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Condemnation, the Virginia Constitution, and What Will it Mean to Development

By Dan Jamison, Group Manager, Koontz-Bryant, P.C.

The November 6th election didn’t bring any change in the White House, but it did bring about a change to the Constitution of Virginia. The Virginia Eminent Domain Amendment, Question 1 was on the ballot as a legislatively-referred constitutional amendment where it was approved by over 82% of the Virginia voters. The changes to Article I. Bill of Rights of the Constitution were twice approved by the General Assembly - in the 2011 and 2012 sessions - allowing the amendment to be put to the voters. The power of eminent domain and the limitations of its use by a government entity have been a part of the Constitution. So what prompted the changes, what are the changes, and what will they mean to the development community?

Eminent domain is the power to acquire private property for public use. If the property owner and the entity acquiring the property cannot reach an agreement on the sale or transfer of the property, then compensation for the taken land is decided by the courts. The changes were prompted after a 2005 Connecticut case where the United States Supreme Court upheld the taking of private property and its subsequent transfer to a private business for economic development purposes (Kelo vs. City of New London). Two years after that, the Virginia General Assembly began enacting changes to limit eminent domain’s use. This is a summary of the changes that are part of the Constitution:
• The right of private property is “fundamental”.
• The taking or damaging of private property must be for public use.
• No more property may be taken or damaged than needed for the stated use.
• Increasing jobs, increasing tax revenue, and economic development will not be considered “public use”.
• Just compensation has been expanded to include lost profits, lost access and damages to the remainder of the property caused by the taking.
• The entity condemning the property has the burden to prove that reason for the taking is a true public use.

The exact terms of “lost profits” and “lost access” have not yet been defined and will be defined by the General Assembly. These definitions could have the greatest impact on whether or not it will be fiscally possible to use the power of eminent domain.

So how will this affect the ability to develop land in the future? While nothing is certain, these changes are very likely to affect the extension of utilities to new sites and the improvements to transportation facilities commonly required during the zoning process. Developers may be required to pay more to acquire the land needed for improvements even when the improvements are clearly for public use. Localities and public agencies may need to change their regulations on where utilities can be located to not impact adjacent properties while ensuring that the necessary infrastructure can be installed during the development process. When the terms for lost profit and lost access are defined, the true monetary impacts of these changes will be known.

Koontz-Bryant staff continues to monitor these and all changes to state regulations. We can help you negotiate the zoning and developmental processes and determine if, when, and where condemnation may play a role in your project. For more information please contact Dan Jamison: 804-200-1903.