Ptential Impacts frm Temprary Cnstructin Easement Acquisitins Karen Laws Cntra Csta Cunty Public Wrks Department Rbin L. Thrntn, Esq. Greenan, Peffer, Sallander, & Lally LLP
Wh are We? KAREN LAWS ROBIN THORNTON Real prperty divisin manager fr Cntra Csta Cunty in Califrnia. Eminent Dmain attrney in Califrnia serving agencies and prperty wners.
What are we talking abut? Temprary Cnstructin Easements What are they? Hw are they valued? Interest value Temprary Severance Damages Emtinal Distress Lss f Gdwill Factrs t cnsider when cndemning TCEs? Restratin versus cmpensatin fr affected imprvements Permanent imprvements in TCE area Duratin Lss f Gdwill Rights reserved t prperty wner Why descriptins matter?
What Is It? Temprary Cnstructin Easement
Easement Defined
Easement Defined [A]n interest in real prperty that cnveys use, but nt wnership, f a prtin f the wner s prperty. Surce: Dictinary f Real Estate Appraisal
Easement Defined Nichls n Eminent Dmain, 5.07(2)(a): "An easement is a nn-pssessry acquired interest in land f anther. The purpse f an easement is t permit an individual, individuals, the public r ther specified parties the right t use the land f anther fr a specific purpse, such as the laying f pipelines r cable under r ver anther's land. Easements are interests in land and nt cntractual rights t land. An easement is t be distinguished frm a lease, the latter f which is an exclusive right t pssess anther's prperty fr a fixed duratin f time. Easements shuld als be distinguished frm licenses, which are nt interests in land. Generally, easements are als expressed in writing, while licenses are generally ral. Land subjected t the burden f an easement is the servient tenement r estate, while land that benefits frm an easement is labeled the dminant tenement r estate. In the latter case, the easement is then referred t as appurtenant t the dminant estate. Easements are created expressly, implied, established by prescriptive use, r acquired by custm, public trust, estppel r cndemnatin. A private easement in real estate is prperty in the cnstitutinal sense; it may be taken fr valid public uses thrugh the exercise f the pwer f eminent dmain. When ne parcel f land is subject t an easement in favr f anther and the servient tenement is taken fr r devted t a public use that destrys r impairs enjyment f the easement, the wner f the dminant tenement is entitled t cmpensatin. Here it makes n difference whether the servient tenement is taken by eminent dmain and the wner f the easement is awarded a share f the cmpensatin as ne f the wners f the land. Nr des it make a difference that a crpratin having the pwer f eminent dmain and wning r cntrlling the servient tenement makes a use f his prperty destructive f the easement and the wner f the easement is the nly persn damaged. An easement is an interest in land, and it is taken in the cnstitutinal sense when the land ver which it is exercised is taken. But if it is nly destryed and ended, a destructin fr public purpses may als be a taking as wuld be an apprpriatin fr the same purpse. T entitle the hlder t cmpensatin, the easement must be an enfrceable ne and nt a mere privilege enjyed at the will f the wner f the servient tenement. In this case, there is n easement, nly a license t use the prperty, and the license cnfers n interest that requires cmpensatin. When the servient tenement is the subject f a cndemnatin prceeding that is judicial in character, the wner f the dminant tenement is a necessary party. Where the taking f the servient tenement is fr a purpse that will nt interfere with the exercise f the easement, the wner f the dminant tenement need nt be jined." (Ftntes mitted).
Temprary Easement
Temprary Easement Defined An easement granted fr a specific purpse and applicable fr a specific time perid. A cnstructin easement, fr example, is terminated after the cnstructin f the imprvement and the unencumbered fee interest in the land reverts t the wner. Surce: Appraisal Institute, The Dictinary f Real Estate Appraisal, Fifth Editin, Chicag, 2010, p. 195
Primary Questins Can it be cndemned? Hw much will it cst?
Hw Much Des it Cst? Valuing Temprary Cnstructin Easements
Gal f Just Cmpensatin Put landwner in as gd a psitin as it wuld have been if the prperty had nt been taken. Citin v. Redevelpment Agency (1998) 51 Cnn.App. 262, 283; Redevelpment Agency v. Cntra Csta Theatre, Inc. (1982) 135 Cal. App. 3d 73, 83; see als US. v. Miller (1943) 317 US 369, 373.
Just Cmpensatin: Fair Market Value The just cmpensatin t which the prperty wner is entitled is the fair market value f the prperty being taken [and where that prperty is part f a larger parcel, the severance damages, if any t the remainder]. [BAJI 11.72] The term just cmpensatin means just t the wner and als t the public which must pay the cmpensatin. Yu must be fair and just t all parties. [BAJI 11.71] Fair market value is the highest price fr the prperty that a willing buyer wuld have paid in cash t a willing seller, assuming that: 1. There is n pressure n either ne t buy r sell; and 2. The buyer and seller knw all the uses and purpses fr which the prperty is reasnably capable f being used. [CACI 3501]
Cnsideratins When It Cmes t Valuing Easements / TCEs: Scpe: Extent f Interference Term: Hw Lng?
Scpe f the Easement: Mst Injurius Use Test: What has prperty wner lst frm bundle f rights, nt what grantee has gained. City f Ls Angeles v. Decker (1977) 18 Cal.3d 860, 866 What is the standard fr determining the rights cnveyed? the prperty must be valued based n the mst injurius use that may be made f the prperty taken. [See, e.g., Cunty f San Dieg v. Bressi (1986) 184 Cal. App. 3d 112, 123 ( The jury in a cndemnatin actin must nce and fr all fix the damages, present and prspective, that will accrue reasnably frm the cnstructin f the imprvement and in this cnnectin [the jury] must cnsider the mst injurius use f the prperty reasnably pssible. (Peple ex rel. Dept. f Pub. Wks. v. Silveira (1965) 236 Cal. App. 2d 604, 622 [ ] )]. [Silveira, supra, 236 Cal. App. 2d at p. 623 ( In determining the mst injurius use f the prperty reasnably pssible, the jury must cnsider the entire range f uses permitted under the reslutin f necessity ). (Emphasis added)].
Easement Valuatin: Generally Befre and after methdlgy (federal methd) value befre and value after with easement in place. Benefits can ffset cmpensatin fr part acquired. Summatin methd (state methd)- part acquired valued separately frm befre and after. Benefits can ffset damages, but wner always entitled t value f part acquired.
Market Evidence Limitatins Des market evidence f temprary cnstructin easements exist? Is that evidence admissible? NO? Cal. Evid. Cde 822(a)(1): if the acquisitin was fr a public use fr which the prperty culd have been taken by eminent dmain.
Temprary Easement: Valuatin Methds Used Examples: Full fee Rate f return n land* (mst ppular) Lss f use Diminutin in rental value f prperty adjacent t TCE; Nrmal rent Capitalized rent lss Percent f fee value Lump sum N payment Special benefit
Temprary Easement: Valuatin Methds Typical Cmpensatin fr temprary easements is usually based n the ecnmic rent f the affected area fr the term f the temprary easement;. Surce: J.D. Eatn, Real Estate Valuatin in Litigatin
Value Plus: Temprary Severance Damages
Placer Water Agency v. Hfman (1985)165 Cal. App. 3d 890 Owner alleged TCE fr pipeline cnstructin substantially prevented use f the prperty fr cattle and sheep ranching and sught damages in the frm f the cst t rent cmparable ranching facilities. Id. at p. 894. Cmpensatin allwed because taking interfered with Owners actual intended use.
Metrplitan Water Dist. f S. Califrnia v. Campus Crusade fr Christ, Inc. (2007) 41 Cal. 4 th 954
Metrplitan Water Dist. f S. Califrnia v. Campus Crusade fr Christ, Inc. (2007) 41 Cal. 4 th 954 QUICK FACTS: Temprary severance damages claimed fr alleged adverse impact f the prject n Owners ability t use, develp, and market its prperty during the 7-year cnstructin perid. TC excluded evidence, CA reversed, SC reversed CA: Campus Crusade did nt identify any intended use f the prperty during the relevant perid, nr did it identify any specific lss attributable t the delay in cnstructin. If Campus Crusade had sld the prperty during the cnstructin perid and if the nging cnstructin had temprarily lwered the sales price f the prperty, it wuld appear that Campus Crusade wuld be entitled t recver that lss frm MWD. [ ] But the mere fact f a delay assciated with cnstructin f the pipeline did nt, withut mre, entitle Campus Crusade t temprary severance damages related t the financing r marketing f the prperty in this eminent dmain actin. Id. at p. 975.
Metrplitan Water Dist. f S. Califrnia v. Campus Crusade fr Christ, Inc. (2007) 41 Cal. 4 th 954 [w]hen the cndemnatin actin is tried befre the imprvement is cnstructed, and substantial althugh temprary interference with the prperty wner s rights f pssessin r access ccurs during cnstructin, the prperty wner may maintain a subsequent actin fr such damage ccurring during cnstructin. Id. at p. 975 [citing Peple v. Ayn (1960) 54 Cal. 2d 217, 229.
City f Fremnt v. Fisher (2008) 160 Cal. App. 4 th 666 5 yr TCE 6.85 f huse
City f Fremnt v. Fisher (2008) 160 Cal. App. 4 th 666 QUICK FACTS: Appraiser valued temprary severance damages based n the hypthetical reduced price at which the huse wuld have sld during the pendency f the TCE. Hwever, n evidence that the wners intended t sell the prperty during this time. Curt: Withut such evidence, the TCE caused n actual injury t the Fishers. Id. At p. 681. HELD: trial curt had erred in permitting the evidence t prceed t the jury.
City f Fremnt v. Fisher (2008) 160 Cal. App. 4 th 666 The trial curt had t find there was a substantial impairment t the actual intended use f the [Owners ] prperty, nt a substantial impairment t a hypthetical use. The curt heard n evidence supprting a finding that the TCE caused actual injury and therefre [the Owners Appraisers ] testimny n valuatin was inadmissible. Id. at p. 683.
City f Livermre v. Baca (2012) 205 Cal. App. 4 th 1460
City f Livermre v. Baca (2012) 205 Cal. App. 4 th 1460 QUICK FACTS: Takings alng cmmercial frntages t recnstruct and elevate a radway. 5 year TCE with remval f landscaping and driveway clsures (2 f 4, left nly ne usable fr 3 cmmercial buildings - ther clsed by curt rder). Trial Curt: excluded all evidence f permanent and temprary severance damages after 10-day evidentiary hearing. Baca claimed clsure f driveway and remval f landscaping wuld substantially interfere with actual intended use f rental and tenant ccupancy. Appellate Curt fund issue shuld have been submitted t jury b/c Baca had presented sufficient uncntrverted evidence t allw jury t cnsider issue f damages. Evidence f substantial impairment f access based n 1.4 mile 10-mnth detur als shuld have been presented t the jury.
Main Take Aways Regarding Temprary Severance Damages in Califrnia: Substantial interference with actual intended use f the prperty. Nt hypthetical r cnjectural use. Substantial impairment. Nte: in Baca, sme language that may supprt argument that Curt limited substantial impairment t issue f access. (Fund in discussin re perm. dmgs). Must demnstrate actual lsses. Must demnstrate attributable t prject, net general market frces.
Jury Instructins Can Prvide Guidance n Valuatin Rules
Califrnia: CACI Jury Instructin Easements Generally
Sample Jury Instructins Califrnia See Easement instructin. N jury instructin specific t temprary cnstructin easement.
Alaska: Civil Pattern Jury Instructins Easements 27.07A EASEMENT DEFINITION The gvernment has taken an easement in [a prtin f the] land wned by the defendant. The term "easement" means a right t use the land f anther fr specific purpses. After an easement has been taken, the prperty wner has the right t use the land cvered by the easement fr any purpse nt incnsistent with the easement. In rder t cmpute just cmpensatin in this case, yu must determine the fair market value f the easement as f the date f taking. [Yu must als determine whether the wner is entitled t severance damages [and whether these damages shuld be ffset by special benefits].] 27.07B EASEMENT NOMINAL DAMAGES If yu determine that the fair market value f the easement is zer, the gvernment must pay the wner $1.00.
Sample Jury Instructins Califrnia See Easement instructin. N jury instructin specific t temprary cnstructin easement. Alaska Same as Califrnia. Adds nminal value cmpensatin fr easement.
Arkansas: AMI Jury Instructin Temprary Easement AMI 2010 Damages Temprary Cnstructin Easement (The prperty wner)[als] seeks just cmpensatin fr a temprary cnstructin easement taken by (the cndemning authrity). The amunt f just cmpensatin fr a temprary cnstructin easement is the fair rental value f the prperty within the easement area fr the perid f time it [was][will be] used.
Sample Jury Instructins Califrnia See Easement instructin. N jury instructin specific t temprary cnstructin easement. Alaska Same as Califrnia. Adds nminal value cmpensatin fr easement. Arkansas Fair Market Rental Value f prperty within easement area fr time perid it will be / has been used.
Washingtn: WPI Jury Instructin Temprary Easements WPI 150.06.02 Just Cmpensatin Temprary Occupancy Just cmpensatin fr temprary ccupancy f prperty means the reasnable cst f restring the prperty t a cnditin equally valuable as the cnditin befre the ccupancy, plus the fair market rental value f the ccupied prperty fr the term f the ccupancy [, plus any apprpriate reductin in rent during the ccupancy n cntiguus prperty in the same wnership and devted t the same use,] [plus any permanent lss in the value f the ccupied prperty, r cntiguus prperty in the same wnership and devted t the same use, caused by the temprary ccupancy]. [If the ccupied prperty can be rented fr a lesser use during the term f the temprary ccupancy, the measure f damages is the difference in the fair market rent befre the ccupancy and the fair market rent during the ccupancy.] [In determining cmpensatin, yu shall ffset against such cmpensatin any special benefits accruing t the remaining prperty as a result f the prject.]
Sample Jury Instructins Califrnia See Easement instructin. N jury instructin specific t temprary cnstructin easement. Alaska Same as Califrnia. Adds nminal value cmpensatin fr easement. Arkansas Fair Market Rental Value f prperty within easement area fr time perid it will be / has been used. Washingtn Reasnable cst f restring prperty. Fair market rental value f prperty fr perid f ccupancy. Any reductin f rent f cntiguus prperty put t the same use. Any permanent lss f value f easement prperty r cntiguus prperty.
Ptential Issues / Impacts Temprary Cnstructin Easements
POTENTIAL ISSUES: Issue 1: Hw d yu treat impacted imprvements in TCE area? Restratin, Cmpensatin, Preservatin? Replacement cncerns: liability issue? quality judgments? Cmpensatin cncerns: Expense Will a temprary replacement be available during the term f the TCE? (e.g., wells, parking).
POTENTIAL ISSUES: Issue 2: Hw D yu Treat Permanent Imprvements Cnstructed Within A TCE? Driveway Cnfrms, curb cuts. (Culd be frm f mitigatin). Imprvements agency des nt necessarily wish t hld title t, but needs t integrate prperty with prject.
Start and terminatin dates? Flating windws? POTENTIAL ISSUES: Issue 3: Duratin
POTENTIAL ISSUES: Issue 4: Gdwill Added by statute in Califrnia. May be included if nt duplicative f ther cmpensatin awarded. Must exist t be cmpensable. Must be caused by prject. Nt ther causes.
POTENTIAL ISSUES: Issue 5: Access Rights What type f access is reserved t the wner?
Describing the Interest Well Can Help Avid Certain Value Pitfalls Temprary Cnstructin Easement
Example 1: Ptential Issues with Descriptin: -what rights are acquired? -what rights are reserved? -what is the term?
Example 2: Ptential Issues with Descriptin: -what des fr cnstructin purpses mean? *rights acquired? *rights reserved? -what is the term? *flating TCE term
Example 3: Further Defined In Other Dcuments Nte: RON defines extent f acquisitins in Califrnia.
Example 3: Further Defined In Other Dcuments Ptential Issues with Descriptin: -Descriptin? -Term?
Questins? Karen Laws Cntra Csta Cunty Department f Public Wrks 925-313-2228 karen.laws@pw.cccunty.us Rbin Thrntn Greenan, Peffer, Sallander & Lally LLP rthrntn@gpsllp.cm* 925-866-1000 *E-mail if yu wuld like a cpy f tday s slides.