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

The Georgia Real Estate Appraisers Board recently adopted its final regulations regarding standards for developing and reporting an “evaluation appraisal.” The regulations state that, where permitted by federal law and policies, a state-licensed or certified appraiser performing an evaluation appraisal need not comply with the Uniform Standards of Professional Appraisal Practice.

The new regulations state that a licensed or certified appraiser may offer “an appraisal which is limited in its scope and development” where an appraisal by a licensed or certified appraiser is not required by federal law. These situations include transactions with a value less than or equal to $250,000, transactions where there is no advancement of new money other than funds necessary to cover reasonable closing costs and transactions with business loans with a value equal to or less than $1 million in which rental income from the property is not the primary source of repayment.

The regulations contain a list of approximately 20 items that a certified appraiser must include in each evaluation appraisal.

Also significant: the regulations state that the evaluation must contain “an estimate of the property’s market value” and that “a valuation that does not provide a property’s market value or sufficient information and analysis to support the value conclusion is not acceptable as an evaluation appraisal. While a broker price opinion, a competitive market analysis, an automated valuation model and a tax assessment value may be useful in developing an evaluation appraisal, the information obtained from these methods of valuation is insufficient standing alone to meet all of the criteria necessary to be an evaluation appraisal.”
 

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Forty-two U.S. appraisal firms announced March 18 that they now are operating as Valbridge Property Advisors. The new firm is comprised of independent, local-market valuation firms with each office run by the local practice leader who must hold an MAI designation of the Appraisal Institute.

The new firm will specialize in office, industrial, retail, multifamily, hospitality, recreation and other special-purpose property types, and the MAI designation is held by appraisers who are experienced in the valuation and evaluation of these types of properties, as well as by those who advise clients on real estate investment decisions.

The firm is shareholder-owned with a board of directors and officers, including Richard L. Armalavage, MAI, serving as president and chief executive officer. It is headquartered in Naples, Fla. “Client demand for a strong independent national commercial property appraisal services platform has driven the formation of Valbridge,” Armalavage said in a news release. “Valbridge will be able to maximize opportunities for clients by elevating industry standards for accuracy, integrity, reporting and technology in service to current and future clients.”
 

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Legislation was introduced in the Pennsylvania General Assembly to expand the ability of real estate sales professionals to provide Broker Price Opinions and Comparative Market Analyses outside of the real estate brokerage context. This legislation would amend the Real Estate Licensing and Registration Act and the Real Estate Appraisers Certification Act.

A Comparative Market Analysis or Broker Price Opinion is developed by a licensed real estate broker, associate broker, or salesperson and provides an estimate of the probable selling price or leasing price of a particular parcel of property. Currently, a Pennsylvania licensed real estate broker or salesperson is permitted to perform a CMA in the real estate brokerage context for “the purpose of determining the asking/offering price for the property by a specific actual or potential consumer or for the purpose of securing a listing agreement with a seller.” Brokers and salespersons are currently prohibited from doing CMAs outside the brokerage context because a value or price opinion provided for a fee is defined in PA law as an “appraisal” and requires an appropriate appraisal license or certification to be held by the individual performing that work

The legislation – SB 869 – was introduced in the Pennsylvania Senate on April 18, 2013. It is sponsored by Sen. Robert M. Tomlinson and has 16 co-sponsors. Senator Tomlinson is the Chair of the Senate Consumer Protection and Professional Licensure Committee.
 

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One of the communities hardest hit by Hurricane Sandy is preparing to use eminent domain to take easements from oceanfront homeowners who are holding up a beach replenishment project, according to the Newark Star-Ledger. These homeowners won't sign easements that would allow federal officials to carry out the work. Mantoloking saw every one of its 521 homes damaged. The Mayor stated the town has no choice if it wants to survive. He said Mantoloking has either signed easements or has verbal commitments from 121 of 128 oceanfront homeowners.

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The Bipartisan Policy Center issued a report proposing changes to current appraisal policy. Although it was primarily focused on reducing the government’s role in the nation’s housing finance system, it had appraisal related recommendations. For example, it recommended banning the use of distressed home sales as comparables which the BPC said was helping to decrease local home values and buyers’ ability to secure financing.

The BPC Housing Commission is led by former U.S. Sens. George Mitchell, Mel Martinez and Kit Bond and former U.S. Housing and Urban Development Secretary Henry Cisneros. The report titled “Housing America’s Future: New Directions for National Policy,” can be found bipartisanpolicy.org/sites/default/files/BPC_Housing%20Report_web.pdf
 

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The Appraiser Qualification Board issued the Second Exposure Draft of Proposed Interpretation and Revision to the Real Property Appraiser Qualification Criteria. The AQB is an independent board of The Appraisal Foundation and composed of at least five practicing appraisers who are appointed by the Foundation’s Board of Trustees for three-year terms. Under the provisions of Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), the AQB establishes the minimum education, experience and examination requirements for real property appraisers to obtain a state certification. In addition, the AQB performs a number of ancillary duties related to real property and personal property appraiser qualifications.

“In 2006, the AQB issued an Interpretation to the Criteria, addressing continuing education for appraisers returning from active military duty. Based on recent events such as Hurricane Sandy, the AQB has recognized that appraisers impacted by a state- or federally-declared disaster may be similarly situated,” the board wrote. “Therefore, the AQB is exposing a revision to the previously adopted Interpretation (that will apply to the current, or 2008 Criteria), as well as a revision to the already adopted Criteria (that becomes effective on Jan. 1, 2015).”

The changes can be found at The Appraisal Foundation’s website appraisalfoundation.sharefile.com/d/s5763fd573e94aafa.
 

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The North Carolina House of Representatives has passed legislation to amend the state Constitution to limit certain eminent domain powers. House Bill 8 would specifically prohibit condemnation of private property except for a public use and provides for the payment of just compensation with right of trial by jury in all condemnation cases. The N.C. House passed the Bill 110-8.

The Bill – an obvious continued reaction to the U.S. Supreme Court decision in Kelo v. New London, Conn. (2005) – would put the constitutional amendment on the General Election ballot in November 2014. It does not appear to change the law other than to specifically include it in that state’s constitution.
 

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I am often asked whether governmental actions can cause a taking even if the government does not formally initiate an eminent domain case. These cases are known as "de facto" or "inverse condemnations" and are difficult to prove. However, establishing a de facto taking can have substantial benefits.

 

The Commonwealth Court recently affirmed a trial court’s ruling finding that we proved a de facto taking in Philadelphia.

 

Our client was in the process of developing a property for residential condominiums. It took substantial steps including obtaining architectural and engineering designs and lining up financing. PennDOT, however, targeted the property for a road project and announced in August, 2006 that it was going to condemn the property. PennDOT did not initiate a condemnation action until May, 2009. However, we alleged that PennDOT’s action destroyed any opportunity to develop the property for its "highest and best use" – condominiums – and caused a de facto taking.

 

After a two day hearing involving testimony of four experts and numerous fact witnesses, the Judge ruled that PennDOT’s actions constituted a de facto taking by December 2006. PennDOT appealed. After briefing and oral argument, the Commonwealth Court affirmed that ruling and found that we proved a de facto taking.

 

This has a significant impact on the case. For example, the property will now be valued as of December 2006 and not May 2009. PennDOT will also be required to pay professional fees (attorneys, experts, etc.) for the entire case.

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PennDOT announced the award of the largest construction contract in agency history, a $212.3 million contract to improve Interstate 95 and its interchange at Cottman Avenue (Route 73) in Northeast Philadelphia. According to PennDOT, “This record-setting contract is for the second stage of our two-stage program” for this project. PennDOT awarded the low-bid $212,325,000 contract to Walsh Construction Company II, LLC of Canonsburg, Pa. The contract is financed with 90 percent federal and 10 percent state funds. Construction is scheduled to begin in August and finish in late summer 2017.

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I am often asked whether governmental actions can cause a taking even if the government does not formally initiate an eminent domain case. These cases are known as “de facto” or inverse condemnations and are difficult to prove. However, establishing a de facto taking can have substantial benefits. We recently were successful in establishing a de facto taking in Philadelphia.

Our client was in the process of developing a property for residential condominiums. It took substantial steps including obtaining architectural and engineering designs and lining up financing. PennDOT, however, targeted the property for a road project and announced in August, 2006 that it was going to condemn the property. PennDOT did not initiate a condemnation action until May, 2009. However, we alleged that PennDOT’s action destroyed any opportunity to develop the property for its “highest and best use” – condominiums – and caused a de facto taking.

After a two day hearing involving testimony of four experts and numerous fact witnesses, the Judge ruled that PennDOT’s actions constituted a de facto taking by December 2006. This has a significant impact on the case. For example, the property will now be valued as of December 2006 and not May 2009. PennDOT will also be required to pay professional fees (attorneys, experts, etc.) for the entire case.

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PennDOT has shown signs that it is pursuing property acquisitions for Route 422 projects in Berks and Montgomery Counties (PA). PennDOT published a notice on September 3, 2011 in The Pottstown Mercury newspaper that it intends to acquire property in Lower Pottsgrove (PA) Township for that portion of its 422 reconstruction project. Property owners are also receiving notices of potential acquisition for various other 422 projects.

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The Pennsylvania Commonwealth Court recently ruled that PennDOT met its burden to condemn agricultural property for a project in Lebanon County. In Dept. of Transp. v. Agricultural Lands Condemnation Approval Board, PennDOT sought to condemn productive agricultural lands for a transportation use. Pursuant to the Farmland Protection Policy Act, the Agricultural Lands Condemnation Approval Board considered the PennDOT project. It found that PennDOT did not prove that there was no reasonable and prudent alternative to the alternative selected by PennDOT and denied PennDOT’s request to use its condemnation power to acquire the lands. On appeal, the Commonwealth Court reversed holding that the Board acted capriciously and ignored overwhelming evidence that there was no reasonable and prudent alternative to the condemnation of the lands.

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Planning for the last phases of the Marshalls Creek Bypass Project – which PennDOT now calls the “Marshalls Creek Traffic Relief Project” – continues. The project was put on hold in April due to funding issues. PennDOT held a public meeting in October to discuss the options for this phase of the project which can be viewed at www.marshallscreekbypass.com/index.cfm

PennDOT posted the following update on January 2, 2009 on its website:

Project Milestones Reached
• PennDOT submitted the Final Traffic Reports to FHWA on November 24, 2008.
• PennDOT submitted the Final EIS (Environmental Impact Statement) Re-Evaluation on November 26, 2008.
• The Kick-Off Meeting for Final Design was held on December 2, 2008.
• A meeting for the Section 106 Programmatic Agreement (environmental/historical compliance agreement) amendment was held on December 4, 2008, with FHWA, SHPO (State Historic Preservation Office), and PennDOT's District and Central offices.
• The Phase III Archaeology report was delivered to FHWA and PHMC on December 30, 2008.
• A Right-of-Way review meeting was held at the PennDOT District Office on December 30, 2008.
• The Park-and-Ride project bids were reviewed and there is an apparent low bidder (Leeward Construction of Honesdale).
• Core borings have begun and will continue through February 1, 2009.

Upcoming Project Milestones
• The Environmental Review and Permitting will continue to be the challenge when trying to advance the Design/Build contract.
• Rettew Associates is scheduling a preliminary meeting with the permitting agencies for the “bypass” portion of the project.
• The Dewberry Team continues to advance the Final Design.
• The next Bi-Monthly Coordination Meeting is set for January 13, 2009.
• Park-and-Ride lot construction to begin in the spring and last one construction season.
 

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One of the new buzzwords these days is “infrastructure.” It is likely that Congress will enact an ambitious economic stimulus package soon after President-elect Obama is inaugurated. One important component will be funds that will be spent on “infrastructure” including roads and bridges.

State officials are drawing up plans for bridge and road improvements in anticipation of funds from a federal economic stimulus package. PennDOT has stated that they are confident that Congress will make money available for replacements and repair projects early next year.

PennDOT has a number of projects that have been stalled due to lack of funding. It is very possible that PennDOT will use an influx of federal funds for these projects. It is unclear at this point the extent to which the projects will involve acquiring property through the power of eminent domain.

 

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The Marshalls Creek Bypass Project continues to create controversy.  Last week, the Northeast Pennsylvania Alliance Board – known as NEPA – voted 13-7 during a special meeting to reject a four-year state transportation funding plan.  The biggest reason it rejected that plan was because it lacked funding for the Marshalls Creek Bypass.  According to press accounts, it is the first time in memory that officials recall the NEPA Board – or any other regional board that reviews transportation funding priorities in Pennsylvania – voting against adoption of a four-year funding plan.  As the Pocono Record reported, “This has not happened before," said NEPA Alliance CEO Jeffrey Box. "It's reflective of the concern the NEPA Board has for numerous transportation projects in all our counties."  The Pocono Record article can be found at www.poconorecord.com/apps/pbcs.dll/article

PennDOT has been planning the Marshalls Creek Bypass Project for many years.  It is aimed to alleviate gridlock at the bottleneck of Routes 209 and 402 in Smithfield and Middle Smithfield townships, Monroe County Pennsylvania. It has been broken up into phases and has been put on hold while PennDOT redesigns part of the project.   Stay tuned.

 

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Funds for widening Route 202 on the section of the highway that runs from near Route 29 to the Exton Bypass will be delayed until at least 2011. The Delaware Valley Regional Planning Commission voted 17-1 to wait until 2011 to begin releasing the PennDOT funds needed to widen this section of the highway. PennDOT’s current plans for this section – known as “Section 300 – anticipate expanding from four to six lanes. It appears that this delay is another example of budget concerns being felt at PennDOT. PennDOT made a decision this year to focus its funding on projects involving bridge repairs.

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PennDOT has re-launched its Marshalls Creek Bypass website. The Monroe County, Pennsylvania project’s website was unavailable for at least a few months. It is now up and running again at www.marshallscreekbypass.com/main.cfm. You can find information regarding PennDOT’s intended construction schedule and other topics. However, the site does not shed any new light on the third phase of construction which was temporarily put on hold in the spring. It appears that PennDOT still intends to move forward at some point with phase 3 of the project. However, it is still considering design issues. Stay tuned.

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Pennsylvania Governor Ed Rendell announced a plan to repair 1,145 bridges across Pennsylvania. The list and a county-by-county map of all the bridges are available on PennDOT’s Web site at www.dot7.state.pa.us/RebuildPA/Main.htm

Rendell has asked the General Assembly to approve this plan which he estimates will require state funding of an additional $200 million a year for three years, to be combined with federal road repair funds. The "structurally deficient" bridges include 91 in Southeastern Pennsylvania including 35 in Bucks County, 26 in Chester County, 15 in Montgomery County, nine in Philadelphia, and six in Delaware County. Most are smaller bridges.

It is unclear at this time whether the General Assembly will approve this project. According to press accounts, Senate Republicans acknowledged repairs were necessary but expressed reluctance to borrow more funds. This issue will likely by an important part of budget negotiations.

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PennDOT has been planning a project known as the “Marshalls Creek Bypass” for many years. It is aimed to alleviate gridlock at the bottleneck of Routes 209 and 402 in Smithfield and Middle Smithfield townships, Monroe County Pennsylvania. PennDOT has already acquired some properties for this project and was sent to acquire more properties when it decided to put the project on hold in April.

I represent some of the property owners that will be impacted by this project and spoke with a PennDOT representative about its plans. PennDOT still intends to go forward with the project. However, it is revisiting some of its plans to determine if there are ways to cut costs.

It appears that we will know more about PennDOT’s plans later in the summer or early fall.

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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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