Eminent domain amendment needs more work

During the 2012 session, members of the General Assembly will consider a proposed amendment to the Constitution of Virginia regarding eminent domain. The idea of adding additional protections for property rights in the constitution is certainly worthy.

However, the specific language and provisions of the pending proposal are seriously flawed. If approved as currently drafted, this amendment will cost Virginia taxpayers dearly and will severely hamper economic development in the commonwealth. A flawed constitutional amendment, once approved, is time-consuming and extremely difficult to remedy. The General Assembly owes it to the taxpayers to get this right.

In response to the controversial U.S. Supreme Court decision in Kelo v. New London , the General Assembly overwhelmingly approved comprehensive legislation in 2007 that provided additional protections for property rights in Virginia and specifically guaranteed that private property cannot be taken by government and conveyed to a private entity for development, which was the scenario in Kelo.

Since 2007, not a single bill has been proposed by legislators to weaken these additional protections for property rights. Consequently, Virginians should be skeptical of claims by special-interest groups that this amendment is needed to guarantee those property rights established in the 2007 legislation. It does much more.

Here are the three most troubling provisions:

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"Public Uses": Under the Constitution of Virginia, private property may be taken only for "public uses," and the General Assembly is authorized to define "public uses." Inexplicably, the proposed constitutional amendment eliminates the authority of the General Assembly to define what constitutes a public use.

Consequently, the carefully drafted definitions of "public use" and "public facilities" — and the limitations on these terms set forth in the 2007 legislation — will be rendered void. The constitutional amendment itself contains no definition of "public use." Therefore, the definition of the concept of "public use" will be up to the courts, while property owners and government entities will be left in a state of uncertainty until a body of case law interpreting "public use" has developed.

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"Loss Profits and Lost Access": The proposed amendment states that, in addition to just compensation for the value of property taken and for damage to the remainder of the parcel, property owners are entitled to receive compensation for "lost profits and lost access."

Virginia courts have consistently refused to include lost profits as a separate item of compensation in property-acquisition cases because the calculation of lost profits is highly speculative and because the extent of any lost profits depends largely on the actions of the business owner.

As for "lost access," Virginia courts have long recognized that a property owner should be compensated for the loss of all reasonable access to private property from an abutting public road, but they have declined to award damages for mere changes in access.

Requiring compensation for "lost access" would mean that property owners could demand compensation even when there is only a change or diminution in access, such as when a median strip or curbing is installed. It is unknown how changes in access to property will be valued. The General Assembly has not asked the Virginia Department of Transportation even to calculate the costs to taxpayers of this change to Virginia law.

It would have been easy to draft this amendment so as to ensure that the "lost profits and lost access" provision applies only to properties that have been the subject of a condemnation action, but that is not how it was written. This leaves open the possibility that business owners could seek compensation for lost access and lost profits when there is even a temporary road closure for utility repairs, road improvements or some other public purpose.

The amendment would authorize the General Assembly to define the terms "lost profits" and "lost access," but no definition can remove the rights the amendment would create. However these terms are defined, it is certain that the provisions establishing a new right to compensation for lost profits and lost access will make property acquisitions by government and public service corporations vastly more complicated and expensive. These unknown additional costs incurred by state and local governments and by public and private utility providers will ultimately be borne by all taxpayers and ratepayers.

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Economic Development: The proposed amendment does not define what constitutes a "public use"; but it does specify one example of what is not a "public use" and what is therefore prohibited. It reads, "a taking or damaging of private property is not for public use if the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development, except for the elimination of a public nuisance existing on the property."

This awkwardly worded provision resulted from amendments offered on the floor of the Senate in the last days of the 2011 session and will have a dramatic adverse impact on economic development, job-creation and infrastructure improvements in Virginia.

There is an exception from this prohibition for privately owned public service companies such as Dominion Virginia Power; but there is no exception for the extension of utilities and road improvements by state and local governments. Therefore, if an economic development prospect should want to locate a new business in a Virginia locality, the locality could not guarantee the extension of utilities or improvement of roads to accommodate the business.

This provision alone will seriously impact Virginia's competitiveness with other states in attracting economic development that could provide jobs for Virginia residents, benefit existing businesses and enhance the revenues of the state and localities.

Last year, Rolls-Royce opened a much-heralded facility in Prince George County, providing jobs, tax revenue and a boost to research and development in the commonwealth. However, the location of this plant depended on the county's commitment to improve public road access to the site. The use of condemnation to acquire the additional right of way was required. This amendment would have precluded this deal.

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Even more troubling is the potential impact of this constitutional amendment on major transportation infrastructure projects planned for Virginia.

Gov. Bob McDonnell has announced that he is advancing the Coalfields Expressway Project and improvements to U.S. 58 along the 36-mile corridor between Hillsville and Stuart. He said that "these two projects are designed to help spur economic development and job creation in some of the areas hardest hit by the economic recession."

Likewise, the proposed construction of a new limited-access U.S. 460 linking the Hampton Roads region to Interstate 85 has been touted as necessary to enhance the utilization of Virginia port facilities, spur economic development and create jobs. It is hard to imagine that these roads can be built without some use of condemnation powers.

Given the publicly stated primary purposes of these projects, it appears that the use of condemnation would be prohibited by the proposed constitutional amendment.

It would have been easy to have exempted public utility and transportation projects from this restriction in the constitutional amendment, but the drafters chose not to do so.

For all these reasons, many business and professional organizations, as well as local governments and utility authorities, are expressing concerns about the far-reaching consequences of the proposed amendment in its current form.

It is a simple matter to revise the current language of this amendment so as to protect property owners in Virginia from Kelo -type takings but avoid the consequences described above. Instead, the proponents of this amendment might try to address some of these issues by introducing "companion bills." However, the content of these bills has so far remained a closely guarded secret. Moreover, because constitutional provisions override statutory ones, the ability of the General Assembly to use general legislation to fix flawed constitutional language is severely limited.

This is an amendment to the Constitution of Virginia. It is far too important not to take the time to do it correctly.

Sterling E. Rives III has specialized in local-government law for 28 years and is the county attorney and legislative liaison for Hanover County. Contact him at srives@co.hanover.va.us or (804) 365-6035.