Relocation: Show Me The Money!
Eminent Domain Law
Under California law, a business cannot recover Just Compensation in eminent domain for loss of business goodwill value unless it proves that: “The loss cannot reasonably be prevented by a relocation of the business or by taking steps and adopting procedures that a reasonably prudent person would take and adopt in preserving the goodwill.”
The key words here are “reasonably” and “reasonably prudent.” Is it reasonably prudent to go into heavy debt in order to relocate? Is it reasonably prudent to relocate without knowing in advance how much financial assistance you will receive from the government and, perhaps more importantly when you will receive it? Is it reasonably prudent to relocate when, under the law, your relocation benefits may be subject to caps that fall way below what a relocation would actually cost?
In one of Callanan, Rogers & Dzida, LLP’s cases, the Firm forced the government’s relocation agent to admit in writing that:
“We agree that any prudent businessman would want to know the costs prior to committing to a (relocation) site… It is understood that most businesses do not have funds available to make payment and then wait to be reimbursed.”
This, of course, is simply common sense. No reasonably prudent business person would undergo the trauma and expense and effort of relocation without knowing how much financing he or she would receive and when he or she would get that financing.
Typically the government ignores these practicalities. Often, the government asks that the business owner “self-finance” a relocation from funds deposited by the government to pay the value of the land taken out from under the business. However, with all due respect, the government has the duty to pay Just Compensation for the property it takes. Forcing a business owner to use that Just Compensation to “self-finance” a relocation simply shirks that constitutional duty by making the business owner take part of that compensation and use it for another purpose; i.e. relocation.
Eminent Domain Relocation Compensation
Relocation benefits also are subject to caps. For example, one type of relocation benefit is “reestablishment expense.” This generally is the cost of getting the new relocation site ready to receive what is relocated from the site taken by the government. But relocation benefits for reestablishment expenses are currently capped at $25,000 for most federally funded projects and at $10,000 for state and local projects that do not involve federal funds. This is a HUGE gap in the law. Experience shows that these reestablishment expenses can reach seven figures, and almost always greatly exceed the caps. How will the reasonably prudent business owner finance these costs? Again, typically the government’s answer is “self-financing.”
Any reasonably prudent business person would want to know how much he or she must “self-finance” and would make business decisions about relocation based on what they learn. Therefore, at the earliest possible time, and throughout the eminent domain/relocation process, a reasonable and prudent business person should ask the government repeatedly and in writing: “Show me the money!” If the government won’t tell how much relocation money will be paid and when, it simply is NOT reasonably prudent to relocate, and the business owner has met the burden of proof. If the government does say how much relocation money will be provided and when, and the amount leaves a great deal more to be “self-financed” or the timing of the payment is at the government’s convenience and on the government’s schedule rather than on a schedule that meets the needs of the business, it simply is NOT reasonably prudent to relocate, and the business owner has again met the burden of proof. Document these efforts in writing so that you have evidence that will meet the burden of proof. Force the government to “Show the money!” Don’t take anything less for an answer.
If you would like to learn more about your rights in eminent domain do not hesitate to call the Attorneys at Callanan, Rogers & Dzida, LLP today at (213) 261-8798 for a free, no-obligation consultation.
The Attorneys at Callanan, Rogers & Dzida, LLP, have over 40 years combined experience in eminent domain law. Our firm represents property and business owners who face, or are already victims of, eminent domain. We appreciate the chance to earn your business.