Arizona Supreme Court Holds That Property Owner Who Quarreled With Light Rail Construction Should Be Compensated For Lost Access

Late last week, the Arizona Supreme Court handed down a decision that clarified the rights of property owners who lose access to an abutting road and, in the process, reinforced the principle that both elimination and substantial impairment of access is compensable under the Arizona Constitution.  But perhaps more significant, the Supreme Court in City of Phoenix v. Garretson held that a property owner should be compensated even if it retains relatively convenient access to that road through other means.

In so holding, the Supreme Court no doubt sent initial shockwaves through public works departments across Arizona who may be wondering whether they are hamstrung in making even basic traffic improvements.  For the reasons discussed below, however, there is little cause for concern based upon the Garretson decision.

Factual Background.  The dispute in Garretson centered around a commercial parking lot in downtown Phoenix.  The property is bounded by Jefferson Street to the north, 1st Street to the east, Madison Street to the south, and a smaller parcel abutting Central Avenue to the west.

In 2005, the City of Phoenix offered to purchase a temporary construction easement on the property for use in connection with the construction of the Light Rail project, to which Garretson agreed.

As part of the construction, the City placed rail tracks on the north side of the property and erected a curb which permanently blocked two driveways on the property that had previously allowed direct access to and from Jefferson Street.  However, the property still retained access from Madison Street and First Street:

Shortly after completing the Light Rail, the City filed a complaint in eminent domain to determine just compensation for the easement.  In his answer, however, Garretson claimed the right to be compensated for the loss of access to Jefferson Street and the resulting reduction in property value.  The City responded that it had exercised its authority to control access to roadways as part of its police power, and that any damage to the property from loss of access to Jefferson Street was non-compensable. Alternatively, the City argued that, because Garretson retained access to the property through other routes, his access had not been substantially impaired in a manner justifying compensation.

The trial court granted partial summary judgment for the City, reasoning that a property owner may not receive compensation of loss of access to a thoroughfare if the owner otherwise retains “free and convenient access” to the property. The Court of Appeals reversed, holding that, when the government eliminates a property owner’s established access to an abutting street while the owner retains access from another street, the owner is not necessarily foreclosed from obtaining compensation.  The City appealed, leading to last week’s decision.

Supreme Court Ruling.  In rejecting the City’s arguments, the Supreme Court sought to reconcile two arguably conflicting prior decisions:  State ex rel. Morrison v. Thelberg, 87 Ariz. 318 (1960), which held that an “abutting property owner to a highway has an easement of ingress and egress to and from his property,” and State ex rel. Herman v. Schaffer, 105 Ariz. 478 (1970), which held “direct access to a highway is not a private property right.”  The key to harmonizing these decisions, the Court figured, was to distinguish between impairment of a property owner’s “right of access,” which is compensable, and government “regulation of traffic flow,” which is not.  Thus, without overruling anything, the Court distilled the following two principles that should govern compensation cases:

• The government possesses the most discretion to regulate traffic flow with respect to “controlled access highways.”  Thus, the government may restrict access to such highways, or reconfigure the roadway system entirely, without triggering compensation for adjoining landowners who lose their direct access.
• A property owner does have a constitutional right to access roads directly abutting its property, however.  Thus, a property owner may be entitled to compensation if (1) the government completely destroys access to an abutting road, or (2) the government substantially impairs the owner’s access to an abutting road and the remaining access proves “unreasonably circuitous.”

In other words, the Supreme Court appears to attribute significance to the distance between a landowner’s property and that landowner’s preferred roadway system: having access to the streets immediately surrounding the property remains paramount, but a landowner has no particular right to access other (more distant) streets or highways with the same ease previously enjoyed.

With respect to the City of Phoenix’s claim, the Supreme Court held it was irrelevant that Garretson had reasonable alternative means of access to Jefferson Street.  “Other means of access may mitigate damages, but does not constitute a defense to the action. . . .  The availability of other means of access . . . is relevant only to the measure of damages.”  Thus, the Supreme Court remanded the case to the trial court to determine the decrease in fair market value to Garretson’s property based on the elimination of access to Jefferson Street.

Furthermore, the Court clarified that it was irrelevant in a case like this whether Garretson’s access had been substantially impaired or whether his remaining access to Jefferson Street was unreasonably circuitous.  Because the City had completely eliminated Garretson’s direct access to an abutting street—even though a 5 or 10 second drive on 1st Street would put any parking lot visitor very quickly back onto Jefferson Street—Garretson was still entitled to judgment as a matter of law.

In sum, it will now be incumbent upon the trial court to determine how much Garretson should be compensated, if at all.  He would certainly have a stronger case if First Street ran only one way to the south, which would require a parking lot visitor to drive clockwise around the entire property in order to access Jefferson Street.  But since First Street, not to mention Madison Street, run in both directions, thereby providing any visitor with relatively easy access to Jefferson Street, the next stage of litigation will most likely come down to a battle of the experts.  Thus, the City of Phoenix may have lost the battle, but it might just ultimately win the war considering the fact Garretson is by no means a landlocked property owner.