Supreme Court to Decide Compensation for Loss of Road Access

Zoning

The Wisconsin Supreme Court recently accepted review of a case that will have substantial implications for those businesses that lose street access to due to Department of Transportation (“DOT”) road projects. Specifically, the outcome of this case will help determine the extent that the DOT must compensate a business owner when it removes access to the property.

The plaintiff, 118th Street Kenosha, LLC (“118th Street Kenosha”), owns a four-store shopping center near State Trunk Highway 50 and Interstate 94 in Kenosha. The shopping center had two access points: one driveway entrance to the shopping center from a public road, 118th Avenue, and one driveway entrance from a private road that intersected with 118th Avenue.

The DOT took a temporary easement from 118th Street Kenosha along 118th Avenue to perform highway relocation construction. As part of this construction, the DOT created a new entrance to the shopping center from the private road. But, it eliminated the previous entrance from 118th Avenue, so that the two access points are now both from the private road.

The DOT recorded an award of damages for the temporary easement it took from 118th Street Kenosha for $21,000. 118th Street Kenosha challenged this award and filed a notice of appeal with the trial court. It sought damages for the temporary limited easement and for the loss of access to 118th Avenue caused by the removal of the driveway to the property. It hired an appraiser who estimated that the DOT highway relocation project caused a $427,600 loss in property value.

Before trial, the DOT sought to prevent 118th Street Kenosha from introducing evidence that it is entitled to compensation for items other than the temporary limited easement that the DOT acquired. 118th Street Kenosha argued that it should be allowed to introduce evidence of the loss of direct access and proximity to 118th Avenue and the related loss in value to the property.

The trial court agreed with the DOT.  The court prohibited 118th Street Kenosha from introducing evidence related to its loss of access to 118th Avenue. The trial court stated that this issue is governed by Wis. Stat. § 32.09, “Rules governing determination of just compensation.” This statute states:

In the case of the taking of an easement, the compensation to be paid by the condemnor shall be determined by deducting from the fair market value of the whole property immediately before the date of evaluation, the fair market value of the remainder immediately after the date of evaluation, assuming the completion of the public improvement and giving effect … to the items of loss or damage to the property enumerated in sub. (6)(a) to (g) where shown to exist.

118th Street Kenosha appealed and argued that it can present evidence of the impact that the loss of access and proximity to 118th Avenue had on the fair market value of its commercial property. The DOT argued that the taking of the temporary easement to create the new private road entrance was a separate and distinct act from the closing and rerouting of the relevant stretch of 118th Avenue and did not result in the property’s loss of direct access to 118th Avenue.

The Court of Appeals rejected the DOT’s argument. The court held that “the taking of the temporary easement was integrally connected with the property’s loss of direct access and proximity to 118th Avenue.” Thus, the court remanded the case to allow 118th Street Kenosha to introduce evidence related to the property’s fair market value before and after the taking of the easement, including the loss of direct access from DOT’s reconstruction.

The DOT petitioned and the Supreme Court has accepted this case for review. This case is important for business owners. The court’s decision will help determine how much money the DOT must pay to compensate a business owner when it removes access to the business’s property. We will provide you with another update once the Supreme Court issues its decision.

If you have questions about this blog post, please contact Attorney Streck at sstreck@axley.com or 608.283.6723.

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