HF 3629

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to real property; eminent domain; providing a definition of public
use; providing for loss of going concern; providing and prohibiting attorney
fees; amending Minnesota Statutes 2004, sections 117.025; 117.036; 117.075,
by adding subdivisions; proposing coding for new law in Minnesota Statutes,
chapter 117.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2004, section 117.025, is amended to read:

117.025 DEFINITIONS.

Subdivision 1.

Words, terms, and phrases.

Unless the language or context clearly
indicates that a different meaning is intended, the words, terms, and phrases defined in
this section have the meanings given them.

Subd. 2.

Taking.

Taking and all words and phrases of like import include every
interference, under the right of eminent domain, with the possession, enjoyment, or value
of private property.

Subd. 3.

Owner.

"Owner" includes all persons interested in such property as
proprietors, tenants, life estate holders, encumbrancers, or otherwise.

new text begin Subd. 4. new text end

new text begin Abandoned property. new text end

new text begin Abandoned property means a property not occupied
by a person with a legal or equitable right to occupy it and for which the condemning
authority is unable to identify and contact the owner despite making reasonable efforts.
new text end

new text begin Subd. 5. new text end

new text begin Condemning authority. new text end

new text begin "Condemning authority" means any person or
entity with the power of eminent domain.
new text end

new text begin Subd. 6. new text end

new text begin Blighted area. new text end

new text begin "Blighted area" means an area in which, in its present use
and condition, all of the buildings in the area are dilapidated.
new text end

new text begin Subd. 7. new text end

new text begin Dilapidated building. new text end

new text begin A building is dilapidated if (1) the building has
been cited for building code violations that are uncured at the time of filing of the petition,
and (2) the cost of repairs required to remedy the building code violations exceed the
assessor's estimated market value for the building as determined under section 273.11, for
property taxes payable in the year in which the condemnation is commenced.
new text end

new text begin Subd. 8. new text end

new text begin Environmentally contaminated area. new text end

new text begin "Environmentally contaminated
area" is an area that contains throughout any substances, defined, regulated, or listed
as a hazardous substance, hazardous material, hazardous waste, toxic waste, pollutant,
contaminant, or toxic substance, or identified as hazardous to human health or the
environment under state or federal law or regulation.
new text end

new text begin Subd. 9. new text end

new text begin Public nuisance. new text end

new text begin The definition of public nuisance for the purpose of
establishing a public use for takings under eminent domain law is the same as in section
609.74.
new text end

new text begin Subd. 10. new text end

new text begin Public use or public purpose. new text end

new text begin "Public use" or "public purpose" means,
exclusively:
new text end

new text begin (1) the possession, occupation, and enjoyment of the land by the general public, or
by public agencies;
new text end

new text begin (2) the creation or functioning of a utility or other public service corporations;
new text end

new text begin (3) mitigation of blight, remediation of an environmentally contaminated area,
reduction of abandoned property, or removal of a public nuisance.
new text end

Sec. 2.

new text begin [117.027] LIMITATIONS ON USE OF EMINENT DOMAIN.
new text end

new text begin Subdivision 1. new text end

new text begin Economic development not a public use. new text end

new text begin The public benefits of
economic development, including an increase in tax base, tax revenues, employment,
general economic health, shall not by themselves, constitute a public use.
new text end

new text begin Subd. 2. new text end

new text begin Cannot take nondilapidated buildings or noncontaminated land. new text end

new text begin A
condemning authority taking property to mitigate blight or remediate environmental
contamination is prohibited from taking buildings that are not dilapidated or land that is
not environmentally contaminated in all cases, including if the nondilapidated buildings or
nonenvironmentally contaminated land is adjacent to blighted buildings or contaminated
land or the taking is absolutely necessary to remedy blight or environmental contamination.
new text end

new text begin Subd. 3. new text end

new text begin Replacement property as compensation. new text end

new text begin The condemning authority
may not compel or otherwise require the owner of the property to accept as part of the
compensation due any substitute or replacement property.
new text end

new text begin Subd. 4. new text end

new text begin Return of property taken. new text end

new text begin The condemning authority may not compel or
otherwise require the owner of the property to accept the return of property acquired or
any portion thereof.
new text end

new text begin Subd. 5. new text end

new text begin Cannot require owner to mitigate costs. new text end

new text begin The condemning authority may
not compel or otherwise require the owner of the property to mitigate costs related to
the condemnation.
new text end

Sec. 3.

new text begin [117.028] TAKING OF NONCONFORMING USE.
new text end

new text begin The requirement by any political subdivision of the state or local zoning authority
that a legal nonconforming use be removed as a condition or prerequisite for the issuance
of a permit, license, or other approval for any use, structure, development, or activity
constitutes a taking that is prohibited without just compensation. This section does not
apply if the permit, license, or approval is requested for the construction of a building or
structure which cannot be built without physically moving the nonconforming use.
new text end

Sec. 4.

new text begin [117.031] ATTORNEY FEES.
new text end

new text begin Subdivision 1. new text end

new text begin Benefits defined. new text end

new text begin As used in this section, the term "benefits" means
the difference, exclusive of interest, between the final judgment or settlement and the last
written offer made by the condemning authority before the defendant hires an attorney.
If no written offer is made by the condemning authority before the defendant hires an
attorney, benefits must be measured from the first written offer after the attorney is hired.
new text end

new text begin Subd. 2. new text end

new text begin Award based on benefits to client. new text end

new text begin The court, in eminent domain
proceedings, shall award attorney fees based solely on the benefits achieved for the client.
new text end

new text begin Subd. 3. new text end

new text begin Business damages. new text end

new text begin Benefits for amounts awarded for business damages
must be based on the difference between the final judgment or settlement and the last
written counteroffer made by the condemning authority provided.
new text end

new text begin Subd. 4. new text end

new text begin Nonmonetary benefits. new text end

new text begin The court may also consider nonmonetary benefits
obtained for the client through the efforts of the attorney, to the extent such nonmonetary
benefits are specifically identified by the court and can, within a reasonable degree of
certainty, be quantified.
new text end

new text begin Subd. 5. new text end

new text begin Fee schedule. new text end

new text begin Attorney fees based on benefits achieved shall be awarded
in accordance with the following schedule:
new text end

new text begin (1) 33 percent of any benefit up to $250,000; plus
new text end

new text begin (2) 25 percent of any portion of the benefit between $250,000 and $1,000,000; plus
new text end

new text begin (3) 20 percent of any portion of the benefit exceeding $1,000,000.
new text end

new text begin Subd. 6. new text end

new text begin Other considerations. new text end

new text begin In assessing attorney fees incurred in defeating
an order of taking, or for apportionment, or other supplemental proceedings, when not
otherwise provided for, the court shall consider:
new text end

new text begin (1) the novelty, difficulty, and importance of the questions involved;
new text end

new text begin (2) the skill employed by the attorney in conducting the cause;
new text end

new text begin (3) the amount of money involved;
new text end

new text begin (4) the responsibility incurred and fulfilled by the attorney;
new text end

new text begin (5) the attorney's time and labor reasonably required to adequately represent the
client in relation to the benefits resulting to the client;
new text end

new text begin (6) the fee, or rate of fee, customarily charged for legal services of a comparable or
similar nature;
new text end

new text begin (7) any attorney fee award made under clause (1).
new text end

new text begin Subd. 7. new text end

new text begin Submittal of fee details. new text end

new text begin At least 30 days prior to a hearing to assess
attorney fees under subdivision 2, the owner's attorney shall submit to the condemning
authority and to the court complete time records and a detailed statement of services
rendered by date, nature of services performed, time spent performing such services,
and costs incurred.
new text end

new text begin Subd. 8. new text end

new text begin Owner's fee agreement submitted to court. new text end

new text begin The owner shall provide to
the court a copy of any written fee agreement that may exist between the owner and the
owner's attorney, and the court must reduce the amount of attorney fees to be paid by the
owner by the amount of any attorney fees awarded by the court.
new text end

Sec. 5.

new text begin [117.032] PROHIBITION AGAINST ATTORNEY FEES BEING
ASSESSED ON PROPERTY OWNERS.
new text end

new text begin No court or government entity shall award attorney fees and expenses to the state of
Minnesota or any political subdivision thereof or any condemning authority to be paid
by owners for defending their property against a threatened or actual taking by eminent
domain or financing related thereto.
new text end

Sec. 6.

Minnesota Statutes 2004, section 117.036, is amended to read:

117.036 APPRAISAL AND NEGOTIATION REQUIREMENTS
deleted text begin APPLICABLE TO ACQUISITION OF PROPERTY FOR TRANSPORTATION
PURPOSES deleted text end .

Subdivision 1.

Application.

This section applies to the acquisition of property
deleted text begin for public highways, streets, roads, alleys, airports, mass transit facilities, or for other
transportation facilities or purposes deleted text end new text begin under this chapter new text end .

Subd. 2.

Appraisal.

(a) Before commencing an eminent domain proceeding under
this chapter, the acquiring authority must obtain at least one appraisal for the property
proposed to be acquired. In making the appraisal, the appraiser must confer with one or
more of the owners of the property, if reasonably possible. deleted text begin At least deleted text end new text begin Notwithstanding
section 13.44 or any other law to the contrary, the condemning authority must provide
the owner with a copy of the appraisal at the time an offer is made, but no later than new text end 20
days before presenting a petition under section 117.055, the acquiring authority must
provide the owner with a copy of the appraisal and inform the owner of the owner's right
to obtain an appraisal under this section.

(b) The owner may obtain an appraisal by a qualified appraiser of the property
proposed to be acquired. The owner is entitled to reimbursement for the reasonable costs
of the appraisal from the acquiring authority up to a maximum of $1,500 deleted text begin within 30 days
after the deleted text end new text begin for single-family and two-family residential property and the actual reasonable
cost of an appraisal for other types of property, provided that the new text end owner submits to the
acquiring authority the information necessary for reimbursement deleted text begin , provided that the owner
does so within 60 days after the owner receives the appraisal from the authority under
paragraph (a) deleted text end . new text begin The condemning authority must pay the reimbursement to the owner
or contract purchaser within 30 days after receiving a copy of the appraisal and the
reimbursement information. Upon agreement between the condemning authority and the
owner, the condemning authority may pay the reimbursement directly to the appraiser.
new text end

Subd. 3.

Negotiation.

new text begin (a) new text end In addition to the appraisal requirements under
subdivision 2, before commencing an eminent domain proceeding, the acquiring authority
must make a good faith attempt to negotiate personally with the owner deleted text begin of the property deleted text end
in order to acquire the property by direct purchase instead of the use of eminent domain
proceedings. In making this negotiation, the acquiring authority must consider the
appraisals in its possession new text begin , including any appraisal obtained and voluntarily furnished
by the owner if available, new text end and other information that may be relevant to a determination
of damages under this chapter.

new text begin (b) Any offer made by the condemning authority to the owner must be made in
writing.
new text end

new text begin (c) The owner may accept any offer from the condemning authority, made before or
after the filing of the petition, at any time during the entire condemnation process.
new text end

Sec. 7.

Minnesota Statutes 2004, section 117.075, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Evidentiary standards. new text end

new text begin (a) The condemning authority must show by
the preponderance of the evidence to the district court that a taking is necessary and for a
public use when the taking is for the possession, occupation, and enjoyment of the land
by the general public, or by public agencies or the creation or functioning of a utility or
other public service corporations.
new text end

new text begin (b) The condemning authority must show by clear and convincing evidence to the
district court that a taking is necessary and for a public use when the taking is to mitigate
blight, remedy an environmentally contaminated area, or reduce abandoned property.
new text end

new text begin (c) The condemning authority must show beyond a reasonable doubt to the district
court that a taking is necessary for a public use when the taking is for the removal of
a public nuisance.
new text end

Sec. 8.

Minnesota Statutes 2004, section 117.075, is amended by adding a subdivision
to read:

new text begin Subd. 1b. new text end

new text begin De novo review on appeal. new text end

new text begin In any appeal of the district court's
determination of whether the taking is necessary and for a public use, the court of appeals
must review the district court's determination of facts and law de novo.
new text end

Sec. 9.

new text begin [117.186] COMPENSATION FOR LOSS OF GOING CONCERN.
new text end

new text begin Subdivision 1. new text end

new text begin Compensation for loss of going concern. new text end

new text begin The owner of a business
or trade conducted on any property taken, damaged, or destroyed, or on the remainder
if such property is part of a larger parcel, or where access to the property is removed or
restricted shall be compensated for loss of its going concern, whether that loss is partial
or total, unless the condemning authority establishes any of the following by clear and
convincing evidence:
new text end

new text begin (1) the loss is not caused by the taking of the property or the injury to the remainder;
new text end

new text begin (2) the loss can be reasonably prevented by relocating the business or trade in the
same or similar and reasonably suitable location as the property that was taken; or
new text end

new text begin (3) compensation for the loss of going concern will be duplicated in the
compensation otherwise awarded to the owner.
new text end

new text begin Subd. 2. new text end

new text begin Going concern defined. new text end

new text begin For purposes of this section, "going concern"
means the benefits that accrue to a business or trade as a result of its location, reputation
for dependability, skill or quality, customer base, good will, or any other circumstances
resulting in probable retention of old or acquisition of new patronage.
new text end

new text begin Subd. 3. new text end

new text begin Procedure. new text end

new text begin In all cases where an owner will seek compensation for loss of
going concern, the damages, if any, shall in the first instance be determined and reported
by the commissioners under section 117.105 as part of the compensation due to the owner.
The owner shall notify the condemning authority of its intent to claim compensation for
loss of going concern no later than 30 days prior to the commissioners' hearings. The
decision of the commissioners regarding any award for loss of going concern may be
appealed by any party in accordance with section 117.145.
new text end

Sec. 10.

new text begin [117.189] PUBLIC HEARING.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, "local government"
means the elected governing body of a statutory or home rule charter city, county, or
township.
new text end

new text begin (b) For the purposes of this section "agency" means any subdivision, agency,
authority, or other entity of the local government, including a port authority, economic
development authority, housing and redevelopment authority, or other similar entity
established under general or special law.
new text end

new text begin Subd. 2. new text end

new text begin Public hearing; vote by local government body. new text end

new text begin Before a local
government or agency acquires property by the exercise of the power of eminent domain,
the local government must notify each property owner in writing of a public hearing on
the proposed taking, post the hearing information on the local government's Web site, if
any, and publish notice of the public hearing in the official newspaper. Notice must be
provided at least 30 days but not more than 60 days before the hearing. Any interested
party must be allowed reasonable time to present testimony at the public hearing. The
proceedings of the hearing must be recorded, broadcasted, if possible, and available to the
public for review and comment at reasonable times and a reasonable place. At the next
regular meeting of the local government that is at least 30 days after the public hearing, the
local government must vote on the question of whether to authorize the local government
or agency to use eminent domain to acquire property
new text end

Sec. 11.

new text begin [117.58] RELOCATION HEARING OFFICER QUALIFICATIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Request for administrative appeal hearing. new text end

new text begin Any aggrieved person
under sections 117.50 to 117.57 may file a written appeal with the condemning authority
in any case in which the person believes that the condemning authority has failed to
properly consider the person's application for assistance. Such assistance may include,
but is not limited to, the person's eligibility for, or the amount of, relocation payment
required under section 117.52. The condemning authority shall consider a written appeal
regardless of form.
new text end

new text begin Subd. 2. new text end

new text begin Appointment of hearing officer. new text end

new text begin If the aggrieved person in subdivision
1 files a written appeal with a condemning authority lacking statewide jurisdiction, the
condemning authority shall appoint a disinterested person to serve as the hearing officer
for the administrative appeal hearing.
new text end

new text begin Subd. 3. new text end

new text begin Hearing officer qualifications. new text end

new text begin Before appointing the hearing officer as
required in subdivision 2, the condemning authority shall inquire whether each prospective
hearing officer has any relationship, business or otherwise, to any of the parties in the
proceedings, or any interest in the proceeding, which may constitute a conflict of interest,
or which may create the appearance of impropriety should that person be appointed.
Responses to this inquiry must be either written, or on the record, and available to any
party in the proceeding before and after appointment. No person who has the appearance
of impropriety, or an actual conflict of interest, may be appointed to serve as the hearing
officer for the administrative appeal hearing. A hearing officer must be an attorney
licensed by the state of Minnesota who is not employed by any condemning authority.
new text end

Sec. 12. new text begin EFFECTIVE DATE; APPLICATION.
new text end

new text begin This act is effective the day following final enactment and applies to condemnation
proceedings commenced on or after February 27, 2006.
new text end