Jeff KottkampOne of the fundamental precepts of American law is that government can’t take your personal property without just compensation. Florida takes that concept one step further with the Bert Harris Act which essentially says that government cannot adversely affect the value of your property without just compensation.

Now that Amendment 13 has passed, and Florida is about to put the greyhound racing industry out of business, it is time to calculate the price tag of eliminating 3,000 direct jobs, 10,000 indirect jobs, ending the racing career of thousands of greyhounds, and closing at least one greyhound track.

One of the biggest casualties of Amendment 13 is the Sanford/Orlando greyhound racetrack. They have live greyhound racing but no card rooms or slot machines. The entire business of the Sanford/Orlando track is built around live greyhound racing. All of their employees will soon be out of work. Their track, tote board, starting gate and grandstands will all be useless.

Since Florida law and precedent require the state to compensate for the ‘fair market value’ of all real and personal property, based on what the courts call the “reasonable investment-backed expectations” of the property owner adversely affected by regulatory action of the state—the Sanford/Orlando track owners will be owed millions.

Case law indicates that compensation for property negatively impacted by government action includes all property where value is adversely affected because of its “functionally integrated nature,” to the prohibited activity — in other words, property that is not prohibited or rendered illegal because of state action must still be compensated for, if it is found that the property was used to support the prohibited activity.

The question then is: What is the fair market value of all the real and tangible property in Florida that would be adversely affected by the passage of Amendment 13? Added to that figure would be litigation cost and attorney fees.

The passage of Amendment 13 will now give rise to thousands of claims under the Bert Harris Act, as well as for inverse condemnation, to those impacted by the amendment including track owners, greyhound racing dog owners, and owners of specialized businesses where the business model depends on the greyhound industry. The question becomes — what is the fair market value of all the real and tangible property adversely affected by the passage of the amendment?

Cost to the state — including the cost of defense, court cost, expert witness fees, attorney fees to plaintiff counsel, and the actual compensation for lost “investment-based expectations” of property value — could easily exceed $250 million. The proposal’s passage will now trigger thousands of lawsuits, as every entity that could establish a legitimate claim that their “reasonable investment-backed expectations” were adversely affected by the proposal would reasonably be expected to file.

The binding precedent establishing the need for the State of Florida to compensate all property owners adversely affected dates back to the 2002 constitutional prohibition of using farrowing pens to birth and wean baby pigs. At the time the Pregnant Pig Amendment passed there were only two pig farmers in Florida impacted—including a farm owned by Steve Basford of Taylor County. His business produced 6,000 pigs per year. Basford had spent more than 30 years developing breeding lines and building his business. However, once the Pregnant Pig Amendment passed, he could no longer continue to operate.

The amendment caused Basford to dispose of his pigs and forced him out of business. In 2010, he filed an inverse condemnation lawsuit against the state arguing that the Pregnant Pig Amendment resulted in a “taking” of his farm equipment – tangible personal property.

Basford won his case. Most of the compensation awarded to Basford was for the property used in the hog farming business – property that was functionally integrated in Basford’s operation, but rendered impractical after the amendment passed. This property included a barn, some poured concrete and some other equipment used in hog farming. The trial court awarded Basford $505,000 based on his inverse condemnation claim finding that the amendment was a “partial taking” of property. Basford also filed a claim under the Bert Harris Act but failed to meet the pre-suit notice requirements on that claim.

In 2013, an appellate court upheld the award finding that the passage of the Pregnant Pig Amendment resulted in a partial taking of Basford’s property. Total damages paid to Brasford as a result of his litigation exceeded $1 million dollars. This ratio of total cost being roughly twice the market value is a similar ratio that DOT experiences from condemnation proceedings (including interest and legal fees) to settle claims.

The Basford precedent most certainly applies to those impacted by the passage of Amendment 13. But the there is a much greater financial impact on Florida than the Pregnant Pig Amendment because so many more people and businesses will be harmed by the Amendment.

As the Basford case indicates, the owners of racing greyhounds, the owners of racing greyhound kennels, and the owners of racing greyhound tracks would all have claims for inverse condemnation if Amendment 13 passes. In addition, they would all likely have substantial claims pursuant to Florida’s Bert Harris Act for the loss in value of their property.

The value of the racing greyhounds in Florida alone is very significant. Depending on their bloodline, racing greyhounds are routinely purchased for as little as $2,000 or as much as $50,000. Many dogs that are currently racing generate revenues that far exceed their purchase price.

To establish the value of the approximately 8,000 greyhound racing dogs currently racing you could assume a very conservative average of $5,000 per dog — which would total $40 million. You would then add the value of the approximately 7,000 racing greyhounds on farms that are being raised and trained. A very conservative figure for greyhounds in training would be $3,000 each, or another $21 million.

Thus, an extremely conservative estimate of the damages just for the racing greyhounds that could no longer race as the result of Amendment 13 would be over $60 million. This does not include the partial taking and loss of value claims related to kennel property and equipment — that’s even more problematic.

Most of the real estate at the greyhound tracks is devoted to the racetracks and passage of Amendment 13 prohibits the intended use of that property. Bets over the last five years on live greyhound racing at Florida’s 12 greyhound racetracks have totaled more than $1.2 billion. Because the income approach to determine market value is a recognized methodology to determine value, and it would be reasonable that the income would be a determinative factor in the owners “reasonable investment backed” expectation of value, that figure could easily be used as a baseline to determine the loss in value of the impacted property.

Greyhound racing is on its way out in Florida—but the effort to put a price tag on ending the industry is just beginning.