Eminent Domain & Condemnation

Calling on our expertise in commercial real estate valuation, but from the opposite end of the value spectrum, is HKCC’s representation of its clients in eminent domain and condemnation proceedings.

HKCC Can Help With Eminent Domain and Condemnation Issues

Eminent domain proceedings are instituted by local governments and municipal authorities to acquire privately held real estate and property rights, (easements, rights of way, etc. ) for various public uses. It is the job of counsel to first ensure proper procedure is followed. As procedural defects are rare, however, the most important job of condemnation counsel is to ensure an owner receives adequate monetary compensation.

Public use is traditionally understood to include public works projects such as road widenings, school construction and bridge and tunnel related work. However, public use has come to be defined by the courts very broadly and today includes concepts as murky as economic revitalization. In other words, courts have deemed it lawful to take a piece of property from one private citizen or company for redevelopment by another.

Some notable recent regional projects which utilized the power of eminent domain are Second Avenue Subway expansion, LIRR East Side Access, the Atlantic Avenue/Barclays Center development in downtown Brooklyn, the Tappan Zee Bridge redevelopment in Westchester and Rockland counties, the widening of Routes 110 and 347 in Suffolk County and the Mineola LIRR station/ track development in Nassau County. HKCC’s partners have represented clients in these taking projects and innumerable other projects around the tristate area for almost forty years.

The valuation standard in these proceedings is the opposite of that used in the tax appeals, as matter of law. While properties must be valued according to actual use for property tax purposes, without consideration of development potential, the law of eminent domain requires compensation to the owner according to its highest and best use. The simplest definition of highest and best use is the most economically advantageous use over a period of time, while at the same time being legally, financially and physically possible. ( The Complete Real Estate Encyclopedia, Denise L. Evans, JD and O. William Evans, JD, 2007, The McGraw-Hill Companies)

Highest and best use is complicated analysis requiring extensive interaction between attorney, appraiser, engineer and other experts. It is one of the attorneys’ critical roles to lead and coordinate this team, while putting forth the strongest legal argument supported by precedent and statute.

To be handled properly, condemnation matters require not only an expertise in valuation concepts, but a strong familiarity with other related areas, such as zoning and land use, constitutional and environmental law. The partners and attorneys at HKCC have been developing this experience for over thirty years.

Eminent domain involves compensation not just for the value of the land taken, but for the loss in value caused by the taking for the remainder of the parcel left with the owner or tenant. This is very often a significant figure, especially because of the highest and best use standard. This loss is also very often not intuitive to even the most sophisticated real estate operator.

Whenever an owner or tenant receives notification of a pending condemnation involving its real estate, or even an offer from a municipality to purchase property in a supposed arms-length transaction (often referred to as “friendly condemnation”), it should review the matter with counsel to ensure it is receiving fair compensation.

Eminent domain takings also involve compensation for personal property and trade fixtures and reimbursement for restoration or relocation costs. All of these factors must be considered very carefully. The law sets strict filing requirements for the filing of claims in these matters, often three years in New York, but as little as one year if ordered by the court. Therefore, a potential condemnee has only one opportunity to be compensated, and this opportunity can be lost, resulting in a disastrous consequences.

We have seen the less than informed or diligent potential claimant go out of business or be forced into bankruptcy as a direct result of a condemnation.

However, this should never happen if counsel is immediately contacted and steps taken to obtain fair compensation. The partners at HKCC are amongst the most respected eminent domain attorneys in the country.