The Ramifications of Post-Kelo Legislation on State Transportation Projects (2012)

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22 Georgia and Ohio,252 7 years in South Dakota,253 or 10 years in Florida and Wyoming.254 For example, in Alabama, if the property that was condemned is not used for the purpose for which it was condemned or for some other public use and is to be sold, the property must be offered first to the person from whom the property was taken or his or her heirs or assigns at the price the condemnor was paid for the property, less whatever amount the former owner can show was paid in income and transaction taxes in con- nection with the property.255 If the offer is not accepted within 90 days the property may be sold to any other person after notice at a public sale.256 In Georgia, [i]f property acquired through the power of eminent do- main from an owner fails to be put to a public use within five years, the former property owner may apply to the condemnor or its successor or assign for reconveyance or quitclaim of the property to the former property owner or for additional compensation for such property….257 In Minnesota, [t]he offer must be at the original price determined by the condemnation process or the current fair market value of the property, whichever is lower, except to the extent that a different value is required for a property interest ob- tained with federal highway funding under United States Code, title 23, or transit funding under United States Code, title 49.258 In Ohio, if 5 years have not elapsed since the prop- erty was appropriated, and the agency decides not to use the property for the stated purpose, “the prior owner…may repurchase the property for its fair market value as determined by an independent appraisal….”259 However, the prior owner’s right of repurchase is extin- guished in several situations, including when “[a] plan, 252 GA. CODE ANN. § 22-1-2(c)(1); OHIO REV. CODE ANN. § 163.211(E). 253 S.D. CODIFIED LAWS § 11-7-22.2 (prohibiting any trans- fer of the property acquired by the threat or use of eminent domain within 7 years of acquisition to any private person, nongovernmental entity, or public-private business entity without first offering to sell the property to the person who originally owned it or to the person's heirs or assigns at the property’s current fair market value or at the original transfer value, whichever is less.) 254 FLA. STAT. ANN. § 73.013(b)(2) (10 years or less); WYO. STAT. § 1-26-801(d) (stating that if a public entity fails to make substantial use of the property for a period of 10 years there is a rebuttable presumption that the property is no longer needed for a public purpose and the previous owner or his successor may apply to the court to request that the property be returned to the previous owner or his successor upon repayment of the amount originally received for the property in the condemna- tion action). 255 ALA. CODE § 11-47-170(c); see also ALA. CODE § 11-80- 1(c). 256 Id. § 11-47-170(c); see also id. § 11-80-1(c). 257 GA. CODE ANN. § 22-1-2(c)(1). 258 MINN. STAT. 117.226(a). 259 OHIO REV. CODE ANN. §§ 163.211 and 163.211(E). contract, or arrangement is authorized that commences an urban renewal project that includes the property” or when “[t]he agency grants or transfers the property to any other person or agency.”260 Finally, as was discussed in Section IV.C of the di- gest, under some state laws when eminent domain was used and the property acquired was conveyed as a con- sequence thereof to a person or private entity, after the passage of a certain period of time, the property may be transferred to another person or private entity.261 For example, in Florida, if 10 years have elapsed since the condemning authority acquired title to the property and the property was conveyed to a natural person or pri- vate entity, “the property may subsequently be trans- ferred, after public notice and competitive bidding unless otherwise provided by general law, to another natural person or private entity without restriction.”262 VIII. POST-KELO REFORMS AND PRETEXTUAL TAKINGS Prior to Kelo, some takings were challenged success- fully on the basis that the stated public purpose for the project was pretextual.263 The Kelo Court held that a local government is prohibited from taking “property under the mere pretext of a public purpose[] when its actual purpose [is] to bestow a private benefit.”264 As one source states, Kelo imposes a substantive limitation on the use of emi- nent domain…. According to the Kelo Court, the Public Use Clause not only prohibits a government actor from taking the private property of one citizen for the personal benefit of another, but also prohibits the taking of private property under the pretext of public purposes when the actual purpose is to bestow a private benefit.265 The post-Kelo reforms in some states prohibit pretex- tual takings. The burden of proof is on the owner to 260 Id. §§ 163.211(C) and (D). 261 FLA. STAT. ANN. § 73.013(2)(a) (after 10 years); GA. CODE ANN. § 22-1-2(b) (20 years); INDIANA CODE § 32-24-4.5-1(c) (chapter inapplicable after 30 years from the acquisition of the real property); LA. CONST. art. I, § 4(H)(1) (no restriction after 30 years have elapsed). 262 FLA. STAT. ANN. § 73.013(2)(a). 263 Blais, supra note 2, at 668 (citing Se. Ill. Dev. Auth. v. Nat’l City Envtl. L.C.C., 199 Ill. 2d 225, 768 N.E.2d 1, 10–11 (2002) (invalidating a quick-take condemnation to expand the parking lot of an adjacent business and holding that the court did not “require a bright-line test to find that this taking be- stows a purely private benefit and lacks a showing of a sup- porting legislative purpose”), cert. denied, 2002 U.S. LEXIS 6453 (U.S. Oct. 7, 2002); Casino Reinvestment Dev. Auth. v. Banin, 320 N.J. Super. 342, 727 A.2d 102, 111 (1998) (rejecting proposed condemnation of private land for transfer to a casino developer to hold for future development when “the primary interest served here is a private rather than a public one,” because the developer’s future uses of the property were unre- stricted)). 264 Kelo, 545 U.S. 469, 478. 265 Blais, supra note 2, at 670 (footnotes omitted).

23 prove that a taking is pretextual.266 In Idaho, eminent domain may not be used to take private property for an “alleged public use which is merely a pretext for the transfer of the condemned property or any interest in that property to a private party.”267 Elsewhere, states have declared that a public use does not include a tak- ing “that is a pretext to confer a private benefit on a known or unknown private entity.”268 In a condemna- tion proceeding in Virginia, a “property owner may challenge whether…the stated public use is a pretext for an unauthorized use….”269 Since Kelo, several courts have considered a chal- lenge to a taking on the basis that it was pretextual.270 In a case decided by the Supreme Court of Hawaii, the property being condemned was to be transferred from one private party to another private party, but with a bypass to be dedicated to the county after completion.271 The county sought to condemn property belonging to the C&J Coupe Family Ltd. Partnership for use as the bypass, which was to be built by Oceanside Partners, a development company, through an agreement with the county. The court addressed the question of whether the use of eminent domain to take property to build a road is always a public use. Two condemnations were in dispute. The first con- demnation had been dismissed, but the second condem- nation had been allowed. The court observed that under the Hawaii Constitution the courts could consider the validity of the public purpose that had been asserted in the condemnation proceeding.272 Although a pretext claim may not be based “‘on mere suspicion,’”273 the court stated that “the character of the proposed public use, i.e., a public road, is itself strong evidence mitigat- ing in favor of the presumption of validity. Indisputa- bly, public roads have long been recognized as a public purpose for which private property may be con- demned.”274 The county’s resolution was prima facie evidence of the bypass’s public purpose; nevertheless, the resolu- tion “need not be taken at face value where there is evidence that the stated purpose might be pretex- 266 Nedzel, supra note 51, at 1007. 267 IDAHO CODE ANN. § 7-701A(2)(a). 268 MICH. COMP. LAWS § 213.23, § 3(6). See also TEX. GOV’T CODE ANN. § 2206.001(B)(2) (similar). 269 VA. CODE ANN. § 1-219.1(E). 270 R.I. Dev. Corp. v. The Parking Co., LP, 892 A.2d 87 (R.I. 2006); 49 WB, LLC v. Village of Haverstraw, 44 A.D. 3d 226, 243, 839 N.Y.S.2d 127, 141 (N.Y. App. 2d Dep’t 2007); Franco v. Nat’l Cap. Revitalization Corp., 930 A.2d 160, 168 (D.C. App. 2007) (condemnee not precluded from demonstrating that the stated reason for a condemnation was pretextual). 271 County of Hawai’i v. C&J Coupe Family Ltd. P’ship, 119 Haw. 352, 376 and n.28, 198 P.3d 615, 639 and n.28 (2008). 272 Id. at 375, 198 P.3d at 638. 273 Id. at 379, 198 P.3d at 642 (quoting Goldstein v. Pataki, 516 F.3d 50, 62 (2d Cir. 2008)). 274 Id. at 380, n.32, 198 P.3d at 643 n.32 (citations omitted). tual.”275 The fact that a project involves a “‘road does not per se make it a public road.’”276 The court re- manded the case for a determination of whether the second condemnation was for a public purpose and not pretextual.277 In a later proceeding, the Supreme Court of Hawaii affirmed the circuit court’s conclusion that the second condemnation was not pretextual, upheld the circuit court’s determination of just compensation for the property, and affirmed the lower court’s denial of Coupe’s request for prejudgment interest.278 The court remanded for a decision on Coupe’s request for attorney’s fees associated with the preparation of billing records and Coupe’s fee petitions in connection with the first condemnation. Although not involving a post-Kelo reform, a taking was held not to be pretextual in a New York case.279 The court rejected a claim that the town’s condemnation of property to preserve it as farmland did not serve a pub- lic purpose but was a pretext to confer benefits on pri- vate persons. The court held that “the mere fact that [the] condemnation will provide incidental benefits to private individuals does not invalidate the condemnor’s determination as long as the public purpose is domi- nant….”280 Moreover, “the possibility that the Town may sell or lease the land to a farmer does not make the proposed condemnation a pretext for improperly confer- ring a private benefit.”281 Although not involving a highway or a post-Kelo change in the law, a New Jersey court remanded a case in which the property owner alleged that the township’s taking to preserve open space near an airport was pre- textual. The property owner claimed that the condem- nation’s “true purpose [was] to exert unlawful, de facto zoning control over airport operations.”282 The court, citing the Kelo decision and other authority,283 re- manded the case because “the objective factors sur- rounding the township’s adoption of the condemnation ordinance impugn[ed] its validity.”284 The court agreed that there was a public purpose for some aspects of the taking,285 but held that “the decision to condemn devel- opment rights to the airport was tainted by the Town- 275 Id. at 381, 198 P.3d at 644 (citation omitted). 276 Id. at 380, 198 P.3d at 643 (citation omitted). 277 Id. at 389, 198 P.3d at 652 (citation omitted). 278 County of Hawaii v. C&J Coupe Family Ltd. P’ship, 124 Haw. 281, 284, 242 P.3d 1136, 1139 (2010). 279 Aspen Creek Estates, Ltd. v. Town of Brookhaven, 47 A.D. 3d 267, 268, 848 N.Y.S.2d 214, 215 (N.Y. App. 2d Dep’t 2007). 280 Id. at 275, 848 N.Y.S.2d at 220 (citations omitted). 281 Id. at 277, 848 N.Y.S.2d at 222. 282 Township of Readington v. Solberg Aviation Co., 409 N.J. Super. 282, 308, 976 A.2d 1100, 1115 (N.J. App. 2009). 283 Riggs v. Township of Long Beach, 109 N.J. 601, 538 A.2d 808 (1988). 284 Township of Readington, 409 N.J. Super. at 312, 976 A.2d at 1117. 285 Id. at 316, 976 A.2d at 1120.