Nevada Freeway Upgrade Not an Unlawful Taking

     CARSON CITY, Nev. (CN) – The Nevada Department of Transportation did not illegally take land for an interstate widening project in Las Vegas, the state Supreme Court ruled.
     The June 25 ruling reversed an earlier decision by the Clark Court District Court which held the state illegally took property from Ad America, a graphic design firm, to widen Interstate-15 in Las Vegas between Desert Inn Road and the U.S.-95/I-15 interchange.
     The state appealed the ruling, arguing it had appropriately exercised its rights under eminent domain. The question before the Nevada Supreme Court was whether the state and city of Las Vegas had lawfully claimed the land, and if not, what damages was Ad America owed.
     To prevail, Justice Michael Douglas wrote, Ad America must prove there was an “‘invasion or appropriation of some valuable property right'” and that there was an “‘unreasonable or oppressive'” action done by the state that caused the property to lose value.
     In the end, the Douglas and his colleagues concluded the district court improperly combined two Nevada laws governing property confiscation, and “after applying the correct law, no taking of Ad America’s property occurred.”
     The Department of Transportation had publicly disclosed its freeway widening plan and the city independently acquired land for the project and made it available for the freeway widening, Douglas wrote.
     The Judge said as part of the public disclosure, the state performed an environmental assessment and publicly releasing plans for several development alternatives to qualify for Federal Highway Association funding.
     Every alternative plan included commercial rental property owned by Ad America, he said.
     Ad America, which provide advertising consultation services, bought its property at 2310 Highland Dr. between 2004 and 2005. When it began working on development plans, Douglas said Ad America learned of a de facto moratorium on development located within the Project Neon corridor and in 2007 started informing tenants that its land would be used for the freeway widening project.
     The company maintained its rental income through 2010 but saw an about 37 percent decrease and could not make its mortgage payments in 2012, Douglas wrote.
     Ad America in May 2011 filed its complaint seeking damages and compensation for what it called a taking of its property, Douglas said.
     In its ruling, the district court “attributed the city of Las Vegas’ actions, including its purchase of property and land-use decision, to [the] Nevada Department of Transportation and determined that [it] committed a taking of Ad America’s property on Oct. 24, 2007,” Douglas wrote.
     Although the district court ruled the taking occurred in October 2007, Douglas said the transportation department did not physically occupy Ad America’s property, pass any regulations or rule affecting its use or took and formal steps to acquire any of its land through eminent domain.
     The transportation department “argues that there was no taking here because there was no physical ouster, regulatory taking, or unlawful exaction” and that “it cannot be held liable for the city’s actions,” Douglas wrote.
     Ad America countered that there was a de factor moratorium on development and it “suffered substantial impacts” as a result, Douglas said.
     State and federal laws require “just compensation” for any taking of land and provide “significant protection of private property rights,” Douglas said, but “these rights must be considered in light of the realities facing state and local government entities in their efforts to serve the public through long-term projects.”
     Both sides agree the transportation department did not “appropriate or physically invade Ad America’s property” and the company never applied for any land-use permits while still maintaining its rental income, Douglas wrote.
     Because it continued to have tenants, the transportation department did not “completely deprive Ad America” of the economic benefits of continuing to use the property, Douglas said.
     The justices ordered the district court to vacate its prior order against the state and instead enter an order in its favor.
     The Interstate-15 widening project is expected to cost as much as $1.8 billion, and will scheduled to be completed in six phases over the next 20 to 25 years.
     Representatives of the parties were not available for comment.

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