A Texas appellate court recently affirmed the dismissal of the city of Austin’s lawsuit claiming commercial and vacant property are being undervalued during property tax appraisals.  Austin sued the Travis Central Appraisal District after an appraisal review board in Travis County denied the city’s formal challenge to what it said was the systematic undervaluation of two classes of vacant and commercial properties. The city alleged the state’s property tax appraisal system is unconstitutional and creates two different standards of assessment, resulting in arbitrary and unequal taxation.

In Austin v. Travis Central Appraisal District et al., case number 03-16-00038-CV, the Third Court of Appeals said, though the city does have statutory standing to challenge the level of appraisals of any category of property in the district, Austin had effectively foregone the administrative determination of its challenge, depriving the district court of jurisdiction. The court said the city could bring its concerns over tax policy to the attention of the Legislature, but that Austin “has no standing to pursue such a debate in this court.”  “The city’s constitutional challenge is a transparent attempt by a taxing unit to debate an issue of tax policy that is within the prerogative of the Legislature, rather than the judiciary,” the court said.

Austin filed the suit in August 2015, two months after the appraisal review board’s ruling, also naming as defendants several individual property owners it claimed held undervalued properties. It argued commercial and vacant properties weren’t being appraised at market value because property owners aren’t required to disclose real estate sales data, which the city said created an imbalance in information available for different properties.

The NJ Appellate Division recently decided a case involving an important and recurring issue – valuing a property for a use that requires land development approvals.  In New Jersey Transit Corp. v. Franco, Docket No. A-3802-12T4, the Appellate Division reversed the trial court due to “prejudicial error” in permitting the condemnees’ experts to value the property with an apartment complex as its highest and best use without establishing the reasonable probability of obtaining certain land development approvals.

The Appellate Division explained that the “crucial issue on appeal is whether the creation of a cul-de-sac . . . would have required and received approval by” the municipality. The condemnees’ experts assumed the municipality would not need to approve a use variance access or that the street could be dedicated to the municipality without need for a use variance.  New Jersey Transit contended that the experts’ opinions failed to analyze whether there was a reasonable probability of obtaining the variance or dedication.  Condemnee’s testified at trial over New Jersey Transit’s objections, which resulted in a jury award of $8.1 million.

The Appellate Division held that the condemnees were required to and failed to show a “reasonable probability” the municipality would either grant a use variance for the cul-de-sac or accept the dedication of the cul-de-sac as a public street. The Appellate Division expressed no opinion on whether the condemnees could, in fact, show such a reasonable probability and remanded the case for a new trial.

The Subcommittee on Housing and Insurance will hold a hearing entitled “Modernizing Appraisals: A Regulatory Review and the Future of the Industry” at 10:00 a.m. on Wednesday, November 16, 2016. This hearing will examine the appraisal industry since the creation of the Appraisal Subcommittee in 1989, review the Dodd-Frank Act’s impact on appraisers, consumers and stakeholders, and explore the future of appraisals, including alternative home valuation methods.

The link to view the hearing ishttp://financialservices.house.gov/

This will be a one-panel hearing with the following witnesses:

  • Mr. James R. Park, Executive Director, Appraisal Subcommittee
  • Mr. David S. Bunton, President, The Appraisal Foundation
  • Ms. Joan N. Trice, Chief Executive Officer and Founder, Clearbox
  • Mr. Bill Garber, Director of Government and External Relations, Appraisal Institute
  • Mr. Ed Brady, Chairman of the Board, National Association of Home Builders
  • Ms. Jennifer S. Wagner, Managing Attorney, Mountain State Justice, Inc.

The site for the $180 million Downtown arena south of the convention center was approved Tuesday by the El Paso City Council.  They also gave the authority to purchase properties and use eminent domain if necessary.  The plan was approved in a 7-0 vote after more than two hours of discussion.  The city can now begin negotiating with property owners to acquire the land.  Mayor Oscar Leeser stated he does not support the use of eminent domain.

The arena will be built in the Union Plaza District and is bounded by West San Antonio Avenue, South Santa Fe Street, West Paisano Drive and Leon Street.  The area contains 42 parcels and includes the Greyhound bus station, some apartment complexes and other buildings. However, the city has identified a total of 22 properties for the arena footprint. Of those parcels, five are vacant or surface lots, seven are commercial, seven are residential and two are city owned, the city said.

The Appellate Division of Superior Court decided a case addressing the amount that should be held in escrow in eminent domain cases involving contaminated properties.  In Housing Authority v. Suydam Investors, L.L.C., the NJ Supreme Court held that in an eminent domain case involving a contaminated property, the condemnor may seek an order requiring estimated remediation costs to be set aside in escrow.  In New Jersey Transit Corporation v. Mary Franco, the Appellate Division the court held that the escrow for the estimated costs of environmental cleanup should be based on “the remediation necessary to achieve the highest and best use of the property used to calculate the amount of the condemnation award” as opposed to the use for which the property is condemned.

Pennsylvania citizens have formed a new group aimed to change the way eminent domain is applied in Pennsylvania.  The group, called Protect Our Pennsylvania, held a rally at the State Capitol Tuesday. At this point, their primary focus is limiting the seizure of private property for pipeline projects. The group is not promoting a specific piece of legislation but has begun discussions with several legislators.

The US Supreme Court has scheduled oral argument for November for an important eminent case. In Murr v. Wisconsin, the Court will consider wither governments may treat 2 distinct parcels that are contiguous and commonly owned as one parcel for purposes of regulatory taking analysis.  Lower courts are split on this issue. There has been significant briefing by the parties and other interested parties.

Our team recently obtained a settlement worth over $5,250,000 in an eminent domain case. PennDOT, the condemnor, originally claimed the property was worth $1,811,000.  Untimely, we were able to settle for a value of $4,500,000 plus interest in the amount of about $7,500,000.  The property was an industrial property located in Philadelphia.  We were able to settle the case before a board of view hearing thereby minimizing the attorney’s fees.

The Texas Comptroller’s office has launched a statewide online eminent domain database. This database will show entities who have exercise dthe power of eminent domain.  “This is clearly an area in which transparency is absolutely essential,” Texas Comptroller Glenn Hegar said. “Knowing who can use eminent domain is the first step to ensuring that this potentially oppressive power is used wisely.”

The database contains 5,042 entities, including cities, counties, school districts, special purpose districts, pipeline and energy companies, water supply corporations, telecommunications companies and other public and private entities.  The database includes each entity’s name and contact information and reported eminent domain information, including

  • the date upon which the entity claims to have been authorized to exercise eminent domain authority;
  • whether the entity filed a condemnation petition in calendar 2015;
  • the projects or purposes for which the entity holds eminent domain authority; and
  • the provisions of the law granting that authority.

A New Jersey tax court judge has granted a property owner’s request to reduce its tax assessment by about $1.5 million.  The Court found that the taxes should have equaled a judgment entered two years earlier under the Freeze Act.

In Norwood Realty Associates v. Township of Ocean, Judge Mala Sundar approved the property owner’s request to use the Freeze Act to substantially lower the taxes on a property located in Monmouth, Ocean Township. The property owner argued that the tax assessment should be $1 million pursuant to a final judgment on the property’s 2014 assessment.  That amount was based on a settlement between the parties.

Judge Sundar rejected the township’s argument that the Freeze Act did not apply because the property had undergone a tax revaluation which can be an exception to the Act.  She explained that since “there was no revaluation for 2016 . . . , the application of the Freeze Act is not automatically barred.”