Eminent Domain Projects: Property Value Considerations

Guest Post by Vernon Swing, PE, Traffic Engineering Manager at Spack Consulting.

The process of eminent domain was established to allow public entities to acquire land from public and private land owners to provide projects that are for the greater good of society. For example, the Minnesota Department of Transportation (MnDOT) acquired land from private land owners in all four quadrants of a new interchange through eminent domain in order to complete the construction. However, the acquisition of this property through eminent domain is not free. Fair market financial compensation is required. The determination of the land value is an area that often requires the assistance of a traffic engineer.

Image by Sioux City Journal

At Spack Consulting, our staff has assisted private land owners on several occasions to help ensure they are being appropriately compensated. While each case is unique, two common themes are:

  1. Could the taken property be developed and if so at what cost? Is the value of the land development opportunity equal to the amount of compensation being offered?
  2. Or did a partial property taking result in diminished value for the remaining property as an ongoing entity?

An example of the first variety involves a parcel in Rochester, Minnesota. While details of the case are quite complicated and confidential, the basic issue involved the taking of access along a State Highway to facilitate an upgrade from an expressway to a freeway with all access limited to grade separated interchanges. Clearly, this was a great project with benefits to the public at large in the form of reduced travel times and increased safety from eliminating at-grade intersections. However, there was an impact to the property as development opportunities that are dependent on access were taken away.

The taking agency offered compensation only for the limited value of the land associated with the driveway area and suggested that without the freeway the traffic operations would degrade to a condition that was unacceptable (LOS E or F). Our staff reanalyzed the traffic conditions with an access configuration that had not been considered and were able to show that full development was feasible on the site while maintaining and acceptable LOS C. The land owner was awarded a large settlement, equivalent to the value of the lost opportunity.

Another example had our staff assisting on a land taking case associated with the construction of a grade separated interchange in Dakota County, Minnesota. In this confidential case, a new grade separated interchange was established along a State Highway to accommodate traffic from Dakota County Highway. This was a very congested intersection prior to the project with a high crash rate. The improved interchange condition was an extremely beneficial project for the general public, again in terms of safety and travel times. However, for the individual businesses surrounding the new interchange, this societal benefit came at a high cost.

A small strip of land was taken from a store property, and the primary access to the County Highway was reduced from right in/right out to right in only. The land owner was concerned that the loss of egress access would result in fewer customers and hired our staff to monitor traffic conditions. We took a unique approach to determining the impact to the site, namely:

  1. We collected traffic counts before, during, and after construction of the interchange. The results showed that traffic along County Highway increased slightly from the before to the after condition, but dropped dramatically during construction. The site traffic however dropped by about 15% from the before to after condition, and dropped by 60% during construction. Clearly the access modification was detrimental to business.
  1. We also acquired transaction receipts for the before and after conditions to verify the findings from the traffic counts. The results showed there were 18% fewer transactions occurring after the completion of the interchange project.

Dakota County hired an independent expert who specializes in eminent domain impacts to convenience stores to review our findings. The results of the review corroborated our findings, and the County agreed to reimburse the land owner for their participation in the increased societal benefit.

We’re not opposed to transportation projects and are often working with public agencies to determine those improvements. However, property owners should also be adequately compensated so they are not impacting more than their fair share for a project that benefits society. When representing land owners (private or public) in eminent domain cases, it is important to approach these cases individually and work to provide verifiable evidence of impacts.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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