Gary David Strauss
Michigan's Website For Condemning Agencies
Strauss & Strauss, PLLC
306 S. Washington Ave, Ste 217
Royal Oak, MI 48067-3845
(248) 584-0100 (248) 584-0101 (fax)
248) 709-1689 (mobile)
Amendments to Article X, section 2 and the Uniform Condemnation Procedures Act
The passage of Proposition 4 amended the Michigan Constitution. Article X, section 2 of the Michigan Constitution now provides that:
Private property shall not be taken for public use without just compensation therefore being first made or secured in a manner prescribed by law. If private property consisting of an individual's principal residence is taken for public use, the amount of compensation made and determined for that taking shall be not less than 125% of that property's fair market value, in addition to any other reimbursement allowed by law. Compensation shall be determined in proceedings in a court of record.
"Public use" does not include the taking of private property for transfer to a private entity for the purpose of economic development or enhancement of tax revenues. Private property otherwise may be taken for reasons of public use as that term is understood on the effective date of the amendment to this constitution that added this paragraph.
In a condemnation action, the burden of proof is on the condemning authority to demonstrate, by the preponderance of the evidence, that the taking of a private property is for a public use, unless the condemnation action involves a taking for the eradication of blight, in which case the burden of proof is on the condemning authority to demonstrate, by clear and convincing evidence, that the taking of that property is for a public use. (146)
Any existing right, grant, or benefit afforded to property owners as of November 1,2005, whether provided by this section, by statute, or otherwise, shall be preserved and shall not be abrogated or impaired by the constitutional amendment that added this paragraph.
MCL 213.23 - Changes In Authority To Use Eminent Domain; Changes in Just Compensation; Changes in Burden for Determining Necessity.
The practical effect of the passage of Proposition 4 is specifically addressed in the changes to MCL 213.23
Changes To The Definition Of “Public Use.”
The amendments to MCL 213.23 adopted the Michigan Supreme Court's holding in Wayne County v Hathcock.
In order to invoke the power of eminent domain, the acquisition must be for a “public use.”
The new law provides a new definition of the term “public use.” Fundamentally, the taking of private property for transfer to another private entity is not a “public use.” "Public use" does not include the taking of private property for the purpose of transfer to a private entity for either general economic development or the enhancement of tax revenue. The statute also provides that “public use” does not include a taking for a public use that is a pretext to confer a private benefit on a known or unknown private entity.
In Hathcock , the Court stated approved of the use of eminent domain in:
Instances where private corporations are generating a public benefits whose very existence depends on the use of land that only can be assembled with the coordination of central government. Examples of these types of uses includes “highways, railroads, canals, and other instrumentalities of commerce.”
The Court stated that unauthorized uses of eminent domain are restricted to situations where the proposed use of the property is invested with public attributes sufficient to fairly deem the entity's activity governmental by 1 or more of the following:
a) A public necessity of the extreme sort exists that requires collective action to acquire property for instrumentalities of commerce, including a public utility or a state or federally regulated common carrier, whose very existence depends on the use of property that can be assembled only through the coordination that central government alone is capable of achieving.
b) The property or use of the property will remain subject to public oversight and accountability after the transfer of the property and will be devoted to the use of the public, independent from the will of the private entity to which the property is transferred.
c) The property is selected on facts of independent public significance or concern, including blight, rather than the private interests of the entity to which the property is eventually transferred. The statute includes definitions of what is necessary to constitute “blight.”
Changes To The Burden Regarding Necessity
Prior to the passage of this amendment, necessity was presumed. The property owner was required to file a challenge to necessity within the time for answering the complaint. Traditionally, the property owner faced a heavy burden to overcome the presumption of necessity. Until the issue of necessity is resolved, the condemning agency cannot proceed with the project.
Under the new statute, the burden of proof is now on the condemning authority to demonstrate, by the preponderance of the evidence, that the taking of a private property is for a public use. If the condemnation involves blighted property the burden of proof is on the condemning authority to demonstrate, by clear and convincing evidence, that the taking of that property is for a public use.
There is a huge body of case law which affirms the limited ability of the trial court to essentially second guess an administrative agency's determination of the necessity for the project and the necessity of acquiring specific property for the project. While the new law does not appear to effect the strict time limitations for challenging necessity, it remains to be seen how trial courts will deal with the new burden.
Requirement of Paying Not Less Than 125% Of Fair Market Value For Principal Residence
Finally, the amendment provides that if a person's principle residence is taken, “the amount of compensation made and determined for that taking shall be not less than 125% of that property's fair market value, in addition to any other reimbursement allowed by law."
This new provision will potentially complicate the condemnation process, as it has an effect on the interpretation of several other statutory provisions. For example, the mandate that the “amount of compensation ...shall be not less than 125% of that property's fair market value,” begs the question of what would justify one owner receiving an additional 25%, while another receives an additional 50%.
OTHER CHANGES TO THE UNIFORM CONDEMNATION PROCEDURES ACT MCL 213.55
The former statute placed stringent requirements on the property owner to notify the condemning agency in writing if the owner believed that “items of compensable property or damage” were not included in the good faith offer. If the written claim was not served within 60 days of service of the complaint or an extension had not been granted, damage claims that were not included in the written claim were barred. As a result, there were instances where potential damages were waived when property owner attorneys did not adhere to the statute. Additionally, the issue of what constituted compliance with the requirements of the written claim was the subject of heated litigation.
The amendments made substantial changes to statute which have effectively relieved the property owner of any burden imposed by the former statute. Under the new law:
1. The time for serving the written claim has been extended from 60 days to 180 days after the complaint is served
2. The owner's appraisal will serve at the written claim if it is provided within the established period for filing written claims.
3. The parties shall exchange the agency's updated appraisal reports, if any, and the owner's appraisal report within 90 days after the expiration of the period for filing written claims, unless a later date is set by the court in accordance with section 11(1) for reasonable cause.
4. If the agency believes that the information provided by the owner is not sufficient to allow the evaluation of the claim, the agency may request additional information from the owner. If the information is not provided the court may
impose sanctions up to barring the claim.
5. For any claim that has not fully accrued or is continuing in nature when the claim is filed, the owner shall provide information then reasonably available that would enable the agency to evaluate the claim, subject to the owner's continuing duty to supplement that information as it becomes available. This information must be provided at least 90 days before trial.
MCL 213.352 - Changes To Moving Expenses
The amendments to MCL 213.352 increased allowances for moving personal property from real property acquired by eminent domain. The changes:
1. Increased the maximum payment to reimburse an individual or family who must relocate due to a condemnation proceeding from $1,000 to $5,250.
2. Established a $3,500 fixed payment that a person with a leasehold interest of less than six months could elect to receive instead of a moving allowance or any other payment under the Act, other State law, or Federal law.
3. Permit a court to award attorney fees and costs to a person with a leasehold interest of less than six months who brought a successful action to recover the moving allowance or fixed payment.
MCL 213.66 - Challenges To Awards Of Attorney Fees For Unsuccessful Challenges To Necessity.
Under the former statute, if a property owner was unsuccessful in challenging the necessity of the acquisition, the condemning agency was not liable for reimbursement of attorney fees or expert fees.
The amendment allows a court to award reasonable attorney or expert witness fees to a person who brought an unsuccessful challenge to a condemnation action that involved the relocation of an indigent person. In order to award fees, the court must find that the challenge was reasonable and in good faith. The amendment exempts acquisitions for “construction of a highway.”
MCL 213.59 - Acquiring Possession of Property
Under the former statute the condemning agency could file a motion to obtain an order for possession after the time for answering the complaint. The trial court could not delay possession for any reason other than a successful necessity challenge. The quid pro quo for obtaining the order was the payment of the estimated just compensation.
Under the new law, where the condemnation involves any individual who occupies a residential dwelling, payment of the estimated just compensation must be made to an owner or relocated person at least 30 days before physical dispossession. Additionally, the individual could not be required to move until he or she had a reasonable opportunity of up to 180 days after payment of moving expenses.
MCL 213.58 - Escrow Of Estimated Just Compensation for Remediation Costs
Under the former statute, a condemning agency had the authority to escrow all or a portion of the estimated just compensation as security for costs of environmental remediation on condemned property.
The amendment exempts an owner's principal residence from this provision if the principal residential structure were actually taken or the amount of the property taken left less residential structure than the minimum lot size if the local governing unit had implemented one by zoning ordinance.