Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
Sub.
H.B. 5 (LSC 127 0578-4) |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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State
GOVERNMENT |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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Various Agency Funds |
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Revenues |
- 0 - |
- 0 - |
- 0 - |
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Expenditures |
Potential increase in compensation
costs for properties taken by eminent domain |
Potential increase in
compensation costs for properties taken by eminent domain |
Potential increase in
compensation costs for properties taken by eminent domain |
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·
The
bill sets out new guidelines for eminent domain procedures, and establishes
compensation guidelines for those takings.
The new guidelines, which include provisions for compensating property
owners, may potentially result in higher costs when eminent domain is invoked.
·
The
state fiscal effects would be difficult to quantify, although the agency most
likely to be affected significantly would be the Department of Transportation,
which relies on eminent domain for various construction projects. Whether the bill would add new costs for the
Department is uncertain, and would depend on several factors.
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LOCAL
GOVERNMENT |
FY 2007 |
FY 2008 |
FUTURE YEARS |
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Local Governments |
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Revenues |
- 0 - |
- 0 - |
- 0 - |
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Expenditures |
Potential increase in
compensation costs for properties taken by eminent domain |
Potential increase in
compensation costs for properties taken by eminent domain |
Potential increase in
compensation costs for properties taken by eminent domain |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.
·
The
bill prohibits public authorities from taking private properties for public use
for the purpose of increasing revenues.
·
The
bill allows properties to be taken by eminent domain in certain circumstances,
and establishes compensation guidelines for those takings. The new guidelines, which include provisions
for compensation property owners, may potentially result in higher costs when
eminent domain is invoked.
·
Whether
these new restrictions would add new costs is uncertain, and would depend on
many factors.
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Provisions of the bill
The bill prohibits public
authorities from taking private property for a public use for the purpose of
increasing revenues for a public authority.
Public authorities may not use the potential revenues as evidence that
the property to be taken is blighted.
The bill also exempts agricultural lands from being designated as
blighted if the land is used for agricultural purposes as defined by section
303.01 or 519.01 of the Revised Code.
If a public agency acquires
any real property, it must include a statement of the purpose of the
appropriation and indicate that the prior owner possesses a right to repurchase
the property if the public agency decides not to use the land for the stated
purpose.
The bill also sets
restrictions as to what purposes that property claimed by eminent domain may be
used. No such property may be used for
any private commercial enterprise, economic development, or any other private
use unless that property is conveyed or leased to a public utility, a private
entity that occupies an incidental area within a publicly owned project, or a
private entity that shows a preponderance of evidence that the property is blighted
as defined in section 1.08 of the Revised Code. Once a public entity finds an area blighted, it cannot
appropriate the property until it adopts a comprehensive development plan, and
obtains a resolution from the appropriate governing legislative body.
Impact on the state and political
subdivisions
There is no immediate direct
fiscal impact on the state or political subdivisions, but some state agencies
and local governments may incur future revenue losses that would otherwise have
been available absent the new restrictions in the bill.
The bill also establishes
some compensation requirements for property taken by eminent domain. The bill requires that any public agency
compensate property owners for any moving or relocation costs, direct losses of
tangible property, reasonable expenses associated with searching for
replacement farms or businesses, and reasonable re-establishment costs. If the final award of compensation for
property exceeds 125% of the public agency's original offer, the court is to
enter judgment in favor of the owner for all costs and expenses. The bill sets out guidelines for awarding
these costs and expenses. The bill
states that relocation costs cannot exceed $2,500.
One state agency certain to
be affected, although to what degree is uncertain, is the Department of
Transportation. On the local level, the
same would hold true for county engineers.
The Department of Transportation revealed that over the FY 2004-2006
period, of the 4,870 parcels it acquired, eminent domain was invoked for the
appropriation of 578 parcels. To what
extent the additional steps required by the bill would affect this process, and
future highway construction and maintenance costs is uncertain.
Should a public agency take
a property through eminent domain, the compensation cost requirements set forth
in the bill could potentially exceed those that exist in current law, thereby
resulting in increased expenditures for the public takings.
·
There
is one primary change in the substitute bill that has a fiscal impact. The substitute bill creates guidelines as to
the awarding of costs and expenses to a property owner when the value of the
property is determined in court. The
substitute bill caps relocation costs at $2,500. There was no such limit in the previous version of the bill.
·
The
substitute bill includes appraisal and engineering fees as expenses that must
be paid for by a public agency in cases where there is judgment in favor of the
property owner.
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The
substitute bill alters the 125% offer rule in two ways. First, before commencing a proceeding, if an
agency makes a revised offer based on conditions indigenous to the property
that could not have been discovered at the time of the first offer, the award
must exceed 125% of the revised offer instead of the original
offer. Second, if a public agency
negotiated in good faith with the property owner, or owner's representative
before and after filing petitions or when the nature of property interest is
inordinately complex to the degree that appraisers may reasonably disagree with
its value, judgment may include attorney's fees and costs only if the award
exceeds 150% of the first or revised offer.
·
The
above fiscal changes to the bill are difficult to quantify. However, it can be assumed that these
provisions will reduce the costs to public agencies of eminent domain
proceedings. The substitute bill will
limit what can be spent on relocation costs.
Presumably, the other changes to the award structure would reduce the number
of instances in which a public agency will be forced to pay attorney's fees and
all other costs and expenses of the property owner.
LSC fiscal staff: Terry Steele, Budget Analyst