Assigned to GOV                                                                                                        AS PASSED BY THE SENATE

ARIZONA STATE SENATE

Forty-seventh Legislature, Second Regular Session

AMENDED

FACT SHEET FOR S.C.R. 1019

criminal prosecutions; technical correction

(NOW:  private property rights protection act)

Purpose

Subject to voter approval, entitles a private property owner to a jury trial to determine if a taking is for a public use, and establishes parameters for a just compensation determination and award of attorney fees in eminent domain actions. 

Background

Eminent domain is the power of the government to acquire private property for a public purpose.  Both the Arizona Constitution and the United States Constitution guarantee the payment of “just compensation” to the property owner for any private property taken by the government (Article 2, Section 17, Constitution of Arizona; Article V, United States Constitution). 

The acquisition of private property generally occurs by way of a lawsuit in which the government agency asks the court to award the government immediate possession of the property and to determine the amount of compensation to be paid to the owner for the property.  On completion or settlement of the trial and payment of compensation, the government agency acquires title to the property.

In Arizona, the power of eminent domain is authorized by the Constitution or state statute for many different public bodies, including state government, city, town and county governments, school districts and certain utilities and special taxing districts.

In 2005, the U.S. Supreme Court ruled 5-4 that private property may be condemned to make way for private development.  The majority opinion for Kelo v. City of New London held that private economic development aimed at generating tax revenues is a “public use” under the Takings Clause of the Fifth Amendment.  The Court stated that the decision did not preclude states from placing further restrictions on the power of the government to take private property.

There is an unknown fiscal impact associated with this resolution.

Provisions

Eminent Domain- Public Use

1. Requires the Judiciary to comply with the Arizona Constitution’s mandate that when taking private property the question whether the contemplated use be public be a judicial question and determined without regard to any legislative assertion.

2. Requires the state or a political subdivision to establish by clear and convincing evidence that each parcel is necessary to eliminate a direct threat to public health and safety caused by the property in its current condition.

3. Entitles a property owner to have a jury serve as the finder of fact in a hearing or trial to determine whether the taking is actually for a public use in an eminent domain action for the purpose of slum clearance or redevelopment.

Just Compensation

4. Requires the municipality to provide a property owner a comparable replacement dwelling that is decent, safe and sanitary if the private property consisting of an individual’s principal residence is taken for a public use for the purpose of slum clearance or redevelopment.

5. Requires a property owner to be compensated in an amount no less than what is necessary to purchase a comparable replacement dwelling that is decent, safe and sanitary if the owner elects for monetary compensation rather than a replacement dwelling.

6. Entitles a property owner to just compensation if the use or division of private real property is reduced by the enactment or enforcement of any land use law after the date of acquisition by the owner in a manner that reduces the fair market value of the property.

7. Prohibits a governmental entity from requiring the property owner to submit a land use application to remove, modify, vary or otherwise alter the application of the land use law to the owner’s property as a prerequisite to demanding or receiving just compensation.

8. Exempts the following land use laws from the just compensation requirement based on the diminution in value to those that:

a) limit or prohibit a use or division of real property for the protection of the public’s health and safety, including fire and building codes, health and sanitation, transportation or traffic control, solid or hazardous waste and pollution control.

b) limit or prohibit a use or division of real property commonly and historically recognized as a public nuisance under common law.

c) are required by federal law.

d) limit or prohibit the use or division of a property for the purpose of housing sex offenders, selling illegal drugs, pornography or obscenity and adult oriented businesses if the land use laws are consistent with the U.S. Constitution and the Arizona Constitution.

e) establish locations for utility facilities.

f) are enacted before the effective date of this act.

g) do not directly regulate an owner’s land.

h) apply to property located within a high noise or accident potential zone.

9. Requires the state or a political subdivision to demonstrate how enacting or enforcing a land use law is exempt for the just compensation requirement based on the diminution in value.

10. Provides the property owner the right to file suit for just compensation if the land use law continues to apply to the property more than 90 days after the owner makes a written demand in a specific amount for just compensation to the state or political subdivision enacting or enforcing the land use law, unless the parties agree on just compensation or a waiver is provided.

11. Requires any demand for landowner relief or any waiver that is granted in lieu of compensation to run with the land.

12. Specifies that just compensation based on diminution in value is in addition to any other remedy provided by law and is not intended to modify or replace other remedies.

13. Allows government entities and private property owners to reach an agreement regarding any proposed action by the governmental entity.

Attorney Fees

14. Prohibits a property owner from being liable for the state’s or a political subdivision’s attorney fees or costs in any eminent domain action or action for diminution in value. 

15. Requires the property owner to be awarded reasonable attorney fees, costs and expenses in every eminent domain action in which the taking is found to be not for a public use.

16. Requires the court to award attorney fees and other expenses if the final amount offered by the state or a political subdivision is 20 percent less than the amount ascertained by a jury or the court for the purpose of slum clearance or redevelopment and allows the court attorney fees and expenses in other circumstances.

17. Allows a prevailing property owner in an action for just compensation that is based on diminution in value to be awarded reasonable attorney fees, costs and expenses.

Miscellaneous

18. Prohibits a public body from discussing the taking of private property for slum clearance and the control and transfer to a private entity from taking place in executive session but allows the public body to receive legal advice from an attorney who does not represent any other party that will benefit from the transaction in executive session.

19. Contains a severability clause.

20. Defines terms. 

21. Contains findings and legislative purpose regarding private property rights and just compensation.

22. Requires the Secretary of State to submit the proposition to the voters at the next general election.

23. Becomes effective if approved by the voters and on proclamation of the Governor.

Amendments Adopted by Committee

· Adopted the strike everything amendment.

Amendments Adopted by Committee of the Whole

1. Removes the requirement that property taken by eminent domain be valued at its highest and best use and the compensation of an individual’s principal residence equal no less than 125 percent of the property’s fair market value if taken for slum clearance and requires the government to provide the property owner a comparable replacement dwelling or monetary compensation in an amount necessary to purchase a comparable replacement dwelling.

2. Removes the requirement that the owner of a business be compensated for loss of good will.

3. Removes the property owner’s right to attorney fees, costs and expenses if the owner prevails in a diminution in value action.

4. Requires, rather than allows, a court to award attorney fees in cases in which the government’s offer is less than the jury finds but only if the government’s offer is 20 percent less and allows a court to award attorney fees and other expenses in other circumstances.

5. Prohibits a public body from discussing the taking of private property for slum clearance and the control and transfer to a private entity from taking place in executive session but allows the public body to receive legal advice from its attorney in executive session.

6. Requires a jury trial to take place within 90 days after the property owner files, if the property owner elects for a jury trial.

Senate Action

GOV               2/16/06     DPA/SE     4-3-0

3^rd Read           3/22/06                        21-5-4

Prepared by Senate Research

April 4, 2006

NS/jas