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State v. Kimco of Evansville, Inc.: Restrictions on Traffic Flow Not Compensable Governmental Takings

On Wednesday, March 4, 2009, the Indiana Supreme Court held that property owners are not entitled to consequential damages for diminished traffic flows resulting from street reconfigurations or limitations imposed on a property from expanding existing points of ingress or egress.

The issues in State v. Kimco of Evansville, Inc. arose after the State sought to acquire a strip of land along the western border of the Plaza East Shopping Center in Evansville. The State needed the land in order to widen one road and improve traffic flow to and from another. The reconfiguration resulted in lane modifications that limited traffic in one direction from accessing the shopping center directly. As a condition of the taking, the State also prevented the shopping center from adding to or widening existing access points along the road.

After the State’s project was complete, the shopping center’s occupancy decreased by nearly forty percent (40%) and, as a result, the shopping center’s value was determined to have decreased by $2.3 million. Thereafter, the owner of the shopping center sued for “loss of access” damages arising from the condemnation, and a jury awarded Kimco $2.3 million. Thereafter, the Indiana Court of Appeals affirmed the trial court’s verdict and award.

In response to the State’s further appeal, the Indiana Supreme Court heard the case and, in a 3-2 opinion, reversed the judgment. In its opinion, the Court reaffirmed its previous holding in State v. Ensley, that “roadway improvements that reduce or interfere with traffic flow to a commercial property do not constitute takings of a property right of the owner of the property.” The Court wrote the following, noting the key distinction from Ensley: “although an elimination of rights of ingress and egress constitutes a compensable taking, the mere reduction in or redirection of traffic flow to a commercial property is not a compensable taking of a property right.”

According to the Court’s rationale, although the shopping center in Kimco could not widen or move its entrances, and the traffic flow to the shopping center had been redirected, “[n]either of the property’s existing points has been eliminated or narrowed as a result of the condemnation. Nor have any of the reconfigurations deprived the owners of their rights of ingress or egress.” As a result, the Court held that in instances where the only substantive allegation is that traffic flow has been encumbered, the negative economic “consequences from the State’s roadway improvements are not compensable because no property right has been taken.”

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