Takings care of business: using eminent domain for solely economic development purposes.

Author:Cooksey, Garreth
Position:Case note
 
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State ex rel. Jackson v. Dolan, 398 S.W.3d 472 (Mo. 2013).

  1. Introduction

    The controversial ruling in the case of Kelo v. City of New London, Connecticut (1) was an impetus for a nationwide discourse on eminent domain reform. Most of the public strongly condemned Kelo, which allowed the city of New London, Connecticut, to strip Susette Kelo of her home for the development of a Pfizer plant. (2) Political fallout from Kelo ushered in a surge of state legislation that restrained the taking of private property by eminent domain. Some states completely banned condemnation for economic development and for blight. (3) Missouri, like several other states, took a less strict route and banned eminent domain for solely economic purposes, but allowed it for blight. (4)

    Missouri passed Missouri Revised Statute Section 523.271 in the wake of nationwide eminent domain reform. (5) The Supreme Court of Missouri first interpreted the statute in State ex rel. Jackson v. Dolan, (6) which narrowed the ability of developers to use eminent domain for economic development. (7) This Note discusses the Kelo ruling and the Missouri statute enacted in response to it. It further examines the beneficial and detrimental implications that Jackson will have on property rights and the economy in Missouri.

  2. Facts and Holding

    In Jackson, Southeast Missouri Regional Port Authority (the "Port Authority") sought to purchase a 30.65 acre parcel of undeveloped land owned by Velma Jackson and Alicia Seabaugh as trustees. (8) The Port Authority viewed the parcel as the foundation for a planned development project in the area. (9) Unfortunately for the Port Authority, the trustees were not willing to part with the land. (10) Because the trustees were unwilling to sell the parcel, the Port Authority attempted to acquire the land through a powerful statutory vehicle: eminent domain. (11)

    The Port Authority is one of fourteen public port authorities in the State of Missouri. (12) The fourteen port authorities are scattered along the Missouri and Mississippi Rivers and function "similarly] to Industrial Parks and Economic Development Commissions." (13) Each port authority is involved with the transfer of cargo and storage, as well as the development of the port district that it controls. (14) The specific development projects that a port authority undertakes vary from port authority to port authority. (15) Due to their public nature, all the port authorities are organized under Missouri Revised Statutes Chapter 68 as a political subdivision of the State of Missouri. (16) As such, the State has vested in the port authorities the power to acquire property by eminent domain. (17)

    In Jackson, the 30.65-acre parcel of land in dispute is located in Scott County, Missouri and is bordered by land that the Port Authority owns. (18) The Port Authority operates its port district along the Mississippi River and owns between 500 to 600 acres of land in that district, which includes both Scott County and Cape Girardeau County. (19) It earns income from two main sources: the leasing of land to tenants and the operation of a six-mile railroad that allows businesses to transfer freight between trains and barges at the harbor. (20) In this case, the Port Authority wanted to expand its facilities by building a loop track that could handle unit trains. (21) Unit trains are longer trains, around 100 cars in length, that can carry oil and other cargo. (22) The current track was ill-equipped to handle trains of this size, and the Port Authority hoped that by building a new loop track it would reduce freight rates and increase the business and employment in the area. (23)

    The Port Authority did not intend to build the loop track on the 30.65acre parcel in dispute. (24) It already owned the land where the track was to be constructed but lacked the funding to complete the project. (25) To fund the track, the Port Authority sought to condemn the trustees' land and lease it to private parties. (26) One private party had already committed to a lease and desired to build a tank on the land to hold liquid products, such as oil, until the liquid could be loaded onto barges and sent down the Mississippi River. (27) The Port Authority had several other potential lessees who aspired to build dry storage units for cargo on the land. (28) Parties that did lease the land from the Port Authority would receive the income they made from other businesses using their tanks and dry storage units. (29) In return, the parties would help pay for constructing the loop track. (30)

    The trustees argued that since the land was being leased to private parties, those parties will be the only beneficiaries of the land and, thus, there was no public purpose for the taking. (31) This, the trustees claimed, was a clear violation of Missouri Revised Statutes Section 523.271 and Article I, Section 28 of the Missouri Constitution. (32) The Port Authority argued that leasing the land to private entities would help raise money for the loop track, which would in turn bring jobs to the area and increase commerce in the port district. (33) Therefore, the Port Authority believed the economic development served a public purpose. (34)

    The circuit court ruled that the taking did not violate Section 523.271 or Article I, Section 28 of the Missouri Constitution. (35) The court reasoned that in addition to economic development, leasing the property would help fund the loop track, which would help improve river commerce. (36) Because the economic development would primarily benefit the public, the seizure of the property was for a public purpose and the benefit private parties received from the seizure was secondary to the public purpose. (37)

    Following the circuit court ruling, the trustees petitioned the Supreme Court of Missouri for a writ of prohibition. (38) The court issued the writ and ruled in favor of the trustees to make the writ permanent. (39) The court held that although the Missouri Constitution does not prohibit takings solely for economic development, the legislature enacted a statute that prohibited this kind of taking. (40) Before this case, Missouri Revised Statutes Section 523.271 had never been interpreted by the Supreme Court of Missouri or the Court of Appeals. (41) The Supreme Court stated that under the statute, the Port Authority must prove "its taking is not solely for economic development purposes." (42) The Port Authority must do this by proving that the purpose of the taking is not "solely to provide an increase in the tax base, tax revenues, employment, [or] general economic health." (43) The Port Authority argued that construction of the loop track was a purpose separate from the economic development. (44) However, the court disagreed and ruled that the purpose of the construction of the loop track was for economic development. (45) Therefore, the court, by its ruling in Jackson, established that when a government entity in Missouri wants to use eminent domain for economic development, the entity must have a clear non-economic purpose in addition to economic development rationales. (46)

  3. Legal Background

    This Part analyzes eminent domain in two subsections. First, this Part examines how the U.S. Constitution and the Supreme Court of the United States have dealt with eminent domain, highlighting the controversial case of Kelo v. City of New London. This Part then discusses Missouri's eminent domain statute, which was enacted in response to Kelo.

    1. The Constitution, the Supreme Court, and Eminent Domain

      Eminent domain in the United States began in colonial America. (47) The system was borrowed from Britain, where land could be seized for public use. (48) Public use in colonial America included such projects as the building of dams and roads. (49) Many of the states in colonial America did not provide any compensation for the land seized, rationalizing that "property right[s] could be compromised in order to advance the common good." (50) The founders, realizing both the importance of eminent domain and the importance of private property, balanced these goals in the Fifth Amendment." (51) The Fifth Amendment codified the government's authority to take property, but it also required the landowner to receive just compensation. (52) The Takings Clause of the Fifth Amendment to the Constitution states, "[N]or shall private property be taken for public use without just compensation." (53)

      The term "just compensation" has been fairly easy to define and is generally accepted as the "fair market value of the property at the time of the taking." (54) The term "public use," on the other hand, has been more difficult to decipher. (55) It has been interpreted broadly to give the government the ability to advance the public good, but it also grants the government the discretion to rein in misuses of eminent domain. (56) This broad interpretation of public use is what led to Kelo v. City of New London. (57)

      Kelo involved a development plan in New London, Connecticut, in 2000. (58) New London was a very poor town with an unemployment rate close to double that of the state. (59) The population of the town was the lowest it had been since 1920. (60) Due to these conditions, local and state officials targeted New London for economic revitalization. (61) The State approved a $5.35 million bond issue to fund a development plan by a nonprofit entity, New London Development Corporation ("NLDC"). (62) In February of 2000, the pharmaceutical company Pfizer Inc. announced plans to build a $300 million research facility in New London that local authorities hoped would help revitalize the city by generating business in the area. (63) The development plan was approved by the city council and was projected to create over 1,000 jobs and to increase tax revenue. (64) The city council selected NLDC to implement the development plan in a ninety-acre area. (65) It also gave NLDC authority to acquire property by...

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