COVER STORY, SEPTEMBER 2006

ILLINOIS RESTORES EQUITY IN EMINENT DOMAIN DEBATE
Illinois’ Equity in Eminent Domain Act provides greater power to defend against eminent domain.
Sanford M. Stein

On July 28, 2006, Senate Bill 3086, which substantially changed existing Illinois eminent domain law, was signed by Governor Rod Blagojevich. The effective date of the Equity in Eminent Domain Act (P.A. 094-1055) is January 1, 2007. The Act will only apply to condemnation complaints filed on or after the effective date. This article summarizes the background and some of the significant effects that the 431-page Act will have on property owners.

The Act responds to the June 2005 United States Supreme Court decision in Kelo v. City of New London (Kelo). The Kelo Court found that non-blighted, private property may be acquired through the exercise of eminent domain and transferred to a private developer for subsequent development because such development thereof could constitute a “public use” within the meaning of the Takings Clause of the Fifth Amendment. The Court noted that, although the condemned land, as developed, would not be open to the public at large, there is no “literal requirement that the condemned property be put to use for the. . . public.” Instead, the Court adopted the more broad interpretation of “public use” as “public purpose.” At the same time, however, the Court emphasized that nothing in its ruling precludes any state from placing further restrictions on its exercise of the takings powers. The Equity in Eminent Domain Act was enacted to strengthen and better define the protections available to Illinois property owners.

The Act provides that, in addition to all other limitations and requirements imposed upon the exercise of eminent domain power, the exercise of eminent domain power must be for a “public use.” The determination of whether a purpose constitutes a “public use” varies depending on the basis for the acquisition of the property, and the ultimate ownership and control of the acquired property.

Under the previous law, there was concern that individual property rights were secondary to governmental demand. Now the government’s burden is somewhat more severe, both in proving that blight exists and with the necessity that there be an actual redevelopment project that will result.

It should be noted that condemnation actions under the O’Hare Modernization Act or in furtherance of an existing tax increment allocation redevelopment plan are exempted from the burdens of proof summarized below. Such actions are to be governed under the O’Hare Modernization Act or the relevant tax increment financing law.

The burden of proof on the governmental entity condemning a property varies under the Act, depending on the ownership and control of the resulting redevelopment. For example, under Section 5-5-5(b), if a property is to be acquired for public ownership and control, then the condemning authority must prove that the acquisition is necessary for a public purpose and that the acquired property will be owned and controlled by the condemning authority or another governmental entity.

However, if eminent domain authority is used to acquire property for private ownership and/or control, then under Section 5-5-5(c) the condemning authority must prove by clear and convincing evidence that the acquisition is primarily for the benefit, use or enjoyment of the public, and necessary for a public purpose. The condemning authority’s burden of proof is lessened under Section 5-5-5(d) if it exercises its authority to acquire property for private ownership and/or control where the primary basis for the acquisition is the elimination of blight.

Further, if the existence of blight or blighting factors is challenged in an appropriate motion filed within 6 months after the date the complaint to condemn is filed, then the condemning authority must also prove, by a preponderance of evidence, that the required blighting factors existed in the area at the time the area was so designated or at any time thereafter. Fortunately for the property owner, the existence of an ordinance or resolution designating an area as blighted is not prima facie evidence of blight.

Of concern to all owners is valuation of the condemned property. The Act provides the methods by which the valuation date of condemned property is to be determined. These methods vary depending on the source of the eminent domain authority, therefore the Act should be consulted for specifics.

In certain eminent domain proceedings for the acquisition of property for private ownership and control, the property owner may be entitled to attorney’s fees and other reimbursements. Whether or not attorney’s fees and other reimbursement are available to the property owner depends on the timing, existence, and acceptance or rejection of settlement offers made between the condemning authority and the property owner. In effect, the government is now at risk for the property owner’s attorneys fees if the government makes an unrealistic offer and forces the owner into a defensive condemnation suit. The expectation is that the government will give the best offer up front, avoiding both the public and private cost of litigation.

The award of attorney’s fees is to be based on the net benefit achieved for the property owner, except that the court may also consider non-monetary benefits if they are specifically identified and can be quantified by the court with a reasonable degree of certainty. The Act defines “net benefit” as the difference, without interest, between the final judgment or settlement and the last written offer made by the condemning authority before the filing date of the condemnation complaint. The Act also defines certain percentage awards for categories of net benefits.

The Equity in Eminent Domain Act does not eliminate the use of eminent domain powers to redevelop private property; however, it does provide a greater degree of equity in the system by placing reasonable burdens on the government to demonstrate actual blight and reasonable valuation. The result is a balance that recognizes important principles of private property rights, while allowing the public interest to secure proper and appropriate redevelopment.

Sanford M. Stein is a partner in the real estate and environmental department of Gardner Carton & Douglas LLP in Chicago. He concentrates his practice in land use, zoning, environmental legislation, and government relations law.

©2006 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.