You asked us to analyze LCO 40, An Act Concerning Eminent Domain for Redevelopment and Economic Development.

SUMMARY

The law allows government agencies to take property for public purposes, which, according to the Connecticut and U. S. Supreme Courts, may include redeveloping property for private, business uses (i. e. , economic development). The agencies must first compensate the property’s owner, who can appeal the amount of compensation to Superior Court.

The agencies can take and redevelop property under three statutory programs that are commonly referred to by their chapter number (i. e. , Chapters 130, 132, and 588l). Each program imposes different planning requirements, but requires agencies to follow Chapter 130’s taking procedures. Other agencies must also follow these procedures when taking property for traditional public uses, such as schools.

LCO 40 (1) limits the extent to which agencies can take property for economic development, (2) sets standards for compensating property owners, and (3) authorizes financial assistance for those who contest

taking. Some of the limitations involve new planning requirements, which the bill imposes only on Chapter 130 and 132 plans. The compensation standards apply to any agency that must follow Chapter 130’s taking procedures.

The bill also authorizes income tax credits for people who reside in the state’s 25 distressed municipalities.

The bill takes effect on October 1, 2006 except for the provisions governing Chapter 132 plans, which take effect upon passage.

LIMITATIONS ON ECONOMIC DEVELOPMENT TAKINGS

The bill limits the extent to which agencies can take property for economic development by:

1. distinguishing between takings for this purpose and a public use,

2. prohibiting towns from taking owner-occupied property for economic development, and

3. requiring local legislative bodies to approve a taking for this purpose by a two-thirds rather than majority vote.

The bill imposes these limitations on the statutory programs through which an agency can redevelop blighted areas (Chapter 130) or improve its or the state’s economic welfare (Chapters 132 and 588l). But it does not impose these limits on the town when it takes property under the general municipal powers law, under which it can acquire land for encouraging private commercial development by negotiating with the owner or by taking it through eminent domain (CGS § 7-148 (3) (a)).

DEVELOPMENT PLAN REQUIREMENTS

Economic Development versus Public Use

The laws authorizing the development programs require towns to prepare a plan describing how the property will be developed. The bill requires the plan to identify whether the property will be developed for public use or economic development. But it imposes this requirement only on plans prepared under Chapters 130 and 132, not those prepared under Chapter 588l.

Public Use. Under the bill, a town develops a property for public use if:

1. the general public will possess, occupy, or enjoy the land;

2. a government agency will do so for a public purpose or to deliver a public service;

3. the land will be used to create or operate a public utility;

4. the taking will correct a specific harm resulting from the way the land was used on the date it was taken.

The latter includes removing a public nuisance or structure that cannot be repaired or that is unfit for people to inhabit or use. Public use also includes acquiring an abandoned property.

Economic Development. The town takes the property for economic development if it will be subsequently used for a purpose that increases jobs, the tax base, tax revenues, or general economic health. But a taking could serve this purpose and not constitute economic development if the property:

1. is abandoned;

2. will be transferred to a private entity that will remove the public health and safety threats, including public nuisances or structures beyond repair or unfit for people to inhabit or use;

3. will be transferred to public ownership or a common carrier, such as a railroad; or

4. will be leased to a private entity that will occupy an incidental area within a public project (e. g. , a coffee shop in a railroad station).

Posting Plans on the Internet

The law requires development agencies to hold hearings on proposed development plans. The bill requires them to post the draft plans prepared under Chapters 130 and 132 on the agency’s web site, if it has one. The agency must do so at least 35 days before the hearing. The posting requirement does not apply to plans agencies prepare under Chapter 588l.

Additional Chapter 132 Plan Requirements

The bill requires Chapter 132 plans to provide additional information on how the proposed project will benefit the public. Under current law, the plan must indicate the number of jobs the agency expects the project to create and the number and types of existing housing units available in the region for the new employees. Under the bill, the plan must identify and address a public need and:

1. estimate the amount of property tax revenue the project will generate;

2. describe the proposed infrastructure improvements, including public access, facilities, and use;

3. describe efforts to clean up blight or contamination;

4. describe aesthetic improvements the project will generate;

5. describe how it will create or sustain market value;

6. describe how the project will help the town residents improve their standard of living;

7. explain how it will maintain or enhance the town’s competitiveness; and

8. describe the process the agency used to prepare the plan and the different options it considered to achieve the project’s objectives.

By law, the plan must include a finding that the plan is not inimical to any statewide planning objective. The bill specifically requires a finding that the plan is not inimical to the State Plan of Conservation and Development.

The law already requires the plan to describe:

1. the project area;

2. the condition of the land and buildings and how they are being used;

3. the proposed uses and their locations;

4. the types and locations of proposed streets, sidewalks, and sanitary, utility, and other facilities;

5. the types and locations of proposed site improvements;

6. present and proposed zoning classifications;

7. indicate subdivision status of land in and around the project area; and

8. show how the agency will finance and administer the project and relocate people and businesses from the project area.

The plan must also find that

1. the land and buildings will be used for industrial or business purposes,

2. the plan is in accordance with local and regional plans; and

3. the project will contribute to the town and the state’s economic welfare.

Lastly, the law requires the plan to include appraisal reports and title searches.

COMPENSATION

The bill sets standards for determining the amount of compensation an agency must pay when taking property. The U. S. and Connecticut constitutions ban government from taking land for public uses without justly compensating its owner. Current Connecticut law does not specify how agencies must determine just compensation, but the courts have based the amount on the property’s fair market value.

The bill bases the compensation on whether the agency is taking the property for a public use or economic development. If a new taking is for a public use, the compensation must equal at least 150% of the property’s fair market value. If the taking is for economic development, the compensation must equal at least 200% of that value. These compensation standards apply to other agencies that take property under Chapter 130’s procedures.

FINANCIAL ASSISTANCE

The bill authorizes financial assistance for owners contesting a condemnation and people who reside in distressed municipalities. It requires the Office of Policy and Management secretary to reimburse an owner for two-thirds of the documented costs he incurred to contest the condemnation. He must do this only after the courts finally decide the matter.

The bill also authorizes a $ 4,000 per year income tax credit for who reside in the state’s 25 distressed municipalities, which the economic and community development commissioner designates annually. The revenue services commissioner must adjust the credit amount to reflect increases in the consumer price index for urban consumers during the preceding 12 months rounded up to the next $ 500. The bill limits the total credit a taxpayer can claim to the total taxes he owes.

JR: ts