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

SPONSOR Rawson

ORIGINAL DATE

LAST UPDATED

1/25/2007

3/15/2007 HB

SHORT TITLE Prohibit Certain Eminent Domain Uses, CA

SB SJR 3/aSFl/a HVEC

ANALYST Schuss

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Conflicts with/Relates to: HB 159, HB 370, HJR 1

SOURCES OF INFORMATION

LFC Files

Responses Received From

Administrative Office of the Courts (AOC)

Attorney General’s Office (AGO)

SUMMARY

Synopsis of HVEC Amendment

The amendment proposed by the House Voters and Elections Committee reinstates previous

language to Subsection A, which now reads:

Private property shall not be taken or damaged for public use without just compensation.

The amendment adds private utilities to public utilities in reference to those that must make just

compensation.

The amendment replaces the word profitable with economic in reference to the transfer of

property from one owner to another in Subsection C.

Synopsis of SFl Amendment

The first Senate Floor amendment to Senate Joint Resolution 3 adds rural electric cooperatives to

Subsection A, which states:

Senate Joint Resolution 3/aSFl/a HVEC – Page

2

Private property may be taken or damaged for public use only upon payment of just

compensation:

(1) by public agencies when necessary for the possession, occupation or enjoyment of

land by the public at large; or

(2) by public utilities, rural electric cooperatives, pipeline common carriers or those

seeking to put water to beneficial use.

Synopsis of Original Bill

Senate Joint Resolution 3 amends Article 2, Section 20 of the Constitution of New Mexico to

specifically allow for the taking of private property upon payment of just compensation by public

agencies when necessary for the possession, occupation or enjoyment of land by the public at

large and by public utilities, pipeline common carriers or those seeking to put water to beneficial

use. The Resolution specifically prohibits the taking of private property for use by a private

commercial enterprise for economic development or any other private use, except with the

consent of the owner, and prohibits the taking of private property from one owner to be

transferred to another, on the grounds that the public will benefit from a more profitable private

use. SJR 3 must be submitted to the voters for approval or disapproval at a general election.

FISCAL IMPLICATIONS

The Administrative Office of the Courts (AOC) notes that there will be a minimal administrative

cost for statewide update, distribution, and documentation of constitutional changes. Any

additional fiscal impact on the judiciary would be proportional to passage of this amendment and

resultant proceedings. Such proceedings have the potential to increase caseloads in the courts,

thus requiring additional resources to handle the increase.

SIGNIFICANT ISSUES

The Attorney General’s Office (AGO) states that presumably this bill is in response to the United

States Supreme Court decision in Kelo v. City of New London, 545 U.S. 469 (2005). On July 23,

2005 the Supreme Court, by a 5-4 decision, allowed the City of New London, Connecticut to

exercise its power of eminent domain to condemn privately owned real estate so it could be used

as part of a comprehensive redevelopment plan. The decision was based upon the city’s desire to

address its economic downturn by allowing the New London Development Corporation, a

private entity under the control of the city government, to revitalize the “Fort Trumbull"

neighborhood after Pfizer Pharmaceuticals began to build a large research facility on the

outskirts of that neighborhood. The corporation offered to purchase the properties involved, but

the owners of 15 out of 115 lots refused to sell. The City exercised its power of eminent domain

and condemned the holdout lots. The Supreme Court upheld the City’s action.

The dissent, authored by Justice O’Conner, and subsequent criticism of the case, suggested that

the use of this power in a reverse Robin Hood fashion—take from the poor, give to the rich—

would become the norm, not the exception. She stated: "Any property may now be taken for the

benefit of another private party, but the fallout from this decision will not be random. The

beneficiaries are likely to be those citizens with disproportionate influence and power in the

political process, including large corporations and development firms."

Several states are considering banning “takings" as authorized by Kelo. However, New Mexico

Senate Joint Resolution 3/aSFl/a HVEC – Page

3

specifically allows a city to exercise its power of eminent domain to address “slum clearance and

development". NMSA 3-46-1 to 3-46-45 1978 comp.

The AOC notes that in the final paragraph of the majority’s opinion in the Kelo v. City of New

London case, Justice Stevens wrote:

In affirming the City's authority to take petitioners' properties, we do not

minimize the hardship that condemnations may entail, notwithstanding

the payment of just compensation. We emphasize that nothing in our

opinion precludes any State from placing further restrictions on

its exercise of the takings power. [Emphasis added.] Indeed, many

States already impose "public use" requirements that are stricter than

the federal baseline. Some of these requirements have been established

as a matter of state constitutional law, while others are expressed

in state eminent domain statutes that carefully limit the grounds upon

which takings may be exercised. As the submissions of the parties and

their amici make clear, the necessity and wisdom of using eminent domain

to promote economic development are certainly matters of legitimate public

debate.

Note

: The U.S. Supreme Court declined on Tuesday, January 16, 2007, to revisit or limit its

2005 ruling in Kelo

upholding governmental power to exercise eminent domain for economic

development.

PERFORMANCE IMPLICATIONS

The AOC states that the courts are participating in performance-based budgeting. It appears that

passage of this constitutional amendment could lead to increased litigation regarding the

appropriate taking of private property and thus may have an impact on the measures of the courts

in the following areas:

•

Cases disposed as a percent of cases filed

•

Percent change in case filings by case type

CONFLICT, RELATIONSHIP

Conflicts with/ Relates to HJR 1, HB 159 and HB 370

TECHNICAL ISSUES

The AOC notes the following technical issue:

It is unclear in Section 1.A. (2) whether public utilities that take private property must be

“common carriers…seeking to put water to beneficial use" or whether the allowance extends to

“public utilities, [and/or] pipeline common carriers, [and/or] those seeking to put water to

beneficial use." Does the ability to take private property extend to private pipeline common

carriers and to private parties seeking to put water to beneficial use.

The AOC suggests that Section 1.A. (2) of SJR3 should clarify who may take private property.

BS/mt