Condemnation Gurus Help Needed!

[Austin]

I would like some input from some of you condemnation gurus. I am working on a case in which a gas pipeline company is taking a right-of-way across a tract of vacant land owned and purchased by my church for development of a large ministry center consisting of church, family life center, senior housing, recreation fields, parks, etc. The land is in four contiguous tracts. The subject tract is 15-acres and was intended by the church for the senior housing in our vision plan. The total land package contains 96-acres, however only 15 or so acres in total is suitable for building sites due to topography being on the side of a mountain.
The pipeline is a 20-inch line with 700 pounds per square inch of pressure and renders about four acres of the developable land unsuitable for buildings because who wants to build housing or any building closer than 200 feet to such a gasline.
I did a market data search and in a small area have found six recent similar purchases of vacant land for similar projects within a five miles radius. Two sales are within two miles of the subject. The pipeline company is taking approximately 3-acres of land and has made an offer of $17,500 with no mention of value before and value after. The average price for a 15-acre tract of vacant "church development land" is $14,000 per acre. Depending on size, prices per acre ranged from $11,000 to $30,000 per acre for vacant church development sites.
I have an MAI buddy that specializes in condemnation work and he is helping us with the appraisal and advising us on what a fair offer would be under the law.
My MAI buddy thinks that the land should be considered under its general highest and best use as though vacant. I contend that highest and best use is not an issue because they are taking a church development site purchased and owned for that purpose not a random tract of land. To me this is like me borrowing 10 twenty dollars bills from you and paying you back with 10 one dollar bills, then claiming that I borrowed 10 pieces of paper currency and paid you back 10 pieces of paper currency. Using my buddy’s theory, the pipeline company can take church development site land valued at $14,000 per acre and pay $4,000 per acre under its highest and best use as though vacant. In my mind, this church project is an enterprise and the damages in the taking of the land should take into consideration the value of the enterprise before the taking and the value of the enterprise after the taking. The reason being, if we carry out our project as planned and have to purchase an alternative site, we would have to pay $11,000 to $30,000 per acre depending on tract size. Any ideas?

 

[Restrain]

In general, under condemnation, a vacant tract of land is valued at its highest and best use, whatever that may be. The fact that the site is planned for development as 'church use' in the future is immaterial. The value is as of the date of appraisal at its highest and best use, whatever that is. The damages is the the difference between (1)value of the remainder before the taking, which is generally the total value of the site less the value of the taking, and (2) the value of the site after the taking. For example, if a site has a reduced utility after the taking and reduces the value $2000 per acre, the damages would be $2000 multiplied by the acres affected. The fact that you may not be able to use the site for the original purpose you intended is generally not a consideration. After all, market value is value to the market, not to a specific individual. If you had improved the site for your church purpose, then you could look at damages to the facilities, etc. But you can't get damages for potential specific uses.

Hope this helps you understand the process. Just an aside. You might discuss with your MAI friend whether the local condemnation commissions ever lean towards the property owner in such instances. If they do, it might benefit you to take this into condemnation instead of settling.

 

[Austin]

Rstrahan: Thanks for the input. The problem I have with this situation is that if for example they acquired our entire land tract based on its highest & best use as though vacant for another purpose, and then we had to find another suitable tract to replace the one being taken, we would in effect be getting a royal screwing. Of the six recent church development site sales, ours is far superior. If they took our entire tract based on the rule you just described they would pay us about $2,500 per acre for our land and we would be forced to pay from $11,000 to $30,000 per acre depending on size for a comparable tract assuming we could find one. We have a very unique location on the side of a mountain. It is the only mountain around here. Essentially the law says one thing but effectively does another. Under the law, the value before the taking less the value after the taking in our case would amount to a minus $10,000 per acre under the rule, but we would only be compensated for $2,500 per acre. That is my mind is taking the property of another without adequate compensation. We are dealing with a trophy location for our purposes that can’t be duplicated. Can a jury determine damages?

 

[Mountain Man]

Can a jury determine damages?
Yes, but you are putting your chances up on an attorney against attorney situation. If you are going to go all the way to court, get the best. The good news is that most public, gov'ment attorneys are not the best, 8) or they would be making much more in private practice. :wink: The jury may be more sympathetic to a church, looking to provide their old mother with a home, than a private owner that wants more $$. Just gotta play the heart strings and show why the church needs more $ than offered.

 

[jtrotta]

Austin,
Should I actually answer this question or should I dance around it for a paragraph or two and then tell you all the BS I just wrote was not intended to help you in any way, shape or form. Well I think I'll just save time and avoid your quiry. By the By - just because your buddy is an MAI doesn't mean he knows the answer to the problem :? Does it :?: :?:

8)

 

[xmrdfghap]

Austin, first, hire an attorney that is familiar with condemnation in your state. This is a specialty that requires experience. I have seen law professors lose rather badly because they are not familiar with nuances of the condemnation laws.

Second, hire an appraiser that specializes in condemnation appraising. You are not looking at just the value of the land. You are also looking at the value of the loss of future use as well as the stigma attached to adjoining property due to the presence of a high pressure gas pipeline. This type of appraisal requires substantial knowledge of those subjects, and a deep database of similar comps. Simply because you consider yourself excellent at appraising does not make you a condemnation appraiser. Also, as an interested party (member of the church) you are biased.

If you think stigma doesn't apply, remember the HP Gas pipeline that blew up in a New Mexico campground a few years ago......it killed 5 people. Wouldn't that be nice to have happen in a retirement village or a school. It is still your property, the pipeline has not been put in place yet, it's location can be changed.

One thing you might consider is the legality of a pipeline doing condemnation of this nature. First, what is the legality of taking from a church? The constitution allows for the government to condemn for the greater good of the people.....it says nothing about condemnation for the profit and convienence of an oil company.......personally I think that would be a good court case. The taking of your land is not going to provide any benefit to you or your community.

I have also thought about the viability of leasing the right of way to the pipeline company. At least you should get a piece of the action as gas prices go up.

Either way, get the best possible professional help......do not use an attorney who is a member of the congregation and do not use an appraiser who is a member......the price may be right, but the cost is too great. Get some guys who know how to play hardball.

 

[Austin]

Thanks for the advice. The appraiser we hired specializes in condemnation work and is one of the best in the country. There is another little twist to this case that the appraiser mentioned. The reason the pipeline is being installed was to serve a proposed 850-mega watt power plant. The plant was scheduled to go on line in 2004. That is 4 times the amount of power this entire city uses. About two months ago they announced that they were scrapping project but they were going ahead with acquiring the necessary licensing for possible sale and the purchasing of the gas line easement for possible future use. The appraiser said he didn’t think they could take land just for speculative purposes. Meaning, there is no present and necessary reason for the taking. There are two other power plants in the works, one less than five miles from our church site that adjoins the existing transcontinental gas pipeline. De-regulation has resulted in a flurry of new smaller gas generating plants. This taking is not by a state authority, it is a private utility gas line company.
I have a bitter taste in my mouth of the condemnation process for a personal reason. Thirty years ago my father purchased a 40-acre potential industrial site in the city. It has all utilities and 2,000 feet of railroad frontage. Six months after the purchase the state ran a picture in the newspaper showing a proposed highway project for a U.S. Rt. 29 by-pass around the city. The map showed the proposed road running right through my fathers land essentially making it useless. For 25 years he could not develop or sell the property for that reason. The result was that the announcement of the proposed highway essentially amounted to a taking of the property for 25 years. When they finally got around to building the road, they changed the plan and ran across one corner of my fathers land. I brought this to the attention of the attorneys and they basically said: to bad. Then to add insult to injury, the condemnation process took 5 years and the last person they settled with was my father. Why? Because the lawyer for the state looked at an old tax map and saw a bridge that gave my father another access route thus denying him compensation for being cut off. Turned out that this bridge was an old foot bridge over the railroad line that had been demolished 30 years previous and it gave assess to a tract of land that the lawyer thought my father owned. Again, sorry about that old boy! Then they wave the Constitution in your face and talk about 5th amendment rights.

 

[Mountain Man]

The appraiser said he didn’t think they could take land just for speculative purposes.

I belive in most states, that would be an illegal taking. Speculative? Is it truely for the public benifit? Is the power company thinking about getting ready for de-regualation? Greg gave the best answer.

 

[xmrdfghap]

Austin, you have my deepest sympathy. However, your story provides ample evidence of what I was saying. In your story, you claimed several times thatSeveral items jumped out at me when you told the story.........your dad, for what ever reason, relied on bad legal advice. This is why I said to get an attorney that knows condemnation. The one you play golf with, go to church with, or use to review your real estate deals or will won't do.

You cannot develop land that is undergoing condemnation. But they cannot indefinitely prevent the use or development of your property.......they either have to buy it, compensate you for it, or abandon their project. A simple title search would have provided ample evidence that the "bridge" was not an issue. Perhaps 30 or 50 years ago in some jurisdictions such steamroller tactics would have worked. In todays reality, I would have loved to have had their appraiser try and tell the court that a nonexistant bridge leading to another property provided me access.....they would have ended up building me a bridge.[/color]

 

[Austin]

Greg: First: There was nothing we could do during the 25 year period. It was just a picture in the paper of a proposed plan. We had one of the best and most experienced condemnation appraisers in the state if not the country, and the lawyer was experienced and from the largest law firm in Southside Virginia. They said we didn't have a case. The law didn't compensate for the 25 years, that was just ts. The state lawyer said he was sorry for holding us up another five years before paying us for the taking, so where are the damages?