"I’m not sure how many of the legislators had ever even heard about eminent domain. Now it’s on the tip of everyone’s tongue.”
By Colleen Schreiber
FORT WORTH – Eminent domain is one of the hot topics in the 80th Texas legislative session. Significantly, 90 percent of the eminent domain bills that have been filed are “pro-landowner” bills.
That was part of the message delivered by Trey Blocker, an attorney with Jackson Walker L.L.P., the lobbying firm for the Texas and Southwestern Cattle Raisers Association.
“At the beginning of this session we were having members asking us if we had a corridor bill or an eminent domain bill that they could carry for us,” Blocker told listeners. “That didn’t happen last session, so that really shows the changes in attitude taking place at the legislature. And it’s a really big change from five or six years ago. I’m not sure how many of the legislators had ever even heard about eminent domain. Now it’s on the tip of everyone’s tongue.”
In a legal seminar in conjunction with TSCRA’s recent annual convention here, Blocker presented an overview of some of the changes that were passed during the last legislative session with regard to eminent domain, specifically those dealing with the Trans-Texas Corridor. He also discussed many of the bills that have been filed for this session.
The eminent domain frenzy, he said, really got started in June 2005 when the U.S. Supreme Court held in the controversial Kelo v. City of New London case that governmental entities can condemn private property and transfer it to a private interest for economic development purposes. That led the Texas legislature during a special session to pass Senate Bill 7, which was more or less meant to stop a similar situation from occurring in Texas. There was still a great deal of concern with regard to eminent domain as it specifically pertained to the Trans-Texas Corridor legislation introduced in the last legislative session.
The Trans-Texas Corridor, he noted, was a vision brought forth by Governor Rick Perry back in 2002 which entailed building a 4000-mile network of corridors up to 1200 feet wide that would include passenger and truck lanes as well as rail and utility zones. Ultimately, he said, bad public relations moves on the part of the Texas Department of Transportation got so many folks across the state stirred up.
“When TxDOT originally put out a map and started talking about the Trans-Texas Corridor, they showed all these corridors crisscrossing the state, and it looked like a spider web,” Blocker told listeners, “and to be honest, that’s what got people concerned. No matter where you were in the state, you thought that corridor was coming through your backyard.”
It was Rep. Mike Krusse who in 2003 carried the original legislation, HB 3588.
“At the time, no one really thought it would happen; we thought it was a pie in the sky vision that we’d never see,” Blocker said. “We later found that TxDOT was moving rapidly forward with this issue.”
That’s when groups like TSCRA, the Texas Farm Bureau and various others really began studying the bill. These groups had several big concerns that they immediately went to work to try to correct. One of their main concerns, Blocker said, was that the proposed corridor was simply going to take up too much good agricultural land. They were also concerned about what TxDOT was calling “ancillary” facilities.
“What TxDOT originally wanted to do was in addition to condemning land for actual roadways, they also wanted to condemn property to build gas stations, restaurants, shopping malls, etc.
“The problem with that, from our perspective, is the state should not be in the business of condemning your property to then turn it over to another private interest so that they can then make money off of it,” Blocker noted.
Another huge concern had to do with the possible transporting and selling of water.
“We had a major concern that TxDOT would start building this corridor and then stick a straw into the ground and pump water from wherever they had the corridor and transport it out of the area to the detriment of the nearby landowners,” Blocker explained.
Loss of access was another huge concern, and Blocker and his firm are working this session to secure adequate compensation to landowners.
In the last legislative session, five bills were drafted in an attempt to rectify some of these concerns.
The bills were filed in the Texas House by Reps. Rick Hardcastle, chairman of the House Agriculture committee, Lois Kolkorst and Garnett Coleman, as well as Glen Hegar, now Senator Hegar. Todd Staples, who is now agriculture commissioner, filed one in the Senate. Political reality at the time, however, forced all of these bills to be rolled into the omnibus transportation bill, HB 2702.
The various ag groups came together to refine the priority issues they wanted to see included in the bill. Those priority issues, again, had to do with those ancillary facilities, access, water and landowner compensation, as well as utility of roads, environmental mitigation and conservation easements, toll regulations, quick take and expiration of option to purchase or lease back. Blocker lined out what was actually accomplished.
“On environmental mitigation, if TxDOT was to condemn or purchase 1000 acres of land from you, they would then have to go out and condemn or purchase two to three times that amount of property for environmental mitigation, because according to the federal government, you have to have a place for all the little critters to run to. So what we did was require TxDOT, instead of purchasing or condemning your land outright to use conservation easements, which would satisfy the environmental needs and also allow the landowner to continue ag use on that property,” Blocker told listeners.
In addition to conservation easements, language included an option to purchase or lease back the property that is purchased or condemned but not immediately needed for the corridor.
“On taxes, the way it was originally set up, if TxDOT condemned your property and then leased it to a private entity to build a gas station or the like, that commercial owner would not pay property taxes to the local government entities and the school districts,” he continued. “We put language in that bill that required the commercial owner to pay those local taxes and support the local schools.”
The diminished access language was compromise language that was included in the final hour. Blocker called it very convoluted language and he noted that there is another bill filed this session that better clarifies the language with regard to access.
Language also was inserted that required TxDOT to preserve the utility of existing roads. Blocker said they also made progress on the access issue, and more legislation is pending this session as well.
“What we did last session was we required access from the corridor to every major intersection of every state highway and every interstate highway. We also added language that said TxDOT should use its best efforts to provide access to major farm to market roads, county roads and smaller state road access as well, and there is a bill this session that will further tighten that up.”
“Quick take,” Blocker told listeners, is a little-known concept that TxDOT said they’ve never used and didn’t intend to use, but nonetheless wanted to reserve the right to use in the corridor language.
“What it would allow TxDOT to do was send you a letter and say, ‘We need your property for the Trans-Texas Corridor and you have 30 days to leave.’ As ludicrous as it sounded and even with the chairman of the transportation committee sitting there telling us it would never happen, we for good reason didn’t want to take their word, so we inserted language that if they were going to use quick take, TxDOT would have to give landowners at least a 90-day notice to get all livestock and equipment, etc., moved.”
He noted, too, that another bill has already been filed this session that would increase it to a 365-day notice.
With regard to water, Blocker told listeners they were able to get language included which prohibits the pumping of water except that which is needed for the actual construction of the highway or for a facility that’s built on the highway. Language was also inserted that requires parties to be subject to local groundwater conservation district rules. Specifically, they must also apply for a permit if they intend to pump water.
Language also was included last session that deals with toll road regulation. That language requires state approval of toll rates set by the private operator.
“Our concern at the time was that if Cintra-Zachry sets these toll rates and then they decide they’re not making enough money to pay off their investors, they might just double or triple those rates,” Blocker remarked. “TxDOT said that wouldn’t happen, but we couldn’t get them to add any language. Then about halfway through the session an article appeared in the Wall Street Journal about a deal in Canada where this company had built this toll road about five years earlier and then they tripled the toll rates on those roads. It was shortly thereafter that we got language which requires TxDOT to approve any toll rates that Cintra might propose,” Blocker said.
The issue of ancillary facilities was also rectified to a degree by including language that said outside investors could only build ancillary facilities if they were going to be gas stations or restaurants, and those facilities had to be built within the median of the highway. Landowners must first be given the opportunity to retain development rights if they choose. Additionally, ancillary facilities may not be built within 10 miles of an entrance or exit ramp.
“When we proposed that language, TxDOT threw their hands up in the air and said, ‘Well, we’ll never build any of these things,’ and we said, ‘Well, darn.’ But we managed to get it in the bill,” Blocker told listeners.
The language also requires county approval before any ancillary facility can be built, and language was included that would allow landowners to obtain some type of royalty off the toll payments made for the portion of the road that goes through their property.
Blocker shifted into a discussion on where the Trans-Texas Corridor project now stands. TxDOT, he said, is moving forward with their contract with Cintra-Zachary.
“Technically, they have already started. SH 130, which goes around Austin, and parts of which are now opened, is considered part of the Trans-Texas Corridor. They are going to continue piecemeal constructing this I-35 project, and we’re doing everything to try and slow that down,” Blocker told listeners. “They’re also working hard on the I-69 part of it. They already have a couple of proposed routes, and we expect them to move forward quickly.”
Despite the significant progress made in the last legislative session, Blocker acknowledged that more still needs to be done. The focus this session, he noted again, is ensuring that landowners are fairly compensated when their land is condemned through eminent domain, and also that the issue of adequate access is thoroughly addressed.
SB 890, filed by Sen. John Carona, deals with both of these issues.
“Over the years, the courts in Texas have chipped away at the landowner’s right to be compensated for land taken. Your rights have been eroded by a growing list of what the courts call ‘non-compensable damages.’”
Sen. Robert Nichols has filed SB 718, which places a two-year moratorium on the inclusion of certain provisions in a comprehensive development agreement or the sale of a toll project.
“For those in the DFW, this has to do with what just happened with Hwy. 121. The concern that we have with the comprehensive development agreements is we’re afraid we’re giving up quite a bit just to get a road built today,” he explained. “We’re afraid the tolls will be too onerous down the road, and we don’t know what else is being promised to Cintra or any other private company that might come in and enter into one of these contracts.
“One thing we have to keep in mind is that corporations, as is their right, are out to make money for their investors, and we need to realize that this is their main focus. It is not out of benevolence that they want to build you a road so you can get to work. So we have to make sure that you as a taxpayer, you as a landowner, and you as a citizen are protected in the process,” he stressed.
Twenty-six of the 31 senators have signed off on this bill and 105 legislators are co-sponsoring a companion bill in the House, HB 2557, introduced by Rep. Lois Kolkhorst.
“I suspect we have a decent chance of passing this bill,” Blocker said.
Senator Glenn Hegar is carrying a bill to clean up some previous language, and that same bill also includes language to put a new provision in the property code. That language, Blocker said, simply states that landowners “shall” be compensated for any diminished access to or from their property, regardless of location and regardless of the valuation of that property. This stems from the Schmidt case, he said, in which the Texas Supreme Court ruled that damages to a remainder tract might not include changes in visibility of property and other results of roadway alterations.
“In the Schmidt case the Texas Supreme Court said that landowners shall only be compensated if they’ve suffered complete and total loss of access. We want compensation for any diminished access that affects the fair market value of your property,” he reiterated.
HB 2557, sponsored by Rep. John Zerwas, requires TxDOT to give landowners at least 14-day notice of intent to come onto their land.
“Originally there was this obscure language in the original corridor legislation that said that if TxDOT decided they needed your land for a project, they could just come on your property. They don’t have to call you or write you a letter,” Blocker said. “This bill will require at least a 14-day notice.”
Senator Steve Ogden has filed a bill that would eliminate the Trans-Texas Corridor system altogether and return Texas to a “truck” system concept, which was proposed 30 years ago. It would require road expansion within existing corridors.
“That’s probably a good idea in certain areas,” Blocker said, “but the problem is to build out I-35 going through Austin or San Antonio and New Braunfels; you just can’t do it. It would be cost-prohibitive, so we will have to build bypasses around the major metropolitan areas.”
Responding to a question from the audience regarding the contract with Cintra-Zachary, Blocker told listeners that the legislature demanded they be able to see the actual contract.
“Typically, any government document is subject to open records,” he reminded. “One of the things that we found in this contract which was very bothersome was a non-compete clause. If, for example, Cintra comes in and builds a corridor, they don’t want your county or city building a parallel road that would take away from their toll road.”
To address this concern, a bill has been filed this session that would require that all contracts be posted on a website before they are executed.
Blocker concluded his remarks by reminding listeners that the state’s population growth dictates that new roads be built. How they are built and where is the dilemma.
“One of the things that Ric Williamson, chairman of the Texas Transportation Commission, was quoted as saying that I agree with is that the reason we have a problem with roads is because for the last 50 years we’ve been taking the gas tax and using it for other things as opposed to using it to build roads.
“I think that’s a contributing factor to the problems that we have today,” Blocker told listeners.
“But as Ronald Reagan said, taxpayers work for the government; they just don’t have to take the Civil Service exam. So they’re going to find a way to get it out of your pocket, whether it’s through a gas tax or tolls,” he concluded.
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