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"Knowledge
of Due Process Essential when Fighting for Fair Settlement"
By Barry A. Springer
Chicago Industrial Properties, Volume 8, No. 4: April
1995
In a situation where private property is legitimately
required for public use, the State can acquire the needed
property by exercising its power of "eminent domain," or, as
it is oftentimes called, "condemnation."
This power exists in the state, merely by virtue of its being the
state. Eminent domain power also typically exists in
subdivisions of the state, such as counties, cities, park
districts, forest preserve districts and public building
commissions.
The power of eminent domain ideally exists, then, chiefly as a
means to "force" the "sale" of the required private property
to the public domain, in order to construct and complete the
public project.
In the United States, there are limitations on (prerequisites to)
the exercise of this power of government.
Under the Fifth Amendment to the United States Constitution, there
is a provision mandating that the taking must be fore
"public use" and that government must pay the private
property owner "just compensation" for the taking or
damaging of his property, before it happens.
Additionally, determining "just compensation" must be according to
due process of law. If an agreement cannot be reached over
"just compensation," the government and the private property
owner have the right to prove what the "just compensation"
should be, in a court of law, before a jury, and with legal
counsel, and all the rules of procedure and evidence
available to every citizen in this country.
Should your property be subject to such acquisition for public
projects, you have considerable rights, (including the right
to challenge the acquisition itself) and you should exercise
those rights to achieve the maximum protection and
compensation for your property.
1. What is public use?
Common examples of public use include road
improvements, schools, forest preserves, parks, courthouses,
post offices and municipal centers. However, in certain
instances, concepts like sports stadiums, redevelopment of
blighted areas and economic development incentives can be
included within the concept of public use, justifying
governmental exercise of eminent domain power as a means to
the end of achieving those "public uses."
2. Initial steps in that process
When government plans a public project, it typically completes
necessary items, such as economic and financial analyses, as
well as all engineering, architectural, land planning,
marketing and other professional studies, in determining
what is required to execute the project.
A land appraisal is required so that the government has some basis
to make an offer.
The government is mandated by law to attempt to agree with the
property owner on the compensation to be paid.
In the event an agreement cannot be reached on the compensation to
be paid, the government has the right to exercise its power
of eminent domain. Although the exercise of this power has
effectively begun with the offer, it blossoms by the
government's filing of a lawsuit for condemnation. Such a
lawsuit is filed by government, solely to have "just
compensation" assessed by an independent arbiter, which may
be the court itself.
More typically, a jury is empanelled to view the property and
assess "just compensation" after hearing evidence on that
issue from both the government and the property owner, at a
full-blown trial.
This trial is the main portion of the "due process of law" that is
afforded under the federal and state constitutions in the
setting of "just compensation."
In the lawsuit, all parties having an interest in the property
(owners, lenders, contract purchasers, judgment creditors,
lien claimants, tenants, persons in possession of the
property et al) are named as defendants in the case, in
order that the government can acquire all of their interests
in the property, thereby gaining clear title to the property
once the suit is completed.
3. Traverse and motion to dismiss
Any defendant may choose to contest the acquisition of the property
by filing a "traverse and motion to dismiss" with the court.
Such a document sets forth grounds alleging why the
government does not have the power and/or authority to take
the property to begin with.
The issues raised by traverse, which include such grounds as lack
of a bona fide attempt to agree on compensation, lack of
public use and excessive taking, are heard by the Court
without a jury, prior to any bearing on the issue of
compensation.
At the hearing on traverse, the government's actions as to the
power to take the property, are presumed by the court to be
valid.
The burden is then on the property owners to rebut that presumption
by showing clear and convincing evidence that the
government's actions were and are arbitrary, capricious and
an abuse of discretion. Traverses are hardly ever won.
However, if a traverse is won, the law provides that the
government must pay the defendants' costs, expenses, and
reasonable attorney's fees incurred in defense of the
lawsuit.
If traverse is lost, the Court's order denying the traverse is not
appealable until after the issue of "just compensation" is
resolved.
4. What is "just compensation"?
"Just compensation" is defined as the fair cash market value of the
property sought to be taken, at its highest and best use, as
of the time that the lawsuit is filed.
"Fair cash market value" is defined as that cash price that a
willing buyer would pay a willing seller for the property
(and not any business on the property), neither being under
compulsion to buy or sell and both being knowledgeable of
all relevant facts.
The highest and best use of the property may also be a use to which
the property was not devoted and for which the property is
not used or zone.
In Illinois, the profits from a business run on the property is not
a relevant fact toward and is not included in the setting of
"just compensation."
Even if the evidence shows that the fair cash market value of the
property taken may be $1 million, and it just so happens
that a business on the property generates sales of $5
million, employs a dozen workers with families, and will be
gone after the property is acquired--the "just compensation"
will remain at $1 million. If the jury ever hears about the
sales that are generated, the judge should instruct it to
disregard that information.
Unless federal funds are involved in the project, expenses of
relocation are also not included in "just compensation" and
are not the obligation of the government in such a case.
Also, each party bears his or her own costs, expenses and
attorney's fees.
5. What is quick-take power?
In some instances (most notably, the Illinois Department of
Transportation and the Illinois State Toll Highway
Authority) certain governmental entities have the power to
pay a preliminary amount of "just compensation" early on in
the case, and secure the title to and right to possession of
the property, in order to begin construction.
This preliminary amount of "just compensation" is set via a hearing
before the court (no jury at this point) at which the
government and the property owner can put forth evidence as
to what preliminary "just compensation" should be.
That award is then paid into court and the property owner can draw
upon it, with one important caveat: both parties may try to
decrease or increase the preliminary award via jury trial,
and if said award is decreased then the excess must be
refunded.
However, no one's rights are otherwise affected by the setting or
drawing upon of said award, should the matter proceed to
trial. The procedure is simply a statutory convenience for
the government, so that the construction of what the
legislature has deemed more important public projects will
not have to wait until the court case setting "just
compensation" is over.
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