Industrial Property Owners

Industrial properties will often have unique needs relating to access, location and regulation. Such concerns may be overlooked by the condemning authority when assessing the property’s value or the impact of the taking on the property’s utility. Some specific concerns of valuing industrial property in condemnation include identifying the property’s highest and best use, valuing fixtures and machinery, environmental considerations, zoning considerations, and determining obsolescence. Additionally, another consideration is whether the owner of industrial property should receive fair market value or be compensated to the full extent of the loss and what prevailing law allows.

When land is taken using the power of eminent domain, the condemning authority takes title to everything attached to the land, whether classified as buildings or fixtures. In eminent domain, a property owner or tenant may receive compensation for the taking of trade fixtures, equipment, machinery and other use-specific improvements made to a property. Generally, trade fixtures are items that are attached to the real property, are adapted or applied to the use of the realty to which they are connected and are intended to be permanent – machinery or equipment installed specifically for use on the property. The compensability of trade fixtures in condemnation differs from state to state and the claim for compensation may be made by either the landowner or the tenant. For industrial landowners and tenants, the guidance of experienced condemnation counsel will be essential to maximize just compensation and minimize impacts to the property and any businesses operating at the site.

Case Studies – Condemnation of Industrial Properties Using the Government’s Eminent Domain Power

Industrial Properties Aerial View

Case Study #1 – Whole Take of Industrial Property with Deep Water Port Access

A municipal port authority with the power of eminent domain initiated “slow-take” proceedings to acquire an 60+ acre industrial property with deep water access for the purpose of construction a port terminal to be owned by the port authority and leased to a private import company. The owner of the property purchased the waterfront property with the intent to redevelop the former plant and construct a bulk terminal. The property had many unique characteristics including an abandoned railroad line, industrial buildings and a small office building. Additionally, the property contained a landfill used by the former industrial owner and was encumbered by some contamination. The owner purchased the property for $8 million and assumed all responsibility for the environmental clean-up. In advance of filing the condemnation suit, the port authority offered the owner $14 million to purchase the property. However, the port required the owner to remain liable for the environmental clean-up. The owner refused the port’s offer and suit was filed. Following a two-week jury trial in which numerous experts testified for both sides concerning the valuation of the industrial fixtures on the site, the cost to cure the environmental issues, the likelihood of the owner obtaining the necessary permits to construct port infrastructure and connect the rail line, as well as the overall value of the property, the jury returned a verdict awarding $76 million in just compensation for the acquisition of the property. Because the port authority used the “slow-take” eminent domain power, it was afforded the opportunity to decide whether it wanted to move forward with the acquisition and pay the amount the jury determined to be just compensation or whether it would abandon the condemnation. The port authority decided to abandon the taking remaining liable for the owners’ attorneys fees and costs determined by the court to be in excess of $10 million.

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Please note: The just compensation awards received by industrial landowners in the above case studies are samples of the results Owners’ Counsel of America attorneys have achieved for their clients. While we can not guarantee the same or similar result in every case, this information is presented to assist you in understanding possible scenarios that can affect your property rights as well as to demonstrate the skill of OCA lawyers. The outcome of your case will depend upon its particular facts and circumstances. It should not be assumed that your case will conclude with a result similar to the case studies above.