Senate Eminent Domain Bill SF 2750 As passed by the Senate. House Eminent Domain Bill HF 2846/SF 2750* As passed by the House.

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1 Scope Preemption. Provides that Minn. Stat. Chapter 117 preempts all other laws, including special laws, home rule charters, and other statutes, that provide eminent domain powers. Public service corporation exception. Provides that the new appraisal and negotiation requirements, the notice requirement regarding an appeal of an order, and the attorney fees, going concern, minimum compensation, limitations, and reestablishment reimbursement provisions do not apply to public service corporations. Provides that appraisal fees may not exceed $500. Prohibition on extraterritorial use. Prohibits the use of eminent domain outside the condemning authority s jurisdiction unless the jurisdiction in which the property is located consents to the condemnation. Public service corporation exception. Provides that the extraterritorial use, attorney fees, going concern, minimum compensation, and limitations provisions do not apply to public service corporations. Public use Limits eminent domain for a public use. Defines public use as: 1) traditional public uses such as roads and parks; 2) the creation or functioning of a public service corporation; 3) mitigation of blighted areas, remediation of environmentally contaminated areas, reduction of abandoned property and removal of public nuisances; or 4) the provision of physical or financial assistance to a governmental unit or nonprofit organization that provides emergency shelter and services for homeless persons in a 1 st class city. Limits eminent domain for a public use. Defines public use as: 1) traditional public uses such as roads and parks; 2) the creation or functioning of a public service corporation; or 3) mitigation of blighted areas, remediation of environmentally contaminated areas, reduction of abandoned property and removal of public nuisances. Economic development Blight Prohibits the use of eminent domain solely for economic development purposes. The public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health are not by themselves a public use. Provides new standards for determining blight. Defines blighted area as an area that is zoned and used for urban use and where more than 50% of the buildings are structurally substandard. Defines structurally substandard as a building that meets the following requirements: 1) inspected and cited for enforceable housing, maintenance, or building code violations; 2) cited violations have not been remedied after two notices to cure noncompliance; and 3) the cost to cure the violations is more than 50% of the assessor s taxable market value for the building; or a building is unsafe or lacking in basic equipment. Access to property. Authorizes a local government to gain access to inspect a building upon showing of probable cause that the building is structurally substandard. Prohibits the use of eminent domain solely for economic development purposes. The public benefits of economic development, except necessary and required public services, including an increase in tax base, tax revenues, employment, or general economic health are not by themselves a public use. Provides new standards for determining blight. Defines blighted area as an area that, at the time of condemnation, is in urban use and where more than 50% of the buildings are dilapidated. Defines dilapidated building as a building that was inspected and cited for building code violations at least 12 months before the condemnation began, in which violations have not been remedied after one reinspection, and that, as of the date of the condemnation action, is structurally substandard. Defines structurally substandard as building code violations related to specific structural aspects of the building (i.e. roof, support walls and beams, foundation, internal utilities, etc.). Provides that a building is not structurally substandard if the estimated cost to correct the violations does not exceed 50% of the estimated market value for the building. Access to property. Authorizes a local government to seek a search warrant to gain access to inspect a building based on a showing of probable cause that a code violation has occurred, that the violation has not been cured, and that the owner has denied the local government access to the property.

2 Contamination Abandoned property Assemblage Standard of Review Appraisal and negotiation Public notice and hearing First right of refusal Provides new standards for determining contamination. Defines environmentally contaminated area as an area where more than 50% of the parcels contain contamination and for which the estimated costs of investigation, monitoring and testing, and remediation are more than the estimated market value of the parcel. Provides new standards for determining abandoned property. Defines abandoned property as property that is: 1) unoccupied or unused for 1 year; 2) not maintained; and 3) for which taxes have not been paid for the previous 2 years. Provides limited ability to assemble property. Prohibits the taking of nonstructurally substandard buildings or non-contaminated parcels unless there is no feasible alternative and all possible steps are taken to minimize the taking of non-structurally substandard buildings or non-contaminated parcels. Imposes a preponderance of evidence standard for certain eminent domain acquisitions. Takings to mitigate a blighted area, remediate an environmentally contaminated area, reduce abandoned property and remove a public nuisance require a preponderance of evidence showing if challenged in court. Provides that a court order approving the public purpose, necessity, and authority for a taking is final unless an appeal is brought within 60 days. Modifies appraisal and negotiation requirements. Extends the appraisal and negotiation requirements that currently apply to transportation purposes to all acquisitions. Requires the exchange of appraisals. Increases appraisal reimbursement to $5000 for non-residential property. Provides that an appraisal must not be used or considered in a condemnation commissioners' hearing unless a copy of the appraiser's written report was provided to the opposing party at least five days before the hearing. Establishes new public notice and hearing requirements. Requires public notice and hearing for all acquisitions. Requires approval by the local elected governing body at a subsequent meeting that is at least 30 days after the public hearing. Also requires the resolution for a taking to mitigate blight, reduce abandoned property, remediate environmental contamination, or remove a public nuisance to identify the public costs and benefits known or expected from the project, and address how the acquisition serves a public use and why the property is needed. Provides for first right of refusal. If a determination is made that the property has not been used and is no longer needed for a public use, the authority must offer to sell the property to the original owner at the original price or the current fair market value, whichever is lower. Provides new standards for determining abandoned property. Defines abandoned property as property that is not occupied or used for any commercial or residential purpose and for which the condemning authority cannot locate the owner. Imposes a clear and convincing evidence standard for certain eminent domain acquisitions. Takings to mitigate a blighted area, remediate an environmentally contaminated area, reduce abandoned property and remove a public nuisance require a clear and convincing evidence showing if challenged in court. Provides for first right of refusal. If a determination is made that the property has not been used and is no longer needed for a public use, the authority must offer to sell the property to the original owner at the original price or the current fair market value, whichever is lower. Exempts MnDOT acquisitions from this provision.

3 Relocation assistance Attorney fees Going concern Requires payment of a property owner s attorney fees in certain circumstances. If the final award is 20% greater than the last written offer made by the condemning authority before filing a condemnation petition, the condemning authority must pay the property owners attorney fees. Also provides payment of attorney fees if a property owner successfully challenges public purpose. Increase in market value. Adjusts the acquiring authority s last written offer of compensation by the rate of appreciation of similar property in the city or town if 3 months or more pass from the date of the last written offer and the filing of the petition. Exception for strip takings. Provides an exception for strip takings if the damages do not exceed $25,000. Requires the property owner to prove damages. Requires compensation for a business owner s loss of going concern if the owner establishes that the business has been destroyed as a result of the taking. Requires compensation for the loss of productive value of agricultural property. If a condemnation involves agricultural property, the owner must be compensated for the loss of the productive value of the agricultural property for at least 5 years after the commencement of the eminent domain proceedings. Procedure. Provides that the condemnation commissioners shall determine going concern damages. Requires the owner to notify the condemning authority of the owner s intent to claim compensation for going concern within 60 days of the first hearing before the court. Requires that an administrative law judge determine relocation assistance in certain cases. Requires an acquiring authority to initiate contested case proceedings to determine relocation assistance if a displaced property owner does not accept the acquiring authority s offer. Provides that the administrative law judge s determination of the amount of relocation assistance constitutes a final decision, and that the acquiring authority must pay all costs of the proceedings. Requires payment of a property owner s attorney fees in certain circumstances. If the final award is 20% greater than the last written offer made by the condemning authority before filing a condemnation petition, the condemning authority must pay the property owners attorney fees. Also provides payment of attorney fees if a property owner successfully challenges public purpose. Determination of damages. Requires that the final judgment or award of damages shall be determined as of the date of taking. Exception for strip takings. Provides that attorney fees shall not be awarded if the final judgment or award of damages does not exceed $5,000. Requires the condemning authority to prove that a property owner has not suffered damages. Requires compensation for loss of going concern unless the condemning authority proves by clear and convincing evidence that the owner is not entitled to this compensation. Use of business valuation appraisal. Provides that an appraisal of the going concern must not be used or considered in a condemnation commissioner s hearing unless a copy of the appraiser s written report is provided to the opposing party at least 5 days before the hearing.

4 Inverse condemnation Other compensation Provides additional reimbursement for business re-establishment expenses. Requires an acquiring authority to reimburse up to $50,000 in reestablishment expenses to displaced businesses. Provides minimum compensation to property owners. Requires that the amount of damages payable must be sufficient to purchase a comparable property in the community and not less than the condemning authority s quick take deposit. Requires compensation for removal of a legal non-conforming use. Requires a local government to compensate the owner of a nonconforming use if the local government requires its removal as a condition of granting a permit, license, or other approval for a use, structure, development or activity. Requires compensation for loss of access. Requires compensation if a governmental entity permanently eliminates more than 51 percent of driveway access to a place of business, resulting in loss of revenues of 51 percent or more. Requires the claim to be made within one year of completion of the project causing the loss of access. Provides that compensation cannot exceed the difference between three years of revenues and costs of goods sold. [NOTE: Part of going concern section.] Requires compensation if a local government provides municipal solid waste collection or limits the number of private operators. Allows a person to bring an action to compel a political subdivision to commence condemnation proceedings if the political subdivision provides municipal solid waste collection services previously provided by private persons, or limits the number of private persons permitted to provide solid waste collection services in a manner that prevents a company currently operating in the community from continuing to do so. Limitations. Provides that a person may not bring an inverse condemnation action if the person provides solid waste collection services to the political subdivision under a contract, and the political subdivision does not renew the contract. Also provides that a person cannot bring an action if the political subdivision prohibits a person from providing solid waste collection services because the person engaged in criminal or fraudulent acts. Requires compensation for removal of a legal non-conforming use. Requires a local government to compensate the owner of a nonconforming use if the local government requires its removal as a condition of granting a permit, license, or other approval for a use, structure, development or activity. Provides that this section does not apply to regulations relating to adult uses. Requires compensation for historic preservation designations that reduce a property s fair market value. Provides that an historic preservation designation adopted on or after August 1, 2002 that reduced a property s fair market value or interferes with the owner s use and enjoyment of the property is a regulatory taking that requires payment of just compensation. Requires compensation for loss of access. Requires compensation if a governmental entity permanently eliminates more than 51 percent of driveway access to a place of business, resulting in loss of revenues of 51 percent or more. Requires the claim to be made within one year of completion of the project causing the loss of access. Provides that compensation cannot exceed the difference between two years of revenues and costs of goods sold.

5 Access to private property Nonconforming lots in common ownership Effective date- TIF transition rules Provides transition rules for certain TIF plans and projects financed with abatement. The bill is effective the day following final enactment, but grandfathers in the following actions by a condemning authority: 1) The municipality has approved a TIF plan before April 1, 2006 and a developer has acquired property by June 1, 2006 pursuant to a contractual agreement with the condemning authority to condemn property, or the condemning authority has issued, sold or entered into a binding agreement to issue or sell bonds to finance the TIF plan or district by June 1, 2006; or 2) The creation of a TIF district was authorized by special law before April 1, 2006, and the condemning authority commences action within 5 years after approval of the TIF plan, or the period permitted under special law, not to exceed 10 years, whichever is later; or 3) The condemning authority has commenced a condemnation action before June 1, 2006 to complete land assembly for a project, financed in whole or part with abatement, and the resolution authorizing abatement was adopted before April 1, Prohibits eminent domain to provide road access in certain situations. A road authority cannot use eminent domain to establish a local road or street for access to property of less than 5 acres that will serve projected traffic of less than 100 average daily trips, unless it is landlocked, or the road is necessary to cost-effectively mitigate safety concerns. Provides that a property that has no other access than over a navigable waterway is landlocked. Limits the ability of cities, counties and towns to regulate contiguous nonconforming lots that are in common ownership. Prohibits a county, city or town from refusing to issue a permit for construction of a single-family residence based on the common ownership of a contiguous nonconforming lot or parcel, provided that contiguous nonconforming lots or parcels in common ownership contain no more than 3 residential structures. A local government cannot prohibit the sale of a residential lot based on common ownership of a contiguous nonconforming lot or parcel. Provides that this subdivision applies to lots and parcels defined as shoreland. Provides transition rules for certain TIF plans and projects financed with abatement. The bill is effective the day following final enactment and applies to condemnation proceedings commenced on or after March 1, 2006, but grandfathers in the following actions by a condemning authority: 1) The municipality has approved a TIF plan by the day following final enactment, and a developer has acquired property by May 1, 2006 in reliance on the condemning authority s contractual obligation to condemn property, or by May 1, 2006 the condemning authority has issued, sold or entered into a binding agreement to issue or sell bonds to finance the TIF plan and has commenced the condemnation action within 2 years after the bonds were issued; or 2) The TIF district was certified before April 1, 2006; a TIF plan was adopted before April 1, 2006; and the condemning authority has commenced condemnation action within 5 years after certification; or 3) The creation of a TIF district was authorized by special law before April 1, 2006, and the condemning authority commences action within the period permitted under special law, not to exceed 10 years; or 4) The condemning authority commences the action before April 1, 2011 to complete land assembly for a project, financed in whole or part with abatement, and the resolution authorizing abatement was adopted before April 1, 2006.