TxDOT sues several displaced properties amid planned I-35 expansion

AUSTIN (KXAN) -- An Austin-based attorney representing more than a dozen property owners displaced by the upcoming Interstate 35 expansion in downtown Austin confirmed the Texas Department of Transportation has filed lawsuits against several of his clients over property acquisitions.

More than 100 residences and businesses along the eight-mile project corridor -- running along I-35 from U.S. Highway 290 East to State Highway 71 and Ben White Boulevard -- were marked for displacement due to the planned expansions. Last June, KXAN first spoke with Luke Ellis, a partner at the law firm Marrs Ellis & Hodge who is representing several properties owners.

Properties earmarked for displacement sued by TxDOT

At that time, the project hadn't yet received final approval, but property owners had begun receiving initial offers from TxDOT as part of the early stages of condemnation. Since, Ellis said TxDOT has made both initial and final offers and has filed lawsuits against many of his clients.

"These are, at their fundamental core, what we call 'takings' lawsuits," Ellis said. "These are condemnation and eminent domain-based lawsuits where the government uses its power of eminent domain to take private land from private landowners."

KXAN reached out to TxDOT regarding these lawsuits. TxDOT declined to comment on the matter as these are active litigation cases.

At issue with these lawsuits, Ellis said, is that he and his clients believe they are owed more for the value of their land than what TxDOT is offering.

TxDOT has previously told KXAN it works with an independent appraiser to assess the market value of properties it's looking to buy as part of a planned project. Ellis confirmed independent appraisal teams have been utilized by TxDOT, but he said he doesn't believe they represent the "true and fair market value" of the individual properties.

"In each of these instances where we are contesting the state's taking, we are challenging to get our clients what we believe they're constitutionally entitled to recover, which is the true, fair market value of the property," he said. "And we don't think that's represented in many of the appraisals we've received from the government."

Why property value assessments might differ

From his perspective, Ellis said he feels several factors are driving differences in opinion between his team and TxDOT's. Those include not only the dramatic increase in Austin property values in recent years, but also changes with the City of Austin's development code.

Some of those recent tweaks -- including the removal of minimum parking requirements, additional zoning overlays and compatibility changes offering higher and more dense property development -- have also been added factors, Ellis said.

But beyond that, he said at issue is his clients finding comparable areas to relocate. His clients displaced by I-35 including office buildings, restaurants, retail, medical and multifamily developments -- finding similar locations to accommodate their individual needs has proven difficult, he said.

"One of the challenges is when they are offered lower than fair market value by the government, they have to go off into the real market to go find a replacement site," he said. "So when their site is undervalued by the government, it puts them in a terrible position to go out and try to find a comparable property because, frankly, they don't have the offer and the valuation by the government."

What's next for these TxDOT lawsuits?

Currently, Ellis said his team is in the early stages of litigation with TxDOT following the state agency's filing of these lawsuits against many of his clients. Ellis confirmed he recently participated in the first special commissioners hearing related to these suits, which serves essentially as a "one day mini trial" as part of the administrative phase of the case.

He said he expects many of the jury trials related to the I-35 Capital Express Central project will come sometime in 2025 or later on.

Outside of the specifics of this case, Ellis said it's important for property owners to remember their Fifth Amendment constitutional right to just compensation in the event of a governmental condemnation and eminent domain-based property acquisition.

Just compensation, he said, can vary depending on both the property as well as some of the specific and unique characteristics it has that, in turn, could influence overall property value. He also stressed that when the government only takes a portion of a property owner's land, they are still entitled to compensation for not only what the government takes but any reduction in value because of that property loss.

"I always like to just reiterate the fundamental nature of a property owner's Fifth Amendment right to just compensation. A lot of times, the government will look at a property owner and suggest that their offer is fair," he said. "I strongly encourage those property owners to visit with an attorney who has experience in eminent domain, to visit with an independent appraiser that is not the government's appraiser to evaluate the fairness and reasonableness of the market value offer made by the government."