Legislature tightens eminent domain rules: Denver (CO) Business Journal, 6/4/06

By Michael Perrault

Three new eminent domain laws on tap in Colorado will require the formation of partnerships to condemn property for private toll roads, will list all entities with the power of eminent domain and will establish a new burden of proof to eradicate blight.

The Colorado Legislature passed three of eight eminent domain bills presented in the 2006 session.

House Bill 1411 preserves the ability of urban renewal authorities to take property to eradicate blight, but requires that the need to eradicate blight be proven by clear and convincing evidence. That could reduce the ability of municipalities to designate areas as blighted and therefore subject to condemnation.

But some opponents claim it lacks teeth and will prove prohibitively costly for small businesses and families trying to save their properties.

The U.S. Supreme Court ruled last year, in Kelo vs. City of New London, that eminent domain can be used solely for economic-development purposes. That sparked a flurry of activity by lawmakers in Colorado and other states.

"The court went on to say that state legislatures are free to pass more restrictive measures if they see fit," said Erin Goff, staff attorney for the Colorado Municipal League.

The eminent domain bills that passed were Senate Bill 78, SB 154 and House Bill 1411. SB 154 takes effect Aug. 7. SB 78 took effect March 31, when Gov. Bill Owens signed it. HB 1411 awaits the governor's decision, but will take effect June 7 if he ignores it.

Goff and Sam Mamet, the Colorado Municipal League's executive director, believe all the discussions and activity in Colorado and elsewhere generally sent a good message.

"We are fortunate that a majority of the members of our state Legislature understand and appreciate the need to maintain the ability of urban renewal authorities to use eminent domain, when absolutely necessary, to alleviate slum and blight," Goff and Mamet concluded in a summation about the legislative session.

"It was really a moving target, because there were so many bills, there were so many legislators interested, there was so much public involvement," said William Mutch, executive director of Colorado Concern, which represents 80 chief executives from across the state.

"Everyone seemed to have a plan for how to address this," Mutch said. "It was way more complicated than I ever imagined."

Even with the passage of the three bills, more action may follow.

Some property rights advocates claim HB 1141's language is "too watered down" and will attempt to place their own initiative on the Nov. 7 ballot.

Members of Colorado Citizens for Property Rights hope to gather enough signatures by the Aug. 7 deadline so voters can consider a state constitutional amendment to prevent local governments from taking any land for economic-development purposes.

Buzz and Peggy Kilker, owners of Buzz's Auto Body in Aurora, spent six years fighting off condemnation before the city of Aurora abandoned one recent project, according to Jessica Peck Corry, director of the Independence Institute's Property Rights Project, and author of "At the Crossroads of Condemnation: The Debate Over Eminent Domain For Private Development & Open Space."

The city of Aurora had included the Kilkers' business as part of a blight designation that encompassed the neighborhood surrounding the newly rehabilitated Fitzsimons Health Sciences Center, Corry said.

SB 78 requires a public/private partnership between the state and a private toll road developer to condemn property for a private toll road.

Mutch said it can be tough to get total funding for transportation projects in Colorado, so the bill made sense in that it allows private investors to pursue toll road projects.

"We supported that concept where basically CDOT does the condemnation part and private capital can be used to buy the right of way," Mutch said.

SB 154 lists all entities with the power of eminent domain.

HB 1411, the last eminent domain bill introduced, designates a new burden of proof for the eradication of blight. It also prohibits taking private property for public or private use without just compensation and consent of the owner, among other guidelines.

The bill requires condemning entities to demonstrate, by a preponderance of the evidence, that the taking of private property is for a public use, unless the condemnation action involves taking the land to eradicate blight, Goff said.

"HB 1411 clarifies that private property cannot be taken for economic-development purposes in Colorado," Goff said. "The legislation preserves the ability of urban renewal authorities to take property to eradicate blight, but requires that the need to eradicate blight be proven by clear and convincing evidence."

Corry believes HB 1411 lacks teeth for two reasons.

"First, if history is any lesson, cities will attempt to exempt themselves from the constitutional protections provided by the bill by claiming 'home rule' status," Corry said. "The litigation that will arise will prove prohibitively costly" for the families and small businesses trying to save their properties.

"Second, there is a huge loophole in the bill [in that] it still allows cities to continue eminent domain abuse through Colorado's urban renewal statute," Corry said. "It's time for government to stop putting for-sale signs in the yards of Colorado's working families. We anticipate that residents will again call on legislators for meaningful change in next year's legislative session."

Mutch believes HB 1411's new legal standards and language will create a different environment.

"It's not going to be business as usual," Mutch said.

The National Conference of State Legislatures, based in Denver, said eminent domain laws have been enacted in at least a dozen states, most leaving room for flexibility and allowing takings in certain instances while seeking to further define "public use."

Denver Business Journal: http://www.bizjournals.com/denver