ACCEPTED 14-15-00745-CV FOURTEENTH COURT OF APPEALS HOUSTON, TEXAS 10/28/2015 5:19:30 PM CHRISTOPHER PRINE CLERK NO. 14-15-00745-CV *** FILED IN IN THE COURT OF APPEALS 14th COURT OF APPEALS HOUSTON, TEXAS FOURTEENTH COURT OF APPEALS DISTRICT 10/28/2015 5:19:30 PM HOUSTON, TEXAS CHRISTOPHER A. PRINE Clerk *** CITY OF ROSENBERG, Appellant/Defendant v. THE STATE OF TEXAS Appellee/Plaintiff

On Appeal from the County Court at Law No. 2 Of Fort Bend County, Texas Trial Court Cause No. l 5-CCV-055144 Honorable Jeffrey A. McMeans, Presiding Judge

APPELLANT'S OPPOSED MOTION FOR EN BANC RECONSIDERATION DENTON NAVARRO ROCHA BERNAL HYDE & ZECH, P.C.

2500 W. William Cannon Drive, Suite 609 Austin, Texas 78745 ( 512) 279-643 l Phone (512) 279-6438 Facsimile George E. Hyde State Bar No. 45006157 SCOTT M. TSCHIRHART State Bar No. 24013655 ATTORNEYS FOR APPELLANT CITY OF ROSENBERG MAY IT PLEASE THE COURT: NOW COMES APPELLANT, the CITY OF ROSENBERG, (hereinafter "Appellant" and/or "the City") and files this Appellant's Opposed Motion for En Banc Reconsideration in accordance with the Texas Rules of Appellate Procedure ("TRAP").

INTRODUCTION By this motion for reconsideration en bane filed under Texas Rules of Appellate Procedure 49.1 and 49. 7, Appellant asks this Court to reconsider its decision to grant the Motion of the State of Texas to Dismiss Appeal for Want of Jurisdiction. See Opinion filed October 13, 2015.

Reconsideration en bane is appropriate in this case because, although the Court correctly identified this to be an issue of first impression in Texas Jurisprudence, the Court's ruling mistakenly concludes that the 2011 Legislative amendments to the Texas Property Code do not make the requirement that the State make a bona fide offer prior to commencement of condemnation proceedings jurisdictional. In fact, the Court incorrectly extended the Hubenak decision (Hubenak v. San Jacinto Gas Transmission Co., 141 S.W.3d 172 (Tex. 2004)) by applying it to statutory language that did not exist when Hubenak was decided. The City contends that the Texas Legislature intended to completely overhaul the condemnation practices in Texas and to make condemning entities follow the

prerequisites set forth in the Texas Property Code prior to initiating a condemnation lawsuit. The Court incorrectly concluded that the abatement remedy set forth in Texas Property Code section 21.047(d) is the sole remedy for the failure of the State to follow the mandatory prerequisites of the condemnation procedure. Moreover, the Court dismissed the City's appeal without giving the parties the opportunity to brief the issues. The City's briefing will establish that the Legislature was, in a string of bills dating back to the Hubenak decision, reacting directly to that decision.

The City should at the very least be afforded the opportunity to brief issues that the Court correctly indicates are issues of first impression under Texas jurisprudence.

Finally, the granting of Appellee's Motion to Dismiss for Want of Jurisdiction effectively deprives the City of its procedural due process rights and makes the 2011 amendments of the Texas Legislature a nullity.

For these reasons, Appellant urges the panel to reconsider its ruling based on the following arguments.

STATEMENT OF RECONSIDERATION POINTS Appellant requests reconsideration of the Court's ruling based on the following: A. The Court incorrectly concluded that the mandatory language used by the Legislature in the 2011 amendments to Chapter 21 of the Texas Property Code were not intended to be jurisdictional and abrogate the Hubenack decision.

B. The Court incorrectly extended Hubenack to apply to statutory language that the Legislature adopted to change the legislative scheme for condemnation set forth in Hubenack.

C. The Court incorrectly concluded that the abatement remedy set forth in Texas Property Code section 2 l.047(d) is the sole remedy for the failure of the State to follow the mandatory requisites of the condemnation procedure.

D. By granting Appellee's Motion to Dismiss for Want of Jurisdiction, without allowing briefing on the subject, the Court deprives the City of certain procedural due process rights that were intended by the Texas Legislature.

ARGUMENTS & AUTHORITIES A. The Court incorrectly concluded that the mandatory language used by the Legislature in the 2011 amendments to Chapter 21 of the Texas Property Code were not intended to be jurisdictional.

Page 3-4 of the Court's Opinion contains the conclusion that the 2011 amendments to Chapter 21 of the Texas Property Code were not intended to undermine the Hubenak analysis. As a result, the Court extended Hubenak to the Legislature's bona-fide-offer requirement. However, the plain language of the statute indicates that the Legislature wanted to change the way condemnations were conducted in Texas and the legislative history supports the argument that these amendments came about as a reaction to the Hubenak decision.

The Legislature used mandatory language to require a condemning entity to take certain steps prior to condemning property. The 2011 amendments from Senate Bill 18 included a new Section 21.0113: Sec. 21.0113. BONA FIDE OFFER REQUIRED. (a) An entity with eminent domain authority that wants to acquire real property for a public use must make a bona fide offer to acquire the property from the property owner voluntarily. (b) An entity with eminent domain authority has made a bona fide offer if: ( l) an initial offer is made in writing to a property owner; (2) a final offer is made in writing to the property owner; (3) the final offer is made on or after the 30th day after the date on which the entity makes a written initial offer to the property owner; (4) before making a final offer, the entity obtains a written appraisal from a certified appraiser of the value of the property being acquired and the damages, if any, to any of the property owner's remaining property; (5) the final offer is equal to or greater than the amount of the written appraisal obtained by the entity; (6) the following items are included with the final offer or have been previously provided to the owner by the entity: (A) a copy of the written appraisal; (B) a copy of the deed, easement, or other instrument conveying the property sought to be acquired; and (C) the landowner's bill of rights statement prescribed by Section 21.0112; and (7) the entity provides the property owner with at least 14 days to respond to the final offer and the property owner does not agree to the terms of the final offer within that period.

Added by Acts 2011, 82nd Leg., R.S., Ch. 81 (S.B. 18.), Sec. 8, eff.

September 1, 2011. (emphasis added) The Court was correct in its conclusion that this is a case of first impression under Texas jurisprudence as it does not appear that any other court has considered whether these provisions are jurisdictional. However, when considering the changes to Section 21.012, it is clear that the Legislature intended these provisions to be jurisdictional:

Sec. 21.012. CONDEMNATION PETITION. (a) If an entity with eminent domain authority wants to acquire real property for public use but is unable to agree with the owner of the property on the amount of damages, the entity may begin a condemnation proceeding by filing a petition in the proper court. (b) The petition must: ( 1) describe the property to be condemned; (2) state with specificity the public use for which the entity intends to acquire the property; (3) state the name of the owner of the property if the owner is known; (4) state that the entity and the property owner are unable to agree on the damages; (5) if applicable, state that the entity provided the property owner with the landowner's bill of rights statement in accordance with Section 21 .0 l l 2; and (6) state that the entity made a bona fide offer to acquire the property from the property owner voluntarily as provided by Section 21.0113. (c) An entity that files a petition under this section must provide a copy of the petition to the property owner by certified mail, return receipt requested.

Acts 1983, 68th Leg., p. 3498, Ch. 576, Sec. 1, eff. Jan. l, 1984.

Amended by: Acts 2007, 80th Leg., R.S ., Ch. 1201 (H.B. 1495), Sec. 4, eff. February 1, 2008. Acts 2011, 82nd Leg., R.S., Ch. 81 (S.B. 18), Sec. 9, eff. September 1, 2011.

The Texas Legislature intended the bona fide offer requirements of Sec. 21.0113 to provide a clear set of rules that a condemning entity must follow in order to determine whether the parties are unable to agree and those mandatory provisions must be complied with prior to filing suit. Otherwise the Legislature's actions in passing Senate Bill 18 had no effect on the condemnation process.

The requirement in Sec. 21.0 l 2(b )(6), that the condemning entity ''state that the entity made a bona fide offer to acquire the property from the property owner voluntarily as provided by Section 21.0113" is also instructive of the clear Legislative intent that the condemning entity could not bring an action without first complying with Section 21.0113. For example, it would be a violation of Texas Rule of Civil Procedure 13 to include a Sec. 21.0 l 2(b )(6) statement in a condemnation petition without actually having previously made the bona fide offer as mandated by Sec. 21.0113. See Tex. R. Civ. P. 13 ("Attorneys.. .who shall make statements in pleadings which they know to be groundless or false ... shall be guilty of contempt."). Moreover Rule 303 of the Texas Disciplinary Rules of Professional Conduct states in relevant part "A lawyer shall not knowingly . ..make a false statement of material fact or law to a tribunal." The Texas Legislature clearly intended that the Sec. 21.0 l 2(b)(6) be included in the condemnation, but that the lawyer who signed the pleading would be bound by both the Texas Rules of Civil Procedure and the Texas Disciplinary Rules of Professional Conduct to make certain that the bona fide offer was made prior to the institution of condemnation proceedings. The Texas Legislature would not have intended that attorneys who sign condemnation petitions would do so in violation of these rules.

The legislative history relating to Senate Bill 18 indicates that the Texas Legislature was reacting directly to the Hubenak decision in a series of enactments

culminating in Senate Bill 18. The House Research Organization, Interim News (May 17, 2010), a true and correct copy of which is attached as Exhibit "A" directly discusses Hubenak and the Legislature's reaction: Concerns about entities exercising the power of eminent domain providing fair initial offers for condemned property have led to recent attempts to require these entities to make "good-faith offers" at the beginning of the condemnation process and to establish meaningful sanctions when they do not. Supporters of a good-faith offer requirement point to the 2004 Texas Supreme Court decision in Hubenak v. San Jacinto Gas Transportation Company, 141S.W.3d172, claiming that case diminished the incentive for condemning entities to negotiate in good faith. That opinion resulted from a number of cases in which property owners claimed that condemning entities did not satisfy the requirement, under Property Code 21 .012, that the authorities were "unable" to agree with the owners on the amount of damages before beginning condemnation proceedings. Property owners argued that the requirement could not be met unless the condemning authorities established that they had engaged in "good- faith" negotiations with the owners before filing suit. The court found that the entities in Hubenak each had made a formal offer to purchase the properties and that this was sufficient to meet legal requirements to make an offer before filing suit.

Supporters of raising the standards for what constitutes a good- faith offer say that the current court interpretation of the law allows condemning entities to make low offers knowingly without facing the penalty of paying attorney' s fees and having to re-file a case as a consequence.....

The article then describes past legislative efforts, which included the bona-fide offer requirement that resulted in Section 21.0113: Past legislative efforts. Two previous bills that failed to be enacted would have established requirements for good-faith offers. HB 2006 in 2007 would have require an entity attempting to take a property to make a bona fide offer, defined as an offer that was based on a reasonably thorough investigation and an honest assessment of the amount of just compensation due to the landowner. It would have allowed a court that found a condemning entity did not make a bona fide offer to dismiss a condemnation suit and require the entity to make such an offer. SB 18 in 2009 would have required a condemning entity to make a bona fide offer meeting several criteria, including obtaining a certified appraisal no higher than the offer made....

See id. These provisions made it into Senate Bill 18 and the Legislature clearly intended to abrogate the Hubenack decision and put in place a more rigid procedure the condemnor must comply with before filing suit.

The City respectfully requests that the Court rehear and reconsider its decision to grant the State's Motion to Dismiss and allow briefing on these issues of first impression under Texas jurisprudence.

B. The Court's incorrectly extended Hubenack to apply to statutory language that the Legislature adopted to change the legislative scheme for condemnation set forth in Hubenack.

On page 4 of the Opinion, the Court correctly noted that the Hubenack court did not address whether the requirement of a bona fide offer is jurisdictional, and that the issue appears to be an issue of first impression in Texas jurisprudence. Then the Court, without additional discussion, concludes that the 2011 amendments to the Texas Property Code do not appear to have undermined the Hubenak analysis.

However, the Court reads too much into the Hubenak decision. It's true that Hubenak stands for the proposition that the requirements under the previous version of Texas Property Code§ 21.012 are mandatory but not jurisdictional. See Hubenak v. San Jacinto Gas Transmission Co., 141 S. W.3d 172, 183~84 (Tex. 2004 ).

However, it is also clear that under Hubenak, a landowner can waive its right to challenge whether the condemnor negotiated in good faith prior to filing the condemnation petition. See id. The Court seemed to indicate that all pre-suit requirements of condemnation actions could be waived by the landowner's failure to timely raise a challenge. See id. In the present case, the City did timely raise a challenge to the State's failure to comply with the pre-suit requirements. The City objected in writing to the State prior to the commencement of the suit and raised the issue in a plea to the jurisdiction after the suit was filed. A plea to the jurisdiction is the only appropriate procedural vehicle for the City to use to challenge the State's failure.

Moreover, as previously demonstrated, the Legislature clearly intended to address the perceived abuses under the Hubenack decision.

The City respectfully requests that the Court rehear and reconsider its decision to grant the State's Motion to Dismiss and allow briefing on these issues in light of the legislative history and the Hubenack court's indication that a landowner could waive all pre-suit requirements by failing to raise a timely challenge.

C. The Court incorrectly concluded that the abatement remedy set forth in Texas Property Code section 21.047(d) is the sole remedy for the failure of the State to follow the mandatory requisites of the condemnation procedure.

On Page 4 of the Opinion, the Court concluded that the Legislature provided an abatement remedy under Property Code Section 2 l .047(d) shows that the defect (the failure of the State to make a bona fide offer prior to commencing suit) is not jurisdictional. However, nothing in Chapter 21 of the Texas Property Code indicates that abatement is the sole remedy available to a landowner. The present case is in a different procedural posture than the Court considered in Hubenack. In Hubenack, the condemnation petitions were filed, the Special Commissioners had made their awards and the landowners timely appealed the awards, and there were opposing motions for summary judgment. See Hubenack, 141 S.W.3d at 176-177. The Court noted that there was no language in the previous Sec. 21.012 that made the "unable to agree" requirement jurisdictional. See id. at 180.

However, the 2011 amendments to Texas Property Code Sec. 21 .0113 and .012 were changed to add specific mandatory requirements that a condemning entity must follow prior to filing suit. This was a major departure from the previous version of21.012(b)(4) that simply stated that the condemnation petition must "state that the entity and the property owner are unable to agree on the damages." When these prerequisites are not met, the entity cannot maintain an action and a plea to the jurisdiction is the proper procedural vehicle to challenge the lawsuit.

The City respectfully requests that the Court rehear and reconsider its decision to grant the State's Motion to Dismiss and allow briefing on these issues in light of the specific changes the Legislative made to Texas Property Code Sec. 21 .0113 and .012 which added specific mandatory requirements that a condemning entity must

follow prior to filing suit and because the Legislature did not provide any changes to Chapter 21 of the Texas Property Code that evidence a legislative intent that abatement is the sole remedy available to a landowner.

D. By granting Appellee's Motion to Dismiss for Want of Jurisdiction, without allowing briefing on the subject, the Court deprives the City of certain procedural due process rights that were intended by the Texas Legislature.

The Texas Legislature clearly intended that the 2011 amendments to Sections 21.0113 and 21.012 of the Texas Property Code would provide procedural due process rights to landowners. The Legislature changed the requirements under fonner Sec. 21.012(b)(4) that simply required the condemnation petition to state that "the entity and the property owner are unable to agree on the damages." To specific actions that must be taken before the condemnation petition can be filed and a certification under Texas Rule of Civil Procedure 13 that the provisions contained in Sec. 21.0113 have been met. When the State failed to comply with Sec. 21.0113, a plea to the jurisdiction is the appropriate vehicle to test the jurisdiction of the trial court.

"The fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner." Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). "Procedural due process considers not the justice of a deprivation, but only the means by which the deprivation was effected." Caine v. Hardy, 943 F.2d 1406, 1411 (5 1h Cir. 1991).

The injury that stems from a denial of due process is not the liberty or property that was taken from the litigant, but the fact that it was taken without sufficient process. See Nasierowski Bros. Inv. Co. v. City of Sterling Heights, 949 F.2d 890, 894 (61h Cir. 1991 ). A due process injury is complete when process is denied.

Zinermon v. Burch, 498 U.S. 113, 125, 110 S.Ct. 975, l 08 L.Ed.2d l 00 (1990).

If a landowner cannot challenge whether the State has complied with the mandatory pre-suit provisions of Sect. 21.0113 and 21.012 immediately after suit is filed, the landowner is deprived of its ability to effectively challenge the State at all. The State will be able to ignore all of the mandatory pre-suit provisions contained in Sec. 21.0113 and 21.012 with impunity. The State's lawyers will be allowed to sign condemnation petitions in direct violation of Texas Rule of Civil Procedure 13 with no meaningful consequences. Moreover, the courts of the State of Texas will be able to ignore the directives of the Texas Legislature set forth in Senate Bill 18.

The City respectfully requests that the Court rehear and reconsider its decision to grant the State's Motion to Dismiss and allow briefing on these issues in order to give effect to the Texas Legislature's 2011 amendments to the Texas Property Code and in order to preserve the procedural due process rights of Texas landowners.

CONCLUSION The City of Rosenberg respectfully requests that the Court rehear and reconsider its decision to grant the State's Motion to Dismiss and allow the appeal of the City's Plea to the Jurisdiction to proceed. Accordingly, Appellant asks this Court to reconsider its decision to grant the Motion ofthe State of Texas to Dismiss Appealfor Want ofJurisdiction, see Opinion filed October 13, 2015, and reverse the decision to grant the State's Motion.

PRAYER WHEREFORE PREMISES CONSIDERED, Appellant prays that this Court reconsider en bane its decision to grant the Motion of the State of Texas to Dismiss Appeal for Want of Jurisdiction and, after filings of briefs and oral arguments, hold that Appellant is entitled to dismissal of the condemnation lawsuit in the trial court, and for such other relief to which Appellant may show itself to be entitled.

SIGNED this 281h day of October, 2015.

t4 Respectfully submitted, DENTON NAVARRO ROCHA BERNAL HYDE & ZECH, P.C.

2500 W. William Cannon Drive, Suite 609 Austin, Texas 78745 512/279-6431 512/279-6438 (Facsimile) [email protected] [email protected]

By: State Bar No. 45006157 SCOTT M. TSCHIRHART State Bar No. 24013655 ATTORNEYS FOR APPELLANT CITY OF ROSENBERG

CERTIFICATE OF CONFERENCE Pursuant to Rule I 0. I (a)(5) of the Rules of Appellate Procedure, the undersigned certifies that attempts to confer with counsel for Appellee The State of Texas was made on Octoz pellant is filing this motion as opposed.

GEORGE E. HYDE SCOTT M. TSCHIRHART

CERTIFICATE OF COMPLIANCE In compliance with Tex. R. App. P. 9.4(i)(3), this is to certify that the Appellants' Motion for En Banc Reconsideration contains 3,320 words, which does not include the caption, signature, proof o ) service, certificate of conference, and certificate of compliance.

GEORGE .HYDE SCOTT M. TSCHIRHART CERTIFICATE OF SERVICE This is to certify that a true and correct copy of the foregoing instrument has been served upon the below named individuals as indicated, and according to the Texas Rules of Appellant Procedure and/or via electronic notification on this the 281h day of October, 2015: Glorieni Azeredo via electronic notification Susan Demaraisa Bonnen Assistant Attorney General Office of the Attorney General of Texas Transportation Division P.O. Box 12548 Austin, Texas 78711-2548

GEORGE E. HYDE SCOTT M. TSCHIRHART

HOUSE RESEARCH ORGANIZATION Texas House of Representatives Interim News Number81-4 May 17, 2010

Legislature may revisit eminent domain issues in next regular session The Tc:<as Legislature may Some issues that continue to curbed eminent domain abuse m rcvisil iss111.:s imolving eminent generate debutc 1nch11.k the factors the stale and tlwt continuing lo domain l;iw tlunng ils 2011 regular that may he considcrcJ in :twardinlf rl!striet 1he cxcrcist: or 1his authority session. Eminent donmin is thl! cumpcnsalion for taken land, how hampc:rs i1s lcgitimLilc mul neccsc;ary authority of a government or private to ensure contkmning authorities use. entity to take pnvatc property for a negotiate in good rmth. rdocalinn public use upon providmg adequate assistanc\! for property owners. and Since enacting a law restricting compensation to the property the c.'ttcnt to which eminent tlonmin the laki11g of private properly for owner. This authority is regulated authority should be used for slum cconomk de\ elopmcnl purposes in by the Tex.as Constitulion and stale and blight clcnrance. Those who 2005, l:1wmakcrs have conshh:n:ll statutes. l>rcvious discussions of oppose furthcr revisions s;1y recent a rangi: or prnpo~cd re\'isions tu cmim:nt domain in Texas centered dmnges in the l;1w have cffc:ctivcly un whether current luw adequately (See eminent domain, page 2) protects property owners from unfair and unnecessary takings.

Property Coe.le. ch. 21 govcms Veterans mental health courts eminent domain (condemnation) proceedings an<l pro,·i1h:s a tlm:c- open in Texas step process for contesting the Last month, D<tllas County became the third county in Tc;o.;as 10 orl!n a t.ik ing of prupcrty undl!r cmincll1 veterans mental hc;ilth court. A hill allowing counties to create these couns, domain authority. First. an entity SB 1940 by Van de Puuc. was cnactctl by •he Tc:<as Lcgislalurc during the with condcmm1tion authority that :?009 regular session. I fan·is County opcnctl the lirst veterans court in Texas is unable to agree wi1h a property in December, and Tarrant County opened the second last mornh. owner on the amount or damages llrnt should he awarJcd for a Veterans mcntul heallh com1s arc rrograms, usually operated within properly may file suit in llislrict an existing trial court, that integrate mental he>tlth and drug treatment for court or county court-ai~law in the certain mililary veter.ins with the processing of crnninal cases in whkh the county where the propcny is lm:atcd. veterans arc dc!Cn<lants. Veterans mental hc<ilth courts rely on supcr,·isory ,\presiding judgt! then appoints and treatment mm.Ids de\·dopcd by other mental health and dmg courts in three special commissioners who Texas :ml.I aroun<l lhc rnunlry. In all such courts. 1f :.i dl.'fontlant successfully reside in the county to award completes treatment anJ other condi1ions sci by the judge. lhc court may damages h&tsc<l on evidence <lismiss the dmrgcs against the defendant. submi11ed at a hearing. Finally, ir ..:llhcr party appeals the awanl One or 1hc distini;uishing traits or veterans mental hc.ilth couns in suggcsh:d by the commissioners, the Texas and nationwide is the inclusion of mentoring scss1011s with other case is submillcd to the coun with veteran~ . These mentors help vc1cr.111s transition to civ1lian Ii fo and navi~.1tc jurisdiction over 1hc case. (See veterans courts, page 9) Exhibit A ·page 2 Interim News

Eminent domain. from page 1 aJctiuatcly dl'linc ·'public nsc" nr sullkk111ly hmtl the use ol"cmincnl domain in slum and blighted areas. the c:xcrcisc of eminent domain in Texas. In '.!007, Under the Texas Conslitution, eminent domain authonty the governur vetoed one bill, HB 2000 by Woolley. may he excn.:1scd only whi:n lanJ is bdng ta~cn for a that would ha,·c made .1 number of cha11gcs lo 1he puhlic use. but the definition of ·'public use:"' has hc:cn use of i:mincnt domain. i11d11di11g dclined lnrgcly by the co1111s. narrowint; the uses for which land may (Jc 1akcn and 1cv1sing 1hc In Novcmhi:r 2001J, Vlllcrs prOl:csscs that guvcm the taking of Two laws <.'mu.:ted rece11t~v lwi:I! .wught tu re.i;tricl thc :ippro\'cd Proposition 11 (I IJR 14 privalc properly. Anothl!r bill. SB by Co11c:). amending the: Tcx<1s by Estes. whidt included similar permissihle uses '?I emi11e11t dnmai11 a111ltority. Constitulion h> rcs1ric1 the use provisions, was appnn-ctl hy the ur eminent domain aulhority Scnmc but died in 1hc I lou:;c lluring lo a l<1king or other dmm.1gc the rc~ulor session in 2009. Voters tu a property rrimarily for the approved a constimLional amendment 111 .!009 that O\\llCl'ship, usc, and enjoyment hy ce11ain entities. Those m1rrowcll the purposes for wluch propc11y may be taken. cmitics im:ludc the stale. a local government. an entity with condcrmmtion authority under slate l:1w. or !he public al k1rgc. The amendment disallowed the laking Restricting uses of eminent domain of property for tmnsfor to <i pri\'atc cnlily p1ima1·ily for ct:onomk development or to cnlmncc tax revcnuc.

Two laws cnacicd recently have sought lo restrict It also required a two-lhirds vole of ;ill the members 1hc ~rmissihh: uses of cmincm domain authority. elected to cJch hou:;c for the Legislature lo enact a fow A law cnacrcd in 1005, SB 7 by fanek. hmi1s the gr.111ling the power of eminent domain to an entity. circumst:rnccs under which a comlemnmg ;iuthority may effective .lanllat)' I. :?O 10. take land for crnnom1c dcvdopmcnl. SB 7 prohibits a taking that: No formal legal t:hallcn~es to :m eminent dumain proceeding based on the recently amended public use • conters a benefit on a pa11icular privmc p<1rty clause ilrc currently pending. Some say that further through the use uf the propeny: limiting pennissibk public uses of cmimml domain • is for a puhhc u-ic 1h:ll is a pretext to conli:r a in statute may be necessary in order to Jcfine key pri\'alc bencfi1 l>n a p.1rticular privotc parry: 01· term~ mu.I n:spoml to putcnti;1I court interpretations of • is for economic development purpoc;cs, unless language! in the Constitution . th.: llc\.clopmcnl is a 'iccoudary purpose rcsulling from urban renewal aclivitics lo Slum and blight eliminate ;11lirm.1tivc ham1s from slums or hlighlcd areas. The a111hority to acquire property for economic dcvclupmcnt, including the removal ur slum mid blight.

The LcgislJturc cnadc<l SB 7 in response 10 lhc n:nmins a subject or con1rovc1sy. The Legisklture U.S. Supreme Court's decision in A.'l'ln '" Ci~1· of'Nc1r has recently dcbatcu whether to restrict 1hc use of J.mu/011, 545 U.S. -469 (2005). which held that use of' emincnl llumain mrthority to acquire pmfh!rty idcntilic<l eminent domain for economic de\ clnpmcnc purposes .1s ··,&urns.. ur '"blighted areas." Proposition I l. the Wils pc1missibk lnu llrnt stale.'> LOllld rcs1rk1 such constitutional amendment adopted in 2009. :11lows :1 aulhorily. taking of property 10 eliminate hligh1 on a partkular pa1ccl only, rather than a lar~er area tlcsignntcd as Public use ·'slum·· or ·'hlightet.I.'" AJvocatcs of reigning in eminent Jom:un powl·r The Texas Urban Renewal Law, cnach!ll in 1%7. said SR 7, whik :1 marked imprnvcmenl. did not ;illows local authorities lo exercise cmincnl domain 111 May 17, 2010 page 3

acquire pro(lcrty within an urhan renewal plan :1re;1 1ha1 residents and businesses for enterprises th;u gener;11c a munit:ijlalily d.:signatcs as a shun or hligh11.:d. Propc11y more tax revenue. may he condemned 111 a section of a dcsigm11cd urban rcncwal area when: the municipality has dctcrminctl lhat Opponents of 1cstric1ing the use of cmine111 domain al lc;ist 50 pcn:enl of stn11.:l11rcs arc Jilapid;1tcd mul show for slum and blighl say proposed limit-; woulJ crcah: other ch:1rac1cristics urhlight. ubstadcs thal cffcclivcly climinall! a municipality's aulhority to <ll!si~nalc a hlightetl area and promote urban In W07 ;md 2009. 1hc Legisluturc considered n.:ncwal through eminent donmin. Thl!y say this would revising lhc authorily 10 crnulcmn prnpc11y in so- diminish thdr ability 10 improve the qunlily or life nf t.·allcJ blighted or slum arcns, hut none of llu: rropnscd rcsid!!nL'> who need lhc mos! assistance. s1a1utu1y revisions hccame l;1w. HB 3057 by C1llcgari in 2007 :mtl SB 18 by C!sles in 1009 would ha\'c prohihill:d a municipality li'otn c~ercising powers under Rights of property owners the Urbm1 Renewal L:1w unless its govcmini; hndy dctcnnincd that c;1ch unil or prnperiy in an area met lhe Artother is.,uc centers on the rights of property definition of "hligh1:· Both bills would have rcquircJ owners whose l:mtl is t:1kcn umlcr eminent domain wrillen notice to pmpc11y owners before :1 blighted area authority. was designated and would have allowed a property In b~ dcsignaccd as hligh1cd only if the owner took no MB 2006. which Go\'. P!!ny v..:10..:tl in :!OU?, ant.I SB reasonable measures to remedy haianlous condit10ns. 1R. which was approved by the Senate but died in the A municipalily wishing 10 exercise eminent domain I louse in 2009, would h:l\'c e~pandcd compcnsa1ion authority in an urban renewal area nol only would have for property uwncrs, rcl1uin:d condemning l!ntitics to had to determine that each property in the area met the nqmtialc in ··gootl faith," and allowed properly owners dclini1ion of blighted - also a provision of Prnposition lu rc:purchasc 1akl!n properly 1ha1 had not been put lo a . the ronstitutional amendment approved by voters puhlic U!>C within I0 years. in 1009 - but also woulJ have had lo n:afiinn the designation on "" ongoing hasii;. Compensation for access to transportation UnJi:.- Prupu~it1011 11, cunJcmnation for u public Th!! fa.:tors thal may be cunsidcrcd in awar<ling use includes a laking intended to eliminate blight on ;1 t:ompcnsalion 10 a property owner fodng eomlcmnation partkular parcel only. h mokes no allowances for taking ha\'!! ll\!cn a subject of ongoing dcbalc. State law allows property due lo the conditions of owners of property subjccl imrmundmg propc11ics. calling to cmincm domain to seek into question the eonstillllionality The jaclOr.'i that may he cousidercd in compensation for their propcny of provision.; of the Urban mmrdi11g compensaliou lo a property in court. In ddenninmg the Renc\\'al Law that authorize this m1•m:1)i1ci11g co11dem11atio11 hal'e amount of rompcn.sation, the practice. bc.•t.w a .'Wl?iect <?{011goi11g debate. coun may consider cc:rtain evidence on the v:1luc of the Supportel's of restricting property being comJemncd :md the use of eminent domain for ncl dam:1gcs tu any remaining slum and blight say current law nllows munkip;ililics property nut taken. A Jlarli<:ular focus of debate has to seize the properties of est:iblishcd rc~idcnl~ and hccn whether lo allow damages for the impact of businesspcorlc based on a qucstionahk designation diminished access to transpol1ation on the remaining of their property as .. blighrcd ... This oflcn ;1rbitrary property when a porlion of Jlropcrty is lat.en. designation. 1hcy say. undermines ind1,,i<lual properly rights lhrough an overly b1oad dclini1ion of :wccptabk Di1•crsi1111 t~{tm/fic:. In a key Tc.\as Supreme Comt property maintenance and appcarnnce. This can be a case in l'N:l, Stare of u•w\· 1 Schmidt, X67 S.W.2d ml!ans o I" tlispl:icing working da!ls and middle class 7<19. two propc11y owners in Au!>lin filed for additional page4 Interim News

d.1111.1g.cs as J rl!sult of a St.lie Mighw.1y 183 con-.1ruct1on l11ghway from thc rcmainini:t rrorerty due 10" :-.talc pruJCCt th:1t lllVOIVCU dcvat111g lane.; Jm) t.1kmg 'il!VCtl highway rrnicct. lo the extent 1ha1 it alfoth!d chc li:ct or their pmpe1ty for right or way. The court found propcny's market 'aluc. The bill abo would have that the l<tnd 1)\\'llCTS, a pt)rtlOll ofwho'\c pmpcrty dchncd m:.rkcc \ Jluc as 1hc price a pro1lcr1y would hring was 1akl.'n for wad cxpansil)n, were not cntitlc<l. whc.:n sold hy a'' illing sdlcr to a willing buyer. SD under Property <...oJc :!. I 04'.?(c). lo compensation for 11( considered m 2009. would ha\'c allo\\ed C.:\•1dc11<.:c diminishcJ propl!rly \'aluc rcsulling fiom a tlivcrshm on a matcri:1l 1111paim1cnt or direct access onto or off uf 1mfflc. increasL·<l circuity ot' trn\cl to the propl.!rty, of the rcm:uning properly to the c.\tcnt that it tiffcctcd rcduccJ v1s1bility lo passersby, or incom cnkncc from the pmpcr1y's market \•aluc. It wuuh.1 not h.m: allowcd cnn-;truction thal wus shJrcd in common with the considemtion ol' circuity of tra\•d nr c.Jh er'iion of tral'fk g~ncr•1l commumty. that w.is common to other propcnics. upholdinl,! the lc!,:;11 dishnc11on identified in Sdm1it/1.

Dimini.d1e1/ 11r impuiretl UL't'I!\'.\'. In May ~009, in Staff! o/'Tl.!.r11.,· 1~ Bri~tvl liotd A.n,t Co. 293 S.W.3tl 170 In vetoing I fB 200(l in ::!007, Gov. Perry sa1J (. 2009). ;i hotel in Sm1 Amonio that lost a portion or its allow111g consiJcrnt ion of c\'idcncc on JimmishcJ property for ii rmlll expansion c;ought dmnagcs for loss access and other dmna!:!CS lo a landowner's remaining or :1 driveway anJ lcmporary prupc11y <luc Lo the exercise of los'> of parking spaces due Ill cmincnt domain \\oul<l result construction O\erruling rhe fo·o bills reu.!11tfr debated in Texas in unacccplahlc higher cosls lo <1ppclla1c cmut in S:in J\nhmio, u·ould hm:e red ~·ed the! /etc/ors that taxpayer!'. The governor said lhc Supreme Court found thal the m<~v b1.~ considered ;,, deter111i11i11g the change woulJ have .1ddcd damagcs cited hy the hotel \\ere tire m/uc• ofproperty tuken 1hror1glt more than SI billion in cxll a not compl!nsablc under Tc.xas eminent domai11. costs to ta:\payers by creating a law hccm1se 1casunablc access new category ,,f damages .1f!cr to the rrop1my remained anti the property uw11c1-s :ilrcady had rcJuccd access cited by the hold did not rise to the level received fair nrnrkct v:1luc for taken l:in<l. Requiring of a "material and substantial" impainncnl. large payments for properties that continued to have :11:cl!ss to trnusporlation that \\.-;1s only diminished, but In 200X. the Tcxas Supreme Cou1t in Swu: <f Tt.•.wrs not climim1tcd. would have made many key public 1: Dml'l1utr, 'l<,7 S.W.Jd 875 (WO~). haJ found tlrnl improwments prohinitively expensive, he said. rcgardlcss nl' whether the loss of access to the.: abutting major highway ch;111ged th..: remainder prnpcny·s C'titics of chc veto of 1113 200{, said the rights or "highest aml hcsl use" from commercial lo residential Tcx•ms subject to eminent domain would have been and 1hcrcby diminished its vuluc. thal did not constitute cnlrnnccd by allowing foir payment for dcmunstr.iblc a "material and substantial .. impainncnt hccause access damages to rrnpcrty. The bill would have clarilictl the lo other public roatls remained. rnngc of acceptable: damag..:s chat could he considered ;mc.J would have accm111tcd fur 1hc actual impnct of /'tut legi.~·lutirc cffom" Two bills recently dcl:lalctl takings on remaining prorcrty. which woul,t promote in Tcxas would have rcvisell thc factors that may be fair ncgotia1ions from the 1)Ulsd. This. cri1ics said, considered in dctenninin~ thl! v:1luc ur property taken would h;1vc reduced excessive litigation that nltcu through eminent domain. The bills woulJ lmve :11lowed rcsulH when condcmnini; au1horitics make minimal evidence of Ifie impact un the mcirkcl value of remaining olTers basctl on a narrow range of factors .il'focli11g prupcny When :JCCl.!SS WilS diminishcd or impaired. mnrkct v.1luc. Cri1ics of the Vl.!lo said the bill would have rcsl\1re<l balance tu an unfair proct.~s that gives HB 2006, cnnsitlcrcd in 2007, would have rcquin:J advniitagl.'s to condemning authorities. and it would thal. for the purp11sc or determining cumpcns:1tio11, have done so witlhlut :my knuwn cost having hccn evidence he considered on diminished access to ;i ic.Jcntilicd by lhc Lcgislativ1.: Budget Board.

May 17, 2010 page 5

Right lo repurchase landowner lo rcl·civc any appri:caalion m v.1lm: •u:crucd between the time the property was comkmncd and \\hen Properly o\\ ncrs ha\'e sought autho1·ity to rcpurcli.1sc it w:is rcpun.:hascJ by the l;mdowner. prnpcity .111he unginal piicc lhcy were paiJ by a condemning uuthority when their funner 1m1pcrty is 1101 Suppol1er.; of allowing propc1 ly owner' In uscJ ;1flcr a ccnain pcrioJ for the public use for which rcpurdmse thdr properly m 1he llnginal price s;1id it it wui. taken. Current law allows a properly owner lo would crc:1tl! a disincenlivc again~t lhc !>peculativ~ rcpun:has~ land wkcn through eminent domain for a exercise of eminent domain ;1uthority by condemning public use thal 1s cancdcJ bdun: the IOth anniversary entities Comknming cntilks would he strongly of the dale the rrorcrty \\'JS at:ljlllrcJ. The rosSCS!>ing discouraged from acquiring land through eminent governmental cnlily mu:;t oiler 10 sell the prnpcrty lo lhc <lomain for which they <lit.I not ha\•c immediate plans. pre\'1ous owner or lhc owner's hdrs for the fair market fakings carrh~d out on a spccul:1li\·c b:i'>is dcpmc value of the 1>mpc11y al the lime the public use was owners of the l'uturc valm: of the prnpcrty. and the canceled, nut ;U the original price paiu by the cntuy. option to rcpurch;isc at the original pnce woulJ help rcctily this grievance.

To cst:tbli~h the constitutional authority for the 1ight of repurclmsc ;11 the original price paiJ. voters approved Opponents of allowmg property owners to Prupo.;irion 7 in 2007 (MJR 30 by Jackson), authorizing n:pun.:hasc !heir property at the original price govcrnmcnt;il entities lo sell land t:1ken through eminent said it would allow '·double recovery" for digiblc domain back to the t<.mncr ll\Vncr, the owncr·s heirs. rropcrly owners who had undcrgoni: cmincnl dom<1in or olhcr succL'SS~lrs, m 1hc prit:c the cntuy paid when proceedings. This would confer a wimlfrill on property acquiring the property if: owners who were compensatccJ adcquatdy fur lhe original taking. lhcy -.a1J. An own..:r wh\l was cliy1blc tu • the public use for which the property was rcpurdrni;e at the price originally paid could accrue all acquired has been canceled: lhl! l!lJUity from appreciation of the value of the prop\!11y • no actuul pmgrc~s has h~cn made tow;irJ the .;mcc the lime of the original laking without having to public use during :i prcscrib.:<l period of time; or pay pmpcrty laxes. maintenance expenses. and other • the propcny is unnecessary for the puhlk use. rnsls nonnally irn.:urrcJ as part of propcr1y ownership.

A cons11tu11onal :11ncndmcnt was rc~1uiret.I 10 m·emdc Good-faith offers the prohibition ;1g.1ins1 a governmental cnllty granting anything uf vi\h11: 10 an indh·idual or corporntiun unless Concerns about cnlitic-; C"<cn:1i.ing the power otherwise spcdficll m the Cunstitulion. or ..:m111cnt tlomatn prm idmg ltlir 111i1i.1l offcp, fur conllcnme<l properly Ii.I\ e led to rci.:cnt allcmpls to I IB 2006, whkh \Vas vetoed hy the ~n\·cnmr in require these c11tit1c~ to make ··gooJ-fa1th offers•· m the 2007, and SB IS. which died in the I louse in 2009. or beginning lhc cuntlemnallon rrnccss aml lo cs1ahlish included " pw\.'ision th.it would ha\'c implemented the me:mingli.tl sanctions when they do nol. St1pporte1s of cou~tiluti1lllal amcn<lmi:nt hy allowing. a 1>mperly owner a gunJ-faith offer 1cquircmcnt roi111 to the 2004 Tc~as whose lanJ was acquircll for a public use that has since Supn.•mc Courl 1lcc1s1on in / lulll'1111k 1 Sa11 .Im i11to Uo.; been cancelled or failed lo pwgress to rcpun:hasc their Trmr.wri.\'.\"Ulll Cv111pm11. 141 S W.3d 172. c..la1ming that property at the original price the conc.kmning entity cusc d1mmislml the 111ccnti\ c ltw w11Jcm11111g cn111ic~ paid. Only lhc origin:ll owners and their heirs could lo negotiate 111 good foith. Thal opinion rc,ulh:d from a have repurchased the property. The right ol repurchase number ol 1. 1);c-; 111 \\ hil:h property own\!1·s claim~d that wnulcJ have ~·r1llicd if'lhc rublic u.;c for lhe properly contlcmnmg entitles did not satisfy the rcquir~menl, were cancdcd or the governmental entity failed to begin unJcr Prnpl!t'lY Code 21 012. th.it lhc authorllh!s operation or ~onslruction t'I' the proJCl.I within IO yc;m;. were "1111ahk" lo :igr\!c wi1h owner-. on 1h1.· mnounl or If such legislation \\ere cn11cteJ. 1t would ;1llow the damage' bcfon.· bcginmng condcrm1;11ion prrn:c1:d111g-. page 6 Interim News

Prupl!rty owners ;irg.ucd 1he rcquirl!mcnt could no1 Some h,1, c propo~ed mca~uring the inilial he met unkss contlcmnmg autlmntcs cswbHshcd that olfor ag;unst lhc linal award dctcnnncd by spcd;il chey had cng;igctl in "good-la1th'. ncgotiationi; wi1h comnusswncrs ;iftcr court pmcccding'\. They -;ay the the owners hcfon: tiling q11t. rhc mun ltllllhl lhat the mere c:dstcncc of an apprnisal docs not ensure a fair entities 111 I luhcnak i:;1ch h..iJ m.1dc a formal offer to offer. as apprnisals may \'ary widely bascJ on th<.: factors purcha~c the propi:11ics and 1h.1t 1h1s was sullicicnl to includctl in dt:tenmmng market \'alui.: Supporters ol' .1 mct:t lcg:•I ri:t1uirc1m:nb lo make an olfor llt.!fore filing a provision to measure 1hi: ini1iul oiler against the final .;uit. aw;1rd 'ay Che final offer should not \,try hy more than ;1 certain percent from the initial oiler. perha1ls 15 OI' 20 Suppmicrs of raising 1hi.: ~t.mdards for what p!!rccnt. Initial otli:rs murl! than 15 ur 20 rcrccnt lower coit..;1i1u1cs a )J.lKld-foith offer say that 1he current court limn a lim1I judgment should be primu /itch: evidence of in11.·rrm:1a1i0n of tl\c law allow-; comkmmng cnli11cs Lo ba<l foith. Supportcl'S of such a provbion say ;1 strong, inakc low olkrs k1wwingly w11hout focmg the penalty dcmons1r.1bli: meac;urc such :1s a minimal variance of paying allorm:y 's foe!> an<l havmg to r~-lile a cJsc percent is lhl! only tnu: means uf ensuring condemning as a cunse4ucncc. Suppurlers say much expense ;m<l cntiti~s m:1kl! guod-failh ulli:rs upfronl. Jlrm·1s1ons 1hat hardship coulJ be a\'oide<l if condemning authorities cnn he minimally saci.stil!d on paper hy ensuring 1.:ertain made :1 fair offer for a pmpel'ly upfront. Many property ad111111islr:11iw requirements arc met do lilllc to ensure a owuers acccJll inilial offcrs hccausc they tear the fair illllial oiler. towering li:gal l'Cl!s, time, and personal hardship that attend lighting for a foir award in court. An owner who Opponents of a ~ood-faith offer re<1uircme11l ba..;cd is offered $2.llUO an acre for land that has a market on rite "ariancc between inicial Jnd fim1l offers say such \'aluc of $:\,000 an acre, for instance. may concludc that a provision 1s too subjective :mJ expects condemning the diffm:nce is not worth a prntrnde<l lcgal light. authorities to prcdicl u co1111's behavior. They say 11 is impossible It) predict how th..: special commissioners Pa.w ll:.~i..,./11tfri: cjftn·ts Two prcvmus hill-; 1ha1 foikd appoin1cJ by a court might dccuJc" partkular case A to be cm1~1c<l would have c:;tahl1shc<l rcqum.:111cnts condemning entity shoulJ not he held ai:count;1ble for for gm1d-fo1th oilers. I 113 2006 in 2007 \\ 1H1ld have not predicting the exact market value of a property in a rcqull'cd an entuy a111:mpti11i; tu In!...: a propcny lo make Cllllle.\l of imperfect information. a huna liJc offer. defined as .111 offer that w11s b.t!-cJ on a rca'iun:1bly 1hurough ill\c.;t1gatllln .lJHI an hQnc~I assc:;smcnt QI the .imount of 1us1 cum111:11sation due to Eminent domain process the f;m<lown..:r. It would ha\ c .11lowcJ a court 1h.11 found :1 comlcmnmg cniity tli<l 1101 m:1kc a bona tiuc ullC:r h> Lawmakcrs lm\'e llcbatcJ several revisions to the dismi's .1 L'undcmncilton suit and require the entity lo process for exercising eminent domain aulhorily in m:tl-.:c such an offer. SA 18 111 ~OO•> wuul<l havi: required recent years. including when an entity must disdos\! iL-; a o:unucmnin~ enLity to make :1 hnna fide oner meeting aulhl>ri1y anti intention Co take a properly. wh-:ther to scvcrnl cri1c1 ia. including obtaining a certified appraisal require conucmning nu1hori1ics 10 provide relocation no higher than the offer m.1dc. A courl finding that .1ssist;im:c to Ji~pl:1ceJ property owners, nn<l lltc such an offer h;1d not been made could have required grallling of st::uutory authori1y to use the power of a condemning entity 10 pay costs and reasonable emincnt domain. Supporters of ch:inging 1hc process attorney's foes im:urrcd by the property own~r directly say propc11y owners often an: overwhelmed hy the related to the failure to make a bona fide ofter. complexity of cmincnl domain proceeding" and unaware of I heir nghls.

Disti11g11i:;lting .~mul·fnit/1 1>jfe r.f. Recent Jchatc on good-failh oilers h:ts centered on how 10 discinguish Disclosure of intent good-faith oll\!rs from those aimed :'It coercing property owners mto settling on :111 unfair r rkc to avoid lcg;il Recent lcgisltlliun lws inn>lvcd changes to notice :111J tees and hassles. thc Jisdosul'c llf mtcnt re11uircmcnls for toking properly.

HOUSE RESEARCH ORGANIZATION Exhibit A May 17, 2010 page 7

r IB 14CJ5 by Callegari. enacted in 2007. rcqu1rcc; pnwisi(ln tn an offer or agrcemen1 h> possi:ss propclly. .m cn111y w11h eminent Jom.iin authot ity 10 prO\· Ilk ,1 The.: 1111\:nl wa.; to rrcv-.:nt such entiries from keeping ki:y landowner's bill of righ1s to a properly ownc:r bc:forc mformation. such :1s ~m ;ippraisal. from pmpcny owners initial ncgollallons lo aClfuirc property. ;\c. required and other mtcrc'itcd part ks. ·nic.:y also woul1I havi.: by 1hc law. lhc: Allorncy Gcnc:r:1rs Ollicc draftc:tl 1hc n:<1uircd an i:ntily lhat was not subject lo upc.:n records l111ulowncr·s lull of rights tu noltly properly owner~ law.; bur w.1s m11hurizctl to c.<tcrcisc cmincnl domain, or 1he1r rig.hi'\ in eminent <lumain prncccdings under such as a pri\·alc u11li1y, IO aJhc:rc lo open lcrnrds lav.s s1,11e law. induJing the right lo" hearing .111J to arpcal rcl:ucd to i.:onllc.:11111:11 ion proc.:c.:dings if rccon.ls were 1hc offer made lor the prorcrly. The hill of riglus 1s requi:stcd by an ullc1:ti:c.J propc.:rty owner. The bills •lW11lable onlme ;1t ht11J.//\•;ww.oag.statc.1x.us ·•!!en!..V/ would have allo\\cd n court to award a pc.:rson who did la11downcrs.sh1ml. In :?OOl), the Legislature followed not rccc.:1w rcqucc;lcd documents reasonable attorney's up with I IB 2685 by Callcg.iri. winch ~pedficd 1ha1 an foes lo be paid by an entity lhal refused to 1irodm:c the entity must provide a t:tlflY of the: bill of righls al least requested mfonn:ttion. .;c\'en 1foys h..:forc making a flnal o!Ti:r 10 purchase ;a landowncr·s pmpc11y. Relocation assistance HB 2006 m 2007 and SB IX in 2009. which wen: Tht: Lcgi,l.tturc ;iJso has considered proposals to 1101 c11;11.:tcd. \\ uulc.J ha\ c pmhibtlcd an entity 'ic:ckmg rc.:quirc :1s,.1s1ancc for pc.:oplc tlisplaccJ hy a taking of lo ac4uin: property from including a conlidl!ntmlily propc.:ny. The li!dcral Uni form Relocation 1\ssistancc

Groundwater raises regulatory takings issues The Texas Supreme Cuun is now con'iidc.:ring a case that adllrcsscs how regulations affect prnpi:rty owners' rights in groundwater beneath their propc11y and what may constiCutc ;1 "regulatory taking" of property, meaning a regulation that res1nc1o; use nf pmpc11y to such <1n ex lent that il amounts In a taking of value that must be: compcns<itcd.

f n Edwcmls Aquifer A111lmritv ·~ Dm·, propcny owncri; daim that the Edwt1rds Aquifer A11thori1y cffoctivcly abridged their property 1ights without compensation by pcn11itting them 10 pump only 14 acre-feet of water from the Edwards Aquifor hcncalh their property. The case i;aincd prominence when, ovcm11ing a district court, the fourth Cuui l of Appeals in S,m Antonio ruh:d lhal groundwater was a vested right that conveys to the rropcrty owner. The Texas Supreme Courl heard oral :1rgu111cnts m the case in February.

The case has gcnc111tcd substantial inlc.:rcst among both .mthontks that n:gulatc groundwater and landowner organizations. Dcha1c on &he takings issue in the CilSC has ccnlcrcd on whether owners· intcrcsl in groundwater beneath their pmpcrty ii. a 'cs1cd properly right protected under the Texas Consti1u1io11 's prohibition against lilkmg propcny for a public use without atkqumc compcns:llion (/\rt. I. sec. 17) La11Jowni:r orgnnizations say an interest in y.rmmdwatcr 1s a h:-;tcd. constitu1iunully prntcdcd right and that this has been alflrmc.:cl historically by the com1.,, anorncy general orinions. anJ in slaluh:.

Grnundwatcr conservation distm:ls say 1hat while landowners pos!.css some rights in grou11dwa1cr hcncalh their property, it doc:s not amount lo a co11s111utioiwlly prnll!ctcd. \. cstcd right ;rncl is 1hcrcforc subject lo regulalOf)' limitalion withou1 compcns.niun pageB Interim News

Act {UR1\,\ l h!llUircs support for property ownc1·.'• Propo-;111011 11, the cons1i1utional amendment cli.,placcd a'\ p.1rl of projects thal rccl!i\'c l~dl.'ral adoplctl in :!009, r.1iscd the bar on grant in~ the pO\\Cr .l'>s1!>l;1ncc, but 1Jus Jocs not C1'1cnJ to takings when: no of ellllllCl\t UOlll:llll lo new entities hy increasing such hmds arc invol\'cd. Current law in Texas pcnnlls chc numbcr of voles m l!ach house of 1he lcg1sln1urc a gowmmcnlal cntity lo provitlc J rclm:ation '>cn·kc necessary to ~rant the power of ..:mincnt domain .md issue rclm:atiou pi!}'mcnts in kci:ping with IC<lcrnl from a simple m;ijunty to two-third-. of all mcmb~rs. guidelines for .in individual d1splm:cd by cminc1u Supporlers of this mcai;urc said that the power of Jom;1i11. cmincnl domain should he gr.11\lcd only if neccs!.:1ry and mcreasing the support threshold in the lcgs~lutun: wouli.I Two b11ls previously consiJcrcJ but not cn;...:h:J hdp protccl agains1 unnecessary expansions of this would have rcquircd rdocation ;ic;si~tancc. HB 2006 power. in 2007 would h;we rcl1ui1cd govcmmcntal entities to prnvi<lc rdocation assis1:111ce and payments to displaced Other iniliativcs have auemptcd to calaldguc exactly propcny owners. SB 18 in 2009 would hnvc required \\·hat entities have lh1s aulhurity and for what purpo.~c assi~Wncc paymcnls and allowcd sp..:cial commissioners SB IX, wh1ch dil!d 111 the I-louse, would lrnvc required to cimsidcr cvu.lencc on whether" condemnation entities created hcfon! 20!0 to submil :1 lcllcr lo the required the relocation of a homestead or fonn and how .:omptrollcr acknowledging their authoiity to c'cn:isc much compensation would he ncccs-;ary lo <1llow thl! lhc power of eminent llmrn1in in the state anti idcntilyrng properly owner to ha\'C a c:ompar;1blc slamlard urlivinl-t the legal source for 1ha1 aulhority. The comptroller or to bl! able to opc1.itc a comparabk 1:11m. would have used lhe responses to gcncrntc :1 report on the cntitks and the source of their aulhority. Entities Supporters uf requiring rdocatiun assistance say 1ha1 did not submit this inli.mnation to 1hc comptroller assistance shuulJ not be limited to those pr~jccts woulc..I have 1hcir power of eminent dom;1in rcvokc<l, 1n that involve feller-JI fnmling. People displaci:tl hy ..:Oci:t creating an exclusive list of cnlillcs posscs-.ing !hi: cmin~nt domain. th.:y Sil}'. :m: s11hjcc1cd 10 hardship power of eminent Joma in in the slate. and linandal dam:1gcs - s11d1 as moving a rcsidcnc~ or liusiucss - 1ha1 ;ire not captt11\:<l undi:r currl!nt In ~006. the Texas Lcgislarive Council released a law dclcnmning "llcl)llillC compensation. Oppon.:nts publicalion with a lic;t of the types of entities that ha\c of rcquiacd rcloc:11ion assislancc s:iy tl'rms such ;lS the power of eminent domain and listing statulcs thal •\:omparnblc stcullhm.1 of living·· arc too subjective anll grant prohibit. or rcstrkt an entity's cxcms..: of this threaten lo ;ulll unn::isonablc costs to tmcpaycrs. power. ·1 he publk.1tion is a,·ailahle at h1111:!: www.1lc. slate.Ix.us nuhspol EmDumain.[!!.lf.

Who may exercise eminent domain - by Andrei Lubomudrov Rl!ccnt cffo11s lo rc\'isc eminent domain practice have indu<le<l increasing rl!quircmcnts th;it must be met for empowering entities to take property an<l dorumcnting which l!lllitics ;11·c empowered to use cmim:nt Jomain m Texas. Tlu.'SI! dTorts stcmmc<l from a conc..:m that ii was 100 easy for nn ..:n1i1y tu be granted cmim:m domain authorily and lhal some entities may possess it unncccssari ly.

May 17, 2010 page 9

Veterans courts, from page 1 Color .uh Nc\'itda. Illinois, Califomrn. Okluhoma. •md Aht!>ka ;all h.1vc some kind of prohlcm-s<1l\ mg l.llllll for hcndils, hcalt h saviccs. mid other hc:lp o lli:n:d by tlu: dch:mlants who arc \'Clcrans. according to the Na11onal lc<lcral Veterans Administr;1tion (VA) mul othc1 ~crvicc ConlCrence of Slate Legislators. pmviJcrs. fl oftcn takes a partktpilnt bctwc..:n 12 :md IX months lo g1 ;1dua1c from veter.ms menial hc;1hh i:ourt pr<lgrams. Problem-solving courts Under SU I ')40, two or more Texas ct•11111ks 1m1y The tirst Ycternns court in the United Slates. 1.:rc••1ed cswhl ish a regional velcrans ment;i) hca II h com t to in Buffalo, New York in January 200~. was mo<lclc<l cover ll•Ulicipating counties. Most of 1hcsc courts will .il'tcr other ''prohkm-solving court~:· -;ud1 .is Jnig ra1t11cr \\ilh cxii;ting or c.xpamling treatment program-; courts. 1hn1 diver! <lefonuants with underlying .1ddic11011c; that arc run ;im.I paid for by lhe VA. or mental hen Ith problems away from tnl'an:cr1111011 :md into trc;ilment. Other kinds of problcm-.,ulvmg courb.

J\cconJing to th1.· Tc'<ns Vctcnrns Commission. in in lhc Unllcd Stares targcl certain criminal or chmnic addition to the new programs iu HarTic;. Tamu11, amt bi:-ha\'ior prulllcms, such as domestic abuse. DWI. or Dallas counties. 1:1 Puso ;md Travis counties arc in hnmdci.sness. Few of lhcsc progr:uns ;ire stan<l-.1lonc the proc~·ss or sell in~ up veter.ms mental hc:thh court courts. l\.10.;1 are c;cpar;llc progr:un'> w11hin a court nf progr;uns. while Ue.xar. Dcntun. Fannin. l lidalgo. and general jurisdictio11 or a criminal coun (For mon rm Orange countii:s arc activdy planning 1hem. New York, pmblt•111-:wfri11g cow·r.~ ;,, Tera.,·. sec: hclm1· ) r Other problem-solving courts in Texas Texas lws a '';1ridy or prnMcm-snlving couns. the must common bdng drug courts. Drng. wm1s arc progrJms, usually opernting within a district court or a county co1111 al law, that divert from incilrccr.11ion into treatment cct1ain defon<lants whose substance abuse was a signinc:ml cause ol' the allcgl!d criminal hcha\ ior. Dmg cout1s suflcrvisc 1rcu1mc11t for tlclcndant.; and use prngrl!ssivc sanctions to \!nforcc compliance with the program. They alsl) may require restitution 10 vicl ims. community service, and other counseling. Other examples of prohkm-solving cnu11s in Texas. besides vetcrans mental health courts. indmk family drug trc:itmcnt, mental health, domcstk violence, homdcss. teen, lru;im.:y. and tohacco courts. l'hcse other problcm-soh·ing courts follow the drug court model of intensive supervision and 1rc:itmcnt of the underlying bcha\ ior or addiction that is contnbuting to the criminal behavior lhat hmughl lhc Jcfcntlaul In w1111. Most of these pmhlcm-soh ing courts nrc either created explicitly by slatute or created by a county with statutory authmization. Creating thc~c couns rc4uircs coordination among existing local cum1s, Jistrkt uuorncys. ln!almcnt providers.•md the county commissioners cuuns that O\'ersce their hmlgcls.

In 1001, thc 77th Texas Lq!islaturc enacted HB 12X7 hy Thompson. which required the large mh•m t:Ollllti\!S of (k'l(ar, Dallas, rt Paso. I J:ims, Jfalalgo. Tarrant ••md Travis Ill establish <lrng l:lllll IS.

It also authori7cd county commis'iioncrs courls m smaller cou11t1e'\ lo establish them. According 10 the OITkc of Court Administration. 91 dmg cuurl programs either have bf.!cn established or arc bci11g JevdopeJ in Texas. A :!002 study by thL' SMU Department of Econom1cs fomul that drng court gr.1<l11atcs had a lowl!r rcddh:ism rate thJn either drug cuurl dmpouls or lhosl! whu did nut rarticipatc in dn1g cout1s at all. Texas dnrg com1s arc fomle<l through grants and p;1nicipant fol!s. l\fany rely on 1;:dcrnl. stale. and private grnnls for start-up and opcmtional cn-;ls. The crrmmal .iuslicc 1.Ji\ isio11 of the Governor's Ollicc said it expects to award about $6 million in grant fonds to Tl!xas drug courts during lis(al 2010-1 I. \. page 10 Interim News

Veteran-; mental hcahh com Is arc the newest kind they ~ay. 111 aJJ1tion. under SA 1940. ;1 \'Ch.'r\111s of prnhh:m suh ing court. They urc intended to alldrcs'i mc111:tl-hc;11lll court judge may expunge a deJC:n<lant"s d1runil bcha\'1urnl. <lcrcmlcm:y. or mental henlth issues criminal record. making it dillicult for courts and law that lllJY undcllic i.l vderan 's criminal behavior. These enforcement lo !lack hislorics or criminal behavior.

CtlUTl<; Wllr~ lhrnugh intensl\'C SUper\'iSion 01'.1 \'eler;in 's treatment. meeting with the veteran anJ treJtmcnt providers .mJ ..nmctimes ret1t11ring drug testing. In Veterans mental health courts in Texas many programs. if a JUJgc is sati-;licd with a <lclcn<lanl's progrcso; in trc.llmcnt and compliam:c with 01he1 Three vch!r.ins mental hi.:ahh com ls arc ClllTCntly concht1011s set by 1hc courl. the judge may expunge. seal, operating in Ti:x.1s. HmTis Couniy's w:is 1he lirsl In opc.:n 1>r cks1roy all r.:co1ds of the criminal beha\'1or. m December ~009 and currently oversees 20 tlcfcndants.

The second. in Tarrant County. opened in April of this Supporters of pmblcm·'>olring cm111s say they yl·;u· ;mu oversees 40 1.kfomla11ts. The 1hird, in Dalhis reduce lhc n:d<lt\'io;m rate for dclCndants who County, .ilso opcnl!d in April mul expects to keep a pai1ic1palc in them. For example, in .2005. the U.S. rolling ;wcragc of hctwl!en 50 :md I 00 tlcl\!ndants in its Gener.ii Aci:uunlalnlity Ollkc.: (GAO) issued a report program. condudiny tlmt \\ hilc Jmi: cou11s arc more cxpcnsi\c to nm th.111 regular c:ourti;, 1hcy result in daamatic cosl Eligibility .;:l\'ing-; to go\-crnmcnt-; O\ er lime because lhcy rc<luce co'its for law cnlim:cmcnl ;md <:JS\! processing and Under SB 1940. to he clil!iblc 10 partidpatc in a reduce the numb.:r of crime \'1ctims. A 200h s1mly m \Cterans mcnt:il health cmu1 m Tc~os. a dd'cnJant must Th<· .lo11n1t1l ~{ Ps.i•t hnadiw Dntg.r or nmc Cali fomi.i hi: a veteran or a member of the U.S. mrncd forces. Th.: dnig cmu1-; rcpmh!ll lhat the recidivism r.1tc of drug Jcfon<lanl :1lso must :-ulli!r from :i brain injury. mental court graduate" was lt!ss than thal of lhc gc:nernl illness. or mental disorder, such <1s post-traumatic -;tress population of dcfc11Jan1s. In that stuJy. the re-arrest disorder or Jcrm:s!.ion, that rcsult..:d frnm scn•icc in rate for the same ur similar ollcnscs wa..; 17 percent a cnmh<11 7.onc or ;i simil:ir hazardous duty area. The for those who successfully complccc<l the drug cou11's ;1ffiiclion must have matcnally affct:tcd the defendant 's rc411ir..:d trc;ilmcnt regimen. 2'> percent for all those criminal conduct tlwr is al is::.uc. who participated, :md 41 pcrccnt for comparable tlmg offi:ndcrs who did not pai1icipa1c. TI1c GAO found SB 1940 grants judges in veterans mental health sirnilur rl·sults iu studies of dmg i:uurts in other states. courts wide c.JiscrcCion to con~1<lcr c\·iJcncc that would c~tabhsh :t ~crvicc: rcconl. .1dtliction, or illness and how Critics or probkm-solving courts say study results those condi1ions may have aflcct~d 1hc all.:g~d criminal that show lower recidivism mies for gr<idualcs of thcsi: cone.Juel. An dig1tilc dcfcn\hlnt may dc.:dc.Jc whcth..:r co111 ts arc no surprise. These court.c; :ire -;1affcd by or not to participate in a vclcrans mental hc.ilth court dcdicah:<l judgcs with the 1ime and llmtling needed h> program hut may 11artkipatc only if lhc prosccu11on closely supervise defi:n<lanL'i \\ho arc spcch11ly chosen consents. If lhc prosecution docs nol cons..:nt. the to partici1>:ilc. These courts h:l\'e enlmnced .;raff levels, dd'cndant will be proc.:ss.:d through normal 1.:rimin;1I inclucling aduitional social workers. highly trained proc.:cdings. eourl managers, and ai:i:ess to expcnenccc.J treatment professionals anti probation officers. Crita:s of probli.:m- Jurisdiction solving courls say it would be helter Ill u.:vote such 1esources to all c~isting courts than to i:1·catl! "boutique SB J940 allows cvunlics lo create \'cti:rans mental courts'" for ccrt.iin groups . Some victim protccuon h.:alth courts to hc;1r all fclonic.; and misckml!anors. groups believe that these courcs may lake altention although few granl such wide jurisd1~·1wn . 11.uris •1w;1y from protecting. \·ktims. Incarceration prutccti; County"s vcti:r;ms ..:ourt prngrJm. lhc lirsl in Tc·rn~. !-ucicty from furl her hann. aml diversion progr.ims 1s .1dmimstl!1cd by a .:rimmal dii-1m:1 -.:ourt !"he mi~ht rc.:lcnsc dangerous indivilluals back inlo society. jurisdiction of th.: veterans court includes both folonies May 17, 2010 page 11

an(l 1111stkmeanors .md cnn mcludl! violent ofli:nsco;, .'\t the frdctill kvcl. in spring. 2009. bills were although noc scxuill offenses or most 3(g) aggrav,11cJ 1n1rnducc<l 111 the U.S. House of Representatives and o flcnc;cc;. 'iuch as murder or aggr•I\ atcd rnhbcry. 1':11 ran I the U.S. Semite that \\'ould provide li:deral g1411lls lo ,1nd D;11las counties :11low only mi'idcmc:mor property vctcrnns court p1 ograms for non-violent offenses. Both olTcnsc' lube heard, ••s will Tr:1\ is .111tl olhcr coumics wctc rctcrrcJ to commiuce. where they t:urrenlly arc planning lo l!l\tahlish wh:rans menial health courts. pending.

Texas counties cslahli,hin.!,! lhcsc courts .ire expected It>follow the models for dmg comts, in whu.:h :1 county Debate on veterans courts in Texas that plans lo allow holh !\:Ionics and misdemeanors lo be heard places the prnyram m " Jistnct court '' ilh Supporh.•rs of \'ercnin~ courts in Texas argue lhat gcner.il or criminal jurisdiction. Ir a county plans 10 crc.lling veterans mental hcallh courts allmvs lhCSl' allow only misdemeanors, it may alsu pl:1cc the program courts 10 develop c:q1cr1isc in mcn1al health illlcl <lnig in a stah1to1y county cou11. .1ddiction treatment for vch:rans that m:1ximii..: thdr eh:mcl!s of rccmcnng :md rl!intcgrnting inlo :-.ucii:1y. The Other .;talcs have different aprroacltcs to velcrans juJgcs. allomcys. <md c:isc workers in 11\esc couns also courls Some stnh!S limit their courts lo properly crimes bccoml! expert' 111 na\'igating VA bcnclito; <mJ lrl!atmcnt or exclude serious 'wlcnt offense-;, whik some s1:1les fnr which a tlclCndanl mighl be eligible. Couns without explicitly allow lhcsc cour1s lo hear all misdcmeunors this e;~pcrtisc may not be as :;ucccsst'ul '11 helping and f don1es. vctemns rcmtcgrntc and avoitl reoffcndiny.

Vclcrans ad\ ocatcs and 1rca1111~111 prO\·idcrs. such Suppot1crs say the Texas law 1a1lors cligibil1ly for as the VA, say \·ctcrnns court-; shoul<l be :1llowcJ to \'Ctcrans courts to a narrow group of vch:rans whu ha\ e adJudic::11c inure i;eriouo; c1 imco;. Th.:)' say e:xisting c:arnc:d access hl diversion prugr.uns. Umlcr SB I lJ40, trcatm..:n1 progr:ims can successfully address 1sst11:~ only vc1ernns with an um.li:rlying mental illnl:!"S tlwt underlying serious crimes, !'lllch t1S DWI ;md some was caused by combat duty arc clig.1blc, and they may domestic violenl.'.c. They also argue that vc&crans who partidp.11c only with 1he conscn1 of tht! pro-;ci:ution. commit IClonics <ire those most in need of 1hc duscly In Tc.'l.as. access lo tht! program is not based soldy on ~upcrvisc<l lrct1lrnc11t 1·cgimcns that a w1crans 1nohlcm· Wl\!rnn !>talus but l!> Jctcm1incJ on u case-by cao;c has1c; solving court c;111 provide. No veteran is automatically <idminctl Funding mechanisms Sup1>orlcrs say veterans mental health courts arc needed becausl" velcrans make up a s1gmflc:m1 portion SB 19.tO allows velcrans mental health courts lo of county jail rorulations in Te.~ms. Acc:ording 10 a 2007 collect a !Cc of up to S 1,000 from the Jc fondant as ~tuJy by the fcdaal Bureau of Justice Statistics. 10 wdl as additio11:1l 1Ccs to cover testing. cnu1lscling. percent of those mcarccr.itcd in slate prison-; :mJ jails in and trc;umcnt c~pcnscs. The Ices 1m1r;1 be b:1sed on the United S1:1lcs arc veterans. Even if vctc1;111s c:ourts the vclcr,111 's ability lo p;iy unJ may be used only for cannot treat :111 <lcfcmJ:mts with similar underlying purpose.'> specific lo the veterans mental hciilth court. problems. they will open up space in cx1~1ing local trcalmcnl program!' by transferring eligible \ ctcrnns The crim111:1I juslke division of the Governor's 111 progrJms run by the VA. A maJor hcndit of Ollicc offers seed grants lo hdp Tc:<as counties csrnblish wlcran~ menial he,11lh t:ourls 1s thJI the VA will he \'clcrnnc; menial health courts. These grants :trc limited 1hc lrcatml!nt provider in mllst c.::ise5. which c;houl<l <o couns lhal hear misdemeanor property crimes. So IJr, result in sig11ifkanl s.tvings 10 local governments. the t:riminal justice tfi\'ision has :1wardcd $100,000 in Lot:~1I govcmmcnl.'> l11s1oric:.lly ha' I! had d11lkully in gr;ints to Tan ;int County's vct.,;r;ms menial health court establishing problem-solving courts because ol lhc high program :m<l is :1sSl'!>Sing, other ;1pplh:ations. ~O!>l of 11·c;1tmcn1. page 12 Interim News

Opponl'nls of \'l'll•r:ms courts in Tl'x:is •my these The Amcncan Ch ii Libs:rtic'i Union h.1o; ... poki:n tlllt courts arc not ncccs'i:iry hccau-;c ex isling courts c.in .1g.1inst the \ cte1·,rns court progrmns Ill ( olorado and handk any special needs a \Ctcran might ha\C. Under Nevada. saying they gr•utt vch:rnn'i cerlnin cnmmnl the U.S and stale constilutions. Tc~:is prosccutors defense rights that other t.lcfondants do not ha\c. already have Wilk lliscrctiun 111 whether ;inJ how to Veterans courts th:it cover only combat veterans c:\.dutk prosecute a crime. They consider ;i \'Ctcr.m 's prior both other veter.ms :iml non-vctcr;ms who h;I\ c -.1milar scrvic~ and, where appmrriatc. use prt!-trial tf j\ cr'iion mcnt::tl illnc'iscs, they .-:ay. For cxainpk. a police nllkcr aml other llrogrnms to get vctc1ans hack on their feet might al-.o sulli:r from work-rcl<llcd posl-tr.mm:itic ag.iin. -.trc'is lli~ordcr. commil a i:rimc. :1110 lo~c rhc nght to carry a lircann .mt.I a lkcno;c: 10 be a pc:acc olliccr. This Jispar.1tc treatment of similt1r dcfom.lants based on -;talus could viol:tlc II~ Equal Prutccllon daur;c ol the U.S. Cons1i1ut1on. opponcnl!i say.

-by Tom Howe

HOUSE RESEARCH ORGANIZATION John H. Reagan Building Steering Committee: Room 420 P.O. Box 2910 David Farabee, Chairman Austin. Texas 78768-2910 Bill Callegari, Vice Chairman Drew Darby (512) 463-0752 Harold Dutton Dan Gattis www.hro.house.state.tx.us Yvonne Gonzalez Toureilles Carl Isett Susan King Staff: Jim McReynolds Jose Menendez Tom Whalley, Director: Geanie Morrison Laura Hendrickson, Editor: Elliott Naishtat Rita Barr, Office Manager/Analyst: Rob Orr Catherine Dilger, Kellie Dworaczyk.

Joe Pickett Tom Howe. Andrei Lubomudrov, Todd Smith Carisa Magee, Blaire Parker. Research Analysts

HOUSE RESEARCH ORGANIZATION Exhibit A