In a victory for private property rights, the Illinois Supreme Court has ruled that taking one owner’s private property and giving it to another for private use is an unconstitutional use of the power of eminent domain.
In Southwestern Illinois Development Authority v. National City Environmental, L.L.C., 2002 Ill. Lexis 299, Docket No. 87809 (4/4/02), the present state supreme court reversed a holding of the court as it was constituted before the November 2001 election. The case represents the most important development in property rights case law in Illinois in several years.
The Southwestern Illinois Development Authority (SWIDA) is a municipal corporation whose purpose is to promote economic development in Madison and St. Clair counties. To that end, SWIDA is empowered to acquire property through the use of eminent domain.
In 1996, SWIDA issued $21.5 million in bonds and loaned the proceeds to Gateway International Motorsports Corporation. Gateway built an auto racetrack, which has had great success. Gateway soon found it needed more parking capacity for its customers.
Two parking alternatives were considered: expanding onto an adjacent site owned by National City Environmental (NCE), or building a parking garage on the track’s existing property. Building the garage on racetrack property would have been the more expensive option.
Accordingly, Gateway tried to buy National City’s land, which NCE used for its own business purposes. But NCE did not want to sell, at least not at the offered price. Apparently unwilling to pay the expense of building a garage on its own property, Gateway asked SWIDA to take NCE’s property. SWIDA completed a quick-take application, which was approved by the county board. A circuit court made a finding of just compensation and entered an order vesting title to SWIDA. On the same day, SWIDA conveyed title to Gateway by way of a quit-claim deed.
NCE filed suit in circuit court, which ruled against it and in favor of SWIDA’s action. On appeal, the court of appeals reversed the circuit court, holding SWIDA had exceeded its constitutional authority.
Not a “public use”
In its initial review of the appellate decision, the Illinois Supreme Court reversed, allowing the taking and conveyance to stand. However, on rehearing, the present court reversed, holding that “SWIDA exceeded its constitutional authority in taking NCE’s land by eminent domain.”
On rehearing, the supreme court defined the issue as “whether SWIDA exceeded the boundaries of constitutional principles and its authority by transferring the property to a private party for a profit when the property is not put to a public use.” Because the parking facility would be used by Gateway customers in exchange for payment, it was not open to the public “by right.” Thus, the court rejected the argument that this was a public use at all.
The court saw through arguments that the taking was for the economic benefit of the public, and placed greater significance on NCE’s ownership rights.
“[T]his action was undertaken solely in response to Gateway’s expansion goals and its failure to accomplish those goals through purchasing NCE’s land at an acceptable price. It appears SWIDA’s true intentions were to act as a default broker of land for Gateway’s proposed parking plan.”
The court ruled eminent domain could not be used to overrule the marketplace: “Using the power of the government for purely private purposes to allow Gateway to avoid the open real estate market and expand its facilities in a more cost-efficient manner, and thus maximizing corporate profits, is a misuse of the power entrusted by the public.”
Steve Merican is an attorney at law practicing in Oak Brook, Illinois.
For more information …
The Illinois State Supreme Court’s April 2002 decision in Southwestern Illinois Development Authority v. National City Environmental, L.L.C. is available on the court’s Web site at http://www.state.il.us/court/Opinions/SupremeCourt/2002/April/Opinions/Html/87809.htm.
The 16-page decision is also available through PolicyBot. Request document #4807601.