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I. A Closer Look at Right of Way Appraisal Issues. Damages and Benefits . Charles F. Crider, MAI. EMINENT DOMAIN. The government’s right to condemn private property for public use for the benefit of the greater community.

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I a closer look at right of way appraisal issues

I. A Closer Look at Right of Way Appraisal Issues


Damages and benefits

Damages and Benefits

Charles F. Crider, MAI


I a closer look at right of way appraisal issues

EMINENT DOMAIN

  • The government’s right to condemn private property for public use for the benefit of the greater community.

  • Virtually every road is constructed on lands that were once private property.

  • Appraising real estate for condemnation purposes presents challenges that are not typical of other appraisal assignments.

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

YELLOW BOOK

The most common way to determine compensation in a partial taking is by using the “before and after” method.

Yellow Book requires the appraiser to:

“describe the principle differences in the property between the before and after situations, including any changes in highest and best use of the property.”

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

Crider, Bouye, & Elliott, LLC


Identifying damages
Identifying Damages after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • Damages may be assessed in the amount necessary to fix or remediatethe damage (cost to cure).

  • Depending on the circumstances, damages may instead be measured by the effect of the harm on the property's market value.

  • It is often necessary to utilize experts in these cases, and there are a wide variety of appraisers who can provide testimony as to the value of real or personal property, or damage to a business interest.

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

Crider, Bouye, & Elliott, LLC after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.


Consequential damages
CONSEQUENTIAL DAMAGES after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

“Loses that do not flow directly and immediately from an injurious act but that result indirectly from the act.”

  • Inverse Condemnation (most common example)

    • Burden of proof with property owner

    • Different in kind (Not merely in degree)

Crider, Bouye, & Elliott, LLC

* Blacks Law Dictionary 8th Edition


I a closer look at right of way appraisal issues

MEASURING DAMAGES after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

-Visibility-

Specific Damages: Damages that are alleged to have been sustained in the circumstance of a particular wrong To be awardable, special damages must be specifically claimed and proven.

* Blacks Law Dictionary 8th Edition

Crider, Bouye, & Elliott, LLC


Measuring damages visibility example
MEASURING DAMAGES after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. - Visibility Example-

2011

75

2012

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

MEASURING DAMAGES after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. -Visibility-

9’

6’

75’

50’

Pres. R/W

45’

Before: 6’/75’ = 8% slope

After : 9’/50’ = 18% slope

Bldg. Setback

New R/W

70’

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

MEASURING DAMAGES after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. – Paired Sales Analysis

  • Increased Grade

  • Increased Proximity

  • What is being lost or diminished? - Visibility

  • What is the effect on highest and best use? – Change?

Crider, Bouye, & Elliott, LLC


Solution a comparable
SOLUTION: *A Comparable* after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

* The total adjustment attributed to loss of visibility should reflect the value of both properties before the acquisition.

** The average grade is calculated by dividing the number of feet above or below grade by the number of feet the building is set back from the road or R/W.

Crider, Bouye, & Elliott, LLC


Conclusion
CONCLUSION: after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • The change in grade increases from 8% before the acquisition to 18% in the after.

  • This is a change of 10%.

  • Further analysis concludes that for every 5% change in grade there is an approximate 8% reduction in value attributed to diminished visibility.

Crider, Bouye, & Elliott, LLC


Severance
- after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. Severance-

  • Subject Property is a 100-acre agricultural tract with direct access from State Road 24 prior to the acquisition.

  • The new controlled access highway will bisect the property leaving 60 acres to the north of the road and 35 acres to the south.

  • New frontage road will provide access to the northern portion

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

60 Acres after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

New

C/A

New Frontage Road

New

35 Acres

C/A

State Road 24

MEASURING DAMAGES

-Severance-

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Severance1
- after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. Severance-

  • The appraiser should consider and address such issues as:

    • A possible change in highest and best use

    • Change in access

    • Change in the value per acre

Crider, Bouye, & Elliott, LLC


Change in grade
- after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. Change in Grade-

  • Tract 32 is improved with an auto body repair shop.

  • Prior to acquisition the building is located approximately eight feet below grade and 90 feet from the present roadway at survey station 367+00.

Crider, Bouye, & Elliott, LLC


Change in grade1
- after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. Change in Grade-

  • The construction slopes were converted to right of way bringing the right corner of the improvements to within six feet of the new right of way.

  • New grade will raise an additional four feet, placing the drive on a 2:1 slope

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

32 after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

New 100’ R/W

Construction Slope

Present R/W

367 + 00

MEASURING DAMAGES

-Change in Grade-

Crider, Bouye, & Elliott, LLC


Solutions
Solutions: after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • Cost to cure

  • Changes in HBU- Keep existing improvement?

  • Demolition & Redevelopment

  • Business Enterprise Value (BEV) is treated differently depending on the jurisdiction.

Crider, Bouye, & Elliott, LLC


Police power vs eminent domain
- after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. Police Power vs. Eminent Domain -

Police Power is defined as, “the right of government through which property is regulated to protect public safety, health, morals, and general welfare.”

Eminent Domain is defined as “the right of government to take private property for public use upon the payment of just compensation.”

  • The intersection is being improved to provide additional turn lanes.

  • A new concrete median along the street abutting the acquired area will restrict ingress and egress to right-in/right-out only.

Crider, Bouye, & Elliott, LLC


Measuring damages police power vs eminent domain

Present R/W after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

Retail Building

New R/W

Concrete Median

New Raised

MEASURING DAMAGES-Police Power vs. Eminent Domain -

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

Ratio after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

Before

After

Land : Bldg

9.89

9.30

Parking: Bldg

258.33

193.75

Internal Movement

5,750

5,405

Primary Frontage

188.0

200.0

Total Frontage

106.98

103.44

Line of Sight

0

10%

COMMON INDICATORS OF POSSIBLE DAMAGES

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Other damages to consider
OTHER DAMAGES TO CONSIDER after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • 1. Temporary Construction Easements

  • 2. Utility Easements

  • 3. Noise

  • 4. Proximity to Residential

    • A. HBU ?

    • B. Interim Use?

    • C. Cost to Cure?


Benefits
BENEFITS after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

Defined as the advantageous factors, which arise from a public improvement for which private property has been taken in condemnation.

(The Dictionary of Real Estate Appraisers – 5th Edition)

Crider, Bouye, & Elliott, LLC


Benefits1
BENEFITS after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

Specific General

  • Offset R/W costs ?

  • Offset Damages ?

  • Particular to the property

  • Non Compensable

  • Affects the whole community

Crider, Bouye, & Elliott, LLC


Benefits2
BENEFITS after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • The corner portion of Tract 15 sold prior to construction however, the grantor and grantee had prior knowledge of the new road design. The sales price reflected the new corner location at a signalized intersection.

  • In spite of the sales price, the appraised value of the site before the acquisition should not reflect the new corner influence.

  • The sales price of the corner site should only be considered in the “after” condition.

Crider, Bouye, & Elliott, LLC


Benefits3

15 after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

Abandoned Pendleton Street

Relocated PendletonStreet

15

BENEFITS

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Specific benefits
SPECIFIC BENEFITS after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • Tract 169 is located on a finger of the lake but was not allowed a dock permit before the acquisition due to the height of the existing bridge.

  • The bridge was raised as a result of the project allowing access underneath State Road 28 to the main body of water, thereby making the site suitable for a boat dock and enhancing the value of this specific property.

  • Specific benefits to a property as a result of a road improvement may offset acquisition costs and/or damages, in some states.

Crider, Bouye, & Elliott, LLC


Specific benefits1

169 after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

New R/W

State Road 28

New R/W

SPECIFIC BENEFITS

Crider, Bouye, & Elliott, LLC


General benefits

P/L after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

P/L

New R/W

Present R/W

GENERAL BENEFITS

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General benefits1
GENERAL BENEFITS after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • Before announcement of the project, new commercial growth was evident along the highway nearest the city limits, but development grew sparse farther south.

    • Using these comparables as a basis for establishing a “before” value would result in an overpayment to property owners situated along the new roadway.

    • Using these sales as a basis for the “after” value would result in an underpayment to the owners.

Crider, Bouye, & Elliott, LLC


I a closer look at right of way appraisal issues

  • Competency Requirements after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.

  • 1. Recognize changes – Social/Economic

  • 2. Recognize changes – Court Cases

  • 3. Recognize changes – Reporting Requirements


I a closer look at right of way appraisal issues

Charles F. Crider, MAI after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action. email: chuck@criderappraisals.comCrider, Bouye, & Elliott, LLC 2 Ridgeway Ave Greenville, SC 29609 (864) 232-1788

Thank you so much,

Crider, Bouye, & Elliott, LLC