Eminent domain became a hot issue in
2005 when the U.S. Supreme Court
ruled in Kelo vs. New London that property could be obtained from private
owners and provided to private developers, expanding the concept of a public use.
Eminent domain was originally created to
enhance blighted areas and was not
thought of as a tool to enhance local tax
revenue by elevating the use of a given parcel of land, says Larry Vanore, director with
Sommer Barnard PC.
Eminent domain laws do not simply allow
taking homes away from people, says
Vanore. The law should be used to better a
community. But under Indiana’s new eminent domain statutes, that cannot be done by
displacing current residents. With the new
regulations, relocating costs may need to be
paid even if an area qualifies for eminent
domain.
Smart Business spoke with Vanore
about the requirements of eminent domain
and how it can create new business and the
steps that need to be taken to protect existing businesses.
How do eminent domain regulations benefit
commercial businesses?
If people are willing to purchase houses
in a blighted area at low cost to renovate
them, then there is likely to be a new inflow
of people. It also becomes a good business
investment for developers. With the inflow
of new people, there will also be a need for
more jobs and more services that commercial businesses can provide.
Developers can also investigate and locate
areas that the city has deemed blighted.
Most cities do not have the time, money and
manpower needed to redo all the areas that
need renovation. Private developers should
look for such areas and work with local governments to rebuild. This creates new jobs
and renews the housing stock.
How can businesses move into areas that are
growing because of eminent domain without
violating new regulations?
Activity spurred by eminent domain can
be very positive by creating a focus on developing the boundary areas between
the more affluent areas and the depressed
areas. Businesses must be aware of other
regulations such as zoning laws that
restrict land uses. For example, businesses
might be able to move into locations on the
edge of previously renovated areas under
eminent domain regulations to provide
services to the new residents. These businesses will attract consumers and workers
and help an area grow even faster.
As housing developments are revitalized
and property values increase, neighborhoods
become more attractive. Businesses may be
able to work with a community to use eminent domain to acquire inexpensive property
while making a large investment for the
future of their company. It is important for
business owners to work with a team of people, including local government officials, to
determine the economic potential of an area
and the potential benefits for the business.
What steps must developers and businesses
owners complete to take advantage of eminent domain regulations?
Developers and business owners should
show how the proposed development will
benefit the larger community and not merely be intended to increase tax revenue. Rezoning determinations may be needed so a
business meets local regulations.
To be prepared, businesses should study
the government’s comprehensive or master plan to know how their plans coincide
with the plan of the city.
Demographic research should also be
completed before attempting to move into
an area. Go to the area, drive around and
talk to people.
Why is eminent domain a concern for existing business owners?
Current owners may be concerned with
new developers coming in and working
through the system to find ways to obtain
the land for private development.
Local government and zoning ordinances
can be used by current owners to protect
against private developers obtaining their
land. Local ordinances can have their own
definition of economic development zones
that better suit the community. Specific
areas can be determined as eminent domain
zones through the comprehensive plan to
encourage eminent domain in appropriate
areas and discourage it in other areas.
City and local governments may ‘grandfather’ existing businesses to provide a
greater level of protection. Government can
justify such actions by stating that the purpose of eminent domain within their land
development planning is to solve problems.
What is the appeals process if local government determines a business’s property
would be better utilized for public use?
Under the new statutes, if the government would like to take your property to
give to another private business, it is
required to give you prior notice and give
you a good faith offer. A business owner
can reject the offer and go to court to challenge the determination. Typically, it is
argued in court that the new use of the land
will not fit the definitions of public use. If a
business owner is successful, he or she
gets to keep the land and local government
is required to pay any attorney fees.
LARRY VANORE is a director at Sommer Barnard PC. Reach
him at [email protected].
