Friday, June 22, 2007

"Many government entities in the business of taking private property from citizens celebrated the Kelo decision...They are celebrating again today."

Furor erupts over eminent domain reform veto


by Christine DeLoma
Volume 11, Issue 43
The Lone Star Report
Copyright 2007

Angering and possibly alienating rural conservative groups that supported him in the past, Gov. Rick Perry vetoed June 15 a bipartisan eminent domain reform bill.

Perry said the bill would cost the government too much money to compensate property owners whose land has been taken from them.

"The property owners of Texas are dumbfounded that a governor from Paint Creek, Tex., could veto the most important property rights legislation in more than a decade, said Texas Farm Bureau president Kenneth Dierschke. " When the Texas Farm Bureau Board of directors met with him earlier in the session, the governor agreed that eminent domain needed to be fixed.

In his veto message, Perry said although HB 2006 by Rep. Beverly Woolley (R-Houston) contained many noteworthy provisions; one provision in particular went too far. It was an amendment added by Sen. Glenn Hegar (R-Katy) that would have allowed private property owners to receive compensation based on the diminished access to their property.

The Texas Department of Transportation (TxDOT) had argued strenuously against the bill, saying it would cost the state at least $1 billion annually. Perry agreed.

"The state and local government would be over-paying to acquire land through eminent domain in order to enrich a finite number of condemnation lawyers at the expense of Texas taxpayers," Perry said. "This bill will slow down and shut down needed construction projects through the creation of a new category of damages that are beyond the pale of reason."

While Perry may be concerned about 'trial lawyers,' the Texas Farm Bureau's members are concerned over the prospect of the Trans-Texas Corridor cutting across their farmlands, making access harder.

In some cases, farmers would have to drive up to 20 miles to the nearest overpass to get to the other side of the highway to access their property. It's an inconvenience many farmers believe they should be compensated for.

Under current law, a property owner can be compensated for his severed land from eminent domain assuming he is not left with reasonable access to his remaining property or is left with material and substantial impairment of access to his property.

Some argue the term "reasonable" is different for different people. HB 2006 would have allowed property owners to submit the market value of diminished access as evidence in an eminent domain proceeding.

The day before Perry's veto, LSR spoke to Texas Transportation Commission chairman Ric Williamson about HB 2006. Willliamson had argued that the term "diminished access" to a property owner's land really meant "diminished income." Williamson worried that businesses would sue the agency over diminished income if affected by road construction designed to enhance public safety.

"We think it's pretty egregious," Williamson said.

The Texas and Southwestern Cattle Raisers Association (TSCRA) said in a statement it was "shocked" that Perry vetoed the eminent domain reform legislation.

"Gov. Perry has sent the message loud and clear that he does not support private property rights," said Jon Means, TSCRA president.

TSCRA has argued that it is not an undue burden for the state to pay landowners for what is taken away from them. "Prior to the 1993 decision by the Texas Supreme Court in Schmidt v. State, landowners were compensated for diminished access," said Ed Small, legal counsel for TSCRA. The state treasury didn't go bankrupt prior to 1993 because of this, and it wouldn't go bankrupt if this bill were to become law."

In State v. Schmidt, the court ruled that the state may exclude certain factors in determining the "fair market value" of compensation to land owners in condemnation proceedings.

At the time, the state was expanding Highway 183 in Austin. The Schmidt in question -- a business owner -- sued TxDOT for inadequate compensation, saying he was not compensated for all damages incurred to his business.

Schmidt was paid for the physical property taken, but not for the loss of his business. The court held that property owners are not entitled to compensation for diminished access due to diversion of traffic, lessened visibility, and inconvenience of construction.

In an op-ed to the Houston Chronicle June 18, Woolley, the bill's sponsor, called the governor's veto a "grave injustice" to property owners. She branded as "simply disingenuous" Perry's charge that the bill would shut down needed construction projects.

"Contrary to the governor's declaration, [HB 2006] would not have provided a financial windfall for condemnation lawyers at taxpayers' expense," Woolley wrote. "Indeed, the protections contained in the bill would preclude the necessity of any lawyers at all because landowners would be treated fairly from the outset, allowing for a fair, negotiated price for land at no known cost according to the comptroller of public accounts, the attorney general and the Legislative Budget Board."

Since the U.S. Supreme Court ruling in Kelo v New London solidified governments' power to use eminent domain for economic development purposes, 31 states, including Texas, have moved to limit eminent domain powers in some form or another.

In 2005, Texas passed SB 7 prohibiting the public taking of private property for economic development under certain circumstances. Yet lawmakers failed to provide a definition of "public use." HB 2006 would have closed this loophole by providing a clear definition that "allows the state, a political subdivision of the state, or the general public of the state to possess, occupy, and enjoy the property."

The bill would have also required condemning authorities to make a legitimate, bona fide offer to purchase a private property owner's land before proceeding with eminent domain. And a government entity that wishes to condemn a parcel of land would have had to take a record vote before proceeding.

Despite its strong support of the vetoed bill, the Texas Public Policy Foundation, a prominent conservative study group, promised to work with Perry and lawmakers in devising a solution to the problem of eminent domain abuse.

"Unfortunately, this veto exposes property owners from Freeport to El Paso to the very real threat of eminent domain," said TPPF's Bill Peacock. "Although the public outcry against Kelo was overwhelming, many government entities that are in the business of taking private property from its citizens celebrated the Kelo decision for making their job easier. They are celebrating again today." O

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