Status of Landowner's Property Slated for Condemnation
| Publication year | 1985 |
| Pages | 1191 |
1985, July, Pg. 1191. Status of Landowner's Property Slated for Condemnation
In the March real estate column, some sound advice was given to help clients confronted with a potential condemnation of their property.(fn1) The author advised them to "clean up, paint up and fix up" their property within the confines of their financial capabilities. This article carries this commonsense counseling a bit further. It addresses the degree of control that landowners may exercise over their property prior to its condemnation, and offers some helpful guidelines to municipalities and other public entities vested with the power of eminent domain regarding actions they may take toward property slated for condemnation.
A discussion of the prospective condemnee's right to improve and develop property slated for condemnation must start with the general condemnation principle that property owners, acting in good faith, may make such improvements.(fn2) This rule is premised on the judicial recognition that it would be unjust to deprive owners of the right to make the best use of their property except at their peril, merely because it lies in the path of a public project that may never come to fruition. Thus, it has been held that until condemnation proceedings are commenced or title has been transferred to the condemnor, owners are entitled to the full use and enjoyment of their property, including constructing improvements which may increase its market value.(fn3)
In addition to making physical improvements on the property, landowners may increase the value of their property through zoning, utilities, drainage and topographical features and access.(fn4) For example, in one case study, the vacant land increased in value from an original appraised value of $1.6 million to $40 million in the span of four years as a direct result of a step-by-step creative development approach.(fn5) Although this did not involve property slated for condemnation, it shows that remarkable results can be achieved by taking purposeful steps toward enhancing the value of property.
Another example is the recent activity south of the Rocky Mountain Arsenal in Adams County between Buckley Road and Gun Club Road. Plans to expand or relocate Stapleton International Airport in this area and create a noise buffer zone have resulted in a spectacular escalation in land values. Recent newspaper articles claim that asking prices have jumped to as much as $90,000 an acre for vacant land that has been rezoned and promised water and sewer services. It is now estimated that it will cost Denver an additional $15 million over the original calculations to buy the necessary land.(fn6)
Given the potentially dramatic increases in property values, it behooves condemning authorities to act quickly in condemning properties for public projects. The longer the delay between the initial announcement of a public project and the actual acquisition stage, the greater the opportunity landowners have to substantially improve and develop their property, resulting in more expense for the condemning authority.
Property owners may be able to have their property valued at a higher price even though the property has not actually
been rezoned or been substantially developed prior to the institution of formal condemnation proceedings. This is because the law of eminent domain requires that land be valued according to its highest and best use. This means that consideration must be given to all of the uses to which the property may reasonably be applied in the future by those of ordinary prudence and judgment.(fn7) In other words, compensation in an eminent domain proceeding is not limited to the value of the property for the use to which it is devoted at the time of the taking; if another use is reasonably probable, it can be considered.(fn8)
In applying the highest and best use concept, condemnees may be able to have their property valued at a higher price than that generated by the existing zoning if a rezoning of the property is reasonably probable. In Stark v. Poudre School District R-1,(fn9) the Colorado Supreme Court reversed and remanded a Court of Appeals decision precluding commissioners appointed in a condemnation case from considering the probability of rezoning as "it would reasonably be reflected in present market value." The court ruled that the condemnee's expert witnesses, who were familiar with property values as well as the zoning history and practices in the area in which the land was located, were clearly qualified to give their opinions on the probability of rezoning.(fn10)
In a more recent case, State Department of Highways v. Mahaffey, the Colorado Department of Highways argued that the trial court should not have allowed respondents' appraiser to testify regarding the income-producing potential of their property for gravel extraction since it was non-income producing on the date it was taken.(fn11) The Colorado Court of Appeals disagreed, holding that there was sufficient evidence in the record as to the quality and quantity of gravel on the property, as well as a market for the gravel. The fact that there was no commercially established gravel operation on the land or that...
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