St. Louis Eminent Domain Attorneys

Eminent domain, also known as condemnation, is the legal process by which a governmental agency is given the legal power to acquire private property for a public use. The "condemnor" is the public or private entity having the legal power of eminent domain. In tax increment financing projects, the private developer borrows the government's name in undertaking condemnation.

Under the Constitution, private property may be condemned so long as the taking is for a public purpose and the property owner is paid just compensation. "Just compensation" is designed to indemnify the property owner for his or her losses. This is often done by paying the "fair market value" for the value taken. If only a portion of the property is acquired, the owner may also be entitled to consequential damages to the property that remains. The owner has the right to be paid for the "highest and best use of the property," as opposed to the existing use. If the business is closely intertwined with the location, business damages may also be awarded.

THE PROCESS IN MISSOURI:

Briefly, the condemnation process is as follows:
(Click the underscored words for definitions)

The government (condemnor) makes an offer to purchase the property to be condemned; the offer is rejected by the property owner and the government then files a petition with the court seeking permission to condemn the property.

The judge holds a condemnation hearing, at which the property owner may challenge the government's right to condemn. The judge then approves or rejects the government's right to condemn.

The judge appoints three commissioners to determine the owner's compensation.

The commissioners conduct a hearing to determine the amount of compensation.

The commissioners report their decision to the court.

The government (condemnor) pays into court the compensation determined by the commissioners.

The government (condemnor) takes title to the property by reason of putting the money into court.

If the parties agree to the amount of the Commissioners' Award, the case may be settled. Otherwise, either side may file exceptions, which means requesting a jury trial.

The owner or tenants seek relocation benefits and services, if applicable.

If a tenant is involved, the Commissioners' Award might be divided between the landlord and tenant. If necessary, a hearing is called for a Motion for Apportionment, is held before a judge to decide dispute over how much of an award a tenant may be entitled to receive.

If the case does not settle, a jury trial is held to determine the amount of compensation. The jury is not told of the commissioner's decision.

Missouri law has eminent domain legislation to protect property owners. It affects negotiations, legal procedures, valuation and compensation. Below is a review of these laws.

Blighting laws
Negotiations and procedure before court actions
Changes in property valuation
Commissioners' hearing procedures
Other changes

BLIGHTING LAWS

Preponderance of the properties within the blighted area must be blighted (Section 523.274)

A municipality must now consider each individual parcel within a proposed project area and can only blight areas where a “preponderance” of the properties are blighted.

Eminent domain cannot be used solely for economic development (Section 523.271)

It is not permissible to condemn “solely” for “economic development.”

Farmland cannot be blighted

Any land that is classified as farmland cannot be blighted. The law defines “farmland” broadly to include, for example, land used for forest cropland, agricultural purposes, feeding, breeding, and management of livestock, and dairy operations. In addition, land that is included under a soil conservation or agricultural assistance program of the federal government will also be considered farmland.

The court must now find “substantial evidence” supporting a finding of blight. (Section 523.261)

When blighting is used in condemnation a trial court must find “substantial evidence” to support a finding of blight. The burden is on the local government to prove an area is actually blighted.

The legal process to challenge blight is expedited (Section 523.261)

Any time there is a blighting ordinance, it can be challenged by any targeted property owner. In addition, an owner can usually wait until the condemnation petition has been filed to challenge blight during an eminent domain case. When any of these occur, the trial judge “shall give the case preference in the order of hearing to all other cases in order to conclude the case within 30 days of having been filed.” Also, after a decision by the trial judge on blight, there is an automatic right to appeal the decision, and the appeal will be expedited.

Five years to condemn after blight ordinance (Section 523.274)

An eminent domain case must be filed within five years of the ordinance adopting blight. This time period can be extended in five year increments by legislative action.

Chapter 353 Redevelopment Corporations created after December 31, 2006 cannot condemn. (Sections 523.262)

353 corporations can only condemn property if they have a redevelopment agreement effective prior to December 31, 2006. This is because after that date, only governmental bodies, or agencies whose governing body is elected, or whose governing body is appointed by elected officials, can exercise eminent domain powers.

NEGOTIATIONS AND PROCEDURES BEFORE COURT ACTIONS

Pre-Condemnation Notice (Section 523.250)

At least 60 days prior to filing a condemnation petition, the condemning authority must give a written notice to the owner of record that has the following information:

Identifying the interest in real property to be acquired
Stating the purpose for which the property is being condemned
Information about the property owner's rights regarding the condemnation
The right to seek legal counsel at the owner’s expense
The right to make a counteroffer and engage in further negotiations
The right of the property owner to obtain the condemning authority's appraisal
The right to have compensation determined by commissioners
The right to seek assistance from the Office of the Ombudsman
The right to contest the condemnation in court
The notice shall be by certified or registered mail

Changing the location of a proposed condemnation project (Section 523.265)

Within 30 days after receiving a Notice of Acquisition, the Owner targeted with potential condemnation on part of his land may demand the condemning authority to consider an alternate location on his property. This procedure involves the landowner proposing, in writing, alternate locations on the same parcel in sufficient detail. A written response by the condemning authority is required giving the reasons why the alternatives are rejected or accepted.

Offer made to property owner 30 days prior to condemnation and with attached appraisal (Section 523.253)

No fewer than 30 days prior to filing a condemnation petition, a written offer must be made to the owner and shall be held open for 30 days. In most cases, an appraisal is included with the offer.

Negotiations and good faith offers (Section 523.256)

This Legislation sets out what constitutes “good faith” by requiring:

All notices under the statute must be timely given to the property owner
The offer must be no less than the appraised value prepared by a state-certified appraiser
The owner has had an opportunity to obtain his or her own appraisal
The condemning authority has considered an alternate location suggested by the owner under section 523.265

If the court finds that the condemning authority did not negotiate in good faith, then the case will be dismissed and attorney’s fees and costs shall be assessed against the condemning authority.

PROPERTY VALUATION

Methods of Valuation (Section 523.001)

Three methods to value property are expressly approved - the comparable sales approach, income approach and cost approach, or “generally accepted appraisal practices” to measure fair market value.

Definition of fair market value (Section 523.001)

"Fair market value" is defined as: “The value of the property taken after considering comparable sales in the area, capitalization of income, and replacement cost less depreciation, singularly or in combination, as appropriate, and additionally considering the value of the property based upon its highest and best use, using generally accepted appraisal practices. If less than the entire property is taken, fair market value shall mean the difference between the fair market value of the entire property immediately prior to the taking and the fair market value of the remaining or burdened property immediately after the taking”.

Valuation - Heritage Property - 50% bonus (Section 523.001)

Property condemned which has been in the same family for more than 50 years will receive an additional 50% over the fair market value of the property.

Valuation - Homestead Property - 25% bonus (Section 523.001)

When a primary residence is condemned, the owner will receive an additional 25%. In partial takings, this only applies when the taking is within 300' of the residence and the owner shows that the taking prevents the owner from utilizing the property. Note that if the property is owned for more than 50 years in the same family, it is better for the owners to apply for the Heritage Value bonus of 50%. An owner cannot apply for both Homestead Value and Heritage Value.

COMMISSIONERS’ HEARING PROCEDURES

Commissioners Hearing - time requirements (Section 523.040)

The new law requires that the commissioners view the property, hear testimony about the value of the property, and review information offered by the parties. The commissioners shall file a report within 45 days after being appointed, which may be extended by the court for good cause shown. Before their hearing, the Commissioners are required to give at least 10 days notice to the parties.

OTHER PROVISIONS OF THE LAW

Relocation benefits (Section 523.205)

The minimum residential payment for relocation is $1,000. Alternatively, actual costs are paid.

The minimum benefit for businesses is $3,000 for moving expenses. In addition, entitled businesses to an additional $10,000 for reestablishment expenses.

Abandonment of condemnation, award of attorney’s fees, expenses, and damages (Section 523.259)

In the event a condemning authority abandons a condemnation, the owner may recover attorney’s fees, expert fees, expenses, and damages.

Procedures to abandon easements

If any easement created after Dec. 31, 2006 is abandoned for more than 10 years, the owner may petition to eliminate the easement. The owner must pay the compensation originally paid when the easement was acquired. This right may be waived at time of conveyance, or later.

Taxes

A property owner may reduce his gross adjusted income by the amount recognized as a gain under Federal Tax Code Section 1033.

Blanket easements are abolished (Section 523.282)

This section abolishes blanket easements created after Dec. 31. 2006 as against public policy.

Does not include easements that become fixed after completion of the initial improvements.

Easements cannot expand their uses (Section 523.283)

Road easements, utility easements and railroad easements that are acquired by condemnation or by negotiations in lieu of condemnation after August 28, 2006, cannot have expanded uses beyond the original purposes of the acquisition.

Ombudsman Office (Section 523.277)

An Office of Ombudsman for property rights was created to assist citizens involved with eminent domain. The statute clearly states that the ombudsman shall not provide legal advice.