Eminent Domain Bill Will Not Protect Landowners

TexPIRG

AUSTIN–Lawmakers fast tracked legislation masked as eminent domain reform through the Senate this week without giving the public adequate opportunity to participate in the process. Cloaked in the guise of eminent domain reform, Texas State Senators rammed through legislation authored by State Senators Craig Estes and Robert Duncan, which will benefit utility companies, the oil and gas industry, real estate developers and even private toll road investors before it ever has the opportunity to work on behalf of the citizens and landowners of Texas.

“There’s nothing new about private toll road wolves wearing sheep’s clothing,” said Melissa Cubria, Advocate, Texas Public Interest Research Group(TexPIRG). “What’s new is that the Senate is selling it to the public as a protection against the wolves.”

The bill does not address potential abuses of right-of way industries like private toll road companies. Local governments have traditionally issued tax-exempt debt in order to build schools, court houses or hospitals. Today, however, private companies establish these so-called “63-20”non-profits so that privatized projects can achieve the same favorable credit terms as public agencies. In order to establish a 63-20, the local government must approve its charter and the issue of its debt, giving the government title to its assets after the debt is repaid. However, a loophole in the law allows an arrangement in which the government can then effectively disown the non-profit, which limits the government’s ability to be involved in the operations of the company. By law, 63-20s cannot make a profit, but private companies can circumvent this restriction by receiving their compensation through development fees that are charged for consulting services.

“SB 18 fails to protect landowners from a loophole in federal tax code that private toll road entities take advantage of to secure preferential treatment for private toll road deals while evading accountability by public officials,” said Cubria.

SB 18 also fails  to adequately define critical terms that will help enforce and strengthen landowner protections while including pages upon pages of excessive legalese. Terms like “public use,” “private benefit,” and “blighted areas”  are left open to are left open to arbitrary interpretation. While landowners can now go to court should they have discrepancies with a condemning entity, without clearly defined definitions for critical terms that prop up the landowner protections in the bill,  it seems the landowners will be standing on rather weak ground.

Continued Cubria, “This opens the floodgates for private toll road companies, real estate developers and other special interests that can essentially condemn a landowners land, build a private toll road and claim that they did so in the name of public use. After all, the Trans-Texas corridor was packaged as a “Community Development Association.”

Senators and Duncan both acknowledged that certain language in the bill wasn’t perfect and may lead to more lawsuits by landowners. In fact, he acknowledged that eminent domain may come up again next session after lawsuits have been filed and problems have arisen. So if SB 18 doesn’t actually reform eminent domain and will continue to create legal challenges for landowners and unnecessary legal expense for the state, then what’s the rush? What is the emergency? Why not just get it right the first time?

“This is a special interests’ dream come true,” remarked Cubria. “Lawmakers rammed this bill through without much time for the public to weigh in because the public would be furious. This bill will not protect landowners. As Senator Estes said in a legislative committee hearing, this is a special interest bill.”

“SB 18 is a phony attempt to appease landowners, whom for years have been outspoken and vocal against profit-driven eminent domain practices that enable private entities to repurchase land for economic development. Sound familiar? SB 18 is the Trans Texas Corridor on steroids,” concluded Cubria.