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City's undue delay in condemning property can constitute inverse condemnation.

Landowners whose property was declared blighted but never formally condemned can recover consequential damages if the city unduly delayed condemnation proceedings or engaged in untoward activity, according to the Supreme Court of Missouri.

Clay County Realty Company and Edith Investment Company (collectively, Clay) own the Gladstone Plaza Shopping Center in the city of Gladstone. In 2003, the city declared the property blighted; in 2004, the city entered a redevelopment agreement, which it then cancelled in 2005. Also in 2005, the city began soliciting tax increment financing proposals for the property and adopted a second ordinance declaring the property blighted. To date, however, the city has neither approved a specific redevelopment project for the site nor commenced formal condemnation proceedings. Clay filed suit claiming that the city's failure to meet stated timetables for condemnation and redevelopment interfered with its ability to attract new tenants and caused existing tenants not to renew their leases. In addition, Clay alleged that the city had assessed unwarranted code violations against the property. Clay argued that the city's actions significantly decreased the property's value, thereby affecting a taking of the property requiring compensation. The trial court dismissed the case before trial, finding that even if Clay's allegations were true, the city's actions did not amount to a taking of the property. Clay appealed.

On appeal, the state supreme court held that Clay's allegations were sufficient to maintain an inverse condemnation claim. The court noted that generally, the mere declaration of blight and the authorization of condemnation do not constitute a taking, even if the property's value consequently declines. However, the court recognized that when a long period of time elapses between the time of blighting and the time of condemnation, a landowner can suffer significant damages in the form of condemnation blight, marked by departing tenants, unmarketability, and profit loss. Still, the court emphasized that because some delay in implementing condemnation proceedings is unavoidable, a landowner must establish the condemnor's undue delay or untoward activity to recover precondemnation damages. According to the court, undue delay includes failing to meet statutory or plan timetables, and examples of untoward activity include unnecessarily renewing a declaration of blight and imposing code violations in bad faith. In this case, the court found that Clay's factual allegations, if proven at trial, were sufficient to establish the city's undue delay and untoward activity. The court thus concluded that Clay was entitled to go to trial on its inverse condemnation claim. The trial court decision was reversed.

Clay County Realty Company v. City of Gladstone

Supreme Court of Missouri

June 10, 2008

254 S.W.3d 859 (Mo. 2008)
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Title Annotation:Recent Court Decisions
Publication:Appraisal Journal
Geographic Code:1USA
Date:Jan 1, 2009
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