by Chaim Mandelbaum
FME Law Counsel
Eminent domain, the process by which a government “takes” an individual’s land or property for “public use,” has long been abused. This is especially true today in Virginia. Too many landowners in the Commonwealth are facing an impossible to win situation when Cities and Counties come calling. Some localities in the state are now finding new ways to abuse this long time doctrine.
For an eminent domain action to be proper, two conditions must be met. First, the land the government is taking must be in the “public interest,” such as for a hospital, road, or a school. Unfortunately, the U.S. Supreme Court in 2005 ruled that governments could seize land using eminent domain in order to transfer it to a new private owner to further economic development.1
Fortunately, this sort of abuse has been curbed in Virginia, where this type of eminent domain has been banned. First in 2007 the state legislature passed a law limiting eminent domain where the primary purpose was to transfer the land to a new private owner. Next, in 2012, the citizens of Virginia voted by a 3 to 1 margin for an amendment to the state constitution that further limited the use of eminent domain to exclude situations where the primary use is for private gain, private benefit, private enterprise, increasing jobs, increasing tax revenue, or economic development.2
The Second condition is that just compensation has to be paid. Unfortunately, it is this obligation to pay just compensation that has become an issue in Virginia. Defining just compensation has always been difficult in eminent domain cases. While the free market allows for property to be easily valued, eminent domain requires that the court decide the value of a property. Courts do this by using expert testimony of property appraisers to determine the theoretical market value of the property.
Unfortunately, what local governments have taken to doing is lowballing landowners by having property appraisers who work for a local government develop an appraisal value often far lower than what the property is worth. The government then makes the landowner an offer to buy the property, an offer higher than the very low appraisal, but still below what the landowner believes the property is worth. If the landowner refuses this offer, the government then seeks to condemn the property using eminent domain at the low appraisal value. When the landowner attempts to claim that the government offered him far more, the government claims this information cannot be used in court, as it is a settlement offer, and settlement offers are confidential in Virginia.3 This allows the government to hide from the court and from a jury the real amount it offered for the property.
This is only one of the underhanded tactics local governments use. The second is to try and dry up the pool of available expert witnesses for landowners. Courts require expert witnesses to try and determine the value of a property. The local government will get experts in the form of trained and licensed property appraisers, and landowners have to do the same. Unlike landowners, local governments work constantly with property appraisers, and these professionals often depend on local governments for a substantial source of their income. So local governments cut off from government work appraisers who side with landowners in eminent domain disputes. Those few expert appraisers who do testify for landowners become the target of the Cities and Counties attorneys, who collude to try and find ways to undermine such appraisers.
It was because of such tactics by local governments that the Virginia Institute of Public Policy (VIPP) became involved in a case against multiple municipalities in Virginia. VIPP learned that one appraiser, who often testified on behalf of landowners, had become the target of substantial shared communications between different cities and counties on how to undermine his testimony. So VIPP sent requests for information about this appraiser to various local governments in Virginia, under the Virginia Freedom of Information Act. This act requires the governments to turn over public documents, such as emails. Instead however local governments worked to stymie the Institutes efforts to bring transparency to such practices, hiding communications under claims of privilege. What has been learned however is illuminating. The City of Chesapeake was forced to admit in court that it shared information about this appraiser with many other cities and counties around the state, even though Chesapeake was not involved with these other municipalities’ cases. Likewise the County of Henrico acknowledged that it shared emails about the appraiser with cities and counties around Virginia. While the Free Market Environmental Law Clinic, working on behalf of VIPP, has not been successful at obtaining these documents yet, it is clear from the fight to obtain them that the counties do not want what they have been doing to appraisers who represent private citizens to be made public.
The result paints a grim picture for landowners. Their ability to fight against condemnation actions is limited by rules that allow local governments to hide the real amounts they offer for property. And the local governments scare off most experts who could testify for landowners and collude to demonize those few that will stand with the property owner. Eminent domain requires that the government pay “just compensation” but there is little justice in the tactics of various Virginia local governments, who are working hard to seize private property and underpay for it.
1. Kelo v. City of New London, 545 U.S. 469 (2005)