This guest post comes to us courtesy of Alan Ackerman and Darius Dynkowski, partners with Bloomfield Hills, Michigan-based Ackerman Ackerman & Dynkowski, a condemnation and eminent domain law firm that exclusively represents landowners. To read more posts from Alan and Darius, head over to their National Eminent Domain blog.
As private companies and government agencies make needed infrastructure upgrades, eminent domain remains a hot-button issue. These actions often lead to conflicts of interest between the condemning agency and private property owners. Frequently, an eminent domain action is initiated in the form of a partial taking—the proposed seizure of one segment of an existing property. While these seizures are intended to provide for the greater good by facilitating new roads, road widening, or infrastructure improvements, the loss of one part of property can have a disproportionately large impact on the utility, viability and profitability of the remaining property.
Owners and operators of automobile dealerships face some unique challenges and potential liabilities from the seizure of even a small piece of property.
The important point to consider when assessing the impact of a seizure is that the dealer is entitled to compensation not just for the seized portion of the property, but also for the loss in value of the remaining property. For automobile dealers, the following issues should be considered when calculating just compensation:
Losing a strip of land along the front-facing edge of the property (a common form of partial taking for utilities upgrades and road widening projects) can have a dramatic impact for automobile dealers’ ability to display their inventory. It can also result in altered or reduced signage.
Not only would business decline during the construction period, but may be adversely impacted going forward.
Poor sales experience
Traditionally, automobile dealers provide an expansive stretch of pedestrian-friendly open space. Any loss or reduction in this fundamental feature makes a partial taking even more challenging for dealers to overcome.
It is critical that auto dealers confronted with a proposed seizure gain an understanding of the process before determining how best to proceed. Oftentimes knowing what not to do is just as important as knowing what you should do.
After written notification of a partial taking is submitted to the dealer, a trained appraiser hired by the government will evaluate the property and make an offer. Automobile dealers need to proceed with caution at this point. The ability to evaluate that offer requires the experience and expertise of an eminent domain attorney and a self-selected licensed appraiser. If the dealer and his counsel determine that the offer is insufficient and subsequently rejects it, the condemning authority will typically file a complaint to seize and the issue may ultimately be resolved in court.
Automobile dealers who may be facing a land seizure should stick to the following list of dos and don’ts:
• Consult with and/or retain experienced legal counsel who specializes in eminent domain and condemnation proceedings;
• Hire an appraiser who understands the ins and outs of operating an automobile dealership; and
• Review any and all relevant legal guidelines, statutes or legislative nuances that apply to your circumstances.
• Do not discuss compensation issues or property values with anyone other than your attorney;
• Do not submit an application for any new permits, variances, or other zoning or ordinance changes; and
• Do not hand over any proprietary documentation or allow any testing or taking of samples without your attorney’s prior approval.
When confronted with a partial taking, automobile dealers must ensure that they receive fair compensation based on the highest and best possible use of their property. Understanding the issues specific to the automotive sales industry and how to proceed when faced with these challenging circumstances is the best way to minimize the long-term loss of value to the property and to the business.