Justice: Eagan took eminent domain authority too far

A Minnesota Supreme Court justice was blunt on Wednesday: The city of Eagan exceeded its condemnation authority when it acquired more than 90 percent of the property it needed for a redevelopment project.

Justice Paul Anderson made those comments as the high court heard arguments over whether Eagan's Economic Development Authority (EDA) had the power to take businesses' land as part of a 70-acre redevelopment at Hwy. 13 and Cedar Avenue.

Two lower courts have come to different conclusions.

The high court's upcoming decision is expected to clarify for all EDAs how they should operate not only in eminent domain procedures, but in other areas, including issuing bonds and contracts, according to the League of Minnesota Cities, which filed a brief on behalf of Eagan.

"The interpretation and the finding here will have some significance statewide, and I think that's why the League of Minnesota Cities has shown some interest," said Tom Hedges, Eagan's city administrator.

The city has long wanted to redevelop the Cedar Grove area along Hwy. 13, known as the "gateway" to Eagan. The EDA, which consists of the five city council members meeting as a separate body, condemned 31 parcels for the project, but the owners of six objected.

Meanwhile, the city faced a deadline. Its eligibility for tax-increment financing was to expire on July 22, 2008, and the city's plan hinged on being reimbursed with those funds. The EDA decided to use eminent domain to acquire the land against the owners' wishes.

The city's attorney, Robert Bauer, contended that the original resolution establishing the EDA did not require a binding agreement before condemnations, and that it didn't limit the EDA's powers.

Three challenge decision

In April 2008, Dakota County Judge Michael J. Mayer ruled in favor of the EDA, agreeing that there was substantial "blight" in the business district, as well as a public purpose for the project. He affirmed the city's use of "quick-take" eminent domain.

But three of the owners challenged that decision in the state Court of Appeals. On May 19, a three-judge panel ruled that the EDA did not have authority to take the land. The panel said the EDA acquires only the power a city possesses and transfers, and that there was no transfer.

City officials disagreed, saying EDAs are given that power under state law. They asked for a high court review.

Jason Adkins, an attorney for the public interest firm the Institute of Justice, said Minnesota should give property owners the benefit of the doubt about what ambiguous statutes mean. And, he said, there must be a solid plan, with a binding development agreement in place, for cities to use eminent domain.

"You can't take someone's property unless you know what you're going to do with it," Adkins said.

"These property owners were under a cloud of doubt for years about what the city was actually going to do with their property. And then, when time was running out, the city ran roughshod over its own rules and tried to condemn these properties."

The same firm also represented a New Haven, Conn., landowner in a landmark eminent domain case before the U.S. Supreme Court and was instrumental in helping change Minnesota's eminent domain law in 2006, said Lee McGrath, executive director of the Institute's Minnesota chapter.

Involved in the suit are a U-Haul store; Randy Quam, owner of an engine repair business, and Jerry Larson, who shut down his auto repair shop.