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SF 2750

1st Unofficial Engrossment - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.
1.1                                        A bill for an act
1.2     relating to eminent domain; defining public use or purpose; prohibiting the use 
1.3     of eminent domain for economic development; requiring clear and convincing 
1.4     evidence for certain takings; providing for attorney fees and other additional 
1.5     elements of compensation; making other changes in the exercise of eminent 
1.6     domain;amending Minnesota Statutes 2004, sections 117.025; 117.075, 
1.7     subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 
1.8     117; 160.

1.10        Section 1. [117.012] PREEMPTION; NO IMPLIED AUTHORITY.
1.11        Subdivision 1. Preemption. Notwithstanding any other provision of law, including 
1.12    any charter provision, ordinance, statute, or special law, all condemning authorities, 
1.13    including home rule charter cities and all other political subdivisions of the state, must 
1.14    exercise the power of eminent domain in accordance with the provisions of this chapter, 
1.15    including all procedures, definitions, remedies, and limitations. Additional procedures, 
1.16    remedies, or limitations that do not deny or diminish the substantive and procedural rights 
1.17    and protections of owners under this chapter may be provided by other law, ordinance, 
1.18    or charter.
1.19        Subd. 2.  Requirement of public use or public purpose.  Eminent domain may 
1.20    only be used for a public use or public purpose.
1.21        Subd. 3. Extraterritorial use prohibited.  No condemning authority may exercise 
1.22    the power of eminent domain outside of its jurisdictional boundaries unless the governing 
1.23    body of the local unit of government where the property proposed to be condemned is 
1.24    located consents to the proposed use of eminent domain powers by the condemning 
1.25    authority.

2.1         Sec. 2. Minnesota Statutes 2004, section 117.025, is amended to read:
2.2     117.025 DEFINITIONS.
2.3         Subdivision 1. Words, terms, and phrases. Unless the language or context clearly 
2.4     indicates that a different meaning is intended, For the purposes of this chapter and any 
2.5     other general or special law authorizing the exercise of the power of eminent domain, the 
2.6     words, terms, and phrases defined in this section have the meanings given them.
2.7         Subd. 2. Taking. "Taking" and all words and phrases of like import include every 
2.8     interference, under the right of eminent domain, with the possession, enjoyment, or value 
2.9     of private property.
2.10        Subd. 3. Owner. "Owner" includes all persons interested in such with any interest 
2.11    in the  property subject to a taking, whether as proprietors, tenants, life estate holders, 
2.12    encumbrancers, beneficial interest holders, or otherwise.
2.13        Subd. 4. Condemning authority. "Condemning authority" means any person or 
2.14    entity with the power of eminent domain.
2.15        Subd. 5. Abandoned property. "Abandoned property" means property not 
2.16    occupied or used for any commercial or residential purpose by a person with a legal or 
2.17    equitable right to occupy it and for which the condemning authority is unable to identify 
2.18    and contact the owner despite making reasonable efforts.
2.19        Subd. 6. Blighted area. (a) "Blighted area" means, exclusively, at the time of 
2.20    condemnation, an area: 
2.21    (1) that is in urban use; and
2.22    (2) where more than 50 percent of the buildings located in the area are dilapidated.
2.23        Subd. 7. Dilapidated building. "Dilapidated building" means, exclusively, a 
2.24    building:
2.25    (1) that was inspected by the appropriate local government and cited for one or more 
2.26    building code violations at least 12 months before the condemnation is commenced;
2.27    (2) in which the building code violations cited have not been remedied, as 
2.28    determined by at least one reinspection that finds noncompliance after the due date for 
2.29    compliance with an order to correct a building code violation; and
2.30    (3) that, as of the date the condemnation is commenced, is structurally substandard. 
2.31    A local government is authorized to seek from a judge or magistrate a search warrant to 
2.32    gain access to inspect a specific building in a proposed development or redevelopment 
2.33    area upon showing of probable cause that a specific code violation has occurred and that 
2.34    the violation has not been cured, and that the owner has denied the local government 
2.35    access to the property. Items of evidence that may support a conclusion of probable cause 
2.36    may include recent fire or police inspections, housing inspection, exterior evidence of 
3.1     deterioration, or other similar reliable evidence of structural deterioration in the specific 
3.2     building.
3.3         Subd. 8. Environmentally contaminated area. "Environmentally contaminated 
3.4     area" means an area:
3.5     (1) where more than 50 percent of the parcels contain any substance or substances 
3.6     defined, regulated, or listed as a hazardous substance, hazardous material, hazardous 
3.7     waste, toxic waste, pollutant, contaminant, or toxic substance, or identified as hazardous to 
3.8     human health or the environment under state or federal law or regulation; and
3.9     (2) for which the estimated costs of investigation, monitoring and testing, and 
3.10    remedial action or removal, as defined in section 115B.02, subdivisions 16 and 17, 
3.11    respectively, including any state costs of remedial actions, exceed 100 percent of the 
3.12    assessor's estimated market value for the contaminated parcel, as determined under section 
3.13    273.11, for property taxes payable in the year in which the condemnation commenced or 
3.14    for which a court of competent jurisdiction has issued an order under laws or regulations 
3.15    adopted by Minnesota or the United States that cleanup or remediation of a contaminated 
3.16    site occur and the property owner has failed to comply with the court's order within 
3.17    a reasonable time.
3.18        Subd. 9. Public nuisance. "Public nuisance" means a public nuisance under 
3.19    section 609.74.
3.20        Subd. 10. Public service corporation. "Public service corporation" means a 
3.21    public utility; gas, electric, telephone, or cable communications company; cooperative 
3.22    association; natural gas pipeline company; crude oil, or petroleum products pipeline 
3.23    company; municipal utility; municipality when operating its municipally owned utilities; 
3.24    or municipal power agency. "Public service corporation" also means a municipality or 
3.25    public corporation when operating an airport under chapter 360 or 473, a common carrier, 
3.26    a watershed district, or a drainage authority. 
3.27        Subd. 11. Public use; public purpose. (a) "Public use" or "public purpose" means, 
3.28    exclusively:
3.29    (1) the possession, occupation, ownership, and enjoyment of the land by the general 
3.30    public, or by public agencies;
3.31    (2) the creation or functioning of a public service corporation; or
3.32    (3) mitigation of a blighted area, remediation of an environmentally contaminated 
3.33    area, reduction of abandoned property, or removal of a public nuisance.
3.34    (b) The public benefits of economic development, including an increase in tax base, 
3.35    tax revenues, employment, or general economic health, do not by themselves constitute 
3.36    a public use or public purpose.
4.1         Subd. 12. Structurally substandard. (a) "Structurally substandard" means building 
4.2     code violations related exclusively to the building's:
4.3     (1) roof and roof framing elements;
4.4     (2) support walls, beams, and headers;
4.5     (3) foundation, footings, and subgrade conditions;
4.6     (4) light and ventilation;
4.7     (5) fire protection including egress;
4.8     (6) internal utilities, including electricity, gas, and water;
4.9     (7) flooring and flooring elements; and
4.10    (8) walls, insulation, and exterior envelope.
4.11    (b) A building is not structurally substandard if the estimated costs of satisfying 
4.12    the cited structural building code violations do not exceed 50 percent of the assessor's 
4.13    estimated market value for the building, as determined under section 273.11, for  property 
4.14    taxes payable in the year in which the condemnation commenced.

4.15        Sec. 3. [117.027] CONDEMNATION FOR BLIGHT MITIGATION, 
4.17        Subdivision 1. Nondilapidated buildings in areas of blight mitigation; absolute 
4.18    necessity. In taking property to mitigate blight, a condemning authority must not take 
4.19    nondilapidated buildings in the area unless there is no feasible alternative to the taking 
4.20    of the parcels on which the buildings are located in order to remediate the blight and all 
4.21    possible steps are taken to minimize the taking of nondilapidated buildings. 
4.22        Subd. 2. Uncontaminated property in environmental contamination 
4.23    remediation areas; absolute necessity. In taking property to remediate environmental 
4.24    contamination, a condemning authority must not take uncontaminated parcels in the area 
4.25    unless there is no feasible alternative to the taking of the uncontaminated parcel in order 
4.26    to complete remediation of the contaminated parcel and all possible steps are taken to 
4.27    minimize the taking of the uncontaminated parcels. 
4.28        Subd. 3. Contribution to condition by developer disallowed. If a developer 
4.29    involved in the redevelopment of the project area contributed to the blight or environmental 
4.30    contamination within the project area, the condition contributed to by the developer must 
4.31    not be used in the determination of blight or environmental contamination.

4.32        Sec. 4. [117.031] ATTORNEY FEES.
4.33    (a) If the final judgment or award for damages, as determined at any level in the 
4.34    eminent domain process, is more than 20 percent greater than the last written offer of 
5.1     compensation made by the condemning authority prior to the filing of the petition, the 
5.2     court shall award the owner reasonable attorney fees, litigation expenses, appraisal fees, 
5.3     other experts fees, and other related costs in addition to other compensation and fees 
5.4     authorized by this section. The final judgment or award of damages shall be determined as 
5.5     of the date of taking. No attorney fees shall be awarded under this paragraph if the final 
5.6     judgment or award of damages does not exceed $5,000.
5.7     (b) In any case where the court determines that a taking is not for a public use or 
5.8     is unlawful, the court shall award the owner reasonable attorney fees and other related 
5.9     expenses, fees, and costs in addition to other compensation and fees authorized by this 
5.10    section.

5.11        Sec. 5. Minnesota Statutes 2004, section 117.075, subdivision 1, is amended to read:
5.12        Subdivision 1. Hearing on taking; evidentiary standard. (a) Upon proof being 
5.13    filed of the service of such notice, the court, at the time and place therein fixed or to which 
5.14    the hearing may be adjourned, shall hear all competent evidence offered for or against the 
5.15    granting of the petition, regulating the order of proof as it may deem best.
5.16    (b) If the taking is for the mitigation of a blighted area, remediation of an 
5.17    environmentally contaminated area, reducing abandoned property, or removing a 
5.18    public nuisance, then, notwithstanding any other provision of general or special law, a 
5.19    condemning authority must show by clear and convincing evidence to the district court 
5.20    that the taking is necessary and for the designated public use.

5.21        Sec. 6. [117.184] COMPENSATION FOR REMOVAL OF LEGAL 
5.23    Notwithstanding any law to the contrary, an ordinance or regulation of a political 
5.24    subdivision of the state or local zoning authority that requires the removal of a legal 
5.25    nonconforming use as a condition or prerequisite for the issuance of a permit, license, or 
5.26    other approval for any use, structure, development, or activity constitutes a taking and 
5.27    is prohibited without the payment of just compensation. This section does not apply if 
5.28    the permit, license, or other approval is requested for the construction of a building or 
5.29    structure that cannot be built without physically moving the nonconforming use. This 
5.30    section does not apply to regulations or ordinances relating to adult uses.

5.31        Sec. 7. [117.1845] OTHER REGULATORY TAKINGS.
5.32    A state or local government preservation designation adopted on or after August 1, 
5.33    2002, that reduced the fair market value of real property or interferes with the owner's use 
6.1     and quiet enjoyment of the property, constitutes a regulatory taking for which the owner 
6.2     must be paid just compensation. The state or local government may repeal or amend the 
6.3     official control or historic preservation designation to eliminate the adverse impact on 
6.4     the property instead of paying damages.

6.5         Sec. 8. [117.186] COMPENSATION FOR LOSS OF GOING CONCERN.
6.6         Subdivision 1. Going concern defined. For purposes of this section, "going 
6.7     concern" means the benefits that accrue to a business or trade as a result of its location, 
6.8     reputation for dependability, skill or quality, customer base, good will, or any other 
6.9     circumstances resulting in probable retention of old or acquisition of new patronage.
6.10        Subd. 2. Compensation for loss of going concern. If a business or trade is 
6.11    destroyed by a taking, the owner shall be compensated for loss of going concern, unless the 
6.12    condemning authority establishes any of the following by clear and convincing evidence:
6.13    (1) the loss is not caused by the taking of the property or the injury to the remainder;
6.14    (2) the loss can be reasonably prevented by relocating the business or trade in the 
6.15    same or a similar and reasonably suitable location as the property that was taken, or by 
6.16    taking steps and adopting procedures that a reasonably prudent person of a similar age 
6.17    and under similar conditions as the owner, would take and adopt in preserving the going 
6.18    concern of the business or trade; or
6.19    (3) compensation for the loss of going concern will be duplicated in the 
6.20    compensation otherwise awarded to the owner.
6.21        Subd. 3. Procedure. In all cases where an owner will seek compensation for loss 
6.22    of a going concern, the damages, if any, shall in the first instance be determined by the 
6.23    commissioners under section 117.105 as part of the compensation due to the owner. The 
6.24    owner shall notify the condemning authority of the owner's intent to claim compensation 
6.25    for loss of going concern within 60 days of the first hearing before the court, as provided 
6.26    in section 117.075. The commissioner's decision regarding any award for loss of going 
6.27    concern may be appealed by any party, in accordance with section 117.145.
6.28        Subd. 4. Use of appraisal at commissioners' hearing. An appraisal of the going 
6.29    concern must not be used or considered in a condemnation commissioner's hearing, nor 
6.30    may the appraiser who prepared the appraisal testify, unless a copy of the appraiser's 
6.31    written report is provided to the opposing party at least five days before the hearing.

6.32        Sec. 9. [117.1865] COMPENSATION FOR LOSS OF ACCESS.
6.33    An owner, as defined in section 117.025, may bring an action for damages and must 
6.34    be compensated by the governmental entity if the owner establishes that the governmental 
7.1     entity's action permanently eliminated 51 percent or more  of the driveway access into and 
7.2     out of the place of business, and that as a result the owner has a loss of revenues of 51 
7.3     percent or more. Determination of the loss must be based on a comparison of revenues in 
7.4     the year immediately prior to the project resulting in the loss of access. 
7.5     A claim for compensation under this section must be made no later than one year 
7.6     after the completion of the project that eliminated the driveway access. Compensation 
7.7     must not exceed (1) the addition of revenue from the two previous years, minus (2) the 
7.8     addition of cost of goods sold from the two previous years.

7.9         Sec. 10. [117.187] MINIMUM COMPENSATION.
7.10    When an owner must relocate, the amount of damages payable, at a minimum, must 
7.11    be sufficient for an owner to purchase a comparable property in the community and not 
7.12    less than the condemning authority's payment or deposit under section 117.042, to the 
7.13    extent the damages will not be duplicated in the compensation otherwise awarded to 
7.14    the owner of the property.

7.15        Sec. 11. [117.188] LIMITATIONS.
7.16    The condemning authority may not require the owner to accept as part of the 
7.17    compensation due any substitute or replacement property.  Nor shall the condemning 
7.18    authority require the owner to accept the return of property acquired or any portion thereof.

7.19        Sec. 12. [117.189] PUBLIC SERVICE CORPORATION EXCEPTION.
7.20    Sections 117.031,  117.186, 117.187, and 117.188 do not apply to public service 
7.21    corporations.

7.22        Sec. 13. [117.1905] PUBLIC HEARING.
7.23        Subdivision 1. Definitions. (a) For the purposes of this section, "local government" 
7.24    means the elected governing body of a statutory or home rule charter city, county, or 
7.25    township.
7.26    (b) For the purposes of this section, "agency" means any subdivision, agency, 
7.27    authority, or other entity of the local government, including a port authority, economic 
7.28    development authority, housing and redevelopment authority, or other similar entity 
7.29    established under general or special law.
7.30        Subd. 2. Public hearing; vote by local government governing body. Before a 
7.31    local government or agency acquires property by the exercise of the power of eminent 
7.32    domain, the local government must notify each affected property owner in writing of a 
8.1     public hearing on the proposed taking, post the public hearing information on the local 
8.2     government's Web site, if any, and publish notice of the public hearing in the official 
8.3     newspaper.  Notice must be provided at least 30 days but not more than 60 days before the 
8.4     hearing.  Any interested person must be allowed reasonable time to present testimony at 
8.5     the public hearing.  The proceedings of the hearing must be recorded and available to the 
8.6     public for review and comment at reasonable times and a reasonable place.  At the next 
8.7     regular meeting of the local government that is at least 30 days after the public hearing, the 
8.8     local government must vote on the question of whether to authorize the local government 
8.9     or agency to use eminent domain to acquire the property.
8.10        Subd. 3. Resolution. If the taking is for the mitigation of a blighted area, 
8.11    remediation of an environmentally contaminated area, reducing abandoned property, 
8.12    or removing a public nuisance, then the resolution of a local government or agency 
8.13    authorizing the use of eminent domain must:
8.14    (1) identify and describe the public costs and benefits that are known or expected 
8.15    to result from the program or project for which the property interest is proposed to be 
8.16    acquired; and
8.17    (2) address how the acquisition of the property interest serves one or more identified 
8.18    public uses or public purposes and why the acquisition of the property is needed to 
8.19    accomplish those purposes.

8.20        Sec. 14. [117.226] FIRST RIGHT OF REFUSAL.
8.21    (a) Notwithstanding section 161.23, 161.43, or 161.44, if the governing body of 
8.22    the condemning authority determines that publicly owned property acquired under this 
8.23    chapter has not been used and is no longer needed for a public use, the authority must 
8.24    offer to sell the property to the owner from whom it was acquired, if the former owner can 
8.25    be located, at the original price determined by the condemnation process or the current fair 
8.26    market value of the property, whichever is lower.
8.27    (b) If the former owner cannot be located after a due and diligent search or declines 
8.28    to repurchase the property, the attorney for the condemning authority shall prepare a 
8.29    certificate attesting to the same and record the certificate in the office of the county 
8.30    recorder or county registrar of titles, as appropriate, to evidence the termination of the 
8.31    right of first refusal. A recorded certificate to that effect is prima facie evidence that the 
8.32    right of first refusal has terminated.

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

9.11    LIMITED.
9.12    A road authority must not acquire property by eminent domain to establish a road 
9.13    for access to property unless it is landlocked or it can be shown that the road is necessary 
9.14    to mitigate ongoing safety concerns. A property that has no other access than over a 
9.15    navigable waterway is landlocked.

9.16        Sec. 17. REVISOR'S INSTRUCTION.
9.17    The revisor shall change the phrase "right of eminent domain" where found in 
9.18    Minnesota Statutes and Minnesota Rules to "power of eminent domain."

9.19        Sec. 18. EFFECTIVE DATE.
9.20    This act is effective the day following final enactment and applies to condemnation 
9.21    proceedings commenced on or after March 1, 2006.