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Universities, Not Your Typical Condemnor

Tonny Storey from Sever Storey conducted oral arguments on a case Thursday that could have wide ranging application for Indiana State Educational Institutions (i.e. universities). First a little background!

Several years ago, Ball State Univeristy embarked on a grand adventure to construct McKinley Commons–a 100,000 square foot facility featuring student housing, a full service hotel, restaurants and meeting space. Funding was put into place for the facility and initial plans were drawn up and approved by the Board of Trustees for the Universit. There was only one problem.  Ball State did not own the land where they wanted to build their new facility. Much of the land Ball State required was purchased in private negotiations with existing landowners.  However, one landowner, Chirs Hiatt, refused to sell. Hiatt owns a profitable copy and student supply shop exactly where Ball State wished to build. When Ball State could not convince him to sell voluntarily they began eminent domain proceedings to take his land from him. So began a case that may soon have legal consequences for universities across the State of Indiana.

Hiatt knew that Ball State would hire an experienced and highly skilled legal team to prosecute his case. To help him defend in the action he turned to Tonny Storey at Sever Storey, LLP. As the attorneys at Sever Storey began to dig into the facts and law it quickly became apparent that Ball State (and other universities across the State of Indiana) may have a signficant problem.

For over forty years state educational insitutions had almost unfettered powers to condemn and acquire property.  This included the power to condemn property for the beneift or convenience of the university. According to arguments by the attorneys at Sever Storey, this all changed in 2006 when the Indiana State Legislature passed Indiana Code 32-24-4.5. This code provision was put in place as Indiana’s direct response to the controversial U.S. Supreme Court case, Town of New London v. Kelo. In the Kelo case, the Supreme Court held that the Takings Clause of the constitution would allow a state institution to take land from a private person and give that land to another private person for a purely commerical purpose so long as an “ecnonomic benefit” accrued to the general public. Indiana, like many other States, felt that this holding could produce substantial government overreach and carefully enacted 32-24-4.5 to provide limiations to the right to take where property is to be transferred from private person to private person.

Now maybe that last sentence gave you pause: “private owner to private owner.” Surely Ball State is not a private owner? Well this is where it gets interesting and where this takings case in Muncie, Indiana could form infamous precedent. According to a thorough analysis of 32-24-4.5 in briefs filed by Sever Storey, State Educational Institutions are private persons under specific Indiana statutes relating to eminent domain.  This means that universities’ powers  can be significantly limited. Sever Storey is quck to point out that Ball State (and other universities) can still be considered a condemnor with eminent domain powers under this staute. Ball State would continue to have unfettered rights to condemn if their acquisition was for a narrowly defined subset of public uses. For instance, contruction of highways, airports, bridges and parks. However, if a university wishes to take land for a use that does not fit into the narrowly defined public uses found in IC 32-24-4.5-1(a) 1-3 then they may only take if the property in question is in a “blighted” condition. In his oral arguments, Tonny Storey noted that no evidence had been submitted that the Hiatt property was blighted. According to Mr. Storey, Ball State, as a private person under IC 32-24-2.5 did not have the right to take the Hiatt property for a non public use and requested that Ball State’s condemnation be dismissed.

The ramifications of this legal argument can be far reaching. Many of the legal rights as to condemnation that universities have taken for granted could be significantly impacted.

As expected, Ball State has put up a virgourous defense to this interpretation of the statute.  According to their brief:

Defendants argue that I.C. 32-24-4.5 governs their objection On this point, Defendants are simply wrong. I.C. 32-24-4.5 does not apply to state educational institutions. The legislature has specifically exempted state educational institutions from the definition of “public agency” subject to this particular eminent domain legislation. See I.C. 32-24-4.5-5.
Assuming arguendo that I.C. 32-24-4.5 applies to Ball State, this section only applies when a “condemner [exercises eminent domain to acquire property] (1) from a private person, (2) with the intent of ultimately transferring ownership or control to another private person, and (3) for a use that is not a public use.” (I.C. 32-24-4.5-1(b) (emphasis added)). This is not the case here for two separate and independent reasons.

CONCLUSION. Ball State is authorized to exercise the power of eminent domain. Ball State’s intended use of the property is a public use and for a public purpose. Defendants’ assertions that Ball State intends to ultimately transfer ownership or control to another private person and that the intended use is not a public use are without merit. Defendants have wholly failed to raise an objection as to the paramount use of the facility. Instead, they attack the anticipated involvement of commercial tenants and a third property management company as fatal to a condemnation action. Defendants’ arguments are misplaced and contrary to applicable law. Regardless, the commercial aspects of McKinley Commons will likewise serve a public use and purpose and further Ball State’s educational mission of providing immnersive learning opportunities for students. Based on all of the foregoing, Defendants’ objections should be overruled.

In open court The trial court Judge  has recognized that whatever decision it reaches will be ultimately appealed by either party. So stay tuned!

Links:

Indiana Law Blog: Great write up about Case History

Indiana Code 32-24-4.5

Star Press on recent hearing

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