A number of state and local highway authorities have expressed concerns about their ability to condemn property for highway PPP projects in light of the backlash from the Supreme Court's decision in Kelo v. City of New London.214 In that decision, the Supreme Court upheld the ability of a public development authority to exercise its eminent domain authority for the benefit of a private developer that was working on a redevelopment project. The decision, however, upset many people that felt private property should not be condemned . The liability of the state and its public entities on claims within the scope of sections 537.600 to 537.650, shall not exceed two million dollars for all claims arising out of a single accident or occurrence and shall not exceed three hundred thousand dollars for any one person in a single accident or occurrence, except for those claims governed by the provisions of the Missouri workers' compensation law, ch. 287, Mo. Rev. Stat. unless it is used by a public authority. Thus, many states passed or have debated the passage of legislation that is designed to restrict the ability of public authorities to use their condemnation power for the benefit of private parties. For example, the Missouri Code gives only MHTC the authority to condemn lands necessary for the new Mississippi River Bridge PPP pilot project and does not allow the MHTC to delegate that condemnation power to a private partner.215
The backlash in some states from the Kelo decision has complicated the ability of project sponsors to assign the risk of land acquisition necessary for a highway improvement to private entities. One typical solution to this delegation limit is for the public project sponsor to retain the risk of land acquisition and related permits and approvals, which often is a risk that the project sponsor is in a better position to manage than the private entity. The Virginia Public-Private Partnership Transportation Act of 1995216 provides that only the state may condemn property, but the required just compensation award may be paid by the private partner. Many states (such as Texas and Missouri) merely provide that the state may condemn property for toll projects but do not impose specific limits on the ability of the state to lease that property to private entities.217 Finally, the Florida PPP statute is silent on the question of eminent domain.
The USDOT Model Legislation specifically provides provisions for the state highway agency when considering its power of eminent domain to acquire property, rights-of-way, or other rights for purposes of PPP initiatives, but it does not address whether private-sector partners can use or otherwise benefit from the exercise of such authority.
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214 545 U.S. 469, 125 S. Ct. 2655, 162 L. Ed. 2d 439 (2005).
215 See § 227.657 Mo. Rev. Stat.
216 Va. Code Ann. § 56-569.
217 See Tex. Transp. Code 314.011, et seq. and 7 Mo. Code Regs. Ann. 10-24.070, et seq.