“Blight” before “Bite”

June 2004

As Americans we tend to have a false sense of security when it comes to our property. When we purchase something it belongs to us until we choose to sell it or give it away--right? Not necessarily!

The power of eminent domain allows the government to acquire private property if it is necessary to carry out a legitimate public purpose. In Colorado, this legislative session produced a law, House Bill 04-1203, that now requires “blight” before the government can “bite” property owners by condemning their property and selling it for private use.

This new law was based on the Arvada decision, discussed in our April newsletter, which requires urban renewal projects to begin “no later then seven years from the date the blight determination is made.”

According to the new law, private property may not be condemned and transferred to a private party unless at least one of the specified requirements is met. Generally speaking, the requirements are as follows:

• The owner consents in writing;
• The authority decides that the property is no longer needed and offers to sell it back to the original owner and he or she declines the offer;
• The property has been abandoned; or
• The authority acquires additional property from the owner because breaking up the property would render the remaining parcel useless and cause economic stress.

Furthermore, if none of the above requirements are satisfied then private property acquired through eminent domain only can be transferred to a private party upon the happening of the three conditions listed below:

• The property is located in a blighted area or the property itself is blighted;
• The property owners are given notice of the possible taking and given the opportunity to propose redevelopment or rehabilitation plans; and
• If there are multiple parcels of land and one owner is holding out, a determination is made that the “hold-out” parcel is indispensable to the acquisition.

In addition to the foregoing conditions, the so-called “Telluride Amendment” discussed in our April newsletter was included in HB 04-1203. The Telluride Amendment essentially states that municipalities may not condemn land outside of its jurisdiction for open space and similar items, with the exception of water works, transportation systems, public utilities and the like.

Proponents of the new law believe it will protect owners of private property from abusive eminent domain practices, while opponents of the new law believe it will result in the delay of development and hamper the revitalization of cities. Nevertheless, the power of eminent domain lives on in the state of Colorado and the legislature has made it clear that protecting private property from the power of eminent domain remains an important interest to protect.

This legal update is for informational purposes only as a service to clients and other friends, is not a complete summary of the rules relating to the subject matter discussed above, and is neither to be construed as legal advice nor intended as basis for decisions in specific situations. For more information about this subject matter or other recent developments, please contact the attorneys in our Real Estate practice group or any other attorney in our firm with whom you normally consult by calling (303) 825-4200.