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Nevada Joins National Trend in Responding to Kelo Decision on Eminent Domain

June 28, 2007

On May 23, 2007, Nevada Governor Jim Gibbons signed into law Assembly Bill No. 102 ("AB102"), a reform measure seeking to curb perceived abuses of the power of eminent domain in response to the U.S. Supreme Court's Kelo decision. The measure comes nearly two years after the Supreme Court rendered its controversial opinion, holding that the promotion of economic development served a legitimate "public purpose" and that no finding of blight was required for condemnation, and affirming that the transfer of property from one private owner to another private owner was sometimes necessary, and permissible, to realize such a public purpose. Kelo v. City of New London, Connecticut, 545 U.S. 469 (June 23, 2005).

At the time the decision was entered, Kelo created an immediate storm of public outcry and spawned a flurry of proposed legislative measures seeking to limit redevelopment efforts and to rein in the use of eminent domain. Indeed, the Supreme Court invited this reining in of the power of eminent domain when it stated in Justice Stevens' majority opinion: "We emphasize that nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power." While many of the proposed bills have stalled or died in other states, Nevada has managed to follow through with its attempt to balance the impact of the Kelo decision, even if it only did so after staring down the barrel of a "PISTOL."

AB102 is considered a compromise plan that restricts governmental agencies' use of eminent domain to acquire private property, but does not unreasonably hinder large public works such as transportation projects. It was initially a companion measure to a proposed constitutional amendment ("AJR3"), which received final approval from the Nevada Assembly, but has to be passed by the Legislature again in 2009 before advancing to a statewide vote in 2010. AB102 contains the same provisions as AJR3; however, it took effect immediately upon the governor's signing.

Perhaps more so than the Kelo decision, AB102 and AJR3 were prompted in response to a ballot initiative petition entitled "Property Owner's Bill of Rights" that was championed by, and more commonly referred to as, the People's Initiative to Stop the Taking of Our Land, or PISTOL. While a trimmed-down version of PISTOL eventually passed following a challenge to the initiative in Nevada's Supreme Court, PISTOL still goes further than either AB102 or AJR3. Among other provisions, PISTOL called for the highest possible payments for blighted property and required that property owners have the right to reacquire the condemned property should it not be put to the public use for which it was condemned within five years. AJR3 would supersede PISTOL if approved by voters.

AB102 and AJR3 primarily prohibit, except in certain circumstances, the taking of private property if the purpose of the taking is to transfer an interest in that property to another private party. In addition, in all eminent domain actions, the owner of the property that is being taken is entitled to a determination of whether the taking is for a public use and the entity that is taking the property has the burden of proving that the taking is for a public use. Furthermore, the amendments require an entity which is taking property by the exercise of eminent domain to provide the owner of the property with all appraisals of the property obtained by the entity before the entity is allowed to occupy the property.

Additionally, the amendment provides for the manner of computing the just compensation owed to a person whose property is taken by the exercise of eminent domain. Notably, Section 2 of AB102, requires that if a property is condemned primarily for a profit-making purpose, the property sought to be condemned must be valued at the use to which the entity that is condemning the property intends to put the property if such use results in a higher value. Still, Section 1 of the amendment provides that neither a property owner nor an entity which is taking property by the exercise of eminent domain is liable for the attorney's fees of the other party, except in certain circumstances.

Of final note, Section 9 of AB102 provides that the owner of property taken by the exercise of eminent domain, or his successor in interest, has the right to reacquire the property for the price paid by the entity which took the property under certain circumstances - namely, if the condemning entity fails to use the property for the public use or reasonably related public use for which the property was taken within 15 years.

For Further Information

If you have any questions about this Alert or would like to learn more about eminent domain and redevelopment laws, please contact George J. Kroculick or any of the other attorneys in our Eminent Domain and Land Valuation Practice Group.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.