Monday, June 9, 2014

Eminent Domain: Necessity For A Taking - Actual Or Engineered?

By Blake H. Gaylord

Florida law unquestionably favors a condemnor’s discretion to identify and select parcels necessary for condemnation. A condemnor’s discretion is broad, but it is not unbridled. To establish the necessity for selecting a parcel for condemnation, a condemnor must prove that it reasonably considered five factors outlined in Hillsborough County v. Sapp, 280 So. 2d 443 (Fla. 1973). The factors identified in Sapp are alternative routes, costs, environmental impacts, planning, and safety of the proposed right of way. Id. 

A condemnor’s evaluation of costs and alternative routes can be bitterly contested when a property owner feels that its property is the subject of “engineered necessity.” Engineered necessity is the condemnation of an entire parcel in order to avoid payment of business damages to an owner for which it would be entitled if only a portion of the property were condemned. This concept is borne out of Florida law that only allows for the recovery of business damages in cases of a partial taking. See Fla. Stat. §73.071(3)(b), (2014). 

The controversy surrounding engineered necessity is the result of since-repealed Florida Statute § 337.27(2) (1997), which allowed the Florida Department of Transportation to condemn an entire parcel of property in order to save costs by avoiding payment of business and severance damages that would result from a partial taking. Takings under this statute became known as Fortune Federal takings after the Florida Supreme Court found § 337.27(2) to be constitutional in the case of FDOT v. Fortune Federal Sav. & Loan, 532 So. 2d 1267 (Fla. 1988). Eleven years later, in 1999, the Florida Legislature expressly repealed § 337.27(2) through House Bill No. 591 and Laws of Florida Chapter 99-385. 

Rather than killing the idea behind engineered necessity, the repeal of § 337.27(2) birthed a new era of it. After 1999, takings designed to avoid business damages that were once accomplished in the open through Fortune Federal takings are now accomplished surreptitiously through an evaluation of the Sapp cost factor with the same purpose of eliminating business damages. Regardless of the process, the Florida Legislature has been clear that avoidance of business damages alone cannot be justification for a taking. 

Landowner attorneys should take care to examine a condemnor’s cost justification for the selection of a parcel for a whole taking if there is a question as to whether a partial taking would be more appropriate. A blatant example of engineered necessity will show itself in a cost analysis of a parcel that solely evaluates the acquisition cost of a partial verses whole taking of that particular parcel. A proper analysis will show an evaluation of multiple cost items between alternative routes or sites rather than the evaluation of just the acquisition cost of one parcel against itself. By the same token, condemning authority attorneys are smart to review decisions by right-of-way personnel in order to make sure that parcels were selected based on proper criteria and analysis. Failure to make such a review can result in contentious and expensive litigation for condemnors.