Topic:
EMINENT DOMAIN; ECONOMIC DEVELOPMENT; REAL PROPERTY; RELOCATION BENEFITS; MUNICIPALITIES; LEGISLATION;
Location:
EMINENT DOMAIN;

OLR Research Report


May 1, 2006

 

2006-R-0320

SUMMARY OF EMINENT DOMAIN AMENDMENT (LCO 5394) TO sSB 34

By: Kevin McCarthy, Principal Analyst

John Rappa, Principal Analyst

Christopher Reinhart, Senior Attorney

You asked for a section-by-section analysis of LCO 5394, amending sSB 34 regarding eminent domain.

1 — CHAPTER 132 PROPERTY ACQUISITION REQUIREMENTS

Taking for Increasing Local Revenue Prohibited

Chapter 132, Municipal Development Projects, allows towns to acquire, improve, and transfer property for developing business and industry (i.e., economic development). A town must first designate a “project area” and prepare a plan to develop it. Its development agency may implement the plan by purchasing property or, with the legislative body's approval, taking it by eminent domain. The bill prohibits the agency implementing a Chapter 132 plan from taking land by eminent domain solely to increase the local tax revenues.

Legislative Body Approval

The bill requires the legislative body to take certain steps before authorizing the agency to take property under a Chapter 132 plan. The legislative body must first hold a public hearing on the proposed taking. It must publish a newspaper notice about the hearing at least 10 days before holding it. It must also send the notice by first class mail to the property's record owners at least 10 days before the hearing's date. The newspaper and mail notices must indicate the hearing's time, place, and subject.

In deciding whether to authorize the taking, the legislative body must:

1. consider how the project will benefit the public and any private entity and determine if the public benefits outweigh the private ones,

2. determine that the agency cannot feasibly integrate the property's current use into the overall development plan, and

3. determine that acquiring the property by eminent domain is reasonably necessary to successfully achieve the plan's objectives.

The legislative body must approve each proposed taking by a two-thirds vote. In towns with a town meeting or representative town meeting form of government, the board of selectmen acts in place of the legislative body. The legislative body or the board of selectmen can approve each taking by a separate vote or it can approve one or more groups of parcels. They may do the latter if each parcel to be taken that is part of a group is identified. It must also notify the public when it approves a taking. The legislative body must do this by publishing a newspaper notice about its decision within 10 days after approving the taking.

Five-Year Deadline for Taking Property

The bill prohibits the agency from taking property five years after the legislative body approved the project plan unless certain conditions are met. It appears to require the legislative body to reauthorize the taking. It appears to do this because it specifically requires the agency to give the legislative body enough information to determine if the agency still needs the property to implement the plan.

The bill resets the five-year clock each time the legislative body materially changes the plan. In other words, the agency may take the property within five years after the legislative body changed the plan. But it cannot take the property after five years without the legislative body's approval.

Findings of Value

The bill requires the agency to itemize the value of the property and any structure and improvements on it and record this information with the certificate of taking. By law, the clerk files this certificate after the agency files a statement specifying the compensation it offers for taking the property (i.e., statement of compensation). The agency must file the statement with clerk, record it on the land records, and notify the property's owners. When the agency later files a return of notice with the court, the clerk must file a certificate of taking.

Offer of Sale

The project plan must indicate how the acquired property will be used. In cases where the agency acquires property under the plan and subsequently decides that it cannot be used as the plan intended or for other public uses, the bill establishes a right of first refusal. It does so by providing a way for the town to notify the original owner, his agent, or designated heirs that it wants to sell the property and specifying a deadline by which these parties must notify the town about whether they want to buy it back.

Under the bill, when the agency takes the property, it must give the owner a form on which he must specify his address, the name and address of his agent, and the names and addresses of those heirs he designated to purchase the property. The owner or his agent can update the form in writing.

The town must mail the form to the listed parties only if it was properly completed or updated and provides the information the town needs to mail the form. In notifying the parties about the property, the town must offer it for sale at a price that is no greater than the amount the municipality paid for the property after any appeal or settlement minus the value of any structures or improvements removed from the property and the amount by which it depreciated.

The municipality must give the parties six months to notify it if they want to purchase the property and another six months to finalize the sale. It may sell the property to a third party if the parties failed to notify the town within six months after the town sent the notice.

EFFECTIVE DATE: Upon passage and applicable to property acquired starting that date.

2 — MUNICIPAL DEVELOPMENT PROJECT PLAN CONTENTS (CHAPTER 132)

Public Benefits

The bill expands the kind of information and analyses the agency must provide in the project plan. The plan must meet an identified public need and describe the process the agency used to prepare the plan and the alternative approaches it considered to achieve the plan's objectives.

By law, the plan must describe the number of jobs and housing units the project will create. The bill also requires the plan to describe the other ways it will benefit the public. It must estimate the amount of local tax revenue the project would generate and generally describe:

1. the infrastructure improvements, including public access, facilities, or use;

2. how it will clean up blight or the environment;

3. the aesthetic improvements it would generate;

4. how the project will help increase or sustain land market values;

5. how the project will help the town's residents improve their standard of living; and

6. how the project will help maintain or enhance the town's competitiveness.

Planning Consistency

By law, the project plan must include a finding that that the plan is consistent with the local and regional land use plans and does not undermine and statewide planning goals and objectives. The bill specifies that the project plan must be consistent with the five-year State Plan of Conservation and Development.

Property Acquisition Process

Under the bill, the plan must include a preliminary statement describing the process the agency proposes to acquire each property subject to the plan.

EFFECTIVE DATE: Upon passage

3 — POSTING MUNICIPAL DEVELOPMENT PLANS ON THE INTERNET

By law, a municipal development agency must hold a public hearing on a municipal development plan. Under the bill, the agency must post its draft plan on its web site, if it has one, at least 35 days before the hearing.

EFFECTIVE DATE: Upon passage

4 — OFFER OF SALE WHEN AGENCY ABANDONS CHAPTER 132 PLANS

The bill makes a conforming technical change to the provision under which the agency may abandon a Chapter 132 plan. By law, the legislative body may abandon the plan three years after adopting it and convey any property the agency could not sell, transfer, or lease for its fair market or fair rental value. Under current law, it may convey the property free of any restriction, obligation, or procedure the plan imposes but must otherwise conform to all state and local laws, ordinances, or regulations. The bill specifies that the agency must also comply with the bill's offer of sale requirements.

EFFECTIVE DATE: Upon passage and applicable to property acquired on or after that date.

5 — CHAPTER 588L MUNICIPAL DEVELOPMENT PROJECT PLANS UNDER THE MANUFACTURING ASSISTANCE ACT

Planning Requirements

The bill imposes mostly the same requirements on plans prepare under Chapter 588l, which also allows towns to acquire and develop property for economic development. It requires a Chapter 588l plan to meet an identified public need and describe the process the agency used to prepare the plan and the alternative approaches it considered to achieve the plan's objectives.

By law, the plan must describe the project's economic benefits, including the number of jobs and housing units to be created and its estimated property tax benefits. The bill instead calls this a description of public benefit and additionally requires a general description of:

1. the infrastructure improvements, including public access, facilities, or use;

2. how it will clean up blight or the environment;

3. the aesthetic improvements it would generate;

4. how the project will help increase or sustain land market values;

5. how the project will help the town's residents improve their standard of living; and

6. how the project will help maintain or enhance the town's competitiveness.

The bill requires the plan to be consistent with the State Plan of Conservation and Development and include a preliminary statement describing how the agency proposes to acquire each property subject to the plan.

Posting Municipal Development Plans on the Internet

Municipal development agencies must also hold public hearings on Chapter 588l plans. The bill requires the agency to post its draft plan on its web site, if it has one, at least 35 days before the hearing.

Taking for Increasing Local Revenue Prohibited

The bill's requirements for taking property under Chapter 588l are similar to those it imposes on Chapter 132 takings. The agency cannot take land solely to increase the local tax revenues. It must hold a public hearing on a proposed taking after notifying the public, which it must do by publishing a newspaper notice at least 10 days before the hearing. The agency must notify the property's record owners by first class mail at least 10 days about the hearing at least 10 days before the hearing date. The newspaper and mail notices must indicate the hearing's time, place, and subject.

Legislative Body Approval

Under the bill, the legislative body must:

1. consider the benefits to the public and any private entity resulting from the development project and determine that the public benefits outweigh any private benefits,

2. determine that the agency cannot feasibly integrate the property's current use into the overall development plan, and

3. determine that acquiring the property by eminent domain is reasonably necessary to successfully achieve the plan's objectives.

The municipality must approve the takings under the same conditions that apply to takings under Chapter 132. The legislative body, or the board of selectmen in municipalities where that body is the town meeting or representative town meeting, must approve each taking by a two-thirds vote. The legislative body or the board of selectmen can approve each taking by a separate vote or it can approve one or more groups of parcels. They may do the latter if each parcel to be taken that is part of a group is identified. It must notify the public about each taking by publishing a newspaper notice within 10 days after its decision.

Five-Year Deadline for Taking Property

The bill prohibits the agency from taking property more than five years after the legislative body approved the development plan unless certain conditions are met. The agency must give the legislative body enough information to determine if the agency still needs the property to implement the plan. But the bill resets the five-year clock each time the legislative body materially changes the plan after adopting it.

Finding of Value

The bill imposes the same finding of value requirement on Chapter 588l takings that it imposes on Chapter 132 takings (see 1).

Offer of Sale

The bill imposes the same offer of sale requirements on Chapter 588l takings that it imposes on Chapter 132 takings (see 1).

EFFECTIVE DATE: Upon passage and applicable to property acquired starting on and after that date.

6 — REDEVELOPMENT PROCEDURES AND OFFER OF SALE (CHAPTER 130)

The bill imposes the same requirements for recording findings of value and making an offer of sale in the Chapter 130 redevelopment procedures as it imposes on Chapter 588l and Chapter 132 takings (described above in 1).

Because a number of other statutes authorizing the use of eminent domain require use of the redevelopment procedures, these changes also affect those takings.

EFFECTIVE DATE: Upon passage and applicable to property acquired starting on and after that date.

7 — COMPENSATION

The bill requires redevelopment agencies to have two independent appraisals conducted on the property to be acquired and base the compensation to be paid to the owner on the higher of the appraisals. Each appraisal must be done (1) by a state certified appraiser without consulting with the other appraiser and (2) in accordance with generally accepted professional standards as described in the Uniform Standards of Professional Appraisal Practice issued by the Appraisal Standards Board of the Appraisal Foundation pursuant to relevant federal and state law.

The bill also increases, from 12 to 35 days, the minimum period that must elapse between when a redevelopment agency files its statement of compensation, which includes the agency's offer, and when it can actually take the property. By law, the maximum period between these events is 90 days.

EFFECTIVE DATE: Upon passage and applicable to property acquired on or after that date.

8 — COURT REVIEW OF STATEMENT OF COMPENSATION

By law, a person can apply to Superior Court for review of a statement of compensation filed by a redevelopment agency. Current law allows the court to appoint a judge trial referee to review the statement. The bill requires the consent of the parties or their attorneys before the court may appoint a judge trial referee and otherwise a Superior Court judge hears the case. A judge trail referee is a judge over the retirement age of 70 who continues to serve and is designated to hear certain cases.

The bill also adds the option of a referral to a judge appointed to hear tax appeals. If each party or their attorneys makes a motion requesting it, the court must refer the application. By law, the chief court administrator appoints two Superior Court judges to hear tax appeals.

The bill also makes the property owner (applicant) the counterclaim plaintiff for purposes of the application, review, appeal, and offers of compromise (see 7 below).

Because other statutes authorizing the use of eminent domain require using the redevelopment procedures, these changes also apply to those takings.

EFFECTIVE DATE: Upon passage and applicable to property acquired on and after that date.

9 — OFFER OF COMPROMISE

The bill makes a property owner who applies to the Superior Court for review of a statement of compensation from a redevelopment agency the counterclaim plaintiff for purposes of offers of compromise, which is a statutory procedure to offer to settle the case for a specified amount.

Under the offer of compromise law, a plaintiff can file an offer with the court after 180 days have passed since service of process on the defendant and up to 30 days before trial. A defendant has 30 days to file an acceptance of the offer with the court clerk. If the defendant accepts, the plaintiff, after receiving the amount specified in the offer, files a withdrawal of the lawsuit which the clerk records.

Under the current law which applies to contract and money damage cases, if the defendant does not accept the offer and, after a trial, the plaintiff recovers an amount equal to or greater than the sum stated in his offer, the court adds 8% annual interest on the amount recovered. For eminent domain cases under the redevelopment procedures, the bill requires the court to add 8% interest on the difference between the amount recovered and the amount specified in the plaintiff's offer.

Defendants can also file an offer of compromise and the bill subjects these eminent domain cases to this procedure as well. By law, a defendant can file an offer with the court clerk up to 30 days before trial. The plaintiff has 60 days after being notified of the offer to accept it. If the plaintiff accepts it, he must, after receiving the amount specified in the offer, file a withdrawal of the lawsuit which the clerk records. If the plaintiff does not accept the offer and later recovers less than the offer of judgment, he must pay the defendant's costs accruing after he received the offer, including reasonable attorney's fees up to $350.

Because other statutes authorizing the use of eminent domain require using the redevelopment procedures, these changes also apply to those takings.

EFFECTIVE DATE: Upon passage and applicable to applications filed starting on or after that date.

10 -12 — RELOCATION BENEFITS

The bill increases the benefits paid to property owners and tenants when the actions of a state or municipal agency force them to relocate. In addition to condemnations, these benefits apply to such actions as code enforcement programs when they force people to move out of their homes or apartments.

The bill requires the agency to pay the higher of the benefits paid under the state or federal Uniform Relocation Assistance Acts. The bill entitles a displaced small business, nonprofit organization, or farm to its actual reasonable expenses needed to reestablish itself on a new site, up to $10,000.

By law, a displaced business or farm can choose to receive a fixed payment based on its annual net income instead of receiving its actual moving and other expenses. The bill increases the maximum payment a business or farm can receive under the income-based option from $10,000 to $20,000.

It also requires that the benefits paid to a displaced business be adjusted, up or down, to reflect any decrease or increase in “good will.” The municipality must separately calculate the increase or decrease in good will. Under the bill, good will is the benefits that accrue to a business from its location; reputation for dependability, skill, or quality; or other circumstances resulting from the probable retention of old customers or acquisition of new customers.

The bill sets conditions for shifting the burden of proof in a court case resulting from relocation due to a taking under chapter 132. If the displaced business' application calculating good will makes a prima facie case for increased payments for good will, the court must require the municipality to prove that the increased payment should not be ordered.

The law provides additional benefits to a displaced homeowner who has lived in his house for at least 180 days before negotiations regarding the acquisition of the property began. The bill increases the maximum additional benefit from $15,000 to $22,500. By law, this additional benefit covers (1) the added cost, beyond the amount paid for the owner's current home, of acquiring a comparable new dwelling, (2) increased mortgage costs for the new dwelling due to a higher interest rate, and (3) reasonable closing costs and related expenses. The bill requires the agency to pay the higher of the additional benefits provided under the federal or state Uniform Relocation Assistance Act.

Current state law entitles a displaced tenant to a benefit to reflect his higher rent as a result of a displacement. Alternatively, the tenant can receive a benefit to help him make a down payment on a home. The bill increase the maximum benefits under both options from $4,000 to $5,250. It eliminates a provision that requires the tenant to match any down payment assistance benefit above $2,000. Again, the bill requires the agency to pay the higher of the tenant benefits provided under the federal or state Uniform Relocation Assistance Act.

EFFECTIVE DATE: Upon passage and applicable to property acquired starting that date.

13 — REPRESENTATIONS ABOUT EMINENT DOMAIN POWER

The bill also makes it an unfair trade practice for a person negotiating to acquire rental or real property to represent in the negotiation that he has the power to acquire the property by eminent domain when he does not.

EFFECTIVE DATE: Upon passage

Background—Connecticut Unfair Trade Practices Act (CUTPA)

The law prohibits businesses from engaging in unfair and deceptive acts or practices. CUTPA allows the consumer protection commissioner to issue regulations defining what constitutes an unfair trade practice, investigate complaints, issue cease and desist orders, order restitution in cases involving less than $5,000, enter into consent agreements, ask the attorney general to seek injunctive relief, and accept voluntary statements of compliance. The act also allows individuals to sue. Courts may issue restraining orders; award actual and punitive damages, costs, and reasonable attorneys fees; and impose civil penalties of up to $5,000 for willful violations and $25,000 for violation of a restraining order.

14 - 20, 22 — OFFICE OF OMBUDSMAN FOR PROPERTY RIGHTS

The bill creates an Office of Ombudsman for Property Rights to:

1. develop expertise in the law regarding taking private property;

2. assist public agencies, when they request it;

3. provide property owners, upon request, assistance concerning eminent domain procedures;

4. identify government actions with potential eminent domain implications and advise agencies;

5. inform the public;

6. mediate disputes between private property owners and public agencies concerning the use of eminent domain or relocation assistance if requested by a private property owner; and

7. recommend changes in eminent domain laws to the legislature.

The office is within the Office of Policy and Management for administrative purposes only. Each state and local agency must comply with the office's reasonable requests for information and assistance.

The bill allows the office to apply for and accept grants, gifts, and bequests of funds from states, federal and interstate agencies and independent authorities, private firms, individuals, and foundations in order to carry out its responsibilities. It creates a property owners ombudsman account as a separate nonlapsing account in the General Fund and any funds received are credited to that account for the office's use in performing its duties.

Under the bill, the ombudsman is appointed by the governor with the consent of either house of the General Assembly. He is designated a department head and serves at the governor's pleasure for up to four years, unless reappointed. He must be an elector with expertise and experience in real estate sales, real estate appraisals, or land use regulation. He must not have been employed or served in an official capacity with respect to an eminent domain procedure within one year of appointment. He may not represent a private property owner or a public agency in any dispute before the courts or a public agency.

The bill prohibits office employees from:

1. being employed or holding a position in any other public agency;

2. receiving or having the right to receive, directly or indirectly, remuneration under a compensation arrangement with respect to an eminent domain procedure; and

3. knowingly accepting employment with a public agency for one year after terminating services with the office.

The bill requires the ombudsman to adopt regulations for mediation procedures for requests it receives. The regulations must specify criteria to determining whether to accept or reject a request to mediate eminent domain or relocation assistance disputes.

The bill sets conditions under which the court can stay a court action related to a taking or relocation assistance. The court must do this for cause if any party to the dispute asked the ombudsman for mediation. They can ask the court to stay the action while the ombudsman decides whether to mediate the dispute or while the ombudsman is mediating the dispute.

The court must order the stay, but in doing, specify the conditions under the the stay must end. Under the bill, the stay ends if either party moves to end or earlier of two events:

1. the mediation resolves the dispute or

2. the regulatory time period for conducting the mediation expires or the ombudsman denies the request for mediation, which ever is sooner.

EFFECTIVE DATE: July 1, 2006

21 — NEGOTIATION AS A CONDITION OF CONDEMNATION

The bill requires a public agency seeking to acquire property by eminent domain to make a reasonable effort to negotiate with the property owner to buy the property before starting an eminent domain action.

The agency must also provide the property owner with (1) information on the bill's mediation provisions including the ombudsman's name, address, and phone number and (2) a written statement explaining that oral representations or promises during negotiations are not binding on the agency. This information must be on a form prescribed by the ombudsman and given to the owner as early as practicable in the negotiation process but at least 14 days before filing the eminent domain action (unless the court allows a shorter period for good cause).

EFFECTIVE DATE: July 1, 2006

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