Bricklemyer Smolker & Bolves, p.a.

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LEGISLATURE AMENDS EMINENT DOMAIN LAWS

The Governor has now signed House Bill 591 and Senate Bill 2350 which change current eminent domain law. This BSB Property Rights Alert highlights and summarizes the changes relating to property, sign and business owners and the experts that assist them.

Less Means More
Generally, a condemning authority may only take land which is necessary for its public project. However, under existing statutes, certain condemning authorities, such as counties, municipalities, the Department of Transportation and a number of expressway authorities, can opt to acquire an entire tract of land if acquisition costs for the total take are less than acquiring the portion which is actually necessary for their project. In Department of Transportation v. Fortune Federa. Savings & Loan Assoc., the Florida Supreme Court ruled such a statutory public policy was constitutional. Those statutes have been typically invoked when business damages and severance damages to the remaining real estate, including costs to "cure," exceeded the value of the entire property. The practical result was that business owners were reluctant to provide any information to a condemning authority for fear the condemning authority would elect to take the entire property, leaving the business owner with no claim for business damages. Effective January 1, 2000, all statutory provisions permitting a total take to result from that cost-benefit analysis are repealed. Good news indeed for business owners.

Mandatory Presuit Negotiation
In exchange for eliminating the fear of complete business loss without any business damage claim, the legislature will require presuit disclosure of detailed business information regarding any business wishing to claim damages resulting from a partial taking. In fact, under the new law, both business owners and property owners must engage in good faith negotiations with the condemning authority before the filing of any eminent domain case after July 1, 2000. The new law requires notices of land owner and business owner rights, requires a written offer for full compensation to the property owner and requires delivery of an appraisal report and construction plans within fifteen days of a request by a property or business owner.

Where businesses are seeking damages, the business owner must send a good faith written offer to settle a business damage claim within 180 days of the notice of its rights. The offer must be by the owner, a CPA or other business damage expert and must explain the nature, extent and monetary amount of damages. Copies of the business records that substantiate the offer and other specified supporting documents must be submitted with the offer or by another agreed date. If public disclosure of such records would be "likely to cause substantial harm to the competitive position" of the business, the records are exempt from the public records provisions of Florida law requiring that records be open for inspection. That added protection, while somewhat loose, should give business owners some added comfort.

Failure to submit a timely business damage offer, absent a good faith justification, waives any claim for business damages. Within 120 days of receipt of the offer, the condemning authority has to accept, counter or reject the offer. If both parties agree, mediation of the business damage claim is permitted, with settlements having the same legal standing as though the matter was resolved through eminent domain court proceedings, including the recovery of costs and attorney's fees. Only experience will tell whether this new presuit negotiation requirement will promote early settlement or simply delay for about one year the filing of condemnation cases where businesses are damaged.

Younger Businesses Recover
Interestingly, the legislature has temporarily reduced from five years to four years the length of time required for a business to be established to be eligible for business damages. The lower threshold is effective January 1, 2000, but is curiously set to be automatically repealed January 1, 2003. We will be vigilant in our efforts with the legislature to ensure the lower threshold is preserved before the end of the 2002 legislative session.

Signs and Billboards
In cases brought after July 1, 2000, subject to approval of the Federal Highway Administration, where a legal non-conforming sign is on the property taken, at the election of its owner and Florida Department of Transportation, the sign may be relocated or reconstructed adjacent to the new right of way at the same height and size. The relocation does not occur if the manner of construction is inconsistent with the current building codes or the relocation site is residentially zoned. In that case, local ordinances will prevail so long as the local government assumes responsibility to provide just compensation for removal.

Presuit Costs
For business damage claims settled by either party accepting the other's initial presuit offer, there is no change in the method for calculating presuit costs. However, all reports and work product for which recovery is sought must be turned over to the condemning authority along with the detailed time records already required under current law. An action to recover costs incurred in presuit settlement is specifically authorized by the new legislation when the parties cannot agree.

Interest on Fees and Costs
The legislature has attempted to settle the issue of prejudgment interest on expert fees for which there have been conflicting court opinions. In an amendment to existing law, the legislature added that no prejudgment interest shall be paid on costs or fees. The new legislation states that the amendment is effective January 1, 2000 but it is not clear whether it applies retroactively to a cause of action brought prior to January 1, 2000 when the actual determination of entitlement or amount is made after that date. It also remains to be seen whether such a retroactive interpretation would be determined to be constitutional.