APPRAISAL INSTITUTE SPEECH Introduction Changing Technology Creates Other Change Telegraph Telephone Fiber Optic Come a Long Way Since First Condemnation [Story on First Condemnation] Two Topics 1) Resale or leasing of easement rights for other purposes 2) Appropriate valuation measures for easement corridors Grant or Lease of Easement Rights for other purposes, such as Fiber Optic Railroads, LCRA To what extent can existing easement holder grant rights for other easements within that easement? LCRA case 138 kv tr. line Stringing fiber optic line Replaces Static wire General Rule Easement grants those rights within instrument Condemnation is it for public purpose and is condemnor authorized to condemn for that Landowner s Position No public use
LCRA not authorized under Enabling Act LCRA s Position Primary Purpose for Internal Use Need 138 kv line Need fiber optics for internal use New Technology, fiber optics, means excess capacity Have always had communications lines Only one case in Texas involving fiber optics Mellon case (Mellon v. So. Pacific Transport) SP had railroad row across property SP granted MCI an easement to install fiber optic cable using a portion of cable for MCI s system, provided that MCI give supporting capacity to SP Ct. granted summary judgment for SP Fiber optic could be used for railroad even if portion used for commercial non-railroad purposes Fiber optic an incidental use not inconsistent with current uses Landowner not entitled to any compensation Other cases across country have allowed it under apportionment of easement doctrine Cousins v. Alabama Power Corridor Valuation Ct. held that Alabama Power Co. had right to share with AT&T the fiber optic lines installed as long as no additional burden on landowner. General Rule Landowner compensated for difference in market value - 2 -
Market Value what a willing buyer would pay a willing seller... First, there is nothing about corridor valuation that deviates from this standard Appraiser must still look at H & B use and, if that is corridor property, value it accordingly Second, appraiser must determine what qualifies as a corridor Before H & B use considered corridor property, may need to be more than one other easement What is a corridor? property? Does this mean landowner would be paid more than adjoining Why ever pay more? Can condemn next door? Isn t it already devalued somewhat by existing structures? Landowner already paid for this diminution in value? If other sales used as comparables reflect damage to remainder, would argue that property value already diminished. Comparison of apples to oranges Lease of fiber optic to consumer can t be a comparable E.g., LCRA acquires fiber optic and leases to MCI for $10,000/mo Aside from rule on condemnors sales, lease to MCI not a comparable 1. LCRA paid for fiber 2. LCRA has other costs, row, fiber, marketing, technical If LCRA sells electricity to consumer, not a comparable for tr. line easement LCRA paid to produce power - 3 -
Still go back to diminution in value of land. This is not a partnership. No capital costs or risk undertaken by landowner If S.P. leased tr. line along corridor Possibly, but not likely, a comparable Simply recovering additional revenue that doesn t reflect value of land Location is important issue You may wish to create corridor, but only helps if in path of needed improvement 2 Cases in Texas discuss corridor valuation U.S. v. 8.41 Acres of Land Acquisition of multiple easements for strategic petroleum reserve Already 15 pipeline easements on property and a road Landowner claimed pipeline corridor - used pipeline easement sales Ct. said no No evidence that H & B use for pipeline row Mere fact that landowners hoped these tracts would be acquired for pipeline purposes did not sever them from rest of land Bauer v. Lavaca Navidad River Authority 85 C.Christi 50 wide water pipeline easement Lower court excluded evidence that H&B use of land was for easement row Owner had 35 years experience in acquiring row Negotiated the sale of elec. power line, railroad & 3 pipelines on property before taking - 4 -
All within a 430 strip between FM 1593 and his westward easement Ct. distinguished 8.41 Acres case California cases As early as 1958 property used for easements row and at time of taking 3 pipelines, 2 electric transmission lines, & a railroad in a well-defined corridor Appellant showed existence of pipeline corridor in place ATF method appropriate method 2467457v.1-5 -