Over the past several decades, most of the transportation projects undertaken by the Florida Department of Transportation have proceeded in accordance with a two-bid process for procurement of contracts. Contracts for the design and construction of the road were awarded separately in a routine sequence known as the “Design-Bid-Build Process.” See, §337.11(3), Fla. Stat. Under this sequence, the bids for construction could not be advertised until all necessary rights-of-way and easements were vested in the state. See, §337.11(3)(c), Fla. Stat. This explains why there was pressure on the condemnor to timely acquire all of the parcels needed for a project under the “quick take” procedure. See, Chapter 74, Fla. Stat.
Under the traditional two-bid process, the first bid was between design engineers to design the project. After definite construction plans were done and approved, the right-of-way needed to build the project was then acquired. If the acquisition was by exercise of the power of eminent domain, due process of law allowed judicial review of the public purpose of the project and of the reasonable necessity for taking a particular property to construct it. Only then was there a second bid between construction contractors for the contract to build the project. A diagram of the sequence in the two-bid approach is as follows: (bid -> design -> acquire property -> bid construction -> build project).
Characteristic of this two-bid process, little time elapsed between Project Design and Engineering (“PD&E”), Right-of-Way Acquisition, and Construction. While construction plans were not necessarily 100% complete at the order of taking stage of the proceedings, construction plans were almost always 100% complete at the valuation stage of the proceedings. In most cases, the Florida Department of Transportation’s project construction was underway or completed by the time of the jury trial. Although there were exceptions, most cases fit into this routine sequence or typical pattern.
As funding for transportation projects has become “catch as catch can,” government agencies such as the Florida Department of Transportation have been inclined to seek funding in whatever form available. It is now customary to see separate funding for PD&E, Right-of-Way Acquisition, and Construction. The gaps in time between these different project phases has increased. The Florida Department of Transportation is no longer in a rush or hurry to build a road; instead, the Department is looking for money to construct it and often receives it in such a manner as to stop and start the overall progress of a given project.
Although the Florida Department of Transportation had been authorized to use the “Design/Build Process” on buildings, major bridges, limited access facilities, and rail corridor projects for some time, the number of Design/Build projects has risen significantly over the last few years. §337.11(7), Fla. Stat. The Department’s authorization to use Design/Build has been expanded to all project types if these projects are included as part of an innovative practices package which has an annual contracting monetary cap of $120 million. §337.025, Fla. Stat. In addition to the Florida Department of Transportation, under Florida law, local governments are also authorized to use Design/Build. §287.055(2) and (9), Fla. Stat.
The Design/Build contract is granted on a competitive bidding process for the design as well as the construction in one contract. The winning bid is judged on a rating system including the quality and cost effectiveness of the completed design submitted by each bidder. Potential private concessionaires will not invest the large expense of designing the project, completing construction plans, and estimating the time and cost of construction in order to bid competitively for a Design/Build project unless they are assured of having the necessary property to carry out the contract they propose. The whole elaborate one-bid process would be disrupted if the needed property were not available as it was bid. Consequently, the innovative one-bid Design/Build contract procurement process changes the sequence of property acquisition to occur before design. A diagram of the one-bid process is as follows: (acquire property -> bid design and construction -> build project).
Instead of the Department procuring professional services through an “Invitation to Bid” under a traditional PD&E, Design/Build favors procuring professional services through a “Request for Proposal.” §287.055, Fla. Stat. In such manner, cost-saving design and selection of the method of construction are incentivized by making it subject to competition. Again, and to provide emphasis, the statutory requirement for an “Invitation to Bid” under the traditional “Design-Bid-Build” procurement process is that no advertisement of bids may be published until all necessary rights-of-way and easements for construction of a project have already been acquired. In sharp contrast, the statutory requirement for an “Request for Proposal” under Design/Build is that no construction activities may begin on any portion of a project until all necessary rights-of-way and easements for construction of a project have already been acquired. Compare, §337.11(3)(c), Fla. Stat., with §337.11(7)(a), Fla. Stat.
Under Design/Build, the design of the roadway remains far more open-ended throughout right-of-way acquisition including Florida eminent domain proceedings. The length of time between right-of-way acquisition and project development components of design and construction may be staggered. Given this, the timelines between project development and right-of-way acquisition do not necessarily align. The result, therefore, is that the plans and specifications for the project may not only be incomplete at the order of taking, but also during the later valuation stage of the eminent domain proceedings.
Thus so, the level of uncertainty associated with the use of the property taken will be far more extensive at both the time of taking and valuation than has been the case under the routine sequence or typical pattern to which most Florida eminent domain lawyers are accustomed.
On balance, both condemnor and condemnee can expect increased uncertainty with respect to the following:
- the length of time between the date of taking and date of construction;
- the delegation of authority to determine the necessity of the taking and the estate or interest to be taken;
- the definition of the legal estate taken; and
- the identification of the use of the property taken for valuation purposes together with a greater likelihood that the condemning authority will not be willing to bind itself to more particular plans or specifications.
Such uncertainty not only increases the likely variance between condemnor and condemnee in their respective estimates of full compensation, but it may also result in creating conflict between private property interests among owners of the property to be acquired, such as between landlord and tenant. Complications may also result if there are no plans or specifications for the use of the property taken at the time the Department commences presuit negotiations required of §73.015, Fla. Stat. Consequently, the emergence of the design/build Process has introduced a larger degree of uncertainty into the determination of full compensation to private property owners. These uncertainties are significant factors to be considered by Florida eminent domain lawyers in the determination of full compensation.
In Part II of this discussion, we will consider the law applicable to defenses against the taking. In Part III, we will also consider the valuation of property condemned for use in the design/build construction process.