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HomeMy WebLinkAbout09272011 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?