Montana Lawmakers Consider Narrowing Eminent Domain: New West, Missoula MT, 3/15/07

By Craig McCallum

Three bills are working their way through the Montana Legislature that would limit the circumstances under which government can take private property under eminent domain.

The bills, inspired by the 2005 U.S. Supreme Court’s Kelo ruling, have found widespread support in an otherwise divisive session.

“I’m touchy about government overreaching its authority, and to take someone else’s land because someone else will pay more taxes (on it) on it is a heinous reason,” Sen. Jim Elliott, D-Trout Creek, said earlier in the session.

Two bills put forward by Elliott, and one sponsored by Sen. Christine Kaufmann, D-Helena, have passed the Senate on 49-1 margins and now are their way through the House. All three try to keep government from using its power of eminent domain to take private property and give it to a private business.

The U.S. Supreme Court in 2005’s Kelo v. City of New London upheld a Connecticut Supreme Court ruling that determined such “takings” were legal. In the case, Susette Kelo’s home stood in good shape but city officials condemned it to allow the transnational drug company Pfizer to build a research branch, which the city said would boost the local economy.

Montana courts have tended to favor private landholders in cases involving eminent domain, but the senators say their bills are necessary regardless.

Elliott said property owners shouldn’t have to worry about state courts changing direction.

That worries Kaufmann, too, though she mainly wants to avoid a re-run of last fall’s I-154, which would have limited eminent domain but also required that governments compensate landowners for land-use decisions that limit the use or value of private land.

“If the backers of I-154 want to come back with their plans to stop government regulation of land use … the passage of this bill will take the eminent domain issues of Kelo out of the discussion,” Kaufmann said earlier in the session.

Montana’s Supreme Court struck down I-154 and two other ballot measures just before the November election after finding “a pervasive and general pattern and practice of fraud.”

Kaufmann’s Senate Bill 363, is drawing support from conservation and public interest groups that opposed I-154. Among them are the Audubon Society, Montana Conservation Voters and the Montana Smart Growth Coalition.

Specifically, it would keep eminent domain from being used in urban renewal projects if the property isn’t “blighted,” or if the main purpose of the project is to increase tax revenue – both major points of contention in the Kelo decision.

The I-154 fiasco bothered Elliott as well. When a lobbyist asked him if one of his bills would include compensating land owners for the effect of local regulations, Elliott replied “Hell, no.”

But Elliott’s bills aim directly at what he has long considered potential problems in Montana’s laws that the Kelo decision only recently brought to the public eye.

His Senate Bill 316 would keep cities from annexing and possibly condemning small parcels of farmland cut up for a public use by allowing them to keep their tax status as agricultural land.

But Elliot’s Senate Bill 41 has a far more general cast. It would force government agencies to wait 10 years before land taken under eminent domain could be sold to a private developer or used for a non-public use.

While a private developer could still do the work, the development would have to serve an immediate public purpose.

Elliot offered an identical bill to the 2005 Legislature but it died in committee.

“Kelo hadn’t been decided in ‘05,” Elliott said. “There wasn’t the outrage then that there is now.”

The two senators expect smooth sailing for their bills, but they have heard concerns of redevelopment planners and local governments.

In Montana, eminent domain is rarely used and usually at the request of the seller, said Ellen Buchanan, director of the Missoula Redevelopment Agency.

When an owner gives up their land in an eminent domain case, they get more time to reinvest before the compensation money becomes subject to capital gains taxes, usually up to three years.

If the willing owner only wants give up their land under this condition, Elliott’s bill would keep the land from being given over to a private company that might help the project to pay itself off, Buchanan said.

Though she voted for Elliot’s bills, Sen. Kaufmann doesn’t quite see eye to eye with him on eminent domain either.

“I think Elliot’s SB 41 shuts down the possibility of using eminent domain for urban development, and I wonder if we want to do that,” she said.

Riley Johnson, a lobbyist and the director of the Montana branch of the National Federation of Independent Businesses, said this is just what he hopes would happen.

“If you’re going to come take my land, it has to be used for a road or something of that nature,” said Johnson, who also supports Kaufmann’s bill.

However, a lobbyist for Montana’s League of Cities and Towns, Alec Hansen, said some rare cases warrant eminent domain for urban renewal.

“If the property is clearly blighted, which is difficult to prove, and if it’s a threat to public health and safety, then it needs to be removed,” Hansen said.

Even so, Hansen agreed that the way Montana’s courts have long protected property owners from some uses of eminent domain ought to be placed into statute.

In 1995’s City of Bozeman v. Vaniman, the Montana Supreme Court decided that government couldn’t use eminent domain to move land to another private holder. Those arguing for Susette Kelo in the U.S. Supreme Court found the case strong enough to use as an example of how states ought to consider eminent domain. But the ruling in Vaniman doesn’t specifically apply to blight, and Johnson doesn’t want small businesses to have to worry about it.

“We aren’t attorneys, and we don’t have money to go out and buy attorneys,” Johnson said.

Institute for Justice, which tracks eminent domain nationwide, gives Montana its highest rating. In 10,000 cases between 1998 and 2003, Montana had only one instance of government threatening eminent domain for the purpose of economic development, and eminent domain didn’t end up being used in that case.

If Montana’s legislature passes these bills, it will be following the lead of 36 other states that have adopted laws limiting eminent domain since the Kelo decision. And though the need may not exist right now, neither Elliott nor Kaufmann wants to wait until it’s too late.

“Quite frankly it’s not used a lot,” Elliott said. “But the threat is there and the threat shouldn’t be there.”

New West, Missoula MT: http://www.newwest.net