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When Does the Government Owe You Money for Changing Access to Your Property?

Real Estate, Land Use and Condemnation Litigation Law Alert Sarah R. Anchors

Under the Arizona Constitution, the state, cities, and other government entities must pay a landowner compensation if they condemn property for a public purpose.[1] But what if the government does not actually take a portion of the landowner’s property, but instead, eliminates or affects access to the property? The case law in Arizona has been a bit unclear about when the landowner is entitled to compensation. The Arizona Supreme Court clarified the law last week in City of Phoenix v. Garretson, CV-13-0181-PR (Ariz. Apr. 17, 2014).

Here are the rules Garretson articulated: (1) If the government project eliminates the property’s roadway access, then the landowner is entitled to compensation for the resulting reduction in property value. (2) If the project substantially impairs, but does not eliminate, the entry point, and the remaining access is unreasonably circuitous, then the landowner again is entitled to compensation for the resulting property value loss. (3) However, if the project substantially impairs access, but the property still has access that is not unreasonably circuitous, then the landowner is not entitled to compensation.

The facts in Garretson fit situation (1) above. The City of Phoenix light rail project eliminated the parking lot’s two access points to Jefferson Street. The property still had access via Madison Street. The facts were similar to State ex rel. Herman v. Wilson, where the property owners had direct access to a highway.[2] In converting the highway into a controlled-access highway, Interstate 10, the state removed the landowners’ direct access to the highway. The court ordered the state pay the property owners compensation, but included in its reasoning that the properties’ only remaining access was unreasonably circuitous. In Garretson, the court made clear that the “unreasonably circuitous” test has no place where the government destroys access. It only applies in situations where the government activity impairs access, such as removing direct access to a highway and replacing it with direct access only to a frontage road.

In Garretson, the City argued that the light rail was merely a change in traffic flow. True, a landowner does not have a right to a certain amount of traffic passing the property. A city can install a left-hand turn lane or make other traffic-flow changes and does not have to pay landowners compensation. But here, the court emphasized, the City eliminated the Jefferson Street access points. Therefore, Garretson was entitled to compensation. The only question remaining was the dollar value. Garretson still has to prove that the loss of access to Jefferson Street reduced the property’s value.

If you have any questions about condemnation matters, please contact Sarah R. Anchors, at [email protected] / (602) 229-5788, or your Quarles & Brady attorney.

[1] “No private property shall be taken or damaged for public or private use without just compensation having first been made.” Ariz. Const. art. 2 § 17.

[2] 103 Ariz. 194, 438 P.2d (1968).