Public Power, Private Gain: Glossary of Terms

Glossary of Terms


Amicus Brief: A brief “amicus curiae” is a “friend of the court” brief. The parties in cases file their own briefs, discussing the facts and the law. Sometimes, individual people or organizations that are not parties to the lawsuit will have something to add that will help the court, like factual background or a different legal perspective. Those people can then submit an amicus brief that provides this additional information.


Bad Faith: This is a general legal term that refers to having improper motives for some action. In the context of eminent domain, if a court finds that that government acted in bad faith, it will refuse to allow the condemnation of property. For example, it would be in bad faith to condemn property in order for the head of the development agency to gain personal profit. This is an obvious example, but there are many, and more complex, varieties of bad faith.


Blight: Most states have a statutory definition of “blight.” Generally it is in an area that has physical deterioration, but state definitions vary considerably. For example, a blighted area might have homes without electricity or plumbing, but it might also be an area that is “economically underutilized,” that has inadequate parking or “inadequate planning”, or too-small yards. Because the definitions vary so widely, it is important to look at state statutes to understand this term in one’s own state. Courts usually hold that using eminent domain to eradicate blight is for public use, whatever the eventual use of the property, because clearing away the blight is a benefit to the public. Declaring an area to be blighted or a slum is often the first step a municipality will take toward condemning property and then transferring it to a private party. And in some states, property may be condemned and transferred to a private party only if the area is blighted or a slum. In recent years, some communities have been successful in challenging blight designations.


Condemnation: This is the general term that means forcible government acquisition of property for any reason. It includes eminent domain, where property is taken for a public use and just compensation must be paid. In some states, the term condemnation can also include taking land for tax delinquency or for building code violations. The government does not have to pay compensation when it condemns for tax delinquency. Whether it has to pay compensation in building code violation condemnations depends on the exact state or local statutes involved.


Condemnee: A condemnee is the person or business whose property is taken.


Condemnor: Condemnor refers to the government body or private party who files the eminent domain lawsuit seeking to acquire private property for “public use.” Condemnors are usually government agencies. In most states, private utility companies can also be condemnors; they can condemn property only for electricity, water and other utility purposes. In a handful of states, private developers or development corporations have been given the government’s power to condemn private property for private economic development.


Defendant: The person who gets sued. In condemnation cases, the defendant is usually the owner of the property being condemned. However, if an owner brings his own lawsuit to prevent a condemnation, the government can be the defendant.


Development corporation: Development corporations are usually private corporations that engage in property development. (Occasionally, a government agency will call itself a “development corporation.”) They can operate on land the corporation or the local government owns and that has not been condemned. In a handful of states, private development corporations are authorized to condemn property. In other states, the government may transfer land to a development corporation after condemnation or just work with the development corporation in creating a development plan.


Easement: An interest in property that allows the use of the land by someone who does not have title to it. For example, one neighbor may grant another an easement to walk across the first person's property on the way home. A landowner may also sell an easement, allowing another party to construct a road, access a water supply or dig for minerals.


Economic development: Some states allow condemnation and transfer to private parties only to eradicate slum or blight. Other states have statutes that allow local governments to condemn for “economic development.” That means that the result of the new project will benefit the local economy, usually in the form of more tax dollars and jobs. If a state allows property to be condemned for economic development, there doesn’t need to be anything wrong with the property or area to condemn it.


Eminent domain: Eminent domain is nearly identical to “condemnation.” It means the power to take land and the process for taking it. The only difference between condemnation and eminent domain is that the term condemnation is a little broader. Eminent domain is not used to describe taking property that has numerous building code violations or tax delinquency. In this report, because we are not discussing condemnation of unsafe buildings, the terms condemnation and eminent domain are used synonymously. Up until the mid-20th century, government used its power of eminent domain for projects that have traditionally been treated as public uses, rather than for private economic development.


Fair market value: The amount that a willing buyer would pay a willing seller for a piece of property is considered its fair market value. In eminent domain situations, because there is no willing seller, appraisers make estimates of how much the property is worth. They use a variety of methods for making these estimates, including sales of comparable pieces of property. Fair market value does not include any increased value that will occur as a result of the development project. For example, if homes are getting condemned for a new shopping center, the property may be worth more because the developer wants it for a shopping center, but that increase is not included in the fair market value.


Good faith offer and good faith negotiations: Many states require that before a piece of property is condemned, the government must make a “good faith offer” to purchase the property. That usually means that the government must get a reasonable appraisal of the value of the property and offer to purchase it for that amount before condemning. Certain states require “good faith negotiations,” which means that the government should try to negotiate with the owner about price before condemning.


Goodwill: Businesses usually have a base of customers who know them and people who identify them with a particular location. For example, a restaurant that has been in the same spot for 25 years has business goodwill in the form of regular customers and identification with that location. If the restaurant is forced out by eminent domain, it will probably lose business. The government does not compensate for that loss. If someone sells their 25-year old restaurant, however, one of the line items in the sale is business goodwill. The buyer pays for the fact that the business is well known and has many customers.


“Highest and best use”: This term has two different uses in the context of eminent domain. When property is condemned and the parties are arguing about just compensation, the rule is almost always that the property must be valued at its highest and best use. So, if a piece of land is vacant but zoned industrial, it is valued as potential industrial land rather then potential residential land. The other way that governments sometimes use the term is that they will argue that property is not being used at its “highest and best use” and that it should therefore be condemned and redeveloped according to its full potential.


Injunction: An injunction is an order from a court requiring a person or entity to do or not do something. In eminent domain cases, owners often seek injunctions to prevent the government from taking their property or tearing down their buildings before a final court decision.


Just compensation: The U.S. Constitution and all state constitutions require that when the government takes property by eminent domain, it must pay “just compensation.” Although the features of compensation vary from state to state, generally it includes the value of land and buildings. Most states and the federal government also provide some compensation for relocation costs. Destruction of a business and loss of business goodwill are generally not included in just compensation. Just compensation does not mean that someone whose property is taken will get the full cost of the building of a new home or business or purchasing another site with the same features.


Necessity of Taking: The government may condemn property for public use. One offshoot of this doctrine is the requirement that a taking be "necessary" to achieve the public use. To use an extreme example, it is not necessary to condemn six blocks of homes in order to erect a small post office on one of those blocks. Sometimes, when owners challenge the public use of a condemnation, they also argue that the takings are not necessary. Generally, courts give even more deference to government findings of necessity than to government findings of public use. However, owners still sometimes win these claims.


Ordinance: This is a law passed by a local legislative body, like a city council, that is written down and on the books.


Plaintiff: The person who brings a lawsuit. In condemnation cases, the plaintiff is usually the government. However, if an owner brings his own lawsuit to prevent a condemnation, the owner can be the plaintiff.


Pretextual taking: When a government agency claims it is taking property for one purpose but the actual purpose is something else. If a taking is pretextual, many courts will refuse to allow it.


Primary public benefit: Many states hold that if a taking has a “primarily” public purpose, then “incidental” benefit to private parties doesn’t make the taking unconstitutional. On the other hand, if the primary purpose of the taking is to benefit a private party, then the taking cannot be justified by only incidental public benefit. Unfortunately, courts have never defined either primary or incidental. Those terms are analyzed by the courts in each case based on the facts of each case.


Private use: Under federal law and in every state, property may be condemned for public uses but not for private use. However, there is no universal definition of “private use.” Some state courts seem to find that everything is a public use and nothing is a private use. Other state courts will find that property cannot be condemned for ownership by private parties. Most states fall in between and try to weigh the evidence that the purpose of the project is public against the evidence that it is private. Private use thus gets determined on a case-by-case basis in court. In this report, however, we use the term private use as an ordinary person would—where the property will be owned and/or used by a private party rather than the government.


Public purpose: Although the federal and state constitutions require that takings be for “public use,” many states have interpreted “public use” to mean “public purpose” or “public benefit.” A public purpose is one that is justified by the beneficial effect it is expected to have on the public.


Public use: The U.S. Constitution and all but a handful of state constitutions have explicit language that says that property can be taken “for public use.” In the few states that do not have such language in their constitutions, the state courts have read it in, so all eminent domain must be for “public use.” Until the middle part of the 20th Century, public use was interpreted fairly literally—used by or available to the general public or owned by the government. Federal courts and the courts of many of the states now interpret “public use” to mean “having a public purpose or benefit.”


Quick take: In many states, there is a specific procedure that allows the government to deposit with the court the amount it thinks the property is worth and then take possession of it very quickly. Sometimes there is no opportunity for a hearing before the government takes possession. For residences, there is usually a somewhat longer period before the person must leave, but businesses in some states can be evicted very quickly. Once the government takes possession of a property through quick take, it can (and often does) demolish the buildings in question.


Redevelopment: Redevelopment means changing an area that has already been developed. In the context of eminent domain, redevelopment means removing the existing homes, businesses, and other buildings and replacing them with something else.


Redevelopment agency: Many states, counties, and municipalities have a particular agency that is in charge of redevelopment projects. The redevelopment agency is a government body, and it usually is responsible for conducting studies pertaining to redevelopment, overseeing the creation of a redevelopment plan, voting on the plan and supervising the implementation of the plan. The redevelopment agency is often the actual condemnor.


Redevelopment area: This is usually the same as a “blighted area.” When a local government decides it is going to redevelop, it designates an area where the redevelopment will take place. In most states, an area must be blighted to call it a redevelopment area. However, the definition of blight can be very loose. Redevelopment areas often have access to special tax benefits, and cities can get state or federal money to use in redevelopment areas. The treatment of redevelopment areas is governed by both state and federal statutes.


Redevelopment plan: After a city has designated a blighted or redevelopment area, it then comes up with (or asks a private consultant to come up with) a plan for redeveloping the area. These large documents are then supposed to guide the course of future redevelopment.


Slum: Declaring an area to be a slum or “blighted” is often the first step a municipality will take towards condemning a property and then transferring it to a private party. Most states have a statutory definition of “slum.” Generally, it is an area that has physical deterioration and crime, but state definitions vary considerably. Courts routinely hold that using eminent domain in slums is for public use, whatever the eventual use of the property, because clearing away the slum is a benefit to the public. The major cases in the 1950s that allow property to be condemned and given to private developers were cases involving slum clearance. These cases opened the door for the abuse of eminent domain we see today.


Statute: A law that was passed by the federal or state legislature and that is on the books.


TIF (Tax Increment Financing): TIF stands for Tax Increment Financing. This is a technique for financing development projects. Let’s say an area is designated as a TIF district effective January 2000, and in 1999, it produced $100 in property taxes, which went to the general city fund. In year 2001, the area produces $150 in property taxes. Of that tax money, the city continues to get the amount in taxes that it got before the area became a TIF district, in this case $100. All of the money above that amount, in this case $50, goes to the redevelopment agency. That extra money can be used to pay for the current project, to pay back bonds that were issued for the project or to pay for new development projects; it all depends on how the particular locality sets up the project financing.


Vacated: When an appellate court vacates a lower court’s judicial decision, the appellate court erases the first decision, usually because it thinks the lower court should have decided the case on different grounds. This is different than a reversal, where the appellate court merely disagrees with the lower court’s interpretation of the same issue.


Validation Action: This is a special term used only in California. After a California municipality designates an area as blighted, people who live within that area can bring a validation action to challenge the blight designation and try to get a court to remove it. Citizens in other states can bring similar lawsuits, but they are usually just called “challenges to blight designations” or something similar.