The Best Class“The Last Class”

; nor shall private property be taken for public use without just compensation.”

The Process of Eminent Domain

Public Necessity and Just Compensation

Eminent Domain – Legal Theory

• Eminent Domain is an ancient power• It is the pre-eminent power of government• Assuming that all land and land rights devolve

from the King – the sovereign’s power extends to the re-possession of any land upon showing of a pubic necessity

• Under our 5th Amendment – “nor shall property be taken by the government except for a public purpose and upon payment of just compensation”

Blackstone On Property and Takings

• So great moreover is the regard of the law for private property, that it will not authorize the least violation of it; no, not even for the general good of the whole community. If a new road, for instance, were to be made through the grounds of a private person, it might perhaps be extensively beneficial to the public; but the law permits no man, or set of men, to do this without consent of the owner of the land. In vain may it be urged, that the good of the individual ought to yield to that of the community; for it would be dangerous to allow any private man, or even any public tribunal, to be the judge of this common good, and to decide whether it be expedient or no.

Blackstone II

• Besides, the public good is in nothing more essentially interested, than in the protection of every individual's private rights, as modeled by the municipal law

• In this, and similar cases the legislature alone can, and indeed frequently does, interpose, and compel the individual to acquiesce

• But how does it interpose and compel? Not by absolutely stripping the subject of his property in an arbitrary manner; but by giving him a full indemnification and equivalent for the injury thereby sustained. The public is now considered as an individual, treating with an individual for an exchange.

Blackstone

• All that the legislature does is to oblige the owner to alienate his possessions for a reasonable price; and even this is an exertion of power, which the legislature indulges with caution, and which nothing but the legislature can perform.

What Is Condemnation?

• The government may “take” in three ways:– Eminent Domain– Regulatory or Categorical Taking of All or Practically

All Value Related to Use– Inverse Condemnation – When the government, by

its actions, makes the use of private property untenable

• Airport Cases• Military Bases• Damage resulting from flooding or dam projects• A project which undermines nearby structural

foundations

What is Just Compensation

• Just compensation is based on value• Value can have many faces but “fair market

value” is the standard used in Eminent Domain

• This is classically define as “what a willing seller with take and a willing buyer offer”

• Justice Butler defined just compensation as:– “The owner is entitled to the full money equivalent

of the property taken, and thereby to be put in as good a position pecuniarily as he would have occupied, if the property had not been taken”

Value – The Principles

• Courts talk in terms of present market value and not future or speculative value unless the probability of such future value affects present value

• If the special adaptability of the land for the projected use creates a special demand by ordinary purchasers, this may be included in present value

• The market value is not all of the just compensation picture.

• It is only a payment for strict money value on a well define parcel

Damages And Value

• Consequential Damages– Term used to describe the personal injuries such as

the expense of moving, inconvenience, interruption of business, loss of good will and under rare circumstances, pain and suffering

– The major principle is that the owner should only be compensated for those things of value that cannot be taken with him

• Severance Damage– The damage resulting from diminution in market

value of the owner’s remainder – the relationship of the part to the whole

Public Purpose

• Public purpose is shown when the holder of a certificate of necessity demonstrates a compelling need (under their corporate purpose) to acquire real property to increase the benefit to the public in general

• Thus, there is a general benefit in:– Building roads– Supplying electrical power– Removing and redeveloping blighted areas– Creating flood control

Case Examples

Public Roads

SidewalksParking Lots

Riley v District of Columbia Redevelopment Corporation, 1956

• The District of Columbia instituted eminent domain against 45 parcels of land for the purpose of clearance for a public building

• Mrs. Riley was given 3 appraisals:– $6,500– $7,000– $6,200

• The jury returned an award of $7,000

This is A Case About Mrs. Riley

She is not the sharpest tack on the bulletin board

Background

•Mrs. Riley bought the house in 1951 for a total of $9,950

–She added $877 worth of improvements

•When it was seized in 1954 she owned a total of $8,902 for the mortgage•Thus the award was $3,800 less than the purchase price and about $1,900 less than her total investment•Mrs. Riley was ticked off and appealed the award

Appeals Court

• The Court begins by saying that just compensation means the full and perfect equivalent in money of the property taken

• The Court then examines two key questions:– The nature of the property in 1951– The nature of the purchase in 1951

• The Court found the house to be solidly built and in good condition for its 50 years of age

• Mrs. Riley purchased the home for her daughter and her elderly Mother – it was conveniently located within walking distance of the Civil Service where Mrs. Riley worked

• It was all she could afford

Can You See What’s Coming?

     

       

Real Estate and Appraisers

• A real estate agent testified for Mrs. Riley. He had sold a large amount of homes in the area for $10,000

• A neighbor purchased a home adjacent to Mrs. Riley in 1952 for $10,800

• The appraisers said the house was approximately 40 percent depreciated and could be built today for $9,355. It had no income producing properties

• The appraisers felt that the purchase price bore no relation to the fair value. She paid too much for it – almost stupidly excessive

And The Court

It is the ordinary rule that the burden of proof in a commendation case rests with the owner

But this is not ordinary

Mrs. Riley seeks nothing – the government here is taking her private property – her home

To take it is the highest form of power and requires the highest form of justice – unequivocal just compensation

God Strikes Down For Mrs. O’Reily

The Lone Ranger Rides Again

Inverse Condemnation and The Rule of Remnants

Martin v Port of Seattle, 1964

• In this case 196 property owners seek damages arising from inverse condemnation against the Seattle-Tacoma Airport

• The damage is from low altitude flights of jetliners over their property

• The essential legal question is whether the property owners actually have a claim for damage from the noise of aircraft

Background

• The property in question forms a rectangular area about one mile long and ½ mile wide directly south of the primary runway

• Jetliners in the process of landing pass over this area at approximately 500 feet in altitude

• Basic problems– Vibration is sufficient to throw dishes from shelves– Conversation is interrupted from noise– Sleep is disrupted, and the noise painful to many– Many cannot sell their homes

Primary Runway

The Airport Responds

• Congress has placed all navigable airspace within the public domain

• The damage is incidental and does not constitute a physical invasion

• At most, it damages but does not take the property

• If a property owner can prove a diminution of value we should pay for that increment only – not be required to take the entire property

The Trial Court

• The trail court found that the interference amounted to a physical invasion of the air easement and constituted an inverse commendation

• When the noise and vibration deprives the land owner of an essential element of their land the result should be the same as if the airport operator brings the condemnation of the property

Appeals Court

• This is no different that it would be if the land in question would have been condemned by the State when the airport land was acquired

• If the damage is slight – then an owner should be entitled to payment for the increment of diminishment of enjoyment – even a slight burden must be paid

• If the damage is substantial, then the owner should be entitled to full and perfect recovery of property under formal condemnation

Remnants

City of Crookstown v Erickson Minn. 1955

• The City condemned land for a sewerage treatment plant, discharge system, and administration building from a Mr. Erickson

• They did not take all the land Erickson owned and left a remnant of 1.3 acre plus the house

• Erickson appealed the judgment and claimed that the contemplated use would damage his remainder

The Erickson Tract Taking

Area of Taking Formerly Erickson Tract

Erickson House

Erickson Tract Remainder

Sewer Plant Office

Waste Water Treatment Plant

Appeals Court

• The Court sets out important rules in this case– When no part of an owner’s land is taken, and the

use of adjoining land causes damage, the damage is not compensable unless it is peculiar to the adjoining land and not the type suffered by the public in general

– Where there is a partial taking, the injured owner is required to show damage peculiar to the remaining property and this becomes part of the compensation

– When the use of the land taken constitutes and integral and inseparable part of the single use, the government will be required to take the entire whole

Why Not Future Value?

• In Board of Education v Baczewski (1992) a Michigan School District condemned 110 acres of land for a future school

• The Board admits that it may continue to use the present High School for another 30 years

• It admits that it took the land to save money because of increased prices in the future

• Should the Board have paid on future value rather than current fair market value?

Court Rule

• School Board officials would not have been performing their duties had they waited for the present school to deteriorate before they purchased land

• Fair market value is all that is required

Eminent Domain: An Analysis of Kelo v. New

London

“For violent fires soon burn out themselves.” Source: W Shakespeare; The Tragedy of King Richard the Second (Gaunt at II, i)

Outline

• Background• Analysis• Implications• Conclusion

Eminent Domain

• Defined by Webster's as the right of the government to take property from a private owner for public use by virtue of the superior dominion of its sovereignty over all lands within its jurisdiction

Background

• New London is in a long economic recession • Kelo purchased a house in the Fort Trumbull

neighborhood• Pfizer builds a multimillion dollar research facility

adjacent to the neighborhood• New London Development Corporation, a private, non-

profit organization, is reactivated• The City of New London calls for complete

redevelopment of the entire deactivated Fort Trumbell Area – housing; parks; businesses

The Actions

• After the development plan was approved by the city, the NLDC began negotiations with the landowners of the area for the purchase of their property

• The development area consists of 115 parcels in addition to the 32 acres of land formerly occupied by the U.S. Naval base.

Background

• NLDC plans a mixed use development with a high end hotel, condos, and retail development

• Area contains approximately• Of the115 privately owned parcels, 15 parcels

are owned by the seven petitioners who are unwilling to sell

• City of New London initiates condemnation at the request of the NLDC

Suzette Kelo et al Take Exception

"There is no amount of money that could replace our homes and our memories. This is where we chose to settle, and this is where we want to stay. This is America, the home of the free, isn't it?”

Brief of the Petitioners

• Want a bright line rule prohibiting eminent domain for economic development

• Condemnation was unconstitutional• Economic development is not a valid public

use under the Fifth Amendment• Affirming the condemnations will promote

more cities to condemn property

Brief of the Petitioners

• Argues that the use of eminent domain amounts subsidizing private projects

• Relies on their interpretation of Berman and Midkiff in their arguments

• Want a “reasonable certainty” of success for any property condemned

Brief of the Respondents

• Court should adhere to its deference to legislatures and hold that economic development constitutes a public use

• Exercise of eminent domain authority by the respondents in this case satisfies the public use requirement

• Courts opinion in Berman and Midkiff validate the condemnation

Brief of the Respondents

• Economic development constitutes a public use because it is rationally related to a conceivable public purpose

• Respondents feel that there is no need for greater oversight on the part of the judiciary

Opinion of the Court

• Court ruled for the respondent by a 5-4 margin• The court upheld the ruling that the proposed

development was a public use within the takings clause. – NLDC had a carefully formulated development plan– Area was judged to be sufficiently distressed to

justify economic rejuvenation– Economic development is a governmental function

that cannot be separated from other functions

Opinion of the Court

• Supreme Court ruled that economic development constitutes a public use

• Consequently, eminent domain can be used to assemble parcels and eliminate holdouts

• Court reminded the parties that individual states can enact legislation either prohibiting or allowing eminent domain for economic development

Implications

• The use of eminent domain as a major tool for public/private alliances in local economic development

• State and Federal legislation prohibiting eminent domain for economic development

• Pending legislation that will limit or prohibit the powers of condemnation.

Comment/Observations

• Berman v Parker, 1954– n 1945, the United States Congress passed the

District of Columbia Redevelopment Act of 1945 to address the vast blighted area found in the District of Columbia

– The Act created a commission of five members called the District of Columbia Redevelopment Land Agency and granted it the power to redevelop blighted areas and eliminate any "blighting factors or causes of blight." The act granted the Agency the power of eminent domain if necessary

Findings

– After five years of planning, the Planning Commission published its results and determined that in one blighted area, [Area B] "64.3% of the dwellings were beyond repair, 18.4% needed major repairs, only 17.3% were satisfactory; 57.8% of the dwellings had outside toilets, 60.3% had no baths, 29.6% lacked electricity, 82.2% had no wash basins or laundry tubs, 83.8% lacked central heating

– “The population of Area B amounted to 5,012 persons, of whom 97.5% were Negroes”

The Supreme Court Weighs In

• Justice Douglas– We do not sit to determine whether a particular housing

project is or is not desirable. The concept of the public welfare is broad and inclusive. The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is within the power of the legislature to determine that the community should be beautiful as well as healthy, spacious as well as clean, well-balanced as well as carefully patrolled. In the present case, the Congress and its authorized agencies have made determinations that take into account a wide variety of values. It is not for us to reappraise them. If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.

And

• On public use– Here one of the means chosen is the use of private enterprise

for redevelopment of the area. Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman. But the means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established.

– The public end may be as well or better served through an agency of private enterprise than through a department of government - or so the Congress might conclude. We cannot say that public ownership is the sole method of promoting the public purposes of community redevelopment projects. What we have said also disposes of any contention concerning the fact that certain property owners in the area may be permitted to repurchase their properties for redevelopment in harmony with the over-all plan. That, too, is a legitimate means which Congress and its agencies may adopt, if they choose

Actions

– The Commission's plans made "detailed provisions for the types of dwelling units and provides that at least one-third of them are to be low-rent housing with a maximum rental of $17 per room per month." The Commission then held a public hearing, after which the plan was approved

– After approval of the plan, owners of a department store in the area designated to be redeveloped brought suit to the court. The landowners claimed that because the department store itself was not blighted, its redevelopment was not necessary and would not constitute a public use. The owners further argued that taking the land under eminent domain and giving it to redevelopers amounted to "a taking from one businessman for the benefit of another businessman

Berman’s – 704 S.W. 4th Washington DC

Conclusion

• TAKE HOME POINTS• Coverage by popular media is incomplete• Given the precedent set in Berman and

Midkiff, the decision was predictable• Eminent domain for economic development is

constitutionally valid• State Legislatures are free to do as they wish

Questions? Comments?