A big thanks to the Appraisal Institute – Greater Oregon Chapter for hosting the January 20, 2017 seminar entitled “Preparing Appraisals for Condemnation Assignments, and How to Improve Skills as an Expert Witness.” I was honored to present the day-long seminar alongside Don Palmer, MAI, of Appraisal & Consulting Group LLC. Don is one of the deans of condemnation appraisers in Oregon and the Pacific Northwest, and a true gentleman. We had a great turnout, a wealth of questions and comments, and much positive feedback. I look forward to future opportunities to work with this great group of appraisers. Finally, a special thank you to Vicki Champ, the Chapter’s executive director. Vicki is a pleasure to work with and a true professional.
The City of Lake Oswego is moving forward with its Boones Ferry Road Project, which calls for the widening of Boones Ferry Road from Madrona Street to the Oakridge Road/Reese Road intersection, together with associated public improvements. As set forth on the Project’s website, the Project includes:
- Four vehicular travel lanes
- Landscaped medians with vehicular turn lane improvements
- New, safer sidewalks with street trees, lighting, street furniture and landscaping
- Two new signalized intersections and two new pedestrian crosswalks
- Bike lanes in each direction
- Improved storm drainage systems
- Undergrounding of utilities
- Pedestrian crossing at Lanewood
The City of Lake Oswego is targeting the taking of 50 properties in whole or part. While this Project serves a legitimate public purpose, whether the owners of the impacted properties will receive just compensation is another matter.
According to press coverage, the City is armed with condemnation resolutions and will soon commence taking property through eminent domain if “negotiations” are not successful. Property acquisitions are scheduled to take place through 2017, with construction to commence in 2018.
From all indications, Washington County has begun filing condemnation actions against property owners with whom it has not reached “agreement” on its Farmington Road Project.
As I noted in my post on the Project earlier this year, it calls for the widening of Farmington Road from Murray Boulevard to Hocken Avenue.
In road widening projects such as this one, which result primarily in partial “strip takings,” the often-found fundamental tension between the government’s approach and just compensation is the government’s propensity to ignore or minimize damages to the value of the property remaining after the taking. Unfortunately for property owners, such damages can be significant, even if the strip taken is relatively small. In addition to factors such as an increased proximity to travel lanes and attendant noise, property owners can be faced with adverse impacts to access, parking, on-site vehicle maneuvering, and conformity with set-backs and other development requirements. In certain situations, the highest and best use of the property can take a hit, potentially resulting in very significant damages.
Fortunately, property owners have a constitutional right not to have their just compensation minimized. Vindicating that constitutional right, however, requires action and standing up to the government.
The steering committee for Metro’s Powell-Division transit project has spoken. Moving forward, it will focus on bus rapid transit (BRT) options, dropping from considering street car and light rail options.
The unanimous vote came as committee members said they were focused more on a project that could be built soon and require substantially less private property acquisition and roadway impacts than a rail project.
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The committee also voted unanimously to focus on a transit route that would use Powell Boulevard in inner Portland, then jog north to Division Street somewhere between 52nd and 92nd avenues, before heading east to Gresham. The route could then extend as far east as the Mt. Hood Community College campus near Troutdale.
For more on the Powell-Division project, see my earlier post.
Metro is moving forward with preliminary planning for its “Powell-Division Transit and Development Project.” For this “high capacity transit” project–meaning most likely light rail or bus rapid transit–Metro is currently soliciting input from the public and the Project’s steering committee regarding transit type, route, station areas, and redevelopment opportunities. Similar to Metro’s “Southwest Corridor” planning, such move was foretold by Metro’s 2009 High Capacity Transit Plan, which sets forth its vision and priority for high capacity transit projects across the Portland metropolitan area.
The Powell-Division corridor, as currently envisioned, stretches from downtown Portland to Gresham. As the name of the Project indicates, the corridor centers on SE Powell Boulevard and SE Division Street for much of its length. A “Project Atlas” published by Metro provides a many-layered view of the corridor area.
As noted above, the planning for the Project is currently in its public input phase, after which the Project team will decide on a preferred mode of transit and preferred route. The Project’s published timeline, from its most recent fact sheet, indicates that the Project team will make a final decision on mode and route recommendations in Winter 2015.
Whatever route and mode of high capacity transit is ultimately chosen, many properties, homes and businesses will likely be impacted. While many elements of the Project appear to serve legitimate public purposes, whether the owners of the impacted properties will receive the just compensation to which they are constitutionally entitled is a wholly different matter. It will also be interesting to see how the Project implements its development goals.
Metro has set its sights on the “Southwest Corridor” as the region’s next area for construction of “high capacity transit,” meaning most likely light rail or rapid bus transit. Such move was foretold by Metro’s 2009 High Capacity Transit Plan, which sets forth its vision and priority for high capacity transit projects across the Portland metropolitan area.
The Southwest Corridor, as currently envisioned, stretches from downtown Portland to Tualatin. It centers on SW Barbur Blvd/99W for much of its route, working its way through Tigard, and then south through the Bridgeport area to downtown Tualatin.
The planning for the project is currently in its “refinement phase,” in which the stakeholders will zero in on a preferred mode of transit and preferred route. “Recommended routes for further discussion” are set forth in Metro staff’s May 5, 2014 report. The Project’s published timeline indicates that the Project’s steering committee will make a final decision on design options in June 2014.
Whatever route and mode of high capacity transit is ultimately chosen, many properties, homes and businesses will likely be impacted. While this Project appears to serve a legitimate public purpose, whether the owners of the impacted properties will receive the just compensation to which they are constitutionally-entitled is a wholly different matter.
In the event the government decides to take your property, you will most likely receive a visit from a “right of way agent” who will present you the government’s “offer” to acquire your property. This post explores what that “offer” typically looks like and what next steps you need to think about.
What kind of communication from the government will accompany the offer?
The government must attempt to reach agreement with you on the fair market value of the property and its acquisition. ORS 35.235(1). Without such an attempt, the government cannot initiate a condemnation lawsuit. ORS 35.245(1). As part of this negotiation, the government must make you an unqualified offer based upon what the government contends is the just compensation for the property. The offer will be in the form of a letter from the government or a private right of way agent with whom the government has contracted.
What is the government’s offer based upon?
In most cases, the government’s offer must be accompanied and supported by a written appraisal. ORS 35.346(2). However, if the government determines that the amount of just compensation is less than $20,000, it may provide you with a “written explanation of the bases and method” by which it arrived at fair market value, in place of a formal appraisal.
The offer mentions possible environmental issues. What is this about?
As part of the appraisal process, the government will often times conduct an environmental review of the targeted property. This review is looking for evidence of possible environmental contamination stemming from present or past uses of the property. A common example giving rise to governmental concern is the presence of an underground storage tank for petroleum products. If the government determines that the property will require some level of environmental remediation, it may seek to have associated costs deducted from the determination of just compensation.
Am I entitled to relocation compensation?
Yes, property owners, as well as tenants, are often entitled to reimbursement for certain relocation and business reestablishment costs resulting from displacement from the taken property. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, 42 U.S.C. § 4601 et seq.; ORS 35.500 to 35.530. Relocation compensation is determined by an administrative process different from the process used to determine just compensation for the taking of the property.
Am I entitled to loss of value to my business?
Technically, no. In the event of a partial taking of property, however, the taking could affect your ability to use the property for a particular business purpose, which also happens to be its highest and best use—for example, a restaurant adjacent to a highway. If the taking results in a less intensive highest and best use, you may be entitled to resulting damages.
Are there benefits to securing a team of experienced advisors in responding to the offer?
Yes, definitely. A team of advisors experienced in condemnation matters can help you achieve just compensation, advise you on relocation issues, and assist you with tax planning in regard to the proceeds of condemnation. Your team may include a condemnation attorney, appraiser, relocation specialist, real estate broker, and tax planner. In certain circumstances, you may need to also enlist the services of, among others, surveyors, land use planners, architects and engineers.
How much time do I have to respond to the offer? Do I have to accept or reject the government’s offer within this time?
The government must give you at least 40 days to respond to the offer before filing a condemnation action. ORS 35.346(1). It is important to note, however, that you are not required to respond to the offer. If you fail to respond, you will be deemed to have rejected the offer. The government may then initiate the condemnation action, but negotiations will most likely continue regarding fair market value and the government’s acquisition of title up to and through the litigation process.
If I reject the offer or do not respond to it, will the government lower its offer?
No, the government generally cannot lower its offer as a negotiation strategy. For practical purposes, the government’s initial offer represents a floor for the negotiations regarding just compensation. As a matter of law, the government cannot lower the amount of its initial offer except upon an order of the court, and that order cannot be entered less than 60 days before trial. ORS 35.346(2).
Should I obtain an independent appraisal?
Yes, in most circumstances, you should obtain an independent appraisal. Though the appraiser contracted by the government is a professional and bound by professional standards, he or she is hired by the government. You also need an analysis performed by an independent professional. Further, if you know the government’s offer is imminent, obtaining an independent appraisal before receiving the offer will, in certain situations, provide you and your advisors the necessary information to develop a proper negotiation strategy.
Washington County and the City of Beaverton are moving forward with their Farmington Road Project, which calls for the widening of Farmington Road from Murray Boulevard to Hocken Avenue. As set forth on the Project’s website:
Farmington Road, between Murray Boulevard and Hocken Avenue, is a heavily-used four-lane section of roadway that lacks continuous bicycle and pedestrian facilities.
This project will make needed safety and traffic capacity improvements to this section of Farmington Road, for all modes of transportation.
■ Widening the roadway to five lanes (two travel lanes in each direction with a center turn lane)
■ Continuous bicycle facilities
■ Continuous pedestrian facilities
■ Street lighting
■ Realign 141st and 142nd Avenues
An aerial strip map showing the extent of the takings and impacted properties is found here. While this Project appears to serve a legitimate public purpose, whether the owners of the impacted properties will receive the just compensation to which they are constitutionally-entitled is a wholly different matter.
The Project’s published schedule indicates that the government has begun “right of way acquisition,” which will continue into the Fall of 2014. Construction was slated to begin in the Spring of 2015, but has been accelerated to the Summer of 2014 according to recent reports.
The government wants to take your property, and you’ve heard that if “negotiations” with the government don’t work out, a lawsuit will result. There are a lot of myths and misconceptions surrounding litigation, including condemnation litigation. Let’s shed some light on the subject.
What gives rise to a condemnation lawsuit? Who files the lawsuit?
If you cannot reach agreement with the government as to just compensation after initial negotiations, the government must file a condemnation lawsuit to obtain possession of and title to the property. The condemnation lawsuit is formally initiated by the filing of a “Complaint.” The Complaint will name the property owner and, typically, all holders of legal interests in the property (mortgage lenders, etc.) as defendants in the lawsuit. ORS 35.245. The Complaint will also describe the government’s eminent domain powers, allege that the property is necessary for a particular public use, and allege the amount the government contends is just compensation. ORS 35.255. The government’s just compensation allegation will most likely restate its original offer to you.
Is arbitration available?
Yes, arbitration is available in certain circumstances at the election of the property owner. Arbitration is a process similar to trial, but less formal. In arbitration, rather than have a judge or jury decide the case, an experienced attorney or retired judge acts as the sole decision maker or “arbitrator.” If the total amount claimed by any party as just compensation does not exceed $20,000, you may elect binding arbitration, meaning that the decision of the arbitrator is final and not appealable except for very limited reasons. If the total amount claimed by any party exceeds $20,000, but is less than $50,000, you may elect non-binding arbitration, which allows either party unsatisfied with the outcome of the arbitration, to appeal the case for a normal trial. ORS 35.346(6).
How long does the lawsuit take?
A condemnation lawsuit may last between 12 and 24 months if it goes all the way through trial. That being said, the lawsuit can possibly settle at any time.
What happens in the lawsuit before the trial?
Prior to the trial, there are a number of important milestones following the Complaint.
• Immediate Possession: If the government needs immediate possession of the property, which is often the case for construction purposes, it will typically file a “Notice of Immediate Possession” at or near the time of the Complaint. ORS 35.352. The Notice of Immediate Possession basically moves the court for an order allowing the government to take possession of the property prior to the trial and judgment on its value. Except in the most extreme of cases, the court grants such requests.
• Deposit of Funds by Government; Property Owner Withdrawal: In order to obtain immediate possession, the government must deposit with the court what it contends is just compensation for the taking of the property. ORS 35.265. Upon order of the court, you are then permitted to withdraw those funds from the court without prejudicing your case. ORS 35.285. The withdrawal process can be more complicated if there is more than one defendant.
• Property Owner’s Answer: Your “Answer” is the formal response to the government’s Complaint. It is generally due 30 days after the filing and service of the Complaint, and failure to timely file an Answer may result in you being “defaulted” or forfeiting the right to contest the government’s contention of just compensation. The Answer responds to the government’s allegations, sets forth any available defenses to the government’s exercise of its eminent domain power, and alleges the amount you believe to be just compensation for the property taken and, as applicable, damages to the remaining value of the property. ORS 35.295. In certain situations, you may also allege in coordination with the Answer counterclaims against the government, including those for “inverse condemnation.”
• Discovery: “Discovery” is the formal process by which parties to a lawsuit obtain documents and information from each other prior to trial. This process may involve requests for production of documents, requests that parties admit certain facts, and depositions of parties. The parties may also request documents from and depositions of third parties by way of subpoena. In Oregon state court, there is no “expert discovery,” so a party may not seek documents from or depose the other party’s appraiser and other experts prior to trial.
• Exchange of Appraisals: While the government must in most cases provide the property owner an appraisal with its original offer, and the parties may exchange subsequent appraisals at any point in the process as part of their negotiations, Oregon law requires the exchange of appraisals at certain times prior to trial. Appraisals not exchanged prior to trial cannot be used at trial. ORS 35.346(5).
• Settlement Conference or Mediation: Many courts will require the parties to engage in a judicial settlement conference before allowing a case to proceed to trial. The parties may also engage in private mediation.
• Pre-Trial Motions; Jury Instructions: Immediately prior to trial, the parties will typically file motions with the court seeking the exclusion of certain evidence that may be irrelevant, unduly prejudicial, or otherwise inconsistent with the rules of evidence. These motions are designed to limit the information that reaches the jury, and the orders arising from them are very important to how the case is tried. The parties will also propose to the court instructions the judge should give to the jury regarding the law the jury must implement. The court’s wording of the jury instructions can significantly influence the conduct of the trial and the jury’s verdict.
• Jury Selection: The jury selection process is technically part of the trial, but it takes place prior to what most people think of the as the beginning of the trial—opening statements. The jury selection process entitles the property owner and the government to question and challenge potential jurors in a process called voir dire. More art than science, jury selection can have major impacts on the outcome of the trial.
Will I testify?
Yes, in many cases you, as the property owner, may testify regarding your opinion of the value of the property taken and, as applicable, the damages to the remaining value of the property.
Who else will testify?
Depending on the nature of the taking, a variety of fact and expert witnesses may testify at trial as to just compensation. These witnesses will include, in the least, the respective appraisers hired by the government and the property owner.
Will the jury view my property?
Yes, in many cases the jury will take a court-sanctioned “field trip” to view the property. Either party may request the jury view by motion to the court prior to the formation of the jury. ORS 35.315. In many cases, by the time of trial and the jury view, the government has taken possession of the property and the project for which the property was taken is under construction or complete. The jury view typically happens right before or right after the lawyers’ opening statements to the jury.
How long will the trial take? How does it progress?
Generally, a trial on a condemnation action will take four days. Depending on the complexity of the case and the number of witnesses for each side, the trial could last longer. After the steps already described above (jury selection, jury view, opening statements), and if the property owner elected to proceed first in the presentation of evidence under ORS 35.305, the property owner’s lawyer will present its case through the testimony of witnesses and presentation of documentary and demonstrative evidence. The government’s lawyer will then present its case in a similar fashion. After the parties are given the opportunity to call rebuttal witnesses, the court will give the jury its final instructions on the law, the lawyers will give closing arguments, and the jury will retire for deliberations on the verdict. It should be noted that the order of the trial may be altered by the judge in certain respects.
What happens after the jury returns a verdict?
The verdict is reduced to a judgment, which is a document that states the just compensation the government must pay the property owner. Upon the government satisfying the judgment, it also operates to transfer title to the property to the government. ORS 35.325. In many cases, the property owner is also then entitled to petition the court for an award of attorney fees and costs. Based upon the court’s determination of the property owner’s reasonable attorney fees and costs, a supplemental judgment is typically entered requiring the government to pay the property owner in such an amount.
What kinds of fees and costs are involved in such a lawsuit?
Property owners can expect to incur attorney fees, expert witness fees, filing fees, the costs associated with appraising the property, related planning and engineering costs, and general expenses associated with litigation. Depending on the nature of the case, other types of fees and costs may be incurred. The amount of fees and costs varies widely depending on the complexity of the matter, the length of the dispute, and other factors.
Can I recover my fees and costs from the government?
In many cases, yes. Oregon law allows a property owner to recover fees and costs, as determined by the court, in three instances:
• If the amount of just compensation determined by the jury exceeds the government’s highest written offer in settlement submitted to the property owner before the government filed its Complaint, ORS 35.346(7)(a);
• If the court determines that the first written offer made by the government before filing the Complaint did not constitute a good faith offer of an amount reasonably believed by the government to be just compensation, ORS 35.346(7)(b); or
• The government “abandons” the condemnation lawsuit by dismissing it or filing an election not to take the property after the jury’s verdict, ORS 35.335.
If the government does not abandon the action, its first offer was in good faith, and the jury’s determination of just compensation does not exceed the government’s highest written offer before filing its Complaint, the government is entitled to a judgment against the property owner for certain limited costs and disbursements, but not attorney and expert witness fees. ORS 35.346(9).
The amount of fees and costs to which you are entitled may be affected by an “offer of compromise” by the government. An offer of compromise is a formal offer by the government to settle the case after filing the Complaint. If you do not accept the offer of compromise, but do not obtain a judgment after trial in an amount greater than the offer, your entitlement to fees and costs can be reduced and the government’s entitlement to costs and disbursements can be increased. ORS 35.300.
Finally, attorney fees and costs should be included in negotiations with the government, and they are often accounted for in settlement agreements reached with the government.
Can either side appeal? Am I entitled to fees and costs on appeal?
Yes, either the government or the property owner may appeal a judgment of the court. An appeal, however, will not prevent the government from taking possession of the property and using it for the designated public use. If you prevail on appeal, you are entitled to an award of reasonable attorney fees and costs incurred during the appeal process. ORS 35.355.
What is the effect of withdrawing funds awarded by the jury on my appeal rights?
If you withdraw from the court the compensation awarded by the jury and deposited by the government (as opposed to the government’s original deposit of its contention of just compensation), you will likely waive your right to appeal. ORS 35.365.
Washington County is moving forward with its 124th Avenue Project, which calls for the construction of a two-lane arterial from Tualatin-Sherwood Road to Grahams Ferry Road. As set forth on the Project’s website:
The primary purpose of the proposed Project between Tualatin-Sherwood Road and Grahams Ferry Road is to provide access to land designated for future industrial development and jobs on unincorporated, developable land between the cities of Tualatin, Sherwood, and Wilsonville.
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The project area is situated in the unincorporated southeastern portion of Washington County between the City of Sherwood to the west, the City of Tualatin to the east, and the City of Wilsonville to the south. The northern terminus of the Project is the existing three-legged intersection of Tualatin-Sherwood Road and SW 124th Avenue that extends north from Tualatin-Sherwood Road. The southern terminus of the Project is Grahams Ferry Road.
Washington County has elected to construct “Option 4,” which targets the taking of 33 properties in whole or part. While this Project undoubtedly serves a legitimate public purpose, whether the owners of the impacted properties will receive just compensation is another matter.
The Project’s published schedule indicates that Washington County will begin “right of way acquisition” in the Summer of 2014, with construction slated to begin in the Spring of 2015.