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

SPONSOR Grubesic

ORIGINAL DATE

LAST UPDATED

2/22/07

HB

SHORT TITLE Repeal Certain Eminent Domain Statutes

SB 1160

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

Senate Bill 1160 addresses issues related to municipality's use of eminent domain for economic

development purposes, by limiting its use to last resort, clarifying the definition of "slum and

blighted", and augmenting public notice requirements. The bill also repeals two related laws that

are no longer in use and are redundant to the Redevelopment Act.

SIGNIFICANT ISSUES

DFA notes that SB 1160 addresses the US Supreme Court Kelo

decision regarding the public use

of eminent domain for economic development purposes, from the perspective of municipalities.

It brings into legislation recommendations made by the Governor's Task Force on Eminent

Domain regarding notification, and retains the Task Force's municipal members desire to retain

eminent domain as a last resort.

The Task Force determined that the Urban Development Code, the Community Development

Code and the Metropolitan Redevelopment Code are redundant and unanimously agreed to

recommend elimination of the Urban and Community Development Codes. SB 1160 eliminates

them. The Task Force also recommended in a 10-7 vote (with 6 members absent) that Section 11

Senate Bill 1160 – Page

2

be removed from the Metropolitan Redevelopment Code; that is the part of the law that currently

allows the use of eminent domain for economic development purposes in a municipality's

attempts to reduce or eliminate slum or blighted conditions. This bill retains that power. In the

Task Force report's minority recommendation, the seven members expressed concern that

without this power it "would unduly restrict the ability of local governments to remedy

conditions that limit economic development and growth. This is particularly true in places like

Rio Rancho where thousands of acres of land suffer from poor and inadequate platting and

layout."

The bill adds new public notice requirements and relocation assistance which, as stated in the

minority recommendations of the Task Force report, offers "a balanced and reasonable

framework for local governments to follow in the aftermath of Kelo

. The Metropolitan

Redevelopment Act has always required local governments to prove that condemnation is

necessary to remedy slum or blight conditions. In fact, some States have responded to Kelo

by

passing legislation that simply mirrors existing law in New Mexico. These procedural

protections would improve New Mexico's existing law by combining and tightening the

definitions of slum area and blight area, enhancing notice and hearing requirements and

providing relocation assistance to displaced property owners." These recommendations were

agreed to by the full Task Force and SB 1160 is the only bill of all the bills introduced this

session to address these issues.

SB 1160 amends the law to say that “No public agency authorized to condemn property under

this Act shall condemn private property for economic development purposes, except for the

eradication of slum and blight as defined in this Act." This reflects the feeling among the

municipal members of the Task Force that "eminent domain has historically been – and should

continue to be used – as a tool of last resort." In other words, with no evidence of abuse by New

Mexico local governments of eminent domain, there is no need to revoke this power.

OTHER SUBSTANTIVE ISSUES

According to the report of the Eminent Domain Task Force, the Metropolitan Redevelopment

Act (MRA) "allows local governments to rehabilitate areas within communities that have fallen

into disrepair or become overridden by crime and violence. Local governments are able to invest

public resources in projects like roads, buildings, parks, and other structures and facilities that

promote economic stability and opportunity. The Legislature has expressly given local

governments the ability to exercise the power of eminent domain. No other laws in New Mexico

allow eminent domain to be used solely for the promotion of economic development."

The Task Force report further notes that in order for a municipality to declare Metropolitan

Redevelopment Area, "the first phase requires the passage of a resolution by a local

governmental body declaring that a proposed area is a slum or blighted and that remedying the

slum or blight is in 'the interest of the public health, safety, morals or welfare of the residents of

the municipality.'" If slum/blight conditions exist, then the local governmental body may

designate that area as a redevelopment area. The designation occurs through a formal vote of the

local governmental body. If an area is not declared a slum or blighted area, it may not be

designated as a redevelopment area and the powers of the Metropolitan Redevelopment Act may

not be invoked. The local governmental body must provide notice to the community of its intent

to (1) hold a slum/blight hearing and (2) declare the slum/blighted area a redevelopment area. If

a local governmental body declares an area a redevelopment area by formal resolution, it may

Senate Bill 1160 – Page

3

then adopt a redevelopment plan." Thus the process under existing law for exercising the MRA

powers, including the use of eminent domain, is fairly explicit. Exercising eminent domain under

the MRA, that is, acquiring "property through purchase or condemnation (that) may be sold or

leased to private parties for a use, (must be) consistent with the redevelopment plan."

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