Compensation due to Major Transportation/Infrastructure Improvements

[Planderella]

In New Orleans, the Regional Transit Authority is presently engaged in reinstalling streetcar tracks along some major thoroughfares in the city. This

article raises an interesting question about the businesses that are being impacted by the construction. Some of the owners believe that they should be compensated for loss of revenues during construction. I'm no legal expert, but this sounds similar to a takings issue. However, in a takings case, the damage sustained by the owner is permanent, whereas in this case, the loss of business is temporary until construction is completed.


P.S. The link does not take you directly to the article which is titled " Streetcar Snarls."


Any opinions on this?

 

[Chet]

I dont beleive its a compensable taking, but my gawd would that open a can of worms if the courts ruled in favor of the businesses. It could lead to this: Would downtown merchants be able to sue for lost business due to construction of a by-pass which removes traffic from their street?

 

[Jeff]

I think this is comparable to closing Chestnut St in Philly around Independence Hall after 9-11.

The surrounding businesses are getting killed, and are threatening to sue the city to reopen the street.

 

[Tranplanner]

Off the top of my head - yeah, I think we have provided some (never enough) compensation for lost business in cases like this..I don't recall for sure though.

Typically now, whenever the Toronto Transit Commission undertakes a major reconstruction/construction project, they have a full-time person assigned to look after community/business complaints, inquiries, etc., and go out of their way to provide additional signage and such.

I can do some digging if you want...there was a newspaper article a while back which profiled a case like this.

 

[Seabishop]

I think in most cases like that the businesses would lose because the government is ponying up thousands of dollars on a public improvement which would benefit them in the long run even if there's a temporary inconvenience.

 

[NHPlanner]

I think in most cases like that the businesses would lose because the government is ponying up thousands of dollars on a public improvement which would benefit them in the long run even if there's a temporary inconvenience.

I'm with Seabishop on this one. I believe that the long run benefits would override the temporary loss of business during construction.

 

[Planderella]

I can do some digging if you want...there was a newspaper article a while back which profiled a case like this.

No need to as my firm doesn't have any direct business with the RTA, but thanks anyway.

Personally, I wouldn't consider it a taking as the long term benefits do outweigh the costs/revenue loss during construction time. It would set a really bad precedent to compensate businesses during this time period, but in the New Orleans case, it just appears that there was some disorganization and possibly miscommunication between the city agencies.

 

[gkmo62u]

But what if the impacts are so great that the businesses fold prior to the long term positive being completed?

 

[Cardinal]

This is an issue perennially brought to our state downtown organization by communities affected by road construction. There is no takings involved in the construction of public utilities or transportation facilities within the public right-of-way. What we have done is to encourage communities to plan well in advance and to implement measures that will help to ease businesses through the difficult time (really, it is the businesses that need to do this). Some possibilities include:

* Improve alternative access. If there is a rear door to the building, make it more visible as a public entrance. In many downtowns it is closer to tha parking anyway, and customers may prefer it long after the construction is done.

* Advertise more. Your customers won't be driving by. Advertise so that they think of you.

* Work with the city and contractor on signage. Use signs that say "___ is open during road construction," and directional signage for a local business detour route.

* Improve coordination of construction. Phase it so that the whole street isn't closed at once, write performance clauses into the contract, work around important events, time business-closing activities for hours when the business would be closed anyway, etc.

 

[Repo Man]

I think I recall hearing about Menomonee Falls, Wisconsin taking out ads in the paper to inform people that the roads were open to the downtown businesses.

The problem with compensation is how would you determine who deserves what? Would a popular restaurant that suffers from minimal loss of business be entitled to the same amount of money as the gas station that loses 50 percent of their business? Also, how do you prove that the entire loss in sales is all a result of the road construction? What about losses due to a downturn in the economy or poor service.