United States: Illinois Latest State to Respond to Kelo Decision

Joining sister states that have reacted to the Supreme Court's Kelo decision and subsequent public outcry, Illinois has passed legislation regarding eminent domain and redevelopment. Starting January 1, 2007, Illinois' eminent domain laws will take on an entirely different look. Illinois Senate Bill 3086, which was adopted in May 2006, rewrites the existing eminent domain laws in five distinct ways: (1) obligates the Court to award attorneys' fees if certain conditions are satisfied, (2) changes the property valuation date, (3) provides for relocation costs to residential landowners, (4) establishes requirements for the sale of condemned property, and (5) creates five categories of taking, each with its own burden of proof and limitations period.

The new law sets forth five categories of takings, each with its own burden of proof, purpose and limitations. For instance, it limits the government's right to condemn private property in a "blighted area" for subsequent ownership or use by a private entity, which provisions were enacted in response to the U.S. Supreme Court's June 2005 decision Kelo v. The City of New London. It requires a condemning authority to prove the right to exercise eminent domain by clear and convincing evidence if the taking is for the purpose of private ownership or control. Depending on the purpose of the taking, the condemning authority will have a significantly higher burden of proof before it will be allowed to exercise eminent domain.

Attorneys' fees are awarded in the event that after the close of discovery but prior to or within 14 days of trial, the property owner makes a final offer of settlement that the condemning authority rejects and the just compensation awarded at trial is equal to or in excess of the offer of settlement. If that occurs, then the Court must award attorneys' fees to the property owner based on the "net benefit." Also, if the final compensation exceeds the offer of settlement, the condemning authority must pay the owner's reasonable costs, including expert fees, and litigation expenses that were incurred by the owner after making the settlement offer.

The valuation date of the condemned property will be determined as of the date the complaint was filed unless the trial begins more than two years after the filing of the complaint. If that occurs, the Court may, in the interests of justice, set a valuation date no sooner than the date of the filing of the complaint, and no later than the day of trial or, in a quick take, the date the condemning authority took title to the property. This provision was intended to allow the property owner to take advantage of any incremental increase in the value of the property after the filing of the complaint. With the enactment of this new legislation, the property owner should be able to take advantage of any increase in the value of his/her property arising subsequent to the initiation of the government's eminent domain action.

The new legislation requires relocation payments by the condemning authority to displaced persons for their reasonable relocation costs as determined in the same manner as current federal legislation.

The legislation establishes specific requirements for the sale of condemned property acquired after January 1, 2007, and under the control or ownership by the condemning authority for less than five years. For municipalities, it requires the traditional sale methods used for surplus real estate.

If you have any questions about this Alert or would like to learn more about eminent domain and redevelopment laws, please contact George J. Kroculick, Richard P. Darke or any of the other attorneys in our Eminent Domain and Land Valuation Practice Group.

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