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Businesses May Be Paid For ‘Lost Profits’

January 29, 2012

Alex Morton
Capital News Service

RICHMOND – Several state legislators are sponsoring proposals to require governments to compensate property owners when public works crews block roads or sidewalks and prevent customers from reaching businesses.

In the House, Delegates Johnny Joannou, D-Portsmouth, and Anne Crockett-Stark, R-Wytheville, are leading efforts to revamp the rules involving eminent domain, government’s ability to take private property for public use.

“Let’s say I owned a piece of land, and owned a condominium on that land. If the county wants to take my land and build a highway in front of my condominium, then I’m going to lose a lot of business,” Crockett-Stark said.

So she is carrying legislation requiring governments to pay businesses for “lost profits” resulting from “lost access” when streets or sidewalks are blocked for work on roads or public utilities.

This is an issue for both urban and rural areas, said Crockett-Stark, who represents House District 6, which includes Carroll and Wythe counties and part of Smyth County in Southwest Virginia.

She said hundreds of Virginians are in this predicament, and many rely on profits from their commercial land as their only source of income.

“My question is, how many years of lost profits are we talking? One year? Ten years? They’re going to lose a lot more than fair market value during that time,” Crockett-Stark said.

But can courts measure exactly how much money was lost during these times? Crockett-Stark says that is the focal point of her legislation: to define the terms “lost access and lost profits,” so that the courts have a consistent way to determine the amount owed to property owners.

Three measures before the General Assembly seek to address this issue:

   – House Bill 597, sponsored by Crockett-Stark.

   – HB 1035, sponsored by Joannou and co-sponsored by five Republican 
     delegates: Crockett-Stark; Mark Cole of Fredericksburg; John O’Bannon of Henrico;
     Lee Ware of Powhatan; and Thomas Wright of Victoria.

   – Senate Bill 437, sponsored by Republican Sens. Mark Obenshain of Harrisonburg and 
Stephen Newman of Forest.

All three bills require governments to give commercial property owners “just compensation” for “lost profits and lost access” resulting from eminent domain. The bills would take effect Jan. 1, 2013, if voters approve a constitutional amendment in November.

Bret Schoolcraft, whose family owns the Halligan Bar & Grill in Richmond, said his business probably would support such proposals. In the city, he said, the only place to park is on the street – so blocking off roads or sidewalks would hurt business a lot.

“If the work was only temporary, that would be one thing. But if the roads were blocked for an extended period of time, it would probably affect us. It would be nice to be compensated if something like that were to happen,” Schoolcraft said.

Crockett-Stark expects many state agencies to oppose this bill. For example, she thinks the Virginia Department of Transportation would argue that cities must maintain and install utilities for the “public good.”

Tamara Rollison, a spokesperson for VDOT, said that if the department acquires anyone’s land, residential or commercial, the agency already pays the property owner fair market value.

“Before any land is taken, there is usually a meeting for public input,” Rollison said. “We try to work closely with businesses beforehand to make sure they are comfortable with what is happening.”

Rollison said VDOT often schedules road work during late night hours, in order to mitigate the impact of construction. She said she cannot see a reason for VDOT to oppose eminent domain bills unless they require governments to pay property owners an inordinate amount of compensation.

“Something that would require VDOT to spend significantly more money would obviously impact our budget, so we would have to look really closely at what this bill would require on our part,” Rollison said.

Crockett-Stark said she understands the need for eminent domain for some public projects. But she said she believes that work for the “public good” often takes precedence over people’s property rights.

“I’m not trying to do harm to any localities, but property rights are also very important to the individuals. So the government needs to find a balance.”

This CNS article was published by news organizations that include the Suffolk News-Herald and the Gaines Times.