CONDEMNATION LAW - 2006

What’s New?

Raymond O. Howd,

Assistant Attorney General

Significant Activity

Ballot Proposal to Amend Art 10, Sec 2 Implementing Legislation HB 5060 Amendments to UCPA

HB 5817 (MCL 213.352) HB 5818 (MCL 213.66) HB 5819 (MCL 213.59) HB 5820 (MCL 213.58) HB 5821 (MCL 213.55)

MDOT V Tomkins MDOT V Weaver MDOT V Frankenlust Lutheran

Background

The Hathcock Decision

The Kelo Decision

Eminent Domain: National Hot Issue

Michigan Legislature Responds

Art 10, Sec 2 (Now)

Private property shall not be taken for public use without just compensation therefor being first made or secured in a manner prescribed by law. Compensation shall be determined in proceedings in a court of record.

As Amended: Proposal 06-4

Private property shall not be taken for public use without just compensation therefore being first made or secured in a manner prescribed by law. If private property consisting of an individual’s principal residence is taken for public use, the amount of compensation made and determined for that taking shall be not less than 125% of that property’s fair market value, in addition to any other reimbursement allowed by law. Compensation shall be determined in proceedings in a court of record.

“Public use” does not include the taking of private property for transfer to a private entity for the purpose of economic development or enhancement of tax revenues. Private property otherwise may be taken for reasons of public use as that term is understood on the effective date of the amendment to this constitution that added this paragraph.

Proposal 06-4 (continued)

In a condemnation action, the burden of proof is on the condemning authority to demonstrate, by the preponderance of the evidence, that the taking of a private property is for a public use, unless the condemnation action involves a taking for the eradication of blight, in which case the burden of proof is on the condemning authority to demonstrate by clear and convincing evidence, that the taking of that property is for a public use.

Any existing right, grant, or benefit afforded to property owners as of November 1, 2005, whether provided by this section, by statute, or otherwise, shall be preserved and shall not be abrogated or impaired by the constitutional amendment that added this paragraph.

A PROPOSED CONSTITUTIONAL AMENDMENT TO PROHIBIT GOVERNMENT FROM TAKING PRIVATE PROPERTY BY EMINENT DOMAIN FOR CERTAIN PRIVATE PURPOSES

The proposed constitutional amendment would:

Prohibit government from taking private property for transfer to another private individual or business for purposes of economic development or increasing tax revenue.

Provide that if an individual’s principal residence is taken by government for public use, the individual must be paid at least 125% of property’s fair market value.

Require government that takes a private property to demonstrate that the taking is for a public use; if taken to eliminate blight, require a higher standard of proof to demonstrate that the taking of that property is for a public use.

Preserve existing rights of property owners.

Should this proposal be adopted?

HB 5060 (2006 PA 367)

Implements Constitutional Amendment - Authority to Condemn

Deletes reference to “Public Purpose” and “Benefit of the Public”

Replaces with “Public Improvement” or “Public Use”

HB 5060

Adopts Standards from Hathcock : Necessity of Taking for Public Use

Prohibits Transfer to Private Entity for Economic Development or Enhancement of Tax Revenue

HB 5060

Burden of Proof

Old: Agency decision binding on the court

New: Agency must prove by a Preponderance of

Evidence

Blight - Clear and Convincing Evidence

HB 5060

Individual’s Principal Residence - Not Less than 125% of FMV

Principal residential structure must actually be taken OR

Remaining contiguous property less than minimum lot size under zoning ordinance

HB 5060

Existing rights, grants, or benefits afforded property owners preserved and shall not be abrogated

Defines Blighted Property

Effective Dec 23, 2006

HB 5817 (2006 PA 369)

Amends MCL 213.352 Moving AllowanceRaises allowance from $1000 to $5200Residential Leasehold Occupant Less

than 6 Months Can Elect Fixed Moving Allowance of $3500

Attorney Fees for Successful Action to Recover Fixed Payment or Allowance

Federal Regs Trump Any Conflicts

HB 5818 (2006 PA 370)

Amends MCL 213.66 Attorney Fees for Unsuccessful

Necessity Challenges: Involving Relocation of Indigent Person Challenge Must Be Reasonable & Good

FaithDoes Not Apply to “Government–Owned”

Transportation Projects

HB 5819 (2006 PA 371)

Amends MCL 213.59EJC Payment 30 days Before

DispossessionDisputes Resolved at Apportionment

Hearing Before DispossessionResidential Occupant has 180 days after

Payment of Moving Expenses to RelocateFed Relocation Regs Take Precedence

HB 5820 (2006 PA 438) Effective Dec 23, 2006

No Escrow of Environmental Remediation Costs for Owner’s Principal Residence:

- Principal residential structure actually taken

- Remaining contiguous property less than minimum lot size under zoning ordinance

HB 5821 (2006 PA 439) Amends MCL 213.55

If Taking Might Require Relocation, Agency to Provide Written NoticeOutline Occupant’s Legal RightsLeasehold Interest Less than 6 MonthsResidential Occupant Can’t be Displaced

Until After Moving Expenses/Allowance PaidReasonable Opportunity to Relocate (180 Days)Fed Regs Trump [HB 5817 MCL 213.352(4)]Comparable Replacement Dwelling 49 CFR 24.2

2006 PA 439

If Owner Believes Agency Did Not Include “1 or More Items of Compensable Property or Damage” (Deleted)

Replaced by “ If Owner Claims the Agency is Taking Property Other Than the Property Described in the GFO” or “Damage Caused by the Taking, Apart From the Value of the Property Taken, and Not Described in the GFO”

Owner Shall File Claim

2006 PA 439

Claim Must State Nature and Substance of Property or Damage (Sufficient Detail)

180 Days After Complaint Served or Later By Court for Reasonable Cause

Owner’ Appraisal May Serve As Written Claim if Timely

Claims Barred if Not Timely

2006 PA 439

Appraisal Exchange Within 90 Days After Expiration of Claim Deadline or Later by Court For Reasonable Cause

If Agency Believes Information Insufficient May Request Additional Info From Owner If Info Not Provided, May Ask Court to Compel Failure to Provide After Court Order

Court May Assess Sanctions, Bar Claim Court May Consider in Determining Attorney Fees

2006 PA 439

Claim Not Fully Accrued or Continuing in Nature Information Then Reasonably Available Continuing Duty to Supplement as Info Becomes

Available Cutoff to Supplement: 90 Days Before Trial Reasonable Discovery Until 30 Days Before Trial Court Extensions for Reasonable Cause Sanctions-Failure to Provide Supplementary Info(Same as if Failure to Comply with Court-Ordered

Additional Information)

2006 PA 439

New GFO if Claims Accepted by Agency (No time Limit Specified)

Sum of GFO for Written Claims or Disclosed in Discovery Plus Original GFO is Basis for Attorney Fee (2 Separate GFO’s)

Residential Tenant Leasehold Less Than 6 Months - Not a Compensable Claim

2006 PA 439

Principal Residence-Agency Required to Pay Loss of Homestead Exemption

Additional Amount Part of EJC Escrow - Should be Part of GFO:Subtract Taxable Value From SEVMultiply by Total Property Tax MillageMultiply that Amount by Number of Years

Owner has Owned Principal Residence Up To 5 Years

MDOT V Tomkins (On Appeal to Mi Supreme Court)

Court of Appeals Holds MCL 213.70(2) Unconstitutional:

(2) The general effects of a project for which property is taken, whether actual or anticipated, that in varying degrees are experienced by the general public or by property owners from whom no property is taken, shall not be considered in determining just compensation.

MDOT V Tomkins

Just Comp Takes Into Account all Factors Relevant to Value

Just Comp in Inverse Condemnation Cases Different than Just Comp in Partial Takings- Spiek Inapplicable

If Taking for Kenowa Overpass was “Integral and Inseparable” Part of M-6, Jury Can Consider General Project Effects

MDOT V Weaver (Supreme Court Declined to Consider)

Subdivision Development Approach to Determine Just Compensation of Vacant Land

2-1 Decision Allowing Use- Based On Prior Approval of Income Capitalization Approach in Norton Shores Billboard Leases

Dissent Finds Use of SDA to Value Vacant Land Impermissible As Matter of Law

MDOT V Frankenlust Lutheran

MDOT Can Use a Different Update Appraiser

MDOT Not Bound By the Original GFO As Admission of Value

But If Lower EJC On Update - Owner May Present Evidence of Higher GFO To Rebut the Lower EJC at Trial