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April 21, 2009 Jay Finegan, 287-1445
Rep. Giles’ Bill on Eminent Domain Would Fully Compensate Business Owners

AUGUSTA – In a statement to the Judiciary Committee on April 16, State Rep. Jayne Crosby Giles made a strong case for her bill to protect Maine businesses from unfair treatment under eminent domain proceedings. Her proposal would base compensation on a “going concern” value when the state needs to acquire business properties for roads, bridges and other public projects.

Her statement to the Judiciary Committee came during a public hearing on the bill, LD 1207, “An Act to Base the Value of Eminent Domain Takings on Going Concern Value.” The 14 members of the committee will convene on April 29 for a work session and committee vote on the measure before it advances to the full House and Senate.

Rep. Giles (R-Belfast), a veteran community banker, submitted similar legislation during the last Legislature. “That bill proposed that a different means of appraisal be used in business takings – to have the business appraised using a going concern value that gives full valuation to the business, versus the current method of appraising only the real property,” she told the committee. “A fiscal note killed that bill. However, the fiscal note proved the case that the State of Maine is not properly compensating business owners for the loss of their property, their business and their livelihood.”

Reinforcing testimony was provided by Dick Dyer, of Winthrop, whose family owned the Sail Inn restaurant, which the state seized in a controversial case to make way for the Waldo-Hancock Bridge. “This bill is proper because it pays the landowner/business owner what the business truly is worth,” he said. “Eminent domain law specifically says that when taking property, the taking agency must pay just compensation. This does not restrict payment to a simple real estate appraisal. It can and should include value for the going concern.”

LD 1207 would establish an impartial ombudsman to ensure that business owners who lose property by eminent domain are properly compensated. “The burden to prove loss remains on the business owner and the business owner must make a request for the additional review,” Rep. Giles explained to the committee. “The use of an impartial ombudsman provides a fairer means of addressing the loss of the going concern value. I believe this bill creates a fairer process for the business owner; plus, this legislation will save the state money by eliminating prolonged and expensive legal proceedings.”

Rep. Giles told the committee that a successful business will have a higher business valuation, and thus a higher amount of the intangible quality known as “goodwill,” if it has been well run and profitable. The location of the business is critical to this success, she said.

“The business owner faces a severe loss in this value if forced to move,” she continued. “Thus, it seems reasonable that proper compensation from the state be provided as determined by the going concern value. Through the loss of the business location, the business owner has lost the income-producing potential from that location for 10, 20, 30 years or more.

“The governing body in an eminent domain proceeding has literally taken a lifetime of earnings from a business owner,” she said, “a lifetime of earnings that includes providing for family members, sending kids to college, employing workers, donating to local community organizations and so much more.”