House File 603 - Introduced HOUSE FILE 603 BY COMMITTEE ON GOVERNMENT OVERSIGHT (SUCCESSOR TO HSB 184) A BILL FOR An Act relating to eminent domain and condemnation, including 1 the authority of acquiring agencies to use eminent domain, 2 the procedures required for the use of eminent domain, and 3 compensation paid to certain property owners and including 4 effective date and applicability provisions. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 2047HV (2) 87 md/sc/rn

H.F. 603 DIVISION I 1 MERCHANT LINES 2 Section 1. Section 6A.21, subsection 1, Code 2017, is 3 amended by adding the following new paragraph: 4 NEW PARAGRAPH . 0b. “Merchant line” means the same as 5 defined in section 478.6A, subsection 1. 6 Sec. 2. Section 6A.21, subsection 1, paragraph b, Code 2017, 7 is amended to read as follows: 8 b. “Private development purposes” means the construction of, 9 or improvement related to, recreational trails, recreational 10 development paid for primarily with private funds, merchant 11 lines, housing and residential development, or commercial or 12 industrial enterprise development. 13 Sec. 3. Section 6A.21, subsection 2, Code 2017, is amended 14 to read as follows: 15 2. The limitation on the definition of public use, 16 public purpose, or public improvement does not apply to the 17 establishment, relocation, or improvement of a road pursuant 18 to chapter 306 , or to the establishment of a railway under the 19 supervision of the department of transportation as provided in 20 section 327C.2 , or to an airport as defined in section 328.1 , 21 or to land acquired in order to replace or mitigate land used 22 in a road project when federal law requires replacement or 23 mitigation. This limitation also does not apply to utilities, 24 persons, companies, or corporations under the jurisdiction of 25 the Iowa utilities board in the department of commerce or to 26 any other utility conferred the right by statute to condemn 27 private property or to otherwise exercise the power of eminent 28 domain , except to the extent such purpose includes construction 29 of merchant lines . 30 Sec. 4. Section 6A.22, subsection 2, paragraph a, 31 subparagraph (2), Code 2017, is amended to read as follows: 32 (2) The acquisition of any interest in property necessary to 33 the function of a public or private utility to the extent such 34 purpose does not include construction of merchant lines , common 35 -1- LSB 2047HV (2) 87 md/sc/rn 1/ 11

H.F. 603 carrier, or airport or airport system. 1 Sec. 5. EFFECTIVE UPON ENACTMENT. This division of this 2 Act, being deemed of immediate importance, takes effect upon 3 enactment. 4 Sec. 6. APPLICABILITY. This division of this Act applies to 5 projects or condemnation proceedings commenced on or after the 6 effective date of this division of this Act. 7 DIVISION II 8 LAKE DEVELOPMENT OR CREATION 9 Sec. 7. Section 6A.22, subsection 2, paragraph c, 10 subparagraph (1), subparagraph divisions (b) and (c), Code 11 2017, are amended to read as follows: 12 (b) For condemnation of property located in a county with 13 a population of greater than nine thousand two hundred fifty 14 but less than nine thousand three hundred, according to the 15 2010 federal decennial census, prior to making a determination 16 that development or creation of a lake as a surface drinking 17 water source is reasonable and necessary, the acquiring 18 agency shall conduct a review of feasible alternatives to 19 development or creation of a lake as a surface drinking water 20 source. An acquiring agency shall not have the authority 21 to condemn private property for the development or creation 22 of a lake as a surface drinking water source if one or more 23 feasible alternatives to provision of a drinking water source 24 exist. An alternative that results in the physical expansion 25 of an existing drinking water source is presumed to be a 26 feasible alternative to development or creation of a lake as a 27 surface drinking water source. An alternative that supplies 28 drinking water by pipeline or other method of transportation or 29 transmission from an existing source located within or outside 30 this state at a reasonable cost is a feasible alternative 31 to development or creation of a lake as a surface drinking 32 water source. If private property is to be condemned for 33 development or creation of a lake, only that number of acres 34 justified as necessary for a surface drinking water source, 35 -2- LSB 2047HV (2) 87 md/sc/rn 2/ 11

H.F. 603 and not otherwise acquired, may be condemned. Upon receipt 1 by the acquiring agency of a petition signed by not less 2 than twenty-five percent of the affected property owners, 3 the acquiring agency shall retain a certified hydrologist to 4 conduct a review and analysis of the proposed development 5 or creation of a lake. The certified hydrologist shall be 6 selected by a majority of a committee comprised of all affected 7 property owners and a representative of the acquiring agency. 8 The acquiring agency shall be responsible for paying the fees 9 and expenses of the certified hydrologist. For purposes of 10 this subparagraph (1), “certified hydrologist” means a person 11 certified by the American institute of hydrology. Development 12 or creation of a lake as a surface drinking water source 13 includes all of the following: 14 (i) Construction of the dam, including sites for suitable 15 borrow material and the auxiliary spillway. 16 (ii) The water supply pool. 17 (iii) The sediment pool. 18 (iv) The flood control pool. 19 (v) The floodwater retarding pool. 20 (vi) The surrounding area upstream of the dam no higher in 21 elevation than the top of the dam’s elevation. 22 (vii) The appropriate setback distance required by state or 23 federal laws and regulations to protect drinking water supply. 24 (0c) An acquiring agency shall not have the authority to 25 condemn private property for the development or creation of 26 a lake as a surface drinking water source unless the United 27 States army corps of engineers has performed an engineering 28 review of the project and approved all required permits and 29 authorizations for completion of the project. 30 (c) (i) For purposes of this subparagraph (1), “number of 31 acres justified as necessary for a surface drinking water source” 32 means according to guidelines of the United States natural 33 resource conservation service and according to analyses of 34 surface drinking water capacity needs conducted by one or more 35 -3- LSB 2047HV (2) 87 md/sc/rn 3/ 11

H.F. 603 registered licensed professional engineers. 1 (ii) For condemnation proceedings for which the application 2 pursuant to section 6B.3 was filed after January 1, 2013, for 3 condemnation of property located in a county with a population 4 of greater than nine thousand two hundred fifty but less than 5 nine thousand three hundred, according to the 2010 federal 6 decennial census, which property sought to be condemned was in 7 whole or in part described in a petition filed under section 8 6A.24, subsection 2 , after January 1, 2013, but before January 9 1, 2014, regardless of whether the petitioner was determined by 10 a court to not be a proper acquiring agency, “number of acres 11 justified as necessary for a surface drinking water source” , 12 as determined under subparagraph subdivision (i) shall not 13 exceed the number of acres that would be necessary to provide 14 the amount of drinking water to meet the needs of a population 15 equal to the population of the county where the lake is to be 16 developed or created, according to the most recent federal 17 decennial census. 18 (iii) Upon receipt by the acquiring agency of a petition 19 signed by not less than twenty-five percent of the affected 20 property owners, the acquiring agency shall retain a 21 licensed professional engineer to conduct an additional 22 independent review and analysis of the determinations made 23 under subparagraph subdivisions (i) and (ii). The licensed 24 professional engineer shall be selected by a majority of a 25 committee comprised of all affected property owners and a 26 representative of the acquiring agency. The acquiring agency 27 shall be responsible for paying the fees and expenses of the 28 licensed professional engineer. 29 Sec. 8. EFFECTIVE UPON ENACTMENT. This division of this 30 Act, being deemed of immediate importance, takes effect upon 31 enactment. 32 Sec. 9. APPLICABILITY. This division of this Act applies to 33 projects or condemnation proceedings pending or commenced on or 34 after the effective date of this division of this Act. 35 -4- LSB 2047HV (2) 87 md/sc/rn 4/ 11

H.F. 603 DIVISION III 1 PIPELINES 2 Sec. 10. NEW SECTION . 479B.9A Additional requirements —— 3 eminent domain. 4 In addition to any other requirements for the granting of a 5 petition pursuant to this chapter, an application for a permit 6 to construct a pipeline involving the taking of property under 7 eminent domain shall not be granted until the applicant has 8 obtained through voluntary easements a minimum of seventy-five 9 percent of the parcels needed for the construction, operation, 10 and maintenance of the pipeline and stations or equipment for 11 the proper operation of the pipeline. If seventy-five percent 12 of the parcels needed has not been obtained through voluntary 13 easements within two years following the date the application 14 is filed with the board, the board shall reject the application 15 and make a record of the rejection. 16 Sec. 11. EFFECTIVE UPON ENACTMENT. This division of this 17 Act, being deemed of immediate importance, takes effect upon 18 enactment. 19 Sec. 12. APPLICABILITY. This division of this Act applies 20 to applications for permits filed but not yet acted upon on the 21 effective date of this division of this Act and to applications 22 for permits filed on or after the effective date of this 23 division of this Act. 24 DIVISION IV 25 RELOCATION OF BUSINESSES AND FARM OPERATIONS 26 Sec. 13. Section 6B.26, subsection 1, Code 2017, is amended 27 to read as follows: 28 1. A landowner shall not be dispossessed under condemnation 29 proceedings of the landowner’s residence, dwelling house, 30 outbuildings if the residence or dwelling house is also 31 acquired, business, farm operation, orchard, or garden, 32 until the damages thereto have been finally determined and 33 paid. However, if the property described in this subsection 34 is condemned for highway purposes by the state department of 35 -5- LSB 2047HV (2) 87 md/sc/rn 5/ 11

H.F. 603 transportation, the condemning authority may take possession 1 of the property either after the damages have been finally 2 determined and paid or one hundred eighty days after the 3 compensation commission has determined and filed its award, in 4 which event all of the appraisement of damages shall be paid 5 to the property owner before the dispossession can take place. 6 This subsection shall not apply to condemnation proceedings 7 for drainage or levee improvements, or for public school 8 purposes. For the purposes of this subsection , “outbuildings” 9 means structures and improvements located in proximity to the 10 landowner’s residence. 11 Sec. 14. NEW SECTION . 316.6A Replacement property payment 12 to certain businesses and farm operations. 13 1. In addition to payments otherwise authorized by this 14 chapter, the displacing agency shall make a payment to a 15 displaced person who is displaced from the person’s place of 16 business or farm operation if the displaced person owned the 17 real property on which the business was conducted or where the 18 farm operation was located for at least one year prior to the 19 date of initiation of negotiations for the acquisition of the 20 real property and if the displaced person purchases comparable 21 replacement real property to conduct the displaced person’s 22 business or farm operation within eighteen months following the 23 date the displaced person vacates the real property or receives 24 payment from the displacing agency under another provision of 25 this chapter, whichever is later. The additional payment shall 26 include the following amounts: 27 a. An amount that when added to the acquisition cost of 28 the real property acquired by the displacing agency, excluding 29 any dwelling on the property, equals the reasonable cost of 30 comparable real property for the displaced person’s business or 31 farm operation, as determined by the displacing agency. 32 b. An amount that compensates the displaced person for 33 any increased interest costs and other debt service costs 34 that the displaced person is required to pay for financing 35 -6- LSB 2047HV (2) 87 md/sc/rn 6/ 11

H.F. 603 the acquisition of comparable replacement real property. The 1 amount shall be paid only if the real property acquired by 2 the displacing agency was encumbered by a bona fide mortgage 3 or land contract creating a valid lien on the real property, 4 excluding the dwelling, or on the dwelling, for not less than 5 one year immediately prior to the initiation of negotiations 6 for the acquisition of the real property. 7 c. The amount of actual, reasonable, and necessary expenses 8 incurred by the displaced person for evidence of title, 9 recording fees, and other costs incident to the purchase of 10 comparable replacement real property, but not including prepaid 11 expenses. 12 2. In addition to payments otherwise authorized by this 13 chapter, the displacing agency shall make a payment to a 14 displaced person or a person who is displaced from the person’s 15 place of business or farm operation as an indirect result of 16 the acquisition of real property by the displacing agency 17 if the person in whole or in part owns the business or farm 18 operation, the person leased the real property upon which the 19 business was conducted or where the farm operation was located 20 for at least one year prior to the date of initiation of 21 negotiations for the acquisition of the real property, and the 22 person leases or purchases comparable replacement real property 23 to conduct the displaced person’s business or farm operation 24 within eighteen months of the date the person vacates the 25 real property or receives payment from the displacing agency 26 under another provision of this chapter, whichever is later. 27 The displacing agency shall determine whether a displacement 28 described in this subsection has occurred. The additional 29 payment shall include the following amounts: 30 a. If the person leases comparable real property, the 31 difference between the average monthly amount of the lease of 32 the comparable real property and the average monthly amount 33 of the lease for the real property acquired by the displacing 34 agency, multiplied by forty-two. 35 -7- LSB 2047HV (2) 87 md/sc/rn 7/ 11

H.F. 603 b. If the person purchases comparable real property to 1 conduct the person’s business or operate the person’s farm, an 2 amount calculated consistent with the provisions of subsection 3 1, paragraphs “a” and “c” . 4 3. All determinations to carry out this section shall be 5 made in accordance with administrative rules adopted by the 6 department. 7 Sec. 15. EFFECTIVE UPON ENACTMENT. This division of this 8 Act, being deemed of immediate importance, takes effect upon 9 enactment. 10 Sec. 16. APPLICABILITY. This division of this Act applies 11 to programs or projects or condemnation proceedings pending or 12 commenced on or after the effective date of this division of 13 this Act. 14 EXPLANATION 15 The inclusion of this explanation does not constitute agreement with 16 the explanation’s substance by the members of the general assembly. 17 This bill relates to the authority of acquiring agencies to 18 use eminent domain and the procedures and compensation required 19 for the use of eminent domain. 20 Division I of the bill establishes a definition of “merchant 21 line” for purposes of Code chapters 6A and 6B that is the 22 same as defined in Code section 478.6A(1). The bill also 23 adds merchant lines to the definition of “private development 24 purposes”. Code section 6A.21 provides that the authority 25 to condemn property for a public use, public purpose, or 26 public improvement does not include the authority to condemn 27 agricultural land for private development purposes unless the 28 owner of the agricultural land consents to the condemnation. 29 The bill also specifies under Code section 6A.21(2) that the 30 limitation on the definition of public use, public purpose, 31 or public improvement does apply to companies under the 32 jurisdiction of the Iowa utilities board or to any other 33 utility conferred the right by statute to condemn private 34 property to the extent such purpose includes construction of 35 -8- LSB 2047HV (2) 87 md/sc/rn 8/ 11

H.F. 603 merchant lines. 1 Division I of the bill takes effect upon enactment and 2 applies to projects or condemnation proceedings pending or 3 commenced on or after the effective date of division I of the 4 bill. 5 Division II of the bill provides that for condemnation 6 of property located in a county with a population of greater 7 than 9,250 but less than 9,300, according to the 2010 federal 8 decennial census, an acquiring agency shall not have the 9 authority to condemn private property for the development or 10 creation of a lake as a surface drinking water source unless 11 the United States army corps of engineers has performed an 12 engineering review of the project and approved all required 13 permits and authorizations for completion of the project. The 14 bill also requires, at the expense of the acquiring agency, a 15 review and analysis of the proposed development or creation of 16 a lake by a certified hydrologist upon receipt by the acquiring 17 agency of a petition signed by not less than 25 percent of 18 the affected property owners. The certified hydrologist is 19 selected by a committee comprised of all affected property 20 owners and a representative of the acquiring agency. 21 In addition to the analysis of surface drinking water 22 capacity and the determination of the number of acres justified 23 as necessary for a surface drinking water source by one 24 or more licensed professional engineers, the bill provides 25 that an additional independent review and analysis of such 26 determinations shall be conducted, at the expense of the 27 acquiring agency, by a licensed professional engineer upon 28 receipt by the acquiring agency of a petition signed by not 29 less than 25 percent of the affected property owners. The 30 licensed professional engineer is selected by a committee 31 comprised of all affected property owners and a representative 32 of the acquiring agency. 33 Division II of the bill takes effect upon enactment and 34 applies to projects or condemnation proceedings pending or 35 -9- LSB 2047HV (2) 87 md/sc/rn 9/ 11

H.F. 603 commenced on or after the effective date of division II of the 1 bill. 2 Current Code chapter 479B allows the Iowa utilities 3 board to grant permits for the construction of hazardous 4 liquid pipelines and grant eminent domain rights to pipeline 5 companies to construct such pipelines. Division III of the 6 bill establishes new Code section 479B.9A to require that 7 in addition to any other requirements for granting a permit 8 pursuant to Code chapter 479B, an application for a permit 9 involving the taking of property under eminent domain will not 10 be granted until the applicant obtains at least 75 percent of 11 the parcels needed for the project through voluntary easements. 12 If 75 percent of the parcels needed has not been obtained 13 through voluntary easements within two years of filing the 14 application, the board must reject the application. 15 Division III of the bill takes effect upon enactment and is 16 applicable to applications for permits filed but not yet acted 17 upon on the effective date of division III of the bill and to 18 applications for permits filed on or after the effective date 19 of division III of the bill. 20 Division IV of the bill relates to the acquisition of real 21 property by governmental entities by modifying criteria for 22 dispossessing owners of property and authorizing payments 23 to certain displaced persons operating a business or a farm 24 operation. 25 The bill amends Code section 6B.26 by adding business and 26 farm operation to the list of types of property from which 27 a landowner shall not be dispossessed under condemnation 28 proceedings until the damages for the property have been 29 finally determined and paid. 30 The bill provides that, in addition to payments otherwise 31 authorized by Code chapter 316, a displacing agency shall make 32 a payment to a person who is displaced from the person’s place 33 of business or farm operation if the displaced person owned the 34 real property on which the business was conducted or where the 35 -10- LSB 2047HV (2) 87 md/sc/rn 10/ 11

H.F. 603 farm operation was located for at least one year prior to the 1 date of initiation of negotiations for the acquisition of the 2 real property and if the displaced person purchases comparable 3 replacement real property to conduct the displaced person’s 4 business or farm operation within 18 months following the date 5 the displaced person vacates the real property or receives 6 payment from the displacing agency under another provision of 7 Code chapter 316, whichever is later. The bill establishes the 8 methodology for determining the amount of the payment based on 9 certain specified costs incurred by the displaced person in 10 acquiring comparable real property. 11 The bill also provides for payments to a displaced person or 12 a person who is displaced from the person’s place of business 13 or farm operation as an indirect result of the acquisition 14 of real property by the displacing agency if the person in 15 whole or in part owns the business or farm operation, the 16 person leased the real property upon which the business was 17 conducted or where the farm operation was located for at least 18 one year prior to the date of initiation of negotiations for 19 the acquisition of the real property, and the person leases or 20 purchases comparable replacement real property to conduct the 21 displaced person’s business or farm operation within 18 months 22 of the date the person vacates the real property or receives 23 payment from the displacing agency under another provision 24 of Code chapter 316, whichever is later. Under the bill, 25 the displacing agency determines whether such a displacement 26 from leased property has occurred pursuant to rules adopted by 27 the department of transportation. The bill establishes the 28 methodology for determining the amount of the payment based on 29 certain specified costs incurred by the person in acquiring or 30 leasing comparable real property. 31 Division IV takes effect upon enactment and applies to 32 projects or condemnation proceedings pending or commenced on or 33 after the effective date of division IV of the bill. 34 -11- LSB 2047HV (2) 87 md/sc/rn 11/ 11