When I think about eminent domain, the haunting image of a large hand sweeping down from the sky and scooping up my house comes to mind. Resonating inside my head are cases such as Kelo vs. the City of New London, Goldstein et al. v. N.Y. State Urban Development Corporation; my Fifth Amendment rights, ‘land grab’, and even the poignant face of Big Brother looming from giant telescreens in Michael Radford’s 1984 film adaptation of George Orwell’s Nineteen-Eighty-four.
Despite eminent domain’s negative connotations, laws and statutes exist to protect property owners like us if we choose to assert them. Over the next several articles, we’ll discuss the power of eminent domain and its history; discuss the eminent domain process and dissect the property owner’s rights in the condemnation process.
To fully understand eminent domain and its powers, we should first look at the definition of eminent domain and understand the power of eminent domain. One definition is the power of the sovereign to take property for “public use” without the owner’s consent. (Julius Sackmna, et al., Nichols on Eminent Domain § 1.11 (3d ed. 2005). Our definition of eminent domain is simply the legal process that has been established to allow governments to gain ownership of private property. Although just compensation is an essential element of the valid exercise of eminent domain power, it is not an essential element of the meaning of eminent domain.
Contrary to public opinion, eminent domain powers did not come from the federal and state constitutions but rather rests in the sovereign state. This principle that the power of eminent domain is an attribute of sovereignty has developed from two schools of thought: (1) Natural law theory, and; (2) the concept of sovereignty. Most states have adopted the latter. For example, Illinois case law states that “the right of eminent domain is an essential attribute of sovereignty, inherent in every independent government, and to be exercised in the discretion of the sovereign power, to promote the general welfare of the people” (Penn Mut. Life Ins. Co. v Heiss, 141 Ill. 35, 31, N.E. 138 (1892). Missouri case law supports this claim, “The right of eminent domain is inherent in every government. In this state it is not conferred, but is limited by the constitution. (Kansas City v. Marsh oil Co., 140 Mo. 458, 41 S.W. 943 (1897).
The federal and state constitutions merely limit the power of eminent domain. Part of these limitations is the payment of just compensation for the appropriated property. The fifth amendment of the US Constitution states “[N]or shall private property be taken for a public use, without just compensation”. The Wisconsin Constitution article I § 13 states “The property of no person shall be taken for public use without just compensation therefore”.
Although the government is required to pay you just compensation for your property, determining this amount is often a source of dispute because it involves a wide range of issues which the government may neglect to consider, such as the highest and best use for a property or damages to a remainder parcel. Frequently, a property owner will only receive just compensation by allowing condemnation to occur. We’ll investigate this process in more detail in a future article.
While exploring the history of eminent domain, we found that the power to take private property for public use has been exercised since the days of the Romans (See 1 Sackman, supra, § 1.12) Although not so called, the power of eminent domain, along with the requirement of just compensation, was well established in England by the time of the American Revolution. When the American colonies became a sovereign state “[t]hey retained for the purposes of government all the powers of the British Parliament…” (Munn v. Illinois, 94 U.S. 113 (1876).
The manifestation of eminent domain power limited by just compensation was enshrined in the U.S. Constitution in 1789. While the states were fee to appropriate property using their own court systems, the power of the federal government to use its own courts to take property located in the states was not recognized until 1875 (Kohl v. United States, 91 U.S. 367 (1875).
The history and power of eminent domain is well established and consequently generates minimal controversy when compared to other more volatile elements of the eminent domain process, such as just compensation and public use. In subsequent articles, we’ll evaluate the types of eminent domain “takings”, participating in the eminent domain process and appealing a condemnation decision.
TRACKBACK URL FOR THIS POST: http://www.condemnation-law.com/blog/articles-eminent-domain/2423/eminent-domain-process-powers-and-history-part-1/trackback/
This project improves mobility by allowing motorists and freight to move north and south through metropolitan Spokane, from I-90 to US 395 at Wandermere. Once complete, the NSC will decrease travel time, fuel usage, and congestion, while improving safety by reducing collisions on local arterials.
When complete, the North Spokane Corridor will be a 60-mile per hour, 10.5 mile-long north/south limited access facility; that connects to I-90 on the south end (just west of the existing Thor/Freya Interchange) and connects to existing US 2 (at Farwell Road) and US 395 (at Wandermere) on the north end.
Interchanges will be built at locations along the corridor, to include: Trent Avenue (SR 290), Wellesley Avenue, Francis/Freya Street, Parksmith Drive, US 2, and US 395 at Wandermere.
The project consists of three phases as follows:
I-90 East and West from Hamilton to Fancher, and I-90 and existing NSC North to the Spokane River
click to enlarge
This section is commonly referred to as the ‘collector/distributor corridor’. Currently property acquisitions are underway from willing sellers and acquisition began in the SE quadrant in July 2011
Spokane River to Francis
click to enlarge
The project extends North of the Spokane River and terminates at the Francis interchange. Refinements to the existing designs from the Spokane River to the Francis Interchange have resulted in project savings of over $300 million dollars. Limited right-of-way acquisitions are currently underway.
The environmental reevaluation for the Spokane River to Francis section will be completed in 2011.
The Spokane River to Francis is further divided into 6 segments, allowing WSDOT to complete the project in phases as funding is secured. This section includes the following projects:
Project One: Francis Interchange Project Two: Rowan North, which includes grading, structures and BNSF realignment. Project Three: Euclid to Rowan, including grading, structures and BNSF realignment Project Four: Wellesley Interchange Project Five: Wellesley to Francis, including grading, paving and structures Project Six: Spokane River to Wellesley, including grading, paving and structures
click to enlarge
Francis/Freya Interchange North to US 395
This project will construct a new highway on new location. A total of 8 projects were funded by the 2003 “Nickel” Legislative Transportation Funding Package. Six are complete and open to traffic (light blue). It is anticipated that the last 2 contracts (in pink and pedestrian path in dark red) will be completed in late 2011 or early 2012.
For the Tiger Grant funded projects, construction began in 2010 on the NSC-Freya Street to Farwell Rd Southbound additional lanes project. This 2 year project will complete the southbound lanes between Francis/Freya and Farewell Interchanges; by constructing 3 additional lanes, and seven bridges and roundabout. The NSC and Parksmith interchange is also being constructed and the project could be complete in 2012.
We were told by WSDOT that property acquisition has resumed in the Francis to Market area and we’re waiting clarification regarding what this additional property will be used for.
The links below show the real estate acquisitions for the I-90 portion of the project as well as the Spokane River to Francis Redesign:
Because this is a public use project, WSDOT will have eminent domain authority to acquire property if negotiations can not be reached.
When the government makes you an offer, it will tell you that it represents fair market value. It may even show you an appraisal. But be aware, appraisals can vary, and the government’s may be a low one. If you reject the government’s offer, it still has to pay you that money, and this does not jeopardize your right to get more money in the eminent domain hearing.
Oftentimes, a property owner will only receive just compensation by allowing condemnation to occur. In condemnation, an owner can show that the rules for highest and best use will produce a higher price than the amount offered by the government.
If you pursue a claim for additional compensation, you should know that in Washington, attorney’s fees and costs may be paid for by the government if the judgment awarded at the trial exceeds the highest written offer by at least 10 percent (WA 8.25.070).
TRACKBACK URL FOR THIS POST: http://www.condemnation-law.com/blog/firm-projects/washington-projects/north-spokane-corridor/2401/north-spokane-corridor-project/trackback/
We’ve been discussing Project Influence Rule in just compensation eminent domain claims. In our previous article, we provided an overview of Project Influence Rule and discussed Condemnation Blight. As a quick review, The project influence rule basically states that any damages you incur in an eminent domain case cannot be influenced by the project itself.
Increasingly we are seeing state highway departments and local governments establish what we call right of way set asides, or ROW preservation projects. With these projects, government authorities are establishing regulations and ordinances that either limit a property owners ability to develop their property to its highest and best use, or allow government agencies to acquire property for projects that are planned in the distant future.
This situation arises when an agency such as a state highway department determines they will need to build a bypass around a growing city in the next 20-30 years. They map out the area where the proposed road will be constructed and identify properties that will need to be acquired at a later time. If you own a piece of land located within the proposed ROW, then these ordinances could prevent you from obtaining a permit to develop your property. Thus, if you wanted to build a gas station on your land, these ordinances could prevent you from doing so, despite the fact the project is planned for the distant future. Your property value in turn remains lower than if it had a business on it, thus allowing the DOT to offer a lower price for your property when they eventually acquire it.
From our perspective these regulations and ordinances are illegal and quite improper. Condemning authorities are utilizing these types of procedures and are doing it in such a way to unfairly depress the prices of property they wish to acquire sometime in the future, while also restricting the ability of property owners to utilize the land they rightfully own.
We are currently litigating a case, which will likely be appealed, involving this very issue. Our client owns a large parcel of land that was previously undeveloped. He purchased the property with the intention of subdividing and developing the land. When he sought the necessary permits and approvals to proceed with development, he was told by the State that a new intersection project was planned in the future that would require the acquisition of a portion of his land. They therefore told him to set-aside a portion of land for this project and gave him approval to sub-divide the rest. He agreed to this, and when the DOT approached him many years later to acquire this property, they valued the land as an out lot based upon its condition before the subdivided plat was filed. Obviously that severely depresses the value of the property.
In this example, it is our contention that as a property owner, you are entitled to have your property valued as though the subdivision was in place and existed at the time of the taking because in fact it did.
This is a new area in the determination of damages that I call to your attention because we are seeing these ordinances appear more and more around the country and there is very little litigation on this issue.
Dan Biersdorf presented oral arguments before the Wisconsin Supreme Court on November 1st, 2011 regarding the determination of contamination value in 260 N 12th Street, LLC and Basil Ryan Jr., vs. Dep’t of Transp., No. 2009AP001557 (Wis. filed 2010)
Our firm initially became involved with this case in March 2008 after the attorney that Ryan initially hired withdrew from the case. Given the complexity of his issues, he was advised to hire an attorney with extensive eminent domain experience and was referred to our firm shortly thereafter. Given our past experience handling valuation contamination cases, (Dealers Manufacturing Co. vs. County of Anoka, No. C9-99-1869 (Minn., 2000) and several favorable interim rulings in two New York cases) we agreed to represent Ryan.
Upon initial review of the case documents, we discovered a significant valuation issue associated with the subject property caused by a claim of environmental contamination. This claim had an impact upon the damage assessment made by the DOT in excess of $600,000. The admission of contamination and remediation evidence in Chapter 32 condemnation cases is one of the key issues in this particular case, and the following points are therefore worth noting:
Should contamination and remediation evidence be admitted in Chapter 32 condemnation cases where: just compensation remedies must be liberally construed in favor of the property owner; there exists separate statutory frameworks (both federal and state) to address contamination and remediation costs; and there are due process concerns and the danger of a double taking where the State reduces the amount of just compensation by contamination remediation estimates while it still can assess penalties for remediation under other regulations?
Should speculative evidence of the impaired value of the property be admitted into evidence in a condemnation case where Respondent relied on estimates that had no basis of fact?
The attached brief details our stance on the issues above and others. With the intention of keeping this article brief (no pun intended), I’ll merely address a few arguments.
Regarding #1 above, if contamination/remediation evidence is allowed (especially in this case where no rebuttal contamination/remediation evidence was allowed), then the property owner is assessed with all the costs without any due process to determine whether the property owner was the responsible party. The property owner is penalized (in this case $645,000) without any determination or due process as to responsibility. In addition (the double dip) the property owner loses the ability to recover the loss in value which the State can still do because it can collect remediation costs. That is the definition of violation of due process.
Additionally, since the cleanup costs being deducted against the fair market value for the subject property were created only because of the public improvement being built by the WisDOT, the determination of just compensation for Ryan had been wrongfully diminished in violation of his rights under W.S.§32.09z95)(b). In order to comply with this statute, the costs associated with contamination remediation must not be considered in determining just compensation in this case.
Regarding #2 above, admitting contamination and remediation costs into this case would be especially egregious where the appraiser has ignored USPAP methodology, typical market norms, and failed to provide a nexus between the remediation costs and the value reductions. The WisDOT’s cost discount is entirely speculative, and we believe their appraisal report, or at least any reference to the Site Conditions adjustment, must be excluded. At trial, the WisDOT’s appraiser acknowledged that he did not use the impaired value analysis prescribed in the USPAP Advisory Opinion 9 (AO-9) or by the Appraisal Institute.
For those interested in reading more, we’ve included our Supreme Court brief. We’ll provide an update once a decision is given.
TRACKBACK URL FOR THIS POST: http://www.condemnation-law.com/blog/articles-eminent-domain/2379/contamination-valuation-oral-arguments-heard-before-the-wisconsin-supreme-court/trackback/
We will be presenting information at an upcoming CLE seminar on one of our cases that is on appeal. The case, County of Dakota vs. Cameron (read more here) involves Minn. Stat. 117.187, which was enacted in 2006 and states:
When an owner must relocate, the amount of damages payable, at a minimum, must be sufficient for an owner to purchase a comparable property in the community and not less than the condemning authority’s payment or deposit under section 117.042, to the extent that the damages will not be duplicated in the compensation otherwise awarded to the owner of the property. For the purposes of this section, “owner” is defined as the person or entity that holds fee title to the property.
Minn. § 117.187 may ultimately change total takings cases because paying strictly for what has been taken may no longer be enough to justly compensate a property owner who cannot find an existing comparable property. The Minimum Compensation Statute, however, is so new that no case has made it through the court system to the appellate level. County of Dakota vs. Cameron is the first case heard on this issue at the appellate level.
The Dakota County Court recently held on this issue:
The Court feels that the term “comparable property” refers to property of a similar location, size, age, condition, zoning, and access as the property taken. Further, in a case such as this where a business needs to be moved, the comparable property should be such that it can reasonably house the business in questions. Such a property may or may not presently exist.
We interpret this statute liberally in favor of the property owner and argue that a comparable property under the Minimum Compensation Statute must be a specific, existent property that the displaced owner can actually purchase. Additionally, this property must be available at the time of the taking, and located within the community.
There is currently no case law interpreting the Statute’s term “in the community”, nor is there any case law interpreting whether a comparable property must be a specific, existent property that the displaced owner can actually purchase. We believe the trial court’s interpretation of the Minimum Compensation Statute ignores the statue’s plain language, is inconsistent with the purpose of the statute to relocate displaced business owners, and is liberally construed in favor of the County, not the property owner.
The US Supreme Court has consistently held in condemnation cases that the government’s obligation is to “put the owner in as good a position pecuniary as if the use of their property had not been taken”. Monongahela Nav. Co. v United States, 148 U.S. 312 (1893); Phelps v. United States, 274 U.S. 341 (1927); Olson v. United States, 292 U.S. 296 (1934). That is, property owners should receive fair and just compensation and not be at any financial loss resulting from the government’s action to seize their property. The condemnation process was designed to protect property owners, and statutes such as Minn. § 117.187 are enacted to further protect the rights of property owners during condemnation proceedings. It is therefore the responsibility of the court to liberally construe eminent domain statutes in favor of the property owner.
TRACKBACK URL FOR THIS POST: http://www.condemnation-law.com/blog/articles/2372/short-primer-on-minnesota-statute-117-187-aka-%e2%80%9cminimum-compensation-statute%e2%80%9d/trackback/
For determining damages in eminent domain claims, there is a concept called the project influence rule that exists in all states; either spelled out in their statute or stated through case law. The project influence rule basically states that any damages you incur in an eminent domain case cannot be influenced by the project itself.
I’ll illustrate this concept through an example. The most obvious situation relates to farm land located just out of town where a new road will be constructed and intersect with the existing road that fronts your property. You currently utilize the land for farming, but once the road is constructed, traffic will increase making land in the immediate area increase in value. Many property owners in this situation recognize the significance of their loss; when the land is taken, they’re losing land that would have been very valuable to them after the project is complete. Additionally, they will no longer have the opportunity to develop this land. My response in this situation relates to the project influence rule and that the portion of your land acquired will only increase in value because of the project. If the project wasn’t constructed, you would continue to use your land as agriculture and the value would remain the same. Because of the Project Influence Rule, a claimant cannot gain a higher level of damages based upon the value of land that is being created by the project.
On the flip side, you also are not penalized because of the project. Again, I’ll illustrate this concept by providing an example. The term that is often used with regards to the project influence rule is ‘condemnation blight’. This issue typically arises in a redevelopment area where a condemning authority slowly acquires as much land as they can amicably before proceeding with condemnation. Once acquired, the properties are vacated and typically left standing. You can imagine that over a period of time the buildings become dilapidated and the neighborhood now consists of vacant, neglected buildings which create condemnation blight. In some cases, when the condemning authority finally acquires the last remaining properties through eminent domain because a negotiated settlement could not be reached, they will try and base their offer of just compensation on the existing blighted conditions. Fortunately, the courts will not allow this because the project is causing the condemnation blight and the project influence rule requires just compensation based upon the value of the properties in the market place assuming the activity by the condemning authority had never occurred.
The $62M project, planned in three stages, will involve numerous changes to the traffic pattern in the Utica area and will involve the major reconstruction and partial realignment of the North-South Arterial through West Utica. This project also includes but is not limited to replacing the 51 year old bridge over Columbia Street, creating a new pedestrian bridge across Route 12, construction of additional parking between Court and Lafayette Streets, and constructing a new ramp off Oriskany St. providing access to Varick Street. Stephen Zywiak, DOT regional design engineer stated “This is the central arterial that we have in the region and the condition is such that we need to get a timely replacement”.
This project has been in the planning phase for years and will affect approximately 85 families and businesses. The final NYS DOT public hearing for the project was held on September 27th, 2011 at the state office building at 207 Genesee St. The final alternative has been selected, property appraisals are underway and the first phase of the project will begin in late 2012. The state can begin acquiring properties once they obtain final design approval from the Federal Highway Administration, which is expected to occur by the end of 2011.
*Design concepts are included below
Because this is a public use project, the state highway department has eminent domain authority to acquire property if negotiations can not be reached. Property owners should familiarize themselves with their rights under New York eminent domain law prior to accepting an offer from the state. We have several pages on our website devoted to this topic, including a flow chart which details the New York eminent domain process and information related to attorney fee and cost recovery. There are 2 important eminent domain statutes that you should be aware of:
When presented with an offer by the State, you can either sign the final settlement papers or the offer for advanced payment. By signing the final settlement papers, you are accepting the state’s offer and waiving your right to pursue additional just compensation under New York eminent domain law. If you would like to pursue a claim for additional just compensation, you must sign the offer for advanced payment. Once this offer is signed, you will receive payment from the state for the amount offered (provided there are no liens or judgments attached to your property and no past due taxes) and allow you to initiate a claim for additional just compensation. If you sign the offer for advanced payment, you must within three years after service of notice of acquisition or vesting, (whichever is later) file a claim for additional damages with the clerk of court having jurisdiction over the matter. (NY EM DOM PROC § 503). Learn more about New York eminent domain.
NY EM DOM PROC § 701 allows for the recovery of attorneys fees and costs in a just compensation case if the final award is substantially greater than the condemning authority’s offer of payment. Learn more about New York attorney fee recovery.
TRACKBACK URL FOR THIS POST: http://www.condemnation-law.com/blog/firm-projects/new-york-projects/2360/route-12-north-south-arterial-project-utica-ny/trackback/
I had the opportunity to meet with about 10 property owners who are affected by the Willets Point Redevelopment Project in Flushing, and I also had the pleasure of meeting Robert LoScalzo, who is creating a documentary on the project. We all had dinner at Tony’s Pizzeria in Flushing and discussed the project, their current right to take challenge and New York eminent domain law.
For those of you not familiar with the area, I’ll spend a few minutes describing it and explaining the purpose of the project. Years ago, downtown Flushing was considered a deteriorating area with no real redevelopment incentive. However, based upon its prime location, downtown Flushing realized significant redevelopment spurred by private dollars. Currently, the area is thriving with businesses and valuable properties. This area is significant because it exemplifies how redevelopment can occur on its own in prime locations, without the aid of a redevelopment authority. Property in a good location is usually (but not always) subject to private redevelopment.
Across the highway (Van Wyck Expressway) from downtown Flushing is Citi Field, and in between the ball park and downtown Flushing is Willets Point. Currently, redevelopment is pushing outward from downtown Flushing towards Willets Point, making Willets Point the only underdeveloped area between downtown Flushing and Citi Field. Although the New York City Economic Development Corp. (NYC EDC) is spearheading a major redevelopment project in Willets Point, I think the area would have attracted private redevelopment over time. I think the marketplace would have realized the potential of Willets Point given its prime location and redeveloped this area on its own, without the aid of NYC EDC.
The redevelopment that has and is occurring in the area will ultimately influence just compensation for these property owners should Judge Madden allow the redevelopment project to proceed and condemnation of these properties occur.
TRACKBACK URL FOR THIS POST: http://www.condemnation-law.com/blog/firm-projects/new-york-projects/2313/willets-point-does-it-need-the-redevelopment-authority/trackback/
Over the past month to month and a half, we’ve been discussing the concept of severance damages and how they impact the amount of compensation a property owner is entitled to receive under eminent domain law. Severance damages play an important role in the valuation process because they are not always obvious and they can produce a significant amount of just compensation for a property owner. We’ve already discussed the loss of access, the loss of reasonable access, loss of parking, and proximity damages. As a reminder, severance damages relate to the loss of value to the remainder (portion of property left after the taking) above and beyond the value of the land and structures taken by the government.
Today, I’d like to end our series on severance damages by discussing the uneconomic remnant. The uneconomic remnant is the portion of property leftover in a partial taking situation that cannot be developed on its own. This remainder parcel is either too small to be developed, or the configuration of the property is such that does not allow for development. Or, a property owner might be left with a piece of property that they no longer want because it has no value in the marketplace.
In this situation, the property owner has several options. In some states, statutes exist that allow an owner to sell the uneconomic remnant to the condemning authority, although we would never recommend doing this. The owner can also keep this property and still recover damages from the condemning authority during the eminent domain proceeding. If the owner elects to keep the property and the uneconomic remnant really has zero or very little value, then the value of the damages in the eminent domain proceeding will not only include the value of the property acquired, but also include the value of the uneconomic remnant prior to the taking.
I frequently educate owners about this to make sure they understand that they can get compensation for an uneconomic remnant without being forced to turn over the title of that property to the condemning authority.
In previous blog posts, we’ve been discussing the concept of severance damages and how they impact the amount of compensation a property owner is entitled to receive under eminent domain law. Severance damages play an important role in the valuation process because they are not always obvious and they can produce a significant amount of just compensation for a property owner. We’ve already discussed the loss of access, the loss of reasonable access and the loss of parking. As a reminder, severance damages relate to the loss of value to the remainder (portion of property left after the taking) above and beyond the value of the land and structures taken by the government.
Another area of severance damages that I would like to address is proximity damages, which are easily explained through use of an example. Imagine that you own a large piece of residential property situated in a pristine countryside overlooking rolling fields, a glistening stream and patches of shade trees. The highway department decides to take the front portion of your property in order to build a new four-lane freeway. After the taking occurs and the road is constructed, you will have a four-lane highway outside your front door disrupting your pristine quiet countryside, thus making your property significantly less desirable for a residential building site. Consequently, even though very little of your property has been taken, the land that you have left will likely be significantly less valuable than it was before the highway was constructed.
That difference of value before the taking and after falls under the general definition of severance damages, but it is more specifically identified as proximity damages. If you can think of proximity as being close to, you’re being proximate to the taking or the project that is causing the damages to the remainder property. This is exactly what happened in the example I’ve just given you. Before, you had property in a quiet countryside, and after the highway is constructed, the property you have left is reduced in value. This reduction in value allows for the recovery of severance damages.
**In response to the inquires we receive about this concept, I’d like to note that If the new highway is constructed near your property but does not actually require the acquisition of a portion of your property, then you are not entitled to compensation for the loss of value under eminent domain law. A physical taking of a portion of your property must occur in order to receive compensation for proximity damages.
When I think about eminent domain, the haunting image of a large hand sweeping down from the sky and scooping up my house comes to mind. Resonating inside my head are cases such as Kelo vs. the City of New London, Goldstein et al. v. N.Y. State Urban Development Corporation; my Fifth Amendment rights, ‘land grab’, and even the poignant face of Big Brother looming from giant telescreens in Michael Radford’s 1984 film adaptation of George Orwell’s Nineteen-Eighty-four.
