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F I S C A L I M P A C T R E P O R T

SPONSOR K. Martinez

ORIGINAL DATE

LAST UPDATED

2/12/07

HB 856

SHORT TITLE

Repeal Certain Imminent Domain Statutes

SB

ANALYST C. Sanchez

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance Administration (DFA)

Administrative Office of the Courts (AOC)

SUMMARY

Synopsis of Bill

House Bill 856 addresses issues related to municipality's use of eminent domain for economic

development purposes, by limiting its use to last resort, clarifying the definition of "slum and

blighted", and augmenting public notice requirements. The bill also repeals two related laws that

are no longer in use and are redundant to the Redevelopment Act.

FISCAL IMPLICATIONS

No fiscal impact on the general fund.

SIGNIFICANT ISSUES

HB 856 provides a response to the US Supreme Court’s Kelo v. London

decision regarding the

public use of eminent domain for economic development purposes, from the perspective of mu-

nicipalities. It brings into legislation agreements made by the Governor's Task Force on Eminent

House Bill 856 – Page

2

Domain regarding notification, along with the wishes of the task force's municipal members to

retain the use of eminent domain as a last resort.

The Task Force determined that the Urban Development Code, the Community Development

Code and the Metropolitan Redevelopment Code are redundant and unanimously agreed to rec-

ommend elimination of the Urban and Community Development Codes. This bill does so. The

Task Force also recommended in a 10-7 vote that Section 11 be removed from the Metropolitan

Redevelopment Code; that is the part of the law that currently allows the use of eminent domain

for economic development purposes in a municipality's attempts to reduce or eliminate slum or

blighted conditions. This bill retains that power. In the task force report's minority recommenda-

tion, the seven members expressed concern that without this power it "would unduly restrict the

ability of local governments to remedy conditions that limit economic development and growth.

This is particularly true in places like Rio Rancho where thousands of acres of land suffer from

poor and inadequate platting and layout."

The bill adds new public notice requirements and relocation assistance which, as stated in the

minority recommendations of the Task Force report, offers "a balanced and reasonable frame-

work for local governments to follow in the aftermath of Kelo v. London

. The Metropolitan Re-

development Act has always required local governments to prove that condemnation is necessary

to remedy slum or blight conditions. In fact, some States have responded to Kelo v. London

by

passing legislation that simply mirrors existing law in New Mexico. These procedural protec-

tions would improve New Mexico's existing law by combining and tightening the definitions of

slum area and blight area, enhancing notice and hearing requirements and providing relocation

assistance to displaced property owners." These recommendations were agreed to by the full

Task Force and HB 856 is the only bill of all the bills introduced this session to address these

issues.

House Bill 856 amends the law to say that “No public agency authorized to condemn property

under this Act shall condemn private property for economic development purposes, except for

the eradication of slum and blight as defined in this Act." This reflects the feeling among the

municipal members of the task force that "eminent domain has historically been – and should

continue to be used – as a tool of last resort." In other words, with no evidence of abuse by New

Mexico local governments of eminent domain, there is no need to revoke this power.

ADMINISTRATIVE IMPLICATIONS

Local government will play key roles in determining when and where imminent domain powers

can be exercised.

OTHER SUBSTANTIVE ISSUES

According to the report of the Eminent Domain Task Force, the Metropolitan Redevelopment

Act (MRA) "allows local governments to rehabilitate areas within communities that have fallen

into disrepair or become overridden by crime and violence. Local governments are able to in-

vest public resources in projects like roads, buildings, parks, and other structures and facilities

that promote economic stability and opportunity. The Legislature has expressly given local gov-

ernments the ability to exercise the power of eminent domain. No other laws in New Mexico al-

low eminent domain to be used solely for the promotion of economic development."

House Bill 856 – Page

3

The Task Force report further notes that in order for a municipality to declare Metropolitan Re-

development Area, "the first phase requires the passage of a resolution by a local governmental

body declaring that a proposed area is a slum or blighted and that remedying the slum or blight is

in 'the interest of the public health, safety, morals or welfare of the residents of the municipal-

ity.'" If slum/blight conditions exist, then the local governmental body may designate that area as

a redevelopment area. The designation occurs through a formal vote of the local governmental

body. If an area is not declared a slum or blighted area, it may not be designated as a redevelop-

ment area and the powers of the Metropolitan Redevelopment Act may not be invoked. (And) the

local governmental body must provide notice to the community of its intent to (1) hold a

slum/blight hearing and (2) declare the slum/blighted area a redevelopment area. If a lo-cal gov-

ernmental body declares an area a redevelopment area by formal resolution, it may then adopt a

redevelopment plan." Thus the process under existing law for exercising the MRA powers, in-

cluding the use of eminent domain, is fairly explicit. Exercising eminent domain under the MRA,

that is, acquiring "property through purchase or condemnation (that) may be sold or leased to

private parties for a use, (must be) consistent with the redevelopment plan."

According to a Wall Street Journal/NBC News poll: “In the wake of the court’s eminent domain

decision, Americans overall cite ‘private property rights’ as the current legal issue they care most

about." And according to an American Survey poll conducted in July among 800 registered vot-

ers nationwide, “Public support for limiting the power of eminent domain is robust and cuts

across demographic and partisan groups. Sixty-percent of self-identified Democrats, 74 percent

of independents and 70 percent of Republicans support limits." Indeed, in response to this deci-

sion, legislators in at least 35 states, including Illinois, are considering changes to eminent do-

main laws to prevent the taking of private land for private development because they argue the

Kelo decision went too far in taking private property.

This reduces the supply of affordable housing in the area and drives up prices, making it more

and more difficult for the underprivileged, racial and ethnic minorities and the elderly to live in

the neighborhoods they call home. Additionally, we need to discuss whether compensation in

eminent domain cases is fair, especially if those who are displaced are unable to find comparable

housing they can afford.

ALTERNATIVES

The bill does not clearly address the issue of whether compensation in eminent domain cases is

fair, especially if those who are displaced are unable to find comparable housing they can afford.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Status Quo

POSSIBLE QUESTIONS

Does this bill help draw a clearer distinction between private use and public use. Moreso than

Kelo v. New London did.

CS/sb