I Was Affected by the Map Act – Does the NCDOT Owe Me Compensation?

For those property owners affected by the North Carolina Map Act, it may come as cold comfort to know the law was not unique. Twelve other states have similar statutes. Many owners have had their property rights frozen in a state of limbo for years – even decades. How did this happen? Why was the Map Act enacted? How did it end with hundreds of North Carolina property owners suing the government? What should you do if you or someone you know has been subject to a Map Act filing? Those are questions we’re going to answer here.

This page is presented in sections, or you can simply scroll down for a complete understanding of the law, its effects, and what’s next for property owners. Or, if you just want to speak to someone about your particular eminent domain or Map Act issue, you can contact us. We’d be happy to speak with you and review your case at no charge.

Understanding the North Carolina Map Act

In 1987, the state legislature voted the North Carolina Map Act into law. Its goal was to lower the cost of land needed by the NCDOT for infrastructure development by preventing development on that property until such a time as the DOT set its project in motion. As a matter of public policy, it seemed logical on its face. Reducing costs meant the NCDOT could accomplish more development. However, the method was, in 2016, deemed unfair.

In practice, the Map Act allowed the NCDOT to record development corridors over properties, putting all potential purchasers of those properties on notice of the restrictions. These Corridor Maps required owners to obtain NCDOT permission to do anything that might increase the value of the property, and therefore the amount the state would have to pay to take it under the laws of eminent domain. Plans for houses, barns, retail establishments, commercial centers or any other uses that might increase the value of the properties could not move forward without approval by the NCDOT. Meanwhile, the filing itself meant that, if the owners wanted to sell the land, few buyers would want it, which further reduced its value.

The Map Act: What if…?

Imagine you’ve bought a new car. You’ve got all sorts of plans for it. It’s going to take you to work and to the grocery store, but it’s also going to take you to the beach and the mountains, and to see family in another part of the state. The possibilities are endless.

Now let’s say the state comes along and says it’s going to buy that car from you, eventually, but in the meantime, the car cannot be used for anything other than taking you to work and back. Further, if you sell the car, the future owner can also only use it to take them to work and back. The state is doing this to keep miles off the car for its own use and make the car cheaper to buy in the future. In the meantime, you’re left with a car that’s not worth as much as you paid for it – since it only goes to work and back – and that will be near impossible to sell! For this inconvenience, the state gives you nothing.

If that freeze on free use of one’s property only lasted a short while, it might be something owners could endure. If the state paid the owners a fee of some kind for the freeze, perhaps that would be fine. The state did neither.

In fact, many property owners faced indefinite freezes, and some properties languished under the state’s freeze for 20 years or more. It does not take an attorney to see how unfair that is to property owners.

Thus, what the Map Act did was allow the NCDOT to, in effect, prevent development and valuable use of properties for indefinite periods of time, suppressing their value and forcing property owners to simply wait and see. Property owners began to resist, and the landmark case that brought the Map Act down was Kirby v. NCDOT, when a group of Forsyth County property owners sued the NCDOT.

In 2016, their case made it to the state Supreme Court, which ruled that the limitations imposed on property owners and the indefinite nature of those limitations amounted to a taking of the property for which the state was required to pay. This included rent, property taxes, and interest.

Landowners who sought legal representation had fought the law, and won.

How the North Carolina Department of Transportation gets its money

When most people think of the NCDOT, they think of orange cones and travel delays, whether fairly or not. What they may not know is exactly how the NCDOT is funded. Did you know that none of the NCDOT budget comes from the state’s General Fund – that is, state income tax dollars?

The majority of the department’s $5 billion budget comes from state and federal gas taxes, and Division of Motor Vehicles fees and taxes on the sale of cars and trucks. It also receives federal relief funds in the wake of natural disasters, though those funds are not exactly reliable sources of income. As of August 2019, the department has received 55% of the money from Hurricane Matthew expenses, and just 11% of Hurricane Florence, for instance.*

*Source: Winston-Salem Journal 

The repeal of the Map Act and stiffing property owners…again

When the North Carolina Supreme Court ruled in favor of the landowners in Kirby v. NCDOT, it declared the Map Act to be unfair and unconstitutional. The damage the ruling did to the statute was clear, and in June of 2019 – three years after the Kirby verdict – the North Carolina legislature completely repealed the Map Act with House Bill 131.

During those three intervening years, as the state tried to figure out a way forward, the General Assembly placed a moratorium on new maps. This prevented the NCDOT from earmarking any more property for future taking, though it did not stall projects in progress.

The fight did not end there. Knowing that the NCDOT was about to face multiple lawsuits it was almost guaranteed to lose, the legislature attempted to staunch the bleeding. In November 2019, the legislature passed House Bill 356.

H.B. 356 had provisions that attempted to control the looming costs of the Map Act to the state in two key ways.

1) The bill capped the amount of money the NCDOT could pay in compensation at $150 million a year. Of course, some attorneys are already calling the move questionable, and predict it will see numerous challenges in court. If the cap is struck down, it would potentially eliminate yet another NCDOT roadblock for affected property owners.

2) The bill limited the amount of interest the state would pay on the settlement amounts. It states that property owners can only receive simple interest, rather than compound interest.

Delays are a common problem with the NCDOT, such that they were sanctioned by a Superior Court judge in 2018 for delay tactics. Capping the amount paid per year could be seen as yet another delay, this time via law. Furthermore, the change to simple interest rather than compound interest reduces the department’s incentive to settle cases in a timely manner – or at all.

These delay and limitation tactics have raised many constitutional concerns. Previously, the state tried to limit interest rates on compensation to property owners in 2016. That move was struck down in Forsyth County courts. Regardless, the NCDOT believes that compensation for Map Act cases could reach $1 billion.

Simple interest versus compound interest – the difference for property owners

Let’s say you own a property, and the NCDOT made a Map Act filing against it in 1999 – over twenty years of waiting as of this writing! A court rules that the department owes you compensation. For simplicity’s sake, let’s say that compensation is $200,000 plus interest. Compound interest increases the principal periodically, meaning that the longer it takes to pay, the more interest accrues. Simple interest does not compound.

COMPOUND INTEREST:
$200,000 x 20 years with 8% annual compound interest = $932,191
SIMPLE INTEREST:
$200,000 x 20 years with 8% simple interest = $520,000

The difference could nearly double the amount of your initial award!

How to tell if you have a potential Map Act lawsuit

It would be easy to believe that your case is too small to register on anyone’s radar, but the truth of the matter is that the NCDOT owes many millions of dollars in compensation to property owners all over the state. There are easily going to be hundreds of cases.

Fight, fight, fight

We recently handled a case under the Map Act corridor with an appraised offer from the NCDOT of just $20,600. By identifying and arguing the full impact of the Map Act on the property, we were able to settle the matter at $250,000.¹

In traditional eminent domain takings, once a property owner accepts compensation, their case is closed. No further action can be taken. Because Map Act cases never involved an offer of compensation, the door remains open, though filing sooner could have advantages – it’s possible that, if you’re successful, you may receive your settlement sooner, for example. The state may also impose a statute of limitations. So, whether you have owned the land since the Map Act corridor was filed or have taken possession in the intervening time, you should consider acting as soon as possible. Ask yourself these questions:

• Is my property subject to a Map Act filing? This information can be found through the NCDOT or through your county.
• How long ago was the land encumbered by the filing?
• How much of the land is frozen?
• Are neighboring parcels also subject to the freeze?

Sometimes, dealing with the NCDOT or the county can result in confusion. How do you read those maps? How do you know what’s being taken? Plus, the legislature is working to prevent the NCDOT from being inundated with lawsuits and having to shell out many millions in compensation all at once. That does not mean that if you have a case, you have time to wait.