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Birmingham, Mich.–Dec. 9. 2021–Bridge and highway repairs are more than just a traffic hassle. Road expansion, broadband development and sustainable energy initiatives can place impacted business and property owners at odds with the government if their property stands in the way of infrastructure improvements, according to Jerome P. Pesick, managing shareholder at Steinhardt Pesick & Cohen, P.C., a Michigan-based law firm specializing in eminent domain and condemnation that represented many commercial property owners in Southwest Detroit forced to relocate or close as a result of the development of the Gordie Howe International Bridge.
“Eminent domain allows the government to take private property for public works, but it must compensate the owner for that taking – and that’s when things can get sticky,” Pesick said. “Typically, the government offers a set amount of compensation and the property owners either accept it or fight it out in court. The owners don’t want to stand in the way of progress, necessarily, they just don’t want to pay for with their business or property.”
Pesick says there are a variety of considerations when determining fair market value of a business or property that is being taken through eminent domain, including:
- The current and long-term impact on the business as a result of the public works project
- Ability to find comparable property at an affordable price
- The cost to relocate
The condemnation process is highly detailed, with strict deadlines for filing claims, pleadings and appraisal reports. Negotiations can take years to finalize, but in Pesick’s experience, the protracted legal battle and the owner’s resolve to stick with it can be worth the effort. In a four- year-long case, Pesick and his firm represented property owners in the largest eminent domain verdict in Michigan history, rendering $25 million in a case that involved a 6.3-acre parcel on the Detroit River with an original government offer of $13.7 million.
In Michigan, the Department of Transportation, as well as county road commissions, maintain lists of priority projects. These lists identify hundreds of roads and bridges that the agencies wish to repair, preserve, improve, and in some instances build new. Some of these may get a jump start through the Build Back Better legislation.
Regardless of what’s tackled first, Pesick, who has represented property owners in virtually every high-profile eminent domain project in Michigan over the last 40 years, including the Detroit stadiums, I-696, M-59, M-5 Haggerty Connector and the Detroit Metropolitan Airport Expansion, adds that any new right-of-way or utility easements required for infrastructure will also require compensation to the property owners.
“In Michigan, the process generally involves the agency that is constructing the project contacting the owner with a good faith offer for the right-of-way. If the agency and the owner cannot agree, the agency may file a condemnation action in a state circuit court to take the right-of-way through eminent domain under the Uniform Condemnation Procedures Act,” Pesick said.
Under that Act, the amount of the agency’s offer is paid to the owner at the beginning of the case, and the case proceeds as a dispute over the amount of compensation that the owner is entitled to receive.
“It is possible for an owner to challenge a proposed taking of right-of-way for an infrastructure project, but most cases proceed with the amount that the owner should receive as compensation as the primary issue,” Pesick said.
In addition to funding roads, bridges, broadband and water systems infrastructure, the Build Back Better Act has a significant focus on sustainability – again, with eminent domain implications.
“Where the program promotes restrictions on building in certain areas in the interest of sustainability, directly or through incentives for local governments to enact restrictions, that may represent an interference with an owner’s vested property rights that requires compensation, too,” Pesick said.
Steinhardt Pesick & Cohen (SPC)
Steinhardt Pesick & Cohen is Michigan’s leading law firm representing commercial property owners in eminent domain, condemnation, property tax matters and complex commercial real estate litigation. Possessing nearly 100 years’ combined experience, SPC’s attorneys represent owners of office, industrial, retail, multi-family, research and development, hospitality, agricultural, mixed-use, and vacant properties. More information is available at http://www.spclaw.com.