Legislature(1997 - 1998)
04/08/1998 01:40 PM Senate JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 190 - ATTEMPT TO PURCHASE BEFORE EMINENT DOMAIN
SENATOR JERRY MACKIE, prime sponsor of SB 190, said this bill
attempts to bring fairness as well as expediency to the acquisition
of land by the state and municipal government. SENATOR MACKIE
explained that SB 190 requires the government to make a good faith
effort to purchase land from a land owner prior to invoking the law
of eminent domain. SENATOR MACKIE said he is not trying to remove
the authority of the state to take land by eminent domain, only
adding a provision to ensure there is a good faith negotiation on
the part of the state or municipal government before they claim
land under eminent domain. SENATOR MACKIE indicated that in some
cases a landowner can be at the mercy of the government, as their
only recourse to keep their land once eminent domain has been
invoked is a costly and time-consuming court challenge, which
generally only serves to set the price to be paid for the land
anyway. SENATOR MACKIE stated that 23 other states have similar
requirements.
SENATOR PARNELL asked what is meant by the language that adds "and
the property interest to be taken." SENATOR MACKIE replied that
this change was added by the drafter to make the bill more
specific. MR. DAVE GRAY, staff to SENATOR MACKIE, interjected that
these would be interests in addition to the property itself and
might include rights of way or logging rights. CHAIRMAN TAYLOR
asked if a view could fall under this, for example if a power line
was directly obstructing a view from a view lot - would this
diminish the property. CHAIRMAN TAYLOR expressed concern that this
"property interest" may expand things beyond the actual property
itself. SENATOR MACKIE said he was only concerned about things that
would be taken under eminent domain; he said a view would not be
taken under eminent domain and CHAIRMAN TAYLOR disagreed, saying it
would apply if the value of a view lot was diminished by the loss
of the view. MR. GRAY specified that there was never any discussion
of this, and the change was intended for other kinds of interests
other than pure ownership, like partnership.
Number 385
SENATOR MACKIE mentioned he had a proposed committee substitute
that would clear up some ambiguities in an earlier draft of the
bill and he hoped the committee would consider it.
SENATOR ELLIS asked why one version of the bill had included a
reasonable and diligent effort and the proposed committee
substitute required a good faith effort. SENATOR MACKIE replied
that the Community and Regional Affairs Committee thought
reasonable and diligent was too stringent a standard to require and
could prevent any takings by eminent domain, so they had changed
the wording to good faith. SENATOR ELLIS clarified that good faith
is a lower standard than reasonable and diligent. SENATOR MACKIE
agreed good faith would be less problematic for a government
entity. CHAIRMAN TAYLOR interjected that these are terms often used
in title actions and a diligent inquiry can be quite a bit of work.
SENATOR MACKIE said all he wanted to see was that agencies extend
the common courtesy of a good faith effort before taking a piece of
property under eminent domain. SENATOR MACKIE said he did not mean
to imply this was not being done now, he just wanted to ensure it
would always be done.
Number 440
SENATOR PARNELL asked if under the current process, the state used
eminent domain to obtain a right of way. SENATOR MACKIE said they
did. SENATOR PARNELL asked if this bill expands or just clarifies
how things are done now. SENATOR MACKIE replied that depends on who
you ask. He said there are good and bad cases of takings by
government entities. SENATOR PARNELL clarified that this bill would
only add the requirement of a good faith negotiation and
consideration of other property interests and SENATOR MACKIE said
he was not sure but further testimony might enlighten them.
MR. BILL CUMMINGS, representing the Department of Transportation
and Public Facilities (DOT/PF) for the Department of Law, urged
everyone to remember that 95 to 98 per cent of the land obtained by
DOT/PF was through negotiation, while only 2 to 5 per cent was
through the condemnation process and the invocation of eminent
domain. MR. CUMMINGS said he is the last person to see a project
before it goes out to bid and briefly explained the process by
which a piece of property is appraised; an offer is made and the
negotiation takes place. He said eminent domain is used as a last
resort. CHAIRMAN TAYLOR noted they were working off the Community
and Regional Affairs Committee as the work draft brought by the
sponsor had not yet been adopted.
MR. CUMMINGS said now, a property owner who is not satisfied or
unable to reach an agreement with the state can, when the state has
taken his or her land under eminent domain, file a petition with
the court challenging the project in terms of if it really achieved
the goal of the maximum public good for the minimum private injury.
MR. CUMMINGS said this bill adds two new provisions; a property
owner can now file an additional court challenge to the
appropriateness of the particular property interest that the state
takes for any particular project. MR. CUMMINGS explained the state
can take a number of different property interests in a piece of
property depending on the particular needs of a given project. For
example, some projects require a fee simple interest which is the
ultimate property right and acquires the entire property down to
the core of the earth. Other projects may require only an easement,
and the type of property interest to be taken is generally left to
the discretion of the condemning authority. MR. CUMMINGS said
generally they try to take the minimum property right they need
for any project.
MR. CUMMINGS said his question about this bill is: what's broken?
He said good faith negotiations are happening now and only
exceptional cases wind up in court. This bill will introduce a
complicated process that will add to the cost of projects. MR.
CUMMINGS concluded by saying that eminent domain is very generous
in its compensation to property owners and owners who contest
eminent domain and win are reimbursed for their court costs,
awarded any damages due to their land and they get their land back.
MR. CUMMINGS said his concern is that there is nothing wrong with
this process to require the changes proposed in this bill.
CHAIRMAN TAYLOR said he did not see how this could be a major
hurdle if it was already being done in 95 per cent of cases. MR.
CUMMINGS replied that this legislation allows a property owner to
contest the propriety of the taking as well as whether the
negotiations were conducted in good faith. MR. CUMMINGS explained
this may significantly delay a project while waiting for a court
decision. He said this provision would allow for significant,
inappropriate delays. SENATOR MACKIE interjected that this is
exactly what the bill is intended to do - to allow property owners
recourse when the entity taking their land cannot show that just
compensation was awarded for it after good faith negotiations.
SENATOR MACKIE said it is not his intent to stop development, but
only to codify the requirement for a good faith negotiation to
prohibit an any possible abuse of the process.
Number 569
SENATOR PARNELL asked again about the "property or interest"
language and asked if this will expand the type of property
interests the state will be paying for or if it only puts in
statute what is already happening. MR. CUMMINGS replied it
increases an owner's ability to contest a taking, they may contest
the nature of the interest taken as well as the taking itself. For
example, a property owner may contest the necessity of a fee simple
taking, saying an easement could have been used instead. SENATOR
PARNELL said this gets at the issue of the maximum public good for
the minimum private harm, but MR. CUMMINGS disagreed, saying that
issue has more to do with the nature and location of a project than
the type of land interest taken.
Tape 98-31, Side B
Number 001
CHAIRMAN TAYLOR said he's afraid the bill expands beyond
negotiating in good faith. He asked about page two of the latest
draft ("K"). MR. CUMMINGS said he thinks that part says if a
property is to be condemned the condemning authority must be able
to show they participated in a good faith negotiation prior to the
condemnation, and that the person with whom they negotiated was not
lacking intellectual capacity.
Number 552
SENATOR MACKIE agreed with the question regarding what might be
considered an additional interest, but he asked for them to
consider possible timber interests and like things.
CHAIRMAN TAYLOR asked MR. CUMMINGS if since most cases are resolved
through negotiation, the others are not simply because there was no
attempt to negotiate. MR. CUMMINGS replied the reasons cases are
not settled include bad legal advice, greed and philosophical
differences. He cited a case in Ketchikan in which the property
owner wanted an amount about twenty times higher than what the
state was willing to pay. SENATOR MACKIE asked if the state
determined the price through an appraisal process and MR. CUMMINGS
indicated that was correct. SENATOR PARNELL asked if a jury would
then determine what the value is using a body of case law that
assign value to different things. MR. CUMMINGS said this was also
correct, and a master would be appointed to make the final
declaration of value under instructions given by the Superior
Court. If the owner is dissatisfied with the decision of the
master, they can appeal and exercise their right to a jury trial.
CHAIRMAN TAYLOR asked if the appraisal happened before this and MR.
CUMMINGS said it did. CHAIRMAN TAYLOR clarified that the master
comes in after the owner has said no and a condemnation and a
declaration of taking has been filed. MR. CUMMINGS said this is
correct. CHAIRMAN TAYLOR mentioned that they then deposit the
amount of the appraisal in an account on behalf of the property
owner who has immediate access to the money should he or she
choose; the owner can even take this money, continue the protest
and try to get more money on top of this. MR. CUMMINGS agreed this
was all correct. CHAIRMAN TAYLOR explained the master can then
rehash the whole situation and change the award made by the
condemning entity. If the master does increase the award, the
property owner can even appeal this, all the while having access to
the extra money deposited for the increased award.
CHAIRMAN TAYLOR said the government entity has already had the land
conveyed at this point and may continue with the project even as
the value continues to be contested. MR. CUMMINGS replied this was
also correct.
CHAIRMAN TAYLOR asked if the property owner still at this point has
the right to challenge the public interest of the project and MR.
CUMMINGS said no, that must be done within 20 days of the filing
for the taking. He added there are provisions for expedited
discovery in these cases. CHAIRMAN TAYLOR concluded that the
project could still be delayed by a court proceeding over the
public interest issue. MR. CUMMINGS replied that was correct.
Number 450
MR. RICHARD HARRIS, representing Sealaska Corporation, supported
the bill. MR. HARRIS stated that Sealaska Corporation, an Alaska
Native Claims Settlement Act (ANCSA) corporation, holds about
330,000 of fee estate land and an equal amount of subsurface land
in Southeast Alaska. Sealaska also owns other properties and MR.
HARRIS said Sealaska views and values all these properties
differently. ANCSA lands are a treasure that took hundreds of years
to secure and Sealaska finds condemnation of these properties
problematic, and thinks SB 190 is an important vehicle to provide
additional protection for landowners and ensure a diligent attempt
is made to buy private land before any condemnation proceeding.
MR. HARRIS said Sealaska would merely like to level the playing
field by requiring two simple things: a good faith effort at
negotiation and the requirement of demonstrating a project is
necessary. MR. HARRIS indicated that 20 other states do this now
and it is recommended procedure under the Universal Eminent Domain
Act.
Number 418
MR. HARRIS remarked that it is not always necessary to take a fee
simple interest in a piece of property. He gave an example in which
he did not think the proper property interest had been taken; it
involved an air easement needed for an airport. The government
bought only the air rights to the land adjacent to the airport, but
placed restrictions on how high the trees on the land could grow.
Because this was timber land, the height restriction devalued it
considerably, though Sealaska was not compensated for this.
MR. HARRIS said a good faith effort is a reasonable requirement,
and might help avoid some problems in the future. MR. HARRIS said
the bill does not expand the jurisdiction of government entities,
and added that view rights can be challenged now as a property
interest.
MR. HARRIS said the bill is a reasonable one and sufficiently
protects the state. The burden of proof is on a property owner to
show grounds for a complaint and the state is only required to show
that a proper assessment has been made, that they are taking the
least interest needed for the project and that they have negotiated
the deal in good faith. MR. HARRIS gave an example in which the
state took fee estate for a piece of jointly owned property and
left the two property owners to fight amongst themselves for the
lump sum of money. He does not see this as a proper good faith
negotiation.
MR. HARRIS stated that though Sealaska is not interested in selling
land, they are willing to trade for other land. Unfortunately, the
agency they deal with most (DOT) has no lands of its own and is
unlikely to get land from its "sister agencies." MR. HARRIS said he
is not happy with this and has tried to address this problem to no
avail.
MR. HARRIS restated his point that this is a reasonable bill that
does not require much more than what is happening now. He stated it
gives a level of protection to landowners and levels the playing
field for negotiations between the two parties.
SENATOR PARNELL asked, in the airport example, what prevented
Sealaska from showing a loss of interest in the land. MR. HARRIS
replied that nothing prevented that, he would just prefer for
Sealaska to ask the state to buy the fee estate in a case like
this. He said it is important to have a fair consideration of the
land owner's interest and come to an agreement about the
appropriate interest to be acquired.
SENATOR PARNELL asked if the language "or interest in the property"
would extend this beyond the direct property owner and MR. HARRIS
replied he did not think so.
Number 285
CHAIRMAN TAYLOR asked if any other states are held up in their
condemnation proceedings by this type of provision, as they only
employ the good faith negotiation portion of this legislation. MR.
HARRIS said he was only saying that the interest to be taken should
be negotiated with a property owner as well, in order to determine
the minimum necessary property owner. CHAIRMAN TAYLOR asked if
there are any other states that do this, he said he could imagine
a dispute over the property interest might hold projects up or
overly limit them. CHAIRMAN TAYLOR said he could see a myriad of
opinions as to the correct property interest to be taken for a
given project, and he remarked that the efficiency of the process
must be maintained. MR. HARRIS replied that there is insurance
built into the bill by the fact that the burden of proof is on the
party opposing the taking. He said a simple challenge will not stop
a project from progressing, especially if the state realizes it is
an invalid claim.
CHAIRMAN TAYLOR asked if, in the airport example, they could file
a suit of inverse condemnation for wrongful taking. MR. HARRIS said
they could and CHAIRMAN TAYLOR added they could prove that through
the same mechanism in the bill also if it were adopted. MR. HARRIS
said they were trying to avoid getting to that point and merely
avoiding the "iron glove" of condemnation by establishing a system
in which the interest and its worth are negotiated in good faith.
He again said this would simply codify, for the most part, what is
already being done.
Number 195
MR. BOB NAVRO testified via teleconference and said the bill is
"wonderful." He is in the middle of a condemnation proceeding and
takes exception to the comment that sometimes people contest these
proceedings due to greed. He argued that our Constitution
guarantees life, liberty and the pursuit of happiness. He equates
happiness with property and says an assessment might not equal the
value of a piece of property in a property owner's mind's eye. He
disagreed with the state's appraisal of his land and supported the
bill.
SENATOR PARNELL moved to adopt work draft "K" as the committee's
working document. Without objection, it was so ordered.
MR. BILL CUMMINGS testified again, saying he is sympathetic to
Sealaska's concerns, but feels they have been dealt with in good
faith.
Number 058
CHAIRMAN TAYLOR commented that it seems the state is limited by the
value determined by the appraiser. CHAIRMAN TAYLOR asked how and
when the state can deviate from this appraisal. MR. CUMMINGS
replied there must be a good reason for any deviation and an owner
needs to show some level of proof for their claim that the land is
worth more than the assessment, but the state wants to settle these
disputes and they benefit from being able to do so.
CHAIRMAN TAYLOR asked if there was an offset for any increase to
the value of the property made by the condemning authority to the
condemned land. MR. CUMMINGS replied this was correct.
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