Infrastructure projects boost eminent domain filings to grab CRE
Legal experts are warning CRE landowners to prepare for an onslaught of eminent domain land seizures by government entities launching $1.2 trillion law-funded projects on investing in land infrastructure and jobs signed into law by President Biden in November.
“The (Infrastructure) Act will undoubtedly lead to a significant increase in the activity of eminent domains to acquire the property rights necessary for the implementation of new infrastructure projects. Many companies are not ready (for this),” said the Review of national legislation said in a recent report.
The tsunami of federal spending, spread over the next five years, will support a wide range of infrastructure projects, including new roads, bridges, railroads, mass transit, electricity transmission networks and of water, many of which will involve government entities establishing off-road access rights by seizing private property using eminent domain.
What should be a five-year parade of eminent domain cases across the country began this month just blocks from the U.S. Capitol, as Amtrak filed an eminent domain case against a CRE company in New York which subleases 425,000 square feet of retail space in Union Station in Washington DC.
Amtrak says it must take over the entire facility to make improvements that will triple the capacity of the nation’s second busiest rail station, which serves more than 5 million passengers a year.
In a lawsuit filed in District Court for the District of Columbia last week, Amtrak claimed it could not complete its master plan, adopted in 2017, to expand Union Station if Union Station Investco LLC, an entity of the company New York real estate Ashkenazy Acquisition Corp. , continues to hold the retail space located in a two-story promenade that overlooks the huge station concourse.
Amtrak’s 20-year master plan for Union Station includes expanding an existing passenger concourse and building two additional concourses. Amtrak’s plan also includes rebuilding the station’s basement, replacing beams, beams and columns that it says have become structurally deficient.
Amtrak’s project to expand Union Station is a joint effort with the US Department of Transportation and the Federal Railroad Administration.
the Washington Post reported that Amtrak offered Union Station Investco $250 million to buy the property, but Ashkenazy missed a deadline to respond to the offer, prompting Amtrak to place the funds for the purchase in an escrow account held by the court as the case proceeds. .
Amtrak said in its filing that it had been negotiating unsuccessfully with Union Station Investco since 2018 to acquire the retail space for the station’s reconstruction. Ashkenazy signed a sublease for the property with a congressional entity, Union Station Redevelopment Corp., in 2007.
Compensation for government condemnation of private property using eminent domain is required by the Fifth Amendment of the US Constitution. Homeowners can appeal government seizures of property by filing a “reverse conviction” claim, the legal term for a lawsuit alleging they weren’t properly compensated.
Last year, Hawaii established a two-year statute of limitations for a landowner to file a reverse conviction claim against the state. The ruling stems from a case involving a 2011 decision by the Hawaii Land Use Commission (LUC) to reclassify more than 1,000 acres, owned by a residential developer, that had been designated by the LUC in 1989 for “urban” use. .
LUC claimed the landlord breached an agreement to build affordable housing on the site. Owner, DW Aina Le’a Development, LLC, waited until 2017 to file for reverse conviction
The North Carolina state legislature is expected to approve an amendment to the state constitution stating that landlords have the right to a jury trial to settle eminent domain disputes.
the Review of national legislation point out that assessments by condemners in eminent domain cases tend to underestimate the value of property; he also said that government entities generally won’t accept offers from landlords if the landlords don’t support their offer with an appraisal.
A typical property appraisal can cost between $5,000 and $10,000, but it can result in an “exponential increase” in compensation, according to the report.