By Cy Ryan (contact)

Thu, Jul 24, 2008 (4:54 p.m.)

CARSON CITY – Governments are going to have to come up with more money when they condemn the property of citizens.

The Nevada Supreme Court has ruled that individuals are entitled to the interest earned on money placed by a government in a condemnation deposit. It said any law allowing local governments to keep interest earned on funds deposited for condemnation actions is unconstitutional.

The decision reversed the ruling of District Judge Douglas Herndon, who ruled in favor of Clark County in a condemnation dispute with Paul and Laurel Moldon.

The Las Vegas Redevelopment Agency sought to condemn property belonging to the Moldons in April 1995. The district court granted immediate occupancy and the agency deposited $725,000 with the court clerk as the estimated value of the property.

After a legal fight, a jury in 2005 ruled the property was worth $1,570,000. After the decision, the Moldons asked for a court order to pay them the interest earned on the deposited $725,000.

The interest had been deposited in the general fund of Clark County. The county cited Nevada law that directs interest earned on money deposited with the court go to the applicable local government general fund.

The Supreme Court, in a unanimous decision written by Justice Michael Douglas, said putting the interest earned into the county treasury was “a taking in violation of the Fifth and Fourteenth Amendments.”

Douglas wrote it allowed the county to “take the Moldons’ earned interest without just compensation” and “it impermissibly allowed Clark County to unduly burden the Moldons to single-handedly benefit the public as a whole.”

The court returned the case to the district court to determine the amount of interest owed to the Moldons on the $750,000 condemnation deposit.