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This is what you should know if your property is being taken.
The State has finally released the final preferred routes for Section 6 of I-69. While these routes are still considered “preferred,” it is unlikely that the Indiana Department of Transportation will vary dramatically from the maps released on September 12, 2017. The current maps of Section 6 provide the likely footprint of the future route most of us will travel between Indianapolis and Bloomington. The links to the maps are below. If your home, business or property is designated as “Potential Relocations,” you may wonder what you should know now.
Preferred Alternative (State Road 37) (as of September 12, 2017)
- Map 1: Indian Creek to Grand Valley Boulevard
- Map 2: Grand Valley Road to Country Club Road
- Map 3: Country Club Road to Ennis Road
- Map 4: Ennis Road to Big Bend Road
- Map 5: Big Bend Road to State Road 144
- Map 6: State Road 144 to Smith Valley Road
- Map 7: Smith Valley Road to Stop 11 Road
- Map 8: Stop 11 Road to I-465
- Map 9: I-465 East Interchange
- Map 10: I-465 West Interchange
Why is the State allowed to take my property if I don’t want to sell?
The first question many clients have had after finding out their property is being taken by the State is, “How does the State take my property if I don’t want to sell it to them?” The answer is through the government’s power of eminent domain, meaning the right of a government or its agent to take private property for public use, with payment of compensation. In Indiana, for projects such as I-69, Indiana Code 32-24-1 gives the State authority to start the condemnation proceeding and take private land. The term “condemnation” is used to describe the formal act of exercising the powers of eminent domain.
History of Eminent Domain in the United States
Eminent domain and condemnation were brought to the American colonies by English Common Law. At that time, the King of England was allowed to take land for any reason and without compensation by his Royal Prerogative. In the United States, our founding fathers had very strong and differing opinions on the use of eminent domain. The Fifth Amendment included a compromise that sought to protect property rights somewhat by requiring “public use” and mandating compensation. The 14th Amendment extends these requirements to the States. The Indiana State constitution specifically address the issue of compensation in Article I, Section 21, “No person’s property shall be taken by law, without just compensation.”
Public Use Requirement
The first requirement for the State to exercise its powers of eminent domain and begin the process of condemnation is that the property subject to the taking is being taken for a public use. The Courts have interpreted the public use requirement very broadly. A government taking will be upheld as long as the taking is “rationally related” to any conceivable public purposes. It is clear that I-69 will fulfill the public use requirement. This means the State will be able to take any property needed for the interstate, regardless of if the property owner wants to sell or not. The next requirement of the State is for the property owner to be paid “Just Compensation.”
Just Compensation Requirement
If the State is taking your property, home, or business for I-69, they are required to pay you “Just Compensation.” Just compensation is the amount of money that returns the property owner to the financial position they would have been in had the property not been take.1 In Indiana, a property owner whose property is being taken, is entitled to the “Highest and Best Use” value of the property at the time of the taking, this can significantly increase what just compensation is. The main battle a property owner losing land to I-69 will face is receiving just compensation from the State. How just compensation is determined will be explained in more detail below.
When will the State make me an offer and what happens when they do?
Currently, the State is projecting that they will begin acquisition of property for Section 6 of I-69 in the first quarter of 2018. The State will contact you to set up what they refer to as a “Kitchen Table Meeting.” The purpose of the “Kitchen Table Meeting,” per INDOT’s Real Estate Buyers Manual, is to “take away any psychological advantage the owner may be seeking” by controlling where the meeting occurs in the home. The buyer will begin the “Kitchen Table Meeting” by displaying the plans for the property being taken to you, discussing which pieces of your land will be affected, and what structures will be removed if needed. The buyer then may ask if you want to walk the property while looking at the plans. The buyer’s next step is making the offer presentation. The presentation will begin with the buyer giving you brochures on acquisitions and, if you are being relocated from your home, a brochure on relocation. In the eyes of the buyer, their big moment comes next – the presentation of the offer to purchase and the purchase price. The Indiana Department of Transportation 2011 Buyer’s Manual puts much significance in this moment, as it states:
“Now you have reached the moment the owner has been anticipating: the offer. The offer letter should remain out of owners view until you are ready to hand it to him…Announce the offer in a confident voice while placing the offer letter in a position you can both view it. Look the owner in the eye while announcing the offer. You should not appear ashamed or embarrassed by the amount.”
This is the Uniform Land or Easement Acquisition Offer. The buyer will go over the reasons they believe this is a fair offer with the property owner. The Uniform Land or Easement Acquisition Offer will include: a confirmation receipt of acquisition booklet, statement of the basis for just compensation warranty deed with a legal description of the land, sales disclosure form, claim voucher, W-9 form requesting taxpayer information, tax memo, owner’s appraisal letter, and finally a prepared return envelope. Throughout the documents, there may be sticky notes attached that say sign here.
The law requires the State wait 30 days after giving the acquisition offer before filing a lawsuit. If you do not accept that day, the buyers routinely make at least two more attempts to persuade you to accept their offer. Property owners may be well served by contacting an attorney prior to accepting any acquisition offer. It has been the experience of the attorneys at Boren, Oliver & Coffey, LLP that the State’s acquisition offer is often significantly lower than what “just compensation” actually is.
What happens when the State files a condemnation suit with the court to take my property?
The court will appoint three independent appraisers to appraise your property following a lawsuit being filed by the court. The appraisers value the property as of the date of service of the summons on the landowner. The appraisers are tasked to determine:
- The fair market value (FMV) of the property being taken. FMV is defined as the price the property would bring after fair and reasonable negotiations between a seller who is willing but not compelled to sell and a buyer who is willing and able but not compelled to buy;
- The fair market value of improvements on the property being taken;
- The amount of damage (or benefit, if appropriate) to any property owned that is not being taken, i.e. the “residence.” Benefit is defined as the amount that the fair market value of the residue of the property will increase due to the construction of improvements contemplated by the taking. Damage is defined as the amount that the fair market value of the residue of the property will decrease by the taking and the construction of the improvements.
- Other Damages, if any, resulting from construction of the improvements in the manner proposed by the condemning authority.2
An issue that often faces business owners is loss of access to their business from a particular location. A property owner may be awarded damages for loss of access to property, but only when the loss of access is special and unique to that property and not the inconvenience suffered by the general public.3 These damages MAY be recoverable but only if the loss of access deprives the property owner of all or substantially all economic or productive use of the property at its highest and best use. If, after the loss of access, the property was still suitable for a less valuable use, the property owner may be awarded damages that reflect the reduced value of the property.3 An example of loss of access damages that are not compensable are as follows: State builds median in the road that cuts off access for all southbound traffic to property. In this case, there are no loss of access damages in the eyes of the court, rather damages would then only be recoverable for the reduced FMV occasioned by the loss of access.
How is the value of my property determined?
The property owner is not limited to considering how the property was being used at the time of the taking. They may also consider the highest and best use for which the property could reasonably be adapted and used at the time of the taking. The highest and best use is the use that will bring the highest dollar amount of return over time. This requires an analysis of that use which would be both economically practical as well as permitted under all governmental regulations and restrictions, such as zoning, etc.
There are three widely accepted methods for determining the fair market value of property taken in a condemnation action:
- The market data approach or value indicated by recent sales of comparable properties in the market;
- The current cost of reproducing the property less depreciation from all sources;
- The income approach or the value which the property’s net earning power will support based upon the capitalization of net income.
There are multiple ways to arrive at what “Just Compensation” actually is. The Attorneys at Boren, Oliver & Coffey, LLP will review your case for free and discuss all options with you to determine if you are receiving the compensation you deserve for your property, prior to you accepting any offer from the State. If you have any questions, feel free to contact our office. Read more about the I-69 condemnation process and what it could mean for you and your family.
1.Indiana Model Civil Jury Instructions, Instruction 3709.
2.Indiana Model Civil Jury Instructions, Instruction 3719.
3.Indiana Model Civil Jury Instruction, Instruction 3729.