TXDOT Gets Hammered for Taking Water Rights

If you spend any time driving Texas Highways -- and I spend quite a bit -- it's hard not to notice the several new and hulking rest stops being built by the Texas Department of Transportation.

As is often the case with government projects requiring prime pieces of real estate, TXDOT often condemns the properties upon which its rest stops are built. Condemntaion is a legalized manner of government taking private property for public use. Often referred to a "eminent domain," the right of the government to take private property for public use is mot without limits. Instead, Chapter 21 of the Texas Property Code lays-out the exact and only manner by which a unit of Texas government may condemn property. One of Chapter 21's requirements is that the government unit performing the condemning (the "Condemnor") negotiate in good faith with the landowner ("Condemnee") for the purpose of attempting to acquire the property through a voluntary sale/purchase transaction. Not surprising is the fact that Condemnors often refuse to negotiate in "good faith," and instead low-ball property owners through a "take-it or leave-it" appraoch. Sometimes, this approach backfires.

A recent verdict by a Bell County, Texas jury recently re-iterated the importance of "good faith" negotiations by hammering TXDOT for that agency's taking of 27.7 acres of IH35 frontage road property that is now a rest stop south of Salado, Texas. The acreage was among 378 acres owned by 7KX investments. The land included nine commercial grade groundwater wells that tapped into the Edwards Aquifer, with six of the wells located on the land TxDOT eventually took using eminent domain.

In 2004 TXDOT offered the landowners less than $500,000 for the property. However, by that time, the landowner already had two potential buyers interested in purchasing water from the wells. Once the state took possession of the land, 7KX was not able to access the wells, and lost the revenues associated with selling the water. TXDOT refused to recognize the landowenrs' claim for the revenues from the lost water sales.

An expert for the landowner testified that the lost revenues pushed the value of the condemned property to $5.88 million. The jury agreed, and after less than two hours, 7KX was awarded that exact amount, the lion's share of which was attributed to lost water rights.

The pricey new rest stop is located off of southbound Interstate 35 near Salado, Texas. Based upon selection of that location by TXDOT, all Texans will foot the bill for 7kX's lost water rights. I know I plan on stopping every time I pass by!