Some residents cry foul over eminent domain use: Billings MT Gazette, 4/16/07

By Tom Howard

For the second time in three months and the third time in three years, the City Council has authorized use of the city's power of eminent domain to acquire private land to complete street or utility projects.

Eminent domain is a section of law that allows governments to acquire private property for public uses. City officials say they use eminent domain only as a last resort when efforts to acquire property have reached an impasse.

On March 26, the council authorized staff to begin condemnation proceedings to acquire seven properties in the Blue Creek area. The city is seeking easements for a city sewer line to serve Briarwood. Although installing the sewer line will require extensive excavation, the construction area will be reclaimed. Unlike street projects, the sewer right of way won't be easy to find within a few years after construction is completed, city officials say.

City Administrator Tina Volek said the city has reached agreement with the owners of six parcels in the Blue Creek area. Negotiations are continuing with other owners, she said. Last fall, the council filed suit against the owners of five parcels on Grand Avenue in order to acquire right of way for the widening the street between Ninth Street West and 12th Street West. A district judge has allowed the city access to the properties so the road project can be completed this summer. Construction is scheduled to begin April 23.

In 2004, the city initiated condemnation proceedings to acquire street right of way through the Peter Yegen Jr. Golf Course. The two sides settled on a price two years later and the street project was completed last year.

Eminent domain has been a hot-button issue among property rights advocates for more than two years after a Supreme Court ruling that allowed the city of New London, Conn., to bulldoze people's homes to make way for shopping malls and other private development.

Although the case Kelo vs. City of New London expanded government's ability to take private property, local residents needn't worry about the city of Billings swooping in and seizing people's homes and businesses, said Councilman Richard Clark.

"In that case the court said they could use eminent domain for economic development," Clark said. "But we have never done that before, and the chances of me voting for something like that are zero."

"I hope we don't have to use (eminent domain) any more," said Councilman Larry Brewster. "Every time we've decided to do it, we've used it as a tool for negotiations."

Brewster said the city uses eminent domain only when there's a possibility of a project being delayed. With construction costs increasing at 8 to 10 percent a year, completing a project sooner saves money for taxpayers in the long run, he said.

"This council has been up front that they're not interested in using eminent domain for anything but for a specific public project," Volek said. "It's certainly not the nature of this council to do like they have back East and condemn large parcels for urban renewal."

Although city officials say that that they use eminent domain only as a last resort, many Blue Creek residents still don't like the thought of a sewer line going through their property.

Detta Graham, whose back yard abuts Blue Creek, worries that the sewer project could damage the creek bed and discourage visits from wildlife.

"The sad part is we have all kinds of birds - pheasants, ducks, geese, cranes and turkeys," Graham said. "They're going to destroy the creek bed."

Graham, a real estate agent, said the city offered her $4,200 for one-tenth of an acre for the sewer easement. She said that's well below market value of around $60,000 per acre for similar property.

Michele Johnson, of 2705 Blue Creek Road, is one of the property owners with whom the city has been negotiating. She said the city's eminent domain powers put property owners at a disadvantage.

The city has offered Johnson $3,350 for a 20-foot-wide easement across her property. Johnson said she has offered an easement from 12 to 16 feet wide.

The way the city's offer is written, Johnson said, "the city can do whatever it pleases and the property owner gets to repair all the damages." Johnson said she wants a fair contract, she wants to be reimbursed for what she has spent on legal fees and she wants the city to promise that it will never try to annex her property.

Councilwoman Joy Stevens said the city has agreed to reimburse property owners for their legal expenses as part of a settlement. Although the current council isn't interested in annexing Johnson's property, she said, future councils may decide differently. The current council can't prevent future councils from annexing property, she said.

Johnson has challenged the City Council before. In 2005, she was a vocal opponent to the Heritage Trail Plan, a network of biking and hiking paths being developed in the Billings area. Johnson and other Blue Creek residents were upset because the plan included maps showing potential bike trails crossing private property. Some worried that the city or county might use eminent domain powers to seize property and build trails.

The City Council and the county commissioners agreed to amend the trail plan.

Johnson asked the county commissioners last week to help "rein in the city's abusive actions."

Commissioner Bill Kennedy said the commissioners don't have the authority to intervene in the city's lawsuit, nor can they prevent the city from annexing property. Montana annexation law is stacked in favor of cities, and if Johnson wants to change the law, she will have to ask the Legislature to change the law, Kennedy said.

Wyeth Friday, planning division manager for the City-County County Planning Department, said the city initiates annexation only when the property owners request it.

In December 2004, the city began condemnation proceedings against Yegen Grand Avenue Farms to acquire the right of way to extend Zimmerman Trail through the Peter Yegen Jr. Golf Course.

The two sides eventually agreed on a price of $575,000, avoiding a court fight. Before that, two appraisals were conducted. One estimated the property was worth $478,500; the other put the value at $237,762. City Councilman Vince Ruegamer said the city agreed to pay the premium of nearly $100,000 above the higher appraisal with the understanding that the money would be paid to the golf course.

At the time, city officials said they probably saved money because taking the case to court would have cost more and could have delayed the project.

Charlie Yegen of Yegen Grand Avenue Farms said the case boiled down to a disagreement over how much the property was worth.

Throughout the process, city officials always tried to be fair, Yegen said. He doubts that the city would exercise its powers of eminent domain in order to seize property for urban renewal.

The city's attempt to acquire property along Grand Avenue was complicated when the city discovered underground fuel storage tanks at the site of the former Dairy Queen restaurant at 11th Street West and Grand. A gasoline station operated on the property before it was a restaurant.

Reger Properties Inc., owner of the Dairy Queen property and a defendant in the case, has asked the court to direct the city to pay Reger $294,000, which was the city's last offer.

Reger's legal brief argues that the city should pay for cleaning up any contamination because Reger had already agreed to the city's offer and the city had known that the property previously had a gas station.

Deputy City Attorney Kelly Addy said the city is willing to pay "just compensation" for the property, but he didn't specify a figure or range. The city is still awaiting environmental tests to determine if any of the underground fuel tanks have leaked.

According to preliminary estimates, it may cost about $5,000 to remove each storage tank. If little soil contamination is found, the cleanup costs could amount to a small portion of a $2.7 million road project. A state program to cover the cost of cleaning up underground storage tanks may also be available if contamination is found, Addy said.

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