House Bill No. 306
Introduced By _______________________________________________________________________________
A Bill for an Act entitled: "An Act providing for compensation for the owner of real property the fair market value of which is substantially and disproportionately reduced by the application of an existing, new, or amended state government rule or local government entity ordinance; and providing for an exemption from application of the rule or ordinance."
Be it enacted by the Legislature of the State of Montana:
NEW SECTION. Section 1. Short title. [Sections 1 through 6] may be cited as the "Fairness to Property Owners Act".
NEW SECTION. Section 2. Legislative findings and declarations. The legislature finds and declares that:
(1) State rules and local government ordinances sometimes have the effect of reducing the market value of private real property.
(2) If a state rule or local government ordinance that reduces the market value of private real property does not abate a public nuisance that affects the public health, safety, welfare, or morals, it is fair and appropriate that the state or local government compensate the property owner for the reduction in market value of the property, and compensation must be made.
(3) Compensation to the property owner is also fair and appropriate, and must be made, if the rule or ordinance abates a public nuisance and if the property owner is not contributing to the public nuisance and did not know about the public nuisance when the property was acquired, and it does not appear that, based upon prevailing community standards, the property owner should have known about the public nuisance when the property was acquired.
(4) [Sections 1 through 6] establish a fair and equitable compensation system to address the findings and declarations in this section.
NEW SECTION. Section 3. Taking of property -- reduction in fair market value -- compensation. (1) If the application of a new, amended, or existing state rule or local government ordinance, including but not limited to one relating to land use planning or zoning, substantially and disproportionately reduces the fair market value of a parcel of real property for the uses that were legal immediately before the application of the rule or ordinance, the property is considered to have been taken for a public use.
(2) A substantial reduction in fair market value is one that reduces the fair market value by more than 5%. A disproportionate reduction in fair market value is one that reduces the fair market value of the parcel to a significantly greater extent than the reduction in fair market value of comparable parcels affected by the application of the rule or ordinance.
(3) In determining fair market value immediately before the application of the rule or ordinance, reduction in that value due to anticipation of the application of the rule or ordinance must be disregarded.
(4) The owner or possessor of the property may require just compensation by, or condemnation and just compensation by, the government or governmental entity that adopted a new, amended, or existing rule or ordinance the application of which substantially and disproportionately reduced the fair market value of the property. Either party may request a jury trial. Just compensation must be determined by the trier of fact. If more than one government or governmental entity adopted a rule or ordinance the application of which substantially and disproportionately reduced the fair market value of the property, the jury shall determine the amount of compensation to be paid by each. The amount of compensation due is the dollar amount by which the fair market value of the property is reduced, including the value of any property interest taken or reduced.
(5) Upon receipt of compensation under subsection (4), the affected property must be reassessed for property tax purposes by reducing its assessed value by the amount of the compensation.
NEW SECTION. Section 4. Time for bringing proceeding. A proceeding under [section 3(4)] must be brought within 2 years after the date of the application of the rule or ordinance at issue.
NEW SECTION. Section 5. Compensation waivers prohibited. A state or local government entity may not make waiver of one or more provisions of [sections 1 through 6] a condition for approval of a use of real property, the issuance of a permit, or any other entitlement.
NEW SECTION. Section 6. Exemptions. A government or governmental entity unwilling or unable to pay compensation under [section 3] may instead exempt all owners of real property affected by the rule or ordinance from application of the rule or ordinance. The exemption may be granted either before or after one or more compensation orders have been granted under [section 3]. A public hearing is not necessary on the grant of an exemption. A government or governmental entity granting an exemption must reimburse a real property owner for the owner's costs and attorney fees for a proceeding under [section 3].
NEW SECTION. Section 7. Severability. If a part of [this act] is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of [this act] is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.