In the next few years, Wisconsin small business owners are likely to be confronted with an area of law they have probably not experienced before: eminent domain, commonly referred to as condemnation.
Highway reconstruction and other transportation projects inevitably require government agencies to acquire land. Governments most often acquire land by condemning it. In condemnation, title to the land shifts from the property owner to the government. In exchange, the property owner is compensated by means of a money payment for the loss of its land.
By way of example, the proposed high‑speed rail line between Madison and Milwaukee will likely require acquisition of property for new depots, tracks and other improvements. The proposed Milwaukee Zoo Interchange reconstruction, which might expand the interchange from six to eight lanes, will require the acquisition by condemnation of 30 to 35 homes and businesses. In northern Wisconsin, U.S. Highway 41 on‑and‑off ramps in Winnebago and Brown counties are being converted into 44 roundabouts, many of which involve acquisition of land from small businesses that are located on or near highway entrances and exits, such as gas stations, fast food stores, etc.
Most small business owners have never been involved in a condemnation proceeding. Condemnation proceedings are often linked to “once in a lifetime” projects such as the high‑speed rail line, and differ in process and scope from tax, environmental or safety regulations that small business owners may have encountered previously.
Set forth below are a series of steps to guide small business owners through the condemnation process:
What is condemnation?
Condemnation, which is also known as eminent domain, allows a government agency or authority to acquire property that it needs for a public project.
How does it work?
The government agency informs the landowner of its intent to acquire the property and provides the landowner with an appraisal the government has performed, which sets forth a dollar value for the property being condemned. The landowner has a right to get its own appraisal, and the cost of the landowner’s appraisal, if performed in a timely fashion, is paid for by the government.
Once the property is appraised, what happens next?
The government, after it receives the landowner’s appraisal, negotiates with the landowner in an attempt to reach a settlement on the dollar value of the property taken. If a settlement is reached, the government pays for the land and the landowner provides a deed to the property.
What if a settlement is not reached?
If a settlement is not reached, the government still has a right to take the land. Typically, the government pays the landowner what it believes the property is worth, and title to the land is transferred by law to the government. In this way, the entire project is not held up because, for example, one landowner out of 50 refuses to accept a settlement.
What happens next?
If no settlement is reached, the landowner can contest the government’s right to take the property. This type of challenge is rare. More often, the landowner acknowledges the government has the right to take the property, but challenges the amount of money that was paid for the property. The case proceeds to trial and a jury decides whether the landowner is entitled to more money for the property that was taken.
Is such a lawsuit expensive?
Condemnation is one of the few areas of the law that requires the losing party to pay the winning party’s attorneys’ fees. If the landowner is successful, and the jury awards substantially more (generally, in excess of 15 percent) than was offered by the government, the government can be forced to pay the landowner’s attorneys’ fees and litigation costs.
How does a small business owner prepare for condemnation?
Three suggestions:
- Get informed. Inevitably, there will be public information available on the project in question, whether in the newspaper, by means of a website, etc. The small business owner should attend all of the informational sessions. At these sessions, there will be maps and layouts, and designers and planners will be available to answer questions and provide clarification.
- Get involved. The small business owner should take an active role in determining how the project will impact its business. If the maps and drawings do not provide enough clarification, ask the project manager to make a personal site visit so as to explain exactly how the project might affect the business. If access to or from the business from a highway or street is going to be changed or moved, ask questions. Where will the new driveway be located? How wide will the new driveway be compared to the old driveway? If there is a median in the existing highway that allows for a left-hand turn into the driveway, will that median access be blocked or eliminated? Ask questions; get answers.
- Get help. If you cannot get answers, or are not satisfied with the answers you get, contact an attorney.
The transportation projects garnering headlines in today’s newspaper will require acquisition of land to make them a reality. Inevitably, some of this land will be acquired from small business owners by means of condemnation. The more a small business owner knows about the condemnation process, the better the small business owner can prepare itself to positively impact the outcome of the condemnation process.
