesserung:

Eminent Domain for Eminent Domain for Redevelopment

Robert H. Thomas rht@hawaiilawyer com rht@hawaiilawyer.com 808-531-8031 www.inversecondemnation.com

57

“To worsen by improvement” To worsen by improvement

58

59

public use? public use?

60

Berman (1954)

Blight the baby with the baby with the bathwater

61

“when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive” Berman, 384 U.S. 34-35

62

Midkiff (1984)

Eminent domain like zoning – just g j another land use tool

63

66

67

Kelo (2005)

“Economic development” p might be a public use p

69

Kelo dissenters (2005)

Economic development p alone is never a public use p

70

Kelo (2005)

pretext to hide private benefit p is not “public use”

71

Kelo (2005)

“pretext” = actual motive

72

Berman - unanimous Midkiff - unanimous Kelo – 5-4

73

“K l ” Ab “Kelo” = Abuse “Kelo”= Incompetence “Kelo”= Property Rights p y g

74

Franco v. National Capital Revitalization Corp.

930 A.2d 160 (D.C. 2007)

75

County of Hawaii v C&J County of Hawaii v. C&J Coupe Family Ltd Partnership Partnership

198 P.3d 615 (Haw. 2008) 208 P.3d 713 (Haw. 2009)

• cert. denied

76

New York -

516 F.3d 50 (2d Cir 2008)

Goldstein v. Pataki

• cert. denied, 128 S. Ct. 2964 (2008)

Goldstein v NY State Urban Goldstein v. NY State Urban Dev Corp.

921 N.E.2d 164 (N.Y. 2009)

49 Wb, LLC v. Village of

921 N.E.2d 164 (N.Y. 2009)

, g Haverstraw

44 A.D.3d 226 (2007)

77

“[T]he record amply demonstrates that the neighborhood in question is not blighted that whatever blight exists is blighted, that whatever blight exists is due to the actions of the City…and that the justification of underutilization is nothing but a canard to aid in the transfer nothing but a canard to aid in the transfer

• f private property to a developer.

Unfortunately for the rights of the citizens affected by the proposed condemnation, the recent rulings of the Court of Appeals …have made plain that there is no longer any judicial oversight of eminent domain di ” proceedings.” Uptown Holdings, LLC v. City f N Y k

• f New York,
• No. 2882 (App. Div. Oct 12,

2010) 2010)

78

Tuck-it-Away v N Y Tuck-it-Away v. N.Y. State Urban Development Corporation Corporation cert denied …cert denied

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Texas Rice Land Partners, Ltd. V. Denbury G Pi li T (A 19 2011) Green Pipeline-Texas (Apr. 19, 2011)

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Schlimmbesserung? Schlimmbesserung?

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Schlimmbesserung? Schlimmbesserung?

ABA 2011 ABA 2011

More information (and More information (and link to order page)

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