New law bans condemning land through eminent domain for industrial parks

Legislation originated by a Jefferson County commissioner last year and signed by the governor last week will eliminate the use of eminent domain proceedings to take land for industrial parks.

The bill (SB1184) is the subject of a report in the Standard Banner of Jefferson City and a column in the News Sentinel by Frank Cagle. Excerpt from the latter:

After a failed attempt at a megasite development in Jefferson County and proposals for other speculative industrial parks, the County Commission passed a resolution calling for eminent domain reform. Commissioner David Seal, the sponsor, went to Nashville this last session and found sympathetic ears.

Eminent domain laws have now been amended to take industrial parks out of the statute for “public use.” In addition, engineering fees, surveying fees and possibly legal fees are awarded to land owners who contest the taking. The bill was sponsored by state Sen. Frank Niceley and state Rep. Andrew Farmer, Republicans who represent Jefferson County. They credit Seal’s lobbying effort with getting it done.

It is often assumed that taking farmland and turning it into an industrial park is a net economic benefit to a county. But usually the industrial park tenants get tax breaks and the county tax base relies on sales tax revenue and the property tax revenue that private property pays.

What is often discounted is the revenue from farms. A cow on an acre of grass produces a calf that winds up a 1,000-pound steer. When the steer gets to market it has produced $4,000 in retail cuts of meat, or almost $400 in sales tax down at Food City. And the farmer still has the cow and the acre of grass for another calf next year. On a 40-acre pasture, that’s $16,000 in sales tax.

Excerpt from the Standard Banner:

The new law provides for three points of protection for land owners in Tennessee, Seal said. It deletes the “industrial parks” exception for takings under 29-17-102 (E), eliminating the provision under which cities and counties can condemn private property for the development of industrial parks under the definition of “public use.” It also provides that any property taken must fall under the strict definition of “public use” as defined by T.C.A. 29-17-102, which references the Fifth Amendment of the U.S. Constitution and the Tennessee Constitution. In addition, it requires the condemning government body to compensate land owners for engineering fees, appraisal costs, and, in certain circumstances, legal fees that may be the result of a condemnation action. Roads, transportation projects, and utilities are exempt from these costs.

Seal said Commission’s resolution was modeled on legislation provided by Managing Attorney Lee McGrath of the Institute for Justice, written statements made by U.S. Supreme Court Justices Sandra Day O’Connor and Clarence Thomas in their Kelo vs New London Dissent, Justice John Paul Stevens’ opinion of the court in Kelo, and from concerns expressed by land owners in Jefferson County, some of whom have indicated to Seal that they believe their private property could be the target of capricious and arbitrary takings by government in future development activities.