Academic journal article Missouri Law Review

The Missouri Eminent Domain Reforms of 2006 "Good Faith Negotiation" Requirement: Cities Can Use Illegitimate Appraisals under Kansas City V. Ku

Academic journal article Missouri Law Review

The Missouri Eminent Domain Reforms of 2006 "Good Faith Negotiation" Requirement: Cities Can Use Illegitimate Appraisals under Kansas City V. Ku

Article excerpt

City of Kansas City v. Ku (1)

I. INTRODUCTION

In 2006, following a wave of public outcry over the Kelo v. City of New London decision (2) and the "disaster" in Sunset Hills, Missouri, (3) the legislature enacted the 2006 Eminent Domain Reforms. (4) This act created new protections for landowners, including a requirement that the would-be condemnor must attempt to purchase the land from the would-be condemnee engaging in "good faith negotiation" before filing a condemnation action. (5) One requirement of "good faith negotiation" is that the condemnor must make an offer to purchase the land at a price no lower than the land's value, as established either by an appraisal or through "an explanation with supporting financial data." (6) Where the condemnor uses an appraisal to establish the value of the land, that appraisal must have been "made by a state-licensed or state-certified appraiser using generally accepted appraisal practices." (7)

Missouri statutes require almost all real estate appraisals to be done by state-licensed or state-certified real estate appraisers. (8) Furthermore, Missouri requires all of those individuals to follow a set of standards promulgated by the federal government--the Uniform Standards of Professional Appraisal Practice (USPAP). (9)

In the instant case, the condemnees (the Kus) received an offer from Kansas City based upon an appraisal created by a licensed real estate appraiser. (10) They refused that offer, and when the City attempted to take the land by eminent domain the Kus presented expert testimony that the appraisal failed to comply with the standards of USPAP. (11) They argued that, therefore, the appraisal was not made using "generally accepted appraisal practices" and, thereby, the City's actions did not constitute "good faith negotiation" under that term's statutory definition in Missouri Revised Statute Section 523.256 (Good Faith Negotiation statute). (12)

The trial court found otherwise and permitted the condemnation to proceed. (13) In reviewing that decision, the Missouri Court of Appeals, Western District, interpreted the meaning of the two statutes (Good Faith Negotiation and USPAP-Compliance) as applied to this situation and held that "an appraiser in a condemnation proceeding must adhere to generally accepted appraisal practices--such an appraiser is not required to adhere to USPAP." (14)

This Article argues that the holding of the Western District contravenes decades of Missouri statutory construction law, undermines significant public policy considerations, and indirectly implicates the Missouri constitutional guarantee of "just compensation" for takings by furthering a system of under-compensation. This Article speculates as to the potential policy reasons for such a holding and, finding only the considerations of judicial economy and condemnation proceeding efficiency (time and expense to the condemnor, the burden of which passes to taxpayers), this Article argues that such considerations must yield to the property interests clearly protected by the language of the Missouri legislature.

II. FACTS AND HOLDING

A. The "Action" of the Case

Appellants Chung Ho Ku and Myong Suk Ku own a property (the Ku Property) commonly known as 1219-21 Grand Avenue in Kansas City, Missouri. (15)

The Ku Property is near the Power & Light Entertainment District, Sprint Center, and H&R Block World Headquarters in the downtown area. (16) In January of 2004, the Tax Increment Financing Commission of Kansas City (TIFC) adopted a resolution recommending that the City Council of Kansas City (the City Council) approve the 1200 Main/South Loop Tax Increment Financing Plan (the Redevelopment Plan). (17) The City Council, in March of 2004, passed an ordinance approving and adopting the TIFC's recommendation, designating a Redevelopment Area (18) and finding that the area was blighted. (19) To support this finding, the City Council cited defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, and the existence of conditions that endanger life or property by fire or other causes. …

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