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Government Takings

Government Takings. A Production Spectrum. Public records. A Production Spectrum. Public Private – Under coercion Regulation - fines, confiscation, imprisonment Financial Incentive taxation – income, property loans, grants Risk assumption – mortgages

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Government Takings

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  1. Government Takings

  2. A Production Spectrum • Public records

  3. A Production Spectrum Public Private – Under coercion • Regulation - fines, confiscation, imprisonment • Financial Incentive • taxation – income, property • loans, grants • Risk assumption – mortgages • Public Infrastructure - construction – water treatment, sewers, roads, schools, airports and airways, waterways, recreation areas • Collecting and disseminating statistics - public records - others • Public records Givings and Takings

  4. Legislature Legislative Mandate Legislation Executive Regulation Judicial LAW

  5. LexisNexis Academic • Search by Content Type • <Legal> <Federal Statutes and Regulations> <Advanced Options> <Constitution> <eminent domain> • <Legal> <Federal Statutes and Regulations> <Advanced Options> <Annotated U.S.Code> <eminent domain> • <Legal> <Federal Statutes and Regulations> <Advanced Options> <Code of Federal Regulations> < eminent domain> • <Legal> <Law Reviews> <eminent domain>

  6. LexisNexis Academic • Search by Content Type • <Legal> <State Statutes & Regulations> <Advanced Options> <Constitution> <Minnesota> <eminent domain> • <Legal> <State Statutes & Regulations> <Advanced Options> <Statutory Code> <Minnesota> <eminent domain> • Search by Source Directory • <Source Directory> <Browse > <Treatises and Analytical Methods> <Dunnell Minnesota Digest> <eminent domain>

  7. LexisNexis Academic • Search by Content Type • <Legal> <Federal and State Cases> <Advanced Options> <US Supreme Court> <eminent domain> • <Legal> <Federal and State Cases> <Advanced Options> <8th Circuit> <eminent domain> • <Legal> <Federal and State Cases> <Advanced Options> <Minnesota> <eminent domain>

  8. General Resources • Protecting Private Property Rights from Takings (Cato Institute, 1995) • Regulatory Takings and Proposals for Change (Congressional Budget Office, 1998) • Regulatory Takings Claims (Bench & Bar of Minnesota, 2002)

  9. Police Powers - the fundamental right of a government to make all necessary laws • Federal government • Article I [The Legislative Branch] (see explanation) • Section 8. [Scope of Legislative Power] (see explanation) • Section 9. [Limits on Legislative Power] (see explanation)

  10. Police Power • state police power comes from the Tenth Amendment to the Constitution, which gives states the rights and powers "not delegated to the United States" • Amendment X [Rights Reserved to States or People (1791)] (see explanation) • the power to establish and enforce laws protecting the welfare, safety, and health of the public • can delegated by the state to municipalities, government subdivisions, or even private persons or corporations when they are authorized to exercise functions of public character

  11. Police Power • Includes the power • to restrict how landowners owners can exercise the legal rights they possess and use real property and thus promote/prohibit certain types of uses – to regulate – called “takings” in extreme cases • to acquire the legal rights of landowners – the power of eminent domain – through condemnation proceedings • Covenant – defeasible fee - easement • Regulation • specific • general - zoning • Regulatory takings • Eminent domain • Confiscation

  12. Power of Government • Power to control how the rights of ownership can be used – police power • "We think it is a settled principle, growing out of the nature of a well ordered civil society, that every holder of property, however absolute and unqualified may be his title, holds it under the implied liability that his use of it may be so regulated that it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. All property in this commonwealth is derived directly or indirectly from the government, and held subject to those general regulations, which are necessary to the common good and the general welfare. Rights of property, like other social and conventional rights, are subject to such reasonable limitations in their enjoyment, as shall prevent them from being injurious, and to such reasonable restraints and regulations established by law, as the legislature … may think necessary and expedient" (Commonwealth v Alger. 7 Cushing's (Massachusetts) Reports 51 at 84; 1851)

  13. Origin of Power • Fifth Amendment to the Federal Constitution (part of the Bill of Rights) • No person shall be held to answer for a capital, or otherwise infamous crime, unless on a 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

  14. Due Process includes • Right to a fair and public trial conducted in a competent manner • Right to be present at the trial • Right to an impartial jury • Right to be heard in one's own defense • Laws must be written so that a reasonable person can understand what is criminal behavior • Taxes may only be taken for public purposes • Property may be taken by the government only for public purposes • Owners of taken property must be fairly compensated

  15. Fifth Amendment to the Federal Constitution (part of the Bill of Rights) • No person shall be held to answer for a capital, or otherwise infamous crime, unless on a 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 • National Eminent Domain Power • Minnesota Constitution Article l, Section 13and Article 13, Section 4 • Eminent domain

  16. Fourteenth Amendment to the U.S. Constitution • “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” Ratified July 9 1868 • Former Supreme Court Justice David Souter has called this amendment “the most significant structural provision adopted since the original Framing” • True significance of the Amendment was not realized until the 1950s and 1960s, when it was interpreted to prohibit racial segregation in public schools and other facilities in Brown v. Board of Education • Minnesota Constitution Article l Bill of Rights

  17. General issues • Appropriate exercise of police power • Due process • Public use • Just compensation

  18. Planning • Comprehensive Planning (Metropolitan Council) • Local Planning Law in Minnesota (Admin Minnesota) • MN Stats 394. Planning, Development, Zoning • MN Stats. 462 Planning, Zoning • Comprehensive Municipal Plans • Comprehensive Planning, Land Use and City-Owned Land (League of Minnesota Cities) • Citywide Plans (St Paul) • The Minneapolis Plan for Sustainable Growth

  19. Zoning (MN Stats.) • Zoning Guide for Cities (League of Minnesota Cities) • Zoning Ordinances (MN Stats.) • Counties – zoning (MN Stats.) • Zoning Administration (Minneapolis) • Zoning code • Zoning maps • Zoning (St. Paul)

  20. Zoning upheld • Village of Euclid, Ohio v. Ambler Realty Co. 272 US 365 (1926) • the first significant case regarding the relatively new practice of zoning, and served to validate zoning ordinances in towns nationwide in the United States  • the Court accepted the argument that zoning met two needs • extended and improved on nuisance law, providing advance notice that certain types of uses were incompatible with other uses in a particular district • was a necessary municipal-planning instrument • The case hinged on whether zoning was unconstitutional under any set of circumstances • There have been no more such challenges to the general scheme • By the late 1920s most local governments had developed zoning ordinances

  21. Regulatory Takings

  22. How far to the left can regulation go before there is a “taking”?

  23. Regulatory Takings • The requirement of the 5th amendment is relatively straightforward when the government formally condemns privately owned land – to build a road • But the issue becomes much more complex when owners allege that government regulations have effectively taken their property – by restricting the ways in which they can use it – and that they should be compensated • In Pennsylvania Coal Co. v. Mahon (1922) the Court recognized that a taking may occur even if there is no physical invasion of the property • Established the diminution-of-value test

  24. Until then the eminent domain applied only when the government physically seized or occupied property • Regulating land uses was not a taking but simply an exercise of the government’s police power to protect the public health, safety, welfare, and morals • In the Pennsylvania Coal Co. case the Court stated, “While property may be regulated to a certain extent, if a regulation goes too far, it will be recognized as a taking” • Cannot deprive the property owner of all reasonable use or value of the property

  25. Subsequently zoning – land use regulations generally recognized as a legitimate exercise of police power – may not deny an owner all economically viable use of the land  • In Agins v. Tiburon, 447 U.S. 255 (1980) the court stated that the application of land-use regulations to a particular piece of property is a taking only "if the ordinance does not substantially advance legitimate state interests ... or denies an owner economically viable use of his land" • Land-use regulations that deny the property owner any economically viable use are deemed a taking of the affected property  Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) First English Evangelical Lutheran Church v. County of Los Angeles 482 U.S. 304 (1987) • More recently, the courts have changed the definition of "substantially advance"

  26. In Penn Central Transp. Co. v. New York City (1978), the Court had rejected any set formula for determining when “justice and fairness” require that injuries caused by public action be compensated by the government • The Court identified several factors of significance in an essentially factual inquiry which includes • the economic impact of the regulation on the claim • the extent to which the regulation interferes with the landowner’s distinct investment-backed expectations • the character of the governmental action

  27. The Minnesota courts have tended to analyze regulatory takings cases on whether the regulation deprives the property of all economically viable uses • Have held that the denial of a building permit, rezoning request, or conditional use permit does not constitute an impermissible taking • Airport overflight cases and airport noise cases are analyzed in a different manner • MACnoise.com

  28. Regulatory Takings (Wikipedia) • Beginning in 1987, the US Supreme Court cases ruled that such regulation was a taking requiring just compensation under the Fifth Amendment to the Constitution  • First English Evangelical Lutheran Church v. Los Angeles County even a temporary taking may require compensation (1987) • Nollan v. California Coastal Commission ruled that a construction permit conditions that fail to substantially advance the agency's authorized purposes require compensation (1987) • Lucas v. South Carolina Coastal Council ruled that environmental concerns were not sufficient to deny all development without compensation (1992) • Dolan v. City of Tigard ruled that conditions of a permit must be roughly proportional to the impacts of the proposed new development (1994)

  29. Eminent Domain

  30. Federal Statutes and Rules • National Eminent Domain Powers (Legal Information Institute) • Delegation of the Federal Power of Eminent Domain to Nonfederal Entities (CRS, 2008) • Eminent Domain. Information about Its Uses and Effect on Property Owners and Communities Is Limited (GAO, 2006) • Eminent Domain: Should Private Property Be Taken for Public Use? (Federal Reserve Bank of S. Louis, 2007) • Legal Information Institute <US Code><“eminent domain”> • <CFR><“eminent domain”> • Search various agency sites using “eminent domain” • Google using agency name and “eminent domain”

  31. Condemnation Process • The Rules of Civil Procedure for the United States District Courts govern the procedure for the condemnation of real and personal property under the power of eminent domain, except as otherwise provided in this rule • 28 USC Appendix Federal Rules of Civil Procedure Rule 71.1

  32. Kelo et al v City of New London et al (2005) • In 2000, the city of New London approved a development plan that, in the words of the Supreme Court of Connecticut, was “projected to create in excess of 1,000 jobs, to increase tax and other revenues, and to revitalize an economically distressed city, including its downtown and waterfront areas.” • In assembling the land needed, the city’s development agent had purchased property from willing sellers and proposed to use the power of eminent domain to acquire the remainder of the property from unwilling owners in exchange for just compensation • Does the city’s proposed disposition of this property qualifies as a “public use” within the meaning of the Takings Clause of the Fifth Amendment to the Constitution?

  33. Question Court Answered • What protection does the Fifth Amendment's public use requirement provide for individuals whose property is being condemned, not to eliminate slums or blight, but for the sole purpose of "economic development" that will perhaps increase tax revenues and improve the local economy? • The 2005 decision authorizing the use of eminent domain for private development projects ignited controversy and has led to nationwide efforts to throttle back eminent domain powers

  34. Minnesota Statutes & Rules • Eminent Domain - Minnesota Statutes Subject Index (Minnesota Revisor of Statutes) • Minnesota Statutes 117 Eminent Domain (Minnesota Revisor of Statutes) • 117.027 Condemnation for Blight Mitigation and Contamination Remediation (Laws, 2006 c.214) • Minnesota Rules Chapter 1245, State-Owned Real Property (Minnesota Revisor of Statutes) • Eminent Domain in Minnesota, A Synopsis (MN Department of Administration)

  35. http://www.condemnation-law.com/main/eminent-domain-process/minnesota-eminent-domain-processhttp://www.condemnation-law.com/main/eminent-domain-process/minnesota-eminent-domain-process

  36. Eminent domain in Minnesota • Traditionally eminent domain has been used to acquire land for such public uses as roads, public buildings, and parks

  37. Eminent domain in Minnesota • Traditionally eminent domain has been used to acquire land for such public uses as roads, public buildings, and parks • In recent years, eminent domain has been used for economic development purposes or as a tool for redeveloping blighted areas

  38. Eminent domain in Minnesota • Traditionally eminent domain has been used to acquire land for such public uses as roads, public buildings, and parks • In recent years, eminent domain has been used for economic development purposes or as a tool for redeveloping blighted areas • In some instances, rather than acquiring land for a specific public works project, local governments have been taking land from one private owner and giving it to another private owner, reasoning that the new development will be economically beneficial to the residents of the community, even if it is a private development

  39. Eminent domain in Minnesota • Traditionally eminent domain has been used to acquire land for such public uses as roads, public buildings, and parks • In recent years, eminent domain has been used for economic development purposes or as a tool for redeveloping blighted areas • In some instances, rather than acquiring land for a specific public works project, local governments have been taking land from one private owner and giving it to another private owner, reasoning that the new development will be economically beneficial to the residents of the community, even if it is a private development • The issue of whether such public benefits can be considered a public use under the federal Takings Clause was at the center of the Kelo v. City of New London U.S. Supreme Court decision in June 2005. The court ruled that the city of New London's economic development plan qualified as a public use within the meaning of the Takings Clause

  40. Eminent domain in Minnesota • Concern over this ruling - and especially the interpretation of the phrase "public use" - led to calls for clarification of Minnesota's existing statutory law regarding eminent domain • The 2006 Minnesota Legislature responded by passing Laws of Minnesota 2006, chapter 214 • The act states that "eminent domain may only be used for a public use or public purpose", and further clarifies that the "public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health, do not by themselves constitute a public use or public purpose" • Other issues addressed by the legislation – condemnation for blight mitigation or contamination remediation, local government public hearing requirements, and compensation procedures

  41. Minnesota Supreme Court The Housing and Redevelopment Authority of the City of Richfield v. Walser Auto Sales, Inc. et. al. (2001) • Preceded the decisions in the Kelo case – even before the CT Supreme Court hearing in 2002 • Concerned the validity of the public purpose for a condemnation used by the city to acquire real property owned by Walser • The Hennepin County District Court granted the City the petition and Walser objected • In court the parties disagreed on whether the property in question was "blighted" • Walser argued that the District Court erred in its ruling finding a valid public purpose • In particular controversy surrounding the method city consultants used to calculate the percentage of blight in the area

  42. Minnesota Supreme Court The Housing and Redevelopment Authority of the City of Richfield v. Walser Auto Sales, Inc. et. al. • The Minnesota Court of Appeals affirmed the District Court’s judgment holding the property was taken for a public purpose • In its opinion, the Supreme Court was evenly divided (3 to 3, with Justice Joan Ericksen Lancaster taking no part) on the public purpose issue • Thus, the decision of the Court of Appeals stood • As a result, legal uncertainty exists as to whether the condemnation of property for a public purpose by a municipality will be upheld in the future in cases with circumstances similar to the Walser case • Eminent Domain Revisited: A Minnesota Case (New York Times Oct 2005)

  43. Minnesota Laws 2006 chapter 214 Set a higher threshold for when public officials can invoke the power of eminent domain, particularly on the key issue of what constitutes a "blighted" property, and included more protection and reimbursement for property owners Minnesota Statutes c117

  44. Web Resources • Re: Strengthening the Ownership of Private Property Act of 2005 (Cato Institute, 2005) • Limits of Urban Redevelopment? Kelo, Walser, and Condemnation in Minnesota(Bench & Bar, August 2005) • Eminent Domain (Larkin Hoffman, 2005) • Eminent Domain: Public Use (Minnesota House Research, 2006) • Challenging the Big Stick (FedGazette, 2006) • Resource on Eminent Domain (Minnesota House of Representatives, 2007)

  45. The Power of Condemnation • Governments – federal, state, and delegated to local - roads • Corporations – electric utilities – transmission lines • Minnesota Power Plant Siting Act gives electric utility companies the power of eminent domain for transmission lines and power plant sites - Minnesota Statutes 216E.12 Eminent domain powers • South East Metro Transmission Line – PUC, Appeals Court • Powerline: The First Battle of America's Energy War • Railroads • Telephone company • University of Minnesota

  46. Eminent domain in play for Minneapolis’ light rail (Daily Reporter, June 19, 2010) • Metropolitan Council to use eminent domain at former Gillette plant (Minneapolis St Paul Business Journal), June 28, 2010) • Condemned prosperity (FedGazette, March 2006) • High court to hear Eagan's eminent domain appeal (Star Tribune September 3, 2009) • Target Field (Wikipedia) • Underwater and Drowning? Some Facts about Mortgages that Could Be Targeted by Eminent Domain (Federal Reserve Bank of New York, Feb 2013)

  47. Confiscation • Alien Property Custodian • The Work of the Alien Property Custodian

  48. Savings and loan crisis • Congress deregulated the thrift industry* • the Depository Institutions Deregulation and Monetary Control Act of 1980 • the Garn–St. Germain Depository Institutions Act of 1982 • Allowed thrifts to offer a wider array of savings products (including adjustable rate mortgages) but also significantly expanded their lending authority and reduced supervision, which invited fraud • *A savings and loan or "thrift" is a financial institution that accepts savings deposits and makes mortgage, car and other personal loans to individual

  49. Savings and loan crisis • These changes were intended to allow S&Ls to "grow" out of their problems, and as such represented the first time that the government explicitly sought to increase S&L profits as opposed to promoting housing and homeownership • Other changes in thrift oversight included authorizing the use of more lenient accounting rules to report their financial condition, and the elimination of restrictions on the minimum numbers of S&L stockholders. • Such policies, combined with an overall decline in regulatory oversight would later be cited as factors in the collapse of the thrift industry

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