Downtown [Waterloo] revitalization boosters fear proposed changes in the state's eminent domain laws could severely hamper their efforts.
An Iowa Senate committee is expected to begin discussions this week on legislation putting stiff restrictions on local governments' ability to acquire property from unwilling sellers when the land would be used for commercial purposes. The House approved a similar bill last month by an 83-15 margin.
Waterloo City Attorney Jim Walsh said such legislation could drive up the cost to taxpayers as the city and Waterloo Development Corp. move forward with downtown revitalization efforts. Waterloo Development is attempting to acquire numerous properties on downtown's west side. The hope is to attract private developers to invest in entertainment- and sports-themed businesses tied to riverfront improvements funded by Vision Iowa.
"If they do this it will be based on hyperbole and knee-jerk reaction by uninformed legislators," Walsh said. "They're opening a can of worms for purely political reasons."
Eminent domain is essentially forcing property owners to sell with a jury determining a fair price. Under the proposed law, local governments could still use eminent domain for public improvement projects, such as roads, sewers and city-owned buildings. But the proposed law would curtail a city's ability to condemn property under urban renewal plans if the land would be turned over to another private owner.
"I think we have to remember that we're talking about individuals' personal property," said Rep. Bill Dix, R-Shell Rock, who supports the measure. "For (a local government) to be able to pass that property from one owner to another, just because somebody thinks it would be better, is not acceptable."
The legislation comes on the heels of a U.S. Supreme Court ruling last year in Kelo v. New London. The court found the Connecticut city government had the authority to use eminent domain to acquire private property for an economic development project.
"I think it's been a growing concern here in Iowa, but the Kelo decision really brought it to light," Dix said.
But Walsh said the rules could have a chilling effect on local economic development, especially in areas where blighted buildings drive away new businesses and investors.
"We're trying to do urban renewal in downtown Waterloo," he said. "If there's a beat-up old building in the Riverfront Renaissance area and somebody is just collecting rent on it and not investing in keeping it up, that person is going to loot the taxpayers of this town if this legislation goes through."
Walsh predicts higher prices from owners.
"They could get five, 10, 20 times what this property is worth by holding a gun to the head of the taxpayers and refusing to sell otherwise," he added. "This is taxpayer robbery."
Dix counters buyers should expect to pay more.
"If you're trying to buy someone's property who doesn't want to sell right now there's justification in paying a premium," he said.
The bill's supporters have also included an exception that could help in some urban renewal efforts.
If 75 percent or more of the assessed value included in a project or plan area is slum or blighted, the remaining property in the plan area is subject to condemnation. But the law shifts the burden of proof from the property owner to the municipality to prove by "clear and convincing evidence" that certain properties are truly in a blighted condition.
Walsh said 99 percent of the land acquisitions by the city are closed through negotiation.
"I have yet to hear of a case of abuse (of eminent domain) here in Iowa," he added.
Dix said he believes constituents want action before that case rears its head.
"Why do we have to wait for the gun to go off?" he said. "If they try to take somebody's property when the Legislature is not in session, we wouldn't be able to act to protect that property owner."
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