INDOT - Eminent Domain -- A Case Study

Eminent Domain Issues:

Jerry Lehman owns a farm on the land chosen to build a new bypass around Terre Haute from existing US41 to I-70. Since many of our members must worry about the Eminent Domain Process and INDOT's procedures, we are happy to be able to share Mr. Lehman's thoughts. If you would like to make contact with Jerry, please send your questions to us, and we will forward them to him.

2/28/2004 , Jerry Lehman wrote:

In case anyone would like to know, here are the particulars on how INDOT has handled the purchase of my property so far. I understand this is normal.

The first contact by the Dept. was on March 13, 2003. The State's offer for this 13.5 acres was for $3,735.73 cents per acre plus severance for a total of $89,451.00. This property is a prime development property even though zoned farming and across the road from a completed up scale sub division. I did show their agent, Brenda Kyle, the area which could be developed and the beautiful overlook home owners would have here. At no time did they try to negotiate but only repeated their offer by letter (copy attached). I countered with my letter stating I believed the acreage was worth between $6,000 & $8,000 based on other properties sold for residential use in the area and using $7,000 as a basis and using their own severance percentage believed the value was $167,984. The Dept. never responded nor was there any attempt to negotiate or visit by the site.

I can understand why the State never negotiates. Nobody would ever except a first offer if they did. But why reject the court's findings?

Their next action was through the courts filing for Right of Eminent Domain. In this process three appraisers were appointed by the court. Their appraisal for the 13.5 acres was $114,087 or about $8,450 dollars per acre, even higher than what I had believed, with severance of $41,170. I suspect that the reason they lowered the severance was the appraisers never talked to me nor asked to see the area. They simply sat in their office (or local bar) and did their, "comps." The courts total value was established at $155,257. This is $65,806 more than the State's original offer. We accepted the courts appraised value and notified the court of our acceptance. This was even though my personally hired (state licensed) appraiser believed the value to be higher. The state rejected the court's findings. The appraisal cost the state an additional $4,500. Don't know what the court costs were. Because the appraisers never came out they missed a special fence, the value of which is about $8,000. This will be added to the amount we will ask of the jury. To this date the state has never tried to negotiate nor even visit the property that I'm aware of. If they drove past they didn't ask to walk the area. They needn't worry for their personal safety as I'm not a violent man. My attorney did invite them through their legal council to visit the property and negotiate. Not word one from them.

My attorney tells me, by law the State now must pay 8.5% interest on that money which is being held by the court, until the jury trial (or settlement) which is scheduled for Aug. of 2005, more than 18 months away. That amount of interest compounded amounts to around $25,000. I also understand because they refused the court's appraisal the state now has prime responsibility for jury trial costs and if the jury places a higher value than the court's appraisal we can also ask for my attorney's fees. Additionally their rejection of the court's findings now releases us from our acceptance and we will now place back on the table the special rabbit enclosure fence ($8,000) which was missed as well as the higher price that my appraiser believes it is worth. With all this possible additional cost they have never tried to negotiate. There seems to be no concern for the additional costs.

My concern here is, why in view of the amount this could cost the state in another two years don't they try to settle. By accepting the court's value they would have saved interest, court costs and their legal costs in another two years. They could offer more today than the court's set value and still save money in two years. One would think someone, at least one person somewhere in the Dept. of land purchasing would be intelligent enough to figure this out.

Yes, I'd be the benefactor of their neglect, but based on my experience the same must be occurring with more landowners and on other projects around the state as well. The DOT is wasting your and my taxes. Dollars lost through neglect. They are derelict in their duties and someone's head should roll at Indianapolis.

So, the INDOT paid the money to the court who is holding it. The court gave the INDOT, "Right of Eminent Domain," and they are building the bypass on it. Because I own the property I get to pay the property taxes on it.

INDOT is treating landowners from whom land is being taken as second class citizens. Another landowner whose home will be only about 150 feet from the elevated bypass whose home will surely be devalued has never been offered cent one for his loss in retail value and severance. I understand he was told by INDOT the noise will be minimal even though traffic will pass at rooftop level near the home. His home will be worth less and he should be compensated. There is no reason why he must hire a lawyer to receive even an offer of compensation? Another second class citizen.

Jerry Lehman
(Address withheld by COUNT US!)
Terre Haute, IN

Jerry Lehman

Update, Oct. 18, 2004

Nearly 2.5 years after the initial contact by the purchasing agent from INDOT the court finally ordered INDOT into negotiations using a licensed mediator here in Terre Haute on Sept. 30, 2004. My attorney and I met an Indiana Deputy Attorney General and a buyer from INDOT's Land Acquisition Dept. at the Mediator's office. We began at 10:00 AM. They finally agreed to accept the courts findings to which we once again agreed. It took INDOT's representatives four and one half hours to agree with the court. So they settled for the value the court established it to be over a year ago, plus the small amount of interest it earned while on deposit.

Why didn't they accept the court's determination at the Right of Emanate Domain action? The state accrued additional expenses for INDOT. My attorney cost increased. The taxpayers lost. Who gained from this wasteful inaction?

And one last question, how long will it take for INDOT to process the paperwork to release the money to us?

Jerry Lehman

Update, June 17,2005

What to expect if the state takes your property.

My wife and I have just gone through the Right of Eminent Domain process in which INDOT took 13.5 acres of our farm ground south of There Haute. Here is our story and what you should expect if the state takes property from you for the new I-69 highway.

First the state hired a local real estate appraiser who appraised the property for INDOT. These appraisals are kept secret by Indiana law. Neither INDOT or the hired appraiser will divulge the appraised value. INDOT then makes an offer for your property and they are not bound by the appraisal. They can offer more or they can offer less. Once this offer is made to the land owner it is policy not to negotiate. If they did, no person would accept the states first offer. Only in rare circumstances will they negotiate. The next step is condemnation proceedings or exercising the Right of Eminent Domain through the court.

In my case the court appointed three State Licensed appraisers. They determined a per acre value of my property was more than double that which was offered by the Dept. of land acquisition of INDOT. The court then declared a value based on the three appraisals. This base price per acre was even higher than what we believed it to be and we accepted the court's finding and agreed to sell. The State rejected it.

Once the Courts establish a value, if either party rejects it, INDOT deposits that amount of money with the court and 30 days later the State is granted, "Right of Eminent Domain." What this means is you still own the property, you still must pay property taxes on it because you still hold title to the property until settlement is reached. And because you and the state haven't come to terms the court holds the money.

You may or may not be able to get part or all of the deposit. In my case the court rejected two requests by letter to withdraw enough of the deposit to pay the income taxes. Yes, that is correct. Even though you don't have the money, the IRS rules it has been paid by the state therefore taxable to you. In my case I had to withdraw money from my lifetime savings to pay the income taxes on that money.

The court then sat a date for a jury trial. In my case about 2 years ahead. In the mean time the court sent notices to the state for secondary trial dates and dates to attempt to reach a settlement. The State never showed or responded to the courts actions. Over a year later the court ordered Indiana to enter into mediation. Had they not done so they could have been held in contempt of court. They did keep that appointment. After 4 hours of intense mediation the State agreed to accept the court's findings of value and the money was released to me. However we did incur several additional thousand dollars of attorney's expenses. And yes, I still had to pay the property taxes on that 13.5 acres for which the state did not reimburse.

Had the State not accepted the courts findings the case would have gone to a jury trial. Just as the state rejected the courts findings they can also reject a jury's determination sending it to a second jury trial. I know of one such case in northern Indiana that took 10 years and two jury trials to settle with the land owner which was a small church. The original offer was around $2,700. Final settlement was over $50,000.

There are several strong arm tactics employed by the state to obtain your property at less than fair market value. First is keeping the appraisal paid for by the state a secret which is permitted by state law. In my case they refused to look at actual real estate sales records in this area of comparable properties. They also told me if I hired a licensed state appraiser they would not accept or consider it. We had two choices, accept the offer or go to court.

The second is holding your money until both parties agree to the value. This places anyone who is losing their house in a real bind. You must vacate and locate a new residence all with your money as the courts hold proceeds deposited. This can drag on for years.

A third strong arm tactic is forcing you to continue to pay property taxes while they build a highway upon it. You will not be reimbursed for these paid taxes.

When I write this I'm doing exactly what INDOT wants me to do. That is spread the word, if you don't accept the states below value offer they can and will drag this out for years. And after expenses and losses you well likely net less than the offer. They have no respect for you as a citizen of Indiana.

The state is acting in criminal ways. Certainly if not criminal, immoral. What can be done about the way the State takes property from it's citizens? Nothing at the INDOT level. Their actions are permitted by Indiana law. We the citizens of this state must call upon our legislators to change the law. Only your state legislators can make the needed changes.

What do I recommend these changes to be?

1. The appraisal paid for by INDOT should be a matter of public record. You the person losing your property and considering the offer should have the right to see that appraisal.
2. The state should be required to accept and consider your appraisal when done by a state licensed real estate appraiser and paid for by the landowner.
3. A law should be written or one amended to require the courts to release at least half of any monies deposited by INDOT with the courts. And in cases where residences are taken all should be released to the landowner.
4. Write a law that would force the state to accept the courts Right of Eminent Domain determination provided the land owner accepts.

And last, as the state drags you through this process and attempts to steal your prized land and improvements stay in touch with your state legislators. Only with their knowledge of INDOT's dishonorable and corrupt methods will they have the impetus to change the laws.