Another Major Win in Airport Case

A substantial increase in just compensation occurred after the County’s appraiser failed to understand or analyze the substantive issues in the case and illustrates why the Uniform Condemnation Procedures Act entitles owners to commission independent appraisals at the agency’s expense.

This month, I reached a final settlement of an avigation easement taking, ending a prolonged process.  The airport used eminent domain to impose an avigation easement to protect a Runway Protection Zone.  A Runway Protection Zone, or RPZ, is an area at the end of a runway that the FAA recommends be kept clear of certain uses. 

The easement had three major impacts.  First, it required clearing much of the landscaping on the property.  Second, it imposed use restrictions that limited the types of tenants that could rent in the development.  Third, the trees were being cleared to preserve what the airport’s aviation planner had previously described as the equivalent of a roadside shoulder, not an area where aircraft are intended to regularly travel but a buffer zone where they may.

The airport’s appraiser completely ignored the impacts of the easement.  He treated as though it was an invisible line in the sky on a planning document that did not impact anything on the ground beyond removing the vegetation.  The appraiser never discussed these impacts in his report.  My deposition examination resulted in him acknowledging that he got the two most important aspects of his appraisal wrong. 

Q. Does the avigation easement encumber any of the subject property outside of that .81 acres?

A. Does not.

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Q. Does the avigation easement, after the tree removal is accomplished, provide any restrictions on the property below a line in the sky that's defined in the Exhibit X of the easement?

A. I don't believe so.

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Q. Is it fair to say that one of the two most important issues when appraising the impact of an easement on a property is identifying the area on the whole of the property that is encumbered by the easement?

A. Yes. 

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Q. Is it fair to say that when appraising the impact of an easement on a property, one of the two most important issues is what rights the property owner who is benefiting from the easement gains to act on the property or what rights that the fee owner of the property loses on the property?

A. I believe they would go hand in hand, they would go together to review, yes. 

*    *    * 

Q. So based upon reviewing these admissions, is it fair to say that the assertion that the avigation easement encumbers only .81 acres as contained in your appraisal report is incorrect?

A. Based on these documents, yes.

Q. And is it also fair to say that the use restrictions that we referenced in the deposition and that are referenced in these responses are never discussed anywhere in your appraisal report?

A. Correct.

Q. And is it also fair to say that the easement encompasses more than simply air rights?

A. Air rights and use restrictions, yes.  Mostly air rights relating to Exhibit X.

Q. But the response to my question would be yes, it is fair to state --

A. I said -- I said in terms of use restrictions, yes.

The airport was in an untenable position. The property owner’s appraiser opined that the impact of the acquisition diminished the property by a substantial amount over and above the cost of relandscaping. The airport’s appraiser naturally concluded that it had no impact, but again, that was because he did not understand what was acquired. 

The parties resolved issues relating to relandscaping the property since their respective experts were not that far apart. However, the permanent impacts to the easement were set to go to trial. The airport filed a Hail Mary motion seeking to strike the property owner’s appraisal report. After this was denied by the Court, the case settled with the airport paying about two-thirds of the difference of the parties' respective appraisal provisions, plus statutory interest. In addition, the airport reimbursed virtually all of the expenses of the litigation and the entire contingent attorney fee. 

While the Uniform Condemnation Procedures Act does not require agencies to obtain an appraisal as part of a statutory good faith offer proceeding the use of condemnation, most agencies do commission one. However, if the appraiser does not actually understand the impact of the taking, such an appraisal is a little more than an effort to induce property owners to waive their right to just compensation while also remaining ignorant of the impacts. Eminent domain appraising involves multiple critical issues that differ from other types of appraisals. This case is a prime example of an appraiser getting it wrong, resulting in an unreliable appraisal being presented to the property owner.

For example, the contemplation of the project must be disregarded when valuing property before the taking.  That means if the project had a negative impact on the value of the property, that is not a basis to reduce the value of the property being acquired. In this example, there were several years during which it was unclear whether the FAA would allow the airport to obtain an easement versus acquiring the entire property and demolishing the building. For that reason, the property owner did not capitalize on certain opportunities available to it. The owners’ appraiser properly disregarded these issues in reaching his before taking value, resulting in a higher value that was then diminished by the taking.

In eminent domain, if an easement or other less-than-fee simple interest is acquired, an appraiser must assume that all the newly acquired rights will be used to the fullest extent allowed by law.  In the example of an avigation easement, that means if the airport is taking the right for aircraft to fly at low heights, the appraisal must assume that such flights will occur. Thus, an appraisal evaluating less than a total taking must detail the property rights being acquired and discuss their impacts. In this case, the airport’s appraisal only included a generic discussion about the nature of an easement that would have been no different had it been for the taking to build a sanitary sewer line. The appraiser hired by the owner considered all the impacts, resulting in him identifying substantial just compensation being owed.

This case is the epitome of why the Uniform Condemnation Procedures Act mandates that agencies pay the reasonable expenses incurred by property owners to obtain their own appraisal. I have seen too many instances like this where the agency’s appraisal ignores the heart of the case and reaches nonsense conclusions. 

Please feel free to contact me if you are faced with any type of eminent domain acquisition.