Eminent Domain Report

When a municipality acquires private property in an eminent domain case, it must first pay just compensation to the property owner. The municipality must file a complaint—a lawsuit—asking the appropriate court to enter a final order of condemnation, vesting title to the property in the municipality. Litigation can take years as the amount that the municipality must pay to the property owner is generally determined by a jury trial—at the very end of the lawsuit’s life.

This can be challenging for municipalities with tight project timelines or an immediate need to put the land to some public use. So, Arizona’s eminent domain statutes allow some municipalities to take “immediate possession” near the case’s outset, permitting the municipality to begin its project on the property immediately.¹

Applying for Immediate Possession

A.R.S. § 12-1116 lays out this process. After or concurrently with filing its complaint, following compliance with all applicable statutory and regulatory requirements regarding written offers and notice, a municipality “may apply for an order permitting the [municipality] to take possession of and use the property sought to be condemned for the purpose prayed for” prior to the resolution of the actual condemnation lawsuit. A.R.S. § 12-1116(E).

The municipality will need to show that the acquisition is (1) for a proper public and (2) necessary for that purpose. The municipality should additionally be prepared to present evidence—likely through calling a witness who appraised the property—of the City’s estimation of just compensation. Once the court considers the application, it will set a hearing for the court to hear testimony on whether the municipality may take possession of the property.

Attending the Hearing

At that hearing, the municipality shows that the property sought to be condemned is necessary for a proper public purpose. This is also the opportunity for any defendants (those with an interest in the condemned property) to challenge whether the acquisition is necessary for a public use.

Once public use and necessity are established, the court then must receive evidence as to probable damages—just compensation. A.R.S. § 12-1116(H). The court’s determination of probable damages will serve as the amount of the bond in the court’s order for immediate possession. Generally, the evidence introduced at this hearing, including evidence of probable damages, is inadmissible on the trial of the action. A.R.S. § 12-1116(O).

Even with the order entered, the municipality does not take possession until it deposits a bond in this amount with either the clerk of the court or the state treasurer. A.R.S. § 12-1116(H–K). Note that interest will accrue on the amount of the bond following deposit and the municipality must pay statutory interest to the property owner(s) ultimately awarded just compensation.

When the order for immediate possession is entered and the bond is deposited, the municipality has taken possession of the property and may proceed with its project on the possessed property.

Moving Forward

The condemnation lawsuit is not over yet—while the municipality has been let into possession of the property, there must still be a final determination of just compensation. So, the case continues like any other, generally concluding through settlement or trial.

¹ Note that not all municipalities may avail themselves of the power of immediate possession. Cities, towns and counties generally follow the scheme laid out above, but it is critical that a municipality assess what statutory powers are available to it before proceeding. Further, federal regulations may modify some of this process in federally funded projects.