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F I S C A L I M P A C T R E P O R T

SPONSOR Anderson

ORIGINAL DATE

LAST UPDATED

1/21/07

HB 159

SHORT TITLE Private Property Rights Protection Act

SB

ANALYST Wilson

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

Minimal

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

SUMMARY

Synopsis of Bill

House Bill 159 enacts the Private Property Rights Protection Act. The bill provides the

following:

•

Definitions for the following terms: “comparable replacement dwelling"; “owner";

“slum"; and “taken" or “taking." Additionally, the bill defines “public use" as not

including “the public benefit of economic development, increased tax base or taxes,

employment or general economic health."

•

The “power of eminent domain may be exercised only if its use is authorized by the state

and for a public use." The bill also provides for the supremacy of the Private Property

Rights Protection Act above all but the New Mexico and United States constitutions and

preemptory federal law.

•

An entity exercising the power of eminent domain for the purpose of slum clearance and

development, to provide to a person whose principal dwelling is taken either a

comparable replacement dwelling or, if desired, a monetary amount at least sufficient to

purchase a comparable replacement dwelling.

House Bill 159 – Page

2

•

The state or its political subdivision, in an eminent domain judicial action involving slum

clearance and redevelopment, to establish by clear and convincing evidence that the real

property being taken is necessary to eliminate a direct threat to the public health or safety

caused by the property in its current condition; or the taking is necessary to acquire

abandoned property. And the state or its political subdivisions must also prove there is no

reasonable alternative to the taking.

•

An owner of real property involved in an eminent domain action is not liable for attorney

fees or costs, and shall be awarded reasonable attorney fees, costs and expenses if the

taking is found not to be for a public use. The bill also provides for the award of attorney

fees, costs and expenses in an action involving slum clearance and redevelopment, when

the final amount of just compensation offered prior to a court trial is less than the amount

of just compensation awarded by a jury or the court.

FISCAL IMPLICATIONS

There will be a minimal administrative cost for statewide update, distribution and documentation

of statutory changes. Any additional fiscal impact on the judiciary would be proportional to

challenges to the exercise of eminent domain under the Act. New laws, amendments to existing

laws and new hearings have the potential to increase caseloads in the courts, thus requiring

additional resources to handle the increase.

SIGNIFICANT ISSUES

The necessity and wisdom of using eminent domain to promote economic development

are certainly matters of legitimate public debate.

The AOC states that House Bill 159 appears to be a response to the United States Supreme

Court’s June 2005 decision in Kelo v. City of New London allowing local governments to force

property owners to sell out and make way for private economic development when officials

decide it would benefit the public, even if the property is not blighted and the new project's

success is not guaranteed.

OTHER SUBSTANTIVE ISSUES

In the final paragraph of the majority’s opinion in the Kelo

case, Justice Stevens wrote:

In affirming the City's authority to take petitioners' properties, we do not

minimize the hardship that condemnations may entail, notwithstanding the

payment of just compensation. We emphasize that nothing in our opinion

precludes any State from placing further restrictions on its exercise of the

takings power. Indeed, many States already impose "public use" requirements

that are stricter than the federal baseline. Some of these requirements have been

established as a matter of state constitutional law, while others are expressed in

state eminent do main statutes that carefully limit the grounds upon which takings

may be exercised.

DW/csd