Pennsylvania Eminent Domain Lawyer & Attorney : Fox Rothschild Law Firm : Condemnation, Real Estate Valuation : Philadelphia, Bucks County, Pennsylvania

The Philadelphia Redevelopment Authority – which regularly uses its power of eminent domain – will have a new chairperson.  Labor Leader John Dougherty, who recently lost his bid for State Senate, announced that he will step down as chairman of the RDA.  His term was not slated to end until early next year.  The stated reason for his resignation is to provide Mayor Nutter, who took office this year,  with the opportunity to select his own chairperson.

Dougherty was appointed to the RDA chairmanship shortly after Mayor John Street took office in 2000.  Dougherty was a major supporter of Street and did not support Nutter in last year’s primary.

The RDA was very active during the Street Administration.  It was the main governmental vehicle for his anti-blight program, the Neighborhood Transformation Initiative.  It regularly used its power of eminent domain and condemned thousands of parcels of property citywide.

Mayor Nutter has stated that the authority will play an important role in his administration.  However, he has not provided many details.  Nutter said he would appoint a successor to Dougherty and fill an existing vacancy on the five-member board as soon as possible.

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One concern I hear consistently expressed by appraisers is that there are times when they are pressured to reach a certain number when appraising properties.  Congress is considering legislation that prohibits all parties involved in a real estate transaction from improperly influencing an appraiser.  The legislation is part of an amendment to pending foreclosure prevention legislation known as the Federal Housing Administration Housing Stabilization and Homeowner Retention Act (H.R. 5830).  On April 24, the U.S. House Financial Services Committee agreed by voice vote to add the amendment to H.R. 5830.

The goal of the amendment is to ensure an independent and competently performed appraisal process.  It has been backed by the Appraisal Institute and has bipartisan support in Congress. However, the future of H.R. 5830 is uncertain.  It authorizes the FHA to guarantee billions of dollars worth of refinanced loans if lenders reduce loan amounts to reflect reduced home values.  The measure would require banks to make less money on the loans but it would also reduce their credit exposure, while helping families stay in their homes.  According to the Appraisal Institute, discussions are underway in the Senate on companion legislation to H.R. 5830, where several other questions will likely be addressed at the committee level, including what property standards (FHA or conventional) will be applied to the appraisals and who will actually order the appraisal.

It would be naive to think that this legislation would eliminate all improper behavior.  However, it is a step in the right direction even if it serves to draw attention to this serious problem.

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The Pennsylvania Department of Transportation ("PennDOT") recently announced its preliminary construction plans for a portion of I-95 in Northeast Philadelphia. These plans include rebuilding two interchanges – one at Bridge Street and one at Betsy Ross Bridge and Aramingo Avenue. PennDOT also intends to rebuild a three-mile stretch of I-95 between Cottman Avenue and the Betsy Ross Bridge. Construction is scheduled to start in 2012. However, according to PennDOT, preliminary engineering is to be completed late this year.

Businesses and residential properties will be acquired for the project – either amicably or through the eminent domain process. I spoke with the outside consultant for the project who told me the acquisition for the project will be in about 2 years. However, we always counsel our clients to engage in “pre-condemnation” planning. This involves a number of potential actions including working with PennDOT to see if you can avoid losing your property. However, most planning involves taking steps to ensure that you receive the maximum payment for your property if it is condemned.

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An appeal recently filed with the U.S. Supreme Court asks the Court to revisit its controversial decision in Kelo v. City of New London. In Goldstein, et al., v. Pataki, et al., property owners are challenging a project in Brooklyn known as the Atlantic Yards Arena and Redevelopment Project.  The properties were condemned for a new basketball arena for the New Jersey Nets as well as high rise apartments and office buildings. 

The challengers — owners of homes and businesses that would be taken to make room for a major part of the development — argue that the purpose of the project is to transfer property from one private owner to another.  The Second Circuit Court of Appeals affirmed the District Court’s dismissal of the lawsuit.  If the appeal is granted, it will be the Court’s first chance to revisit its 2005 Kelo decision. 

Click here to see the petition filed by the property owners.

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One critical aspect of any eminent domain case is selecting the right valuation expert.  Recently, the Commonwealth Court of Pennsylvania ruled that real estate brokers can serve as valuation experts in eminent domain cases even if they do not have a real estate appraiser license.

In King v. West Penn Power Company, a power company acquired a portion of a privately-owned airport for an electronic transmission line by its power of eminent domain.  The property owner in King challenged the amount of “just compensation” that was offered by the power company.  The property owner sought to present the testimony of a real estate broker to testify regarding the negative effect of the taking on the fair market value of the property.

The power company filed a motion to preclude the broker’s testimony on the basis that that the broker did not have a real estate appraiser license.  The trial court granted the motion and precluded the broker’s testimony. The property owner appealed.

The Commonwealth Court reversed the trial court’s decision and found that the broker did not need a real estate appraiser license to qualify as a valuation expert in a condemnation case.  The alleged basis for the motion to preclude the broker’s testimony was the Real Estate Appraiser Certification Act which provides that it is unlawful to perform real estate appraisals “in non-federally related transactions” without a valid certificate from the State Board of Certified Real Estate Appraisers.  However, the definition of “federally related transaction” in the State Board of Certified Real Estate Appraisers’ regulations does not include appraisals for condemnation proceedings.  In addition, the definition of “condemn” in the Pennsylvania Eminent Domain Code does not include “transactions.”   Therefore, the Court held the phrase “nonfederally related transaction” in the Appraisers’ Act does not encompass condemnations of property.

The Court also continued to explain its decision by stating that “it makes no sense to require that qualified valuation experts in condemnation proceedings possess real estate appraiser licenses.”

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