Opinion ID: 2493631
Heading Depth: 1
Heading Rank: 20

Heading: Present value of future CIAC

Text: ¶ 42. Regarding future CIAC, although the trial judge stated it's the one that's probably worried me the most[,] Elliott's testimony was admitted because Bear Creek permitted the consideration of CIAC which had been developed and w[as] in but had not been given to Bear Creek at the time of the taking. In so ruling, the trial judge equivocated, stating that I have real questions about that because of ... the way it reads in Bear Creek. See Bear Creek, 416 So.2d at 399. ¶ 43. Gulfport argues that Dedeaux has failed to produce any authoritative source in support of the use of the present value of future [CIAC] in valuing the Certificate. Gulfport further: submits that if Dedeaux can use the present value of the increase in value of its water and sewer lines by way of donated property occurring after the date of taking, then Dedeaux could also get an appraiser to estimate how much its land will increase in value after the date of taking and calculate the present value of the future increase in value of the land. ¶ 44. In response, Dedeaux cites the pretrial order of the trial court which stated, [t]he [c]ourt is of the opinion that the methodology used by [Elliott] as to future revenues and future [CIAC] [is] in accordance with accepted methods of evaluation of a utility business.... According to Dedeaux, Elliott's intangible-asset valuation was consistent with Nichols on Eminent Domain and Bear Creek, and was the same approach that Elliott had used in previous public-utility valuations. Moreover, Dedeaux contends that future CIAC was a significant source of income as the installation of new subdivisions in Dedeaux's service area in 1996 was on-going at a `relatively rapid pace' and had been on-going for years. [16] ¶ 45. In Bear Creek, the Town of Madison, following annexation, petitioned to condemn a portion of a certificate of public convenience and necessity held by Bear Creek Water Association (Bear Creek), a non-profit corporation authorized to distribute water to an area of southern Madison County. Bear Creek, 416 So.2d at 400. [N]o physical facilities or other real property of Bear Creek were included in the proceedings.... [I]n the condemned area, Bear Creek owned only the certificate... granting it the right to distribute water. Id. But, at the time the petition was filed, a subdivision developer had installed water distribution facilities in the condemned portion at an approximate cost of $85,000[,] which had not yet been conveyed to Bear Creek. Id. Regarding the fair market value of the portion of the certificate condemned, this Court stated that: it is essential ... to examine Bear Creek's previous income, its physical assets, their proximity to the area which Bear Creek is precluded from serving, the probability of its receiving the water facilities installed by the subdivision developer, the probability of residential growth, and the likelihood of future revenues from the area. In other words, all of the factors that a businessman or concern would reasonably consider in determining Bear Creek's value in an open market. We think this evaluation must be determined as of the date the eminent domain petition was filed.... Id. at 402 (emphasis added). Based thereon, this Court concluded that future CIAC, in the form of the water facilities already installed by the subdivision developer, was wrongly excluded by the trial court. See id. at 403. ¶ 46. This Court finds Bear Creek distinguishable on the issue of future CIAC. In Bear Creek, the water facilities already had been installed, but not yet conveyed, on the date of taking. See id. at 400. In this Court's estimation, that unique factual scenario dictated the specific reference to the probability of [Bear Creek] receiving the water facilities installed by the subdivision developer.... Id. at 402. Here, there is no evidence of record that any likely future CIAC comparable to that in Bear Creek existed on the date of taking. Dedeaux's attempt to expand Bear Creek 's general reference to the likelihood of expansion and the probability of residential growth to include the consideration of future CIAC is unsupported by any authority. Since Elliott's testimony on future CIAC was based only upon his professional judgment, without reference to recognized authority, this Court finds it too speculative to constitute a valid consideration in intangible-asset valuation. Therefore, this Court concludes that the trial court abused its discretion in admitting Elliott's testimony on the present value of future CIAC. See Pitre, 35 So.3d at 499; Watts, 990 So.2d at 149; Edmonds, 955 So.2d at 792; McLemore, 863 So.2d at 36.