Thursday, October 20, 2005

Eminent Domain bill provides exemption for Trans-Texas Corridor

The dust is far from settled on eminent domain


David Hendricks
San Antonio Express-News
Copyright 2005

The U.S. Supreme Court couldn't have done anything more to get the attention of Texans this summer when it ruled local governments could condemn private property for use by for-profit economic development projects.

The court's 5-4 ruling in Kelo vs. New London allowed the Connecticut city to condemn 15 waterfront properties for a hotel-condominium commercial development.

It took only weeks for the Texas Legislature to respond with Senate Bill 7, approved during an August special session and aimed at prohibiting Texas governments from doing the same thing to property owners here.

"These projects, often in the name of economic development, should not come at the expense of people's property rights," Gov. Rick Perry said when he signed SB 7 into law.

"I draw the line when government begins to pick winners and losers among competing private interests, and the loser is the poor Texan who owns the land to begin with," Perry added.

At first, it would appear Perry is shooting his favorite project, the Trans Texas Corridor, in the head. The state has a contract with a for-profit Spanish company, Cintra, and its San Antonio-based partner, Zachry Construction Corp., to plan the first leg of the huge statewide toll highway project.

If Cintra and Zachry build and operate the highway, it will be to make money. Isn't that similar to the Kelo vs. New London case?

Not really. For starters, SB 7 protects the Trans Texas Corridor by name. The Texas Department of Transportation will be able to condemn land for the toll road corridors, including scenic easements.

Second, SB 7 preserves all the traditional purposes for eminent domain — airports, railroads, highways, reservoirs, hospitals, parks, schools, drainage projects, utilities and others.

It even allows for sports stadiums, including those privately built for profit, if approved by voters in an election held before Dec. 1.

The stadium issue has been big in Houston. Two stadiums dramatically increased nearby property values, said Matthew Deal, a partner in Houston-based Lewis Realty Advisors, a property appraisal company that has served public and private clients in thousands of Texas eminent domain cases.

Minute Maid Park, home of the Houston Astros, was built on a blighted side of downtown Houston where land values had sunk as low as $10 to $20 per square foot. After the baseball stadium was built, those values rose to more than $100 per square foot, Deal said.

Similarly, land values in the Toyota Center neighborhood were in the $40 range but also increased to more than $100 per square foot after the Houston Rockets' home opened, he said.

Let's consider another case. A city agency wants to condemn the parking lot of a private company so that a nonprofit corporation owned by a church can use it for a senior housing project.

Should the private company's property be subject to an eminent domain sale?

That nearly happened in recent weeks in San Antonio. Tommy Moore, owner of Urban Communications Inc., received a letter from the San Antonio Development Agency, which has eminent domain powers.

The letter said St. Paul Area Development Corp., a nonprofit organization established by St. Paul United Methodist Church, wanted the parking lot at 120 Mesquite St. that is owned by Urban Communications. The lot is adjacent to an office building the company leases, and tenants park there. St. Paul Area Development wanted the parking lot for a senior housing project.

The possible condemnation didn't make sense to Moore. Why take a property worth about $400,000 off the tax rolls, he asked, and give it an untaxed organization?

It turns out that the nonprofit's letter to Moore mentioned the possibility of condemnation because the law requires it. The agency, however, has agreed with Moore to negotiate for the land and not to condemn it, said St. Paul Area Development Executive Director Manuel Macias Jr.

Had the development corporation and the church wanted to press the issue, however, the matter might have ended up in court.

"You could have 10 lawyers in a room, and five would argue for one side in this case and the other five would argue the other way," Deal said.

In other words, eminent domain cases are becoming more complex than ever. Neither Kelo vs. New London nor SB 7 can resolve all the cases that will arise in Texas.

Fortunately, SB 7 also created an interim committee of five state senators and five representatives to study Texas eminent domain uses. The committee will report recommendations to the 2007 session of the Legislature, which could further revise state law.

In the meantime, and probably forever, condemnation cases may be decided as much in the courthouse as in the negotiating room.

San Antonio Express-News:

UPDATED: Gov. Perry vetoes latest bill to curb eminent domain abuse