June 11, 2008

Declaring Property Blighted is A Taking

By Declaring Property Blighted is A Taking

by Timothy Sandefur

Yesterday the Missouri Supreme Court issued a very interesting decision in Clay County Realty Co. v. City of Gladstone, holding that a property owner can sue the government for a regulatory taking when it declares property blighted, and then does nothing with it, thereby destroying much of the value of the property. "Considering the constitutional prohibition against takings without just compensation," the justices wrote, "this Court holds that actions for condemnation blight are inverse condemnation claims that property owners may advance in order to recover consequential precondemnation damages, such as…claims…for increased operating costs and for lost rental and lease income." This is big news, given that Missouri courts have never allowed such takings claims before.

Unfortunately, as is often the case, the court gives a great deal of deference to government officials to delay and dawdle in ways that private industries could not, and as a result it is not clear how much actual effect this decision will have. "Because some delays relating to condemnation proceedings are natural and unavoidable, before property owners have a viable cause of action for precondemnation damages, they must establish that there has been aggravated delay or untoward activity in instituting or continuing the condemnation proceedings at issue…. Where a condemning authority’s delays have not exceeded statutory limitations, the delays should not be labeled as ‘aggravated’ without additional evidence of related ‘untoward activity.’" These terms are not precisely defined.

Nevertheless, it is refreshing to see the court recognize that a blight declaration creates a cloud over property that reduces value and violates property rights.

Thanks to Dave Roland at the Show Me Institute for the pointer.

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