Q: What is eminent domain?
A: Eminent domain describes a government’s power to acquire private real property from its owner—even over the owner’s objection. Most frequently, eminent domain (sometimes called an “appropriation” or a “taking”) is used by a governmental entity or agency (such as a city, county, or a state agency like the Ohio Department of Transportation) to acquire property for projects like expanding roads, installing sewers, relocating or installing utilities, or for other similar public projects. The power of eminent domain also may be used for economic development, which involves taking properties or portions of properties to create special districts or to clean up the properties to bring business and infrastructure to a municipality. All of these reasons for using the power of eminent domain—road expansion, relocation or installation of utilities, economic development—are limited by several important constitutional protections. First, a government’s exercise of eminent domain must be necessary for a public purpose. Second, the government may only take private property for public use if the owner of that property is paid just compensation.
Q: How can economic development be considered a public purpose when the property is sold to a developer or another private party?
A: Members of the public do not usually have a favorable reaction to the use of eminent domain for economic development purposes. And it is true that, for more than 50 years, Ohio law always considered the promotion of economic development to be a public purpose warranting the exercise of eminent domain. However, Ohio law changed in 2007, and Ohio law now requires that a property can be taken for the sole purpose of economic development only if it is “blighted.” This change in the law ensures that the public purpose for taking property on the basis of economic development is tied to the elimination of blight and the redevelopment of property for the public’s benefit.
Q: What is “blight”?
A: Under Ohio law, a property is “blighted” if it is unsafe for human habitation or use, poses a direct threat to public health or safety, or has unpaid taxes or assessments that exceed the fair value of the land. If an entire area, consisting of multiple parcels of land, is targeted to be taken through eminent domain, at least 70 percent of that area must be deemed blighted before the government can exercise its power of eminent domain over the whole area.
Q: Who decides that a property is blighted?
A: Typically, the government entity seeking to take the property approves a comprehensive development plan that describes the public need for the property. Then, the city council (or other appropriate legislative body) reviews the plan, determines whether the area referred to in the plan is blighted, and then ultimately determines whether it is appropriate to use eminent domain. In order for the use of eminent domain to be approved, the comprehensive plan must be publicly financed. This prevents an interested party, such as a developer, from paying for the property, a safeguard to ensure that the property is being taken for a public purpose and that the power of eminent domain is not being used to forcibly transfer property from one private party to another.
Q: Can you give an example of how eminent domain is used to promote economic development?
A: Imagine a four-block square near a city’s downtown that used to be a vibrant residential and commercial area 50 years ago, but is now considered to be run down. Vacant houses dot the area, a few of the businesses have boarded-up windows, and many of the buildings are covered in graffiti. City residents complain about the area, and wish that it could be restored to benefit the city rather than to burden its resources. A developer comes along with a plan to transform the area into an old fashioned city-square development, and finds the four-block area to be the perfect location for it. The city agrees that the new construction would revitalize the area, increase the property tax base, and bring new jobs and residents to the area. The city begins by negotiating with each property owner to buy up the businesses and homes for the purpose of selling the properties to the developer. However, some businesses and a few residential owners don’t want to sell. This is where the power of eminent domain comes in. The city must decide if it should exercise its power of eminent domain and whether the city can appropriate the “hold-out” properties by applying the “blight” test described above. The city will have to approve a plan and deem the “hold-out” properties blighted before it may begin eminent domain proceedings.
Q: What happens if the city decides blight exists and that eminent domain can be imposed?
A: The city must first get a property appraisal, which Ohio law requires. At least 30 days before filing an eminent domain action in court to take a property, the city must notify the owner of its intent to acquire the property and must make a “good faith offer” to buy the property based on the recent appraisal. If the parties cannot agree on a price through negotiation, the city may file a suit called an “appropriation action” with the court. In the appropriation action, the city must convince the court either that the property is blighted or that the property is located in a blighted area. The city must prove, by a “preponderance (or greater weight) of the evidence,” that the property is blighted or is located in a blighted area.
Q: Can an owner get paid for property taken by eminent domain even if he has let his property fall into “blight”?
A: Yes. Every owner of property taken by eminent domain is entitled to receive “just compensation” for his or her property. This right is set forth in both the U.S. and Ohio constitutions. “Just compensation” under Ohio law has been interpreted to mean the “fair market value” of the property—the price that a willing owner would voluntarily take when selling his property to a willing buyer in the open market. Property owners may also be entitled to certain costs associated with the taking, such as relocation expenses, goodwill payments and/or economic damages for a business that is forced to relocate.
This “Law You Can Use” legal information column was provided by the Ohio State Bar Association. It was originally prepared by Akron attorney Barbara A. Sanchez. It was updated by attorney Kara M. Singleton of the Columbus office of Vorys, Sater, Seymour and Pease LLP.