Opinion ID: 2525141
Heading Depth: 3
Heading Rank: 2

Heading: Landowner Testimony as to Highest and Best Use

Text: ¶ 17 Having determined that Hildale did not waive its right to appeal the admissibility of the Cookes' highest and best use testimony, we now address the merits of the City's argument that the trial court erred by allowing the Cookes to testify to highest and best use. ¶ 18 Municipalities in Utah have long had authority to exercise the power of eminent domain. See Utah Const. art. XI, § 5. At the same time, however, that authority is constrained both constitutionally and statutorily. Article I, section 22 of the Utah Constitution states, Private property shall not be taken or damaged for public use without just compensation. In awarding just compensation to landowners who have had their property condemned, section 78-34-10 of the Utah Code provides: The court, jury[,] or referee . . . must ascertain and assess: (1) the value of the property sought to be condemned . . . ; [and] (2) if the property sought to be condemned constitutes only a part of a larger parcel, the damages [that] will accrue to the portion not sought to be condemned by reason of its severance from the portion sought to be condemned. . . . Utah Code Ann. § 78-34-10 (1996). ¶ 19 Just compensation means that the owners must be put in as good a position money wise as they would have occupied had their property not been taken. State v. Noble, 6 Utah 2d 40, 43, 305 P.2d 495, 497 (1957). In other words, The measure of damages [in a condemnation case] is . . . the market value of the property . . . . The accepted formula for determining fair market value is not how much would the property produce over a period of fifteen years, but what would a purchaser willing to buy but not required to do so, pay and what would a seller willing to sell but not required to do so, ask. Noble, 6 Utah 2d at 44, 305 P.2d at 498; see also Sigurd City v. State, 105 Utah 278, 289, 142 P.2d 154, 159 (1943). ¶ 20 Likewise, in cases where a partial taking results in severance damages by affecting the remainder of the property, ascertaining the market value of the property is also necessary. As we noted in Salt Lake County Cottonwood Sanitary District v. Toone , The cardinal and well-recognized rule as to the measure of damages to property not actually taken but affected by condemnation is the difference in market value of the property before and after the taking. 11 Utah 2d 232, 234, 357 P.2d 486, 488 (1960); see also State ex rel. Rd. Comm'n v. Peterson, 12 Utah 2d 317, 321, 366 P.2d 76, 79 (1961) (holding that the correct measure of severance damages is the difference between its fair cash market value before and after the taking). ¶ 21 Accordingly, the time at which the market value of a condemned land is assessed becomes crucial to properly measuring just compensation. Section 78-34-11 of the Utah Code mandates, For the purpose of assessing compensation and damages, the right thereto shall be deemed to have accrued at the date of the service of summons, and its actual value at that date shall be the measure of compensation . . . as provided in Section 78-34-10. Indeed, we have stated that the appropriate measure of damages is not simply the market value of the land condemned but the market value at the time it was condemned: [T]he measure of compensation of land actually taken is the market value of the land on that date, no more and no less. State ex rel. Rd. Comm'n v. Bettilyon's, Inc., 17 Utah 2d 135, 137, 405 P.2d 420, 422 (1965), cert. denied, 382 U.S. 1010, 86 S.Ct. 619, 15 L.Ed.2d 526 (1966). ¶ 22 The requirement that the value of condemned land be assessed at the date of the service of summons does not mean that just compensation is calculated by taking a temporal snapshot of the land's value according to its use at that time. Rather, the value of condemned property is based on the highest and best use to which it could be put at the time of the taking, without limitation as to the use then actually made of it. State ex rel. Rd. Comm'n v. Jacobs, 16 Utah 2d 167, 170, 397 P.2d 463, 464 (1964); see also State ex rel. Rd. Comm'n v. Wood, 22 Utah 2d 317, 320, 452 P.2d 872, 873 (1969); Moyle v. Salt Lake City, 111 Utah 201, 212, 176 P.2d 882, 888 (1947). The reason for this is, if the damages for a taking are to be appraised on the basis of the actual value at the date of summons, consideration must be given to all factors bearing upon such value that a prudent and willing buyer and seller, with knowledge of the facts, would take into account, including any potential development that could be performed on the property. Wood, 22 Utah 2d at 319, 452 P.2d at 873. ¶ 23 However, totally conjectural or speculative potential uses may not be considered when determining the highest and best use of a property, for a determination of highest and best use must reflect only potential development [that] could with reasonable certainty be expected with respect to the property. Id. (emphasis added). Such developments, moreover, must not be merely in the realm of speculation because the land is adaptable to a particular use in the remote and uncertain future. Jacobs, 16 Utah 2d at 170, 397 P.2d at 464. In other words, a property's highest and best use includes only those uses that are feasible, not those that are merely possible. Id. ¶ 24 To prove that a potential use of a property is feasible, three specific elements must be established. First, it must be demonstrated that the use is physically feasible  that the land is physically suited or adaptable to the potential use. See, e.g., Kennecott Copper Corp. v. Salt Lake County, 122 Utah 431, 433, 436, 250 P.2d 938, 939-40 (1952) (finding that the current use of a property as a copper tailings dump was its highest and best use because the tailings ha[d] become a part of the ground where they [we]re dumped and ha[d] completely destroyed the value of the ground for grazing purposes). Second, it must be established that the use is legally feasible  that the land is legally available for the potential use, or that any legal restrictions currently preventing the potential use have a reasonable probability of being modified so that they no longer pose a barrier. See Redevelopment Agency v. Barrutia, 526 P.2d 47, 48 (Utah 1974) (indicating that a property's highest and best use was for commercial purposes because it was so zoned); Jacobs, 16 Utah 2d at 170-71, 397 P.2d at 465 (recognizing that where `there is a possibility or probability that the zoning restriction may in the near future be repealed or amended so as to permit the use in question, such likelihood may be considered if the prospect of such repeal or amendment is sufficiently likely as to have an appreciable influence upon present market value' (emphasis omitted) (quoting 4 Nichols on Eminent Domain § 12,322(1))). Finally, it must be proven that the potential use is economically feasible  that there is sufficient demand for the potential use. See State ex rel. Rd. Comm'n v. Hopkins, 29 Utah 2d 131, 133-34, 506 P.2d 57, 58-59 (1973) (ruling that the trial court had not erred by admitting evidence of a proposed subdivision where such a use would have comported with existing zoning and evidence had been admitted that 75 homes per year had been sold in the area for the past three years); State ex rel. Eng'g Comm'n v. Tedesco, 4 Utah 2d 248, 250, 251, 291 P.2d 1028, 1029 (1956) (holding that the trial court erred by failing to exclude from evidence the market value testimony of experts who had assumed without basis that there was a willing seller of 62 lots who had 62 present willing buyers, with nothing left to do but deliver an ownership document). [6] See generally Allan T. Brinkerhoff, Note, Eminent Domain: Proving Highest and Best Use of Undeveloped Land in Utah, 1973 Utah L.Rev. 705, 707-13. ¶ 25 While landowners may testify as to a proposed use they may have for the land different than the use for which it is employed at the time of the taking, and that such proposed use is not entirely conjectural or speculative, including their own foundational testimony establishing what steps have been taken to realize a transformation in use of their property, see, e.g., Utah Dep't of Transp. v. Jones, 694 P.2d 1031, 1036 (Utah 1984); Jacobs, 16 Utah 2d at 170-71, 397 P.2d at 465, they may not testify to the highest and best use of the property itself unless a foundation is laid establishing their expertise. As we stated in Jones: Admission of any type of testimony requires the laying of proper foundation to qualify the witness to give the particular testimony sought to be elicited. No foundation was laid or sought to be laid regarding Jones' qualifications to testify regarding the highest and best use of the subject property. Highest and best use is a term of art in eminent domain proceedings. Testimony regarding it must come from properly qualified experts. Jones' ownership of the land alone would not qualify him to give such an opinion. 694 P.2d at 1036. In short, a landowner may testify concerning the individual elements of feasibility, but that landowner must offer the testimony of a properly qualified expert to prove the actual feasibility of a potential use.