Indiana Supreme Court Rules Change in Traffic Flow Not Compensable Taking

The Indiana Supreme Court just announced a decision refining how it will analyze “takings” cases. The context for the analysis was a taking concurrent with redesign of the adjacent roadway in front of a shopping center. In State of Indiana v. Kimco, 902 NE2d 206, Kimco recovered a jury verdict in excess of $2.3 million based on the State’s taking of a strip of its shopping center, along with redesigning and reconfiguring traffic flow in front of the center.

In announcing its decision, the Indiana Supreme Court indicated that it will follow Federal takings law in the future, and confirmed that there is no difference between the rights afforded under the Indiana and United States Constitutions. Thus, any demonstrable taking is compensable. However, a reduction in value that is not directly attributable to the taking is not recoverable.

There was no dispute that the State took a .154-acre strip of land along the border of Kimco’s property. However, Kimco’s main claim was that the shopping center’s value was reduced by over $2 million based on the change in traffic patterns associated with the road construction project. The State did not rebut the amount of Kimco’s claim, but simply claimed that any reduction in the value of the shopping center was not recoverable as a taking.

In analyzing the issue, the Indiana Supreme Court looked at changes in access to the shopping center before and after the project. The Court recognized that restricting access was a compensable taking, but found that access was not restricted in this case. The traffic flow surrounding the property changed, and the convenience of entry into and out of the center had been affected, but the property remained accessible from all of the roadways at all of the pre-existing entrances.

The Court concluded that restricting ingress or egress constitutes a compensable taking, but that Kimco’s ingress and egress rights had not been affected. The value of the convenience in reaching the center based on changes made to other property affected Kimco in the amount of over $2 million. However, because the pre-existing ingress and egress remained in place, there was no taking and there could be no recovery of the lost value in the center.

Posted by: Thomas F. Bedsole

Categories: Construction Contracts, Current Developments / Legislation