Potentially Paving Way for Wilmington Urban Renewal Project

On June 28, 2008, Gov. Ruth Ann Minner of Delaware vetoed a bill that would have placed tougher restrictions on governmental entities seeking to take private property by eminent domain. The bill, which the state legislature passed earlier this June, would have allowed state or local agencies to condemn and take private land only if it were intended for a limited, defined "public use."

Specifically, the bill sought to amend Chapter 95, Title 29 of the Delaware Code relating to real property acquisition and eminent domain by adding a new section 9501A, which narrowly defined "public use" and added a condition to the exercise of eminent domain in connection with the removal of a "blighted area." Pursuant to the bill, "public use" would only mean:

(1) the possession, occupation, and utilization of land by the general public or by public agencies; (2) the use of land for the creation or functioning of public utilities, electric cooperatives, or common carriers, or (3) where the exercise of eminent domain (a)(i) removes a "blighted area" as defined at 31 Del. C. §4501(3), or a "slum area" as defined at 31 Del. C. §4501(21); (ii) removes a structure that is beyond repair or unfit for human habitation or use; or (iii) is used to acquire abandoned real property and (b) eliminates a direct threat to public health and safety caused by or related to the real property in its current condition.

[Senate Bill No. 245.]

The bill further stipulated that "public use" would not include the generation of public revenues, increase in tax base, tax revenues, employment or economic health, through private landowners or economic development.

Moreover, the bill placed an additional burden upon condemnors where use of the condemned property would involve ownership, development or occupation by private parties. Namely, if real property were to be condemned for use by a private party, the state or agency thereof or a political subdivision would first have to establish by "clear and convincing evidence" that the use of eminent domain complies with the new definition of "public use."

The bill stems in part from a heated dispute between several south Wilmington landowners and the City of Wilmington, which recently revised its urban renewal plan for a riverfront area that includes scrap yards, a lumberyard, an auto repair shop and numerous vacant lots. A group of landowners in the area, who fear the city might condemn their land for private use in connection with the urban renewal plan, is suing the city in Chancery Court, alleging that the government's plan is unconstitutional.¹ The bill was also a response to the controversial 2005 U.S. Supreme Court ruling in Kelo v. City of New London, 545 U.S. 469 (2005), in which the Court held that the promotion of economic development served a legitimate "public purpose" and affirmed that the transfer of property from one private owner to another private owner was sometimes necessary, and permissible, to realize such a public purpose.

In light of the U.S. Supreme Court's decision in Kelo and the fact that the Delaware Senate, on June 30, 2008, failed to override the Governor's veto by two votes, the riverfront property owners who are challenging the urban renewal project now likely face an even tougher battle.

For Further Information

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

1. See "Minner vetoes eminent domain bill," Cris Barrish & Ginger Gibson, The News Journal (Wilimington, DE) (June 29, 2008).

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