Presentation Transcript

1. TLE’s & PLE’s“Afterthoughts” of Eminent Domain Appraisal WisDOT Statewide Real Estate Conference 2013 Chula Vista Resort, Wisconsin Dells
2. Temporary Limited Easement (“TLE”) WI Statutes, 32.09(6g) “In the case of the taking of an easement, the compensation to be paid by the condemnor shall be determined by deducting from the fair market value of the whole property immediately before the date of evaluation, the fair market value of the remainder immediately after the date of evaluation, assuming the completion of the public improvement …” What does this mean for the appraiser?
3. Temporary Limited Easement (“TLE”) Before & after valuation analysis Shortcut methods Appropriate for relatively nominal amounts Keeps appraisal time & fee down 1) Land Lease Comparables 2) Land Cap Rates 3) Land Rent Factor 4) Rent Factor, Occupied vs. Unoccupied Periods
4. 1) Land Lease Comparables
5. 2) Land Cap Rates
6. 3) Land Rent Factor
7. 3) Land Rent Factor
8. 4) Rent Factor, Occupied vs. Unoccupied Periods
9. 4) Rent Factor, Occupied vs. Unoccupied Periods
10. Summary of TLE Methods
11. Permanent Limited Easement (“PLE”) Easement an interest in real property that conveys limited use, but not ownership of a portion of the owner’s property (WisDOT, Real Estate Program Manual) The appraiser must evaluate rights conveyed by the easement read and understand easement document
12. Permanent Limited Easement (“PLE”) What is impact on rights of ownership or bundle of rights? Bundle of Rights Use surface, subsurface, air rights exclusive use vs. shared use Lease Sell Mortgage Give it away Do nothing
13. Permanent Limited Easement (“PLE”) Issues to be considered What is loss of present and future utility of easement area? How can it be used? What is proposed use of easement? Where is easement located? Along property line Within setback area Through middle of parcel In relation to improvements on larger parcel Is future building expansion affected Has there been a change in highest and best use of: Easement area? Remainder parcel?
14. Permanent Limited Easement (“PLE”) Issues to be considered, continued… Can either party make changes to construction or grade after completion? Is property owner required to obtain permission to use easement area? Can property owner construct drives, utilities, etc. across easement area? What are obligations of parties? property taxes insurance maintenance and repair Does easement area provide any benefit to owner? Does easement impact larger parcel?
15. Permanent Limited Easement (“PLE”) Valuation Appraiser should use sound reasoning and logic to determine what percentage of total ownership interest is affected (WisDOT/Real Estate Program Manual) Before & after valuation analysis Comparable sales Severance damages to remainder parcel Shortcut method Appropriate for relatively nominal amounts Keeps appraisal time & fee down
16. PLE Shortcut Method
17. Permanent Limited Easement (“PLE”) Damage Rules of Thumb (What I have seen appraisers use) Significant to severe impact on present and future use: 75% to 100% Some impact on use (ingress/egress rights): 50% to 75% Shared use by parties; no negative impacts on use:± 50% Location along property line or unusable land area: 25% to 50% Location within setback area: 10% to 50% Nominal or no effect on use and utility: 0% to 10%
18. Party Time? Thank you!