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Fate of Eminent Domain Legislation Rests with Governor Perry

June 8, 2007

Although the 80th Regular Session of the Texas Legislature officially came to an end on Monday, May 28, 2007, the battle over new eminent domain legislation is far from over.  There is a flurry of activity up in Austin, as property owners and governmental agencies lobby Governor Perry over House Bill 2006, the central piece of eminent domain legislation this session.

Critics contend that H.B. 2006 could cost local and state governments more than $1 billion a year in additional costs for public projects.  Proponents, on the other hand, argue that the measure would provide property owners additional protection when their land is taken through the eminent domain process.  Governor Perry has until June 17, 2007, to veto, sign or allow the bill to become law without signature.  Both sides are in the midst of trying to sway Governor Perry over to their side.

If Governor Perry signs the bill, there is no question that it will become much more expensive for condemning authorities to obtain land for public purposes.  This is because the bill's language allows property owners whose property is taken for the state highway system or a county toll project to be compensated for reduced access to their property as a result of an eminent domain action.  Under current Texas Supreme Court precedent, diminished access is not compensable so long as suitable access remains.  This change in the law would go into effect September 1, 2007.

The key provisions of H.B. 2006 and the other eminent domain bills from this session of the Texas Legislature are summarized below:

H.B. 2006 Relating to the Use of Eminent Domain Authority:

  • provides that "the special commissioners shall consider any diminished access to the highway and to or form the remaining property to the extent that it affects the present market value of the real property."  This requirement is limited to where property is being condemned for the state highway system or a county toll project;
  • defines a "public use" as one that allows the state, a political subdivision, or the general public to possess, occupy, and enjoy the property, including the specifically enumerated public projects in current law;
  • provides that a governmental entity may not take private property through the use of eminent domain if the taking: (a) confers a private benefit on a particular private party through the use of the property; (b) is for a public use that is merely a pretext to confer a private benefit on a particular private party; (c) is for economic development purposes, unless the economic development is a secondary purpose resulting from municipal community development or municipal urban renewal activities, or (d) is not for a public use as defined by the bill;
  • requires a record vote with specific wording to take each parcel of land through the use of eminent domain;
  • requires an entity that wants to acquire real property for a public use to make a "bona fide offer" to acquire the property voluntarily and to certify in the condemnation petition that the offer was made.  A "bona fide offer" is defined to mean one that is not arbitrary or capricious and is based on a reasonably thorough investigation and honest assessment of the amount of the just compensation due to the landowner as a result of the taking.  The legislation provides that if a court finds that a condemnor failed to make a bona fide offer, the court shall abate the suit and order that an offer be made.  If a court finds that a condemnor frivolously asserts that it made a "bona fide offer" when it did not, the condemnor may be forced to pay the property owner's court costs and attorney's fees;
  • modifies the current provisions that allow a property owner to repurchase the property if it isn't used by the condemnor within ten years of the condemnation by providing that the repurchase price is the price paid to the condemnee at the time the property was condemned (this provision requires voter approval of H.J.R. 30, below, to be constitutional), and providing that the right is activated if the condemnor fails to begin the operation or construction of the project in the ten-year period; and
  • provides that a person whose property is taken by eminent domain for an easement may construct streets or roads up to forty feet wide over the easement.

H.B. 1495 Landowner's Bill of Rights: requires the attorney general to prepare a landowner's bill of rights that must be provided to a property owner before any governmental or private entity with the power of eminent domain begins negotiating with a property owner to acquire real property.  The landowner's bill of rights will generally describe the eminent domain process.

H.J.R. 30 Constitutional Amendment: Because the Texas Constitution prohibits the state from giving away or disposing of property at less than market value, a constitutional amendment is necessary so that the Texas Legislature can allow the resale of condemned property to the previous owner as the original selling price if the public use is cancelled or not carried out within 10 years, as proposed in H.B. 2006.  This provision will go before the voters on November 6, 2007.