July 01, 2015 Urban Lawyer

Recent Developments in Eminent Domain

by Robert Thomas

Robert H. Thomas (rht@hawaiilawyer.com) is a Director at Damon Key Leong Kupchak Hastert. LLM, Columbia Law School; JD, University of Hawaii. He is the past Chair of the Eminent Domain Law Committee of the ABA Section of State and Local Government Law. His blog on land use and eminent domain law is www.inversecondemnation.com.

It has now been ten years since the U.S. Supreme Court, in Kelo v. City of New London,1 raised the public consciousness about eminent domain by holding that a municipality’s exercise of eminent domain supported only by claims that doing so would help the local economy was not a per se violation of the Public Use Clause of the Fifth Amendment. In the past year, the courts have also been active, and 2014 saw a decided upswing in the number of interesting eminent domain cases decided. This article discusses the recent case law on both “power to take” issues and those involving just compensation.

I.  Public Use Issues

A.  Pennsylvania: No Public Use to Condemn when “Sole Purpose” of Taking Benefits Private Developer

In a very important case from Pennsylvania, Reading Area Water Auth. v. Schuylkill River Greenway Ass’n,2 the question before the court was this:

The primary question raised is whether a municipal authority may exercise its eminent domain powers to condemn an easement over privately-owned land, where the sole purpose of the easement is to supply a private developer with land to install sewer drainage facilities needed for a proposed private residential subdivision.3

The short answer: no.

The Schuylkill River Greenway Association, true to its name and in conjunction with Bern Township, intended to build a public walking and recreational trail on land it owns along the bank of the river. Unfortunately for the Association, the property next to theirs was slated for development into an “adult residential subdivision,” and the subdivision needed access to the river water, which would require a water main and a sewage line “to run through the Greenway’s property.”4

The Water Authority first tried to buy an easement, but when negotiations didn’t come to fruition, it condemned the land needed, and estimated just compensation for the value of the easement at $3,500:

The resolution reflected that the easement was to be condemned at Developer’s request and that it would be used for water, sewer, and stormwater purposes specifically to enable Developer to build Water’s Edge Village. The resolution also stated that Developer would be responsible for initiating eminent domain proceedings . . . and would be required to pay all costs associated with such proceedings, including just compensation to the Greenway.5

The landowner objected, asserting that the attempted taking was illegal under the Pennsylvania Property Rights Protection Act, because it was for solely for the benefit of a private enterprise. Landowner also asserted that the amount of land to be taken was in excess of what was needed, and thus the Water Authority lacked the authority to take the extra land. After hearing testimony, the trial court agreed, and sustained the landowner’s objections, holding that “the condemnation was effectuated solely to benefit a private commercial developer who had been unable to acquire an easement through private measures.”6 The court held that the stated public use was a pretext to private benefit.7 The court concluded that the facilities to be built would be owned by Developer, “and that the primary beneficiary of the condemnation would be Developer, and not the general public.”8 In addition, the facilities would interfere with the greenway, a trail proposed for public use. On appeal, the Commonwealth Court reversed. It concluded that, “although the availability of the utilities would make Developer’s homes more valuable, this alone would not negate the project’s public purpose of providing water, sewer, and storm water services.”9

The Pennsylvania Supreme Court reversed, distinguishing Kelo on the basis that the benefit was conferred on an identifiable private party, and there was no evidence of some larger plan that of which the taking was a part.10 Moreover, the taking here fit into the “classic” or “traditional” public use (utilities), and not the redevelopment scheme at issue in Kelo. “It can reasonably be argued, then, that whether the taking presently in issue is ‘primarily’ for a public use or a private benefit is a matter of perspective.”11 A condemnation sufficient under the Public Use Clause could be implemented for private use.12

But the court avoided basing its decision on the constitution. It held that although an exercise of eminent domain may result in some private benefit, the Pennsylvania Property Rights Protection Act, and not the constitutional public use limitation, was the controlling law and the decisive factor. The Act prohibits takings “solely for private enterprise,” and the court focused on the word “solely.”

[I]n spite of the drainage easement’s colorable public-use facet as outlined above, [the Authority] condemned it, in effect, to allow Developer to occupy and use it for private enterprise — namely, to develop a residential subdivision.13

Thus, the case was remanded.

A couple of thoughts: first, what if the Water Authority, now that the taking has been invalidated, tries again, but this time drafts the resolution so that it includes all of the supposed public uses that were not present in the first draft? Will that save it from another challenge on the same grounds? We would not think so, because the trial court did not just base its decision on the text of the resolution, and concluded that the stated use was pretextual. We would think that the Water Authority would, at a minimum, have to prove new conditions. Second, this decision is an instructive one even for those in jurisdictions without a statute similar to the PPRA, because it shows how a trial court may treat cases where a taking is challenged as pretextual, even where the challenge is constitutionally-based.14

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