Eminent domain bill raises concerns: Hutchinson (KS) News, 4/2/06

By John Green

City and highway officials worry that provisions in an eminent domain bill passed by the [Kansas] House last month, if it survives, will significantly drive up the cost of public improvement projects.

Highway advocates say it would likely kill a number of road projects and place an ever-greater burden on taxpayers for routine development.

The controversy stems from drastic revisions that change the eminent domain property appraisal process and inflate the compensation paid to owners of condemned property.

"Obviously it's an ill-advised amendment," said Sandy Jacquot, general counsel for the League of Kansas Municipalities. "It would make even public improvement projects cost prohibitive. You couldn't do it if you had to use eminent domain."

Hutchinson City Manager John Deardoff said he worries about what might come out of a legislative conference committee.

"I don't think it's going to be good for cities," Deardoff said. "Whether you believe its right or not, it's a tool that needs to be there and no one has shown me where municipalities in Kansas have abused it."

Why the change?
Local and state governments have traditionally used eminent domain to secure land for public projects like expanding roadways or putting in water lines. Some locales around the country have used it for economic development projects.

The U.S. Supreme Court ruled in a Connecticut case last year that municipal entities could use eminent domain to transfer property from one private owner to another to spur economic development.

In response to an effort to restrain use of the procedure for economic development in Kansas, a number of entities, from the Kansas Farm Bureau to the state chamber of commerce, wrangled for weeks over a compromise bill.

When a Senate version of that bill reached the House floor for debate March 23, however, lawmakers significantly altered it and then approved it 117-4.

Determining values
An amendment introduced by Rep. Arlen Siegfreid, R-Olathe, changed the valuation process.

In current law a judge appoints three "disinterested residents of the county," including two experienced in valuations, to examine the property and propose a fair market value, which the judge uses to determine compensation.

Under Siegfreid's amendment, each party - the landowner and the government entity - select its own appraiser to determine a value. The process then averages those two values.

"Our concern with that change is it sets up an adversarial system," said Sally Howard, chief counsel for the Kansas Department of Transportation. "We know there are appraisers who testify for landowners and some for condemning parties. They may see their role differently under this, as an advocate rather than a neutral party serving the court."

Then, under another provision of the Siegfreid amendment, the process multiplies that average value by 200 percent to determine compensation.

The bill no longer includes any definition of "fair market value" as determined by the court.

Inflated costs
Jacquot noted that, while either party can appeal the value, a judge or jury has nothing to use to evaluate the award.

"You're really not even starting at fair market, and then you multiply that by 200 percent," Howard said.

Jacquot cited a recent case in Johnson County to illustrate the potential impact. A city condemned land for a sewer project. One party appealed the award set by the appraisers. A jury ultimately awarded the landowner $10,900.

Yet the highest appraisal in the case came in at $480,000, Jacquot said. Using the jury award as the low, the two appraisals averaged out at $245,000.

"Times 200 percent, the award would have been $490,900, while in reality the award was $10,900," Jacquot said.

The determination of award would apply on all public improvement projects, Jacquot said, not just economic development projects originally targeted by the bill.

"I don't think the average citizen wants to see government have to pay a grossly inflated amount for a piece of property for a sewer line," Jacquot said.

The change will put pressure on tax rates or utility rates - or government will forego improvement projects and people will live with substandard streets or bridges.

Thinking of homeowners
Siegfreid explained that he simply wanted to give fairer compensation to landowners.

"Having a realtor background I'm very much aware when you first buy your home, at that point you have less equity and cash than ever when owning a property," Siegfreid said. "I don't think it's fair to take property when someone has owned it only a year or so and there's no requirement you pay more than 125 percent for it. You can't even find a new house and move for that, particularly in urban areas."

The Senate bill included graduated awards only for property taken for economic development projects - not public improvement. The House amendment changed it entirely.

As proposed, it required 125 percent of fair market value for a home owned less than five years, then increased 25 percent for every five years of ownership, up to 200 percent for a 15-year resident.

Siegfreid said he changed the process for determining value to involve professional appraisers. He doubted that a homeowner might hire an appraiser who would inflate the value.

"If they are unethical and intentionally inflate property, they can lose their license," he said.

Siegfreid also said government should not undercompensate property owners to reduce the cost of public roads.

"I'm not in stone on this, but I will resist going back to 125 percent very strongly," he said.

Sen. Terry Bruce, R-Hutchinson, sits on the conference committee that will attempt to work out a compromise bill, probably when lawmakers return for a wrap-up session April 26.

"It looks like there's going to be quite a bit more ironing out than intended," Bruce said, noting that the House version deviated pretty substantially from the Senate bill.

He said representatives worked through a Thursday night until 4 a.m. Friday, then returned to work later that morning and took up the eminent domain bill at the end of the day.

"I think some of the amendments by the House were done not knowing the full consequences," Bruce said.

He said the Senate wants government to retain eminent domain power for traditional uses - private carriers, public utilities, streets, bridges and roads.

"What we're really trying to limit is government taking from private individual and giving to another private individual," Bruce said. "We want it used strictly for government purposes."

Deep impact
Howard, at the transportation department, said the bill could have "a negative impact" on highway projects.

"We'd have fewer dollars to spend on construction, because we'd be spending more on land acquisition," she said. "We're trying desperately to stay ahead of development and do corridor management and this would just kill us."

Max Zimmerman, a longtime proponent for expanding U.S. 54/400 through Kansas, said he thinks the changes could make it impossible to build highways in the state.

"There's never been much trouble working through the courts to determine a value," Zimmerman said. "Appraisers normally take into consideration the value of the property, not as farmland particularly, but whatever value it would have with improvement. That 200 percent seems so arbitrary. It could kill a lot of deals."

For highway projects, Zimmerman said the current eminent domain process worked satisfactorily.

Hutchinson News: http://www.hutchnews.com