Condemnation Issues for Valuation of Pipeline and Utility Easements

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Condemnation Issues for Valuation of Pipeline and Utility Easements CONDEMNATION ISSUES/UTILITY EASEMENTS CONDEMNATION ISSUES/UTILITY EASEMENTS Presenters: Joseph E. Batis, MAI, R/W-AC [email protected] (815) 726-1455 Joseph C. Magdziarz, MAI, SRA, AI-GRS, AI-RRS [email protected] (815) 482-5909 John M. Spesia, Esq. [email protected] (815) 726-4311 MAJOR PROJECTS & COURT CASES • Enbridge Energy Line 78 Pipeline • Southern Access Extension Pipeline • Flanagan South Pipeline • Southern Access Pipeline • Southern Lights Pipeline • Kinder Morgan/NGPL pipeline • Guardian Pipeline • Enterprise Products Pipeline • Explorer Pipeline • Alliance Pipeline • Aux Sable Liquid Products pipeline • Horizon Pipeline • Rockies Express Pipeline • Aqua Monee-Kankakee water pipeline • Lake Michigan water pipeline project • Northern Border Pipeline • Quantum Pipeline • Keystone Pipeline MAJOR PROJECTS & COURT CASES • Enbridge Energy Line 78 Pipeline • Southern Access Extension Pipeline • Flanagan South Pipeline • Southern Access Pipeline Enbridge Pipelines (Ill.), L.L.C. v. Troyer, 2015 IL App (4th) 1503344 • Southern Lights Pipeline Enbridge Energy, L.P. v. Chicago Title, 2016 IL App (3d) 150201-U • Kinder Morgan/NGPL pipeline Enbridge Pipelines v. Kuerth, 2016 IL App (4th) 150519 • Guardian Pipeline Enbridge Pipelines v. Monarch Farms, 2017 IL App (4th) 150807 • Enterprise Products Pipeline Enbridge Energy, L.P. v. Fry, 2017 IL App (3d) 150765 • Explorer Pipeline Enbridge Pipelines v. Hoke, 2017 IL App (4th) 150544 • Alliance Pipeline • Aux Sable Liquid Products pipeline Enbridge Pipelines v. Temple, 2017 IL App (4th) 150346 • Horizon Pipeline Enbridge Pipelines v. Kiefer, 2017 IL App (4th) 150342 • Rockies Express Pipeline • Aqua Monee-Kankakee water pipeline • Lake Michigan water pipeline project • Northern Border Pipeline • Quantum Pipeline • Keystone Pipeline MAJOR PROJECTS & COURT CASES • Southern Access Extension Pipeline MAJOR PROJECTS & COURT CASES • Southern Access Extension Pipeline • 247 Miles of crude oil pipeline • 1,224 total tracts • 55 Eminent Domain consolidated into 9 trials • $76.2 Million (Landowners’ Claims) 152 acres of pipeline easements • $850,000 Landowner Awards APPRAISAL REPORT 62 Acres of Pipeline Easement $27,950,224 - Damages Pipeline Interference with farming: “An evacuation plan for family “Trees could be genetically altered members … must be made … to have ears of corn as their fruit” If there was a fire, or explosion … human nature would cause an attraction to see the damaging event … The landowners living near the easement must keep a packed suitcase too.” APPRAISAL REPORT 62 Acres of Pipeline Easement $27,950,224 - Damages Results • Appraiser testimony barred • $377,000 Award (right-of-way) • $0 remainder damages TOPICS • SCOPE • METHODOLOGY • BEING PERSUASIVE • DISTINGUISHING YOURSELF SCOPE SINGLE LINE DEFINED EASEMENT SCOPE SCOPE MULTIPLE LINE EASEMENT SCOPE SCOPE SINGLE LINE FLOATING EASEMENT SCOPE SINGLE LINE FLOATING EASEMENT “BLANKET EASEMENT” SCOPE SCOPE HOW WERE THE EASEMENT RIGHTS ACQUIRED? HOW WAS THE PROPERTY (LAND) ENCUMBERED? SCOPE HOW WERE THE EASEMENT RIGHTS ACQUIRED? HOW WAS THE PROPERTY (LAND) ENCUMBERED? BY AGREEMENT ROW DOCUMENT SIGNED BY TWO PARTIES SCOPE HOW WERE THE EASEMENT RIGHTS ACQUIRED? HOW WAS THE PROPERTY (LAND) ENCUMBERED? BY AGREEMENT ROW DOCUMENT SIGNED BY TWO PARTIES BY CONDEMNATION COMPLAINT FILED; DESCRIBES RIGHTS ACQUIRED SCOPE HOW WERE THE EASEMENT RIGHTS ACQUIRED? HOW WAS THE PROPERTY (LAND) ENCUMBERED? BY AGREEMENT ROW DOCUMENT SIGNED BY TWO PARTIES BY CONDEMNATION COMPLAINT FILED; DESCRIBES RIGHTS ACQUIRED BY SUBDIVISION PLAT EASEMENTS IDENTIFIED ON SUBDIVISION PLAT SCOPE COMPLAINT – Rights of Utility Company The property rights sought include a pipeline right-of-way and perpetual easement to lay, construct, operate, maintain, inspect, remove, alter, replace, relocate and reconstruct a pipeline; the right to clear and to keep clear the right-of-way so as to prevent damage or interference with the safe and efficient operation and patrol of the pipeline and right-of-way; the right at any and all times to go upon the right-of-way for any of the foregoing purposes as well as the right of ingress and egress to and from the right-of-way; the right reasonably to limit excavation within the right-of-way or the erection within the right-of-way of any permanent structures, the landowner(s) retaining the right to fully use and enjoy the right-of-way and easement areas in ways that do not threaten the safety, integrity, and operation of the pipeline. SCOPE JURY INSTRUCTIONS When I use the words “Just Compensation” for each defendants’ property which will be taken, I mean the fair cash market value of the property at its highest and best use on the date the complaint was filed. I.P.I. No. 300.80 When I use the expression “highest and best use” of property I mean that use which would give the property its highest cash market value on the date the complaint was filed. I.P.I. No. 300.84 The value of the property within the easement strip is the difference between the fair cash market value of the property immediately before the easement is imposed and the fair cash market value of the property immediately after the easement is imposed. I.P.I. No. 300.54 SCOPE JURY INSTRUCTIONS When I use the word “remainder” I mean the defendant’s property outside the easement strip which defendant claims is damaged by the imposition of the easement. I.P.I 300.86 METHODOLOGY METHODOLOGY METHODOLOGY [W]here a witness has considered improper elements of damage, his testimony will be deemed incompetent *** even though in part based upon proper elements. Trunkline Gas Co. v. O'Bryan, 21 Ill. 2d 95, 100 (1960) METHODOLOGY Mr. Spesia. Appraiser. METHODOLOGY IMPROPER FACTOR [A]ny temporary interference with access to the easement area could not, under the law, cause damage to the remainder property. See Trunkline Gas Co. v. O'Bryan, 21 Ill. 2d 95, 100-01, (1960) (recognizing the settled law that the temporary consequential interference with the use of farm property caused by the construction of a public improvement was not a proper element of damage to the land not taken). Enbridge Energy v. Fry, 2017 IL App 3d 150765, ¶55 METHODOLOGY METHODOLOGY IMPROPER FACTOR We agree with the trial court that [Landowners’ Appraiser] based [his] valuations on numerous improper factors. These inappropriate factors included fear and stigma associated with oil pipelines, potential for oil leaks, and the unfounded speculation that hydrostatic testing would pose unspecified safety concerns. Given our agreement with the court's evidentiary rulings, which essentially barred all of landowners' expected valuation testimony, we also see no reason to disturb the court's grant of directed findings. Enbridge Pipelines (Ill.), L.L.C. v. Monarch Farms, 2017 IL App (4th) 150807, ¶77 METHODOLOGY DEFENDANTS’ APPRAISER’S WITNESS DISCLOSURE Appraiser’s METHODOLOGY When I use the words “fair cash market value” I mean that price which a willing buyer would pay in cash and a willing seller would accept, when the buyer is not compelled to buy and the seller is not compelled to sell. I.P.I No. 300.81 METHODOLOGY IMPROPER FACTOR As we have already noted, landowners' claims regarding the use of comparable sales of other easements to determine the value of the damages to the property caused by the permanent easements at issue in this case have no merit because no such marketplace exists. Enbridge Pipelines v. Kuerth, 2016 IL App (4th) 150519, ¶121 METHODOLOGY DEPOSITION OF CONDEMNOR’S APPRAISER Def’s Appraiser’s files. PERSUASIVE PERSUASIVE • AUTHORITATIVE TEXTS • DOCUMENTS • INTERVIEWS • STUDIES • SALES • EXHIBITS PERSUASIVE - AUTHORITATIVE APPRAISAL EXCERPT PERSUASIVE OBJECTIVE ANALYSIS EVALUATING PIPELINE IMPACT ON VALUE PERSUASIVE - INTERVIEWS TRIAL TESTIMONY OF UTILITY COMPANY APPRAISER PERSUASIVE – ASSESSMENT DATA PERSUASIVE - SALES PERSUASIVE - SALES PERSUASIVE - EXHIBITS RESIDENCE PERSUASIVE - EXHIBITS Lighthouse Pointe September, 2014 Section 15, Frankfort Township, Will County PERSUASIVE – INDEPENDENT APPRAISAL INDEPENDENT APPRAISAL ON SUBJECT PROPERTIES DISTINGUISH DISTINGUISH DISTINGUISH – APPRAISER OPINIONS APPRAISER’S PROPERTY LISTING DISTINGUISH – DEVELOPER OPINIONS DISTINGUISH REAL ESTATE BROKER’S DEVELOPMENT DISTINGUISH - REPORTS DISTINGUISH - REPORTS QUESTIONS Presenters: Joseph E. Batis, MAI, R/W-AC [email protected] (815) 726-1455 Joseph C. Magdziarz, MAI, SRA, AI-GRS, AI-RRS [email protected] (815) 482-5909 John M. Spesia, Esq. [email protected] (815) 726-4311.
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