Eminent Domain Report

When a public agency acquires property for a public project, property owners have a constitutional right to receive just compensation. But what about the businesses that operate on the property – are they entitled to anything? 

The rights of business owners vary from state to state, as there is not a constitutional right to compensation for business losses. In California, business owners may be entitled to compensation for several items. These include:

• Loss of Business Goodwill: A business may accrue “goodwill” because of its location, reputation and ability to attract and ...

In California, a business operating on real property being acquired, in whole or in part, for a public project may make a claim for loss of goodwill and be entitled to compensation if the business operator establishes the foundational elements: (1) the taking caused the loss, (2) the loss could not be prevented by relocation or other reasonable mitigation measures, (3) the loss is not includable as a reimbursable relocation expense, and (4 ) the loss does not duplicate other compensation being paid.  (Code Civ. Proc. §1263.510(a).)  As part of its affirmative duty to mitigate damages, a ...

When is a lease termination triggered by eminent domain versus by contract?  The case of Media v. City of San Diego, 2021 U.S. Dist. LEXIS 103728 addressed this question and concluded that the lease termination was only a product of the lease naturally terminating, not the governmental acquisition of the underlying property.  This opinion raises questions regarding the future of loss of goodwill and furniture, fixtures, and equipment (FF&E) for short-term tenants.

Background

A billboard owner had been leasing property to display the billboard for many years when it was converted to a ...

When a public agency seeks to acquire property by eminent domain, the agency’s appraiser sometimes forgets to account for unique value attributes of the property. For example, the valuation may fail to take into account income the property generates from a billboard or a cell tower. According to an article on KCRA News, 'I think they are a bunch of thieves': Auburn couple decries Caltrans' eminent domain move, this situation is currently playing out in Northern California. …

When a business is taken as a result of a public improvement, the business is entitled to seek compensation for, among other things, loss of business goodwill. Typically, this loss is calculated by measuring the business’ before-condition value and comparing to its after-condition value.  This traditional methodology was the cornerstone for business goodwill appraisers to determine just compensation.  Yet late last year, the California Court of Appeal issued a ruling in People ex rel. Dep't of Transp. v. Presidio Performing Arts Found. (2016) 5 Cal. App.5th 190 which may have ...