BILL ANALYSIS C.S.S.B. 14 By: Bivins State Affairs 4-11-95 Committee Report (Substituted) BACKGROUND The "takings clause" of the Fifth Amendment of the U.S. Constitution prohibits the governmental taking of private property for public use without just compensation. The Texas Constitution contains a similar provision in Article 1, Section 17. A government can take private property in two ways: by exercising its power of eminent domain through a process known as condemnation, or by applying laws or regulations that are overly confiscatory or restrictive of the owner's use of the person's property. In addressing the "taking" issue, courts must balance legitimate public goals with fundamental rights. Courts are limited to applying broad constitutional language to specific factual situations. In Texas, governmental entities are not required to evaluate the effect of their administrative and regulatory actions on constitutionally-protected property rights. Additionally, there is no statutory cause of action for private property owners who believe governmental actions have resulted in a reduction in the market value of their property. To date, 12 states have passed private property rights laws: Arizona, Delaware, Idaho, Indiana, Mississippi, Missouri, North Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia. Recently, the U.S. House of Representatives passed H.R. 9 which requires the federal government to compensate private property owners for the effects of certain regulatory restrictions. PURPOSE As proposed, C.S.S.B. 14 sets forth regulations regarding state governmental or political subdivision actions regarding private real property. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Title 10A, Government Code, by adding Chapter 2007, as follows: CHAPTER 2007. GOVERNMENTAL ACTION AFFECTING PRIVATE PROPERTY RIGHTS SUBCHAPTER A. GENERAL PROVISIONS Sec. 2007.001. SHORT TITLE: Private Real Property Rights Preservation Act. Sec. 2007.002. DEFINITIONS. Defines "governmental entity," "owner," "market value," "private real property," and "taking." Sec. 2007.003. APPLICABILITY. (a) Applies this chapter only to the adoption or issuance of an ordinance, rule, or similar measure; a governmental action (action) that imposes a physical invasion, dedication, or exaction of private real property (property); and an action by a municipality that has effect in the municipality's extraterritorial jurisdiction unless the action imposes identical requirements or restrictions throughout the entire municipality and its extraterritorial jurisdiction; and enforcement of an action, whether the enforcement of the action is accomplished through the use of permitting, citations, orders, judicial or quasi-judicial proceedings or other similar means. (b) Sets forth actions to which this chapter does not apply. Sec. 2007.004. WAIVER OF GOVERNMENTAL IMMUNITY; PERMISSION TO SUE. (a) Provides that sovereign immunity to suit and to liability is waived and abolished to the extent of liability created by this chapter. (b) Authorizes a person that has a claim under this chapter to sue the state or a governmental entity as provided by this chapter to recover damages or invalidate an action. (c) Provides that this section does not authorize a person to execute a judgment against property of the state or a governmental entity. Sec. 2007.005. ALTERNATIVE DISPUTE RESOLUTION. Applies Chapter 154, Civil Practice and Remedies Code, to a suit filed under this chapter. Sec. 2007.006. CUMULATIVE REMEDIES. (a) Provides that the provisions of this chapter are not exclusive, and that the remedies are in addition to other procedures provided by law. (b) Prohibits a person from recovering under this chapter and also under another law or in an action at common law for the same economic loss. SUBCHAPTER B. STATUTORY SUIT FOR COMPENSATION Sec. 2007.021. ENTITLEMENT TO COMPENSATION. (a) Provides that a governmental entity is liable for compensation if the governmental entity takes an action that affects an owner's private real property in a manner that restricts or limits a right to property that would exist otherwise, and the action is a producing cause of a reduction in the value of the affected property of 20 percent or more. (b) Provides that the state is liable for the compensation owed a property owner as the result of a governmental action by a political subdivision that is reasonably taken to fulfill an obligation mandated by state law. Sec. 2007.022. SUIT FOR COMPENSATION. (a) Authorizes a property owner to bring suit to recover compensation. Requires the suit to be filed in a district court in the county of the owner's affected property, or any applicable county if the property is in more than one county. (b) Requires a suit to be filed within two years after the cause of action accrued. Provides that a cause of action accrues on the date the property owner knew or should have known that the action restricted the owner's right in the property. Sec. 2007.023. COMPENSATION AND COSTS. (a) Provides that whether an action requires compensation is a question of fact. (b) Provides that the compensation owed to the property owner is determined from the date of the action and sets forth the procedure for computing the compensation. (c) Authorizes the property owner to recover compensation in an amount equal to the economic loss sustained while the action was in effect if the action resulted in a taking and the action has ceased or has been rescinded, amended, invalidated, or repealed. (d) Requires the court to award a property owner who prevails certain trial fees. Provides that prejudgment interest is calculated from the date of the reduction in market value. Sec. 2007.024. JUDGMENT. (a) Requires the court's judgment in favor of a property owner to meet certain qualifications. (b) Subjects a judgment awarding compensation to a property owner who prevails in a suit against the state or a state agency to an appropriation by the legislature. SUBCHAPTER C. REQUIREMENTS FOR PROPOSED GOVERNMENTAL ACTION Sec. 2007.041. GUIDELINES. (a) Requires the attorney general to prepare guidelines to assist governmental entities in identifying and evaluating governmental actions that may result in a taking. (b) Requires the attorney general to file the guidelines with the secretary of state for publication in the Texas Register. (c) Requires the attorney general to review the guidelines annually and revise them to ensure consistency with legislative actions and judicial decisions of the U.S. Supreme Court and the supreme court of this state. (d) Authorizes a person to make comments to the attorney general concerning the guidelines. Requires the attorney general to consider the comments in the annual review process. (e) Provides that material provided to the attorney general is public information. Sec. 2007.042. PUBLIC NOTICE. (a) Requires a political subdivision that proposes to engage in an action that may result in a taking to provide at least 30 days' notice of its intent by providing a notice published in a newspaper published in the county in which the property is located. Requires the political subdivision to publish a notice in an adjacent county if a newspaper of general circulation is not published in that county. Requires a political subdivision to include in the notice a summary of the takings impact assessment (assessment) that was prepared as required and the name of the subdivision official from whom a copy of the assessment may be made. (b) Requires a state agency that proposes to engage in an action that may result in a taking to provide notice in the manner prescribed by Section 2001.023 and filed with the secretary of state for publication in the Texas Register a copy of the assessment that was prepared by the agency. Sec. 2007.043. TAKINGS IMPACT ASSESSMENT. (a) Requires a governmental entity to prepare an assessment that complies with the evaluation guidelines developed by the attorney general before the governmental entity provides public notice. (b) Provides that a political subdivision is not required to prepare an assessment for an action taken that is taken to fulfill an obligation mandated by state law but must prepare instead a statement describing the mandate and citing the statute or rule under which the mandate is imposed. (c) Sets forth requirements for the assessment. (d) Provides that an assessment prepared under this section is public information. Sec. 2007.044. SUIT TO INVALIDATE GOVERNMENTAL ACTION. (a) Provides that action requiring an assessment is void if an assessment is not prepared. Authorizes a property owner affected by an action taken without the preparation of an assessment to bring suit for a declaration of the invalidity of the action. (b) Requires the suit to be filed in a court described by Section 2007.022(a). (c) Requires the court to award a property owner who prevails certain trial costs. Sec. 2007.045. UPDATING OF CERTAIN ASSESSMENTS REQUIRED. Requires a state agency that proposes to adopt a governmental action that may result in a taking as indicated by the assessment to update the assessment if the rule is not adopted within 180 days after the notice is given. SECTION 2. Amends Section 2002.011, Government Code, to make conforming changes. SECTION 3. Amends Chapter 23B, Tax Code, by adding Section 23.11, as follows: Sec. 23.11. GOVERNMENTAL ACTION THAT CONSTITUTES TAKING. Requires the effect of an action on the market value of property to be taken into consideration by the chief appraiser in determining the market value of the property. SECTION 4. Requires the attorney general to file the guidelines for publication by January 1, 1996. SECTION 5. Requires the comptroller to report to the governor, lieutenant governor, speaker of the house, and attorney general regarding state agency compliance with the assessment procedures and make recommendations for improvements before the 75th Legislature convenes. SECTION 6. (a) Effective date: September 1, 1995. (b) Effective date of Sections 2007.042 and 2007.043: January 1, 1996. Applies these sections only to an action described in Section 2007.003(a)(1) through (3) that is first proposed to be taken on or after that date. (c) Applies Section 2007.021 to an action described in Section 2007.003(a)(1) that is first proposed on or after September 1, 1995, and an action described in Section 2007.003(a)(4) if the action is initiated after September 1, 1995. SECTION 7. Emergency clause.