iThe federal government is expected to pass a large infrastructure spending bill in 2021 to fund road and bridge improvement projects. Retail property owners need to keep a careful eye on the construction plans for these projects since they often involve modifying highway access and installing sidewalks. These design changes can have an impact on a retail site.
As a general rule, the government’s “police power” enables it to regulate the state highway system. When it comes to road widening and bridge repair projects, the government will often adjust, modify, or revoke access along an adjoining highway as part of the project. For example, a small retail site may have 3 or 4 curb cuts along the frontage of a property, which may violate existing ordinances due to the curb cuts’ number, location, or size. When the government decides to bring the access points up to Code as part of a road or bridge project, a property owner may be forced to close certain openings, modify others, or relocate the access points. Depending on the property’s layout, the modification of access can be devastating to the property owner and tenants. In addition, the government may deny an owner’s request for compensation for the loss in value caused by the change in access, arguing the government is merely exercising its police power.
What should a retail property owner do when it discovers a local project is moving forward? First, determine if there will be any road work that may modify the access to their property. If there is going to be a modification of access, the property owner should consider retaining a traffic engineer to evaluate the modifications and how they will impact the use of the site (i.e., customer access, on-site circulation patterns, access for delivery trucks).
Second, property owners need to determine whether the government’s actions require the government to pay just compensation for the damages caused by the modification of access. Often there is a small taking of land necessary for the road project; other times, there is not. The analysis of what is compensable can be challenging.
