You might not think that the conclusion which the U.S. Court of Appeals for the Tenth Circuit reached in M.A.K. Investment Group, LLC v. City of Glendale, No. 16-1492 (May 14, 2018) would be all that controversial: when private property is declared by a municipality to be "blighted" and subject to redevelopment (and eminent domain), the municipality needs to tell the owner about it, even if the taking may occur somewhere down the road. But apparently it was not obvious, for it took years of litigation to figure it out.
Colorado's urban renewal statute permits local governments to designate private property as blighted (by looking at eleven factors), take it any time within the next seven years, and transfer the land to a new private owner. An owner has a very short time window -- 30 days -- to challenge the blight determination by filing a lawsuit in a Colorado trial court. The statute's notice provision:
As for notice, the statute requires a city to notify property owners in two instances: (1) when the city begins a study regarding blight involving their properties, and (2) when the city will hold a hearing regarding its intention to acquire property for public or private redevelopment. See § 31-25-107(1)(b), (3)(b).But when it comes to the results of these blight hearings, the notice requirement depends on whether the city found the property at issue blighted or not. Strangely enough, Colorado’s statute requires a city to mail notice to those whose property it does not find blighted, but does not require a city to notify those whose property it does find blighted. See § 31-25-107(1)(b). The statute also takes care to note that “[n]otwithstanding any other provision of law, any determination made by the governing body . . . shall be deemed a legislative determination and shall not be deemed a quasi-judicial determination.” § 31-25-105.5(2)(c).
Slip op. at 5-6.
MAK's property was included in Glendale's "Riverwalk" redevelopment project. The City told MAK it was studying whether the property was blighted, and would hold a public hearing "to approve the Riverwalk Urban Renewal Plan." But the City did not tell MAK that the hearing "related to the possibility of future condemnation proceedings" against MAK. Slip op. at 6. At the hearing, the City found that the property was blighted. But the City didn't tell MAK about that finding, nor did it tell it that this opened the 30-day repose period for MAK to challenge the blight determination. By the time MAK found out several months later, it was too late, baby.
MAK sued in federal court under § 1983, asserting the Urban Renewal statute violated its due process and equal protection rights. The District Court dismissed the complaint.
The Tenth Circuit reversed. We're going to focus on the due process claims, because those were the most interesting. MAK made two distinct challenges. First, that the statute did not provide adequate notice to MAK that its property was blighted. Second, that the City had an obligation to provide MAK with notice of the 30-day repose period, and because the statute did not require it to do so, the statute is unconstitutional.
The court first identified MAK's property interest. The City argued that the statute did not jeopardize MAK's property, because a blight determination only subjected MAK's land to possible future condemnation, and didn't actually take the land. The court concluded, however, that MAK's property interest was the (statutory) right to judicial review. Ah, a government-created "entitlement," aka New Property. Slip op. at 10 ("This state-created cause of action constitutes a protected property interest."). Id. at 11 ("M.A.K. had a property interest in its statutory cause of action to challenge the blight determination process for abuse of discretion.") (footnote omitted).
Having concluded MAK owns due process property, the court addressed its two lack-of-notice claims, that the property was determined to be blighted, and that this opened the 30-day challenge window. The court concluded that the City was required to have told MAK about the blight finding, but was not required to inform it of the 30-day challenge period. Slip op. at 16 ("Applying this intuitive rule, we conclude due process required Glendale to provide M.A.K. with direct notice of the adverse blight determination. In contemporary terms this means notice had to be mailed, emailed, or personally served.").
Without notice, MAK "was left unaware of the potentially looming condemnation action," id., and had no idea it could have and should have challenged the finding.
When in the absence of notice, property owners are likely to lose a property right—in a cause of action or otherwise—the Mullane rule applies. At that point, the state must take reasonable steps to provide enough notice for reasonable persons to realize they must investigate possible remedies.
Slip op. at 17. The court rejected the City's argument that MAK and other property owners have a duty to keep up on things, and even if MAK could have been more diligent, that alone did not relieve the City of the duty to give an owner notice that the City has made a determination that may affect the owner's rights. Read the opinion from pages 18 through 29 for the court's analysis of each of the City's related arguments.
The court had a different view of the City's duty to tell the owner specifically about the 30-day repose window and its ability to challenge that decision in court. Slip op. at 29. The court held the government's due process obligation to provide ends after it tells the property owner about its decision, and it is up to the owner to figure out what it might do next. Slip op. at 29-30. Property owners have a duty to keep themselves informed about avenues of relief:
The right to seek review within thirty days is publicly accessible in a statute. Had M.A.K. been notified of the blight determination, it could have turned to "public sources to learn about the remedial procedures available to [it]."
Slip op. at 30-31.
In sum, Glendale needed to tell MAK of Glendale's blight determination, but it didn't need to tell MAK what it could do to challenge that decision. That responsibility falls on MAK.
While we appreciate this analysis, we think the better rule would have concluded that the City owed MAK notice of both the city's decision and MAK's avenues of relief. The court recognized that its ruling created a circuit split with the Second Circuit's decision in Brody v. Village of Port Chester, 434 F.3d 121 (2d Cir.2005) -- which held that due process requires both notice of the government act, and the avenue of review -- (and, by the way, with the Hawaii Supreme Court's ruling in Kellberg v. Yuen, 131 Haw. 513, 319 P.3d 432 (2014), which adopted the same rule as Brody).
Brody and Kellberg concluded (rightly, we think, since we represented the owner in the latter case) that the burden on government to inform an owner of the government's own process for review is so minimal that it it really is no burden at all. Also, these are the government's own procedures, and this isn't a game of hide the ball, littered with traps for the unwary owner.
Government should be transparent when it does things that could end up depriving someone of their property, including the ways for the owner to contest the finding. Like the statutes and rules in Brody and Kellberg, Colorado's urban renewal law is dense text, 37-single-spaced pages, and probably not so easily understandable that the "average landowner" would realize it has a very short window in which to react (and in a very specific way).