Condemnation blight under Florida law: a rule of appropriation or the scope of the project rule in disguise?

• Author: Alfert, Robert, Jr.

The ubiquitous notion of "condemnation blight" appears to have gained a resurgence in eminent domain circles, especially in Florida. Not surprisingly, condemnation blight also continues to be one of the more erratically applied, confused notions in eminent domain jurisprudence. Judicial decisions from the various states apply the concept differently, and differences of opinion can even be found among decisions in the same state. Perhaps the only common denominator is in the meaning of condemnation blight. Condemnation blight generally refers to the detrimental impact on property caused by the threat of condemnation or by delays between the time the condemnor announces a proposed acquisition and the time the actual taking occurs.[1] The question then becomes whether courts will recognize condemnation blight as a rule of appropriation (i.e., a de facto taking absent a physical invasion or the imposition of some direct legal restraint) or a rule of evidence applicable to valuation proceedings. This article analyzes the majority and minority views and assesses the status of Florida law on this subject. Although not a paradigm of clarity, the Florida Legislature and Florida courts have at least established certain guideposts for practitioners to follow in this area of the law.

Condemnation Blight as a Rule of Appropriation

The general proposition recognized in the vast majority of jurisdictions is that the mere plotting or planning in anticipation of a public improvement--the generally alleged cause of condemnation blight--does not constitute a taking.[2] A variety of reasons underscore this proposition: Plotting or planning does not deprive the owner of the use or enjoyment of the property; no physical invasion of the property has occurred; the projected improvement may be abandoned; the threat of condemnation is one of the conditions upon which all property is held; and, finally, precondemnation planning assists and promotes flexibility in the growth and expansion of, inter alia, cities, counties, and critical infrastructure.[3]

A distinct minority of jurisdictions, however, have articulated exceptions which may apply in "extraordinary circumstances."[4] A taking may be found where the condemnor engages in extreme activity which evinces an "unequivocal intent" to take the allegedly affected property. Prohibitory actions by the condemnor which interfere with an owner's use and enjoyment of the property may constitute an exception. An increasing number of courts are also holding that actions of a condemnor which tend to severely depreciate the value of property required for a public improvement may rise to the level of a compensable taking.[5]

The most often cited cases in this area reveal that polar results can arise from virtually indistinguishable facts, dependent solely upon whether the presiding court recognizes an exception to the general rule regarding precondemnation activities. For example, the case of City of Chicago v. Loitz, 329 N.E.2d 208 (Ill. 1975), involved a proposed realignment of an intersection which would require four separate parcels. To facilitate the project, the commissioner of public works was authorized to engage in negotiations with the property owners to purchase the four parcels. The commissioner specifically entered into negotiations with the condemnee and reached an oral agreement as to price. This agreement was never reduced to an enforceable contract. During these negotiations, the city acquired or condemned the other three separately owned parcels.[6]

The city ultimately never sought to finalize the purchase agreement and, in fact, abandoned the entire project. The condemnee later claimed that the planning activities severely damaged his property which, at that time, was being used for the operation of a gas station. The common knowledge of the project allegedly prompted the gasoline supplier to refuse to supply gasoline for resale and terminated negotiations with the condemnee for additional funds to remodel the gas station. Although the condemnee conceded that planning activities such as open discussions of public improvements, adoption of planned improvements, and publication of the adopted plans do not rise to the level of a taking, the condemnee argued that the price negotiations and alleged price agreement itself independently constituted a taking. The Illinois Supreme Court, expressly following the majority rule, held that neither the price agreement nor the totality of the city's action could give rise to an inverse claim.[7]

The case of Macmor Mortgage Corporation v. Exchange Nat'l Bank of Chicago, 332 N.E.2d 740 (Ill. App. Ct. 1975), which followed and perhaps extended the authority of Loitz, involved the distinction of the takings claim being predicated on the effect of the condemnor's acquisition of adjacent property rather than the refusal to acquire the subject property. In Macmor Mortgage, the condemning authority announced its plan to develop a new junior college within an eight-block city area. The claimant landowner in this action owned two hotels located within phase III of the planned project. Over the course of four years the condemnor acquired or razed virtually all of the property within phase III with the sole exception of the two hotels.[8]

The inverse condemnation action brought by the landowner alleged that the acquisition and demolition of the buildings surrounding the two hotels "destroyed the residential character of the area, destroyed the attractiveness of the hotels as residential property, and rendered the property unfit for its sole feasible use." The overall alleged impact was the interference with the landowner's use and enjoyment of the property. Relying on the general rule that precondemnation activities do not constitute a taking, the appellate court ruled that even the acquisition and demolition of surrounding properties and resulting decline in the value of the subject property was not sufficient to constitute a taking.[10]

Under virtually identical material facts, decisions from other jurisdictions have ruled otherwise. As an example, in Richmond Elks Hall Association v. Richmond Redevelopment Agency, 561 F.2d 1327 (9th Cir. 1997), the condemnor...