Summary of Revisions to Minnesota
Statutes Chapter 117

Following the U.S. Supreme Court’s 2005 decision of Kelo v. City of New London, 545 U.S. 469, there was a nation-wide movement by property rights activists to restrict the use of eminent domain. The Minnesota Legislature responded to the case by overhauling the state statute governing eminent domain. The following are some of the more important revisions to Minnesota Statutes Chapter 117:

(1) An express requirement that eminent domain only be used for a “public use or purpose.” Minn. Stat 117.012 Subd. 2. This requirement is found in the U.S. and Minnesota Constitutions, but it is also now codified in the statute.

(2) Several definitions have been revised or added to § 117.025 including:

• Blighted Area. An area that is in urban use and where more than 50 percent of the buildings are structurally substandard. Formerly “blight” was determined by the courts.
• Structurally substandard. A building that was inspected by the appropriate local government and cited for one or more enforceable housing, maintenance, or building code violations which have not been remedied after two notices to cure the noncompliance. Formerly “structurally substandard” was determined by the courts.
• Environmentally Contaminated Area. An area in which more than 50 percent of the parcels contain any substance defined, regulated, or listed as a hazardous substance, hazardous material, hazardous waste, toxic waste, pollutant, contaminant, or toxic substance, or identified as hazardous to human health or the environment under state or federal law or regulation. Formerly “environmentally contaminated area” was determined by the courts.
• Public use; public purpose."Public use" or "public purpose" exclusively means:
  (i) the possession, occupation, ownership, and enjoyment of the land by the general public, or by public agencies;
  (ii) the creation or functioning of a public service corporation; or
  (iii) mitigation of a blighted area, remediation of an environmentally contaminated area,
  reduction of abandoned property, or removal of a public nuisance.

The statute explicitly states that public benefits of economic development, including an increase in tax base, tax revenues, employment, or general economic health, do not by themselves constitute a public use or public purpose.

(3) Minnesota Statutes § 117.027 now contains a strict set of procedural requirements for the use of eminent domain to remove blight or clean up environmental contamination.

(4) The statute now contains a provision for the award of attorney fees to a property owner, in certain circumstances, who challenges the public purpose of a taking or an award of damages and wins. See Minnesota Statutes § 117.031.

(5) The appraisal requirements have be revised in favor of property owners and the reimbursement limits have been increased. See Minnesota Statutes § 117.036.

(6) Local governments must now hold a public hearing before using eminent domain for the mitigation of a blighted area, remediation of an environmentally contaminated area, reducing abandoned property, or removing a public nuisance. The local government must identify and describe the public costs and benefits of the project and address how the acquisition of the property interest serves one or more identified public and why it is needed. See Minnesota Statutes § 117.0412.

(7) Any local zoning authority that requires the removal of a legal nonconforming use as a condition or prerequisite for the issuance of a permit, license, or other approval for any use, structure, development, or activity constitutes a taking and is prohibited without the payment of just compensation. See Minnesota Statutes § 117.184.

(8) If a business or trade is destroyed by a taking, the owner must be compensated for loss of going concern, unless (1) the loss is not caused by the taking of the property or the injury to the remainder; (2) the loss can be reasonably prevented by relocating the business or trade in the same or a similar and reasonably suitable location; or (3) compensation for the loss of going concern will be duplicated in the compensation otherwise awarded to the owner. See Minnesota Statutes § 117.186.

(9) Related to going concern, a property owner must now be compensated where 51 percent or greater of the driveway access has been permanently eliminated and as a result of the loss of driveway access, revenue at the business was reduced by 51 percent or greater. See Minnesota Statutes § 117.186.

(10) A condemning authority cannot require that a property owner accept, as part of the compensation due, any substitute or replacement property. Nor can the condemning authority require that the property owner accept the return of property acquired or any portion of the property. See Minnesota Statutes § 117.188.

(11) Property owners from whom property is acquired are now entitled to a right of first refusal for that property if it is no longer need by the government. The property must be sold to the former owner at the price the government paid for it or the current fair market value, whichever is lower. See Minnesota Statutes § 117.226.

(12) If a dispute arises with regard to relocation assistance, a condemning authority must initiate a contested case hearing with the Minnesota Office of Administrative Hearings. See Minnesota Statutes § 117.52 Subd. 4.

These revisions to the statute are so recent that there impact on the use of eminent domain is still unclear. It will probably take several years and court cases before the full effect of the revisions is realized.