LID Does Not Violate Fifth Amendment’s Takings Clause

The Oregon Court of Appeals recently ruled in the City of Albany’s favor regarding a long running dispute over a local improvement district (“LID”).  In Parker et al v. City of Albany, __ Or App __, __ P3d __ (December 8, 2010), the court rejected the petitioners’ claim that the LID violated their rights under the Fifth Amendment to the U.S. Constitution. Prior to establishing the LID, the city condemned some of the petitioners’ property to extend a road within the LID.  Subsequently, the city assessed the petitioners as property owners who benefitted from the LID.  The assessment included a proportional share of the city’s costs in condemning petitioners’ property.

The petitioners asserted that Fifth Amendment prohibits the city from requiring them to pay their share of the city’s costs in acquiring their property for the LID.  Specifically, they argued that the city’s assessment requires them “to pay some of the cost of the taking of their own property, [meaning] they will not have received just compensation for their land.”  In rejecting that argument, the court made a distinction between the government’s eminent domain powers and the power to raise revenue.  The court held that Albany had properly exercised both powers, and that having condemned the land and paying petitioners “just compensation” to acquire it, the city was not barred by the Fifth Amendment from subsequently assessing petitioners their pro rata share of the city’s acquisition costs.