November 18, 2002

By Timothy S. Hollister thollister@goodwin.com

Hartford, Connecticut

Office: 860-251-5601

Fax: 860-251-5699

http://shipmangoodwin.com/

Whoever said "You can't fight City Hall" may have been talking about eminent domain -- the government's power to take private property, even against the owner's will, for a "public use." Although this power (also called "condemnation" or "taking") can be used to evict families from their homes, it has been used so often for things we take for granted - roads, bridges, schools, storm drains, sewers, etc. -- that if government decides it needs a property, we assume it will succeed in taking it.

Across the country, however, there are some signs that the courts, who can be asked to review the use of condemnation, are taking a harder look at what government must demonstrate in order to take land.

Historically, when government has taken land, it has had to satisfy five requirements:

(1) follow required procedures (notice, hearings, etc);

(2) act in good-faith;

(3) take land only for a "public use";

(4) take only what is necessary for that use; and

(5) pay the owner "just compensation," meaning fair market value.

Procedural compliance, necessity, and adequate compensation have been regular subjects of court cases but public use has not, because back in the 1950's, the U. S. Supreme Court held that what is a public use is up to Congress and the state legislatures.

Given this latitude, governments have gotten into the habit of condemning land for the "public purpose" of promoting private economic development, such as demolishing run-down buildings to make way for a shopping center.

For decades, the courts have rarely interfered, but in the past three years, in Connecticut and nationally, this has started to change.

Recent court decisions cover a wide range of situations. In Illinois, a regional economic development authority condemned 148 acres owned by an auto-shredding business in order to build a parking lot that would allow an adjacent auto racetrack to add enough seats to attract NASCAR/Winston Cup events. The racetrack, however, was privately owned and operated, and the auto-shredding business sued, claiming that the taking was not for a public use.

Particularly, the owner of the shredding business pointed to the fact that the racetrack owner had agreed to put up the money ($1 million) that the authority would pay as just compensation (an arrangement that is not uncommon). The Illinois Supreme Court held that the taking was "a private venture designed to result not in a public use, but in private profits," and thus unconstitutional.

In Indiana, a redevelopment agency used its condemnation power to invalidate a covenant that restricted lots in a subdivision to residential use, allowing three of the lots to become part of a shopping center. A state court held that the agency's action was not for a public purpose.

The courts are also applying heightened scrutiny to governments' determinations of when "blight" (building deterioration) justifies a taking. A federal court in Kentucky recently rejected a city's claim that a neighborhood's tax delinquencies, illegal dumping grounds, and drainage problems were a basis for clearing the way for a privately-owned hotel and conference center. State law, said the court, required that a finding of blight be based on a threat to health or safety.

The Connecticut Supreme Court issued two opinions on eminent domain earlier this year. When the City of Bridgeport sought to condemn a privately-owned yacht club and marina as part of its redevelopment efforts, the court held the city had not used all reasonable efforts to obtain the property by agreement or demonstrated that the property was necessary to the redevelopment plan.

In another case, the City of Stamford sought to acquire the location of a popular diner known as "Curley's." Stamford had adopted its urban renewal plan in 1963, but did not condemn under an amended version of this plan until 1999. The court held that Stamford could not base a condemnation on a document so far out-of-date.

Another recent Connecticut case struck down the use of eminent domain to thwart a "locally unwanted land use" (also known as a "LULU"). In the Town of Orange, a developer sought to build on nine acres a 168 unit apartment complex in which 25 percent of the units would be affordable housing.

While hearings on the zoning permits were in progress, the Town quickly prepared a plan for an "industrial park" consisting of 172 acres, including the housing site. The plan's first step would have been to condemn the nine acres, but it said nothing about the remaining 163 acres. The Connecticut Supreme Court issued an injunction, finding that the timing of the plan and the sparsity of its information showed that the Town was acting in bad faith.

Finally, a federal court in California recently enjoined a redevelopment agency from condemning land where a growing church wanted to build a new place of worship. The court noted that the redevelopment plan had been in place for ten years, but only when the church filed a zoning application did the agency activate its redevelopment efforts. The court also held that since the intended beneficiary of the redevelopment was a Costco discount store, the agency was not pursing a public use.

These developing limits on eminent domain are of particular interest to Connecticut property owners for one other reason: our Supreme Court held earlier this year that in a condemnation, the costs of cleaning up pollution on a property can be deducted from fair market value when the government takes the land.

Thus, the financial stakes in some condemnations have been raised, and a landowner may need to fight a condemnation just to keep control of the scope and cost of a remediation program.

The lesson of these cases is that there are "red flags," circumstances or facts that may signal a basis to challenge a condemnation:

When a private party will responsible for some large part of the money that will be used to pay for the condemnation;

When the government condemns more land than is necessary for the stated public purpose;

When the condemnation proceeds without a current or recent study of the economic benefits;

When land is being condemned property for a project that will be run entirely by a private business;

When condemning land that will have the effect of denying housing or interfering with a religious organization; or

When government stretches the definition of "blight" or fails to negotiate fairly with an existing business before a taking.

Eminent domain is an awesome power, but we are discovering that it indeed has limits.

Shipman & Goodwin's environmental, land use, and real estate litigation practice is led by Tim Hollister, Paul Sanson, and Joe Williams in Hartford and Barry Hawkins, Bill Ruskin, and Fred Gold in Stamford.

Professional Experience: Mr. Hollister practices in zoning, planning and wetlands applications and litigation, as well as a wide range of real estate and administrative law problems that arise in the context of land use and environmental matters. These include eminent domain and inverse condemnation, unconstitutional takings and other civil rights violations, fair housing, drafting and enforcement of land use regulations, flood plain management, mineral rights, riparian rights, specific performance, landlord and tenant, quiet title, title insurance, tax appeals, broker's commissions and foreclosures. He has represented developers, corporations, property owners, municipalities and neighborhood and environmental groups in administrative proceedings before local, state, regional and federal agencies and litigation in the state and federal trial and appellate courts.

Mr. Hollister has developed a national reputation in land use law. He is an author of State and Local Land Use Liability, published in 1998 by the West Group. During 1996-97, he served as Chair of the Environmental Law Section of the Connecticut Bar Association. He is a Regional Vice President of the International Municipal Lawyers Association, the organization of city and town attorneys in the United States and Canada, at whose conferences he is a frequent speaker. IMLA has awarded Mr. Hollister its "Local Government Law Fellow" designation, certifying his expertise in municipal law; he is the only Connecticut attorney to have receive this certification. He has assisted the City of Springfield, Missouri in revising its zoning regulations and policies and has advised Springfield and several other municipalities across the country on fair housing issues. Mr. Hollister represented the Home Builders Association of Connecticut as plaintiffs in the landmark exclusionary zoning case Builders Service Corporation v. East Hampton Planning and Zoning Commission, and has litigated several matters under Connecticut's Affordable Housing Appeals Act

Mr. Hollister is admitted to practice in the state and federal courts of Connecticut. He often does pro bono work on land use and housing issues. He has been a director of The Connecticut Fair Housing Center, Inc. He has served as Counsel to the Connecticut Coalition to End Homelessness, and has served as a director of the Connecticut Association of Residential Facilities and the Coro Foundation.

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