Opinion ID: 1166970
Heading Depth: 2
Heading Rank: 1

Heading: Enhanced Value from the Highway Projects

Text: The primary issue on appeal is whether the superior court erred in considering evidence of value added to the parcels by the expected construction of the two roads. The appraisals submitted by the landowner for parcel four mention the planned extension of Geist Road as a factor in determining the highest and best use of the taken land. The same is true for two of the three appraisals submitted by the landowner for parcel seven. One of the landowner appraisals for parcel one mentions that the access ramp built as part of the new Parks Highway at its intersection with Chena Pump Road creates access to the property at its northwest corner, and goes on to state that the parcel's highest and best use at the time of the taking would be for speculative investment in anticipation of the long-discussed Geist Road extension for which the parcel was ultimately taken. This appraisal concludes that the highest and best use of parcel one would be commercial if the Geist Road extension were connected to the Parks Highway at the Chena Pump Road intersection as planned, and for multi-family residential use if the extension were not completed. [3] Another of the landowner appraisals concluded that the ultimate completion of Geist Road would lead to some commercial development on parcel one in addition to the multi-family residential development projected regardless of the Geist extension. The superior court observed in its decision that the ready availability of utilities to the subject properties was more significant than access in increasing the value of the parcels. However, the court noted that the owners were entitled to receive compensation for parcels four and seven attributable to the planned extension of Geist Road because it was a separate project from the Parks Highway construction for which these parcels were taken. The court concluded that value attributable to the Parks Highway could be considered in determining just compensation for parcel one, taken for the Geist extension, for the same reason. The superior court also concluded that just compensation for each parcel could include value from the expected construction of the Geist extension at least until 1968, because prior to that time no route which would take any of the subject property had been chosen for the project. The state challenges these findings, arguing that although the projects were designated as separate by the highway department, they were part of the same overall plan to restructure traffic flow through the area, and that the superior court erroneously included value from the projects attributable to years since 1968 in its awards. In Alaska, inclusion of value enhancement attributable to the project for which the property is being taken is generally prohibited in determining condemnation awards. AS 34.60.120(3) provides in pertinent part: A decrease or increase in the fair market value of real property before the date of valuation caused by the public improvement for which the property is acquired or by the likelihood that the property would be acquired for the improvement, ... will be disregarded in determining the compensation for the property. This general rule is in accordance with the requirement in the Alaska and United States Constitutions that just compensation be paid for private property taken for public use, [4] since it only prevents a landowner from receiving more value for his property than he would if the government had no use for his land and it was purchased by a private buyer. However, this rule does not preclude an owner from receiving compensation for value added to the property by an unrelated public project which took no portion of the tract involved. As stated in 4 J. Sackman, Nichols' The Law of Eminent Domain § 12.3151(3), at 12-470 (rev. 3d ed. 1979): [I]t has been held that, where property is enhanced in value by reason of a public project and subsequently the property is taken for another unrelated project the owner is entitled to recover the enhanced value brought about by the first project. See United States ex rel. TVA v. 137 Acres of Land, 406 F.2d 1283 (6th Cir.1969). As previously mentioned, the superior court concluded in its findings that the Geist Road extension and the Parks Highway were two separate projects for the purposes of determining just compensation. We agree that this determination is one of fact, which on review we may reverse only if it is clearly erroneous. [5] Our conclusion is supported by precedent holding that a determination in a particular case of whether a parcel is within the original scope of a public project subsequently enlarged to require the taking of the tract is a question for the trier of fact. John L. Roper Lumber Co. v. United States, 150 F.2d 329, 331 (4th Cir.1945); cf. United States v. Certain Lands Located in the Townships of Raritan and Woodbridge, 144 F. Supp. 206, 213-14 (D.N.J. 1956), modified on other grounds, 246 F.2d 823 (3d Cir.1957). On the other hand, the conclusion that determining the scope of a project is a question of law reached in United States v. Reynolds, 397 U.S. 14, 20, 90 S.Ct. 803, 807, 25 L.Ed.2d 12, 18 (1970), and Wardy v. United States, 402 F.2d 762, 763 (5th Cir.1968), is premised on Federal Rule of Civil Procedure 71A(h), which reserves all legal and factual questions, except the determination of just compensation in a jury trial, to the trial judge. There is no comparable rule governing eminent domain litigation in Alaska. In the case at bar, the trial judge acted as fact finder in lieu of a jury. The Wardy opinion characterizes the issue as a legal question, but does so incorrectly in our opinion. Determining the scope of a single project or the relationship between projects involves a determination from documents, testimony, and other evidence of the government's intent at a particular time. Under the clearly erroneous standard of review, we will not reverse a trial court's finding of fact unless convinced, in a definite and firm way, that a mistake has been committed. Alaska Foods, Inc. v. American Manufacturer's Mutual Insurance Co., 482 P.2d 842, 848 (Alaska 1971). We conclude there was adequate evidence in the record here to support the superior court's findings as to separate projects. The projects were designated by the highway department under different numbers, one as a primary road and the other as a part of the secondary road system. [6] The condemnation proceedings for the parcels taken for the Parks Highway began a year prior to that for the parcel taken for the Geist extension, as a separate case, despite the fact that one parcel for the Parks Highway and the one for the Geist project were being taken from the same tract of land. Further the state's appraiser for parcel one considered the projects to be separate for the purposes of valuation, considering the Parks Highway as a given condition in appraising that parcel for the Geist extension taking. Another witness from the highway department also stated that the projects were separate. While the two roads both contributed to diverting traffic from the University area and met at an intersection, the state did not show that constructing either project was dependent upon the completion of the other. The superior court correctly observed that the burden of proving that the projects should be considered as one for valuation purposes was on the state, the party asserting the claim. United States ex rel. TVA v. 137 Acres of Land, 406 F.2d 1283, 1287 (6th Cir.1969). We turn next to the question of whether it was proper to consider value due to the expectancy of the Geist Road extension prior to the choice of the route which would take parcel one in determining just compensation for parcels four and seven. The appraisals for these parcels taken for the Parks Highway only mention value from the Geist extension in their analysis. [7] Two of the landowner appraisals for parcel one, taken for the Geist Road extension, also considered value from that project in determining compensation for that parcel. However, we agree with the superior court's conclusion that value resulting from the general knowledge that the project was planned was proper to consider up to the date the route was chosen that would take parcel one. The applicable exception to the general prohibition against awarding enhanced value from the project for which a parcel is taken is referred to in Nichols' treatise as the indefinite location rule: It frequently happens that the exact site of the projected improvement is not determined until the condemnation proceedings have been actually instituted, and that it is only known in a general way that it will be located in a certain neighborhood. In such case the anticipatory rise or fall of values may affect all land in the neighborhood, and it may be the fact that when a certain location is taken, the land acquired had on the day of the institution of proceedings a greater or lesser market value than it would have had if there had been no preliminary discussion of the improvement. If this modification of values is to be disregarded, an exception to the rule that market value is the test must be recognized. To allow a public agency to depress market values in a particular neighborhood by threatening to erect an offensive structure in its midst, and then to take advantage of this depression in paying for the land required, would be so abhorrent to the public sense of justice that it has never been seriously argued that it could be done. When, however, the situation is reversed, and the preliminary discussion has enhanced the value of the land in the neighborhood, the courts have not been inclined to create an exception to the general rule that market value at the time of the taking is the conclusive test, and have usually held that the owner is entitled to the benefit of the appreciation in value from the general expectation that the improvement for which it was taken would soon be constructed. 4 J. Sackman, Nichols' The Law of Eminent Domain § 12.3151(2), at 12-459 to 12-460 (rev. 3d ed. 1979) (footnotes omitted). This rule derives in part from language in United States v. Miller, 317 U.S. 369, 377, 63 S.Ct. 276, 281, 87 L.Ed. 336, 344, reh. denied, 318 U.S. 798, 63 S.Ct. 557, 87 L.Ed. 1162 (1942), which dealt with the enlargement of an existing project: The question then is whether the respondents' lands were probably within the scope of the project from the time the Government was committed to it. If they were not, but were merely adjacent lands, the subsequent enlargement of the project to include them ought not to deprive the respondents of the value added in the meantime by the proximity of the improvement. [8] Authority to Proceed with the Geist Road project was given in 1964, which was authority to proceed with necessary preliminary studies leading to the selection of a preferred route. A 1962 Department of Highways Development plan showed a planned extension of Geist Road to the Nenana Highway, along a route which would not take any of the subject parcels. The route through parcel one was selected in 1968. Given these facts, we cannot conclude that the superior court's finding that parcel one was not properly within the scope of the Geist Road project until 1968 was clearly erroneous. If some of the appraisals considered by the superior court included value attributable to the period after 1968, as the state alleges, we conclude that any error in admitting that evidence was harmless. [9] The amount of just compensation awarded by the superior court for parcel one was less than the amount determined in an appraisal originally performed for the state which did not consider any value from the extension of Geist Road. [10] Furthermore, the award was considerably lower than the amount suggested in the other appraisals offered by the landowner. [11]