Rio Rancho places limits on eminent domain: New Mexico Business Weekly, 7/9/06

By Jason Trenkle

Rio Rancho [NM] City Council voted last week to uphold a previous resolution never to use eminent domain to forcibly take a home or business from an existing owner to make land available for commercial development. But, they say, it's okay to take undeveloped, private property if it's needed for redevelopment plans that improve the greater common good.

The city has used eminent domain to seize property for at least two redevelopment projects in the last two years. It attempted a third time in February, but failed after the attempt was met with stiff opposition from property owners.

Such opposition and a general controversy over the practice caused the council to go to the table on June 28 to pass restrictions against seizing residential homes or commercial businesses, says Rio Rancho Mayor Kevin Jackson. Jackson says he pushed for the restrictions, which passed unanimously, because he disagrees with the actions of former city leadership in exercising eminent domain. But, he says, as long as safeguards are in place the process is a vital economic development tool that can be used for the common good.

Opponents of the process say it's a political tool that rewards developers with access to land for lucrative projects and has been used in the past to coerce and manipulate property owners into selling land at an appraised value that some say is well below what the land might be worth. Many landholders in Rio Rancho own vacant property for investment purposes.

The way it works: When the city determines it needs land for a project, it informs a property owner that it is condemning the property and offers to pay an appraisal value determined by an independent appraiser hired by the city or developer. The owner can accept the offer, pay for their own appraisal, or take the city to court. If the court determines the city has a legitimate need for the land, it can force a sale at a price determined by a court-appointed appraiser.

The use of eminent domain to take land for projects such as roadways and other governmental infrastructure has long been accepted. But its expanded use, to seize property for commercial development, was only approved by the U.S. Supreme Court in June 2005. In that case, Kelo vs. The City of New London, the court ruled that government could seize property for redevelopment purposes under the "takings" clause in the Fifth Amendment of the U.S. Constitution. The case arose out of an incident in New London, Conn., in which private property was condemned to make way for a redevelopment plan.

Peter Johnson, a San Diego, Calif. resident who owns property in Rio Rancho, says eminent domain has given the city carte blanche to go forward in condemning property in areas the city has slated for redevelopment projects.

He says his property, in a 440-acre parcel along Loma Colorado Boulevard near Rio Rancho High School known as Unit 13, has been condemned as blighted property. He says 80 percent of all private property in that parcel has been acquired by the city using eminent domain and then handed over to developers, including Pulte Homes, for development. Johnson questions whether the majority of Pulte's appraisal offers are being made in good faith and whether the city is overstepping its authority.

In a prepared statement, Garret Price, vice president of Pulte Homes of New Mexico says, "We conduct all of our land acquisition activities with respect and fairness." He says more than 92 percent of the lots in Unit 13 "have been successfully contracted" using the appraisal process, with only a handful of holdouts ending up in court.

Former Rio Rancho Mayor Jim Owen, who oversaw eminent domain on two projects — the Cabazon development near Unser Boulevard and Golf Course Road and the Loma Colorado development — says the city's efforts are being made in good faith. He says it is attempting to reverse problems caused by decades-old antique platting. Antique platting refers to how plots of land were sold in the early 1960s to mainly out-of-state land owners by AMREP, a New Mexico real estate company and the major developer of Rio Rancho. Owen says people bought plots of land, at mostly discounted rates, one on top of another, but it hasn't appreciated as much as most expected. Today, those platted areas, including Unit 13, have nearly 300 owners, each with their own septic and water system. He says a few disparate property owners have created a "dangerous" situation for others — roads are washed out and debris has crossed property lines damaging neighboring properties — and because the city doesn't have ownership, it can't do anything to fix the public infrastructure without using eminent domain.

Mark Lautman, director of economic development for Forest City Covington, the developers behind the 12,900-acre master-planned Mesa Del Sol development south of the Albuquerque International Sunport, served 12 years as vice president of AMREP. He said that no one really envisioned today's Rio Rancho when much of the land was sold in prior decades.

"You couldn't call it a master plan, it was really just a lot layout. Not a lot of thought went into [Rio Rancho] becoming a separate city," Lautman says.

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