You asked for an analysis of LCO 39 “An Act Revising the Process for the Taking of Real Property by Municipalities for Redevelopment and Economic Development. ”

SUMMARY

The bill imposes additional procedural requirements on municipal development and redevelopment agencies when they condemn (take) land or other real property for economic development purposes. Specifically, the bill requires that the plans prepared by these agencies specify that the proposed use for each property in the area covered by the plan is either a “public use” or for “economic development,” and defines these terms. It requires that the plan include a preliminary statement describing how each parcel of real property it covers will be acquired.

By law, the agencies can exercise the power of eminent domain with the approval of the municipality’s legislative body. The bill requires that legislative body approve, by a two-thirds vote, the acquisition of real property by eminent domain, as provided for in the plan, when the property is being acquired for economic development. It requires that the municipality place a notice of such approvals in a newspaper having substantial circulation in the municipality within ten days of its approval.

It increases the amount of compensation that property owners are entitled to when their property is taken by these agencies for economic development purposes, including paying for a business’ lost “good will” in some cases. It gives owners the right to appeal the legislative body’s to authorize the agency to take property for economic development or other purposes.

By law, several other agencies must follow the redevelopment agency procedures amended by the bill when they condemn property. It is not clear whether the bill affects these agencies. These agencies include:

1. the comptroller, when she takes water company on behalf of the state or a municipality under CGS § 16-50d;

2. “implementing agencies,” which can be nonprofit organizations or local agencies designated by a municipality to implement business or municipal development projects under the Manufacturing Assistance Act;

3. municipal corporations when taking property in neighborhood revitalization zones under CGS § 48-6;

4. municipal corporations when taking property for municipal purposes under CGS § 48-6 and 48-12.

PLANNING REQUIREMENTS

By law, development agencies and redevelopment agencies must develop plans before they acquire property. The bill requires that such plans include a determination that the proposed land use for each property in the area covered by the plan is either a “public use” or for “economic development. ”

Under the bill, “public uses” are the following:

1. the possession, occupation and enjoyment of land by the general public or by a public agency, department or institution for a public purpose or to provide public services;

2. using land to create or operate public utilities; or

3. acquiring real property to correct a specific harm from the use of such land on the date of acquisition, including the removal of a public nuisance or structures that cannot be repaired or are unfit for human habitation or use or the acquisition of abandoned property.

Under the bill, “economic development” is any land use that increases tax revenues, the tax base, employment, or general economic health. It includes using land for industrial purposes or for business purposes. The latter includes any commercial, financial, or retail enterprise, including tourism, and income-producing property. On the other hand, economic development does not include (1) the transfer of land to public ownership or to a private entity that is a common carrier, such as a railroad, (2) the transfer of property to a private entity when eminent domain will remove a threat to public health or safety such as (a) public nuisances or (b) structures that are beyond repair or unfit for human habitation or use, (3) the acquisition of abandoned property, or (4) the lease of property to private entities that occupy an incidental area within a public project.

COMPENSATION

Under the U. S. and state constitution, a property owner is entitled to just compensation for property taken by eminent domain, Under state law, the development or redevelopment agency determines the amount of compensation to be paid, which can be appealed to the courts.

The bill generally requires that this compensation be the property’s fair market value. But, in the case of real property taken for economic development purposes, it entitles the owner to an amount at least equal to one and one half times the fair market value. It precludes the fair market value being adjusted for any increases or decreases in the property’s value attributable to (1) the project for which the property is being acquired, (2) the eminent domain proceeding in which the property is to be acquired, or (3) any preliminary actions of the agency relating to the property’s acquisition. This provision appears to supersede CGS § 8-132, which requires the court or judge trial referee hearing an appeal of a condemnation by an agency to “take into account relevant to the fair market value of the property. ”

GOOD WILL

If the property is currently being used for commercial or business uses, the compensation must include “good will” under certain circumstances. “Good will” is the benefit that accrues to a business because of its location; reputation for dependability, skill or quality; and any other circumstances resulting in probable retention of old customers or acquisition of new customers.

Under the bill, business or commercial property owners must be compensated for the good will they lose on the property to be acquired, or on the remainder of such property if it is part of a larger parcel that is being taken if the owner proves the following: (1) the loss is caused by the taking of the property or injury to the remainder; (2) the loss cannot reasonably be prevented by relocating the business or by taking steps and adopting procedures that a reasonably prudent person would take in preserving good will; and (3) compensation for the loss will not be duplicated by other compensation the owner will receive.

APPEALS

Under current law, an agency must file a statement of compensation regarding the property to be taken with the Superior Court for the judicial district where the property is located. The statement includes the amount of compensation to be paid to the owner, among other things. The owner can accept the payment; alternatively he or anyone else aggrieved by the statement can appeal to the court.

The bill additionally allows anyone who is aggrieved by the decision of the municipality’s legislative body to take real property under the development agency or redevelopment agency statutes to appeal to court, before the statement of compensation is filed. The appeal must be served within 15 days after the newspaper notice of the approval is published. Since current law does not require newspaper notice of the legislative body’s approval, it is unclear (1) whether this appeals process applies to condemnation made under current law and (2) if it does, what is the deadline for filing an appeal.

The municipality (presumably the development or redevelopment agency) cannot file a statement of compensation regarding the property until this appeal is finally adjudicated.

Under the bill, the municipality has the burden of proving that the decision to take the property was supported by sufficient evidence in the agency’s record in the case. The municipality also has the burden of proving, based on the evidence in the record, that:

1. the acquisition is for a public use of the property or will increase tax revenues, the tax base, employment or general economic health;

2. the acquisition is needed to protect substantial public interests in health, safety or other matters which the municipality may legally consider;

3. public interests clearly outweigh the interests of the individual property owner; and

4. such public interests cannot be protected by reasonable changes to the development or redevelopment area.

If the municipality does not satisfy its burden of proof, the court must wholly or partly revise, modify, remand or reverse the condemnation decision in a way consistent with the evidence in the record before the court.

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