Historically, the power of eminent domain has been exercised to facilitate the construction of large public projects such as highways and railroads, schools and housing developments, to name a few.
Eminent domain has been used to clear blighted areas in cities to make way for redevelopment. More recently, the power has also been used to enable municipalities to clear the way for economic redevelopment projects, such as new shopping centers. Indeed, the decision in Kelo v. City of New London, a case that went before the United States Supreme Court in 2004, set a precedent for property to be transferred to a private owner for the purpose of economic redevelopment.
The court found that if an economic project creates new jobs, increases city revenue and revitalizes a depressed or blighted urban area, that project qualifies as a public use.
“Eminent domain is the power of the state to appropriate an individual citizen’s property for the benefit of the citizenry,” says Jay Levitch, a partner with The Stolar Partnership. “Eminent domain is embedded in the federal constitution and the state constitution.”
Smart Business spoke with Levitch about eminent domain, how compensation in a property-taking is determined and how to go about finding a suitable attorney to assist you in an eminent domain case.
How does the process of eminent domain work?
If it’s a state agency — such as the Missouri Department of Transportation — the condemning authority has the power to claim land for a public purpose or public use. This power derives from the constitution.
If it’s a municipality seeking the land, the agency can pass legislation to claim it for a public purpose or public use. In either case, the entity identifies the property and the purpose for which it is to be taken. It then notifies the property owner or owners of the need for the property and makes an offer of compensation.
If the condemning authority and the property owners cannot agree on the compensation for the taking, there is a procedure prescribed by statute that enables the condemning authority to initiate a lawsuit in order to pursue taking the property.
How is compensation determined?
The process was revamped by the Missouri General Assembly in 2007. There is a statute that defines just compensation and says that it is to be determined by a jury utilizing a variety of generally accepted appraisal practices.
This includes, but is not limited to, the sales comparison approach, which looks at sales of similar types of property; the cost replacement approach, which is an evaluation technique based on what it would cost to replace the property with a similar property of similar construction; and the income approach, which looks at the property in terms of the income it generates and translates that into the property value.
These techniques, plus other generally accepted appraisal techniques, may be presented to the jury as a means by which the jury becomes informed as to the fair market value of the property. After evaluating the evidence, the jury then makes a determination and awards the property owner compensation for the taking of his or her property.
How have public views about eminent domain shifted recently?
We have a seen a change in the attitudes of the public over the last several years. It culminated with the Kelo decision by the United States Supreme Court. Ten years ago, people were not opposed to the use of eminent domain to try to foster redevelopment, the rebuilding of cities and the development of roads.
But over time, some people have come to believe that eminent domain has been used to transfer private property from one owner to another who plans to develop the property for their own profit. As a result, in the St. Louis area, you don’t see nearly as much use of eminent domain in connection with redevelopment as you once did.
Can a business be compensated if the government’s eminent domain acquisition adversely affects its operations?
The law in Missouri holds that a business owner is not compensated for the impact an eminent domain taking has upon its business. The view has been that the condemning authority is taking the land; it is not taking the business.
However, there are exceptions. There have been instances of substantial rewards for the partial taking of a business that completely closes off the access to a public street and leaves customers with a convoluted type of access to the business.
There have also been awards for the taking of property that impacts the ability of a business to expand.
What criteria should be considered when selecting an attorney in an eminent domain matter?
As with any legal matter, the person who is seeking an attorney should look for a lawyer with experience in the field. If a person is faced with a letter from a condemning authority saying, ‘We are going to be taking your property,’ it’s important for the property owner to look for a lawyer who has represented property owners and who is familiar with the eminent domain process.
Jay Levitch is a partner with The Stolar Partnership. Reach him at firstname.lastname@example.org or (314) 641-5178.