Eminent domain will be a major issue for the General Assembly when its members convene for their regular session after Gov. Bredesen’s State of the State address Feb. 6, with more than a dozen different bills filed already.
Government agencies most often use eminent domain as a tool to acquire property for public uses such as infrastructure projects.
However, political attention was drawn to the subject last summer after the U.S. Supreme Court decision in Kelo v. City of New London, in which the court established that the U.S. Constitution does not prohibit the use of eminent domain for economic development purposes. Instead, the establishment of standards to use eminent domain is left to the states.
Tom Lee, an attorney with Waller Lansden Dortch & Davis, said Tennessee’s eminent domain law differs from the law in Connecticut that ruled in the Kelo decision.
“In Connecticut, the state law specifically provided for the city’s right to exercise powers of eminent domain for economic development purpose,” Lee said. “Tennessee does not have that law, and there is no statute on our books that would permit the local government to take for that purpose.”
Lee said opinions whether Tennessee should change its current eminent domain provisions differ depending on whether the issue is seen from the perspective of a developer, a municipality, or someone concerned with private property rights.
“My guess is that, given the political timing, municipalities would be content to keep the law as is for now and revisit the issue at another time, without making it perhaps harder to create that power,” Lee said.
Several other states, among them Alabama, Colorado, Ohio, Nevada and Texas, have attempted to tighten up eminent domain laws.
But in some states, eminent domain legislation has failed because developers realized it could restrict their participation in possible revitalization efforts, said Jeff Ockerman, an attorney with Stites & Harbison.
“We need to be careful we don’t shoot ourselves in the foot and put restrictions on our [development tools] that … have been used for good purposes in our recent history, and to make sure that we can continue to use eminent domain powers in redevelopment districts for those good purposes.”
In Tennessee, only public housing authorities can use eminent domain for revitalization efforts in redevelopment districts. A redevelopment district is a housing tool that allows public housing authorities to give developers financial incentives such as tax credit incentives to encourage the revitalization of mostly inner-city areas.
“We need to make sure that the progress we’re making in Nashville now in redeveloping our core downtown and our core urban areas doesn’t get stopped because of an overreaction to a Connecticut state law in a case that hasn’t come up in Tennessee and isn’t likely to come up in Tennessee,” Ockerman said.
The Metropolitan Development and Housing Agency (MDHA) is the local entity that initiates eminent domain in Nashville’s redevelopment districts.
Ockerman said MDHA has carefully scrutinized situations before making use of eminent domain over the past few years and has utilized it sparingly — for example, the Coliseum and the Gaylord Entertainment Center.
The main criticism MDHA has faced in the recent past regarding eminent domain is whether the agency has offered real market value to original property owners. In some cases, a court has ordered MDHA to pay more.
“So that’s been the real question here, whether or not in the case of an eminent domain taking there’s been the proper value paid for the property,” Ockerman said.
Meanwhile, not only are states re-examining their eminent domain powers, but several bills in the U.S. Congress are also pending. The House of Representatives, for example, approved a bill that would prohibit federal funding for state and local projects that use eminent domain for economic development.
The House also introduced a proposed constitutional amendment that would prohibit the transfer of property from one private entity to another, unless the purpose was for public conveyance or transportation.
And legislation before the U.S. Senate would create a federal ombudsman for property rights.
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