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An Assessment Of The Effects Of Public Project Acquisitions On Adjacent Business

An Assessment of the Effects of Public Project Acquisitions on Adjacent Business was prepared by Economics Research Associates (ERA) under contract to the Office of Real Estate Services (HEPR), Federal Highway Administration in October 1996. The purpose of this report was to investigate the secondary impacts of highway activities on adjacent properties. To do so, the contractor, utilized a team of authors: Rivkin Associates; Daniel Mandelker; Brian Blaesser, Robinson, & Cole. This group conducted a review of academic literature and topical legal decisions regarding compensable and non-compensable takings.

The report offers good information on this area of study and may be of particular interest to states considering revised legislative or procedural requirements concerning compensable elements in eminent domain. Staff at HEPR have put together this short synopsis of the report in advance of its distribution. The goal was to provide the reader with some insights into the report's content and direction to points of possible interest.

In most States, if there is no taking from a property as part of a highway project, no damages are awarded to that property owner. However, there appears to be some sentiment from the public wanting recognition of and compensation for "secondary impacts". "Secondary impacts" refers to a variety of ways a highway, the physical structure, the construction activity, and its use may affect the value of a piece of property. Among the secondary impacts discussed in this report are: noise; loss of access; loss of parking; diversion of traffic; odors and emissions; loss of business profits/goodwill; interim construction loss; loss of view; and loss of visibility. Today, most State agencies are reluctant to attempt to compensate for secondary impacts. There is no substantial data to support these claims, and attempts to quantify these impacts are difficult.

State courts have generallyfound that secondary impacts are not compensable. Several have ruled that a landowner must prove the damage claimed is special or unique to that property only and not common to all abutting properties. The report cites several relevant court cases revolving around these issues.

Additionally, the report identified a number of worthwhile practices that agencies attempting to address secondary impact issues may want to consider. They range from creative dissemination of information to use of computer-aided "before" and "after" visualization of construction features. Case studies indicated that simply keeping the public thoroughly informed addressed many concerns about effects on properties' viability and value during and after a project. The following lists some methods used to inform the public about a project and to address concerns about secondary impact:

There is a suggestion in the report as follows:

"...at the federal level there is the need to establish guidelines that set standards and define methodologies that can better measure impacts so that if policy continues to change, there are in place tools to quantify the issues and help direct policy."

HEPR believes it may be appropriate and advisable to work toward development of uniform guidelines for the measurement of these impacts at the federal level. But the issue of setting "standards" is considered to be within the purview of the individual states and an area not properly subject to regulation at the federal level.

Publications: Linda Burris (linda.burris@dot.gov)

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Updated: 04/02/2013
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