I. A Closer Look at Right of Way Appraisal Issues.

I. A Closer Look at

Right of Way Appraisal Issues

Damages and BenefitsCharles F. Crider, MAI

•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.

4Crider, Bouye, & Elliott, LLC

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.”


The most significant aspect of valuing property before and after the acquisition is the estimate of damages and/or benefits to the remainder, if any, caused by the action.


Identifying Damages• Damages may be assessed in the amount

necessary to fix or remediate the 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.



“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)

9Crider, Bouye, & Elliott, LLC* Blacks Law Dictionary 8th Edition


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


2011

201275

Before: 6’/75’ = 8% slopeAfter : 9’/50’ = 18% slope

50’

9’

Pres. R/W45’

New R/W70’

Bldg. Setback

75’ 6’


MEASURING DAMAGES – Paired Sales Analysis

• Increased Grade

• Increased Proximity

• What is being lost or diminished? - Visibility

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


SOLUTION: *A Comparable*BEFORE AFTER

Sales Price $250,000 $200,000

Value of R/W obtained - + $19,200 *

Adjusted Value $250,000 $219,200

Date of Sale 9/02/2011 9/06/2012

Market Conditions Adjustment + 4% - 0 -

Adjusted Price $260,000 $219,200

Adjustment -15.7% -

Average Grade ** 8% 18.0%

* 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. 14Crider, Bouye, & Elliott, LLC

CONCLUSION:• 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.


• 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


State Road 24

60 Acres

35 AcresC/A

New

New

New Frontage RoadC/A


• 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


• 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.


• 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


Construction Slope

Present R/W

New 100’ R/W

367 + 00

32


Solutions:1) Cost to cure2) Changes in HBU- Keep existing

improvement?3) Demolition & Redevelopment4) Business Enterprise Value (BEV) is

treated differently depending on the jurisdiction.


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. 23Crider, Bouye, & Elliott, LLC

Retail Building

Con

cre t

e M

edia

n

New

R/W

New

Rai

sed

Presen

t R/W


Before After

Land : Bldg 9.89 9.30

Parking: Bldg 193.75 258.33

Primary Frontage 200.0 188.0

Total Frontage 106.98 103.44

Line of Sight 0 10%

Ratio

Internal Movement 5,750 5,405


OTHER DAMAGES TO CONSIDER

• 1. Temporary Construction Easements• 2. Utility Easements• 3. Noise• 4. Proximity to Residential

• A. HBU ?• B. Interim Use?• C. Cost to Cure?


Specific General Specific General

• Offset R/W costs ?

• Offset Damages ?

• Particular to the property

• Non Compensable

• Affects the whole community


– 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.


Relo

cate

d Pe

ndle

ton

Stre

etAbandoned Pendleton

Street

15

15


• 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. 31Crider, Bouye, & Elliott, LLC

New R/W

State Road 28

New R/W

169


P/L

P/L

New R/W

Present R/W


• 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.


• Competency Requirements

• 1. Recognize changes – Social/Economic• 2. Recognize changes – Court Cases• 3. Recognize changes – Reporting Requirements

Charles F. Crider, MAI

email: [email protected]

Crider, Bouye, & Elliott, LLC2 Ridgeway AveGreenville, SC 29609(864) 232-1788


I. A Closer Look at Right of Way Appraisal Issues.

Documents

damages damages

mai slide

llc specific damages

th edition slide

special damages

private property

value of rw

personal property