This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0610 - Real Property Rights Protected From Some Gov. Actions
L.R. NO. 2268-01
BILL NO. SB 610
SUBJECT: Property
TYPE: Original
DATE: January 16, 1996
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Many State Funds (Unknown)* (Unknown)* (Unknown)*
Total Estimated
Net Effect on All
State Funds (Unknown)* (Unknown)* (Unknown)*
*Unknown fiscal impact (cost or loss) -- expected to exceed $100,000
annually.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
None
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1997 FY 1998 FY 1999
Local Government (Unknown) (Unknown) (Unknown)
FISCAL ANALYSIS
ASSUMPTION
Officials from the Office of State Courts Administrator (CTS) would expect a
number of test cases to explore the parameters of the new right, and, after a
period of adjustment, CTS would anticipate there would be a relatively low
volume of new case filings. CTS could not predict the possible costs to
units of government. CTS assumes the volume of cases which might be filed
during the initial "test case" period is not known but could be substantial.
Officials from the Office of the Attorney General (AGO) assume they would
need 2 FTE Assistant Attorneys General II ($35,000 per year) to defend the
anticipated 100 to 200 claims arising under the new property rights created
under the proposed legislation. AGO officials expect first year costs of
$13,400 for data processing and furniture. Ongoing costs would amount to
approximately $24,000 per full fiscal year for travel, office expenses,
communication, data processing, furniture and other expenses.
Officials from the State Tax Commission assume that because Tax Commission
rulings and appeals affect assessed value and/or the subclass of property in
which it is assessed that, in turn, could affect property values. Rulings
are assessments for property tax purposes but could, as a consequence, affect
value. Extent of such claims would be pure speculation.
Officials from the Department of Social Services - Division of Legal Services
(DOS) assume that the proposed legislation could have a major impact on the
TEFRA lien program currently being developed pursuant to 42 U.S.C. 1396p and
Section 208.215.9 RSMo. These liens would be a mechanism to allow the state
to pursue reimbursement for medical assistance paid on behalf of the property
owner. DOS officials assume the proposed legislation could prevent the use
of the liens because such liens would limit the right to real property
thereby creating a cause of action against the state for the loss of the
value of the property in the amount of the lesser of 25% or $10,000.
Officials from Central Missouri State University stated that the proposed
legislation would have a fiscal impact, although the nature and extent of the
impact would develop on a case-by-case basis making the total fiscal impact
unknown.
Officials from the Department of Highways and Transportation (DHT) stated
that the fiscal effect of this proposal on DHT's regulation of outdoor
advertising and the installation of medians would be uncertain. It could be
substantial if courts award damages and court costs, expert witnesses and
attorneys' fees. The total impact would depend on the number of suits filed
and their success in the courts.
Officials from the Department of Natural Resources (DNR) assume the proposed
legislation would affect DNR by constraining its ability to apply
environmental rules because of the possibility that a person or entity would
seek damages as a result. DNR's decision to take action (or to take no
action) could be construed by nearby landowners as reducing their property
value. This proposal allows every decision to be challenged if the action
could be construed to be a property value redirection. DNR would be required
to spend considerable time and resources defending against possible suits.
Damages from settlement or litigation could fiscally affect the state.
This legislation will also lengthen the time DNR requires to issue a permit.
This action could possibly result in the Environmental Protection Agency
(EPA) withdrawing the federal financial support and authorization/delegation
of the regulatory programs. The EPA would then be responsible for all permits
and enforcement actions in the state of Missouri. As of December, 1995, DNR
maintained federal EPA funds exceeding $100 million for annual and special
projects funding.
Officials from the Department of Elementary and Secondary Education (DES)
assume that any expenses and costs resulting from damage awards given to
plaintiffs would be derived from the General Revenue Fund and appropriations
would need to be increased to offset losses. DES could not give a cost
estimate for the proposed legislation.
Officials from the Department of Labor and Industrial Relations - Division of
Employment Security (ESU) assume the proposed legislation would remove from
ESU a very effective collection mechanism because it would exclude
unemployment tax liens. ESU collects approximately $300 million in
unemployment contributions each year and total delinquencies amount to
approximately $18 million annually. If liens were not possible, the total
delinquencies would increase by at least $1 million annually because some
employers would no longer see the need to pay contributions.
Officials from the Department of Health (DOH) assume the proposed legislation
would cause their department to spend a significant amount of time and
resources defending against possible lawsuits. DOH conducts on-site property
inspections of sewers and hazardous waste dumps, etc.; negative results could
cause property owners to seek damages as a result of diminished property
values. The total impact would depend on the number of suits filed and their
success in the courts.
Officials from the Department of Agriculture (DOA) assume the proposed
legislation would cause the DOA to not fulfill its regulatory obligations due
to the creation of a cause of action for any affected individual through
which the individual might sue the DOA when the enforcement of statutes and
regulations caused a negative impact on real property values. The total
impact would depend on the number of suits filed and their success in the
courts.
Officials from the Missouri Department of Conservation (MDC) assume the
proposed legislation could cause litigation against MDC regarding hunting and
fishing regulations restricting the use of real property. MDC would argue
that fish and wildlife are not real property but are owned by the state, but
assumes litigation costs including staff time could exceed $100,000 annually.
Officials from the Missouri Gaming Commission (GAM) assume the proposed
legislation would result in significant liability to the state. Because
property typically used for excursion gambling boat projects is otherwise
useless and worthless riverfront, it could be assumed that a prima facie case
could be made against the state as provided for in subsection 4 of the
proposal. If the market in the state became saturated with gaming operations
and GAM chose not to issue any more licenses for an area, it could be argued
that this decision would result in a reduction in the fair market value of
the affected portion of property. Property that was being considered for use
in a $100 million riverboat gambling project would drop 25% or more in value
if it could no longer be used for such purpose. Because of the size of most
riverboat gambling developments and the profit potential involved, the impact
of lawsuits could involve millions of dollars.
The following agencies stated that the proposed legislation would have no
fiscal impact on their budgets: State Auditor's Office, State Treasurer's
Office, Highway Department and Highway Patrol Retirement System, Department
of Insurance, Office of Administration - Division of Design and Construction,
Chief Clerk - House of Representatives, Department of Revenue, Department of
Economic Development, Department of Corrections, Department of Labor and
Industrial Relations (Division of Workers Compensation; Labor and Industrial
Relations Commission), Lottery Commission, Office of the Governor, Secretary
of the Senate, Office of the Secretary of State, Department of Mental Health,
Department of Public Safety, Coordinating Board for Higher Education,
University of Missouri-Columbia, Missouri Southern State College, Missouri
Western State College, and Northeast Missouri State University.
Officials from Harris-Stowe College, Lincoln University, Northwest Missouri
State University, Southeast Missouri State University, Southwest Missouri
State University, and State Fair Community College did not respond to our
fiscal impact request.
Oversight assumes that, to the extent state agencies chose to reduce
enforcement/regulatory actions, some cost savings could be realized.
However, there would be an overall increased cost to the state resulting from
increased litigation and damages awarded.
FISCAL IMPACT - State Government FY 1997 FY 1998 FY 1999
(10 Mo.)
*GENERAL REVENUE
Cost - Office of Attorney General (AGO)
Personal Service (2 FTE) ($ 58,333) ($ 71,750) ($ 73,544)
Fringe Benefits (17,932) (22,056) (22,607)
Equipment and Expense (33,482) (24,703) (25,319)
Total Cost - AGO ($109,747) ($118,509) ($121,470)
*Oversight assumes that the proposed legislation could significantly
impact not only the General Revenue Fund, but many other state funds. The
full extent of the fiscal impact is unknown because there is no way of
estimating how many claims will be instituted nor the extent of damages
claimed by parties. It is conceivable that many agencies' rules and
regulations could be interpreted as affecting the real property rights of
owners.
FISCAL IMPACT - Local Government FY 1997 FY 1998 FY 1999
(10 Mo.)
Oversight assumes that the proposed legislation could significantly impact
local funds also. The full extent of the fiscal impact is unknown because
there is no way of estimating how many claims will be instituted nor the
extent of damages claimed by parties. It is conceivable that many political
subdivisions' rules, regulations and ordinances could be interpreted as
affecting the real property rights of owners.
DESCRIPTION
This proposal is entitled the "Private Property Rights Restoration Act". It
would allow for a cause of action to the owner of real property against the
state or any political subdivision if: 1) some state or political
subdivision action in any way infringes upon a private property right; and
2) such action results in a reduction in the fair market value of the
affected portion of property. The act would prohibit a cause of action
against any city, town, village, county or township that regulates property
through zoning.
A prima facie case against the state or political subdivision would be made
if the reduction meets certain levels. The owner could elect to recover
either the drop in fair market value and keep title, or the fair market value
prior to the application and relinquish title. If the owner's use or
proposed use of the property amounts to a public nuisance, no recovery would
be allowed if the state or political subdivision can establish that the use
or proposed use is a public nuisance. A six year statute of limitations
would be enacted. A court would be able to award costs, including reasonable
attorney and witness fees, to a prevailing plaintiff, with the state agency
or political subdivision responsible for payment of the judgment.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Office of Administration
Department of Agriculture
Department of Conservation
Department of Corrections
Department of Economic Development
Department of Elementary and Secondary Education
Department of Health
Coordinating Board for Higher Education
Department of Highways and Transportation
Department of Insurance
Department of Labor and Industrial Relations
Department of Mental Health
Department of Natural Resources
Department of Public Safety
Department of Revenue
Department of Social Services
Office of State Courts Administrator
Missouri Gaming Commission
State Lottery Commission
State Tax Commission
Highway Department and Highway Patrol Employees Retirement System
Chief Clerk - House of Representatives
Secretary of the Senate
Office of State Auditor
Office of Attorney General
Office of the Governor
Office of Secretary of State
Office of State Treasurer
Central Missouri State University
University of Missouri-Columbia
Missouri Southern State College
Missouri Western State College
Northeast Missouri State University
NOT RESPONDING: Harris-Stowe College, Lincoln University, Northwest Missouri
State University, Southeast Missouri State University, Southwest Missouri
State University, and State Fair Community College.