philadelphia eminent domain

An Oklahoma appellate court recently reconfirmed that a taking by a state or local entity must satisfy, among other things, both the state and U.S. Constitutions.  In that case, the City of Muskogee condemned a property for a parking lot.  The property owners alleged that the taking was not for a “public use” as that term is used in the Oklahoma Constitution because the city and its parking authority “agree[d] to lease the parking spaces to [a private entity’s] employees first before they are offered to the public.” 

The Oklahoma Court of Civil Appeals agreed and found that the taking violated the Oklahoma Constitution and explained that it “is clear ‘that private property may not be taken or damaged by the condemning agency unless the taking … is necessary for the accomplishment of a lawful public purpose.’”  In a footnote the court stated that the city “cannot avoid constitutional restrictions on the power of eminent domain by merely labeling the proposed parking facility as a public utility.” The court held the parking lot “was designed and established primarily for the purpose of serving a private entity” and “employees of that entity’s tenant.”

It is unclear whether this taking would have been constitutional under the U.S. Constitution’s “public use” requirement.  However, this case illustrates that states can have stricter eminent domain requirements and a taking by a state or local entity must satisfy both Constitutions.

About a year ago, the Philadelphia RDA condemned property owned by a nationally recognized artist. This condemnation received a great deal of local and national attention including newspaper and radio coverage (I was interviewed by one station). The property owner, James Dupree, used this property as his studio. The property was one of 17 properties condemned by the RDA allegedly to cure blight in that neighborhood and would have been used to build a new supermarket.

Dupree challenged the taking and the RDA has now decided to abandon the condemnation and the project.  Brian Abernathy, executive director of RDA, said in a statement, “Unfortunately, the legal costs associated with Mr. Dupree’s appeals make it impossible to continue . . . . While we have explored the potential of building around Mr. Dupree’s property, a viable project under these conditions is not possible. In short, the inability to acquire Mr. Dupree’s property puts the prospect of bringing fresh food to this community at serious risk.”

This decision has also attracted the attention of the press locally and nationally including the Washington Post.  Once again, this show the sensitivity of issues relating to the taking of private property. 

Two D.C. Council committees advanced legislation allowing for the use of eminent domain in the construction of a $300 million professional soccer stadium in Washington, D.C.  The bill will now go before the full council for a vote on Tuesday.  While the legislation allows for eminent domain to be used to acquire the land, Mayor-elect Muriel Bowser, chair of the economic development committee, said she remains hopeful they will be able to come to a new agreement with the city for the land.

One frequent issue in eminent domain and other valuation cases is the admissibility of appraisals obtained by a party other than the appraisal they intend to actually use.  For example, in a case that will be heard by the VA Supreme Court, VDOT had two appraisals in an eminent domain case.  VDOT chose only to present the lower value appraisal to the jury and the judge prohibited any reference to VDOT’s higher appraisal.  VDOT has been criticized for this tactic and have been accused of bullying tactics by one newspaper.   http://hamptonroads.com/2014/11/states-high-court-should-put-vdot-its-place-unfair-property-appraisals

It is not uncommon for a property owner or a condemning authority to have more than one appraisal.  Condemnors have been criticized for paying property owners the lower of the appraisal amounts.  The VA Supreme Court will decide the admissibility of these appraisals.

It is also not uncommon for property owners to obtain more than one appraisal in eminent domain and other settings.  One way we try to protect these appraisals from being obtained by third parties is to retain the appraiser – or other experts – as “consulting experts.”  These experts’ work product can then be protected as confidential “work product.”

So, if you are considering retaining valuation experts, it is important to consider retaining these experts through an attorney.

The City of Hartford has used its power of eminent domain to assemble land for a stadium.  The Hartford City Council approved a $350 million plan to build a minor league baseball stadium for the New Britain Rock Cats. However, it does not own all of the land necessary for the stadium.  The City has filed an action to take 14 properties for $1.98 million.  The city would then enter into a 99-year lease with the stadium’s developers, who would likely use that land for retail, housing, and other uses.

Jon Stewart used eminent domain debates to criticize Republicans over their support of the Keystone Pipeline in a recent Daily Show.  In his usual method, he juxtaposed statements by Republicans decrying the use of the power of eminent domain and supporting its use for the Keystone Pipeline project. 

The Show’s use of this topic shows two things.  First, eminent domain remains a very controversial topic and a hot button issue.  Second, when and how this power should be used is very complicated.  Permitting utilities – including privately owned utilities – to use the power of eminent domain is hardly a new concept.  However, it is rarely the focus of debate.  Controversial projects often draw attention to this issue which was the case with Jon Stewart.  

The clip can be found at little-seizers

Mortgage Daily has reported that there was no quarterly change in the risk of mortgage fraud, according to the 2Q 2014 National Mortgage Fraud Risk Index published by analytics firm Interthinx.  However, the risk of Valuation fraud was up for the quarter.

The mortgage fraud risk index, which is based on an analysis of loans processed through the FraudGUARD system. California has the highest fraud index. Florida and New Jersey are tied at second place for highest overall risk.  The national Property Valuation Fraud Index was higher than the first quarter and the same point last year.

The city of Hackensack, N.J., has asked the NJ Supreme Court to determine whether a municipality seeking to condemn property must expressly find that the property is “blighted” in order to meet the constitutional eminent domain standard.  It seeks to overturn an Appellate Division ruling that rejected the city’s plan to condemn two properties on the grounds that the ordinance passed by the city did not contain a finding of blight.  The ordinance stated that the buildings were deteriorated to the point of being boarded up, their use was untenable, the parking lots were unusable and badly designed and that the properties were having a negative effect on surrounding properties.

The Appellate Division ruled that a finding of blight was mandated by prior court rulings.  The city maintains that those ruling do not require an express finding of blight in every case.  Hopefully, the NJ Supreme Court will provide more concrete guidance for future condemnations.

The PA Supreme Court on Tuesday declined to hear an appeal in a Mercer County eminent domain case.  The case involves Mercer Area School District’s attempt to condemn property that borders school grounds to extend a parking lot and build an emergency access point.  The School Board first attempted to condemn land in 2010.  However, after the property owners challenged the taking, a trial court found that the taking was excessive, was done in bad faith and was an abuse of discretion.  The School District tried again in 2012 and, after the property owners again objected, the same judge found that his first ruling precluded the second action by the school board based on the doctrine of “res judicata.”

The Schools District appealed and the PA Commonwealth Court on March 17 reversed the decision holding that the trial court reserved for the School District the right to file a second action by saying that if it wanted to do so it would have to correct certain deficiencies from the original filing.  The Commonwealth Court did note, however, that “[a]s a general principle, the doctrine of res judicata (otherwise known as claim preclusion) can operate to bar a condemnor from filing successive eminent domain actions.”  The doctrine did not apply in that case, the Court held, because “even if all the elements of res judicata are met, res judicata will not prohibit a second action where a trial court’s order or opinion dismissing the first action indicates the court’s intent to permit the plaintiff to bring a second action.” 

 The Commonwealth Court reversed the trial court’s decision and the property owners attempted to appeal to the PA Supreme Court.  In contrast to appeals to the PA Superior and Commonwealth Courts, appeals to the PA Supreme Court are not guaranteed and only a small percentage of petitions for appeals are granted.  The PA Supreme Court entered an order this week denying the property owners’ appeal request.  The case will now be remanded back to the trial court to address the merits of the taking.

 

The New Jersey Appellate Division recently held that Hoboken cannot designate an 11.5-acre site in the city as an “area in need of rehabilitation,” which had allowed it to implement a redevelopment plan.  It found that the Hoboken City council misinterpreted the appropriate statute.  The Appellate Division held that it was unclear whether the council properly applied the relevant statutory criteria because the city’s resolution misstated the statute upon which it relied. The suit, brought by leather goods manufacturer R. Neumann & Co. against the city of Hoboken, its mayor, and several other defendants, claimed that the resolution wasn’t supported by adequate evidence, was motivated by an ulterior purpose and was inconsistent with the state’s Local Redevelopment and Housing Law, according to the opinion.

The panel also rejected the company’s argument that the delineation of an “area in need of rehabilitation” gives municipalities the right to exercise eminent domain, finding that the designation only allows them to adopt a redevelopment plan. Those plans don’t provide for the taking or acquisition of property within such an area, according to the opinion.   According to state law cited in the panel’s opinion, the area would need to be designated as an “area in need of redevelopment” before a municipality would have the power to take or acquire private property by condemnation.