Publisher's note: This post appears here courtesy of the Carolina Journal, and written by Julie Havlak.
Victims of the Map Act won their case in the N.C. Supreme Court this month, but their victory will put even more pressure on the cash-strapped N.C. Department of Transportation.
Ted and Sarah Chappell first moved into their Fayetteville house in 1962, where they raised a family. They bought the land and the house 23 years later. Two years after that, the General Assembly passed the Map Act, which allowed the state to bar property owners from using their land if it was in a designated highway corridor. The act triggered hundreds of lawsuits and drove the state Department of Transportation into financial straits.
Along the way, it changed the course of the Chappells' lives and destroyed the value of their land. The department's 1992 map drew the Fayetteville Outer Loop roadway through the middle of the Chappell's two-story home, sending the property value plummeting from $144,888 to $7,641, according to testimony from the Chappell's appraiser.
Three decades later, the Chappells still haven't been paid for their land, but they deserve full compensation for their property, the state Supreme Court ruled
Friday, May 1.
Courts said the Map Act had allowed the state to take private land for future highways without immediately paying homeowners, leaving some waiting decades for compensation. The law aimed to save the DOT money in the long run by allowing the department to prevent land from being sold before it went up in value. But the plan didn't work. Because the department stalled compensation for years, it now must fork out almost $1 billion, according to the DOT's estimates.
The department isn't prepared to pay. It dug itself into a $2-billion
budget deficit in 2019. It blamed the Map Act and storms, though a state audit
and McKinsey and Co. report
blasted the DOT for careless overspending. The coronavirus punched
another $300 million hole in its budget, and lost revenue could total almost $3 billion, said State Auditor Beth Wood.
"It is expensive to violate the property rights of citizens,"
said Joe Coletti
, John Locke Foundation senior fellow. "The decision exacerbates the self-inflicted cash crunch at the Department of Transportation."
The Supreme Court ruled compensation should be based on the difference in the property's worth before and after it fell under the Map Act. The ruling could force the state to pay other homeowners the full value of their properties, as appraisers told a jury that homes had little or almost no market value because of the Map Act.
For the damages, the Superior Court in Cumberland County awarded the Chappells $1.75 million - almost $831,000 of which came from 8% interest compounded annually.
But the Supreme Court shot down that interest calculation, telling the local court to base the interest rate on historic economic data. Whether the new calculated rate will favor the Chappells or the state is unclear. The Chappells will have to wait for the local court to calculate their interest payments before they're compensated.
The state will have to repay owners for the property taxes it charged on land that had "virtually no value," the court ruled. The Department of Transportation will also pay legal expenses.
"It is undecided now,"
said Neil Yarborough, the Chappell's attorney. "We believe this will offset any damage caused by the interest decision. It's walking away a win."
The ruling could help decide more than 100 remaining Map Act lawsuits. The decision will push the department to settle cases, says Jon Guze
, director of legal studies at the John Locke Foundation. Guze filed an amicus brief supporting Map Act victims.
"Obviously this is bad news for the DOT,"
said Guze. "They were trying to reduce the amount they were trying to pay the property owner. They raised four objections and lost on three. And the one they won on, the interest calculation, was the least important."
But the General Assembly blocked the DOT
from spending more than $150 million to settle Map Act cases each year. It also prohibited homeowners from collecting compound interest, shearing away hundreds of thousands of dollars in compensation for damages. The legislative move stalled a DOT rush to settle cases, and it could add another five to seven years to homeowners' wait for compensation.
"The state needs to make some decisions about how to deal with people it has admittedly injured for 20 years,"
said Matthew Bryant, a Winston-Salem lawyer who represents Map Act victims. "We stand ready to either try the cases or settle them. As soon as it opens back up, we'll be back in the courtroom ... and we'll get our clients the money that's been owed to them for the better part of two decades."
The ruling could influence the outcomes of other direct condemnation cases and disputes over easements that allow the state to use private land for specific purposes. The Supreme Court's decision requires the state to appraise property taken away, and forbids the state from breaking the rules of civil procedure.
"This decision has broader impacts locally,"
Yarborough said. "Why are these two things important? Utility relocation. DOT has taken much greater amounts of land under permanent utility easements than it has in pure right away."
Editor's note: This story was corrected after publication to clarify the Map Act's definition. We regret the lack of clarity.