A metro-area transit district condemned a portion of a residential lot for a light-rail line. The property was owned by a LLC, which in turn was owned by a family trust. The condemnor offered $19k as compensation, but the trust thought it was worth a lot more: $280k.
One of the big issues contributing to the difference was the loss of parking which would result from the taking. The condemnor wanted to introduce evidence that the family trust which owned the LLC, also owned adjacent and nearby parcels. Thus, the argument went, these parcels were in “common ownership,” and the loss of parking caused by the taking “could more easily obtain right to access [an area] that could be used for on-site parking.”
The trial court kept out that evidence via an in limine ruling. No “unity of use,” and therefore the parcels should not be considered as one. After the jury awarded $118k as compensation, the condemnor appealed, arguing that the jury was entitled to consider whether the loss of parking on the subject property might have been mitigated by replacement parking on nearby parcels, because it was very likely with the “same owner,” the condemnee could cut itself a good deal on supplying replacement parking.
In Tri-County Metro. Trans. Dist. v. Walnut Hill, LLC, No. A159757 (June 20, 2018), the Oregon Court of Appeals concluded that the condemnor’s argument suffered from a “fundamental flaw” on a “basic principle” of condemnation law: valuation is measured by what the market would have paid for the property taken. And a hypothetical buyer here would not be the family trust, and that buyer would not own the adjacent parcels:
The fundamental flaw in TriMet’s argument is that the benefits it posits from the relationship among the current property owners flow only to Walnut Hill LLC and not to any purchaser that might acquire the Walnut Hill property. Accordingly, those benefits are not relevant to a determination of the property’s fair market value, which “is determined based on what a hypothetical but willing purchaser would pay for the property.” Hughes, 162 Or App at 420. A hypothetical purchaser of the Walnut Hill property would not have the same kind of relationship that Walnut Hill LLC has with the entities that own the Monroe Street and Chestnut Hill properties. Accordingly, any advantageous parking access that Walnut Hill LLC might be able to obtain because of its relationship to those other entities is irrelevant to the determination of what a different purchaser would be willing to pay for that property. Although such a purchaser presumably would account for the lack of parking in determining a price that it would willingly pay for the Walnut Hill property, that purchaser would have no reason to pay more simply because Walnut Hill LLC—but not it—might have been able to easily negotiate for parking at or by a route through the Chestnut Hill or Monroe Street properties.
Slip op. at 424.
The court also affirmed the exclusion of the proffered evidence under a “larger parcel” rationale:
the trial court’s ruling is best understood as rejecting any implicit suggestion by TriMet that the relationship between the owners of the multiple properties meant that the jury should have been permitted to conceive of those properties as forming a single, larger parcel when they considered the extent to which the loss of parking at Walnut Hill reduced the value of that property.
Slip op. at 426-27.
Long story short: the question in valuation in eminent domain is, at minimum, what would the market have paid for this property?
Tri-County Metropolitan Trans. District v. Walnut Hill, LLC, No. A159757 (Or. App. June 20, 2018)