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The Michigan Constitutional Conundrum and the Remedy for Remaining Blighting Properties

Until amended in 2006, the Michigan Constitution of 1963 eminent domain provision stating, in part

“[p]rivate property shall not be taken for public use without just compensation therefor being first made or secured in a manner prescribed by law. Compensation shall be determined in proceedings in a court of record.” MICH. CONST. art. X, § 2.

 

In the mid-1960’s, Michigan enacted an Economic Development Act which allowed for the acquisition of property in order to create economic development. This allowed property to be acquired by eminent domain and transferred to a third party to develop the property for some alleged economic purpose.

In the 1976-1979 time period, John DeLorean had left his job as a visible salesman for the Pontiac Motor Cars and was determined to open his own automotive production facility. Mr. DeLorean considered Detroit, but because of the “slow take” provision limiting the fee acquisition of residential property, withdrew from the process in Detroit and went on to build the DeLorean Motor Company manufacturing plant in Ireland.

At that time, in order to compromise a number of issues, a Uniform Condemnation Procedures Act was enacted in Michigan in 1980. This allowed for the “quick take” of any property.  Within four months of passage of the act, General Motors had already met with the City of Detroit and requested a one square mile parcel near an expressway and rail, expecting to expand and build a new plant in what was other than a “green fields” development.  The city then moved forward with what was subsequently known as the Poletown condemnation project, one that was much maligned for many years because of the simple purchase to transfer to a third party.

Poletown was an expedited Supreme Court process in which the Supreme Court accepted a Court of Appeals bypass and ruled in a matter of weeks. Every major political power supported the acquisition, from the unions to the major and minor business to all elected officials.  However, a two Justice dissent in the Supreme Court successfully argued for the citizens, if not the powers to be, that the economic development process allowing forced dispossession for economic benefit to the community and a third party was indeed not a public use.

In the following twenty-three years, Poletown was challenged a number of times in the Michigan courts. There were at least three Court of Appeals opinions which accepted the Poletown decision as precedent but looked to the Supreme Court to reconsider its inappropriate decision.  This sounds very much like what is being described to you in the potential for a Knick reversal of the Hamilton Bank decision in another part of the writings being provided in this offering.

In 2001, Wayne County determined that it would acquire land south of a future expanded airport runway in order to have an economic redevelopment, thereby paying some of the costs of the project itself. In a challenge to this decision, Wayne County simply relied upon the economic development provision of Poletown, deferring to the potential that the Airport Authority could have claimed that noise and other danger factors required the acquisition.

On appeal to the Supreme Court, two of the Court of Appeals judges concurred in the upholding of the acquisition premised on the precedent but urged the Michigan Supreme Court to reconsider an ill-founded Poletown decision.

The Michigan Supreme court reversed its Poletown decision, finding that the 1963 Constitutional Convention did not support the economic development provision by the Constitutional language.

Subsequent to the Wayne County decision of Wayne County v Hathcock, the legislature exhibited a willingness in making certain that the Hathcock decision was not reversed and provided the public with the opportunity to pass an amendment effectively codifying Poletown.  The relevant portion of the amendment to Article X, §2 states, in part,

“Public use” does not include the taking of private property for transfer to a private entity for the purpose of economic development or enhancement of tax revenues. Private property otherwise may be taken for reasons of public use as that term is understood on the effective date of the amendment to this constitution that added this paragraph.

 

One could readily foresee the Kelo decision in light of the Poletown reversal.  It is noteworthy that the Kelo decision specifically cited the Hathcock decision in the majority’s support of “federalism” in maintaining that each jurisdiction had the opportunity to limit eminent domain should it so choose.

The 2006 Constitutional Amendment:

The 2006 Constitutional Amendment did not bar all urban or blight removal of individual homes. It only places an additional burden on the acquiring agency when there is a taking for the eradication of blight.  Many jurisdictions in Michigan have taken the constitutional amendment to a place it should not be; namely that no blight acquisitions may be made.  To the contrary, blight acquisitions are available under the constitution.  However, in Michigan, the limitations of individual acquisitions are arguably barred under a state statute.

The 2006 Amendment does not bar all urban or blight removal of individual homes. Blight is still a basis for acquisition.  However, the definition of what may be acquired for blight is limited by MCL 213.23, which states in part:

(c) The property is selected on facts of independent public significance or concern, including blight, rather than the private interests of the entity to which the property is eventually transferred.

 

(3) As used in subsection (1), “public use” does not include the taking of private property for the purpose of transfer to a private entity for either general economic development or the enhancement of tax revenue.

 

(4) In a condemnation action, the burden of proof is on the condemning authority to demonstrate, by the preponderance of the evidence, that the taking of a private property is for a public use, unless the condemnation action involves a taking of private property because the property is blighted, in which case the burden of proof is on the condemning authority to demonstrate, by clear and convincing evidence, that the taking of that property is for a public use.

 

The statute as presently written offers the community in general no protection even if a single house is a blighting influence. The blight procedure is not an expedited procedure in almost any judicial system because of Due Process.  Realistically, government wants to clean up the blighted properties as quickly as it can.  The process of an appraisal and a filing may be far easier than waiting until the property is foreclosed for non-payment of taxes or the blight procedure, one which can be delayed almost indefinitely, is concluded.

However, if one takes a look at the law it is clear the constitution did not contemplate an absolute prohibition on the acquisition of blighted buildings. Because the constitutional provision allows a much greater breadth of acquisition than the existing statute, the statute is constitutional in the arguable protection of individual property rights. However, a simple change in the statutory language would remedy the situation and make local communities which retain properties that are not blighted but either blight other properties or inhibit the general safety, health and welfare of the community would best be propounded with the following amendments:

In a condemnation action, the burden of proof is on the condemning authority to demonstrate, by the preponderance of the evidence, that the taking of a private property is for a public use, unless the condemnation action involves a taking of private property FOR THE ERADICATION OF BLIGHT, in which case the burden of proof is on the condemning authority to demonstrate, by clear and convincing evidence, that the taking of that property is for a public use.

 

What has been missed to date by the communities is the misunderstanding of the language in the Constitution and the stricter language of the State statute.  The State statute may be changed.

At the time of Poletown, there was not a clear understanding of all of the available benefits under the Uniform Relocation Act now available.  However, payment does not protect one from an acquisition without the preservation of the right to acquire by the agency.

The final comment here should be why Detroit has developed so well.  Clearly the efforts of Dan Gilbert and his associates have made a huge difference in downtown.  Yet, this redevelopment was bound to work with or without Dan Gilbert.  When one understands of the available alternatives to eminent domain for redevelopment, such as brownfield financing, tax increment financing, economic development funds, and a myriad of other forms of relief through assist and the rehabilitation of older buildings, one can see the result of the lack of easy eminent domain.  Economic activity has increased.

In conclusion, the eminent domain process when economic development was available as a basis for eminent domain fulfilled the failure in the system of what Chief Justice Roberts alluded to in his comment in the Murr v Wisconsin dissent that:

“regulatory takings, however – by their very nature – pit the common good against the interests of a few… in the face of this imbalance, the Takings Clause ‘prevents the public from loading upon the one individual more than his just share of the burdens of government; Monongahela Nav. v United States, 14 at U.S. 312, 325 (1893), by considering the effect of regulation on specific property rights as they are established at state law.”

 

This issue of balance is one that the State of Michigan still must remedy. Given the Kelo decision, with the response by so many states that acquisition for an end private user was inappropriate, one can readily foresee an “overreach” and a response to the overreach.

Saginaw Trail Pipeline Offers Are Made

Consumers is making offers at the Saginaw County end of the pipeline project that will traverse from Clawson to Zilwaukee. This pipeline will affect over 700 parcels.
The quality and nature of the appraisals will vary greatly. There are some properties that may not be substantially affected by a replacement pipeline. However, others will have new pipelines, each which will have a specific effect on the needs of each individual owner.
Some of the offers seem to be within the range of reasonableness. Others simply do not take into context that every property is unique, with the appraiser completely failing to understand the nature of individual properties.
Without question, there will be disputes on just compensation. At the same time, Consumers seems to be making a good faith effort to ascertain the value needed to determine just compensation for at least some of the properties while missing an accurate estimate of just compensation on others.

The project timing has been accelerated!

See:  http://efile.mpsc.state.mi.us/efile/docs/18166/0051.pdf