09272011 PROPOSED CONSTITUTIONAL AMENDMENTProposed Eminent Domain
Constitutional Amendment
Briefing to City Council
September 27, 2011
Rebecca D. Kubin
Deputy City Attorney
Virginia Beach City Attorney’s Office
2
Current Eminent Domain Provision in Virginia
Constitution
The General Assembly shall not make “any law
whereby private property shall be taken or
damaged for public uses, without just
compensation, the term ‘public uses’ to be
defined by the General Assembly;”
“Public uses” are defined in Va. Code §1-219.1
(2007).
3
Proposed Amendment to
Article I, Section 11 in the Bill of Rights
That the General Assembly shall pass no law whereby private
property, the right to which is fundamental, shall be damaged or
taken except for public use. No private property shall be damaged or
taken for public use without just compensation to the owner
thereof. No more private property may be taken than necessary to
achieve the stated public use. Just compensation shall be no less than
the value of the property taken, lost profits and lost access, and
damages to the residue caused by the taking. The terms “lost profits”
and “lost access” are to be defined by the General Assembly. A public
service company, public service corporation, or railroad exercises the
power of eminent domain for public use when such exercise is for the
authorized provision of utility, common carrier, or railroad services.
In all other cases, a taking or damaging of private property is not for
public use if the primary use is for private gain, private benefit,
private enterprise, increasing jobs, increasing tax revenue, or
economic development, except for the elimination of a public nuisance
existing on the property. The condemnorbears the burden of proving
that the use is public, without a presumption that it is.
4
5 Elements of the Proposed Amendment:
1.Restates all existing provisions: Restates the existing constitutional
provisions except reverses “taken or damaged.”
2.Necessary: “No more private property may be taken than necessary to
achieve the stated public use.”
3.Just compensation redefined: “Just compensation shall be no less than
the value of the property taken, lost profits and lost access, and damages
to the residue caused by the taking.”
The terms “lost profits” and “lost access” are to be defined bythe General
Assembly.
4.Keloamendment/public use: “A taking or damaging of private property
is not for public use if the primary use is for private gain, private benefit,
private enterprise, increasing jobs, increasing tax revenue, or economic
development, except for the elimination of a public nuisance existing on
the property.”
5.Burden of proof on public use: The condemnorbears the burden of
proving that the use is public, without a presumption that it is.
5
Elements 1, 4 and 5 --KeloAmendment
Existing constitutional
Proposed amendment
provision
•“…that the General Assembly shall not
•That the General Assembly shall pass
pass… any law whereby private
no law whereby private property, the
property shall be taken or damaged for
right to which is fundamental, shall be
public uses, without just
damaged or taken except for public
compensation, the term "public uses"
use. No private property shall be
to be defined by the General
damaged or taken for public use
Assembly;”
without just compensation to the
owner thereof.
•§1-219.1: Except for private utilities
•A taking or damaging of private
and common carriers, property can
property is not for public use if the
only be taken where (a) the public
primary use is for private gain, private
interest dominates the private gain
benefit, private enterprise, increasing
and (b) the primary purpose is not
jobs, increasing tax revenue, or
privatefinancial gain, private benefit,
economic development, except for the
an increase in tax base or tax revenues
elimination of a public nuisance
or an increase in employment.
existing on the property.
•Change in law: The condemnorbears
the burden of proving that the use is
Generally, makes statutory law part of the
public, without a presumption that it
is.
Virginia constitution, but shifts burden of proof
and removes presumption that use is public.
6
Element 2 –No More Than Necessary
“No more private property may be taken than
necessary to achieve the stated public use.”
?Restatement of existing law
?Va. Code §1-219.1 (Limitations on Eminent
Domain)
7
Element 3 –Just Compensation Redefined
Current definition of “just
Example:
compensation”:
Va. Code §25.1-230
•The value of the property to be
taken
?market value of take area and
easements
Plus
•“damages to the residue beyond
the enhancement in value”
?Damages are offsetby any
Take Area value: $65,000
enhanced value brought by
Damages Claimed: $120,000
the project
Enhancement :$250,000
Total just comp.: $65,000
8
Element 3: Proposed Amendment
Redefines “Just Compensation”:
“Just compensation shall be no less than
the value of the property taken,
lost profits and
lost access, and
damages to the residue caused by the
taking.”
•Adds lost profits
?Separate from damages to residue
•Adds lost access
?Separate from damages to residue
•Import of “shall be no less than” is unclear.
?Enhancement is not mentioned.
?Might be interpreted to remove the provision that damages shall be offset by
enhancement to the residue.
9
Amendment Changes Law to Allow (and
Require) Payment of Lost Profits
Proposed Constitutional
Current law:
Amendment
•Lost profits are not
•Lost profits would be:
compensablein eminent
?recoverable, and
?required to be paid (“no less
domain cases
than…”)
?Courts have found that they
require “speculation and
•Lost profits might not be offset by
enhanced property value caused by the
conjecture.”
project
?Profits may only be
considered in determining
?“…no less than…lost profits”--
expect argument that offsetting
the market value of the
would be unconstitutional.
property.
?Separately lists lost profits from
damages to residue
Hunter’s Admin. v.
Damages can be offset under current
?
Chesapeake & Ohio Rwy. Co.,
law, but value cannot. (Va. Code §
25.1-230).
107 Va. 158 (1907).
10
Example: Lost Profits
Princess Anne Road –KempsvilleRoad
•Numerous businesses were touched
by the project
?Offices
?Restaurants
?Retail
?Auto sales
•These two restaurants were total
takes acquired for full market value:
?Land value +
?Improvements value
•Under proposed amendment,
payment for commercial
acquisitions would be:
?Full value for land +
?Full value for improvements+
?Lost profits =__________
MORE THAN MARKET VALUE
11
Lost Profits: Effect of Constitutional
Amendment
•Likely increase in:
?Litigation –speculative nature of lost profits would require litigation to
resolve claims
Practical problem: How does City make an offer on anticipated lost profits
?
or determine which businesses will suffer them?
Definition of lost profits is uncertain: duration of award, actual or
?
predicted, elements needed to prove loss in court (causation may be
uncertain in a down economy), and can they be offset?
?Overall cost of projects –adds a new and significant element of
compensation that would be claimed in most acquisitions of all or part of
commercial properties.
•Project Design Choices: Project designers would have a monetary
incentive to disproportionately affect/displace residential
homeowners –to avoid costs of affecting commercial properties.
•Likely decrease in:
?Road improvement projects, due to cost.
12
Lost Access: Amendment May Create New Property
Right in Maintaining Existing Access
Proposed Constitutional
Current common law:
amendment
•Property owners have an easement in
•Allows compensation for “lost access.”
the road
•Appears to expand the easement from a right
?Protected property right in maintaining
to reasonable access to a right to the status quo
“reasonable access” to their property
of the flow of traffic.
•In eminent domain, owners may not
recover damages from changes in
•No stated exception for exercise of police
access, so long as “reasonable access” is
powers (promote safety) ---Subordinates the
maintained.
police power to the property owner’s right to
•The private right of access is
maintain all current access.
subordinate to the rights of the state
and cities to exercise their police
•General Assembly to define “lost access”
power to control the flow of
?Expect definition will include changes to
traffic.
medians, driveways, traffic signals,
number and direction of travel lanes (one-
way), through-streets. . . .
The “reduction or limitation of direct access in the
?“…no less than…lost access” argument
exercise of police powers to regulate traffic, as
exists that offsetting would be
distinguished from a complete extinguishment and
unconstitutional.
termination of all the landowners right of direct
?Listed separately from damages to residue,
access, generally is not compensable.”
which can be offset under current law, but
State Hwy. & Transp. Comm’rv. Linsly, 223
value cannot. (Va. Code §25.1-230).
Va. 437 (1982).
13
Lost Access Claims Previously Addressed by the
Virginia Supreme Court as Not Compensable:
•Installation of a median stripin front of a commercial property.
?Highway Comm’rv. Howard, 213 Va. 731 (1973).
“Circuityof access imposed upon the [property owner] was an incidental, non-
?
compensable inconvenience caused by the lawful exercise of the police power to
regulate traffic.”
•Installation of curbing, leaving 2 openings of 50’ and 30’, on a commercial
property on Route 58.
?Highway Comm’rv. Easley, 215 Va. 197 (1974).
•Restricting parking on a street abutting landowner’s property was a valid
exercise of City’s police powers.
?Town of Leesburg v. Tavenner, 196 Va. 80 (1954).
?Landowner claimed his patrons were inconvenienced by parking signs limiting
parking to certain areas of the street.
•Removal of one of a service station’s two driveways --because a driveway at
that location would be a menace to the safety of the traveling public–was
within the police power of the City.
?Wood v. City of Richmond, 148 Va. 400 (1927).
?Permit for driveway was issued without consideration of the extent of traffic and
later revoked.
14
Examples of Changes in Access in Recent Projects:
LynnhavenParkway Project from Holland Road to LishellePlace
Project features:
•Widened
Lost access?
Lynnhaven
Parkway from
four lanes to
six lanes
•Added median
•Closed direct
access to
residential
streets
Lost access?
15
Examples of Changes in Access in City Projects:
LaskinRoad Gateway Phase 1A, Phase 4 (32Street connector)
nd
16
Median Closure:
LynnhavenParkway between Princess Anne Road and
Independence Boulevard (Parkway Shopping Center)
Median was closed
due to unsafe
conditions.
Studies revealed an
average of 26
crashes per year
by vehicles entering
or exiting this
shopping center.
Before Median Closure
17
Median Closure:
LynnhavenParkway between Princess Anne Road and Independence
Boulevard
Median closure at the
midblock location saw
a reduction in crashes
by 96%.
Acquisition costs: $0
No property or
easements were
acquired –safety
change was made
entirely within the
existing right-of-way.
Shopping center and 4
outparcels saw change
in access.
After Median Closure
18
Expect to see new costs from other
municipal actions:
Light Rail:
To extent
it affects
access to
properties
Traffic calming projects:
Such as Old Beach Village
Temporary or permanent street closures:
e.g., 19 th Street Corridor Study; road work
19
Lost Access: Effect of Constitutional Amendment
•Access changes similar to those in the previous cases would now be
compensable
?medians, parking regulations in front of a property, added curbs,
changes to driveways, etc….
•Likely increase in the cost of road projects, due to increases in:
?Number of parcels affected on each project.
?Inverse condemnation cases, due to difficulty of identifying parcels with
“loss of access.”
?Litigation regarding quantifying the value of the lost access.
Not included as an element of damage to value.
?
?Lost profits claims tied to the lost access.
•Likely increase in other litigation not related to projects. Expect
inverse condemnation cases (claiming regulatory takings) relating
to zoning restrictions or other changes in access.
•Likely decrease in safety projects within right-of-way, due to
increased cost.
20
Summary of Effects of Proposed
Constitutional Amendment
•Probably creates a new property rightin maintaining existing
access.
•Changes 100-year-old common law: loss of access would now be
compensable.
•Creates a new category of compensation: Lost profits.
•Significantly increases the anticipated cost of projects.
•Available funding for anticipated loss of access and lost profits
claims will determine whether safety improvements can be made.
•In designing new road projects, engineers will have to weigh needed
safety measures against cost of threatened access or lost profits
claims.
•Shifts burden of proof on public use.
21
Once Constitutional Amendment is Enacted,
Reversal to Current Law May Not be Possible
•These new provisions have not been tested by statute
?There may be unforeseen impacts to the budget and to
the number and type of projects affected.
•Makes these new rights “constitutional rights”
?Given much deference by the courts.
•Amendment will be difficult to reverse
?Constitutional amendments must be passed in two
consecutive years (exact same wording) by a majority
of both houses of the General Assembly and then voted
on by public referendum.
22
Status of Proposed Constitutional
Amendment:
First Consideration by General
Assembly: Complete.
Agreed to by majority of both houses of the
General Assembly in February 2011
Second Consideration by General
Assembly: 2012
Will come back before the General
Assembly in 2012 session for consideration
•Must be passed by a majority of
both houses in exact wording
Referendum:
If passes General Assembly in 2012, will go
to public referendum in November 2012
Questions?