HF 603 (LSB 2047HV (2) 87)

HOUSE FILE 603

BY  COMMITTEE ON GOVERNMENT OVERSIGHT

(SUCCESSOR TO HSB 184)

A BILL FOR

An Act relating to eminent domain and condemnation, including the authority of acquiring agencies to use eminent domain, the procedures required for the use of eminent domain, and compensation paid to certain property owners and including effective date and applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
MERCHANT LINES

    Section 1.  Section 6A.21, subsection 1, Code 2017, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0b.  “Merchant line” means the same as defined in section 478.6A, subsection 1.
    Sec. 2.  Section 6A.21, subsection 1, paragraph b, Code 2017, is amended to read as follows:
   b.  “Private development purposes” means the construction of, or improvement related to, recreational trails, recreational development paid for primarily with private funds, merchant lines, housing and residential development, or commercial or industrial enterprise development.
    Sec. 3.  Section 6A.21, subsection 2, Code 2017, is amended to read as follows:
   2.  The limitation on the definition of public use, public purpose, or public improvement does not apply to the establishment, relocation, or improvement of a road pursuant to chapter 306, or to the establishment of a railway under the supervision of the department of transportation as provided in section 327C.2, or to an airport as defined in section 328.1, or to land acquired in order to replace or mitigate land used in a road project when federal law requires replacement or mitigation. This limitation also does not apply to utilities, persons, companies, or corporations under the jurisdiction of the Iowa utilities board in the department of commerce or to any other utility conferred the right by statute to condemn private property or to otherwise exercise the power of eminent domain, except to the extent such purpose includes construction of merchant lines.
    Sec. 4.  Section 6A.22, subsection 2, paragraph a, subparagraph (2), Code 2017, is amended to read as follows:
   (2)  The acquisition of any interest in property necessary to the function of a public or private utility to the extent such purpose does not include construction of merchant lines, common carrier, or airport or airport system.
    Sec. 5.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 6.  APPLICABILITY.  This division of this Act applies to projects or condemnation proceedings commenced on or after the effective date of this division of this Act.
DIVISION II
LAKE DEVELOPMENT OR CREATION

    Sec. 7.  Section 6A.22, subsection 2, paragraph c, subparagraph (1), subparagraph divisions (b) and (c), Code 2017, are amended to read as follows:
   (b)  For condemnation of property located in a county with a population of greater than nine thousand two hundred fifty but less than nine thousand three hundred, according to the 2010 federal decennial census, prior to making a determination that development or creation of a lake as a surface drinking water source is reasonable and necessary, the acquiring agency shall conduct a review of feasible alternatives to development or creation of a lake as a surface drinking water source. An acquiring agency shall not have the authority to condemn private property for the development or creation of a lake as a surface drinking water source if one or more feasible alternatives to provision of a drinking water source exist. An alternative that results in the physical expansion of an existing drinking water source is presumed to be a feasible alternative to development or creation of a lake as a surface drinking water source. An alternative that supplies drinking water by pipeline or other method of transportation or transmission from an existing source located within or outside this state at a reasonable cost is a feasible alternative to development or creation of a lake as a surface drinking water source. If private property is to be condemned for development or creation of a lake, only that number of acres justified as necessary for a surface drinking water source, and not otherwise acquired, may be condemned.  Upon receipt by the acquiring agency of a petition signed by not less than twenty-five percent of the affected property owners, the acquiring agency shall retain a certified hydrologist to conduct a review and analysis of the proposed development or creation of a lake. The certified hydrologist shall be selected by a majority of a committee comprised of all affected property owners and a representative of the acquiring agency. The acquiring agency shall be responsible for paying the fees and expenses of the certified hydrologist. For purposes of this subparagraph (1), “certified hydrologist” means a person certified by the American institute of hydrology. Development or creation of a lake as a surface drinking water source includes all of the following:
   (i)  Construction of the dam, including sites for suitable borrow material and the auxiliary spillway.
   (ii)  The water supply pool.
   (iii)  The sediment pool.
   (iv)  The flood control pool.
   (v)  The floodwater retarding pool.
   (vi)  The surrounding area upstream of the dam no higher in elevation than the top of the dam’s elevation.
   (vii)  The appropriate setback distance required by state or federal laws and regulations to protect drinking water supply.
   (0c)  An acquiring agency shall not have the authority to condemn private property for the development or creation of a lake as a surface drinking water source unless the United States army corps of engineers has performed an engineering review of the project and approved all required permits and authorizations for completion of the project.
   (c)  (i)  For purposes of this subparagraph (1), “number of acres justified as necessary for a surface drinking water source” means according to guidelines of the United States natural resource conservation service and according to analyses of surface drinking water capacity needs conducted by one or more registered licensed professional engineers.
   (ii)  For condemnation proceedings for which the application pursuant to section 6B.3 was filed after January 1, 2013, for condemnation of property located in a county with a population of greater than nine thousand two hundred fifty but less than nine thousand three hundred, according to the 2010 federal decennial census, which property sought to be condemned was in whole or in part described in a petition filed under section 6A.24, subsection 2, after January 1, 2013, but before January 1, 2014, regardless of whether the petitioner was determined by a court to not be a proper acquiring agency, “number of acres justified as necessary for a surface drinking water source”, as determined under subparagraph subdivision (i) shall not exceed the number of acres that would be necessary to provide the amount of drinking water to meet the needs of a population equal to the population of the county where the lake is to be developed or created, according to the most recent federal decennial census.
   (iii)  Upon receipt by the acquiring agency of a petition signed by not less than twenty-five percent of the affected property owners, the acquiring agency shall retain a licensed professional engineer to conduct an additional independent review and analysis of the determinations made under subparagraph subdivisions (i) and (ii). The licensed professional engineer shall be selected by a majority of a committee comprised of all affected property owners and a representative of the acquiring agency. The acquiring agency shall be responsible for paying the fees and expenses of the licensed professional engineer.
    Sec. 8.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 9.  APPLICABILITY.  This division of this Act applies to projects or condemnation proceedings pending or commenced on or after the effective date of this division of this Act.
DIVISION III
PIPELINES

    Sec. 10.  NEW SECTION.  479B.9A  Additional requirements —— eminent domain.
   In addition to any other requirements for the granting of a petition pursuant to this chapter, an application for a permit to construct a pipeline involving the taking of property under eminent domain shall not be granted until the applicant has obtained through voluntary easements a minimum of seventy-five percent of the parcels needed for the construction, operation, and maintenance of the pipeline and stations or equipment for the proper operation of the pipeline. If seventy-five percent of the parcels needed has not been obtained through voluntary easements within two years following the date the application is filed with the board, the board shall reject the application and make a record of the rejection.
    Sec. 11.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 12.  APPLICABILITY.  This division of this Act applies to applications for permits filed but not yet acted upon on the effective date of this division of this Act and to applications for permits filed on or after the effective date of this division of this Act.
DIVISION IV
RELOCATION OF BUSINESSES AND FARM OPERATIONS

    Sec. 13.  Section 6B.26, subsection 1, Code 2017, is amended to read as follows:
   1.  A landowner shall not be dispossessed under condemnation proceedings of the landowner’s residence, dwelling house, outbuildings if the residence or dwelling house is also acquired, business, farm operation, orchard, or garden, until the damages thereto have been finally determined and paid. However, if the property described in this subsection is condemned for highway purposes by the state department of transportation, the condemning authority may take possession of the property either after the damages have been finally determined and paid or one hundred eighty days after the compensation commission has determined and filed its award, in which event all of the appraisement of damages shall be paid to the property owner before the dispossession can take place. This subsection shall not apply to condemnation proceedings for drainage or levee improvements, or for public school purposes. For the purposes of this subsection, “outbuildings” means structures and improvements located in proximity to the landowner’s residence.
    Sec. 14.  NEW SECTION.  316.6A  Replacement property payment to certain businesses and farm operations.
   1.  In addition to payments otherwise authorized by this chapter, the displacing agency shall make a payment to a displaced person who is displaced from the person’s place of business or farm operation if the displaced person owned the real property on which the business was conducted or where the farm operation was located for at least one year prior to the date of initiation of negotiations for the acquisition of the real property and if the displaced person purchases comparable replacement real property to conduct the displaced person’s business or farm operation within eighteen months following the date the displaced person vacates the real property or receives payment from the displacing agency under another provision of this chapter, whichever is later. The additional payment shall include the following amounts:
   a.  An amount that when added to the acquisition cost of the real property acquired by the displacing agency, excluding any dwelling on the property, equals the reasonable cost of comparable real property for the displaced person’s business or farm operation, as determined by the displacing agency.
   b.  An amount that compensates the displaced person for any increased interest costs and other debt service costs that the displaced person is required to pay for financing the acquisition of comparable replacement real property. The amount shall be paid only if the real property acquired by the displacing agency was encumbered by a bona fide mortgage or land contract creating a valid lien on the real property, excluding the dwelling, or on the dwelling, for not less than one year immediately prior to the initiation of negotiations for the acquisition of the real property.
   c.  The amount of actual, reasonable, and necessary expenses incurred by the displaced person for evidence of title, recording fees, and other costs incident to the purchase of comparable replacement real property, but not including prepaid expenses.
   2.  In addition to payments otherwise authorized by this chapter, the displacing agency shall make a payment to a displaced person or a person who is displaced from the person’s place of business or farm operation as an indirect result of the acquisition of real property by the displacing agency if the person in whole or in part owns the business or farm operation, the person leased the real property upon which the business was conducted or where the farm operation was located for at least one year prior to the date of initiation of negotiations for the acquisition of the real property, and the person leases or purchases comparable replacement real property to conduct the displaced person’s business or farm operation within eighteen months of the date the person vacates the real property or receives payment from the displacing agency under another provision of this chapter, whichever is later. The displacing agency shall determine whether a displacement described in this subsection has occurred. The additional payment shall include the following amounts:
   a.  If the person leases comparable real property, the difference between the average monthly amount of the lease of the comparable real property and the average monthly amount of the lease for the real property acquired by the displacing agency, multiplied by forty-two.
   b.  If the person purchases comparable real property to conduct the person’s business or operate the person’s farm, an amount calculated consistent with the provisions of subsection 1, paragraphs “a” and “c”.
   3.  All determinations to carry out this section shall be made in accordance with administrative rules adopted by the department.
    Sec. 15.  EFFECTIVE UPON ENACTMENT.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
    Sec. 16.  APPLICABILITY.  This division of this Act applies to programs or projects or condemnation proceedings pending or commenced on or after the effective date of this division of this Act.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the authority of acquiring agencies to use eminent domain and the procedures and compensation required for the use of eminent domain.
   Division I of the bill establishes a definition of “merchant line” for purposes of Code chapters 6A and 6B that is the same as defined in Code section 478.6A(1). The bill also adds merchant lines to the definition of “private development purposes”. Code section 6A.21 provides that the authority to condemn property for a public use, public purpose, or public improvement does not include the authority to condemn agricultural land for private development purposes unless the owner of the agricultural land consents to the condemnation. The bill also specifies under Code section 6A.21(2) that the limitation on the definition of public use, public purpose, or public improvement does apply to companies under the jurisdiction of the Iowa utilities board or to any other utility conferred the right by statute to condemn private property to the extent such purpose includes construction of merchant lines.
   Division I of the bill takes effect upon enactment and applies to projects or condemnation proceedings pending or commenced on or after the effective date of division I of the bill.
   Division II of the bill provides that for condemnation of property located in a county with a population of greater than 9,250 but less than 9,300, according to the 2010 federal decennial census, an acquiring agency shall not have the authority to condemn private property for the development or creation of a lake as a surface drinking water source unless the United States army corps of engineers has performed an engineering review of the project and approved all required permits and authorizations for completion of the project. The bill also requires, at the expense of the acquiring agency, a review and analysis of the proposed development or creation of a lake by a certified hydrologist upon receipt by the acquiring agency of a petition signed by not less than 25 percent of the affected property owners. The certified hydrologist is selected by a committee comprised of all affected property owners and a representative of the acquiring agency. 
   In addition to the analysis of surface drinking water capacity and the determination of the number of acres justified as necessary for a surface drinking water source by one or more licensed professional engineers, the bill provides that an additional independent review and analysis of such determinations shall be conducted, at the expense of the acquiring agency, by a licensed professional engineer upon receipt by the acquiring agency of a petition signed by not less than 25 percent of the affected property owners. The licensed professional engineer is selected by a committee comprised of all affected property owners and a representative of the acquiring agency.
   Division II of the bill takes effect upon enactment and applies to projects or condemnation proceedings pending or commenced on or after the effective date of division II of the bill.
   Current Code chapter 479B allows the Iowa utilities board to grant permits for the construction of hazardous liquid pipelines and grant eminent domain rights to pipeline companies to construct such pipelines. Division III of the bill establishes new Code section 479B.9A to require that in addition to any other requirements for granting a permit pursuant to Code chapter 479B, an application for a permit involving the taking of property under eminent domain will not be granted until the applicant obtains at least 75 percent of the parcels needed for the project through voluntary easements. If 75 percent of the parcels needed has not been obtained through voluntary easements within two years of filing the application, the board must reject the application. 
   Division III of the bill takes effect upon enactment and is applicable to applications for permits filed but not yet acted upon on the effective date of division III of the bill and to applications for permits filed on or after the effective date of division III of the bill.
   Division IV of the bill relates to the acquisition of real property by governmental entities by modifying criteria for dispossessing owners of property and authorizing payments to certain displaced persons operating a business or a farm operation.
   The bill amends Code section 6B.26 by adding business and farm operation to the list of types of property from which a landowner shall not be dispossessed under condemnation proceedings until the damages for the property have been finally determined and paid.
   The bill provides that, in addition to payments otherwise authorized by Code chapter 316, a displacing agency shall make a payment to a person who is displaced from the person’s place of business or farm operation if the displaced person owned the real property on which the business was conducted or where the farm operation was located for at least one year prior to the date of initiation of negotiations for the acquisition of the real property and if the displaced person purchases comparable replacement real property to conduct the displaced person’s business or farm operation within 18 months following the date the displaced person vacates the real property or receives payment from the displacing agency under another provision of Code chapter 316, whichever is later. The bill establishes the methodology for determining the amount of the payment based on certain specified costs incurred by the displaced person in acquiring comparable real property.
   The bill also provides for payments to a displaced person or a person who is displaced from the person’s place of business or farm operation as an indirect result of the acquisition of real property by the displacing agency if the person in whole or in part owns the business or farm operation, the person leased the real property upon which the business was conducted or where the farm operation was located for at least one year prior to the date of initiation of negotiations for the acquisition of the real property, and the person leases or purchases comparable replacement real property to conduct the displaced person’s business or farm operation within 18 months of the date the person vacates the real property or receives payment from the displacing agency under another provision of Code chapter 316, whichever is later. Under the bill, the displacing agency determines whether such a displacement from leased property has occurred pursuant to rules adopted by the department of transportation. The bill establishes the methodology for determining the amount of the payment based on certain specified costs incurred by the person in acquiring or leasing comparable real property.
   Division IV takes effect upon enactment and applies to projects or condemnation proceedings pending or commenced on or after the effective date of division IV of the bill.