Valuation Issues from Current
Cases
Orell C. Anderson, MAI
and Stephen G. Valdez
• Background
• Case overviews
• Implications on valuation
My Sandbox
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Co-founder and partner at Bell Anderson &
Sanders, LLC
Co-author of Real Estate Damages
Expert Appraiser
– Specializing in condemnation & contamination
Current Cases affecting Valuation
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City of Livermore v. Baca
Texas v. LEDREC, Inc.
County of Glenn v. Foley
New Jersey Transportation v.
Marlton Plaza
3
City of Livermore v. Baca
Big Picture:
Severance Damage evidence to be put before
a jury
City of Livermore v. Baca
Street re-alignment
Property owner claimed severance due to impaired “view and curb
appeal”, drainage, and access – while increasing utility service costs
Baca’s evidence of severance damages was excluded in trial
Baca appealed decision to exclude evidence and won
Baca
Property
Project
City of Livermore v. Baca
Appraisal Implications:
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Evidence of severance damages to be put before a jury
The appraiser needs to know and understand the audience
– Opinions of value and the basis for those opinions need to be
easily understood and communicated simply and concisely
Texas v. LEDREC, Inc
Big Picture:
Appraiser speculation that could affect value may
be proven to be wrong, but is admissible if analyzed
correctly
High Rise Casino* for
Sale!!!
*Just add High Rise Casino
Texas v. LEDREC
Highway expansion
Property owner appraiser based severance damages on decreased
setback that would conflict with city zoning… once the nearby city
“inevitably” annexed the subject property
Condemning agency argued that assumed annexation was too
speculative and that appraiser opinions should be excluded
Property owner “won,” appraiser speculation admissible because it
was analyzed correctly (although it may be proven wrong)
LEDREC before
LEDREC after
Texas v. LEDREC
Appraisal Implications:
Appraiser opinions and assumptions that support those
opinions may or may not be wrong, but they will be
considered if the analysis used to reach those opinions is
“reliable”
An appraiser, a broker, and a city planner
are stuck at the bottom of a well. The
broker and the city planner can’t come up
with a way to get out, when the appraiser
shouts: “I’ve got it!!! First we assume that
there’s a ladder…”
Glenn County v. Foley
Big Picture:
What’s a comparable?
Adjustments to comparables must be objective
Would someone looking for
this….1969 Chevy Malibu
…consider this comparable?...1992
Hyundai POS
Glenn County v. Foley
Expansion of adjacent land fill via the taking of Foley’s property
Foley appraiser concluded to highest and best use of “olive orchard” at a
value of $1.7mil using “comparable sales” of other orchards
County appraiser opined to value of $600,000 based on highest and best use
of “grazing land”
Court ruled that a property qualifies as a comparable if its sale “can provide
any rational inference in support” of an estimate of value
Court ruled that adjustments to comparables can be made only if they have
“some rational basis”
Glenn County v. Foley
Appraisal Implications:
Appraiser selected “comps” should be
comparable to the subject property appraised
Adjustments need objective support
rationally
– When those adjustments are difficult / impossible to quantify, a
“windsock” approach may be more appropriate (i.e. “superior /
inferior / similar”)
All I have to do is
come up with an
ocean view
adjustment and a
100’ tall “Pharoah”
adjustment, and
these will be perfect
comps!
Legal Non-conforming
RealEstateDamages.com
Legal Non-conforming
RealEstateDamages.com
New Jersey Transportation v. Marlton Plaza
Big Picture:
Scope of damages available to a property owner
is limited to damages that are a result of the
taking
New Jersey Transportation v. Marlton Plaza
Project was to eliminate traffic circle in lieu of a grade separated
interchange to relieve local traffic congestion
Marlton Crossings shopping center agreed to lose an access point
prior to the project
During condemnation proceedings, Marlton claimed that on site
congestion impaired the value of the shopping center
– Specifically cited the loss of the access point, and NOT the project as the reason
Marlton won, the agency appealed and the appellate court remanded
the case for retrial, stating that compensable damages ought to be
limited to results of the project and proposed taking, not previous
consensual access modification
New Jersey Transportation v. Marlton Plaza
Before
After
Former
Circle
Current
Overpass
Marlton
Property
Marlton
Property
New Jersey Transportation v. Marlton Plaza
Before
After
Former
Access
Access removed, per
prior agreement
New Jersey Transportation v. Marlton Plaza
Appraisal Implications:
When considering potential severance damages, the
appraiser should only consider damages that are a result
of the project
Conclusion
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Questions ?
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