Minnesota cities adjust to losing the hammer of eminent domain

When Richfield wanted to clear land for a new Best Buy headquarters over the objections of some property owners, the city got its way by using eminent domain to gain control of the land.

That power, reviled by some as government overreach, was curbed by a 2006 change in state law. Today, cities condemn property not for big, eye-catching developments but for mundane public uses like street expansions, trails and sewer projects. Bloomington once used eminent domain to gain control of a single parking stall.

"It used to be that … you could use eminent domain to assemble some or all of that [redevelopment] site, and resell it for private use," said Larry Lee, Bloomington's community development director. "We can't do that now.

"What cities still have eminent domain for is to use it for a public purpose: a city hall, a fire station, a park, a trail."

Minnesota law changed after a 2005 U.S. Supreme Court ruling sided with a Connecticut city that condemned private property for redevelopment, displacing homeowners who in some cases had lived in their homes for decades. A public outcry followed, and many states rewrote eminent-domain laws.

Minnesota law now limits government condemnations to public-use projects.

"It's pretty much roads, trails, sewer easements, things directly related to public infrastructure," said Sandra Johnson, Bloomington's city attorney.

The timing of the law change makes it hard to gauge its impact, said John Stark, Richfield's director of community development. He said it changed just as real estate tanked.

"Whether the change is good or bad is up to someone more important than me to say," Stark said. "It has vastly changed the way we do redevelopment. … We are definitely doing less development than we did, but it's hard to say if that's because of eminent domain or because of the economy."

Most recent redevelopment in Richfield has occurred on single pieces of property.

In contrast, the Best Buy development took about 70 homes and two car dealerships. Although eminent domain was actually used only with the car dealerships, Stark said homeowners may have decided to sell partly because of the threat of eminent domain.

Sometimes eminent domain is used for strategic purposes — for example, to clear up the title on an "orphan" property — and, in complicated situations, to buy property from willing sellers.

One of those so-called "friendly condemnations" was used this summer in Richfield along 17th Avenue S. north of 66th Street. Three homes that the city wants to move or raze to make way for a trail and parkway were caught in red tape because the owners, who wanted to sell, owed more on the houses than they were worth. When the city sent eminent-domain notices, slow-moving banks began negotiating. Agreements on two properties have been reached.

"This speeds up the process," said Jeff Pearson, Richfield transportation engineer.

This week in Bloomington, three eminent-domain measures appeared before the City Council. One involved easements for traffic signal work at an intersection with complex ownership issues, the second was a friendly condemnation for a road right of way and the third involved nine properties that will be affected by construction of the Hyland Trail.

Six of those property owners object to the off-road walking and biking trail, which needs easements for construction and utilities. They have refused to negotiate with the city, so Bloomington is pursuing eminent domain.

"In the great majority of cases, people settle with the city before going through formal condemnation," attorney Johnson said. "I think in this case, it is more of an attempt to stop the trail project."

At the council meeting, property owner Terry Langness indicated the same to the council.

"How many of you have moved to your property and suddenly get the property taken from you for a bike trail?" he asked. "How would you expect us to react?"

Bloomington's Lee said the city prefers to reach agreement with property owners. While the city can no longer condemn to acquire property for private developments, he said the change hasn't been a barrier to development in the South Loop area near the Mall of America.

When several properties there became available, the city bought them or reached deals to eventually acquire them.

"We've been pretty lucky," Lee said. "When we knew they were listed, we went to the council and said it would behoove us to act now. And the City Council said yes."

Richfield's Stark thinks the debate over eminent domain may not be over. For cities, the law creates issues when an area is targeted for redevelopment. As cities buy properties one by one, the last property owner in the area becomes much more powerful than the first owner who sold, he said.

And he said if Best Buy were looking for big plot of land today, without a tool like eminent domain Richfield probably couldn't compete with an outer-ring suburb that could point the company to a cornfield.

Now that the economy is picking up, Stark said, it could be just a matter of time before legislators begin looking at cities and asking why certain areas are suffering from disrepair and disinvestment.

"If they start asking why we can't fix it up, it will bring up discussion of eminent domain as a tool again," he said.

Mary Jane Smetanka • 612-673-7380