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

3. Damages and Benefits Charles F. Crider, MAI

4. 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. 4 Crider, Bouye, & Elliott, LLC

5. 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.” 5 Crider, Bouye, & Elliott, LLC

6. 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. 6 Crider, Bouye, & Elliott, LLC

7. 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. 7 Crider, Bouye, & Elliott, LLC

8. 8 DAMAGES CONSEQUENTIAL SPECIFIC BENEFITS GENERALSPECIFIC

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

10. 10 Crider, Bouye, & Elliott, LLC 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 8 th Edition

11. 11 Crider, Bouye, & Elliott, LLC 2011 2012 75

12. Before: 6’/75’ = 8% slope After : 9’/50’ = 18% slope 50’ 9’ Pres. R/W 45’ New R/W 70’ Bldg. Setback 75’ 6’ 12 Crider, Bouye, & Elliott, LLC

13. 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? 13 Crider, Bouye, & Elliott, LLC

14. SOLUTION: *A Comparable* BEFOREAFTER Sales Price$250,000$200,000 Value of R/W obtained-+ $19,200 * Adjusted Value$250,000$219,200 Date of Sale9/02/20119/06/2012 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. 14 Crider, Bouye, & Elliott, LLC

15. 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. 15 Crider, Bouye, & Elliott, LLC

16. 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 16 Crider, Bouye, & Elliott, LLC

17. State Road 24 60 Acres 35 Acres C/A New New Frontage Road C/A 17 Crider, Bouye, & Elliott, LLC

18. 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 18 Crider, Bouye, & Elliott, LLC

19. 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. 19 Crider, Bouye, & Elliott, LLC

20. 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 20 Crider, Bouye, & Elliott, LLC

21. Construction Slope Present R/W New 100’ R/W 367 + 00 32 21 Crider, Bouye, & Elliott, LLC

22. Solutions: 1) Cost to cure 2) Changes in HBU- Keep existing improvement? 3) Demolition & Redevelopment 4) Business Enterprise Value (BEV) is treated differently depending on the jurisdiction. 22 Crider, Bouye, & Elliott, LLC

23. 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. 23 Crider, Bouye, & Elliott, LLC

24. Retail Building Concrete Median New R/W New Raised Present R/W 24 Crider, Bouye, & Elliott, LLC

25. BeforeAfter Land : Bldg 9.899.30 Parking: Bldg 193.75 258.33 Primary Frontage 200.0 188.0 Total Frontage 106.98103.44 Line of Sight 010% Ratio Internal Movement 5,750 5,405 25 Crider, Bouye, & Elliott, LLC

26. 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?

27. 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) 27 Crider, Bouye, & Elliott, LLC

28. Specific General Offset R/W costs ? Offset Damages ? Particular to the property Non Compensable Affects the whole community 28 Crider, Bouye, & Elliott, LLC

29. –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. 29 Crider, Bouye, & Elliott, LLC

30. Relocated Pendleton Street Abandoned Pendleton Street 15 30 Crider, Bouye, & Elliott, LLC

31. 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. 31 Crider, Bouye, & Elliott, LLC

32. New R/W State Road 28 New R/W 169 32 Crider, Bouye, & Elliott, LLC

33. P/L New R/W Present R/W 33 Crider, Bouye, & Elliott, LLC

34. 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. 34 Crider, Bouye, & Elliott, LLC

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

36. Charles F. Crider, MAI email: chuck@criderappraisals.com Crider, Bouye, & Elliott, LLC 2 Ridgeway Ave Greenville, SC 29609 (864) 232-1788 36 Crider, Bouye, & Elliott, LLC