Background:

Eminent Domain.

Eminent domain is the term used to describe the power of a government to take private property for public use. The power of eminent domain extends to all types of property, although it is most often associated with the taking of real property, such as acquiring property to build a highway. A "condemnation" is the judicial proceeding used for the exercise of eminent domain.

The Fifth Amendment to the United States (U.S.) Constitution provides that "private property [shall not] be taken for public use, without just compensation."

Article 1, section 16 of the Washington Constitution provides, in part:

"Private property shall not be taken for private use, except for private ways of necessity, and for drains, flumes, or ditches on or across the lands of others for agricultural, domestic, or sanitary purposes. No private property shall be taken or damaged for public or private use without just compensation having been first made ... [T]he question whether the contemplated use be really public shall be a judicial question, and determined as such, without regard to any legislative assertion that the use is public ..."

"Public Use" under the Federal Constitution.

The U.S. Constitution requires that a taking be for a "public use." In 2005 the U.S. Supreme Court considered what "public use" means in Kelo v. City of New London. In Kelo, the city of New London, Connecticut, planned to condemn property as part of an economic development plan to revitalize the area surrounding a large pharmaceutical company moving into the area. The condemnation of property for the development plan did not come from an area of blight. The plan called for the condemned property to be transferred to a private developer, and the planned uses included offices, a hotel, parking, a conference center, and other commercial uses. Much of the property in the development was not to be made available for use by the general public. The plan was intended to, among other things, enhance the city's tax base and create jobs. The Court upheld the plan as meeting the "public use" requirement of the Fifth Amendment.

"Public Use" under the Washington State Constitution.

In Washington, in order for a proposed condemnation to satisfy Article I, section 16, a court must find: (1) that the use is really public; (2) that the public interests require it; and (3) that the property acquired is necessary for the purpose. What constitutes "public use" in this state has evolved over the years.

In Hogue v. Port of Seattle, a 1959 decision, the Washington Supreme Court declared unconstitutional a plan by a port district to condemn property and transfer it to private parties as part of the creation of an industrial development district. The Court required that the proponents of such a plan must show that the condemned property is to be put to what is "really" a public use. The Court noted that simply wanting to put someone's property to a "higher and better economic use" is not sufficient grounds to condemn it.

Subsequent case law suggests that, while the public use requirement cannot be met simply because the planned use would be a more productive use as part of an economic development project, some limited transfers of condemned property for private use may be permissible, such as when the private use is incidental to the planned public use.

Though the Washington Supreme Court has explicitly said that economic development alone does not constitute a public use, it has allowed takings to cure "blighted areas." Blighted areas are areas "which constitute a serious and growing menace, injurious to the public health, safety, morals and welfare of the residents of the state." Property acquired with public funds to remove blight may be resold to private persons, subject to use restrictions that prevent recurrence of the blighted condition.

Summary of Bill:

New provisions are added to the statutes regarding the use of eminent domain by public entities.

Private property may only be taken for public use. "Public use" is defined to include:

the possession, occupation, and enjoyment of the property by the general public, or by public agencies;
the use of property for the creation or functioning of public service companies, a consumer-owned utility, or common carriers; or
the use of eminent domain to: (1) remove a public nuisance or an uninhabitable structure, or to acquire abandoned property; and (2) eliminate a direct threat to public health and safety caused by the property in its current condition.

The taking of private property by any public entity for economic development does not constitute a public use, and property cannot be taken for the purpose of economic development. The prohibition against taking property for economic development extends to the condemnation of property in blighted areas.

"Economic development" is defined as any activity to increase tax revenue, tax base, employment, or general economic health, when that activity does not result in a public use or the transfer of property to private entities that occupy an incidental area within a publicly owned and occupied project.

Economic development does not include:

the transfer of property to a public service company, a consumer-owned utility, or a common carrier for the purpose of constructing, operating, or maintaining generation, transmission, or distribution facilities;
port districts' activities; or
highway projects.

The public benefits of economic development, including an increase in tax base, tax revenues, employment, and general economic health, may not constitute a public use.

In an action to establish or challenge the asserted public use of a taking of private property, the taking must be deemed for economic development, and is not a proper basis for eminent domain, if the court determines that: (1) the taking does not result in any of the listed exceptions to economic development; and (2) economic development was a substantial factor in the decision to take the property.