When a public agency acquires property for a public project, property owners have a constitutional right to receive just compensation. But what about the businesses that operate on the property – are they entitled to anything?
The rights of business owners vary from state to state, as there is not a constitutional right to compensation for business losses. In California, business owners may be entitled to compensation for several items. These include:
- Loss of Business Goodwill: A business may accrue “goodwill” because of its location, reputation, and ability to attract and keep customers. Compensation for business goodwill may be awarded if a business loses these benefits because of the taking, assuming the business undertakes reasonable efforts to mitigate its losses.
- Fixtures and Equipment: A business may be entitled to compensation for the value of immovable fixtures and equipment. This can include things like signage, security cameras, building canopies, electrical upgrades, and certain appliances.
- Relocation Benefits: A business may be entitled to recover some of the costs of moving the business and reestablishing it at a new location. These costs can include transportation of personal property, packing and unpacking personal property, dismantling, re-assembling, and re-installing machinery and equipment, modifications to a relocation site, storage costs, permit or license fees, signs and stationary, and certain professional services.
- Leasehold Bonus Value: A business that has a lease at below-market rent may be entitled to the difference between contract rent and market rent for the remainder of the lease term, known as “leasehold bonus value”.
