We recently had a significant victory in a large tax appeal case in Allegheny County, PA. The property included 2 office buildings that were being transitioned from a single tenant to a multi-tenant property. There were 2 years under appeal and, prior to our challenge, the assessed fair market value was $49 million. Our appraised values were $16.7 million and $21 million. The taxing authority’s appraised values were $20 million and $30.9 million. I attempted to settle the case, but the taxing authorities were not interested in a reasonable resolution. It went to a full hearing and the award was for our exact values. The taxing authorities did not appeal the decision.
The city of Orlando initiated eminent domain proceedings to take property owned by a church to build a new soccer stadium. A judge ruled in January that Orlando could take the property via its eminent domain powers. Orlando spokesperson Heather Fagan issued this statement:
“We have spent the last year trying to work with the Williams family [which owns the church]. The City was willing to pay the Williams family a fair amount–substantially more than the appraised value plus relocation costs, but the City has to balance this with our duty to safeguard the assets of the City. When the Williams family retreated to their original demand of over $30 million we had no choice but to take this issue to the courts for resolution.”
Each state has its own set of appraiser regulations. Although there are substantial similarities, they can vary. The Appraisal Institute has assembled a document titled “Provisions of State Appraiser Licensing and Certification Laws Applicable to Appraisal Review” which is available free to its members and may be purchased by non-AI professionals. The document provides information on state agencies, definitions, certification and/or licensing requirements, as well as appraisal management company requirements.
According to an article in the Appraisal Institute’s Valuation magazine, litigation regarding appraisal reviews has been increasing. One possible explanation cited in the article is that there are simply more appraisal reviews. It also states that some review appraisers lack the necessary competency to perform the work.
One of the major categories of claims is for those used in loan origination/purchasing. In essence, appraiser reviewers have the same potential liability as those who actually perform the appraisal. The second major category is defamation claims. In these cases, the appraiser whose work is reviewed may be offended or injured by a negative review.
The PA Superior Court recently addressed issues regarding determining the fair market value of property in the context of a “deficiency judgment” proceeding. In Liberty Philadelphia REO, LP v. EFL Partners V, L.P., the Superior Court held that it was proper in that case to fix the fair market value of condominiums based on the developer’s approach. The appellee argued that the appraiser employing that approach used the “bulk sales” approach which it claimed was prohibited by Cheltenham Federal Savings and Loan Associations v. Pocono Sky Enterprises, Inc., 451 A.2d 744 (Pa. Super. Ct. 1982). The Court held the appraisal was proper and that Cheltenham did did not reject the bulk sales approach in all circumstances.
One of the hot issues in the PA Governor’s race is natural gas drilling. One small component of that is a utility’s power of eminent domain. State Treasurer Rob McCord (Dem.) has stated that he would seek to rescind the power of eminent domain by a company developing a natural gas storage facility.
The New Jersey legislature is considering a bill that would abolish NJ’s Real Estate Appraisers Board and transfer regulation of appraisers to the state’s Real Estate Commission. Bill A2387 was unanimously passed by the Regulated Professions Committee March 13. The Appraisal Institute strongly opposes the bill. The Bill’s sponsors, Troy Singleton, and representatives of the Appraisal Institute are scheduled to meet. A copy of the bill can be found at http://www.njleg.state.nj.us/2014/Bills/A2500/2387_R1.HTM
In 2005, the US Supreme Court issued one of its most controversial decisions. In Kelo v. City of New London, the Court held that it was not unconstitutional to use the power of eminent domain to take homes and other private property and transfer the property to private entities for economic development. It found that economic development was a “public purpose” which, therefore, satisfied the Fifth Amendment “public use” requirement.
Although the taking was held to be constitutional, the extraordinary public reaction caused the City of New London to abandon the project. 9 years later, the property still remains vacant. New London Mayor Daryl Justin Finizio ultimately issued an apology to former Fort Trumbull property owners and announced a restructuring of the New London Development Corp.
The City of Sacramento won a major eminent domain battle in its attempt to secure land for a new arena. A judge has given it the rights to the old Macy’s Men’s store in Downtown Plaza. The store was the last parcel needed by the city to make the site into a new $448 million, 24/7 attraction. The city filed its eminent domain suit in January after its $4.35 million offer for the property was rejected.
A Federal Judge agreed with a federally appointed commission’s $1.5 million appraisal of what is now the Flight 93 National Memorial property. The property, located in Shanksville, PA, was condemned for the Memorial. The land’s former owner, Michael Svonavec, argued the 275-acre property was worth $23 million. It is not known whether Svonavec will appeal the ruling.