Recently the Indiana Court of Appeals heard a case between Indiana school corporations and the State of Indiana regarding a political subdivision’s ability to assert a Takings Clause claim for the taking of its property in Lake Ridge School Corporation and School City of Hammond, West Lafayette Community School Corporation v. Eric Holcomb, Indiana State Board of Education, Indiana Department of Education, and Todd Rokita, Case No. 22A-PL-423. In that case, Lake Ridge School Corporation, School City of Hammond and West Lafayette Community School Corporation learned that as political subdivisions, the State could force them to sell or lease their schools, once they were no longer in use, to a charter school or state education institution for $1.

In 2019 and 2020, Lake Ridge and School City of Hammond closed schools in their districts. Under Indiana Code, once the school closed, the schools should have notified the State within 10 days, made the building available to a charter school or state educational institution and sell that building to the interested charter school or state educational institution for $1. The Schools sued the governor, the attorney general, the Indiana Department of Education and the Indiana State Board of Education contesting the validity of the statute and claimed that the statute constituted a taking of the Schools’ property. The State argued that the Schools could not sue the State for an unconstitutional taking because “the Takings Clause has no role to play in intragovernmental disputes between a State and one of its agencies or political subdivisions”.

The Court of Appeals agreed with the State. In its decision for the State, the Court cited a US Supreme Court case that political subdivisions are created as convenient agencies for exercising such governmental power of the state as may be entrusted to them. “The state, therefore, at its pleasure, may modify or withdraw all such powers, may take without compensation such property, hold it itself, or vest it in other agencies, expand or contract the territorial area, unite the whole or a part of it with another municipality, repeal the character and destroy the corporation.”  The Court went on to explain because a political subdivision is merely a department of the state and held that the state may withhold, grant or withdraw powers and privileges as it sees fit, that political subdivisions cannot sue their states under the takings clause.

This case may have lingering effects on the rest of political subdivisions and municipalities throughout Indiana, as the State may now seize any property of a political subdivision for any reason or any purpose, with no compensation. I have practiced eminent domain condemnation law for over a decade and accept case referrals from attorneys across Indiana and represent commercial, agricultural and residential landowners to assert their rights and maximize compensation in land acquisition transactions.

Article by: Lindsey M. Bennett, Attorney