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Policy restricting Metropolitan Council LCA grants for projects using eminent domain for economic development

On January 25, 2006, the Metropolitan Council's governing body adopted a policy that restricted local governments from using Metropolitan Livable Communities Act (LCA) grant funding for projects that used eminent domain authority for "economic development" purposes.

During the 2006 legislative session new eminent domain law was enacted. Effective May 20, 2006, governmental units may use eminent domain only for a "public use or public purpose" as that term is defined by the new state law. The legislation can be viewed at: http://ros.leg.mn/bin/bldbill.php?bill=S2750.5.html&session=ls84

Except for certain tax increment, tax abatement and other types of projects that are exempt from the restrictions contained in the new law, the new eminent domain law is more restrictive than the Council's January 25 policy and addresses the property protection issues identified by the Council when the Council adopted its LCA eminent domain policy.

On June 28, 2006, the Council adopted a revised policy that is consistent with the statutory definitions and restrictions contained in Minnesota's new eminent domain law. Both policies follow:

JUNE 28, 2006
POLICY RESTRICTING METROPOLITAN COUNCIL LCA GRANTS
FOR PROJECTS USING EMINENT DOMAIN

(Applies to LCA grant applications, LCA grant awards and LCA grant agreements made on or after June 28, 2006)

Purpose:  The Metropolitan Council adopts this Private Property Protection Policy (“Policy”) to help protect the private property rights of citizens of the metropolitan region and to ensure scarce Livable Communities Act (“LCA”) grant funds are not used to support projects for which private property was taken through eminent domain proceedings unless eminent domain was used for a “public use or public purpose.”

Policy:  No applicant for a Metropolitan Council LCA grant (“Applicant”) shall be eligible for LCA grant funds if the project for which an LCA grant is requested uses eminent domain power to acquire property from an “owner,” unless eminent domain was used for a “public use or public purpose” and the procedural and other requirements of Minnesota Statutes chapter 117 and other laws authorizing the exercise of the power of eminent domain have been met.

Definition:  For purposes of this Policy, the term “public use or public purpose” means exclusively:

(1)   the possession, occupation, ownership, and enjoyment of the land by the general public or by public agencies;

(2)   the creation or functioning of a “public service corporation” as that term is defined in Minnesota Statutes section 117.025, subdivision 10; or

(3)   mitigation of a “blighted area” as that term is defined in Minnesota Statutes section 117.025, subdivision 6, remediation of an “environmentally contaminated area” as that term is defined in Minnesota Statutes section 117.025, subdivision 8, reduction of “abandoned property” as that term is defined in Minnesota Statutes section 117.025, subdivision 5, or removal of a “public nuisance” as that term is defined in Minnesota Statutes section 117.025.

All words, terms and phrases as defined and used in Minnesota Statutes chapter 117 shall apply to the implementation and interpretation of this Policy.  All projects for which eminent domain may be used under Minnesota Statutes chapter 117 and all projects that qualify for an exemption under Minnesota Statutes chapter 117 are eligible for LCA grant funding.

Certification of Compliance:  Applicants shall submit with their LCA grant applications a certification of their compliance with this Policy and the requirements of Minnesota Statutes chapter 117 and other laws authorizing the exercise of the power of eminent domain.  Prior to the receipt of LCA grant dollars, each Applicant shall again certify, in writing, its compliance with this Policy and the requirements of Minnesota Statutes chapter 117 and other laws authorizing the exercise of the power of eminent domain.

Remedy for Violations:  LCA grant agreements shall include a provision requiring the forfeiture and repayment of all LCA grant funds received in connection with a project award if eminent domain power is exercised in connection with that project in violation of this Policy or in violation of Minnesota Statutes chapter 117 or other laws authorizing the exercise of the power of eminent domain.

Implementation:  Except as provided in this paragraph, the Private Property Protection Policy adopted by the Council on January 25, 2006 shall apply to LCA grant awards and LCA grant agreements made on or after January 25, 2006 and before June 28, 2006.  This Policy is effective June 28, 2006 and shall apply to LCA grant awards and LCA grant agreements made on and after June 28, 2006.  If a notice of petition was served in connection with an Applicant’s project between January 25, 2006 and May 20, 2006, the project is not eligible for LCA funding unless the project: (1) would have been eligible under the Council’s January 25, 2006 policy; or (2) qualifies for an exemption under Minnesota Statutes section 117.012, subdivision 3 or 2006 Minnesota Laws chapter 214*, section 22, clauses (b) through (e).

* The Council's June 28, 2006 policy erroneously referred to chapter 412 of the 2006 session laws. The correct chapter number is 214.

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The following policy was revised by the Metropolitan Council on June 28, 2006.

January 25, 2006
POLICY RESTRICTING METROPOLITAN COUNCIL LCA GRANTS
FOR PROJECTS USING EMINENT DOMAIN

(Applies only to LCA grant applications LCA grant awards and LCA grant agreements made on or after January 25, 2006 and before June 28, 2006)

Purpose: The Metropolitan Council adopts this Private Property Protection Policy (“Policy”) to protect the private property rights of citizens of the Metropolitan region, to discourage the use of eminent domain for the benefit of one private entity to the detriment of another and to help ensure scarce public funds are used for purposes that primarily benefit the general public.

Policy: No applicant for a Metropolitan Council LCA grant (“Applicant”) shall be eligible for LCA grant funds from the Metropolitan Council if the project for which an LCA grant is requested requires the exercise of eminent domain authority over private property for purposes of economic development as defined below:

Definition: For purposes of this policy, the term “economic development” means the taking of private property from one private person or entity, without the consent of the owner, and conveying or leasing such property to another private person or entity, for commercial enterprise, or to increase tax revenue, tax base, employment, or general economic health, provided that such term shall not include:

(a) acquiring private property for public ownership and public use, such as for a roadway, park, sanitary sewer, hospital, public school, or similar use;

(b) acquiring private property to remediate or clean up pollution or contamination that threatens or may threaten public health or safety or the environment, if the Applicant certifies: (i) the property owner is unable or unwilling to pay for appropriate remediation or clean up; (ii) remediation or clean up must occur expeditiously to eliminate or mitigate the threat to public health or safety or the environment; and (iii) no Responsible Party has been identified or is financially capable or carrying out the remediation or clean up;

(c) leasing property to a private person or entity that occupies an incidental part of public property or a public facility, such as a retail establishment on the ground floor of a public building;

(d) acquiring abandoned property or acquiring “blighted” property as the term “blighted” is defined and used in Minnesota Statutes chapter 469;

(e) removing a public nuisance; or

(f) clearing defective chains of title.

Certification of Compliance: Applications for Metropolitan Council LCA grants shall require certification of compliance with this Policy. In addition, prior to the receipt of Metropolitan LCA grant dollars, an Applicant shall again certify, in writing, its compliance with this Policy.

Remedy for Violations: Metropolitan Council LCA grant agreements shall include a provision requiring the forfeiture and repayment in full of any and all Council LCA grant revenues in the event that eminent domain authority is exercised in violation of this Policy.

Implementation: This Policy applies to LCA grant funding cycles initiated in calendar year 2006 and shall not apply to LCA grants awarded on or before the date this Policy is adopted by the Council's governing body.