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Proposed legislation could allow businesses to sue local governments

By Tami Stevenson

The Senate Judiciary Committee voted 7-4 on SB 620, November 30, to allow businesses to sue if local ordinances cause at least 15 percent losses of revenue or profits.

The proposed legislation is drawing opposition from local governments but statements of need for the bill say investments by businesses drive the economic growth of a community. The economic costs of local rules and regulations that are primarily for the benefit of a county or municipality as a whole should be borne by the county or municipality as a whole. The legislation would require counties and municipalities to compensate businesses for business damages when an ordinance or a charter provision causes a business significant economic harm.

The bill will go into the 2022 legislative session. If passed, it would take effect July 1, 2022, and would apply to an enactment or amendment of a county or municipal ordinance or charter provision that is enacted or amended on or after July 1, 2022.

According to the summary, the business must have been in operation for at least 3 years to qualify. Business damages recoverable are the probable damages to such business which the application of the enactment or amendment of the ordinance or charter provision may reasonably cause. Compliance with a 180-day presuit notice and settlement period is required. A prevailing business may also be awarded costs and attorney fees payable by the county or municipality. If the parties settle the matter pre-trial, attorney fees are limited to a reasonable rate. If the business prevails after the presuit process, attorney fees are a percentage of the difference between the county or municipality’s counteroffer and the final award.

Currently, landowners have a cause of action under the Bert J. Harris Act to compensate them for the lost value of their land caused by certain local government actions; landowners have a cause of action for onerous local regulation in the form of exactions; and business landowners have a cause of action under eminent domain law for business damages related to a taking of real property.