Land Use & Development

Don’t Fear the Blight: Fear Montana State Laws

By Nancy Mahoney, 10-17-05

	Bozeman's NE Mill District Photo: Ian van Coller

The topic of eminent domain has been all over the local Bozeman papers (Daily Chronicle and the Tributary) in the last two months because people are concerned how it might be used in two new Urban Renewal Districts. Local concern with the “blight� designation in our Northeast Neighborhood, in particular, dovetailed with a visit to Bozeman by Chip Mellor, president and counsel of the Institute of Justice, which represented the homeowners in Kelo v. New London before the Supreme Court. Mellor and the homeowners may have lost the landmark decision, but he has rebounded with what appears to be a crusade to educate the public about the use and misuse of eminent domain, and to warn us about the dangers of blight. What he should have also warned us about was Montana State Law, which currently does not provide a whole lot of protection for private property owners.

In a luncheon hosted by Property and Environment Research Center (PERC), and attended by more than 100 people, Mellor warned that because of the Kelo decision the term “public use�—as found in the U.S. Constitution—can be interpreted to mean “public benefit�, thereby allowing the government to take private property (at fair market value) and allow its use by another private entity if it is part of a city’s economic development plan (e.g., taking homes from low-income folks to make way for a shopping mall or hotel that would provide more jobs and tax revenue). Mellor warned that as a result of the Kelo decision the vast majority of businesses and homeowners are without the protection of their constitutional rights, because when sections of a city are deemed “blighted�, it opens the door to the more sweeping uses of eminent domain to seize private property for economic development purposes. He seemed intent on alarming us into action—in particular, by warning us here in Bozeman to “beware the term blight� because it either becomes a self-fulfilling prophecy or benefits only the already-wealthy developers.

These points are valid, to an extent. Blight designations are necessary in many cities for the creation of Tax Increment Financing (TIF) districts, which advance economic development in depressed areas by capping property tax payments and reinvesting the property tax revenues within the district to pay for improvements, typically of infrastructure such as sewers, roads, street lighting, etc. TIF districts have been used successfully in Helena, Missoula and Kallispel without the use of eminent domain to displace homeowners or benefit private developers. But perhaps the most relevant example of the successful use of TIFs is Bozeman’s own Main Street district—a downtown thriving with locally-owned businesses.

During his speech, Mr. Mellor missed two important opportunities to relate the national concern with property rights to his local audience. One of which was to congratulate the Bozeman and its City Commissioners on their foresight in passing an ordinance on August 1st, 2005 that explicitly prohibits the “use of eminent domain powers to acquire private property for another private property owner’s use in connection with the� the tax increment financing district in the northeast community. Although Mellor toured that district before coming to the luncheon, he was unaware of the city’s ordinance, and of the 13 member commission that is in place to decide how the tax revenues in the district should be spent (i.e., not on improvements solely benefiting private developers). Rather than trying to jump-start an anti-blight movement in the audience, it might have been more productive to hold up our small city as an example of how communities can strengthen private property rights and to encourage citizens to continue to put pressure on city government to stand behind that ordinance.

The second missed opportunity was to warn us of a far greater threat to our personal property rights than blight: Montana State Law.

After Mellor’s speech, Michael Kakuk, an attorney representing the Montana Realtors Association, shared findings from a brief which examined eminent domain and “private use� in Montana State. Now, I am not an alarmist, but the information he presented is indeed a bit alarming. According to Mr. Kakuk, Montana Law neither prohibits nor requires a finding of “blight� for the use of eminent domain by or for the benefit of private entities. Montana Statute (7-5-4106 Power of Condemnation) permits a city or town council to contemn private property for any public use listed therein. There are over thirty used defines—here are just a few:

1. All public uses authorized by the government of the United States;

2. Roads, streets…“and all other public uses for the benefit of a county city or town or the inhabitants of
a county, city, or town� (how many inhabitants does it have to benefit?);

3. Urban renewal projects (the only public use that requires a finding of “blight�):

4. Roads, tunnels, and dumping places for working mines, mills, or smelters for the reduction of ores
(your land can be taken so tailings from a private mining company can be dumped there);

5. Private roads leading from highways to residences or farms (I hope that Oprah doesn’t by land
nearby and require access across my yard);

6. Logging railways (would I get free firewood?);

7. Temporary logging roads and transportation of logs and timber products to public streams, lakes,
mills, railroads or highways for a time to be determined by the court (so they can trash your property
and then give it back to you…?).

In short, Montana Law permits local governments to enact eminent domain and take private property for use by another private entity for many reasons that do not require a designation of blight. This is especially concerning given that Mellor stated the biggest abusers of eminent domain are big box stores, such as COSTCO, that explicitly use eminent domain as part of their strategy to assemble parcels for their stores. COSTCO’s strategy is not infill development depending on “blight� designations—but greenfield development that relies on squishy statues such as “public uses for the benefit a town or its inhabitants�. Under Montana law, farmers, ranchers and other rural and suburban property owners are even more likely to be at risk, because no prior designations are necessary to enact eminent domain and seize property that will be used by a private entity.

So don’t fear the blight (or the implications of the Kelo verdict). Fear Montana Law.

And if you are really afraid, write your state representatives and get involved.

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