PA 07-141—sSB 167

Judiciary Committee

Planning and Development Committee

Appropriations Committee

AN ACT REVISING THE PROCESS FOR THE TAKING OF REAL PROPERTY BY MUNICIPALITIES FOR REDEVELOPMENT AND ECONOMIC DEVELOPMENT AND REVISING THE PROCESS FOR PROVIDING RELOCATION ASSISTANCE FOR OUTDOOR ADVERTISING STRUCTURES ACQUIRED BY THE COMMISSIONER OF TRANSPORTATION

SUMMARY: This act makes many changes to the laws towns must follow when taking property to be developed and used for roads, parks, and schools (i. e. , public uses) or apartments, stores, and factories (i. e. , economic development). Most of these laws are contained in three chapters that authorize economic development takings to achieve different goals. Chapter 130 authorizes takings to eliminate blight and prepare an area for redevelopment; Chapter 132, to facilitate new commercial and industrial development; and Chapter 588l, to help manufacturers and other key industries expand or relocate in Connecticut.

Accomplishing these goals benefits towns in different ways. For example, providing parks, playgrounds, and other amenities improves quality of life, and stimulating new business creates jobs and generates tax revenue to fund municipal services. The act prohibits towns from taking property if the goal is primarily to increase tax revenue. It also eliminates their authority to take property for economic development under the municipal powers statutes (Chapter 98).

The three development chapters require towns to prepare plans showing how they intend to develop the property they plan to acquire or take. The act requires these plans to include more information, analyses, and findings about the need to take specific properties. It also requires towns to review and approve plans every 10 years and adds more steps to the planning process.

The chapters allow towns to implement the plans by acquiring, preparing, assembling, and transferring parcels. The act adds more steps to the taking process. It requires towns to hold a public hearing on each taking and state why it is necessary. It requires town legislative bodies to approve each taking under a Chapter 132 or 588l plan by a two-thirds vote. The act allows property owners to ask the Superior Court to enjoin takings under any of the three chapters if the town or agency failed to follow the correct statutory procedure. It gives towns a minimum of 10 years to complete a taking.

The act specifies how towns must compensate owners when taking their property for economic development. Prior law did not specify how towns had to determine compensation, but most based it on a property's fair market value as determined by an appraisal. The act explicitly requires them to determine value based on two independent appraisals when taking property under the three chapters. The compensation must equal the average of the two appraisals for takings under Chapter 130 and 125% of that value for takings under Chapters 132 and 588l.

The act also changes the procedure the court must follow when reviewing a town's offer of compensation for economic development and other takings. The changes include allowing a tax judge, in addition to a judge trial referee, to review the statement of compensation and allowing the parties to use the offer of compromise statute, which provides a procedure to offer to settle a case.

Besides compensating owners for taking their property, the law requires towns to compensate them and their tenants for being displaced from the property. In most instances, the act increases these relocation benefits when towns take property for economic development.

The act establishes a right of first refusal for owners whose property was taken for this purpose. If a town decides that it cannot use the property as intended or for a public purpose, it must offer the property for sale back to the original owner. The town must do this before offering to sell the property to anyone else.

The act makes it an unfair trade practice for anyone to represent they have eminent domain power when negotiating to acquire a property unless they are an appointed or elected official of a public agency with that power ( 17).

Lastly, the act requires the Department of Transportation (DOT) commissioner to pay relocation benefits when acquiring a billboard and specifies how to determine the benefit amounts. (PA 07-5, June Special Session, modified the method the commissioner must use to determine the benefit amounts. ) It allows billboard owners and others receiving relocation benefits from DOT to appeal the benefit amounts to the State Property Review Board.

The act makes technical and conforming changes ( 20-22).

EFFECTIVE DATE: Upon passage and applicable to property acquired starting on that date, except:

1. the changes to Chapter 588l plans are effective upon passage and applicable to property acquired on or that date and to development plans adopted on or after that date ( 3);

2. the changes to Chapter 130 and 132 plans and how long they remain in effect are effective October 1, 2007 and applicable to plans adopted on or after that date ( 5-6, 10-11);

3. the changes to relocation benefits other than for DOT and billboards are effective October 1, 2007 and applicable to property acquired on or after that date (13-15);

4. the offer of compromise provisions are effective upon passage and applicable to applications filed on or after that date ( 16);

5. the unfair trade practice violation is effective upon passage ( 17);

6. a technical change is effective October 1, 2007 ( 21); and

7. a technical change is effective upon passage ( 22).

STATUTORY AUTHORITY TO TAKE PROPERTY FOR ECONOMIC DEVELOPMENT

The authority to take property is contained in many laws, each specifying different reasons for using this power. The act amends those laws that allow towns to take property for economic development. These laws are divided into four chapters. Chapter 98 specifies towns' general powers, which includes acquiring or taking property for different purposes. Unlike the other chapters, it does not specify the procedure towns must follow when taking property.

The other chapters require towns to prepare plans under which they may take property and specify the procedure when doing so. Chapter 130 allows towns to acquire or take property to redevelop blighted areas. The property can be used for public and private purposes. Chapter 132 allows towns to acquire or take property to stimulate private commercial and industrial development in any area regardless of its condition. Similarly, Chapter 588l allows them to take property on behalf of manufacturers and other key industries seeking to expand or relocate in Connecticut.

Although these chapters authorize takings for different purposes, each imposes similar planning and procedural requirements. Each requires towns to prepare plans showing how property will be developed and used. Chapter 130's procedure for taking property and compensating owners also applies to takings under Chapters 132 and 588l and those other chapters that authorize takings for public purposes. Chapter 135 requires towns to pay relocation benefits to property's owner and tenants.

4 — TAKINGS UNDER THE MUNICIPAL POWERS CHAPTER

Chapter 98 lists towns' general governmental powers, including acquiring or taking property for specified purposes. Under prior law, those purposes included a wide range of public uses and encouraging private commercial development (CGS 7-148(c) (3) (A)). The act eliminates takings for private commercial development and, consequently, allows towns take property for this purpose only under the three development chapters.

PLANNING REQUIREMENTS

The development chapters allow towns to take property for public uses and economic development under a development plan. The act makes many similar changes to the process for preparing and approving these plans.

3, 5, & 10 — Plan Contents

Under Chapter 130, a town can designate an area for redevelopment if it is deteriorated, deteriorating, substandard, or detrimental. Under the act, an area is detrimental only if the conditions there are detrimental to the community's safety, health, morals, or welfare. The act requires the area's development plan to describe how it is deteriorated, deteriorating, or detrimental to the community's safety, health, morals, or welfare. (PA 07-207 defines “deteriorated” and “deteriorating. ”) The plan must also identify each parcel the agency intends to acquire or take.

The act makes identical changes to the contents of Chapter 132 and 588l plans. It expands the kind of information and analyses these plans must contain. The plan must describe how it was prepared and the alternatives the agency considered to achieve its goals. It must also identify the public need being addressed.

By law, the plans must describe the project's economic benefits, including the number of jobs and housing units the project will create. Chapter 588l plans must also estimate the amount of local tax revenue the project will generate. The act imposes this requirement on Chapter 132 plans.

The act requires Chapters 132 and 588l plans to describe how they will:

1. improve infrastructure, including public access, facilities, or use;

2. clean up blight or the environment;

3. improve the area's aesthetic quality;

4. help increase or sustain land market values;

5. improve residents' living standards; and

6. make the town more competitive.

Besides requiring Chapter 132 and 588l plans to provide more information, the act changes a finding these plans must contain and requires new ones. Under prior law, the plan had to include a finding that it did not harm statewide planning objectives. Under the act, it must be prepared with due consideration of the five-year State Plan of Conservation and Development.

The act requires Chapter 132 and 588l plans to include a preliminary statement describing how the town or agency will acquire property and a finding that:

1. the plan's public benefits outweigh any private benefits,

2. the property's existing use cannot be feasibly integrated into the project's overall development plan,

3. taking the property is reasonably necessary to successfully achieve the plan's objectives, and

4. the plan's primary purpose is not to increase local tax revenues.

The act prohibits agencies from approving a Chapter 130 plan unless they make this four-point finding, but does not require the plan to include them.

3, 6, 10, & 11 — Approving the Plan

The act makes the procedures for approving Chapter 130 plans consistent with those under the other chapters. By law, an agency that prepared a Chapter 130 plan must ask the town's planning commission for its written opinion about the plan. In stating its opinion, the act requires the commission to indicate if the plan is consistent with the town's plan of conservation and development (plan of C&D).

The act requires the agency to make more findings before it can approve the plan. By law, the agency must find that the area qualifies as a redevelopment area and that the plan will materially improve conditions there. The act prohibits the agency from approving the plan unless the planning commission indicated that it was consistent with the town's C&D plan. The law already imposes these requirements on Chapter 132 and 588l plans. As mentioned above, the act also prohibits the agency from approving the plan unless it makes the four-point finding about the plan's overall effects and the need to take property.

Under prior law, the town's legislative body or an agency it designated to act on its behalf had to decide whether to approve a Chapter 130 plan. Under the act, only the legislative body can approve the plan. By law, the legislative body must approve Chapter 132 and 588l plans before the development agency can implement them.

The act's other changes affect the process for approving plans under the three chapters. The law requires an agency to hold a hearing on the plan before adopting it. The act requires an agency to post a draft of the plan on its website, if it has one, at least 35 days before the hearing.

If the town's legislative body approves the plan, the agency must publish a newspaper notice to that effect. The approval is good for 10 years, after which the agency must review and readopt the plan at least once every 10 years. If the agency chooses to readopt or amend the plan, it must follow the same procedures for adopting the initial one. These provisions do not apply if the agency prepared the plan with federal funds and the rules governing these funds prohibit imposing a 10-year renewal deadline.

TAKING PROCESS

The act establishes similar processes for taking property under Chapters 130, 132, and 588l. As discussed below, the only difference is the entity that must approve each taking.

1, 2, & 3 — Public Hearing

The act requires the agency to hold a public hearing on any proposed taking. The agency must publish a newspaper notice about the hearing within 10 days of holding it. It must also send the notice by first class mail to the property's record owners and property owners within 100 feet of the property to be taken, at least 10 days before the hearing date. The newspaper and mail notices must indicate the hearing's time, place, and subject.

1, 2, & 3 — Approving a Taking

The act requires different entities to approve takings under Chapter 130 and Chapters 132 and 588l. The development agency's governing board must approve each taking under Chapter 130 and the town's legislative body must approve each one under the other two chapters. But neither entity can do so under the act unless they:

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 voting requirements for takings under Chapter 130 are different than those for takings under Chapter 132 and 588l. The development agency's governing board must approve each proposed taking by a majority vote of its members. It can do this by voting separately on each taking or group of takings. The agency may do the latter if each property in the group is identified.

If the agency is acting under Chapter 132 or 588l, the legislative body must approve each 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. In either case, the deciding body can vote separately on each taking or on groups of takings. As with takings under a redevelopment plan, the body may vote on groups of takings if each parcel is individually identified. After the deciding body approves a taking, the town or agency must publish a newspaper notice to that effect within 10 days.

1, 2, & 3 — Five-Year Deadline for Taking Property

The act gives the agency five years to complete the taking of a property the plan slates for acquisition. The five-year clock begins when the agency takes its first property. The agency can extend the deadline for up to an additional five years, but it cannot take any property 10 years after the date of the first taking. These deadlines do not apply if the project involves federal funds and the rules governing these funds prohibit imposing deadlines for completing takings.

1, 2, & 3 — Enjoining a Taking

The act allows owner-occupants to apply to the Superior Court to enjoin a taking, which the court may do if it finds that the agency or town failed to comply with the statutory requirements for preparing and approving plans. The owner's application stops the five-year or 10-year clock for completing the taking until the court enters final judgment or until there is an appeal of such a judgement, whichever happens later.

8 — Appraisals and Compensation

By law, local and state agencies must compensate property owners when taking their property. Prior law did not specify how to determine compensation, but most agencies did so based on the property's value, as determined by a real estate appraisal. The act explicitly requires agencies to base compensation on appraised value when they take property under the development chapters.

It also specifies how they must determine value. An agency must have the property appraised by two state-certified appraisers who must work independently of each other and use 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 federal and state law. Each appraiser must provide a copy of the appraisal to the property owner and the agency.

The act bases compensation on the average of the two appraisal amounts. Compensation must equal that average for takings under Chapter 130, and 125% of that average for takings under the other two chapters. In both cases, the agency must increase the compensation if it takes more than five years to acquire the property. The five-year clock starts after the agency acquires another property under the plan that is within 1,000 feet of the subject property. In these cases, the agency must increase the compensation by 5% per year from the 6th to the 10th year.

These compensation requirements do not apply if the project uses federal funds and the rules governing the use of those funds set a different compensation standard.

8 & 9 — Court Review of Statement of Compensation

The process for compensating owners is contained in Chapter 130 and must be followed when taking property under many other chapters, including the other two development chapters and those authorizing takings for widening roads, building schools, and other public purposes. The act does not change the steps in the process but increases the time to complete certain ones.

The process begins when the agency files a statement of compensation with the Superior Court specifying, among other things, the amount of compensation for taking the property. The property owner can accept the amount offered or ask the Superior Court to review it. Prior law required the agency to wait 12 days after it filed the statement of compensation before it actually took the property. The act increases the waiting period to 35 days. The maximum period between filing the statement and taking the property remains 90 days.

Prior law allowed the court to appoint a judge trial referee to review the statement. The act allows it to do so if the property owner and the agency or their attorneys ask the court to appoint one. A judge trail referee is a retired judge who continues to serve and is designated to hear certain cases.

The act gives both parties the option of asking a tax judge to review the statement instead. If either party or their attorneys make a motion to that effect, the court must refer the application to a judge appointed to hear tax appeals. By law, the chief court administrator appoints two Superior Court judges for that purpose.

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

16 — Offers of Compromise

The act makes a property owner who applies to the Superior Court for review of a statement of compensation 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 prior law, which applied only to contract and money damage cases, if the defendant did not accept the offer and, after a trial, the plaintiff recovered an amount equal to or greater than the sum stated in the offer, the court added 8% annual interest on the amount recovered. For eminent domain cases using the Chapter 130 procedures, the act 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 act subjects these takings 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 or she must pay the defendant's costs accrued after the offer, including reasonable attorney's fees up to $350.

1, 2, 3, & 12 — Offer of Sale

The act gives owners the right to buy back property taken under the plans and specifies how they may exercise that right. An owner may exercise his or her right if the agency or town decides that it cannot use the property as intended or for a public purpose and the agency or towns wants to sell it. The act provides a method for notifying the owner about this right.

When the agency takes the property, it must give the owner a form on which to write his or her name and address, the name and address of his or her agent, and the names and addresses of those heirs he or she designates to purchase the property. The owner or his or her agent can update the form in writing.

The agency must mail the notice of sale 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 agency must offer it for sale at a price that is no more than the lesser of the amount the agency paid for the property or its fair market value at the time the agency offers it for sale. The town 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 fail to notify the town within six months after the town sends the notice.

The act makes a conforming change to the provision under which an agency may abandon a Chapter 132 plan by specifying that it must comply with the act's offer of sale requirements when selling property.

The act's provisions governing the right of first refusal do not apply if the project involves federal funds and the rules governing those funds prohibit the agency from offering the property to its original owners or designated heirs.

RELOCATION BENEFITS

13-15 — Benefits Under the Development Chapters

State and federal law requires agencies to pay relocation benefits whenever they displace people from their homes, farms, and businesses. The benefits under federal law tend to be greater, and agencies must pay these when acquiring or condemning property with federal funds. The act requires an agency to pay the higher of the benefits under the state or federal relocation laws when it acquires or takes property under the three development chapters. It must do this regardless of the funding source.

18-19 — Benefits to Billboard Owners

The act requires the Department of Transportation (DOT) commissioner to pay relocation benefits to billboard owners when he acquires their structures. The benefit amount depends on whether the owners find another site in the area within one year after the commissioner acquired the structure. (PA 07-4, June Special Session, allows this period to be extended if the commissioner and the owner agree. )

If a billboard owner obtains all necessary state and local permits for a new site within one year after the commissioner acquired the structure, the commissioner must pay a sum that equals the replacement cost and fair market value of the structure minus the fair market value of the new site, which must be determined according to the income capitalization method. (PA 07-4, June Special Session, changes the second component to fair market value of the structure at the new site. ) The site must be in the same Standard Metropolitan Statistical Area, as determined in the federal census, as the prior site and not have been previously offered for sale or lease to the owner.

If the owner cannot obtain the necessary permits within one year after the commissioner acquired the site or chooses a site that was previously offered to him or her for sale or lease, the commissioner must pay a sum that equals the combined value of the structure's replacement cost and fair market value. (PA 07-4, June Special Session, drops the requirement that the commissioner pay the replacement cost. ) The owner must document that he or she cannot obtain the permits within one year or that the only available sites are those that he or she had been previously offered.

(PA 07-207 specifies that these relocation benefit requirements do not apply if they violate federal laws and regulations governing outdoor advertising structures along interstate and federally assisted highways. PA 07-4, June Special Session, requires the commissioner to pay relocation costs or the amounts described above. )

18-19 — Appeal DOT Relocation Benefits

Billboard owners and others receiving relocation benefits from DOT may appeal the amount of the relocation benefit to the State Properties Review Board, which must hear and decide the appeal within 30 days after receiving it. The board's decision is final.

BACKGROUND

Related Act

PA 07-207 also amended some of the laws under which towns can take property for economic development and other purposes. It specifies criteria for determining if an area is deteriorated or deteriorating under Chapter 130. It requires the Superior Court to refer a statement of compensation to the property rights ombudsman for review if both parties request it. The act requires the ombudsman to study the feasibility of basing relocation benefits for businesses on the good will they lose or gain after being displaced from their property. The ombudsman must report his findings to the legislature by January 1, 2008. Lastly, the act specifies that this act's provisions regarding DOT relocation benefits apply only if they do not violate federal highway laws or agreements between the DOT commissioner and the federal commerce secretary.

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.

OLR Tracking: JR: CR: JL: dw