Eminent Domain Raises Issues for Owners

May 18, 2011

By HunterMaclean Attorneys

Published in Business in Savannah

Imagine that you own a business located directly in the path of the proposed Jimmy DeLoach Parkway expansion in Chatham County. Do you have to move your business? Are you required by law to sell your land? Do you know what your rights are? Many business owners aren’t aware of the full spectrum of legal issues relating to eminent domain until they are faced with the possibility of having all or some of their privately-owned land taken for public use.

Eminent domain refers to the legally-sanctioned power of the government to take private property for a public use. This power can be asserted by the federal government, State of Georgia, county, municipality or under some circumstances a private corporation, like a utility company, following the payment of “just compensation” to the owner of that property. In many cases, property owners are faced with the power of eminent domain when the State Department of Transportation extends or expands a roadway like the Jimmy DeLoach Parkway, the Truman Parkway or Bay Street.

Federal, state and local governments have the legal right to seize private property through the power of eminent domain. The power of eminent domain is limited by the Fifth and Fourteenth Amendments to the United States Constitution. The Fifth Amendment, which restricts the actions of the federal government, says in part that “private property [shall not] be taken for public use, without just compensation.” Under Section 1 of the Fourteenth Amendment, this limitation is also imposed on the actions of U.S. state and local governments.

In Georgia, just and adequate compensation is the fair market value of the land that is taken, plus consequential damages or benefits to any remaining property. Such compensation may extend to damage incurred by a business. The measure of business damages is the difference in the fair market value of the business before and after the taking, including lost profits, loss of customers or decrease in earning capacity.

When land is assumed through eminent domain, property owners need to think, first and foremost, about the value of their land and real estate. Business owners should consider the impact the proposed project will have on their business operation, parking and other issues, if all or part of their land is taken through eminent domain.

In 2005, the U.S. Supreme Court ruled in a landmark case involving the issue of eminent domain, setting the stage for later developments in Georgia. The case, known as Kelo v. City of New London, involved the use of eminent domain to transfer land from one private owner to another for economic development purposes in Connecticut.

The Kelo case arose from the condemnation by the city of New London, Connecticut of privately owned real estate so that it could be used as part of a comprehensive redevelopment plan which promised a significant number of new jobs and a major boost to the local tax base. In a landmark 5-4 decision, the Supreme Court ruled that the general benefits a community enjoys from economic growth qualifies redevelopment plans as a permissible public use under the Fifth Amendment.

In 2006, in large part as a response to the landmark Kelo case, Governor Sonny Perdue signed the Landowner’s Bill of Rights and Private Property Protection Act (HB1313), protecting private landowners in Georgia against the abuse of eminent domain. Governor Perdue also signed HR1306, a constitutional amendment requiring that the condemnation of property be approved by a vote of the elected governing authority of the county or city in which the property is located.

Throughout condemnation proceedings the property owner has the right of due process. There is a formal process the Department of Transportation or any condemning authority must go through. They are required to provide land owners with multiple opportunities to be part of the process and to respond to eminent domain issues, if they so choose.

For land owners, it’s smart to be involved as early in the process as possible to find out exactly what the condemning authority wants to take. Land owners can potentially negotiate an alternative arrangement – like a different path for a highway to take — or determine the best way to protect their home or business, despite the loss of land.

Eminent domain can be a complex legal issue affecting homeowners and business owners alike. When in doubt, consult a legal expert to determine the best course of action affecting your property.

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