POPULAR GOVERNMENT Ten Common Misconceptions about Eminent Domain Charles A. Szypszak

minent domain is currently receiving much public attention, E some of it emotionally charged. The realities of North Carolina law may be surprising to someone who has no direct experience with eminent domain. This article summarizes responses to ten common misconceptions about eminent domain, drawn from the book Eminent Domain and Local Government in North Carolina: Law and Procedure (for more information about the book, see the sidebar on page 44).

Misconception 1. Eminent domain is a newly created power. Eighteenth-century English laws, which are the foundation of the American legal system, authorized the use of eminent domain to acquire land for roads, bridges, fortifications, and other improvements. North Carolina’s courts always have viewed the state legislature as having the inherent power to do the same. Early state laws authorized local governments to use eminent domain to acquire land for roads. Some even authorized con- scription of people living nearby to work on the road’s construction, for up to six days annually east of the Blue Ridge Mountains and up to ten days west of them. Conscription for road construc- tion was discontinued in the nineteenth the power for public projects has been a cific valuations often are contested, but century, but governments continued to legislative prerogative for centuries. the general principle of compensation at use eminent domain to acquire land for market value is well established. highways and later for canals, railroads, Misconception 2. Government pays and other public improvements. As the only what it wants to pay for property Misconception 3. State agencies and demand for public improvements has that it takes by eminent domain. local governments determine their intensified and government projects The United States and North Carolina own powers of eminent domain. have become more interrelated with constitutions require that “just compensa- A government authority may not as- private development, some particular tion” be paid to an owner whose property sume that it has the power of eminent uses of eminent domain have been ques- is taken by eminent domain. “Just com- domain merely because such a power tioned and challenged, but the use of pensation” means payment of the market would be useful. The legislature must value of what is taken. Market value is authorize the use of eminent domain for The author is a School of Government fac- determined according to recognized the intended purpose. The North ulty member specializing in real property methods of real estate valuation, such as Carolina General Statutes authorize local law. Contact him at [email protected]. comparison with similar properties. Spe- governments to use eminent domain to

winter 2009 43 For More Information on Eminent Domain Eminent Domain and Local Govern- ment in North Carolina: Law and Procedure, by Charles Szypszak, may be ordered from the School of Government website, www.sog. unc.edu, by following the link to Publications and then searching for “eminent domain.” carry out their common functions, such owners must move or curtail their oper- answer. Contesting compensation does as building schools, roads, parks, ations, the owners may believe that they not further delay the transfer of title. hospitals, libraries, office buildings, are losing future business profits. North and water and sewer systems. The Carolina law does not require compensa- Misconception 7. Government may statutes authorize state authorities, such tion to be paid in such a circumstance. use eminent domain only when there as the Departments of Transportation The general rule applied by the courts, is no other way to construct the and Administration, to use eminent subject to limited exceptions involving project. domain for state highway and con- unusual uses of eminent domain, is that The North Carolina Supreme Court struction projects. They also have loss of profits from a business operation has held that authorities with the power authorized public utilities and other is not an element of constitutionally of eminent domain have discretion to authorities to use eminent domain for required compensation when eminent determine the property to be taken if certain purposes. domain is used to acquire the land on the purpose is legislatively authorized which a business has operated. and constitutionally permissible. Deci- Misconception 4. Compensation must sions about project needs are not sub- be paid for any interference with Misconception 6. Landowners can ject to court approval except when facts private property. delay a project by contesting indicate that the government is acting Government activities usually have an compensation. in bad faith on no conceivably legiti- impact on the neighborhood in which In most situations involving the use of mate basis. North Carolina’s courts they are located. Government has a eminent domain, the only issue that presume that public officials act legally “police power” to restrict the uses of requires a court resolution is a dispute and in good faith. Someone claiming private property in order to protect public about the amount of required compen- otherwise must be able to prove it in health and safety, even if a restriction sation. The law enables governments to order to challenge the manner in which results in a loss of value. The law tries move forward with projects without a government is exercising its authority to distinguish between changes in value having to wait for a final resolution of to use eminent domain. that must be borne by landowners gen- compensation disputes. Under North erally and those that unusually affect par- Carolina law, most acquisitions rely on Misconception 8. An eminent domain ticular properties and constitutionally a “quick take” procedure, by which the case can easily be abandoned. entitle owners to compensation. For government acquires title and the right Once a government files an eminent example, the courts have held that the to possession of the property as soon as domain case, abandoning the acquisi- owners of land along a highway are not the government files a complaint, a tion may be difficult, even if the gov- entitled to compensation just because declaration of taking, and a deposit of ernment and the owner agree to do changes are made to restrict travel, but estimated compensation with the court. so. Usually the title to the property if a particular parcel is negatively af- The quick-take procedure applies to transfers as soon as an eminent domain fected in an unusual and substantial acquisitions for roads, sidewalks, case is filed, and in most cases, owners way, compensation may be required. schools, and utilities, among other withdraw deposited compensation at purposes. If the government is taking that time. If the government has a Misconception 5. Business owners property for purposes to which the change of plans, there likely will be must be paid for lost profits. quick-take procedure does not apply, in complications to unravel, and the When government takes the land on most cases the title will vest in the resolution of the issues may require which a business is operated and the government when the owner files an court involvement.

44 popular government Misconception 9. Judges have recently expanded the use of eminent domain. School Hosts Webinar, continued from page 3 In the much-publicized 2005 case Kelo v. City of New London, the U.S. Supreme Court upheld a Connecticut city’s use of eminent domain to acquire land for a private developer as part of a project to rejuvenate an economically troubled area.1 The decision reflected the Court’s historic deference to the elected legis- lature’s judgment about when to use eminent domain. The North Carolina Supreme Court has similarly tended to defer to the General Assembly’s judg- ment about when to authorize eminent domain. Although some may perceive eminent domain as being used expan- sively, legislatures are taking this step using the discretion that the courts have traditionally accorded them. Some state legislatures have been less inclined than others to authorize the use of eminent domain. The North Carolina General Assembly does not currently authorize timetable for the program’s implemen- by Miller at appropriate points during the use of it for economic development tation. Information about the NSP is her presentation. in the manner employed in Kelo. available at www.nccommerce.com/ Participants reported that the en/CommunityServices/. webinar was a positive experience, Misconception 10. “Playing hard ball” During the webinar, participants were and they provided favorable feed- is better than trying to reach an invited to submit questions through an back on both the content and the agreement. online Q&A window on their computer technology-driven delivery. For more A government and a property owner screens. Their questions were then an- information on the webinar or the have reasons to try to agree on a com- swered in real time, either by a text reply CED Program, contact Lobenhofer pensation amount rather than become onscreen from one of three DCA staff at lobenhofer@ sog.unc.edu or embroiled in litigation over it. Govern- members monitoring the questions or 919.843.7736. ments have a constitutional obligation to pay compensation that is just, and they should be willing to discuss a rea- sonable amount with owners rather than Local Government Supports Better Coordination take aggressive positions and incur liti- gation expenses. For their part, owners among Nonprofits should not assume that intransigence will be rewarded. A government likely will ith schools, counties, and tors to think proactively and discuss be more flexible about compensation be- municipalities currently the question, What can the nonprofit fore positions have hardened and litiga- W experiencing a budget network do within its own sphere to tion expenses have begun to mount. crunch, tensions may heighten as cuts strengthen its capacity to provide Marginal gains in compensation by pur- affect citizens seeking help from non- effective, compelling services to resi- suing litigation are likely to be consumed profit providers and government agen- dents? More than fifty participants by litigation costs. Owners typically re- cies. How can vital services be main- spent time naming the strengths of the cover some costs for appraisers, engin- tained with less money? Instead of local nonprofit network, identifying eers, and plats in litigation, but the pro- focusing only on the lack of money, shared interests, and creating new cess quickly consumes resources, and nonprofits in one community came alliances for problem-solving. parties usually must bear significant together in a daylong workshop on Although money is tight for most costs themselves, including attorney fees. coping with the crunch in realistic, nonprofit and government service but creative ways. providers, human capital and con- Note In late October, the Orange County siderable experience are not in short 1. Kelo v. City of New London, 545 U.S. Human Services Advisory Commission supply. The challenge is to identify and 469 (2005). convened a meeting of nonprofit direc- make the most of the nonmonetary continued on page 46 winter 2009 45