Eminent Domain

Understanding Eminent Domain

  1. PROTECTION FOR LANDOWNERS
  2. WHAT IS EMINENT DOMAIN
  3. DUE PROCESS
  4. THE LAW OF INDIANA
  5. FEDERAL LAW and the EXPANSION OF EMINENT DOMAIN: THE KEHLO DECISION
  6. THE INDIANA RESPONSE TO KEHLO
  7. JUST COMPENSATION
    1. FMV
    2. Highest and best use
    3. Severance
  8. CONCLUSION

PROTECTION FOR LANDOWNERS
The following is a brief explanation of laws and rules surrounding the government’s right of eminent domain. Although this article provides the basis for understanding some of the concepts surrounding eminent domain and condemnation it is no substitute for a consultation with an attorney experienced in protecting owner rights. If you should have any questions regarding eminent domain or condemnation please feel free to call or email to arrange a free initial consultation.
Phil Sever

WHAT IS EMINENT DOMAIN
Federal, state and local governments, agencies and utilities are granted the right to take private property for a public use by using the power of Eminent Domain. The right of governments to utilize Eminent Domain is codified in both federal and state constitutions and is supported numerous additional laws and court decisions. The Federal government’s right to eminent domain can be found in the 5th and 14th amendments to the U.S. Constitution. According to the 5th amendment:
“No person shall be held to answer for a capital, or otherwise infamous crime, unless on presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

and in the 14th amendment:

Section 1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

The right of the Indiana government to take private property can be found at Article 1, Section 21 of the Indiana Constitution:
No person’s particular services shall be demanded, without just compensation. No person’s property shall be taken by law, without just compensation; nor, except in case of the State, without such compensation first assessed and tendered.

In most situations, governments have given the power of eminent domain to administrative agencies, local utilities, or local boards, e.g. library boards. For example, in Indiana the power of eminent domain to take private land for road projects is exercised by the Indiana Department of Transportation
Condemnation refers to the legal process that the government must utilize when exercising its power of eminent domain. This should not be confused with the situation where a building is designated as no longer fit for habitation.
Traditionally, private property was often taken for public uses like building freeways, schools, bridges, and more recently certified technology parks. With the expansion of energy and communication needs the rights of eminent domain are increasingly being utilized to take private property for gas lines, powerlines and fiber optic cable lines are being

DUE PROCESS and EMINENT DOMAIN PROCEDURE
As stated above the right of the federal government to exercise eminent domain is set forth in the 5th Amendment to United States Constitution. In the case of Chicago, Burlington & Quincy Railroad v. Chicago (1987) the Supreme Court ruled that the process by which landowners be given just compensation was guaranteed by the due process clause of the 14th Amendment to U.S. Constitution. Nearly all states contain these same types of due process guarantees in their own constitutions.

As such Federal Rule of Civil Procedure 71 and Indiana Code 34 provide the legal process by which the Federal Government and State of Indiana may exercise eminent domain. Click here to view the full text of Federal Rule 71. Click here to view the full text of Indiana Code 34. Discussion of how these rules work in more detail on other sections of this website or by clicking here.

THE EXPANSION OF FEDERAL POWER and KEHLO
Traditionally, the U.S. Supreme Court has granted great leeway to the individual states and the federal government in defining exactly what satisfies a “public purpose.” For example, the Court in the 1950’s permitted Washington, D.C., to condemn by eminent domain procedures large sections of blighted neighborhoods surrounding the U.S. Capitol building in order to be re-developed and sold off to private persons and companies in order to clean-up and restore the squalid conditions of the area. In that case, the Court reasoned that “[i]f those who govern the District of Columbia decide that the Nation’s Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way.”1 The Court believed that even though the takings of individual homes and stores would be sold or handed over to new private owners, the Constitutional safeguards were met because the overall plan that Washington, D.C., was following would benefit the public at large.
Unlike the situation in Washington, D.C., in the 1950’s, Ms. Kelo of New London, Connecticut, does not live in a blighted neighborhood. In fact, the area of Fort Trumbull was a fine neighborhood and was not as affected by the poor economic conditions faced by other areas of New London. However, the Supreme Court decided in 2005 to rule against her and to permit New London to re-develop the area. The Court’s reasoning for allowing the project to go forward basically follows the same logic as it employed in the 1950’s. The Court recognized that the city will be eventually handing the land over to new private owners. But because there is a significant plan in place to benefit the whole community by spurring economic growth and development, and not just to benefit one person or group, the Court allowed the city to press forward with its plan, emphasizing that these decisions are for the states and local governments to make and not for federal courts.
The backlash of the Court’s decision has been fierce in many states. States like Georgia and Indiana have enacted new regulations stressing that the building of economic development areas are not “public uses.” These states in addition to others have even more narrowly defined and limited exactly what kind of private property can even be taken, making such heightened requirements that the private property be either in a blighted area or be a nuisance. Another example of Kelo legislative backlash would be new regulations signed into law by Gov. Bush in Florida, where a new law dictates that condemned private land cannot be handed over or sold to another private party for a period of ten years.
While the call to arms for property rights has raged in some states, others have embraced the Court’s decision. Delaware, for example, has passed new legislation that codifies an almost mirror image of the Court’s decision. Vermont has passed new legislation that purports to strengthen property rights, but in fact has so many loopholes and exceptions that it is almost a toothless measure.

THE INDIANA RESPONSE TO KEHLO
The Indiana General Assembly modified Indiana’s existing eminent domain law in 2006. The most significant change to the existing law was the placement of new restrictions on localities from using the eminent domain power to create economic development zones or to spur private businesses. The legislature carefully delineated the possible scenarios where eminent domain procedures are for a “public use.” These public uses include the building of schools, bridges, highways, airports, and certified technology parks. Further, the legislature limited the types of property that may be acquired by eminent domain, namely those that are public nuisances, unfit for habitation, abandoned or environmentally contaminated.
Projects that no longer qualify under the law as a public use are now termed as “private to public to private” projects (or “ppp”). Some properties in a “ppp” then may not be acquired through an eminent domain action and must be purchased by whatever cost the seller is demanding as compensation.

JUST COMPENSATION
The US and Indiana Constitutions mandate that a person who has had their property taken by eminent domain receive just compensation for their land. Determining just compensation for the landowner is typically the most important part of the eminent domain case. In most instances it is highly unlikely that the landowner will be able to stop the government taking. This leaves the amount of compensation to be paid to the landowner as the true battle in most eminent domain cases.
Just compensation is not merely a calculation of the fair market value of the property to be taken. Instead it is a measure that is designed to put the landowner in the identical position he occupied prior to the taking.
In general, there are three basic components of damages to determining just compensation. First, the landowner should determine the highest and best use of the affected parcel. If the current use is farm land but the highest and best use of the parcel is as commercial or residential land the landowner is entitled to utilize the value of the land at its highest and best (most valuable) use. Second, after determining the highest and best use of the property then a fair market value must be attributed to the government taking. Fair market value can be determined by a variety of methods. Most typical is the comparable sales method whereby the property being taken is compared in value to other similar parcels while still being cognizant of highest and best use. Finally, a determination should be made if there are any damages to the residual of the property. In some instances a taking can negatively affect the entire property. In these instances it is important to determine how the taking reduces the value of the entire property. In more complicated cases damages may also be available due to a regulatory or access issue.
With almost every eminent domain and condemnation case the determination of just compensation for the landowner is a critical and complicated task. Before accepting any offer from the state landowners would be well served to seek qualified and experienced representation

CONCLUSION

Hopefully the materials in this article have been helpful in education and arming yourself to face the eminent domain process. Remember, it is important to seek representation as early as possible in the process to insure that your receive the best possible result.

1 Berman v. Parker, 348 U.S. 26 at 33 (1954).

Eminent Domain & Condemnation Articles