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February 25, 2011

Our New <a href="http://profile.typepad.com/commercialappraiser">Commercial Appraiser </a>Website Under Construction: http://profile.typepad.com/commercialappraiser
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February 15, 2011

Tuesday, February 15, 2011

The Federal Reserve is giving lenders two options for determining “customary and reasonable” appraisal fees and it appears many are moving toward the more pragmatic approach instead of relying on independent surveys.

The first option is a “two-step process” where the lender (or appraisal management company) calculates an amount that is “customary” based on recent rates and “reasonable” based on actual services performed with adjustments for each transaction, said Kerri Smith, an attorney at K&L Gates.

The second option is based on recent rates generated by third-party surveys that take into account services performed by a representative sample of appraisers in a geographic area. “In talking with our clients, it appears many creditors and AMCs would like to sit under [option] one,” Smith said during a K&L Gates webinar for clients.

Both options give lenders and AMCs a way to demonstrate their compliance with the Fed’s appraisal independence regulations that go into effect April 1.

However, there are a limited number of fee surveys available, Smith said, and it is unclear if they satisfy all of the Fed’s requirements. The surveys must exclude fees paid by AMCs to appraisers under the Fed’s rule. AMCs account for nearly 70% of all appraisals.

To adopt option one, lenders will have to identify recent rates that have been charged in a state, metropolitan area, or county. The appraisal rate is not supposed to reflect administrative or advertising costs. “The ultimate rate must be supported with data and documentation,” Smith said.

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February 09, 2011

Urban Revitalization and Eminent Domain: Misinterpreting Jane Jacobs

New Article: Urban Revitalization and Eminent Domain: Misinterpreting Jane Jacobs
Posted: 08 Feb 2011 12:58 PM PST
George Mason U. lawprof
Steven J. Eagle is familiar to regular readers of this blog for authoring the seminal treatise Regulatory Takings, now in its fourth edition. Talk takings and you will invariably be dealing with his scholarship.
Here's the latest: Professor Eagle has recently posted a new paper, "Urban Revitalization and Eminent Domain: Misinterpreting Jane Jacobs" on SSRN. The abstract:
This article reviews the implications for land use policy of Jane Jacobs’ The Death and Life of Great American Cities. Fifty years after its publication in 1961, Death and Life remains a clarion call for resistance to monolithic development and to the reigning paradigm of urban planning in the mid-20th century. The article asserts, however, that government officials and planners have learned the wrong lesson from Jacobs. Their emphasis on the top-down imposition of what purports to be varied development is evident in the growth of condemnation for retransfer for private economic redevelopment. Such policies are directly contrary to Jacobs’ insistence on bottom-up organic development.

The article further describes the muddled state of the U.S. Constitution’s Public Use Clause, evident in Kelo v. City of New London and in state cases such as Goldstein v. New York State Urban Development Corporation. It asserts that judicial unwillingness to provide meaningful scrutiny to condemnation for private redevelopment is based, in part, on acceptance of the revisionist, and incorrect, reading of Jacobs’ work.
(links added). The portion of the article that resonated most with us begins on page 40:
Kelo v. City of New London contains considerable rhetoric about why the Public Use Clause was not violated, but little that pins down how that clause would be violated. Most clearly, "the sovereign may not take the property of A for the sole purpose of transferring it to another private party B, even though A is paid just compensation." The operative word is "sole." One could hardly imagine a transfer expressed in these terms. Indeed, the fitting out of any new grand private residence results in the employment of laborers and domestics, and the expansion of any legitimate business advances the welfare of its customers.
at 40 (footnotes omitted).
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February 08, 2011


January 18, 2011

CLTA Wins Lawsuit

Counsel for the California Land Title Association (“CLTA”) successfully defended the CLTA in a unique lawsuit in the San Luis Obispo County Superior Court.  Plaintiff sued his title insurer and CLTA after the title insurer denied Plaintiff’s title claim relating to an undisclosed underground easement.  Plaintiff creatively tried to create CLTA liability by alleging that CLTA advertised on its website misleading and false representations about title insurance and title insurers’ duties to reimburse insureds for covered losses.  Read more about the case.

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Former Detroit Lead Inspector Sentenced for Fraud

WASHINGTON — Former city of Detroit Health Department lead inspector Donald Patterson was sentenced today to three years and 10 months in prison and 24 months of supervised release on wire fraud charges stemming from an U.S. Environmental Protection Agency (EPA) investigation. In July 2010, Patterson pleaded guilty and admitted he accepted cash to provide a clean bill of health to homes in which he had either done no inspection or provided fraudulent lead removal training. Lead is a serious public health issue causing a range of health effects from behavioral problems and learning disabilities, to seizures and death. Children six years old and under are most at risk.

“The actions of this public official put the health and lives of children at risk,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “In this case, the local government inspector failed to do his job by submitting false reports for personal gain. Today’s sentencing shows that those who knowingly put the public at risk, particularly our most vulnerable citizens, our children, will be prosecuted to the fullest extent of the law.”

Patterson, 50, was employed by the city of Detroit as a lead paint inspector. His job was to ensure that all paint-based lead hazards were safely removed from the homes he inspected. Instead, Patterson used his position to obtain cash from the owners or renters of these homes in exchange for falsely certifying that the homes were free of lead or for providing fraudulent lead removal training. Patterson admitted that between October 2008 and August 2009 he had accepted cash totaling $1,350 in connection with fraudulent abatement of lead hazards to which children were being exposed at four separate properties.
The Patterson case was investigated by EPA and the FBI, with assistance from the city of Detroit and the state of Michigan.

Michigan residents who have concerns about possible lead hazards in their homes should call the Michigan Department of Community Health Hotline at 800-648-6942. 

More information on EPA’s criminal enforcement program: http://www.epa.gov/compliance/criminal/index.html

To report an environmental violation: http://www.epa.gov/compliance/complaints/index.html

More information on lead: http://www.epa.gov/lead/pubs/leadinfo.htm#health


Note: If a link above doesn't work, please copy and paste the URL into a browser.
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Cal Ct App: No Appeal From Stipulated Condemnation Judgment
Posted: 08 Feb 2011 12:01 AM PST
When is a final judgment in a condemnation case not appealable? When the appellant agreed that the trial cout's order resolved "all claims and issues" in the case and thus it reflected that no one could appeal, that's when.
City of Gardena v. Rikuo Corp., No. B217302 (Cal. Ct. App. Feb 7, 2011), the parties mediated the issues and entered into a settlement agreement, after which the trial court entered a final judgment. After entry of judgment, the trial court entered two additional orders awarding the City money from the deposit made to cover the costs of remediation. Although the City did not contest the appealability, the court of appeal asked for supplemental briefing on the jurisdictional issue.
The court concluded the orders were not appealable as "orders after judgment" since they followed a consent judgment, which is normally not appealable unless consent to judgment was provided "merely ... to facilitate an appeal following adverse determination of a critical issue." Order at 4 (citing Norgart v. UpJohn Co., 21 Cal. 4th 383, 400 (1999)). The court concluded that the property owner gave consent to the judgment in order to finally resolve the case, not to pave the way for an appeal:
The judgment in this case recites that it "resolves all claims and issues related to the taking of the Subject Property, including all claims and issues in the Inverse [Condemnation] Action as well as all claims and issues in this eminent domain action." Thus, by consenting to the judgment, the parties manifested their intent to settle their dispute fully and finally. This is not a case in which the parties stipulated to a judgment merely to facilitate an appeal following the adverse determination of a critical issue. The purpose of the stipulated judgment here was to resolve "all claims and issues" arising from the eminent domain and inverse condemnation actions, including claims and issues relating to the cost of the ongoing remediation on the subject property. As to such claims and issues involving remediation, the parties stipulated, in effect, to a dispute resolution mechanism by which the trial court would make factual determinations that would resolve those issues. Therefore, the parties in this case consented to a final judgment that is not appealable as a matter of law.
Order at 4 (footnote omitted). The court rejected the property owner's argument that "in eminent domain cases, the law allows parties to apply for a final order of condemnation after the full amount of the judgment has been deposited in the trial court or paid to the landowner." Order at 5. The court held that in those cases where the post-judgment orders are appealable, the judgment itself was contested. This triggers the appealability of the subsequent orders.
The court also held the property owner to the words of the stipulated judgment and settlement agreement, and rejected the argument that despite agreeing that the judgment resolved "all claims and issues" in the case, it really didn't mean that. "Here, the consent judgment expressly provides that it was intended to resolve all of the issues in controversy between the parties, including the manner in which disputes over the cost of remediation would be resolved. As a result, it would appear to be a final determination of the rights of the parties to the proceeding." Order at 8.
Appeal dismissed.

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Greg Kugle To Speak To HSBA On Shoreline Issues (2/18/2011)
Posted: 07 Feb 2011 06:42 PM PST
On Friday, February 18, 2011 from noon to 1:00 p.m., my Damon Key colleague
Greg Kugle will be speaking to the Hawaii State Bar Association's Real Property and Financial Services Section on Shoreline Issues. Greg chairs our firm's real estate and construction law practice group, and has been representing property owners on shorelines issues across the State of Hawaii for many years.
The presentation is free for HSBA members and will take place at the HSBA Confrerence Room, 1100 Alakea Street, Suite 1000. HSBA members from the neighbor islands can call in to a toll-free conference line (contact us for the instructions).

Vermont Law Review: Essay Reflections From The Amicus Curiae In The Judicial Takings Case
Posted: 07 Feb 2011 06:29 PM PST
VTLREV_coverAs we noted here (when we posted our article), the latest issue of the Vermont Law Review deals with the U.S. Supreme Court's "judicial takings" case, Stop the Beach Renourishment, Inc. v. Florida Dep't of Environmental Protection, 130 S.Ct. 2592 (June 17, 2010). 
In eight essays, the authors of several of the many amicus briefs add their post-opinion thoughts. Authors include Ilya Shapiro (Cato Institute), Professor John D. Echeverria (Vermont Law), and Julia Wyman (Marine Affairs Institute). The groundwork is laid in the first article, by Professor L. Kevin Wroth:
If hard cases make bad law, bizarre cases may make no law at all. The recent Supreme Court decision, Stop the Beach Renourishment, Inc. v. Florida Department of Environmental Protection is a case in point. In the Essays that follow, the Vermont Law Review has brought together the reflections of seven lawyers, or teams of lawyers, for amici curiae in the case. The authors’ challenge was to consider the meaning and future implications of a decision in which no clear rationale emerged from the opinions.
at 413 (footnote omitted). The editors have now posted the entire volume here.
Here is the table of contents and links to the articles:
§ Hold Back the Sea: The Common Law and the Constitution, L. Kevin Wroth
§ Judicial Takings and Scalia's Shifting Sands, Ilya Shapiro & Trevor Burris
§ Of Woodchucks and Prune Yards: A View of Judicial Takings From the Trenches, Robert H. Thomas, Mark M. Murakami, & Tred R. Eyerly
§ Do we Really Need a Judicial Takings Doctrine, Richard Ruda
§ Stop the Beach Renourishment: Why the Judiciary is Different, John D. Echeverria
§ A Divided Ruling for a Divided Country in Dividing Times, Michael J. Fasano
§ In States we Trust: The Importance of the Preservation of the Public Trust Doctrine in the Wake of Climate Change, Julia B. Wyman

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February 07, 2011


THE INFLUENCE OF VALUERS AND VALUATIONS ON THE WORKINGS OF THE COMMERCIAL PROPERTY INVESTMENT MARKET Research funded by the Education Trusts of the Investment Property Forum, Jones Lang LaSalle and the Royal Institution of Chartered Surveyors

The major aim of the research is to examine the influence that valuers and valuations have on the workings of the commercial property investment market in the UK. The research described involved interviews with 30 fund managers and owners and their property advisors. It finds evidence that valuations do not stand above the market, but are instead an integral part of it. Opportunities for client influence exist and appear to be used. The research has important implications for the type of property research which assumes that valuations and prices are independent of one another, an example being debates over valuation accuracy. The research also reveals differences in the way that valuers amend frequently reviewed periodic valuations and a worrying increase in the concentration of valuers providing valuations for monthly indices.
View or Download
 The following links allow you to view and download full papers. These links are maintained by other sources not affiliated with Microsoft Academic Search.  
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February 05, 2011

B-1. Federal Law Controls.

B-1. Federal Law Controls. Since the experience of many appraisers primarily  http://www.harriscompanyrec.com/yellowbookuasfaappraiser.html  non-public acquisition appraisals, or conducting appraisals under various state

laws, it is particularly important that appraisers bear in mind that in federal acquisitions,

because the meaning of just compensation is a matter of fundamental constitutional

interpretation, questions with respect to compensation are to be resolved in accordance

with federal rather than state law.94 Because federal law differs in some important aspects

from the law of some states, it is incumbent upon both the attorney and the appraiser to

make certain that they understand the applicable federal law as it affects the appraisal

process in the estimation of market value, which will generally be the basis for determining

just compensation for property acquired by the United States for public purposes. While

state law once controlled procedural matters, since the adoption in 1951 of Rule 71A,

Federal Rules of Civil Procedure, procedural as well as substantive matters in federal

condemnation cases are controlled by federal law.95

State law is sometimes referred to, though not necessarily followed, in resolving the

nature of property rights acquired. The Supreme Court of the United States has stated that

“[t]hough the meaning of ‘property’ . . . in the Fifth Amendment is a federal question, it will

normally obtain its content by reference to local law.”96 It has been judicially made clear

that “[t]his does not mean, however, that every local idiosyncrasy or artificiality in a state’s

concepts, or the incidents thereof, necessarily will be accepted.”97 It is also established that

the United States may elect to acquire whatever interest it deems necessary whether or not

the state recognizes the definition of the interest selected.98

B-2. Market Value Criterion. Under established law, the criterion for just compensation

is the market value of the property taken. As stated by the U.S. Supreme Court:

The United States has the authority to take private property for public use by eminent domain,

but is obliged by the Fifth Amendment to provide “just compensation” to the owner thereof. “Just

94. United States v. 93.970 Acres of Land, 360 U.S. 328, 332-333 (1959); United States v. Miller, 317 U.S. 369, 380 (1943).

95. Kirby Forest Industries, Inc. v. United States, 467 U.S. 1, 3-4 (1984); United States v. 93.970 Acres of Land, 360 U.S.

328, 333, n.7 (1959).

96. United States ex rel. T.V.A. v. Powelson, 319 U.S. 266, 279 (1943).

97. State of Nebraska v. United States, 164 F.2d 866, 868 (8th Cir. 1947), cert. denied 334 U.S. 815.

98. United States v. Little Lake Misere Land Company, 412 U.S. 580, 604 (1973); United States v. Certain Interests in

Property in Champaign County, Ill., 271 F.2d 379, 384 (7th Cir. 1959), cert. denied 362 U.S. 974.

30 Uniform Appraisal Standards for Federal Land Acquisitions

Compensation,” we have held, means in most cases the fair market value of the property on the

date it is appropriated. “Under this standard, the owner is entitled to receive ‘what a willing buyer

would pay in cash to a willing seller’ at the time of the taking.”99

On a number of occasions, the Supreme Court has addressed the issue of market value,

as the measure of just compensation, in federal condemnation cases. The following definition

of market value has been adopted for use by appraisers in applying these Standards to

their appraisals and reports prepared for federal land acquisitions:

Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in all

probability the property would have sold on the effective date of the appraisal, after a reasonable

exposure time on the open competitive market, from a willing and reasonably knowledgeable

seller to a willing and reasonably knowledgeable buyer, with neither acting under any compulsion

to buy or sell, giving due consideration to all available economic uses of the property at the time

of the appraisal.

This definition is based on a compendium of Supreme Court decisions regarding the

definition of market value for federal eminent domain purposes.100 As with most definitions

of market value, this one contains various implicit elements, some of which have “been

hedged with certain refinements developed over the years in the interest of effectuating the

constitutional guarantee” of just compensation.101

In ascertaining market value, consideration should be given to all matters that might be

brought forward and reasonably be given substantial bargaining weight by persons of

ordinary prudence, but no consideration whatever should be given to matters not affecting

market value.102 In developing the generally applied rule that market value is the measure

of just compensation, the federal courts have employed variations of the term market value;as explained by the Supreme Court in

United States v. Miller, 317 U.S. 369, 374 (1943)

(internal citations omitted):

The owner has been said to be entitled to the “value,” the “market value,” and the “fair market

value” of what is taken. The term “fair” hardly adds anything to the phrase “market value” which

denotes what “it fairly may be believed that a purchaser in fair market conditions would have

given,” or, more concisely, “market value fairly determined.”

It is clear from these decisions that the adding of adjectives, such as fair or cash to the

term market value does not alter its meaning for federal acquisition purposes.

The Supreme Court has cautioned that:


strict adherence to the criterion of market value may involve elements which, though they affect

such value, must in fairness be eliminated in a condemnation case, as where the formula is

attempted to be applied as between an owner who may not want to part with his land because of

its special adaptability to his own use, and a taker who needs the land because of its peculiar

fitness for the taker’s purposes. These elements must be disregarded by the fact finding body in

arriving at “fair” market value.103

99. Kirby Forest Industries, Inc. v. United States, 467 U.S. 1, 9-10 (1984) (citations omitted).

100. Almota Farmers Elevator and Warehouse Co. v. United States, 409 U.S. 470, 474 (1973); Kerr v. South Park Commissioners,

117 U.S. 379, 386-387 (1886); United States v. Miller, 317 U.S. 369, 374 (1943); Kirby Forest Industries, Inc. v.

United States, 467 U.S. 1, 10 (1984); McCoy v. Union Elevated R.R. Co., 247 U.S. 354, 359 (1918); United States v.

Reynolds, 397 U.S. 14, 17 (1970).

101. United States v. Reynolds, 397 U.S. 14, 16 (1970).

102. United States v. 50 Acres of Land, 469 U.S. 24, 29 (1984).

103. United States v. Miller, 317 U.S. 369, 375, (1943). See also United States v. Fuller, 409 U.S. 488, 491 (1973).

Section B-2

Uniform Appraisal Standards for Federal Land Acquisitions 31

Likewise, since market value is the test, no consideration should be given in the

appraisal to any special value of the property to the owner not directly reflected in the

market value.104

In this connection, the Supreme Court has noted that “[t]he value compensable under

the Fifth Amendment, therefore, is only that value which is capable of transfer from owner to

owner and thus of exchange for some equivalent. Its measure is the amount of that equivalent.”

105 The Court goes on to state: “If exchanges of similar property have been frequent, the

inference is strong that the equivalent arrived at by the haggling of the market would probably

have been offered and accepted, and it is thus that the ‘market price’ becomes so

important a standard of reference.”106 Accordingly, it is the market price which arises from the

“haggling of the market” which is being sought. When price-controlled property is taken, the

controlled price, being the only lawful market price, is the normal measure of just compensation,

107 as “The Fifth Amendment allows the owner only the fair market value of his property;

it does not guarantee him a return on his investment.”108

It is significant that the federal definition of market value is based on the presumption

that the property, prior to the effective date of valuation, was on the open market for a

reasonable length of time to find a buyer who was ready, willing, and able to consummate a

purchase on the effective date of valuation. The federal courts have not attempted to define a

reasonable length of time, probably in recognition of the fact that such length of time may

vary dependent upon a myriad of factors, such as property type, market conditions, property

location, and price range of property. Nor have the federal courts required that an estimate of

market value be linked to a specified exposure time on the open market, only that it be

reasonable under the circumstances. For that reason, appraisers should not link their estimates

of market value made for federal acquisition purposes to a specific exposure time. To

do so places a limiting condition on the estimate that is not required for federal land acquisition

purposes, and one which may be found to be unacceptable by the federal courts.

The question of what constitutes reasonably knowledgeable buyers and sellers, within

the context of market value, has been addressed. It has been found that reasonably knowledgeable

does not require buyers and sellers to be all-knowing, but rather to have the

knowledge possessed by the “typical ‘willing buyer-willing seller’” in the marketplace: “The

market from which a fair market value may be ascertained need not contain only legally

trained (or advised) persons who fully investigate current land use regulations; ignorance of

the law is every buyer’s right.”109 Consideration should be given to “a relevant market made

up of investors who are real but are speculating in whole or major part.”110 As the same

court explained in a later appeal:


The uncontroverted evidence of an active real estate market compels the conclusion that the

typical ‘willing buyer-willing seller’ requirement of fair market value had been met; it would be

inappropriate for a court to substitute its own judgment of value for that of the market. While an

[appraiser] might be justified in adjusting the fair market value figure by discarding aberrational

values based upon sales between related entities or fraudulent sales to widows and orphans, an

[appraiser] may not discard an entire market as aberrational.111

104. United States v. 50 Acres of Land, 469 U.S. 24, 35 (1984); United States v. 564.54 Acres of Land, 441 U.S. 506, 511

(1979); United States v. Miller, 317 U.S. 369, 375 (1943).

105. Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949).

106. Ibid., 6.

107. United States v. Commodities Trading Corp., 339 U.S. 121, 124-125 (1950).

108. United States ex rel. T.V.A. v. Powelson, 319 U.S. 266, 285 (1943).

109. Florida Rock Industries, Inc. v. United States, 18 F.3d 1560, 1566, n.12 (Fed. Cir. 1994).

110. Florida Rock Industries, Inc. v. United States, 791 F.2d 893, 903 (Fed. Cir. 1986).

111. Florida Rock Industries, Inc. v. United States, 18 F.3d 1560, 1567 (Fed. Cir. 1994).

Section B-2

32 Uniform Appraisal Standards for Federal Land Acquisitions

The Supreme Court has ruled that any alteration in the market value of the property

being acquired that is attributable to the project for which it is being acquired must be

disregarded.112 This subject is discussed in detail in Section B-10. The market value which is

sought is not merely theoretical or hypothetical; it represents, insofar as it is possible to

estimate it, the actual selling price. As has been judicially declared: “where ‘private property

is taken for public use, and there is a market price prevailing at the time and place of the

taking, that price is just compensation.’”113

Even though “[t]he Court has repeatedly held that just compensation normally is to be

measured by ‘the market value of the property at the time of the taking contemporaneously

paid in money,’”114 it has also recognized that deviation from this measure of just

compensation has sometimes been required “‘when market value has been too difficult to

find, or when its application would result in manifest injustice to owner or public.’”115 As

explained by Justice Douglas:

The Court in its construction of the constitutional provision has been careful not to reduce the

concept of “just compensation” to a formula. The political ethics reflected in the Fifth Amendment

reject confiscation as a measure of justice. But the Amendment does not contain any definite

standards of fairness by which the measure of “just compensation” is to be determined. The Court in

an endeavor to find working rules that will do substantial justice has adopted practical standards,

including that of market value. But it has refused to make a fetish even of market value, since that

may not be the best measure of value in some cases.116

This should not be construed to mean that in all instances in which highly similar

comparable sales are unavailable, the courts will disavow the market value measure of

compensation. As the Supreme Court explained:

There may have been, for example, so few sales of similar property that we cannot predict with

any assurance that the prices paid would have been repeated in the sale we postulate of the

property taken. We then say that there is ‘no market’ for the property in question. But that does

not put out of hand the bearing which the scattered sales may have on what an ordinary purchaser

would have paid for the claimant’s property. We simply must be wary that we give these

sparse sales less weight than we accord ‘market’ price, and take into consideration those special

circumstances in other sales which would not have affected our hypothetical buyer.117

The Court has also made it clear that “[t]he ascertainment of compensation is a judicial

function, and no power exists in any other department of the government to declare what

the compensation shall be or to prescribe any binding rule in that regard”118 because themeaning of just compensation is a matter of fundamental constitutional interpretation, and

the ability to make binding interpretations of the Constitution rests only with the United

States Supreme Court.

In short, while the “Court has never attempted to prescribe a rigid rule for determining

what is ‘just compensation’ under all circumstances and in all cases . . . market value has

normally been accepted as a just standard.”119 Thus, these Standards are based on the

premise that the compensation for federal land acquisitions will be measured by the

112. United States v. Reynolds, 397 U.S. 14, 16-17 (1970).

113. United States v. Toronto, Hamilton & Buffalo Navigation Co., 338 U.S. 396, 404 (1949), citing United States v. New

River Collieries, 262 U.S. 341, 344 (1923).

114. United States v. 50 Acres of Land, 469 U.S. 24, 29 (1984) (citations omitted).

115. Ibid.

116. United States v. Cors, 337 U.S. 325, 332 (1949) (citations omitted).

117. United States v. Toronto, Hamilton & Buffalo Navigation Co., 338 U.S. 396, 402 (1949).

118. United States v. New River Collieries, 262 U.S. 341, 343-344 (1923).

119. United States v. Commodities Trading Corp., 339 U.S. 121, 123 (1950).

Section B-2

Uniform Appraisal Standards for Federal Land Acquisitions 33

relatively objective working rule120 of market value as established by the Supreme Courtover 100 years ago.121 It is also for that reason that appraisers are instructed by these

Standards to estimate the market value of property being acquired by the government,

rather than to estimate the just compensation due for the property acquired. The determination

of “just compensation” is beyond the scope of the appraiser’s assignment, expertise,

and authority. If the circumstances of a particular case render the market value measure

“too difficult to find, or when its application would result in manifest injustice to owner or

public,”122 that determination will be made by the court in accordance with applicable law.Buildings and improvements,123 timber, crops, sand, gravel, minerals, oil, and so forth, in

or upon the property are to be considered to the extent that they enhance the market value

of the property as a whole. The total value of the property shall not be estimated by adding

the values of such separate items to the value of the land, and the fact that the various

items are in separate ownerships does not alter this rule. It must be remembered that it is

the market value of the entire property that is the standard of valuation, and not the total

of the money values of the separate items. This subject is discussed in greater detail in

Section B-13 of these Standards. The mere possibility of the existence of minerals, oil, or gas

is not sufficient to affect market value. Such a possibility can be given consideration only

when there is sufficient probability of the presence of mineral, oil, or gas as to affect market

value and when that probability would be given weight by a prudent person in bargaining.

Government-constructed buildings and improvements put on the property during the

government’s prior occupancy (e.g., when the government begins construction of the public

improvement prior to the transfer of title and the effective date of the appraisal, or when the

government made improvements as a prior lessee of the property) are often excluded from

consideration in estimating market value, depending upon the specific facts of the case.

Therefore, appraisers who encounter government-constructed improvements on the property

to be appraised as of the effective date of the appraisal should request written instructions

from the client agency or legal counsel on how the improvements should be treated. 124

120. United States v. 564.54 Acres of Land, 441 U.S. 506, 511 (1979).

121. E.g., Boom Company v. Patterson, 98 U.S. 403, 408 (1878).

122. United States v. 50 Acres of Land, 469 U.S. 24, 29 (1984).

123. Section 302(a) of P.L. 91-646, the Uniform Relocation Act (URA), approved January 2, 1971, 84 Stat. 1905, 42 U.S.C.

§4652 provides:

[n]otwithstanding any other provision of law, if the head of a federal agency acquires any interest in real property in any

State, he shall acquire at least an equal interest in all buildings, structures, or other improvements located upon the real

property so acquired and which he requires to be removed from such real property or which he determines will be adversely

affected by the use to which such property will be put.

The appraiser should receive from the acquiring agency advice as to the requirements of such agency for the

removal of buildings, structures and the identification of these which the head of the agency determines will be

adversely affected by the proposed use of the property. However, appraisers should also recognize that such instructions

may not be applicable if the case is referred to the Department of Justice for condemnation, because Section 102

of the Act provides:

(a) The provisions of section 4651 of this title of the Act [relating to real property acquisition policy and practices] create no

rights or liabilities and shall not affect the validity of any property acquisitions by purchase or condemnation.

(b) Nothing in this Act shall be construed as creating in any condemnation proceedings brought under the power of eminent

domain, any element of value or of damage not in existence immediately prior to January 2, 1971. 42 U.S.C. §4602.

124. In researching this issue, legal counsel may want to start their research by referring to the following cases: Old

Dominion Co. v. United States, 269 U.S. 55, 65 (1925); Searl v. School District, Lake County, 133 U.S. 553, 562-565

(1890); Washington Metropolitan Area Transit Authority v. One Parcel of Land, 780 F.2d 467, 471 (4th Cir. 1986); United

States v. Delaware, Lackawana & Western Railroad Co., 264 F.2d 112, 116-117 (3rd Cir. 1959); Bibb County, Georgia v.

United States, 249 F.2d 228, 230 (5th Cir. 1957), but see United States v. Certain Space in Rand McNally Building, 295

F.2d 381, 383-384 (7th Cir. 1961).

Section B-2

34 Uniform Appraisal Standards for Federal Land Acquisitions

As a general rule, the property being acquired should be valued as of the time of

acquisition, or as near that time as is possible.125 When the appraisal is made after the

taking, no consideration whatever should be given to physical changes, particularly improvements

made by the condemnor, or changes in value occurring after the taking.

Likewise, as discussed in Section B-10, no consideration should be given to or allowance

made for enhancement or diminution in value of the property attributable to or resulting

from the project or from the government’s special need for the property, other than that

due to physical deterioration within the reasonable control of the owner, whether such

changes in value occur before or after the time of acquisition.

B-3. Highest and Best Use. Market value is to be determined with reference to the

property’s highest and best use, that is:

The highest and most profitable use for which the property is adaptable and needed or likely to

be needed in the reasonably near future. . . .126

Such use “is to be considered, not necessarily as the measure of value, but to the full

extent that the prospect of demand for such use affects the market value while the property

is privately held.”127

“Ordinarily, the highest and best use for property sought to be condemned is the use to

which it is subjected at the time of the taking. This is true because economic demands

normally result in an owner’s putting his land to the most advantageous use.”128 In the

conduct of appraisals for federal land acquisition purposes, there is a presumption that the

existing use of land is its highest and best use.129 Therefore, when there is a claim that the

highest and best use of a property is something other than the property’s existing use, the

burden of proving that different highest and best use is on the party making the claim.130

However, if the property is clearly adaptable to a use other than the existing use, its

marketable potential for such use should be considered to the extent that potential affects

market value.131 But, market value cannot be predicated upon potential uses that are

speculative and conjectural; as the Supreme Court has said:

Elements affecting value that depend upon events or combinations of occurrences which, while

within the realm of possibility, are not fairly shown to be reasonably probable should be excluded

from consideration, for that would be to allow mere speculation and conjecture to become a

guide for the ascertainment of value—a thing to be condemned in business transactions as well as

in judicial ascertainment of truth.132

A proposed highest and best use requires a showing of reasonable probability that the

land is both physically adaptable for such use and that there is a need or demand for such

125. That will generally be the date of the appraiser’s last property inspection in voluntary acquisitions. In a declaration of

taking case, the proper time of valuation is the date of filing the declaration of taking or the date of the government’s

entry into possession, whichever occurs first. United States v. Dow, 357 U.S. 17, 21-22 (1958). In a straight condemnation

(without declaration of taking), the date of commencement of trial is used as the date of valuation. See Kirby Forest

Industries, Inc., v. United States, 467 U.S. 1, 16-17 (1984), for a full discussion of the date of valuation question in a

straight condemnation case.

126. Olson v. United States, 292 U.S. 246, 255 (1934). See also Boom Company v. Patterson, 98 U.S. 403, 408 (1878).

127. Ibid.

128. United States v. Buhler, 305 F.2d 319, 328 (5th Cir. 1962).

129. United States v. L. E. Cooke Company, Inc., 991 F.2d 336, 341 (6th Cir. 1993); United States v. 62.50 Acres of Land, 953

F.2d 886, 890 (5th Cir. 1992); United States v. 69.1 Acres of Land., 942 F.2d 290, 292 (4th Cir. 1991).

130. United States v. 62.50 Acres of Land, 953 F.2d 886, 890 (5th Cir. 1992); Tennessee Gas Pipeline Co. v. 104 Acres of

Land, 780 F.Supp. 82, 86 (D.R.I. 1991).

131. Olson v. United States, 292 U.S. 246, 255 (1934).

132. Ibid., 257.

Sections B-2 through B-3

Uniform Appraisal Standards for Federal Land Acquisitions 35

use in the reasonably near future; physical adaptability alone is insufficient.133 “[O]bviously

the more profitable operation must be allowed by law to be carried out on the premises.”134

(See Sections B-23, “Zoning and Permits” and D-6, “Zoning and Other Land Use Regulations.”)

In no event may an appraisal be made on the basis of one use for the land while the

improvements are valued on the basis a different, inconsistent use. (See A-14, “Analysis of

Highest and Best Use”). Various parts of a single property may have different highest and

best uses as long as these uses are not inconsistent (e.g., residential or commercial alongroad or highway frontage and agricultural use for the rear land).135 These differences,

however, may enter into the determination of the larger parcel, which is discussed in

Section B-11. In no event is it proper that the different uses be valued independently and

merely added together to derive a value for the whole property.136

Highest and best use cannot be predicated on a demand created solely by the project

for which the property is acquired (e.g., rock quarry, when the only market is the highway

project for which property was acquired.).137 A proposed highest and best use cannot be theuse for which the government is acquiring the property (e.g., missile test range, habitat

conservation, airfield, park), unless there is a prospect and competitive demand for that use

by others than the government:138

The Supreme Court has recognized the existence of a ‘principle which excludes enhancement of

value resulting from the government’s special or extraordinary demand for the property.’ . . . .The

focal point of the ‘special or extraordinary’ standard is that values resulting from the urgency or

uniqueness of the government’s need for the property or from the uniqueness of the use to which

the property will be put do not reflect what a willing buyer would pay to a willing seller. . . . [I]t is

clear that government projects may render property valuable for a unique purpose. Value for such

a purpose, if considered, would cause ‘the market to be an unfair indication of value,’ because

there is no market apart from the government’s demand.139

Likewise, “[t]he benefit a real estate development produces for a community or the

amenity contribution provided by a planned project (i.e., the public space in a park-like

area) is not considered in the appraiser’s analysis of highest and best use. Highest and best

use is driven by economic considerations and market forces, not by public interest.”140

Therefore, “a non-economic highest and best use is not a proper basis for the estimate of

market value [thus] a highest and best use of conservation, preservation, or other use that

133. Ibid., 256; United States v. 27.93 Acres of Land, 924 F.2d 506, 512 (3rd Cir. 1991); United States v. 33.90 Acres of

Land, 709 F.2d 1012, 1014-1015 (5th Cir. 1983); United States v. 158.24 Acres of Land, 696 F.2d 559, 563 (8th Cir.

1982); United States v. 77,819.10 Acres of Land, 647 F.2d 104, 110 (10th Cir. 1981).

134. United States v. Meadow Brook Club, 259 F.2d 41, 45 (2nd Cir. 1958), cert. denied, 358 U.S. 921.

135. United States v. 179.26 Acres of Land, 644 F.2d 367, 371 (10th Cir. 1981); United States v. 320.0 Acres of Land, 605

F.2d 762, 817 n.124 (5th Cir. 1979); Eagle Lake Improvement Co. v. United States, 160 F.2d 182, 184 (5th Cir. 1947),

cert. denied, 332 U.S. 762; United States v. Carrol, 304 F.2d 300, 306 (4th Cir. 1962).

136. United States v. 91.90 Acres of Land, 586 F.2d 79, 87 (8th Cir. 1978); cert. denied, 441 U.S. 944 (1979); Morton Butler

Timber Co. v. United States, 91 F.2d 884, 888 (6th Cir. 1937); United States v. Jaramillo, 190 F.2d 300, 302 (10th Cir.

1951); United States v. Certain Parcels of Land in Rapides Parish, La., 149 F.2d 81, 82 (5th Cir. 1945).

137. United States v. Cors, 337 U.S. 325, 333 (1949); United States v. 320.0 Acres of Land, 605 F.2d 762, 811 n. 107 (5th

Cir. 1979); United States v. 46,672.96 Acres of Land, 521 F.2d 13, 15, 16 (10th Cir. 1975); J. A. Tobin Construction Co.

v. United States, 343 F.2d 422, 423 (10th Cir. 1965), cert. denied, 382 U.S. 830; United States v. 158.76 Acres of Land,

298 F.2d 559, 560 (2nd Cir. 1962).

138. United States v. Chandler-Dunbar Co., 229 U.S. 53, 80-81 (1913); United States v. 320.0 Acres of Land, 605 F.2d 762,

783 n.26, 811 n.107 (5th Cir. 1979); United States v. 46,672.96 Acres of Land, 521 F.2d 13, 15-16 (10th Cir. 1975).

139. United States v. Weyerhaeuser Co., 538 F.2d 1363, 1366, 1367 (9th Cir. 1976), cert. denied, 429 U.S. 929 (1976)

(internal citations omitted).

140. The Appraisal of Real Estate, 11th ed. (Chicago: Appraisal Institute, 1996), 298 n.1.

Section B-3

36 Uniform Appraisal Standards for Federal Land Acquisitions

requires the property to be withheld from economic production in perpetuity, is not a valid

use upon which to estimate market value.”141

The Department of Justice’s “view is that an appraisal premised on a highest and best use

of ‘preservation,’ ‘conservation,’ ‘natural lands’ and the like is not an appraisal of ‘fair market

value’ and is unacceptable for both direct purchase and eminent domain acquisitions. That

view is largely based on the principles of eminent domain law from which we conclude that a

non-economic use is not a proper basis for assessing fair market value, that a value premised

on a highest and best use of ‘preservation’ or the like does not represent a ‘market’ value, and

certainly does not represent a ‘fair’ value.”142 Therefore, the Department of Justice will not

approve any appraisal report for federal acquisition purposes wherein the value estimate is

based upon an uneconomic highest and best use. Nor will it approve any appraisal report that

incorporates a definition of highest and best use that includes the concept of non-economic

uses. (See A-14, “Analysis of Highest and Best Use.”)

When determining the highest and best use of land riparian to navigable water, there

are special considerations that must be taken into account. See discussion in Section B-14.

Because the highest and best use is a most important consideration in estimating

market value, it must be dealt with specifically in appraisal reports. Many things must be

considered in determining the highest and best use of property and each potential use must

be analyzed in terms of its physical possibility, legal permissibility, financial feasibility, and

its degree of profitability. That use which meets the first three tests and is the most profitable

use (i.e., results in the highest value) is the property’s highest and best use.

Important practical applications of highest and best use estimates arise in connection

with partial acquisitions, such as flowage, conservation, clearance or other types of easements.

The value of the remainder, after a partial acquisition, is governed largely by its

highest and best use. If, for example, what was essentially farmland before the acquisition

has become lakefront property having a highest and best use for recreational home sites,

the important principle of offsetting special benefits discussed in Section B-12, might

become applicable. However, if the acquisition causes the remainder property to have a less

valuable highest and best use, the difference between the values of the property before and

after the acquisition will reflect both the diminution in the value of the remainder resulting

from the acquisition as well as the value of the land or property interest actually acquired.

This is more fully discussed in Section B-11 of these Standards.

Concerning partial acquisitions, the appraiser must consider any material change in the

intensity of use within a highest and best use classification: for example, when a balanced

farm in the before position becomes an unbalanced farm in the after position because of

the partial acquisition by the government.143 The highest and best use classification of an

agricultural farm would cover both positions. However, the two intensities of that use, a

balanced versus an unbalanced farm, would identify the need to carefully re-analyze the

comparative ratings of each of the comparable sales in the after position, or even the need

to use different comparable sales in the after position than were used before the

government’s acquisition.

141. Interagency Land Acquisition Conference, “Position Paper: On the issue whether a noneconomic highest and best use

can be a proper basis for the estimate of market value” (Washington D.C., 1995).

142. William J. Kollins, “Presentation on Issues Raised by the ‘Public Interest Value’ Concept: Views of the Department of

Justice” (Paper delivered at the Annual Meeting of the American Society of Farm Managers and Rural Appraisers, Reno,

NV, November 11, 1994), 4. See also, William J. Kollins, “Public Interest Value,” United States Attorney’s Bulletin

(February 2000): 47-53.

143. For example, in the before position the farm may have a balanced ratio of supporting outbuildings to service the land

area in the farm, whereas in the after position, because of the reduced land area of the farm, the outbuildings may

constitute an over-improvement and thus contribute less value, because of the lessened land area to be served.

Section B-3

Uniform Appraisal Standards for Federal Land Acquisitions 37

B-4. Sales Comparison Approach to Value. Arms length transactions in lands inthe vicinity of and comparable to the land under appraisement,

144 reasonably near the time

of acquisition, are the best evidence of market value,145 but not to the extent of exclusion ofother relevant evidence of value.

146 Such transactions are commonly referred to as comparable

sales, and the process of forming an opinion of the property’s market value through

comparison of such sales transactions with the subject property is known as the sales

comparison approach to value. Too often it has been found in appraisal reports that, under

the circumstances of the case, the most reliable approach to value has been over-shadowed

by the time, attention, and detail given to other less reliable approaches to value.

Comparison of sales transactions to the subject property being appraised is the essence

of the sales comparison approach to value. The basic elements of comparison to be considered

are recognized as:

• Property rights conveyed

• Financing terms

• Conditions of sale

• Market conditions (historically referred to as a time or date of sale adjustment)

• Location

• Physical characteristics

• Economic characteristics

• Use and zoning

• Non-realty components of value included in the sale property147

Accepting the truism that all three of the usual approaches to value are based on market data

interpretation, the federal courts recognize that the sales comparison approach is normally the

best evidence. Adjustments made to comparable sales are often developed by the use of techniques

from the income capitalization and cost approaches to value and, conversely, factors used

in the income capitalization and cost approaches are often derived from comparative market data.

The important role of the sales comparison approach to value in appraisals for federal

land acquisitions is illustrated by the Supreme Court’s statement that: “Where private

property is taken for public use, and there is a market price prevailing at the time and place

of the taking, that price is just compensation.”148 Or, as put by the 10th Circuit: “The best

evidence of such value is like and comparable sales within a reasonable time preceding the

condemnation.”149 The sales comparison approach normally should be stressed and care

144. This would include a prior sale of the land under appraisement, which could very well be the most comparable of all the

comparable sales. See Section B-5, “Prior sales of the identical property,” for fuller discussion of this point.

145. E.g., El Paso Natural Gas Co. v. Federal Energy Regulatory Commission, 96 F.3d 1460, 1464 (D.C. Cir. 1996); United

States v. 819.98 Acres of Land, 78 F.3d 1468, 1471 (10th Cir. 1996); United States v. 24.48 Acres of Land, 812 F.2d 216,

218 (5th Cir. 1987); Nemmers v. City of Dubuque, 764 F.2d 502, 505 (8th Cir. 1985); United States v. 103.38 Acres of

Land, 660 F.2d 208, 211 (6th Cir. 1981); United States v. 100 Acres of Land, Etc., Marin Cty., Cal., 468 F.2d 1261, 1265

(9th Cir. 1972), cert. denied, 414 U.S. 822 (1973); United States v. Upper Potomac Properties Corp., 448 F.2d 913, 918

(4th Cir. 1971); United States v. 344.85 Acres of Land, 384 F.2d 789, 791-792 (7th Cir. 1967); United States v. 60.14

Acres of Land, 362 F.2d 660, 665 (3rd Cir. 1966).

146. El Paso Natural Gas Co. v. Federal Energy Regulatory Commission, 96 F.3d 1460, 1464 (D.C. Cir. 1996); United States v.

819.98 Acres of Land, 78 F.3d 1468, 1471 (10th Cir. 1996); Servalli v. United States, 845 F.2d 1571, 1575 (Fed. Cir. 1988);

United States v. 421.89 Acres of Land, 465 F.2d 336, 338-339 (8th Cir. 1972); United States v. Upper Potomac Properties

Corp., 448 F.2d 913, 917 (4th Cir. 1971); United States v. 344.85 Acres of Land, 384 F.2d 789, 792 (7th Cir. 1967).

147. For a general discussion of these elements of comparison see, The Appraisal of Real Estate, 11th ed. (Chicago:

Appraisal Institute, 1996), 403-414.

148. United States v. New River Collieries, 262 U.S. 341, 344 (1923).

149. Onego Corporation v. United States, 295 F.2d 461, 463 (10th Cir. 1961).

Section B-4

38 Uniform Appraisal Standards for Federal Land Acquisitions

should be taken that it does not get lost among other evidence concerning what the courts

often view as less reliable approaches to value. Because it is the most easily understood

approach to value, it often develops the most acceptable and convincing evidence of the

market value of the property to both the courts and the parties to the transaction.

It is imperative to verify sales amounts and to ascertain whether terms and conditions

of a sale were conventional and under open competitive market conditions. This requires

interviews and discussions with the seller, buyer, the closing agency, or the broker handling

the transaction and the verification of recordation, which is the only avenue of verification

not based upon statements of persons other than the appraiser. Verification must be

accomplished by competent and reliable personnel, and if the case goes into condemnation,

the sale must be personally verified by the appraiser who will testify.

The extent of sales verification will vary with the circumstances of each sale, including

the specific parties involved in the sale and the importance and weight ultimately given to

the sale in the final estimate of value. Sales must be evaluated under two criteria: the

weight, if any, to be given them by the appraiser in arriving at an estimate of market value

of the property under appraisal, and the admissibility of such sale if the acquisition must be

by condemnation. Although the criteria for these evaluations are similar, they are not

identical, and the result of one evaluation does not necessary dictate the result of the other.

For instance, a sale that is found to be inadmissible does not necessarily have to be entirely

excluded from the appraiser’s consideration in deriving an estimate of market value (e.g.,

see discussion of “offers” in Section B-16 of these Standards). Nor is a sale which the

appraiser concluded should be given no weight necessarily inadmissible. The criteria for the

evaluation of sales for purposes of admissibility will be discussed below. Sections A-17, and

D-9 discuss the criteria and required verification process for various categories of sales to

determine the weight, if any, these sales should be given by the appraiser.

However, in determining when to consider, and if so how much weight to give sales in

their appraisals, appraisers should recognize that the criteria established for the admissibility

of sales by the federal courts were established for legitimate and persuasive reasons.

Therefore, one of the factors that should be considered in the selection and weighing of

comparables sales is their admissibility.

Forced sales, i.e., sales made under some form of legal (as distinguished from economic)

compulsion, are generally not admissible in a condemnation trial.150 “A forced sale

is one which has no probative value whatever and therefore must be excluded from evidence.”


151 “The phrase ‘forced sale’ is used in the law of condemnation to describe a sale of

property which is inadmissible as evidence of value because elements of compulsion so

affected the seller that the sale could not be said to be fairly representative of market value

at the time made. This conception of a forced or compulsive sale includes force or compulsion

as a result of some kind of legal process.”152 It has been held that a comparable sale

was not under compulsion, coercion or compromise, such as to be inadmissible in evidence,

if the witness testifies or if it is otherwise shown, that the public records do not disclose that

the sale was at foreclosure, under deed of trust securing an indebtedness, at execution or

attachment, at auction, under the pressure of the exercise of the power of eminent domain,

or under other coercion sui generis – types of legal compulsion generally disclosed by

150. United States v. Certain Land in Fort Worth, Texas, 414 F.2d 1029, 1031-32 (5th Cir. 1969); District of Columbia

Redevelopment Land Agency v. 61 Parcels of Land, 235 F.2d 865, 865-66 (D.C. Cir. 1956); Hickey v. United States, 208

F.2d 269, 275 (3rd Cir.1953), cert. denied, 347 U.S. 919(1954); United States v. 5139.5 Acres of Land, 200 F.2d 659,

661 (4th Cir. 1952); Baetjer v. United States, 143 F.2d 391, 397 (1st Cir.), cert. denied, 323 U.S. 772.

151. Hickey v. United States, 208 F.2d 269, 275 (3rd Cir. 1953), cert. denied, 347 U.S. 919 (1954).

152. Ibid.

Section B-4

Uniform Appraisal Standards for Federal Land Acquisitions 39

public records.153 The motivation behind other transactions can be shown, but only as

affecting the weight that should be afforded a sale, not as to its admissibility.154

Sales to a condemning authority are often inadmissible. (See Section B-18, “Price paid by

government entity for similar property.”) The reasons for excluding sales to a condemning

authority are not applicable, however, to sales by a condemning authority. Sales between

members of a family or closely related business entities are not arms-length transactions, and

since they may involve other factors than market value considerations, such sales are generally

inadmissible. Sales involving the exchange of property are generally not admissible

because they are considered unreliable indicators of market value and introduce too many

collateral issues. As has been explained:

If evidence of . . . an exchange is to be considered as proof of present valuation, the values of such

exchanged lands obviously must be proved by the same standards as attends proof of value of the

property being condemned. Then it becomes the task of the trial judge to determine ordinarily

whether such collateral issues would be so confusing or so lengthy as to cause him to rule out any

effort to prove value of the condemned tract in such a fashion.155

Sales that include personal property (e.g., the sale of a farm that includes the farm

equipment and/or livestock), are likewise considered inadmissible, unless they can accurately

be adjusted to reflect only the real property transaction. Distress sales and sales with

atypical financing terms are of questionable reliability and should be used only with great

care. If want of available market data necessitates reference to such a sale or sales, it is

important that proper adjustments be made.

Sales after the date of acquisition are not per se inadmissible (contrary to popular

belief) and with appropriate caution and restraint may be utilized by the appraiser if they

meet the usual standards of comparability and are not otherwise incompetent as evidence

of value.156 Sales transacted on or before the date of acquisition are the preferred support

for an appraisal and if such sales are available and adequate, there is little justification for

using post-acquisition sales. Use of post-acquisition sales should be avoided where they

reflect artificially inflated or depressed values resulting from the acquisition itself or from

the government’s project,157 or if they significantly post-date the acquisition date.

A binding and unconditional contract of sale, even where title has yet to be conveyed,

is generally competent admissible evidence of value and may be utilized by the appraiser as

a comparable sale.158 However, it is essential that the contract be binding and unconditional.

153. United States v. Certain Land in Fort Worth, Texas, 414 F.2d 1029, 1031-1032 (5th Cir. 1969); District of Columbia

Redevelopment Land Agency v. 61 Parcels of Land, 235 F.2d 865, 865-866 (D.C. Cir. 1956).

154. United States v. 6, 162.78 Acres of Land, 680 F.2d 396, 399 (5th Cir. 1982); United States v. Certain Land in Fort Worth,

Texas, 414 F.2d 1029, 1032 (5th Cir. 1969); District of Columbia Redevelopment Land Agency v. 61 Parcels of Land,

235 F.2d 865, 866 (D.C. Cir. 1956); United States v. Katz, 213 F.2d 799, 800 (1st Cir. 1954); United States v. 5139.5

Acres of Land, 200 F.2d 659, 661 (4th Cir. 1952).

155. United States v. Leavell & Ponder, Inc., 286 F.2d 398, 406 (5th Cir. 1961), cert. denied, 366 U.S. 944.

156. United States v. 68.94 Acres of Land, 918 F.2d 389, 398 (3rd Cir. 1990): United States v. 0.161 Acres of Land, 837 F.2d

1036, 1044 (11th Cir. 1988); United States v. 312.50 Acres of Land, 812 F.2d 156, 157 n.3 (4th Cir. 1987): United States

v. 428.02 Acres of Land, 687 F.2d 266, 270 (8th Cir. 1982); United States v. 320.0 Acres of Land, 605 F.2d 762, 799-803

(5th Cir. 1979); United States v. 691.81 Acres of Land, 443 F.2d 461, 462 (6th Cir. 1971); United States v. 63.04 Acres

of Land, 245 F.2d 140, 144 (2nd Cir. 1957).

157. Ibid. But in the case of a partial acquisition where offsetting of benefits or damages are involved, post-acquisition sales

could be particularly relevant in valuing the remainder. For example, they may also be particularly useful when the

measure of damages is the difference between the market value before and after imposition of an easement. United

States v. 1129.75 Acres of Land, 473 F.2d 996, 999 (8th Cir. 1973).

158. United States v. 312.50 Acres of Land, 812 F.2d 156, 157 (4th Cir. 1987); United States v. 428.02 Acres of Land, 687

F.2d 266, 270-271 (8th Cir. 1982); United States v. 114.64 Acres of Land, 504 F.2d 1098, 1100 (9th Cir. 1974); United

States v. Smith, 355 F.2d 807, 811-812 (5th Cir. 1966).

Section B-4

40 Uniform Appraisal Standards for Federal Land Acquisitions

Mere offers and unexercised options, by contrast, are inadmissible as evidence of value and,

therefore, the appraiser should give little or no weight to such options, except to the extent

that they may set limits of value.159 See Section B-16.

The consideration and weight accorded to sales of other lands is determined by the

reliability of the data collected and verified and by the application of the three tests of

proximity (in time, in location, and in physical and economic similarity). But, the appraiser

should throughly investigate sales that were considered though not relied upon as direct

comparables in reaching a final estimate of market value. Such research material should be

retained in the appraiser’s file. When the comparability, thus admissibility, of a sale is

disputed in the course of a valuation trial, it is a well-recognized principle of law that the

determination of admissibility rests within the sound discretion of the presiding judge,

whose ruling is subject to review only for abuse of discretion.160 Retention of all data

considered by the appraiser in concluding a value estimate will insure that adequate market

data will be available for presentation to a trier of fact if the acquisition has to be accomplished

by condemnation.

B-5. Prior Sales of the Identical Property. Prior sales of the same property,

reasonably recent and not forced, are extremely probative evidence of market value.161

Accordingly, the appraiser has an obligation to determine what the owner paid for the

property. Adjustments for changes in market conditions may have to be made, or the prior

sale may have been made under circumstances that render it irrelevant to the determination

of the market value as of the date of valuation, but each appraisal report must include

a statement with respect to the consideration accorded to the immediate past sale of the

property under appraisal.

The admission into evidence of a sale of the property being acquired is extremely

pertinent, and thus courts have sustained such admissions even when a considerable period of

time has elapsed between the sale and the date of valuation.162 Not only must the appraisal

report include the latest sale of the property (regardless of when it was made) with whatever

statement is deemed relevant to the value as of the effective date of appraisal and any

adjustments made to reflect current value, but these Standards also require the reporting of

all sales of the subject property within 10 years of the date of valuation. (See Section A-13e.)

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HUD recently released Worst Case Housing Needs 2009: A Report to Congress.

HUD recently released Worst Case Housing Needs 2009: A Report to Congress. This report, part of a long-standing series, details major housing problems faced by American renter families. HUD defines the term "worst case needs" as very low-income families who do not receive housing assistance and who either pay more than half their monthly income for rent, or live in severely substandard housing, or both. In 2009, there were 7.10 million worst case needs households — a major (20%) increase over the level previously reported in 2007.

Key Findings:
·  There has been a disturbing overall upward trend in worst case housing needs, with an almost 42% increase since 2001; more than 6% of all households are now facing such needs.
·  Dramatic increases in worst case needs were caused by shrinking incomes, as well as rent increases due to increased competition among low-income families for fewer affordable units.
·  Worst case needs affects all demographic groups and household types. Every racial/ethnic group experienced increases in worst case needs during 2007–2009, with Hispanic households having the largest increase in incidence (8 percentage points).
·  Higher-income families are competing for a limited number of affordable rental units, further driving down already low vacancy rates for the lowest-rent units. Only 36 of every 100 extremely low-income renters have affordable units available to them.
·  The share of worst case needs among very low-income renters with disabilities increased from 37.5% to 40.7% between 2007 and 2009.
·  The availability of affordable rental housing varies across regions of the country. The supply is most scarce in the West, where only 53 units are available per 100 very low-income renter households, compared with 65 in the South, 66 in the Northeast, and 87 in the Midwest.
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February 04, 2011

Eminent Domain & Land Valuation Litigation seminar scheduled for February 17-19, 2011

Eminent Domain & Land Valuation Litigation seminar scheduled for February 17-19, 2011

The 28th Annual American Law Institute-American Bar Association (ALI-ABA) Eminent Domain & Land Valuation Litigation Course will take place Thursday, February 17 - Saturday, February 19, 2011 at the Hyatt Regency in Coral Gables, Florida. The course runs concurrently with ALI-ABA's annual Course of Study, Condemnation 101: Making the Complex Simple in Eminent Domain.

The Eminent Domain course is an advanced level continuing legal education course that features 25 sessions focusing on key issues in eminent domain and property valuation litigation. Some of this years topics including the following:

• Case Study on Columbia University: Defending Against Private Development

• The Interplay Between the Due Process Clause and the Takings Clause

• Challenges and Issues Facing our Departments of Transportation across the Nation

• Ways To Handle the Valuation of Difficult Properties

• High-Voltage Transmission Lines and Their Effects on Residential Property Values

• Right of Way Changes Without a Physical Taking: Is There an Inverse Condemnation Claim?

Condemnation 101 provides an introduction or refresher to basic concepts and techniques of preparing and presenting a condemnation case. This course of study aims at simplifying the complexity of an eminent domain case from initial case planning, understanding core valuation concepts, working with valuation experts, preparing a case to win, and pursuing resolution through mediation or trial.

Interested? There is still time to register. Contact ALI-ABA at (800) 253-6397 or register online here.

Special Offer: Attend Eminent Domain and Land Valuation Litigation and bring an associate to Condemnation 101 for 50% off.

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How can I share my ideas on how the City can make improvements?

How can I share my ideas on how the City can make improvements?


As an important part of the reform process, we need to hear from stakeholders in the development industry. We are inviting key representatives from the business, architecture, and engineering communities to provide us with input regarding Development Reform and needed changes to the City’s system.


The following four focus group meetings will be held specifically for the development industry:




When: February 7, 2011 – 1:30pm-3:30pm


Where: LA Chamber of Commerce
            350 S. Bixel Street
            Los Angeles, CA 90017


San Fernando Valley


When: February 8, 2011 – 9:00am-11:00am


Where: The Valley Economic Alliance
             5121 Van Nuys Blvd., Ste. 200
             Sherman Oaks, CA 91403
When: February 8, 2011 – 8:00am-10:00am

VICA Land Use Committee
            Beverly Garland Holiday Inn
            4222 Vineland Ave.
            North Hollywood, CA 91602


February 10, 2011 – 9:00am-11:00am

City of Los Angeles
             Dept. of Building & Safety
             11620 Wilshire Blvd., 11th Flr.
             Los Angeles, CA 90025
If you have the time and would like to participate, please RSVP at:http://www.surveymk.com/s/4RSVP

Will the community also have opportunities to provide input?

Yes, The City Planning Department is organizing separate forums to solicit community input in February. More information available at: http://cityplanning.lacity.org.

What if I can’t attend any of these meetings and want to share some ideas for how to improve the development process?

If you can’t attend a focus group, the KH-Woolpert team still wants your input. Here is a link where you can share your thoughts: http://www.surveymk.com/s/DevelopmentReform


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Cert Petition Coming In Ninth Circuit Rent Control Takings Case (Guggenheim)

Cert Petition Coming In Ninth Circuit Rent Control Takings Case (Guggenheim)
Posted: 04 Feb 2011 12:01 AM PST
The last chapter in the Ninth Circuit's rent control saga has not been written. In Guggenheim v. City of Goleta, No. 06-56306 (Dec. 22, 2010), a sharply divided
en banc NInth Circuit concluded that Goleta's mobile home rent control ordinance was not a taking under the three-factor regulatory taking test of Penn Central Transportation Co. v. New York City, 438 U.S. 104 (1978). Our resource page on the case is here (includes all opinions and merits and amicus briefs).
Mark Alpert (one of the attorneys for the property owners) reports on his blog California Property Rights Journal:
We are happy to announce that Dan Guggenheim has made the decision to file a cert petition. We are thrilled that Dan has been able to retain former Solicitor General Ted Olson and his appellate team at Gibson, Dunn to lead the effort along with myself and Rob Coldren at HKC.
With a panel decision concluding that the ordinance was a taking, a divided en banc Ninth Circuit holding otherwise, a majority opinion that makes hash of Penn Central, a strong Kozinski dissent, and a Supreme Court heavy hitter on the team, this one is worth following.
Stay tuned.
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February 03, 2011

Best Plaintiff Group Name: Association of Irritated Residents
Posted: 02 Feb 2011 11:11 AM PST
An opinion today from the U.S. Court of Appeals for the Ninth Circuit in 
Association of Irritated Residents v. Envt'l Protection Agency, No. 09-71414 (Feb. 2, 2011)
The case involves whether the EPA properly approved revisions to California's State Implementation Plan for meeting air quality standards for ozone under the Clean Air Act. The court granted the petition and remanded the case to the EPA for further consideration. 
But what really grabbed us was the plaintiff: "Association of Irritated Residents." Oh, we get it: AIR. How cheeky. Reminds me of those catchy names plaintiff's groups often use (see, e.g., United States v. SCRAP (Students Challenging Regulatory Agency Procedures), 412 U.S. 669 (1972)), and the acronyms that float around the land use arena to describe motivation (e.g., NIMBY, BANANA), which we discussed in this post.
But I think "Association of Irritated Residents" is the best. Pretty much one-size
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From: American Housing Survey (AHS)

From: American Housing Survey (AHS) ListServ <ahs@huduser.org>




I am starting to accept proposals for the Data Shop article to be included in the November 2011 of HUD's journal, Cityscape. If you have done any crunchy data analysis recently and would like to share your experience with others who share a taste for such fare, please send me a short abstract by March 22nd. I will make my decision in early April and expect a draft by the beginning of June.


For a formal description of what Data Shop is all about, see http://www.huduser.org/portal/periodicals/cityscpe/vol12num2/ch9.html.


Feel free to share this invitation to anyone in the universe who you might think would want to contribute.


Dav Vandenbroucke
Senior Economist
U.S. Dept. HUD


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February 02, 2011

From: American Housing Survey (AHS) ListServ

From: American Housing Survey (AHS) ListServ <ahs@huduser.org>


A new report based on American Housing Survey data, "Investigating Very High Rent Burdens Among Renters in the American Housing Survey" is available for download from the HUD USER web site, http://www.huduser.org/portal/datasets/ahs/ahsprev.html#analyses.


This report was prepared by Frederick J. Eggers and Fouad Moumen of Econometrica, Inc., under contract with HUD's Office of Policy Development and Research. It takes a look at the puzzling phenomenon present in AHS and other survey datasets: persistently high incidence of renter households paying over 50 percent (in some cases, over 100 percent) of their incomes for housing.


The analysis finds that the AHS shows somewhat higher incidence of high burdens than other sources, but other Census Bureau surveys show fairly high incidence as well. Longitudinal analysis observed the same households "flipping" in and out of the high burden class over time, from changes on both the cost and income sides. A surprising result is that households with high burdens do not move out of their units more frequently than those with lower burdens.


There is some evidence that observed high burdens may be the result of measurement error. For example, data quality checks of survey responses revealed missing or inconsistent responses for households with severe rent burdens. It is possible that, for some of their households, methods used to adjust these responses to create complete and consistent data records resulted in their showing a high rent burden when, in fact, their rent burden was below the worst case needs threshold.


Dav Vandenbroucke
Senior Economist
U.S. Dept. HUD


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