Ohio Public Law Alert: Eminent Domain Legislation

    View Author July 2007
    Senate Bill 7, relating to eminent domain laws in Ohio, was passed by both the House and the Senate on June 27, 2007 and will take effect 90 days after being signed by the Governor and filed with the Secretary of State. The proposed State constitutional amendment restricting eminent domain (SJR1) did not pass. Senate Bill 7 sets forth new statutory requirements applicable to taking property for urban renewal purposes and changes the procedures for all eminent domain actions.

    Senate Bill 7 provides for a Revised Code definition of blight for all purposes (other than for Revised Code Chapter 725), containing a requirement that at least 70 percent of parcels in a designated area qualify as blighted parcels for an area to be deemed a blighted area. The factors to be taken into account to make a blight determination are specified in the Bill. To determine whether a property or area is blighted, no person may take into account whether there is a better use for the property or area or whether the property could generate more tax revenues if put to another use. Certain agricultural land may not be included in a blighted area. Further, no property may be appropriated based on a finding of blight made in an ordinance or resolution enacted as an emergency measure.

    The definition of blighted area found in Revised Code Section 1728.01, which is used in certain tax increment financing programs, is likewise revised by the Bill. The definition of blighted area in Revised Code Chapter 725 used for urban renewal tax increment financing bonds was not amended.

    The Bill also provides that no property may be taken by eminent domain for conveyance or lease to any private commercial enterprise unless (1) to a public utility or common carrier, or to a private entity that occupies a port authority transportation facility; (2) the private entity use is an incidental area within a publicly owned and occupied project; or (3) it is established by a preponderance of the evidence that the property or area is blighted. A public entity may appropriate property for a private use based on a finding that the area is blighted if the public entity adopts a comprehensive development plan describing the public need for the property, which must include at least one study documenting the public need. The development of the plan must be publicly funded.

    In addition, the Bill provides the following relating to eminent domain actions:

    • Requires that a statutory form of notice and a written good faith offer for the property, accompanied by an appraisal or summary of appraisal, be sent to the property owner at least 30 days before filing a petition for appropriation.
    • Permits the property owner in most circumstances to repurchase the property within five years after the appropriation if the eminent domain project is abandoned before transfer of title from the governmental entity.
    • Permits either party to request that the issue of the value of property be submitted to nonbinding mediation, at the expense of the public entity.
    • Permits an appeal to be taken by the property owner before the property may be taken by the public entity, except in the case of certain public road or rail projects and certain public utility projects.
    • Authorizes a court to grant a stay on appeal if the property owner posts a supersedeas bond, except for certain exigency cases.
    • Requires that businesses be compensated up to $10,000 for loss of goodwill.
    • Requires that owners of businesses receive an award of up to 12 months of net profit of the business for actual loss of business resulting from an appropriation.
    • Requires that property owners or tenants be compensated for their actual moving and relocation expenses.
    • Requires generally that property owners be awarded attorneys' fees and costs (including appraisal fees) if the final compensation awarded is greater than 125 percent of the government's good faith offer, except for takings (other than of certain agricultural land) for public road or rail projects and for other exigencies. If certain agricultural land is taken for those exigencies, the applicable percentage is 150 percent.
    • Requires that property owners be awarded attorneys' fees and costs if the court determines in favor of the property owner as to the authority for the taking.
    • Changes the burden of proof to put more of a burden on the public entity to prove the necessity (public purpose) for the taking.

    The Bill also prohibits a park board or park or conservancy district or similar authority from appropriating property outside the county or counties in which the entity is located unless the action is approved in writing by the legislative authority of the county in which the property is located. In addition, for an appropriation by a "public agency that is not elected," if an owner has provided a public agency with a written objection to the appropriation, the elected officials of the public agency or elected individual that appointed the "unelected agency" or a majority thereof may "veto" that appropriation. If the public agency that is not elected is a state agency or instrumentality, such as a university, the Governor has the "veto" authority.

    The changes described above do not apply to appropriation proceedings pending on the effective date of the Bill.

    If you have any questions or would like to discuss the new legislation in more detail, please contact any of the public law lawyers listed in this alert.