The evidence is all in place. I spent nearly the entire day yesterday on the stand explaining my work product for about the zillionth time.
The NCAB position essentially boils down to the testimony of the new Deputy Director. The technical issue is that Humphries believes that I somehow did not comply with state law for condemnation blight because my highest and best use for the property was the same one of the many uses the airport could use the property, air cargo uses. He based his opinion on the fact that he had thirty years of experience with the NCDOT and that he knew from his experience that you can not appraise the property with the same highest and best use as that use identified by the condemnor for the project. He could not offer any support for his opinion other than his general knowledge of the law as he had learned inhouse as an appraiser for the states largest condemnor. He admitted he had not read Eatons text or attended any professional seminars on the topic, outside of NCDOT course, in his thiry years of experience. This says a lot about the NCAB support for this being a profession which requires some academic and intellectual rigour.
My position is that Eatons text says that you can appraise the property with a highest and best that is the same as the condemning authority if there is a reasonable demand for such a use outside of the condemnor. In other words, if the state is the only person who could use the land for a road, you can not value the land for a highest and best use as a road. In this case the subject property adjoins an airport. It has the physical ability to be used for airport related uses, including air cargo facilities. It meets all other tests for highest and best use, including demand as evidenced by other tenants expanding at the airport.
The sticky issue is that the airport says that they do not allow through the fence access per the preferred FAA policy. Of course, they argue safety and security as the main issues, but the real issue is that the airport wants to own the land so it can control the airport growth. In this regard, the ariport has undertaken many actions, in addition to adopting the unwritten policy against through the fence access, that demonstrate almost total control of the property. They show the property as a future site for cquisition on their master plan which means that they have zoning authority, they failed to extend sewer to the site as an adjoining property when estending sewer to a nearby portion of the airport. They rerouted a road as part of their longer term plan, diminishing the value of the property. They maintained an uneconomic remnant that acts as a buffer precluding visibility and access to a major road in anticipation of ultimately acquiing this property. And they actually told prospective purchasers of this site for airport related uses that would not require through the fence access, that the airport was going to buy the property so they scared of these buyers. The executive director actually argued two different positions on what the purpose of the taking was for the subject and for an adjoining property because the legal arguments were different.
These are the actions of an agressive condemnor who uses every possible trick in the book to deny the property owner the right to use his land for what its maximumally productive use, that of using the airport frastructure for air cargo, aviation related activities, or for recieving just compensation for the land. They acted soley for one purpose, preserve this land for their own air cargo use.
The key issue in this analysis is the self serving policy adopted by the condemnor denying access. In fact, there are many airports which allow through the fence access with the FAA approval. I argued that absent the condemnation power of the airport, this site would be purchased by an aviation related activity and that the economic demands of the market would warrant that the airport authority, whos mission is to provide the aviation infrastructure to the public, would grant access. There are no security and safety issues with users like Fed EX, Air National Guard units and other such users of these facilities. I initially appraised the property based on the premises that the condemnor would grant access absent blight (my value about $88,500 P/A), and then because of concerns about potential legal rulings, my client asked me to value the property without considering through the fence access.
The NCAB has accepted the airports position on this matter without hesitation. If you accept the NCAB position, any condemnor can write the purpose of the taking in such a manner that it would be impossible to appraise a property for any purpose that the condemnor might possibly contemplate, even if the use has market demand otherwise. Further, the condemnor who is in a political position to excercise almost toal control of a property can do exactly what happened in this case, made the proeprty owner carry the property at his cost for almost thirty years until a suitable tenant came to the airport. They then acquire the property at a very low price getting their stable of appraisers to ignore blight, ignore the property history, and thereby under value the property.
The judge allows only the second premise to be presented based on the legal briefs. You know the rest of the findings of the trial. The airports apraisers have their feathers ruffled because they are shown to be incompetent, even at the lwoer value, and they turn to their cronies on the NCAB to regain some measure of credibility.
The NCAB is more than happy to comply since they can silence one of their critics. In defense of their experts position on this matter, they site the decision of the judge to limit testimony in htis case, arguing that this is a definitive interpretation of the law and that is clear evidence that makes my reasoning inappropriate in the first appraisal and that this makes the report misleading. The board argues that any report must not be misleading to any third party.
But wait, who actually heard my opinion developed in the first appraisal? The only client was the property owners attorney. The airport only recieved the report through disclosure, they were not intended users. the jury never heard it. An appraiser has no obligation under USPAP to make a report to be understood by unintended users, at least that is the ASB positon,so the only person who could have been mislead was the attorney who testified that he was not mislead, he fully understood the legal issues.
Not so fast the NCAB argues, the NCAB does not have to accept the ASB position on this issue, they are the board and their position is that a report can not be misleading to anyone who reads it.
Now we see the reall conundrum of this issue. What the NCAB is really saying is that if you are appraising for any type of litigation, and if you write a report based on a legal issue, and the NCAB disagrees with the legal position, you are guilty. It does not matter what the context of the assignment is or whether the report was adequate for the clients use. All these boards need to prove you wrong is have one of their "experts" say he thinks you are wrong and that you mislead someone, any one. You are guilty of a violation of USPAP. If some judge somewhere decides for legal reasons not to allow a portion of your appraisal, you have failed to comply with standards. In short, you can not accept legal instructions from clients without exposing yourself to regulatory action.
So now you have the full picture in this sad saga. The NCAB will submit their staff as experts, citing years of experience, that the work that you do is wrong without citing any basis other than their experience. If they say you are wrong, they conclude the report is misleading. They do not need to prove to whom the report is misleading or what you did wrong. They say it, therefore it is.
One final thing. Since the issue is not about value, the fact that the airports appraisers just missed the mark and I essentially got it right, is just irrelevant according to the NCAB. In fact, the NCAB sees absolutely no reason to believe that the six appraisers who argued the airports position have violated standards in this matter. Apparently the property history is not important, becasue USPAP is only a minimal standard in that instance.
Well, this is my last post about events of this hearing. If any one out there has questions I will try to answer. If and when a judge rules, I will post the results.
Best regards to all, and thanks for your support.
Tom Hildebrandt GAA
