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Stephon B. Bagne

Member, Clark Hill PLC

Phone: (313) 965-8897

Fax: (313) 309-6897

Email: sbagne@clarkhill.com

 

Stephon B. Bagne’s expertise in representing property owners in condemnation cases is widely recognized. Stephon has represented all types of property owners in a variety of situations including vacant and improved property, partial and total takings, easement and fee acquisitions, involving commercial and residential properties. He has won jury trials in courts throughout the State of Michigan and successfully defended those verdicts before the Michigan Court of Appeals. Stephon has prevailed in challenges of the necessity of takings and negotiated less onerous acquisitions in partial taking matters. He regularly speaks and writes about eminent domain and other real estate law issues for a variety of professional organizations. For a more complete bio, please click here.

 

 

 

 

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Friday
Aug232019

MDOT Aeronautics Bureau Issuing Inaccurate Brochure

The Michigan Department Transportation Aeronautics Bureau is issuing a brochure based upon federal standards that is grossly inaccurate in many respects as it relates to property owner rights under Michigan Law. 

I am currently representing several property owners as it relates to the Niles Airport and its desire to obtain additional avigation easements. (“Avigation” is an unfamiliar word to many, it relates to the word “aviation,” these are easements benefitting airports.)

I have extensive experience in representing property owners in airport takings, most notably in Lenawee County. In those cases, the airport was compelled to acquire an entire subdivision of residential homes based upon the impact of their proposed avigation easements. These blog posts describe those projects.

The Niles Airport project is being managed by the Michigan Department of Transportation Bureau of Aeronautics. As part of the initial steps in this project, I was asked to pass along a brochure entitled “Land Acquisition for Public Airports.” This is an FAA publication that discusses rights under federal law. However, it is grossly misleading for the MDOT Bureau of Aeronautics to use this brochure for acquisitions under state law, which provide significantly greater benefits to property owners.

Here are some examples of the misleading nature of this brochure.

“What is Fair Market Value”

The brochure states that "Fair Market Value is usually defined as the amount of money which would normally be paid for a property in a sale between a willing seller, not compelled to sell, and a willing buyer, not compelled to buy.” This is inconsistent with a definition used in Michigan. M. Civ. JI 90.06 is a jury instruction created by the Michigan Supreme Court to explain the law to jurors deciding condemnation cases. It defines market value in part as “the highest price estimated in terms of money that the property will bring if exposed for sale in the open market with a reasonable time allowed to find a purchaser buying with knowledge of all of the uses and purposes to which it is adapted and for which it is capable of being used.” The difference between using a “normal price” and a “highest price” standard can be significant. For example, I have seen many appraisals where a normal price value would be somewhere around the mid-point of a range of adjusted comparables. The highest price standard is often the highest of the adjusted comparables. This is very significant for total taking cases. It is also significant for partial taking cases since damages are generally assessed on a percentage of the overall value. The same percentage of diminution can result in significantly higher just compensation where the underlying value is higher.

“During Negotiations With Airport, May You Be Represented By An Attorney Or An Appraiser?”

This section states that the fees of the owner and the appraiser “will be paid by you and are not reimbursable.” Again, this is disturbingly inaccurate. It calls into question whether the MDOT is seeking to discourage property owners from getting proper expert assistance when evaluating this complex issue.

Condemnation cases in Michigan are governed by the Uniform Condemnation Procedures Act. MCL 213.66.

The statute governs reimbursement of expert and attorney fees. Once a good faith offer is issued, the property owner has an absolute right to obtain independent assistance from a real estate appraiser and have those expenses paid by the condemning agency, assuming that the amount incurred is reasonable. Also, the standard retainer agreement used by eminent domain specialists such as myself is a contingent fee arrangement, in which the attorney is paid 1/3 of the increased just compensation over and above the good faith offer. MCL 213.66 includes a provision calling for reimbursement of that attorney fee. And while past results are not a promise of future performance, in virtually every case I have ever handled for property owners the attorney fees have been voluntarily reimbursed in full by the condemning authority. Every property owner facing a potential condemnation should contact an eminent domain specialist such as myself.

“What Authority Does The Airport Owner Have To Acquire Your Property Through Condemnation?”

In responding to this question, the brochure confirms an owner’s entitlement to just compensation but does not reference the property owner’s ability to challenge the acquisition. The brochure makes it sound as though the court has no role in this process other than the determination of just compensation. While the standards for challenging a taking by a public agency such as a municipal airport requires establishing fraud, an error of law, or abuse of discretion, the potential of such challenge does exist and can be challenged in court.

Total Taking Issues

The brochure discusses displacement from your home. While the brochure focuses upon relocation issues, it is inherently incomplete because it does not recognize a property owners entitlement to be paid 125% of just compensation when displaced from their occupied home. This benefit is derived from the Michigan Constitution, specifically amendments to it enacted by the electorate in 2006. This link discusses that change to the Michigan Constitution. 

The brochure also focuses on relocation benefits without mentioning just compensation benefits that exist when displaced. For example, it indicates that “a displaced small business, farm, or nonprofit organization may receive a payment, not to exceed $10,000 for actual reasonable reestablishment expenses” and itemizes classes of these expenses. However, Michigan recognizes that such entities are entitled to just compensation for the cost to avoid business interruption. Just compensation for business interruption is not capped at $10,000. Indeed, these costs can often be very substantial and can capture expenses being incurred years into the future.

Eminent domain is a highly technical and specialized area of the law. Since it is beyond the knowledge and expertise of the vast majority of attorneys, individual property owners cannot possibly be expected to understand their rights when confronted by a taking. The MDOT’s issuance of a brochure that contains significant inaccuracies and material exclusions does not help the situation. All property owners facing eminent domain should contact an eminent domain specialist.

Please feel free to contact me if you have been approached by an airport or another condemning authority about giving up property rights.

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