BILL REQ. #:  H-5114.1 

READ FIRST TIME 02/08/06.   

     AN ACT Relating to restrictions on condemnation and sale of condemned property by state and local governments; amending RCW 8.04.070, 8.08.020, and 8.12.030; adding a new section to chapter 8.04 RCW; adding a new section to chapter 8.08 RCW; adding a new section to chapter 8.12 RCW; creating new sections; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   (1) Members of the public have expressed concern regarding a recent United States supreme court decision, Kelo v. New London (No. 04-108 (June 23, 2005)), which upheld, under the United States Constitution, a Connecticut city's exercise of eminent domain. It is the intent of the legislature to recognize, reaffirm, and support existing Washington case law under Article I, section 16 of the state Constitution, that prohibits the condemnation of private property other than for certain public purposes pursuant to law.
     (2) In light of the United States supreme court decision in Kelo v. New London, the legislature intends to reaffirm existing Washington state law relating to the use of eminent domain by state and local governments, and to reaffirm the prohibition in Article I, section 16 of the state Constitution on the use of eminent domain to take private property for private use. To this end, the legislature recognizes, reaffirms, and supports the restrictions on the use of eminent domain to take private property for private use, as set forth in chapters 8.04, 8.08, 8.12, 8.16, and 8.20 RCW. It is the intent of the legislature that state and local governments shall not appropriate or acquire any real property for the primary purpose of economic development without the consent of the property owner.

NEW SECTION.  Sec. 2   A new section is added to chapter 8.04 RCW to read as follows:
     (1) If the state determines, within seven years after the date the property is transferred to the state, that all or a portion of real property or an interest in real property that was acquired through condemnation or the threat of condemnation is no longer necessary for a public purpose and should be sold, the former owner shall have a repurchase right as provided in this section. "Former owner" means the person or entity from whom the state acquired title and that person's or entity's successors or assigns to the property or property interest subject to the repurchase right.
     (2) At least ninety days prior to the date on which the state will announce a public competition bid for purchase or, if the sale is to be negotiated, at least ninety days prior to the date on which a purchase and sale agreement or similar document is to be signed, the state shall (a) publish notice of its determination to sell the property or portion of property in a legal newspaper of general circulation in the area where the property to be sold is located, (b) describe generally any easements, other restrictions, or reserved rights the state intends to retain upon sale, and (c) mail notice of the determination to the former owner of the property at the former owner's last known address or to a forwarding address if that owner has provided the state with a forwarding address.
     (3) If the former owner notifies the state in writing within thirty days of the date of notice provided under subsection (2) of this section that the former owner intends to exercise the repurchase right granted by this section, the state shall, unless it already has a completed current independent appraisal for the property, immediately arrange for an independent appraisal to determine the fair market value of the property or portion of property subject to repurchase, adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures. All costs of appraisal shall be paid by the state. If the former owner does not provide timely written notice to the state of the intent to exercise a repurchase right, that right shall be extinguished and the state shall be relieved of any further obligation under this section.
     (4) Within thirty days of the date the state provides a written copy of the appraisal to the former owner, the former owner may exercise the repurchase right granted by this section by delivering to the state earnest money or a deposit in a form determined by the state in an amount equal to five percent of the appraised value, together with a written promise to pay, within thirty days, the following:
     (a) The lesser of (i) the appraised value less the earnest money or deposit, or (ii) an amount equal to the compensation received from the state when the property or portion of property was condemned or sold under threat of condemnation, with interest accrued at the market rate, and with the amount adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures, as determined by the independent appraisal, less the earnest money or deposit; and
     (b) All required fees and costs otherwise required for the transfer of real property.
     (5) Upon receipt of the full payment required in subsection (4) of this section, the state shall transfer title to the former owner, subject to any easements, other restrictions, or reserved rights retained by the state. If the former owner fails to complete the sale, the earnest money or deposit shall be forfeited to the state, the former owner's repurchase right shall be extinguished, and the state shall be relieved of any further obligation under this section.
     (6) The state may reject a notice of intent under subsection (3) of this section received from a person or entity claiming to be a successor or assignee that is not accompanied by evidence sufficient to demonstrate that the person or entity is the successor or assignee of the person or entity from whom the state acquired title.
     (7) The obligations imposed on the state in this section are in addition to those provided by law for the surplusing or sale of public property to private parties.

NEW SECTION.  Sec. 3   A new section is added to chapter 8.08 RCW to read as follows:
     (1) If a county determines, within seven years after the date the property is transferred to the county, that all or a portion of real property or an interest in real property that was acquired through condemnation or the threat of condemnation is no longer necessary for a public purpose and should be sold, the former owner shall have a repurchase right as provided in this section. "Former owner" means the person or entity from whom the county acquired title and that person's or entity's successors or assigns to the property or property interest subject to the repurchase right.
     (2) At least ninety days prior to the date on which the county will announce a public competition bid for purchase or, if the sale is to be negotiated, at least ninety days prior to the date on which a purchase and sale agreement or similar document is to be signed, the county shall (a) publish notice of its determination to sell the property or portion of property in a legal newspaper of general circulation in the area where the property to be sold is located, (b) describe generally any easements, other restrictions, or reserved rights the county intends to retain upon sale, and (c) mail notice of the determination to the former owner of the property at the former owner's last known address or to a forwarding address if that owner has provided the county with a forwarding address.
     (3) If the former owner notifies the county in writing within thirty days of the date of notice provided under subsection (2) of this section that the former owner intends to exercise the repurchase right granted by this section, the county shall, unless it already has a completed current independent appraisal for the property, immediately arrange for an independent appraisal to determine the fair market value of the property or portion of property subject to repurchase, adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures. All costs of appraisal shall be paid by the county. If the former owner does not provide timely written notice to the county of the intent to exercise a repurchase right, that right shall be extinguished and the county shall be relieved of any further obligation under this section.
     (4) Within thirty days of the date the county provides a written copy of the appraisal to the former owner, the former owner may exercise the repurchase right granted by this section by delivering to the county earnest money or a deposit in a form determined by the county in an amount equal to five percent of the appraised value, together with a written promise to pay, within thirty days, the following:
     (a) The lesser of (i) the appraised value less the earnest money or deposit, or (ii) an amount equal to the compensation received from the county when the property or portion of property was condemned or sold under threat of condemnation, with interest accrued at the market rate, and with the amount adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures, as determined by the independent appraisal, less the earnest money or deposit; and
     (b) All required fees and costs otherwise required for the transfer of real property.
     (5) Upon receipt of the full payment required in subsection (4) of this section, the county shall transfer title to the former owner, subject to any easements, other restrictions, or reserved rights retained by the county. If the former owner fails to complete the sale, the earnest money or deposit shall be forfeited to the county, the former owner's repurchase right shall be extinguished, and the county shall be relieved of any further obligation under this section.
     (6) The county may reject a notice of intent under subsection (3) of this section received from a person or entity claiming to be a successor or assignee that is not accompanied by evidence sufficient to demonstrate that the person or entity is the successor or assignee of the person or entity from whom the county acquired title.
     (7) The obligations imposed on the county in this section are in addition to those provided by law for the surplusing or sale of public property to private parties.

NEW SECTION.  Sec. 4   A new section is added to chapter 8.12 RCW to read as follows:
     (1) If a city or town determines, within seven years after the date the property is transferred to the city or town, that all or a portion of real property or an interest in real property that was acquired through condemnation or the threat of condemnation is no longer necessary for a public purpose and should be sold, the former owner shall have a repurchase right as provided in this section. "Former owner" means the person or entity from whom the city or town acquired title and that person's or entity's successors or assigns to the property or property interest subject to the repurchase right.
     (2) At least ninety days prior to the date on which the city or town will announce a public competition bid for purchase or, if the sale is to be negotiated, at least ninety days prior to the date on which a purchase and sale agreement or similar document is to be signed, the city or town shall (a) publish notice of its determination to sell the property or portion of property in a legal newspaper of general circulation in the area where the property to be sold is located, (b) describe generally any easements, other restrictions, or reserved rights the city or town intends to retain upon sale, and (c) mail notice of the determination to the former owner of the property at the former owner's last known address or to a forwarding address if that owner has provided the city or town with a forwarding address.
     (3) If the former owner notifies the city or town in writing within thirty days of the date of notice provided under subsection (2) of this section that the former owner intends to exercise the repurchase right granted by this section, the city or town shall, unless it already has a completed current independent appraisal for the property, immediately arrange for an independent appraisal to determine the fair market value of the property or portion of property subject to repurchase, adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures. All costs of appraisal shall be paid by the city or town. If the former owner does not provide timely written notification to the city or town of the intent to exercise a repurchase right, that right shall be extinguished and the city or town shall be relieved of any further obligation under this section.
     (4) Within thirty days of the date the city or town provides a written copy of the appraisal to the former owner, the former owner may exercise the repurchase right granted by this section by delivering to the city or town earnest money or a deposit in a form determined by the city or town in an amount equal to five percent of the appraised value, together with a written promise to pay, within thirty days, the following:
     (a) The lesser of (i) the appraised value less the earnest money or deposit, or (ii) an amount equal to the compensation received from the city or town when the property or portion of property was condemned or sold under threat of condemnation, with interest accrued at the market rate, and with the amount adjusted to reflect the value of any physical changes to the property, such as improvements or removal of structures, as determined by the independent appraisal, less the earnest money or deposit; and
     (b) All required fees and costs otherwise required for the transfer of real property.
     (5) Upon receipt of the full payment required in subsection (4) of this section, the city or town shall transfer title to the former owner, subject to any easements, other restrictions, or reserved rights retained by the city or town. If the former owner fails to complete the sale, the earnest money or deposit shall be forfeited to the city or town, the former owner's repurchase right shall be extinguished, and the city or town shall be relieved of any further obligation under this section.
     (6) The city or town may reject a notice of intent under subsection (3) of this section received from a person or entity claiming to be a successor or assignee that is not accompanied by evidence sufficient to demonstrate that the person or entity is the successor or assignee of the person or entity from whom the city or town acquired title.
     (7) The obligations imposed on the city or town in this section are in addition to those provided by law for the surplusing or sale of public property to private parties.

Sec. 5   RCW 8.04.070 and 1988 c 202 s 6 are each amended to read as follows:
     (1) At the time and place appointed for hearing the petition, or to which the hearing may have been adjourned, if the court has satisfactory proof that all parties interested in the lands, real estate, premises or other property described in the petition have been duly served with the notice, and is further satisfied by competent proof that the contemplated use for which the lands, real estate, premises, or other property are sought to be appropriated is really necessary for the public use of the state, it shall make and enter an order, to be recorded in the minutes of the court, and which order shall be final unless appellate review thereof is sought within five days after entry thereof, adjudicating that the contemplated use for which the lands, real estate, premises or other property are sought to be appropriated is really a public use of the state.
     (2) The state shall not take private property solely for the purpose of economic development. For the purposes of this section, "economic development" means the acquisition or use of real property to increase tax revenue, tax base, employment, or economic health. For the purposes of this section, "economic development" does not include the acquisition or use of real property for the primary purpose of: (a) The transfer of real property to public ownership; (b) the transfer of real property to a private entity that is a common carrier, such as a utility or railroad; (c) the transfer of real property to a private entity when acquisition or appropriation is necessary to remove a threat to public health or safety; (d) the transfer of real property to a private entity when acquisition or appropriation is necessary for the removal of unsanitary or unsafe conditions, conditions that endanger life or property by fire or other causes, conditions conducive to ill health, transmission of disease, infant mortality, juvenile delinquency and crime, hazardous soils, substances, or materials, or conditions detrimental to or constituting a menace to the public health, safety, welfare, and morals in its present condition and use; (e) the transfer of real property to a private entity when acquisition or appropriation is necessary for the acquisition of abandoned property; or (f) the lease of real property to a private entity that occupies an area within a public project or facility.

Sec. 6   RCW 8.08.020 and 1949 c 79 s 2 are each amended to read as follows:
     (1) Any condemnation, appropriation or disposition intended in RCW 8.08.010 through 8.08.080 shall be deemed and held to be for a county purpose and public use within the meaning of RCW 8.08.010 through 8.08.080 when it is directly or indirectly, approximately or remotely for the general benefit or welfare of the county or of the inhabitants thereof.
     (2) A county shall not take private property solely for the purpose of economic development. For the purposes of this section, "economic development" means the acquisition or use of real property to increase tax revenue, tax base, employment, or economic health. For the purposes of this section, "economic development" does not include the acquisition or use of real property for the primary purpose of: (a) The transfer of real property to public ownership; (b) the transfer of real property to a private entity that is a common carrier, such as a utility or railroad; (c) the transfer of real property to a private entity when acquisition or appropriation is necessary to remove a threat to public health or safety; (d) the transfer of real property to a private entity when acquisition or appropriation is necessary for the removal of unsanitary or unsafe conditions, conditions that endanger life or property by fire or other causes, conditions conducive to ill health, transmission of disease, infant mortality, juvenile delinquency and crime, hazardous soils, substances, or materials, or conditions detrimental to or constituting a menace to the public health, safety, welfare, and morals in its present condition and use; (e) the transfer of real property to a private entity when acquisition or appropriation is necessary for the acquisition of abandoned property; or (f) the lease of real property to a private entity that occupies an area within a public project or facility.

Sec. 7   RCW 8.12.030 and 1915 c 154 s 1 are each amended to read as follows:
     (1) Every city and town and each unclassified city and town within the state of Washington, is hereby authorized and empowered to condemn land and property, including state, county and school lands and property for streets, avenues, alleys, highways, bridges, approaches, culverts, drains, ditches, public squares, public markets, city and town halls, jails and other public buildings, and for the opening and widening, widening and extending, altering and straightening of any street, avenue, alley or highway, and to damage any land or other property for any such purpose or for the purpose of making changes in the grade of any street, avenue, alley or highway, or for the construction of slopes or retaining walls for cuts and fills upon real property abutting on any street, avenue, alley or highway now ordered to be, or such as shall hereafter be ordered to be opened, extended, altered, straightened or graded, or for the purpose of draining swamps, marshes, tidelands, tide flats or ponds, or filling the same, within the limits of such city, and to condemn land or property, or to damage the same, either within or without the limits of such city for public parks, drives and boulevards, hospitals, pesthouses, drains and sewers, garbage crematories and destructors and dumping grounds for the destruction, deposit or burial of dead animals, manure, dung, rubbish, and other offal, and for aqueducts, reservoirs, pumping stations and other structures for conveying into and through such city a supply of fresh water, and for the purpose of protecting such supply of fresh water from pollution, and to condemn land and other property and damage the same for such and for any other public use after just compensation having been first made or paid into court for the owner in the manner prescribed by this chapter.
     (2) A city or town shall not take private property solely for the purpose of economic development. For the purposes of this section, "economic development" means the acquisition or use of real property to increase tax revenue, tax base, employment, or economic health. For the purposes of this section, "economic development" does not include the acquisition or use of real property for the primary purpose of: (a) The transfer of real property to public ownership; (b) the transfer of real property to a private entity that is a common carrier, such as a utility or railroad; (c) the transfer of real property to a private entity when acquisition or appropriation is necessary to remove a threat to public health or safety; (d) the transfer of real property to a private entity when acquisition or appropriation is necessary for the removal of unsanitary or unsafe conditions, conditions that endanger life or property by fire or other causes, conditions conducive to ill health, transmission of disease, infant mortality, juvenile delinquency and crime, hazardous soils, substances, or materials, or conditions detrimental to or constituting a menace to the public health, safety, welfare, and morals in its present condition and use; (e) the transfer of real property to a private entity when acquisition or appropriation is necessary for the acquisition of abandoned property; or (f) the lease of real property to a private entity that occupies an area within a public project or facility.

NEW SECTION.  Sec. 8   Sections 2 through 7 of this act take effect July 1, 2007.

NEW SECTION.  Sec. 9   The office of financial management, working in consultation with state and local governments and private utilities and corporations that acquire property through eminent domain, shall develop and provide recommendations to the legislature by December 1, 2006, regarding the definition of "economic development" as set forth in RCW 8.04.070, 8.08.020, and 8.12.030 and regarding the appropriate statutory provisions for providing a repurchase right to the former owner of land that has been condemned by a state or local government or a private utility or corporation, where the condemning entity has decided to sell the condemned land.