Opinion ID: 2007897
Heading Depth: 1
Heading Rank: 9

Heading: facts regarding merits of appeal

Text: Installation of water mains on the subject property commenced March 31, 2003. Construction of both the 42- and the 54-inch water mains was completed no later than September 30. MUD's engineer testified that except on Lot 1, the 54-inch water main that ran along Ranch View Drive was located entirely in the public right-of-way and that the 42-inch water main was located both on the private easement and the public right-of-way. David Broekemeier (hereinafter Broekemeier), a co-owner of the development, testified that out of 110 lots in the subdivision, he had 68 lots contracted for sale at the time of the taking and that subsequently, only 18 closed. He attributed the failure to sell the 50 lots to the easements. He stated that the average price for those lots was $60,000 and that he had sold only 31 lots since the taking. Broekemeier also testified the development had been held up by MUD's failure to service the area with 8-inch water mains. Broekemeier claimed he could not sell the lots without water, because the power company would not service the area before the water mains were in place. Ason Okoruwa, a certified appraiser, testified on behalf of Liberty. On direct examination, Okoruwa stated that he had determined the market value for the lots in the subdivision before the easements were taken. He testified that in this particular case, the installation of the water mains vastly affected the market value of the lots on which the water mains were located, as well as adjoining lots. He ascertained the effect on the lots from research and from talking to Broekemeier, who indicated that he lost 50 presales as soon as the purchasers became aware of the water mains. Okoruwa testified that given Liberty could not sell those lots, he had to estimate what were the damages caused by the taking. If there was a low market value for residential lots, the highest and best use changed. He concluded that before the taking of the easements, the highest and best use of the property was residential, and that afterward, it became recreational, park, or open space. He then subtracted the recreational value of the lots from their residential value, and the difference was his estimate of damages. The record indicates Okoruwa testified that the damages to the property actually taken by the permanent easements were $206,000. He opined that the damages to the balance of the lots upon which the easements were located were $892,000. Thus, according to Okoruwa, the total damages to the lots upon which the easements were located were $1,098,000. Okoruwa then testified to the damages to the lots directly adjacent to the permanent easements. The before value of the lots directly adjacent to the lots with permanent easements was $657,000. He opined their value after the easements was $89,000. This amount reflected a difference of $568,000, which Okoruwa stated was the damages caused to the lots that were adjacent to the permanent easements. Okoruwa then gave his opinion as to the damages caused by the temporary easements. He stated that because of the temporary construction easements, Liberty could not sell any of the lots for at least 1 year. He proceeded to determine what he considered was the appropriate rental rate for the lots in the subdivision because they could not be sold. He concluded that the reasonable rental rate, or rate of return, for 1 year on the land was 15 percent. This rate applied to the value of all the lots that were off the market for at least 1 year, which, according to Okoruwa, was the entire subdivision. Okoruwa testified that the value before the construction of the temporary easements was $2,159,000 and that the value after was $1,877,000. The difference of $282,000 was the amount he attributed as damages to the subdivision for being taken out of the market for at least 1 year. MUD objected to Okoruwa's testimony on the basis of foundation, arguing that Okoruwa was relying on statements made to him about effects and events that took place after the taking. MUD's objections were overruled. Okoruwa was then asked to total all the damages about which he testified. He was directed to exclude from his total the amount of any damage that might have been calculated for lots to the south of those described in his testimony. He stated that the damages were $2,418,000. He opined this was the sum that should be awarded to Liberty to compensate it for the takings. MUD's objection based on lack of proper and sufficient foundation was overruled. Thomas Stevens, an appraiser for MUD, testified that the highest and best use of Liberty's property was single-family residential. He stated that in his 40 years of experience in the appraisal business, he had not seen an impact on valuation of a property due to the presence of a water main. He valued the permanent easements at $32,500 and the temporary easements at $17,500.