Testimny t the Judiciary Cmmittee f the Ohi Huse n Huse Bill 5 (Eminent Dmain) April 19, 2007 DIRECTOR JAMES G. BEASLEY Chairman Blessing, ranking member Harwd and ther members f the Judiciary, my name is James Beasley, and I am the Directr f the. Thank yu fr the pprtunity t share ODOT s cncerns n Huse Bill 5. I wuld like t ffer sme brief cmments and then ask the Administratr f ur Office f Real Estate t address the Cmmittee in mre detail. Ohi has lng recgnized the delicate balance between eminent dmain and the rights f prperty wners. It is a unique pwer that shuld nly be used in cases f last resrt. Even the Ohi Cnstitutin in Article 1, Sectin 19, which talks abut eminent dmain in times f war recgnizes this imprtant balance, placing a specific urgency n making and repairing ur radways. By way f my backgrund, I came t ODOT this year after almst three decades as the Cunty Engineer f Brwn Cunty. During my tenure, there were numerus times when the cunty was required t exercise its pwer f eminent dmain. I always fund the ODOT prcess t be the mst fair and equitable t landwners and t the cunty. Huse Bill 5, hwever, cntains certain prvisins that will have a negative impact n that prcess. We think these prvisins will hamper ur effrts t deliver a safe highway system in a timely and ecnmical manner. As drafted, this legislatin culd cst the department millins f highway dllars in right f way csts. Inflatin n the price f cnstructin materials has already taken its tll n ur purchasing pwer. Requiring the state t pay even mre fr right f way will deepen the financial shrtfall. Sme f the prvisins in this bill including nes that create an imbalance between access and safety culd als add years t an already lengthy prject develpment prcess, delaying needed safety imprvements t ur highway system. Time is mney in the cnstructin industry, s new delays n matter the length will mean additinal csts. ODOT is trying t stretch its dllars t make ur radways safer and reduce cngestin. The department already faces an uncertain financial future in the financing f ur pririty radway prjects. We are cncerned this Bill will nly add t that uncertainty. Mr. Chairmain, I wuld nw ask Mr. Viau t cntinue ur testimny befre we mve n t yur questins. Ohi Huse Bill 5 Testimny, April 19, 2007 1
ADMINSTRATOR JIM VIAU Chairman Blessing, ranking member Harwd, and ther members f the Judiciary Cmmittee, my name is Jim Viau, and I am the Administratr f the Office f Real Estate fr the Ohi Department f Transprtatin. Eminent dmain is a unique pwer that shuld nly be used in cases f last resrt t prmte public prjects, like ODOT s highway prjects. ODOT appreciates the impact eminent dmain can have n landwners, and we recgnize ur respnsibility t treat all landwners in a fair and equitable manner. ODOT s first pririty in any right f way acquisitin is t prtect the rights f the landwner. Clearing a prject fr cnstructin always takes a back seat t prtecting prperty wners rights. ODOT has a very gd track recrd n these matters, and is a respnsible steward f the pwer f eminent dmain. Let me briefly share with yu an verview f the ODOT acquisitin prcess: Natinal Envirnmental Plicy Act (NEPA): ODOT prjects fllw the NEPA prcess, which includes multiple levels f public invlvement and input Owners are ntified and infrmed f: the interests t be acquired their rights under Federal and State law the agency s bligatin t secure an appraisal Owners accmpany the appraisers: ODOT requires the appraiser t ffer the wner the right t accmpany the appraiser during their inspectin appraiser must cnsider wner s cncerns regarding the taking and impacts t the residue prperty Pre-Apprval f appraisers: ODOT nly uses appraisers wh are qualified and pre-apprved all cmplex appraisals are prepared by State General Certified Appraisers (Cmmerce Real Estate Divisin regulates) Appraisals must be reviewed and cmpliant with: Federal Unifrm Act 49 CFR ORC OAC Ohi Cnstitutin Case Law Unifrm Standards fr Prfessinal Appraisal Practices (USPAP) Unifrm Appraisal Standards fr Federal Land Acquisitins Current appraisal thery and techniques Appraisals: Ohi Huse Bill 5 Testimny, April 19, 2007 2
Appraisals d nt penalize wners fr negative prject influences in estimating the value. ODOT cmpensates fr the part taken and any damages t the residue (part nt taken) ODOT ffers t purchase any unecnmic remnants (ODOT acquisitin leaves the wner with a parcel that has limited value r utility t the wner) Owner Prvided Cpy f Appraisal: ODOT prvides a cpy f the appraisal r valuatin at the time f the first negtiatin meeting. Agents must explain the appraisal t wner Owner invited t share any infrmatin that wuld indicate a different value, and ODOT will update the appraisal if the wner s infrmatin supprts a higher value ODOT will als update the appraisal t current market cnditins if significant time has elapsed since the riginal valuatin r market cnditins have changed Negtiated Settlements: ODOT, thrugh its Administrative Review Prcess, will settle with an wner fr an amunt that exceeds the appraised value Prcess allws ODOT and wner t avid litigatin in many instances Relcatin Benefits: ODOT ffers relcatin benefits t all wners, tenants and businesses that are displaced by ur highway prjects. Benefits include: Replacement Husing Additives (Owners and Tenants) Mve Csts Incidental Expenses (Clsing Csts, Utility Hkups, etc.) Increased Interest Business Search Csts We have a very thrugh prcess and nly exercise the pwer f eminent dmain after all ther ptins are exhausted. Please permit me t share with yu a few facts regarding ur acquisitins. Over the past three fiscal years ( 04-06), ODOT has acquired a ttal f 4,870 parcels f land. Of this ttal, 4,292 (r 88%) have been successfully negtiated withut having t file fr apprpriatin. Of the remaining 578 parcels (r 12%) that were filed fr apprpriatin, nly 27 (r 5%) f these parcels actually went t a jury fr verdict. The vast majrity f all f ODOT s acquisitins (99.4%) are settled withut prgressing t a full jury trial. If yu change the law regarding attrney fees, these numbers will change dramatically. ODOT emplys a pst acquisitin prperty wner pinin survey t measure its success in negtiating with landwners and t determine hw ODOT can imprve its prcesses. Ohi Huse Bill 5 Testimny, April 19, 2007 3
Since its inceptin, ODOT has surveyed ver 16,000 prperty wners. Of thse wh respnded: 62% rated their interactin with ODOT as Excellent 25% rated it as Very Gd 7% rated it as Gd 4% rated it as Fair 2% rated it as Pr As yu can see, 94% f thse respnding rated their interactin with ODOT as Gd t Excellent. Fr these very reasns, the Eminent Dmain Task Frce exempted ODOT frm its recmmendatin n attrney s fees. Hwever, ODOT has cncerns that a precedent culd be set by this Bill. Namely, the changes cntemplated t Cde Sectins 163.14(B) and 163.16(B) related t the payment f attrney s fees and ther expert witness fees when the jury award in an apprpriatin case exceeds 125% f the agency s initial ffer. The payment f landwners attrney fees and ther expert witness fees is a great departure frm Ohi law. Ohi curts have fllwed the standard that the payment f attrneys fees is nly t be made in punitive cases - where a party has clearly demnstrated bad faith. Thrugh ur effrts t imprve the safety f the traveling public, ODOT des nt act in bad faith, and shuld nt be subject t the penalty f attrneys fees and ther expert witness fees. There is a cncern that future decisin-makers might frget this imprtant fact abut ODOT, if a precedent is set fr ther entities t pay these fees. Anther area f cncern ne that culd stagnate highway prjects bth state and lcal centers arund access. HB 5 states that apprpriatins fr prjects that will disrupt the flw f traffic r impede access t prperty will nly be made after the agency makes reasnable effrts t plan the prject in a way that limits thse effects. Our public invlvement prcess and ur expert engineering already fully address this cncern. ODOT attempts t mitigate the effects n landwners and the traveling public, but safety issues smetimes frce us t revise r eliminate access frm the traveled way. Our biggest surce f accidents cmes frm traffic entering r exiting a radway, r turning against cnflicting traffic. As I mentined, this prvisin affects all radway prjects, either state r lcal. Cuntless prjects will face delays as these items are questined and litigated. And, as the Directr pinted ut, time is mney. Requiring the state t pay fr even mre than what is actually needed will als add t that pricetag. That is why we have cncern regarding the payment f up t $5,000 fr lst business and lss f gdwill. Placing a value n these perceived damages will be difficult and incredibly subjective. Lst business is uncertain and depends n t many cntingencies. Lst gdwill is even mre speculative and nearly incalculable. We d nt acquire the wner s business; we nly acquire the land and buildings it ccupies. The wner takes their business interest with them t their new lcatin t again sell their gds and services. Ohi Huse Bill 5 Testimny, April 19, 2007 4
Requiring the payment f business damages is a great departure frm existing state eminent dmain plicies and practices in Ohi. When this issue has been raised, Ohi curts have rutinely ruled that business damages, f any kind, are nt cmpensable. The state f Flrida has similar business damages and attrney s fees laws. There, hundreds f millins f dllars have been diverted frm their radway imprvement fund t pay fr attrneys and ther experts hired by landwners and their cunsel, and fr business damages. In Flrida, apprximately 40% f their acquisitins g t apprpriatin, as there is n incentive t penly negtiate and settle acquisitins. In summary, ODOT is a leader in prtecting the rights f landwners, and we supprt effrts t create unifrm eminent dmain prcedures. Hwever, ODOT ppses diverting highway funds t pay cstly attrney fees r incredibly subjective business csts. We als ppse any additinal burdens n prjects that affect the flw f traffic r access, as we knw that wuld hamper ur effrts t deliver a safe, effective and efficient highway system. On behalf f ODOT, I wuld like t thank yu fr the pprtunity t prvide this testimny, and wuld nw entertain any questins the Cmmittee may have. Ohi Huse Bill 5 Testimny, April 19, 2007 5