Eminent Domain and Brownfields - What the Future Holds
By Shawna M. Bligh
The Session Law Firm
Kansas City, MO
Eminent domain is often an essential development tool utilized by local governments to acquire contaminated sites and pursue bold Brownfields redevelopment strategies that can be a catalyst for community revitalization. Brownfields are abandoned, idle or under‑used real property where expansion or redevelopment is complicated by the presence or potential presence of environmental contamination. However, using eminent domain for private projects, such as Brownfields redevelopment, is always a divisive issue. This is even more the case since the Supreme Court’s decision in Kelo v. City of New London.
In Kelo, the Supreme Court addressed the question of whether a city violates the Fifth Amendment's takings clause if it takes private property, through its powers of eminent domain, and sells it for private development to further the local government’s overall economic growth plan. On June 23, 2005, the court held that local governments could use their powers of eminent domain to take property for private, economic development. The Kelo opinion has prompted an avalanche of legislation at both the federal and state level.
At the federal level, the U.S. House of Representatives passed legislation, which would withhold, for two years, federal money from state and local governments, which use their powers of eminent domain to take property intended for private, economic development. This legislation, H.R. 4128, the Private Property Rights Protection Act of 2005, is a direct response to the Kelo decision. H.R. 4128 defines “economic development” as taking private property for commercial, for-profit projects intended to increase tax revenues, the tax base, employment or improve general economic health. H.R. 4128 passed the House on November 3, 2005 by a vote of 376-38, and is currently before the Senate Committee on the Judiciary. While hearings have been held on the bill, no legislative action has been scheduled.
Fortunately, a bipartisan amendment, H.AMDT. 612, to H.R. 4128 added an exemption, from the definition of “economic development” for the redevelopment of brownfield sites, as defined in the Small Business Liability Relief and Brownfield Revitalization Act of 2002 (Pub. L. No. 107-118). The amendment, introduced by Congressman Gary Miller (R-CA) and Eddie Bernice Johnson (D-TX), would allow cities to responsibly use eminent domain to redevelop brownfield sites. On the House floor, Congressman Miller stated “owners of brownfield sites are frequently unwilling to sell them for fear of cleanup and cost of contamination. Eminent domain can often help break through legal and procedural barriers to the sale of land.”
The United States has more than 450,000 vacant or underused industrial sites as a result of environmental contamination. While not only improving and protecting the environment, cleanup of Brownfields restores the sites to productive use, facilitates job growth, and substantially increases tax revenues for local governments. Additionally, cleanup revitalizes otherwise dormant urban core areas, thus promoting smart growth by taking development pressures off undeveloped, open land. Without eminent domain for redevelopment purposes, local governments would be less likely to redevelop Brownfields because of the liability for all costs and cleanup of the polluted land as the owner and operator of the site. Therefore, it is imperative that eminent domain legislation, at both the state and federal level, include exemptions for Brownfields redevelopment. Without such exemptions, Brownfields redevelopment would be significantly impaired and contaminated lands would sit idle.
At the state level, the Missouri House and Senate have proposed various limitations on the use of eminent domain, and, unfortunately, none of the proposed legislation provides an express Brownfield exemption. Examples of presently proposed limitations include prohibiting the state or local governments from exercising its powers of eminent domain to acquire property for the purpose of economic development; limiting the definition of “blighted areas” under Missouri eminent domain laws; requiring businesses in areas taken by eminent domain to reimburse persons displaced from that area; and even placing a moratorium on the use of eminent domain until 2007.
Missouri has several state Brownfields including the Kansas City Riverfront Development and the St. Louis Arena. The state of Missouri benefits greatly from Brownfields redevelopment and eminent domain is an important tool in these redevelopment areas. Eminent domain was an essential component in the redevelopment of Kansas City’s Central Industrial District. This is the oldest industrial area of the bi-state Kansas City region where the Kansas and Missouri Rivers meet. Blight and fear of contamination threatened to drive away remaining businesses and private investment in the late 1990's. Efforts to retain a leading business were frustrated by a private owner's refusal to maintain the site in violation of City codes, which later led to a catastrophic fire that devastated the West 8th Street area. The owner refused to cooperate with City officials who planned to use local, state and federal funds to acquire the ruins and prepare the area for redevelopment. Ultimately, what came to be known as the Lewis & Clark Redevelopment Area Project succeeded, in large part because of the City’s eminent domain powers. Improvements in the area led to over $100 million in private investment, the creation of 421 jobs and retention of more than 1,100 jobs. Without the City’s powers of eminent domain, the many benefits of this Brownfield redevelopment project would have been lost.
The Missouri Brownfield Redevelopment Program is administered by the Department of Economic Development and the Department of Natural Resources. The program's purpose is to oversee cleanup and provide various financial incentives for the redevelopment of contaminated properties. If the legislature is concerned about the potential misuse of eminent domain powers by municipalities, serious consideration should be given to conferring with the Department to address these concerns while at the same time furthering the goals of this Program.