City Acquisition of Property
Minnesota state law authorizes the City of Minneapolis to acquire property by gift, direct purchase, and – in limited situations – through eminent domain proceedings. Property owners with questions should call the Department of Community Planning and Economic Development (CPED) at (612) 673-5042, TTY: (612) 673-5154.
Why does the City of Minneapolis acquire property?
The City acquires property for various purposes, including infrastructure needs and City redevelopment goals such as enhancing our neighborhoods, creating jobs and strengthening the City’s economy.
Who appraises the property?
The City hires an independent appraiser to determine the property’s fair market value. The appraiser schedules a convenient time with the owner to inspect the property, and the owner or the owner’s representative is invited to accompany the appraiser. With non-residential properties, the City may also hire an appraiser to determine the value of any fixtures or leasehold improvements included in the property.
How is the offer amount determined?
State law provides that when property is acquired for a public purpose, the owner must receive "just compensation." Just compensation is interpreted by the courts to mean that owners are entitled to payment for the fair market value of their property. Fair market value is defined as the amount a willing buyer would pay, and a willing seller would accept, when neither party is forced to sell or buy. The offer is based on the property appraisal and is supported primarily by recent sales of similar properties. When applicable, an income and cost approach may also be used.
How is "direct purchase" of property handled?
City representatives deal directly with the property owner. After the appraiser determines the fair market value and the City determines whether the acquisition cost is feasible, the owner receives a written offer from the City to purchase the property. Owners will be given an opportunity to consider the offer and may call CPED at (612) 673-5042 for more information or to schedule an appointment to discuss the offer. Owners may obtain their own appraisals if they wish. The City will reimburse the owner for the reasonable cost of an appraisal up to $1,500 for a single-family or duplex residential property or a property valued at less than $10,000 and up to $5,000 for all other properties.
What happens when property owners accept the offer?
Both the owners and the City sign a purchase agreement. In addition to receiving the agreed-to purchase price for the property, owners may be entitled to moving expense payments and other relocation benefits. These will be more fully explained by a City relocation counselor.
At its own expense, the City will obtain an examination of the title to the property. If the title is clear, a closing will be scheduled for the property. At the closing, any claims against the property are settled in order to vest in the City marketable title, free of any taxes, liens or encumbrances. The City will make a cash settlement with the owner at the closing, and the City will record all necessary documents to complete the transaction.
After accepting the offer, how soon are property owners required to move?
After the closing, owners and tenants may be allowed to occupy the property until the City has completed its relocation responsibilities. No occupants are required to move (unless the property is hazardous) until the City has referred them to a comparable replacement property. Occupants continuing to occupy the property after the sale to the City will be required to pay rent based on the fair rental value of the property.
What happens if property owners don’t accept the offer?
In certain instances, the City may apply to the court to acquire the property by condemnation proceedings (also called eminent domain). Condemnation proceedings exist to protect property owners’ rights, and owners may call CPED at (612) 673-5042 to discuss the procedure.
How are condemnation proceedings handled?
Condemnation proceedings begin when the City files a petition with Hennepin County District Court. A copy of the petition and a notice of the hearing are sent to the property owner. The petition and notice:
- Inform the owner of the purpose of the petition and the date, time and location of the first hearing
- Describe the property and list the names of all people who may have an interest in the property
- Request the court to appoint three qualified individuals to act as commissioners to determine what should be paid for the property
The hearing is held in the Hennepin County Government Center where an attorney for the City will present the petition to the court. If the petition is granted, the City either pays the owner or deposits into court the amount of the City’s appraisal. At this time, title and possession of the property transfer to the City. However, the owner retains his/her right to be heard on what ultimately should be paid for the property.
The initiation of condemnation proceedings does not mean that the City has withdrawn its offer for the property. Owners may still accept the offer or try to reach agreement with the City on price in order to avoid the time, expense and uncertainty of court proceedings.
Will someone listen to the property owner’s opinion of the property’s value?
Yes. Three court-appointed commissioners who are experienced in real estate sales and capable of making a fair value determination will review the appraisers’ opinions of value, view the property, and consider any testimony related to value – including the owner’s opinion of value. The commissioners then decide on an award that in their opinion will justly compensate the owner.
Can property owners appeal the commissioners’ award?
Yes. Property owners and the City both have the right to appeal the commissioners’ award. At this stage, if not sooner, it is best for the owner to consult with an attorney.
What happens after an appeal?
If the owner, City, or both parties appeal to the District Court, the compensation is decided by a jury. Simply because an appeal is filed, however, does not mean the matter will go to court as it may be settled before trial.
If the appeal is settled out of court, owners can expect the final payment approximately two weeks after the City receives a signed settlement agreement. If the appeal goes to trial, owners can expect the final payment approximately 30 days after the jury returns its verdict, unless the jury’s verdict is appealed. In this case, final payment will depend on the outcome of the appeal.
City relocation assistance
The City will:
- Provide timely and accurate information about relocation payments and assistance – what is available, who is eligible and how to obtain them
- Provide assistance to complete any required application or claim forms
- Inform residents of their rights to seek review of any claim for relocation payments or benefits
- Provide services necessary to make sure the relocation process does not result in different or separate treatment because of race, color, religion, sex or national origin
- Provide information to displaced people about housing programs and other assistance to minimize hardship
- Not require any person to move until he/she has been offered assistance in finalizing a suitable replacement site (within his/her financial means) in a location that is reasonably convenient to work, transportation and other facilities
- Provide assistance to minimize any hardship displaced people may encounter and make sure displaced people are relocated in comparable, safe and sanitary dwellings
- Inspect all relocation housing before and after occupancy by displaced people
Relocation payments for homeowners, renters and non-residential property owners
Homeowners and renters may choose one of the following options to pay for moving and related expenses:
- Reimbursement or direct payment to a licensed mover. The City requires a written claim, which must be supported by original receipts or other evidence before payment can be made. The City will furnish forms and assistance in making the proper claim.
- A fixed moving expense payment that is based on the number of habitable rooms that are occupied
Homeowners who have occupied the home for more than 180 days before negotiations began may be eligible for a replacement housing payment to help them buy another home. The payment may include the following:
- The difference between the payment made for the old dwelling and the cost to buy comparable housing
- An amount to compensate for the difference between the old and new mortgage interest rates, if there is existing debt on the acquired property
- A portion of the closing costs on a new home
Homeowners who do not qualify for a replacement housing payment or who elect not to buy another home may be eligible for a rental assistance payment to help pay their rent for a 42-month period.
Renters and certain others who have occupied the property for at least 90 days before negotiations began may receive, in addition to their moving expenses, one of the following payments:
- Rental assistance to help meet the increased cost of renting comparable housing. This payment is made annually for a 42-month period.
- Down payment assistance which may be applied toward the purchase of a comparable dwelling. These funds must be used to reduce the purchase price and/or to pay certain closing costs.
Businesses and other non-residential entities may be eligible for relocation payments, which can include:
- Moving and related expenses, including expenses for searching for a new location, reprinting stationery, reconnecting telephone and alarm services and moving notices
- Up to $50,000 for reestablishment expenses such as repairs, improvements and modifications to the new location, or increased operating expenses during the first two years
Eligible businesses may elect to receive an alternative payment instead of moving and related expenses. This payment is based on the business’ average annual net earnings for a two-year period prior to displacement. Minimum payment: $1,000. Maximum payment: $20,000.
If the City makes an offer to acquire your property and if the property is currently occupied, information about relocation assistance and benefits will be explained in greater detail by a relocation counselor.
If you have any questions or need more information, please call CPED at (612) 673-5042, TTY: (612) 673-5154
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When writing to CPED, please include your name and mailing and property addresses.
City of Minneapolis
Community Planning and Economic Development
Real Estate Development Services
Crown Roller Mill
105 Fifth Avenue South, #200
Minneapolis, MN 55401
August 28, 2006
Last updated Nov. 1, 2011