EMINENT DOMAIN: SENATE BILL 18 MAY BE THE OMNIBUS “REFORM” BILL

The Committee Substitute for S.B. 18 by Sen. Craig Estes (R–Wichita Falls) may emerge as the session’s primary eminent domain bill. It attempts to strike a reasonable balance between the needs of condemnors and the property rights of landowners.

In 2007, H.B. 2006 was the omnibus eminent domain reform bill. That bill made sweeping and dramatic changes to eminent domain law and the condemnation procedures that go with it. It was vetoed by the governor because it could have unreasonably modified the way condemnation damages are calculated and would have cost the state millions of dollars.

This session, more than 20 bills and joint resolutions proposing constitutional amendments, most of which would be extremely harmful to municipal authority, have been filed.

Unlike those bills and unlike H.B. 2006 (2007 session), S.B. 18 appears to make more subtle changes in an effort to promote fairness for property owners. The version of the bill that has been voted out of the Senate State Affairs Committee has the following selected provisions:

  • Public Use: A governmental or private entity may not take private property through the use of eminent domain if the taking is not for a “public use.” The bill would rely on existing court precedent defining public use and would preserve the “safe harbor” provision in current law that authorizes the acquisition of property for transportation projects, utility projects, and public buildings.
  • Record Vote: A record vote of the governing body, with specific procedures and wording, will be required to take each parcel of land through the use of eminent domain.
  • Report to Comptroller: Any entity authorized to exercise the power of eminent domain must submit to the state comptroller, by December 31, 2010, a letter stating that the entity is authorized to exercise the power of eminent domain and identifying the provision or provisions of law that grant the entity that authority. The entity’s authority to use eminent domain will expire if the letter is not sent by the deadline.
  • Property Owner’s Appraisal: When an entity with eminent domain authority wants to acquire real property, it shall disclose to the property owner any and all appraisal reports produced or acquired by the entity relating specifically to the owner’s property and prepared in the ten years preceding the offer; and the entity must pay for an appraisal of the property at a property owner’s request.
  • Bona Fide Offer: When an entity with eminent domain authority wants to acquire real property for a public use, it must make a bona fide offer to acquire the property from the property owner voluntarily. If a court determines that a condemnor did not make a bona fide offer to acquire the property from the property owner voluntarily, it will abate the suit, order the condemnor to make a bona fide offer, and order the condemnor to pay costs and attorneys’ fees.
  • Condemnation Petition: A condemnation petition must state with specificity the public purpose for which the entity intends to use the property. The petition must state that the entity and the property owner are unable to agree on the damages after negotiating in good faith, and an entity that files a petition must provide a copy of the petition to the property owner.
  • Special Commissioners’ Hearing: Each party has a reasonable period to strike one of the three special commissioners appointed by the judge in the case, with the judge appointing a replacement.
  • Compensation: The special commissioners shall consider an injury or benefit that is peculiar to the property owner and that relates to the property owner’s ownership, use, or enjoyment of the particular parcel of real property, including a material impairment of direct access on or off the remaining property that affects the market value of the remaining property, but the commissioners may not consider an injury or benefit that the property owner experiences in common with the general community, including circuity of travel and diversion of traffic. (Note: This provision is directed at the Texas Supreme Court's opinion in State v. Schmidt. That case dealt in part with damages caused by a highway improvement. The court held that owners were not entitled to compensation for diminution in value of the remainder due to diversion of traffic, increased circuity of travel to property, lessened visibility to passersby, or inconvenience of construction activities. [These are commonly referred to as the “Schmidt factors.”] The Schmidt case dealt with the expansion and elevation of Highway 183 in Austin, and thus the facts are urban. However, the Texas Farm Bureau is likely interested due to the construction of the Trans-Texas Corridor or other highway projects that are moving through rural areas. The compensation provisions in S.B. 18 appear to be more balanced than those in other bills because they offer some certainty from existing court precedent.)
  • Relocation Assistance: As a cost of acquiring real property, a city must provide a relocation advisory service for an individual, a family, a business concern, a farming or ranching operation, or a nonprofit organization that is compatible with the Federal Uniform Relocation Assistance and Real Property Acquisition Policies Act. The city must also pay moving expenses and rental supplements, make relocation payments, provide financial assistance to acquire replacement housing, and compensate for expenses incidental to the transfer of the property if an individual, a family, the personal property of a business, a farming or ranching operation, or a nonprofit organization is displaced in connection with the acquisition.

The bill would also modify current statutory provisions that allow a property owner to repurchase condemned property if it isn’t used by the condemnor within ten years of the condemnation.

Finally, the bill would provide that the standard for determining the fair value of the state’s interest in access rights to a highway right-of-way shall be the same legal standard that is applied by the Texas Transportation Commission under the Texas Transportation Code, which may include the impairment of highway access to or from real property where the real property adjoins the highway.

As the Texas population grows, citizens demand more services. Parks, libraries, police buildings, and other public facilities are not generally considered options in cities that want to remain livable, and the use of eminent domain to acquire land for projects to accommodate all current and future city residents is inevitable. Providing a way in which citizens can live and work in close proximity, safely and healthfully, is the very reason cities have eminent domain authority in the first place.

The provisions of S.B. 18, in its current form, might make the use of eminent domain more complicated, and nominally more expensive. But the bill is not nearly as bad as virtually every other alternative.

The bill now heads to the Senate floor.

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