HF 2846

5th Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to eminent domain; defining public use or purpose; prohibiting the use
of eminent domain for economic development; requiring clear and convincing
evidence for certain takings; providing for attorney fees and other additional
elements of compensation; making other changes in the exercise of eminent
domain; amending Minnesota Statutes 2004, sections 117.025; 117.075,
subdivision 1; proposing coding for new law in Minnesota Statutes, chapter 117.

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

Section 1.

[117.012] PREEMPTION; NO IMPLIED AUTHORITY.

Subdivision 1.

Preemption.

Notwithstanding any other provision of law, including
any charter provision, ordinance, statute, or special law, all condemning authorities,
including home rule charter cities and all other political subdivisions of the state, must
exercise the power of eminent domain in accordance with the provisions of this chapter,
including all procedures, definitions, remedies, and limitations. Additional procedures,
remedies, or limitations that do not deny or diminish the substantive and procedural rights
and protections of owners under this chapter may be provided by other law, ordinance,
or charter.

Subd. 2.

No implied authority.

The power of eminent domain shall not be implied.
In order to exercise the power of eminent domain, the condemning authority must have an
express grant of eminent domain authority.

Subd. 3.

Extraterritorial use prohibited.

No condemning authority may exercise
the power of eminent domain outside of its jurisdictional boundaries unless the governing
body of the local unit of government where the property proposed to be condemned is
located consents to the proposed use of eminent domain powers by the condemning
authority.

Sec. 2.

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, For the purposes of this chapter and any
other general or special law authorizing the exercise of the power of eminent domain, 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 with any interest
in the property subject to a taking, whether as proprietors, tenants, life estate holders,
encumbrancers, beneficial interest holders, or otherwise.

Subd. 4.

Condemning authority.

"Condemning authority" means any person or
entity with the power of eminent domain.

Subd. 5.

Abandoned property.

"Abandoned property" means property not
occupied or used for any commercial or residential purpose 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.

Subd. 6.

Blighted area.

(a) "Blighted area" means, exclusively, at the time of
condemnation, an area:

(1) that is zoned and used for urban use; and

(2) where more than 50 percent of the buildings are dilapidated.

Subd. 7.

Dilapidated building.

"Dilapidated building" means, exclusively, a
building:

(1) that was inspected by the appropriate local government and cited for one or more
building code violations at least 12 months before the condemnation is commenced;

(2) in which the building code violations cited have not been remedied, as
determined by at least one reinspection that finds noncompliance after the due date for
compliance with an order to correct a building code violation; and

(3) that, as of the date the condemnation is commenced, is structurally substandard.

Subd. 8.

Environmentally contaminated area.

"Environmentally contaminated
area" means an area:

(1) where more than 50 percent of the parcels contain any substance or 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; and

(2) for which the estimated costs of investigation, monitoring and testing, and
remedial action or removal, as defined in section 115B.02, subdivisions 16 and 17,
respectively, including any state costs of remedial actions, exceed 100 percent of the
assessor's estimated market value for the contaminated parcel, as determined under section
273.11, for property taxes payable in the year in which the condemnation commenced or
for which a court of competent jurisdiction has issued an order under laws or regulations
adopted by Minnesota or the United States that cleanup or remediation of a contaminated
site occur and the property owner has failed to comply with the court's order within
a reasonable time.

Subd. 9.

Public nuisance.

"Public nuisance" means a public nuisance under
section 609.74.

Subd. 10.

Public service corporation.

"Public service corporation" means a
public utility; gas, electric, telephone, or cable communications company; cooperative
association; natural gas pipeline company; crude oil, or petroleum products pipeline
company; municipal utility; municipality when operating its municipally owned utilities;
or municipal power agency. "Public service corporation" also means a municipality or
public corporation when operating an airport under chapter 360 or 473, a common carrier,
a watershed district, or a drainage authority.

Subd. 11.

Public use; public purpose.

(a) "Public use" or "public purpose" means,
exclusively:

(1) the possession, occupation, ownership, and enjoyment of the land by the general
public, or by public agencies;

(2) the creation or functioning of a public service corporation; or

(3) mitigation of a blighted area, remediation of an environmentally contaminated
area, reduction of abandoned property, or removal of a public nuisance.

(b) The public benefits of economic development, including an increase in tax base,
tax revenues, employment, or general economic health, do not by themselves constitute
a public use or public purpose.

Subd. 12.

Structurally substandard.

(a) "Structurally substandard" means building
code violations related exclusively to the building's:

(1) roof and roof framing elements;

(2) support walls, beams, and headers;

(3) foundation, footings, and subgrade conditions;

(4) light and ventilation;

(5) fire protection including egress;

(6) internal utilities, including electricity, gas, and water;

(7) flooring and flooring elements; and

(8) walls, insulation, and exterior envelope.

(b) A building is not structurally substandard if the estimated costs of satisfying
the cited structural building code violations do not exceed 50 percent of 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 commenced.

Sec. 3.

[117.027] CONDEMNATION FOR BLIGHT MITIGATION,
CONTAMINATION REMEDIATION.

Subdivision 1.

Nondilapidated buildings in areas of blight mitigation; absolute
necessity.

In taking property to mitigate blight, a condemning authority must not take
nondilapidated buildings in the area unless there is no feasible alternative to the taking
of the parcels on which the buildings are located in order to remediate the blight and all
possible steps are taken to minimize the taking of nondilapidated buildings.

Subd. 2.

Uncontaminated property in environmental contamination
remediation areas; absolute necessity.

In taking property to remediate environmental
contamination, a condemning authority must not take uncontaminated parcels in the area
unless there is no feasible alternative to the taking of the uncontaminated parcel in order
to complete remediation of the contaminated parcel and all possible steps are taken to
minimize the taking of the uncontaminated parcels.

Subd. 3.

Contribution to condition by developer disallowed.

If a developer
involved in the redevelopment of the project area contributed to the blight or environmental
contamination within the project area, the condition contributed to by the developer must
not be used in the determination of blight or environmental contamination.

Sec. 4.

[117.031] ATTORNEY FEES.

(a) If the final judgment or award for damages, as determined at any level in the
eminent domain process or by the parties themselves, is more than 20 percent greater than
the last written offer of compensation made by the condemning authority prior to the
filing of the petition, the court shall award the owner reasonable attorney fees, litigation
expenses, appraisal fees, other experts fees, and other related costs in addition to other
compensation and fees authorized by this section.

(b) In any case where the court determines that a taking is not for a public use or
is unlawful, the court shall award the owner reasonable attorney fees and other related
expenses, fees, and costs in addition to other compensation and fees authorized by this
section.

Sec. 5.

Minnesota Statutes 2004, section 117.075, subdivision 1, is amended to read:

Subdivision 1.

Hearing on taking; evidentiary standard.

(a) Upon proof being
filed of the service of such notice, the court, at the time and place therein fixed or to which
the hearing may be adjourned, shall hear all competent evidence offered for or against the
granting of the petition, regulating the order of proof as it may deem best.

(b) If the taking is for the mitigation of a blighted area, remediation of an
environmentally contaminated area, reducing abandoned property, or removing a
public nuisance, then, notwithstanding any other provision of general or special law, a
condemning authority must show by clear and convincing evidence to the district court
that the taking is necessary and for the designated public use.

Sec. 6.

[117.184] COMPENSATION FOR REMOVAL OF LEGAL
NONCONFORMING USE.

Notwithstanding any law to the contrary, an ordinance or regulation of a political
subdivision of the state or local zoning authority that requires the removal of a legal
nonconforming use 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 and
is prohibited without the payment of just compensation. This section does not apply if
the permit, license, or other approval is requested for the construction of a building or
structure that cannot be built without physically moving the nonconforming use. This
section does not apply to regulations or ordinances relating to adult uses.

Sec. 7.

[117.1845] OTHER REGULATORY TAKINGS.

A state or local government preservation designation adopted on or after August 1,
2002, that reduced the fair market value of real property or interferes with the owner's use
and quiet enjoyment of the property, constitutes a regulatory taking for which the owner
must be paid just compensation. The state or local government may repeal or amend the
official control or historic preservation designation to eliminate the adverse impact on
the property instead of paying damages.

Sec. 8.

[117.186] COMPENSATION FOR LOSS OF GOING CONCERN.

Subdivision 1.

Going concern defined.

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.

Subd. 2.

Compensation for loss of going concern.

If a business or trade is
destroyed by a taking, the owner shall be compensated for loss of going concern, unless the
condemning authority establishes any of the following by clear and convincing evidence:

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

(2) the loss can be reasonably prevented by relocating the business or trade in the
same or a similar and reasonably suitable location as the property that was taken, or by
taking steps and adopting procedures that a reasonably prudent person of a similar age
and under similar conditions as the owner, would take and adopt in preserving the going
concern of the business or trade; or

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

Subd. 3.

Procedure.

In all cases where an owner will seek compensation for loss
of a going concern, the damages, if any, shall in the first instance be determined by the
commissioners under section 117.105 as part of the compensation due to the owner. The
owner shall notify the condemning authority of the owner's intent to claim compensation
for loss of going concern within 60 days of the first hearing before the court, as provided
in section 117.075. The commissioner's decision regarding any award for loss of going
concern may be appealed by any party, in accordance with section 117.145.

Subd. 4.

Use of appraisal at commissioners' hearing.

An appraisal of the going
concern must not be used or considered in a condemnation commissioner's hearing, nor
may the appraiser who prepared the appraisal testify, unless a copy of the appraiser's
written report is provided to the opposing party at least five days before the hearing.

Sec. 9.

[117.1865] COMPENSATION FOR LOSS OF ACCESS.

An owner, as defined in section 117.025, may bring an action for damages and must
be compensated by the governmental entity if the owner establishes that the governmental
entity's action permanently eliminated 51 percent or more of the driveway access into and
out of the place of business, and that as a result the owner has a loss of revenues of 51
percent or more. Determination of the loss must be based on a comparison of revenues in
the year immediately prior to the project resulting in the loss of access.

A claim for compensation under this section must be made no later than one year
after the completion of the project that eliminated the driveway access. Compensation
must not exceed (1) the addition of revenue from the two previous years, minus (2) the
addition of cost of goods sold from the two previous years.

Sec. 10.

[117.187] MINIMUM COMPENSATION.

When an owner must relocate, the amount of damages payable, at a minimum, must
be sufficient for an owner to purchase a comparable property in the community and not
less than the condemning authority's payment or deposit under section 117.042, to the
extent the damages will not be duplicated in the compensation otherwise awarded to
the owner of the property.

Sec. 11.

[117.188] LIMITATIONS.

The condemning authority may not require the owner to accept as part of the
compensation due any substitute or replacement property. Nor shall the condemning
authority require the owner to accept the return of property acquired or any portion thereof.

Sec. 12.

[117.189] PUBLIC SERVICE CORPORATION EXCEPTION.

Sections 117.031, 117.186, 117.187, and 117.188 do not apply to public service
corporations.

Sec. 13.

[117.1905] PUBLIC HEARING.

Subdivision 1.

Definitions.

(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.

(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.

Subd. 2.

Public hearing; vote by local government governing body.

Before a
local government or agency acquires property by the exercise of the power of eminent
domain, the local government must notify each affected property owner in writing of a
public hearing on the proposed taking, post the public 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 person must be allowed reasonable time to present testimony at
the public hearing. The proceedings of the hearing must be recorded 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 the property.

Subd. 3.

Resolution.

If the taking is for the mitigation of a blighted area,
remediation of an environmentally contaminated area, reducing abandoned property,
or removing a public nuisance, then the resolution of a local government or agency
authorizing the use of eminent domain must:

(1) identify and describe the public costs and benefits that are known or expected
to result from the program or project for which the property interest is proposed to be
acquired; and

(2) address how the acquisition of the property interest serves one or more identified
public uses or public purposes and why the acquisition of the property is needed to
accomplish those purposes.

Sec. 14.

[117.226] FIRST RIGHT OF REFUSAL.

(a) If the governing body of the condemning authority determines that publicly
owned property acquired under this chapter has not been used and is no longer needed
for a public use, the authority must offer to sell the property to the owner from whom it
was acquired, if the former owner can be located, at the original price determined by the
condemnation process or the current fair market value of the property, whichever is lower.

(b) If the former owner cannot be located or declines to repurchase the property,
the condemning authority shall prepare a certificate attesting to the same and record the
certificate in the office of the county recorder or county registrar of titles, as appropriate,
to evidence the termination of the right of first refusal.

Sec. 15.

[117.58] INFORMATION ON OWNERS RIGHTS AND PROCEDURES.

The attorney general shall prepare and make available to the public a statement that
summarizes the significant legal rights and obligations of condemning authorities, owners,
and tenants. The statement shall describe the significant provisions of this chapter and
any applicable federal law and provide an overview of the procedures and time frames
involved in an eminent domain action. The statement shall include information for owners
and tenants on where else they may get information on how to protect their interests in
eminent domain. The attorney general shall revise the statement annually to ensure that
it continues to describe accurately the statutory and case law governing the rights and
obligations of condemning authorities, owners, and tenants.

Sec. 16. REVISOR'S INSTRUCTION.

The revisor shall change the phrase "right of eminent domain" where found in
Minnesota Statutes and Minnesota Rules to "power of eminent domain."

Sec. 17. EFFECTIVE DATE.

This act is effective the day following final enactment and applies to condemnation
proceedings commenced on or after March 1, 2006.