What is Just and Adequate Compensation?
The eminent domain provisions in both the Georgia and United States Constitutions make clear that the government is not prohibited from taking property for public use. Rather, under the Georgia Constitution, if the government takes or damages private property for a public purpose, it must provide just and adequate compensation to the property owner. The Georgia Constitution's just and adequate compensation provision is broader than that provided by the United States Constitution.
What Issues Give Rise to Compensation?
A physical appropriation taking occurs when the government causes a direct and ongoing physical occupation of private property or effectively destroys the owner's property rights. In this situation, just compensation is the market value of the taken land plus any consequential damages. Consequential damages are calculated by measuring the difference between the market value of the remaining land before and after the taking.
If the government limits how the owner can access their property, the owner may be entitled to compensation for that loss of access. In the past, this applied to the removal of a deceleration lane that allowed large trucks requiring increased maneuverability to gain access to the property. However, converting the street on which the property abuts into a dead-end street or cul-de-sac is not compensable if there remains circuitous access to all points that the owner could originally reach. This applies even if the change causes customers to drive farther or affects traffic flow. If a court finds that access has been substantially interfered with, damages are measured by the diminution in market value of the property resulting from the interference.
An inverse condemnation claim arises when the governmental entity creates a condition on private property that amounts to a taking without compensation. This typically includes nuisances or trespasses that diminish the utility and functionality of a private owner's land. Even if the nuisance or trespass is temporary, the property owner may still be entitled to damages. Examples that courts have found to constitute inverse condemnation include government actions diverting water onto property, damaging property through noise, odors, or pollution, and causing mud and silt to flow onto property. Damages are measured by the diminution in the fair market value of the property.
Since business property is within the meaning of the Georgia Constitution, the damaging of a business for a public purpose requires just compensation for the damaged business. This is recovered as a separate item of compensation in addition to the lost value of the land. To recover business damages, the owner must prove the following:
- It had an established business on the property;
- the claimant had a property interest in the business;
- the loss in business was caused by the government; and
- the property was unique.
For property to be considered unique, it must have value specific to the owner and be incapable of being replaced. Uniqueness is a question for the jury; however, examples where juries have found property to be unique include railroads, because tracks are not typically bought and sold on the open market, and liquor stores located in the best spots in town, particularly when there is evidence of lost profits after relocation. A tenant may generally recover for either total or partial destruction of the business, but a property owner must prove total destruction of the business to recover. Damages are based on actual losses but cannot be speculative.
Georgia courts use a balancing test to determine whether zoning constitutes an unconstitutional taking. A restriction is invalid if it causes significant harm to the owner but has little public benefit and renders the property largely unusable. The owner has a high burden of proof and must show the zoning significantly limits use of the property, though it does not have to eliminate all use. If a zoning regulation is struck down, courts typically require the government to rezone the property rather than award money damages. Georgia law generally focuses on removing the zoning restriction, not paying compensation.
For more information about just and adequate compensation under Georgia eminent domain law, please contact Ivy N. Cadle, Kayla L. Pfeifer, or any member of Baker Donelson's Commercial Litigation team.
The authors acknowledge with appreciation the assistance and research from Baker Donelson Summer Associate Joseph Uribe.