1. Valuation Issues from Current Cases Valuation Issues from Current Cases Orell C. Anderson, MAI and Stephen G. Valdez Background Background Case overviews Case overviews Implications on valuation Implications on valuation

2. My Sandbox n Co-founder and partner at Bell Anderson & Sanders, LLC n Co-author of Real Estate Damages n Expert Appraiser –Specializing in condemnation & contamination

3. 3 Current Cases affecting Valuation City of Livermore v. Baca City of Livermore v. Baca Texas v. LEDREC, Inc. Texas v. LEDREC, Inc. County of Glenn v. Foley County of Glenn v. Foley New Jersey Transportation v. Marlton Plaza New Jersey Transportation v. Marlton Plaza

4. City of Livermore v. Baca Big Picture: Severance Damage evidence to be put before a jury

5. City of Livermore v. Baca Baca Property Project n Street re-alignment n Property owner claimed severance due to impaired “view and curb appeal”, drainage, and access – while increasing utility service costs n Baca’s evidence of severance damages was excluded in trial n Baca appealed decision to exclude evidence and won

6. City of Livermore v. Baca Appraisal Implications:  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

7. 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

8. Texas v. LEDREC n Highway expansion n Property owner appraiser based severance damages on decreased setback that would conflict with city zoning… once the nearby city “inevitably” annexed the subject property n Condemning agency argued that assumed annexation was too speculative and that appraiser opinions should be excluded n Property owner “won,” appraiser speculation admissible because it was analyzed correctly (although it may be proven wrong) LEDREC beforeLEDREC after

9. 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…”

10. Glenn County v. Foley Big Picture: n What’s a comparable? n Adjustments to comparables must be objective Would someone looking for this….1969 Chevy Malibu …consider this comparable?...1992 Hyundai POS

11. Glenn County v. Foley n Expansion of adjacent land fill via the taking of Foley’s property n Foley appraiser concluded to highest and best use of “olive orchard” at a value of $1.7mil using “comparable sales” of other orchards n County appraiser opined to value of $600,000 based on highest and best use of “grazing land” n Court ruled that a property qualifies as a comparable if its sale “can provide any rational inference in support” of an estimate of value n Court ruled that adjustments to comparables can be made only if they have “some rational basis”

12. Glenn County v. Foley Appraisal Implications: n Appraiser selected “comps” should be rationally comparable to the subject property appraised n Adjustments need objective support –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!

13. Legal Non-conforming

15. New Jersey Transportation v. Marlton Plaza Big Picture: n Scope of damages available to a property owner is limited to damages that are a result of the taking

16. New Jersey Transportation v. Marlton Plaza n Project was to eliminate traffic circle in lieu of a grade separated interchange to relieve local traffic congestion n Marlton Crossings shopping center agreed to lose an access point prior to the project n 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 n 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

17. New Jersey Transportation v. Marlton Plaza Before After Marlton Property Former Circle Current Overpass

18. New Jersey Transportation v. Marlton Plaza Before After Former Access Access removed, per prior agreement

19. New Jersey Transportation v. Marlton Plaza Appraisal Implications: n When considering potential severance damages, the appraiser should only consider damages that are a result of the project

20. Conclusion Questions ? Questions ? orell@realestatedamages.com steve@coastappraisalnetwork.com