Interagency Land Acquisition Conference

UNIFORM APPRAISAL

STANDARDS FOR FEDERAL

LAND ACQUISITIONS

2016

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Interagency Land Acquisition Conference

UNIFORM APPRAISAL

STANDARDS FOR FEDERAL

LAND ACQUISITIONS

2016

PDF EDITION

Interagency Land Acquisition Conference

UNIFORM APPRAISAL

STANDARDS FOR FEDERAL

LAND ACQUISITIONS

2016

The Uniform Appraisal Standards for Federal Land Acquisitions have been developed, revised,

approved, adopted and promulgated on behalf of the Interagency Land Acquisition Conference.

The Conference is solely and exclusively responsible for the content of the Standards. The

Appraisal Foundation provided editing and technical assistance to the Standards, but neither

undertakes nor assumes any responsibility whatsoever for the content of the Standards. The

Appraisal Foundation has published the Uniform Appraisal Standards for Federal Land

Acquisitions on behalf of the Conference and in cooperation with the United States Department

of Justice.

Printed in the United States of America

ISBN: 978-0-09892208-8-0

The Appraisal Foundation is the nation’s foremost authority on the valuation profession. The

organization sets the Congressionally authorized standards and qualications for real estate

appraisers, and provides voluntary guidance on recognized valuation methods and techniques

for all valuation professionals. This work advances the profession by ensuring that appraisals are

independent, consistent, and objective.

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Contents I

TABLE OF CONTENTS

FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

0. INTRODUCTORY MATERIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

0.1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

0.2. Governing Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

0.3. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

0.4. About the Sixth Edition to the “Yellow Book.” . . . . . . . . . . . . . . . . . . . . . . . . . 6

0.5. Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

1. APPRAISAL DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1.1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1.2. Problem Identication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

1.2.1. Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1.2.2. Intended Users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

1.2.3. Intended Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

1.2.4. Type of Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1.2.5. Eective Date.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

1.2.6. Relevant Characteristics of the Subject Property. . . . . . . . . . . . . . . . . . . . .11

1.2.6.1. Property Interest(s) to be Appraised . . . . . . . . . . . . . . . . . . . . . . . . 11

1.2.6.2.Legal Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

1.2.6.3. Property Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

1.2.6.4. Contacting Landowners . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

1.2.7. Assignment Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1.2.7.1. Instructions, Hypothetical Conditions, Extraordinary Assumptions. . . . . . . .13

1.2.7.2. Jurisdictional Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

1.2.7.3. Special Rules and Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

1.2.7.3.1. Larger Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

1.2.7.3.2. Unit Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

1.2.7.3.3. Government Project Inuence and the “Scope of the Project” Rule 16

1.2.7.3.4. Before and After Rule . . . . . . . . . . . . . . . . . . . . . . . . .17

1.2.7.3.5. Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

1.2.7.3.6. Benets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

1.2.8. Scope of Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

1.3. Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

1.3.1. Property Data.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

1.3.1.1. Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

1.3.1.2. Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18

1.3.1.3. Zoning and Land Use Controls . . . . . . . . . . . . . . . . . . . . . . . . .19

Uniform Appraisal Standards for Federal Land Acquisitions / Table of ContentsII

1.3.1.4. Use History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

1.3.1.5. Sales History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

1.3.1.6. Rental History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

1.3.1.7. Assessed Value and Annual Tax Load . . . . . . . . . . . . . . . . . . . . . .21

1.4. Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21

1.4.1. Area and Neighborhood Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

1.4.2. Marketability Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

1.4.3. Highest and Best Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

1.4.4. Denition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

1.4.5. Four Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

1.4.5.1. Economic Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

1.4.6. Larger Parcel Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

1.4.7. Highest and Best Use Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

1.5. Application of Approaches to Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

1.5.1. Land Valuation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

1.5.1.1. Sales Comparison Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

1.5.1.2. Subdivision Development Method . . . . . . . . . . . . . . . . . . . . . . . . . 25

1.5.1.3. Ground Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

1.5.2. Sales Comparison Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

1.5.2.1. Prior Sales of Subject Property . . . . . . . . . . . . . . . . . . . . . . . . .26

1.5.2.2. Selection and Verication of Sales . . . . . . . . . . . . . . . . . . . . . . . .26

1.5.2.3. Adjustment Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

1.5.2.4. Sales Requiring Extraordinary Verication . . . . . . . . . . . . . . . . . . .28

1.5.3. Cost Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1.5.3.1. Critical Elements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

1.5.3.1.1. Reproduction and Replacement Costs . . . . . . . . . . . . . . . . 34

1.5.3.1.2. Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

1.5.3.1.3. Entrepreneurial Prot . . . . . . . . . . . . . . . . . . . . . . . . .35

1.5.3.1.4. Unit Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

1.5.4. Income Capitalization Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

1.5.4.1. Market Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

1.5.4.2. Comparable Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

1.5.4.3. Expense Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

1.5.4.4. Direct Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

1.5.4.5. Yield Capitalization (Discounted Cash-Flow [DCF] Analysis). . . . . . . . . .36

1.6. The Reconciliation Process and Final Opinion of Value . . . . . . . . . . . . . . . . . . . . . . 36

1.7. Partial Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37

1.7.1. Before and After Rule (Federal Rule) . . . . . . . . . . . . . . . . . . . . . . . . . . .37

1.7.1.1. Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

1.7.1.2. Benets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

1.7.1.3. Osetting of Benets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

1.7.1.4. Takings Plus Damages Procedure (State Rule) . . . . . . . . . . . . . . . . . . . 39

1.8. Leasehold Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

1.8.1. Market Rent and Highest and Best Use . . . . . . . . . . . . . . . . . . . . . . . . .39

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Contents III

1.8.2. Leasehold Estate Acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40

1.8.3. Larger Parcel Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

1.9. Temporary Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

1.9.1. Temporary Construction Easements (TCEs) . . . . . . . . . . . . . . . . . . . . . . .42

1.9.2. Temporary Inverse Takings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

1.10. Acquisitions Involving Natural Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

1.10.1. The Unit Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

1.10.2. Highest and Best Use Considerations. . . . . . . . . . . . . . . . . . . . . . . . . .44

1.10.3. Special Considerations for Minerals Properties. . . . . . . . . . . . . . . . . . . . . 45

1.10.4. Special Considerations for Forested Properties . . . . . . . . . . . . . . . . . . . . . 48

1.10.5. Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

1.11. Special Considerations in Appraisals for Inverse Condemnations . . . . . . . . . . . . . . . 49

1.12. Special Considerations in Appraisals for Federal Land Exchanges . . . . . . . . . . . . . . .50

1.13. Supporting Experts Opinions and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

1.14. Appraisers as Expert Witnesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

1.15. Condentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54

2. APPRAISAL REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

2.1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

2.2. Appraisal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

2.2.1. Oral Appraisal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

2.2.2. Restricted Appraisal Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56

2.2.3. Compliance with Rule 26 of the Federal Rules of Civil Procedure . . . . . . . . . . . 57

2.2.4. Electronic Transmission of Appraisal Reports . . . . . . . . . . . . . . . . . . . . . .57

2.2.5. Draft Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

2.3. Content of Appraisal Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57

2.3.1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

2.3.1.1. Title Page. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

2.3.1.2. Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

2.3.1.3. Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

2.3.1.4. Appraiser’s Certication . . . . . . . . . . . . . . . . . . . . . . . . . . . . .58

2.3.1.5. Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

2.3.1.6. Photographs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

2.3.1.7. Statement of Assumptions and Limiting Conditions . . . . . . . . . . . . . .59

2.3.1.8. Description of Scope of Work . . . . . . . . . . . . . . . . . . . . . . . . . .60

2.3.2. Factual Data—Before Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

2.3.2.1. Legal Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

2.3.2.2. Area, City, and Neighborhood Data . . . . . . . . . . . . . . . . . . . . . . .61

2.3.2.3. Property Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61

2.3.2.3.1. Site. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

2.3.2.3.2. Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62

2.3.2.3.3. Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

2.3.2.3.4. Use History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

2.3.2.3.5. Sales History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Uniform Appraisal Standards for Federal Land Acquisitions / Table of ContentsIV

2.3.2.3.6. Rental History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

2.3.2.3.7. Assessed Value and Annual Tax Load. . . . . . . . . . . . . . . . . 63

2.3.2.3.8. Zoning and Other Land Use Regulations. . . . . . . . . . . . . . . 63

2.3.3. Data Analysis and Conclusions – Before Acquisition . . . . . . . . . . . . . . . . . . . 63

2.3.3.1. Highest and Best Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

2.3.3.1.1. Four Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

2.3.3.1.2. Larger Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65

2.3.3.2. Land Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

2.3.3.2.1. Sales Comparison Approach . . . . . . . . . . . . . . . . . . . . .65

2.3.3.2.2. Subdivision Development Method . . . . . . . . . . . . . . . . . . .65

2.3.3.3. Cost Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66

2.3.3.4. Sales Comparison Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . 66

2.3.3.5. Income Capitalization Approach . . . . . . . . . . . . . . . . . . . . . . . .67

2.3.3.6. Reconciliation and Final Opinion of Market Value . . . . . . . . . . . . . . .68

2.3.4. Factual Data—After Acquisition (Partial Acquisitions Only) . . . . . . . . . . . . . . .68

2.3.4.1. Legal Description. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

2.3.4.2. Neighborhood Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68

2.3.4.3. Property Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

2.3.4.3.1. Site. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

2.3.4.3.2. Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69

2.3.4.3.3. Fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

2.3.4.3.4. History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

2.3.4.3.5. Assessed Value and Tax Load . . . . . . . . . . . . . . . . . . . . . . 69

2.3.4.3.6. Zoning and Other Land Use Regulations . . . . . . . . . . . . . . . 69

2.3.5. Data Analysis and Conclusions—After Acquisition (Partial Acquisitions Only) . . . . .69

2.3.5.1. Analysis of Highest and Best Use . . . . . . . . . . . . . . . . . . . . . . . . 70

2.3.5.2. Land Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

2.3.5.3. Cost Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70

2.3.5.4. Sales Comparison Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

2.3.5.5. Income Capitalization Approach . . . . . . . . . . . . . . . . . . . . . . . .70

2.3.5.6. Reconciliation and Final Opinion of Market Value . . . . . . . . . . . . . . .70

2.3.6. Acquisition Analysis (Partial Acquisitions Only) . . . . . . . . . . . . . . . . . . . . . 70

2.3.6.1. Recapitulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

2.3.6.2. Allocation and Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

2.3.6.3. Special Benets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

2.3.7. Exhibits and Addenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71

2.4. Reporting Requirements for Leasehold Acquisitions . . . . . . . . . . . . . . . . . . . . . .72

2.4.1. Property Rights Appraised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72

2.4.2. Improvements Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

2.4.3. Highest and Best Use and Larger Parcel . . . . . . . . . . . . . . . . . . . . . . . . .72

2.5. Project Appraisal Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Contents V

3. APPRAISAL REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

3.1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80

3.1.1. Government Review Appraisers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

3.1.2. Contract Review Appraisers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

3.1.3. Rebuttal Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

3.2. Types of Appraisal Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

3.3. Problem Identication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83

3.3.1. Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84

3.3.2. Intended Users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

3.3.3. Intended Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

3.3.4. Type of Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

3.3.5. Eective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .84

3.3.6. Subject of the Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

3.3.7. Assignment Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

3.4. Responsibilities of the Review Appraiser . . . . . . . . . . . . . . . . . . . . . . . . . . . .85

3.5. Review Appraiser Expressing an Opinion of Value . . . . . . . . . . . . . . . . . . . . . . . .86

3.6. Review Appraiser’s Use of Information Not Available to Appraiser . . . . . . . . . . . . . .86

3.7. Review Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

3.8. Certication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88

4. LEGAL FOUNDATIONS FOR APPRAISAL STANDARDS . . . . . . . . . . . . . . . . . 89

4.1. Introduction to Legal Foundations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

4.1.1. Requirement of Just Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

4.1.2. Market Value: The Measure of Just Compensation . . . . . . . . . . . . . . . . . . . 90

4.1.3. Federal Law Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90

4.1.4. Dening Property Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

4.1.5. About the Sixth Edition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

4.2. Market Value Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

4.2.1. Market Value Denition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93

4.2.1.1. Date of Value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

4.2.1.2. Exposure on the Open, Competitive Market . . . . . . . . . . . . . . . . . .95

4.2.1.3. Willing and Reasonably Knowledgeable Buyers and Sellers. . . . . . . . . . .95

4.2.1.4. All Available Economic Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

4.2.2. The Unit Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

4.2.2.1. Ownership Interests (the Undivided Fee) . . . . . . . . . . . . . . . . . . . . 97

4.2.2.2. Physical Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

4.2.2.2.1. Existing Government Improvements . . . . . . . . . . . . . . . . .98

4.2.2.3. Allocations and Administrative Payments Under the Uniform Act . . . . . . .98

4.2.2.4. Departure from the Unit Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

4.2.3. Objective Market Evidence; Conjectural and Speculative Evidence . . . . . . . . . . . 99

4.2.4. Renements of Market Value Standard . . . . . . . . . . . . . . . . . . . . . . . . 100

4.2.5. Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

4.2.6. Exceptions to Market Value Standard . . . . . . . . . . . . . . . . . . . . . . . . . 101

Uniform Appraisal Standards for Federal Land Acquisitions / Table of ContentsVI

4.3. Highest and Best Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

4.3.1. Highest and Best Use Denition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

4.3.2. Criteria for Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

4.3.2.1. All Possible Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

4.3.2.2. Market Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104

4.3.2.3. Economic Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

4.3.2.4. Zoning and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

4.3.2.4.1. Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

4.3.3. Larger Parcel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

4.3.4. Criteria for Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

4.3.4.1. Unity of Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

4.3.4.2. Unity of Ownership (Title). . . . . . . . . . . . . . . . . . . . . . . . . . . 113

4.3.4.3. Physical Unity (Contiguity or Proximity) . . . . . . . . . . . . . . . . . . . . . . . 115

4.3.4.4. Legal Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

4.3.4.5. Special Considerations in Partial Acquisitions . . . . . . . . . . . . . . . . . 117

4.3.4.6. Special Considerations in Riparian Land Acquisitions . . . . . . . . . . . . 117

4.3.4.7. Special Considerations in Land Exchanges . . . . . . . . . . . . . . . . . . 117

4.3.4.8. Special Considerations in Inverse Takings . . . . . . . . . . . . . . . . . . . 117

4.4. Valuation Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

4.4.1. The Three Approaches to Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

4.4.2. Sales Comparison Approach. Under federal law. . . . . . . . . . . . . . . . . . . . . 119

4.4.2.1. Comparability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

4.4.2.2. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

4.4.2.3. Sales Verication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

4.4.2.4. Transactions Requiring Extraordinary Care. . . . . . . . . . . . . . . . . . 122

4.4.2.4.1. Prior Sales of the Same Property . . . . . . . . . . . . . . . . . . . 123

4.4.2.4.2. Transactions with Potential Nonmarket Motivations . . . . . . . . 124

4.4.2.4.3. Exchanges of Property . . . . . . . . . . . . . . . . . . . . . . . 128

4.4.2.4.4. Sales that Include Personal Property . . . . . . . . . . . . . . . . 128

4.4.2.4.5. Contingency Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

4.4.2.4.6. Oers, Listings, Contracts, and Options . . . . . . . . . . . . . . . 129

4.4.2.4.7. Sales After the Date of Valuation . . . . . . . . . . . . . . . . . . 130

4.4.3. Cost Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

4.4.3.1. Foundations of the Cost Approach. . . . . . . . . . . . . . . . . . . . . . . 132

4.4.3.2. Value of the Land (Site) as if Vacant. . . . . . . . . . . . . . . . . . . . . . 134

4.4.3.3. Reproduction Cost and Replacement Cost . . . . . . . . . . . . . . . . . . 134

4.4.3.4. Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .135

4.4.3.5. Entrepreneurial Incentive and Entrepreneurial Prot . . . . . . . . . . . . . 135

4.4.3.6. Unit Rule and the Cost Approach . . . . . . . . . . . . . . . . . . . . . . .136

4.4.4. Income Capitalization Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

4.4.4.1. Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

4.4.4.2. Income to Be Considered . . . . . . . . . . . . . . . . . . . . . . . . . . . 140

4.4.4.3. Capitalization Rate or Discount Rate . . . . . . . . . . . . . . . . . . . . .140

4.4.4.4. Unit Rule Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

4.4.4.5. Further Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Contents VII

4.4.5. Subdivision Valuation and the Development Method . . . . . . . . . . . . . . . . . 142

4.4.5.1. Reasonable Probability of Development . . . . . . . . . . . . . . . . . . . . 143

4.4.5.2. Application to Undeveloped Land . . . . . . . . . . . . . . . . . . . . . . . 144

4.4.5.3. Credible Cost Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

4.4.5.4. Availability of Comparable Sales . . . . . . . . . . . . . . . . . . . . . . . 145

4.5. Project Inuence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

4.5.1. The Scope of the Project Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

4.5.2. Application of the Scope of the Project Rule. . . . . . . . . . . . . . . . . . . . . . 149

4.5.3. Legal Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

4.5.4. Impact on Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

4.5.5. Limits of the Scope of the Project Rule . . . . . . . . . . . . . . . . . . . . . . . . 150

4.5.6. Further Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150

4.6. Partial Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

4.6.1. The Federal Rule: Before and After Methodology . . . . . . . . . . . . . . . . . . 152

4.6.1.1. Larger Parcel Determination . . . . . . . . . . . . . . . . . . . . . . . . 153

4.6.2. Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

4.6.2.1. Compensable (Severance) Damages . . . . . . . . . . . . . . . . . . . . . . 155

4.6.2.2. Necessary Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

4.6.2.3. Non-Compensable (Consequential) Damages . . . . . . . . . . . . . . . . . . 159

4.6.3. Benets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

4.6.4. Exceptions to the Federal Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . .165

4.6.4.1. Taking Plus Damages (the “State Rule”) . . . . . . . . . . . . . . . . . . . . 166

4.6.5. Easement Valuation Issues. In general terms . . . . . . . . . . . . . . . . . . . . . .168

4.6.5.1. Dominant Easement Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 169

4.6.5.1.1. “Going Rates” and Nonmarket Considerations. . . . . . . . . . . 171

4.6.5.1.2. Temporary Easements. . . . . . . . . . . . . . . . . . . . . . . . 171

4.6.5.1.3. Sale or Disposal of Easements . . . . . . . . . . . . . . . . . . . 171

4.6.5.2. Lands Encumbered by Easements . . . . . . . . . . . . . . . . . . . . . . . 172

4.6.5.3. Appurtenant Easements to the Servient Estate . . . . . . . . . . . . . . . . 172

4.7. Leaseholds and Other Temporary Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . 174

4.7.1. Leaseholds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

4.7.2. Temporary Inverse Takings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

4.8. Natural Resources Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

4.8.1. Unit Rule and Natural Resources. . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

4.8.2. Highest and Best Use and Natural Resources . . . . . . . . . . . . . . . . . . . . . . . 179

4.8.3. Valuation Approaches for Mineral Resources . . . . . . . . . . . . . . . . . . . . . 180

4.8.4. Timber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

4.8.5. Water Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

4.9. Inverse Takings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184

4.10. Land Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

4.11. Special Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

4.11.1. Riparian Lands and the Federal Navigational Servitude . . . . . . . . . . . . . . . 187

4.11.2. Federal Grazing Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

4.11.3. Streets, Rail Corridors, Infrastructure, and Public Facilities . . . . . . . . . . . . . 195

Uniform Appraisal Standards for Federal Land Acquisitions / Table of ContentsVIII

4.11.3.1. Streets, Highways, Roads, and Alleys . . . . . . . . . . . . . . . . . . . . .196

4.11.3.2. Corridors and Rights of Way . . . . . . . . . . . . . . . . . . . . . . . . . . 198

4.11.3.3. Substitute-Facility Compensation . . . . . . . . . . . . . . . . . . . . . . . 199

4.12. Appraisers’ Use of Supporting Experts’ Opinions . . . . . . . . . . . . . . . . . . . . . . 201

4.13. Common Purpose (Roles and Responsibilities) . . . . . . . . . . . . . . . . . . . . . . . . 203

4.13.1. Appraisers and Other Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203

4.13.2. Government Agency Sta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .205

4.13.3. Landowners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

4.13.4. Attorneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206

APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207

A. Appraisal Report Documentation Checklist. . . . . . . . . . . . . . . . . . . . . . . . . . 208

B. Recommended Appraisal Report Format for Total Acquisition . . . . . . . . . . . . . . . 212

C. Recommended Appraisal Report Format for Partial Acquisitions . . . . . . . . . . . . . . 214

D. Recommended Project Appraisal Report Format . . . . . . . . . . . . . . . . . . . . . . . 216

E. Extraordinary Verication of Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .218

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220

INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245

Uniform Appraisal Standards for Federal Land Acquisitions / Foreword 1

FOREWORD

This is the sixth edition of the Uniform Appraisal Standards for Federal Land Acquisitions, known to many

as the Yellow Book. The valuation of real estate in federal acquisitions—serving public purposes that range

from national parks and public buildings to infrastructure and national security needs—must satisfy not only

appraisal industry standards authorized by Congress, but also the command of the Fifth Amendment to

the U.S. Constitution: that no property shall “be taken for public use, without just compensation.” Sound

appraisals are vital to ensure that government acquisitions do justice to both the individual whose property is

taken and the public which must pay for it. These federal Standards, frequently cited in legislation and court

rulings, have guided the appraisal process in the valuation of real estate in federal acquisitions since their

original publication by the Interagency Land Acquisition Conference in 1971.

The Attorney General formed the Interagency Land Acquisition Conference in 1968. Since its inception,

the Conference has been “fueled by the common purpose and dedication” of its participants—any and all

federal agencies that acquire property for public uses. Their shared objectives are to promulgate uniform,

fair, and ecient appraisal standards for federal acquisitions; to identify and nd the best solutions to

the problems incident to acquiring land for public purposes; and to consider all acquisition-related

matters with the twin aims of protecting the public interest and ensuring fair and equitable treatment of

landowners whose property is aected by public projects.

The Conference is chaired by the Assistant Attorney General for the Environment and Natural Resources

Division, Department of Justice, and Andrew M. Goldfrank, Chief of the Division’s Land Acquisition

Section, serves as Conference Executive.

In updating the Standards for the rst time in 16 years, we incorporated relevant new appraisal

methodology and theory, integrated new case law, and ensured appropriate consistency with professional

appraisal standards. The content is also restructured and revised for clarity and readability, resulting in

practical and understandable guidance for appraisers, attorneys, and the general public. The nal text

reects the contributions of the Conference agencies’ representatives, who shared valuable insights and

suggestions on the previous Standards and commented on drafts of the sixth edition.

The Appraisal Foundation provided technical assistance in preparing these Standards for publication. To

ensure the Yellow Book is easily available to all interested users, The Appraisal Foundation is publishing

this 2016 edition in both print and electronic forms under a cooperative agreement with the Department

of Justice. A free electronic version is also available on the Department of Justice website.

I commend the sixth edition of the Yellow Book to all readers as the foremost authority on real estate

valuation in federal eminent domain, and an indispensable resource for the appraisal of property for all

types of federal acquisitions. And, I would like to single out for special recognition appraisal unit chief

Brian Holly, MAI, and trial attorney Georgia Garthwaite, of the Department of Justice, who led the eort

that resulted in this sixth edition of the Uniform Appraisal Standards for Federal Land Acquisitions, with

the assistance of Mr. Goldfrank.

John C. Cruden, Chair

Interagency Land Acquisition Conference

December 6, 2016

Uniform Appraisal Standards for Federal Land Acquisitions / Acknowledgments2

The Interagency Land Acquisition Conference gratefully acknowledges the important

contributions of the following individuals.

United States Department of Justice

Jennifer Campbell, Supervisory Paralegal

Eric Chiapponi, Review Appraiser

Hannah Flesch, Paralegal

Kristine Hartley, Review Appraiser

Jacqueline Hyatt, Law Clerk

Daniel Kastner, Trial Attorney

Kristin Muenzen, Trial Attorney

Erica Pencak, Trial Attorney

Wade Schroeder, Review Appraiser

Michelle Sellers, Paralegal

Lucy Shepherd, Sta Assistant

Moriah Sulc, Paralegal

Reade Wilson, Trial Attorney

General Services Administration

Nicholas Huord, Chief Appraiser

United States Army Corps of Engineers

Mary Arndt, Chief Appraiser

United States Forest Service

Jerry Sanchez, Chief Appraiser

United States Department of the Interior

Timothy Hansen, Chief Appraiser

United States Department of the Navy

Mark Worthen, Chief Appraiser

The Appraisal Foundation

Magdalene Vasquez, Editor

ACKNOWLEDGEMENTS

Uniform Appraisal Standards for Federal Land Acquisitions / Introductory Material 3

0. INTRODUCTORY MATERIAL

0.1. Purpose. The purpose of the Uniform Appraisal Standards for Federal Land Acquisitions (Standards) is to

promote fairness, uniformity, and eciency in the appraisal of real property in federal acquisitions. Just

compensation must be paid for property acquired for public purposes, whether by voluntary purchase,

land exchange, or the power of eminent domain. Landowners should be treated equitably no matter

which agency is acquiring their land. The use of public funds compels ecient, cost-eective practices.

The same goals of uniformity, eciency, and fair treatment of those aected by public projects underlie

the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (hereinafter

Uniform Act).

The Uniform Act applies to federal acquisitions as well as many state and local

government acquisitions involving federal funds.

In federal acquisitions, the purpose of an appraisal—whether prepared for the government or a

landowner—is to develop an opinion of market value that can be used to determine just compensation

under federal law. As a result, appraisals in federal acquisitions face dierent—and often more rigorous—

valuation problems and standards than those typically encountered in appraisals for other purposes,

such as private sales, tax, mortgage, rate-making, or insurance. These Standards set forth the guiding

principles, legal requirements, and practical implications for the appraisal of property in all types of

federal acquisitions.

These Standards may need to be modied to meet specic requirements of agency programs, special

legislation, or negotiated agreements between agencies and landowners.

Any such modications to these

Standards require specic written instructions from the acquiring agency, as do modications to comply

with court rulings or stipulations between parties in litigation.

Legal questions often arise when applying these Standards to the facts of a specic appraisal assignment,

requiring appropriate written legal instructions. Appraisers and agency counsel should work closely to

ensure legal instructions not only are legally correct, but also adequately address the valuation problem

to be solved. Federal agencies are also encouraged to consult with the U.S. Department of Justice on

challenging legal and valuation issues, regardless of whether condemnation is anticipated. Appropriate

legal instructions can resolve doubt about the proper method of valuation or the application of particular

rules to specic factual situations. If these Standards are properly applied, under sound legal instructions,

1 The Uniform Act, also called the URA, is discussed throughout these Standards. The Uniform Act addresses two principal areas:

• Real Property Acquisition policies set out agency appraisal criteria and negotiation obligations in order to encourage acquisitions by agreement, avoid

litigation, ensure consistent treatment for landowners across federal programs, and promote public condence in federal property acquisition practices.

• Relocation Assistance policies are designed to ensure uniform, fair, and equitable treatment of those who are displaced by government programs and

projects, and to minimize the hardships displaced persons may face as a result of programs and projects intended to benet the public as a whole.

Federal regulations direct agencies to implement the Uniform Act in an ecient, cost-eective manner, and specically reference these appraisal

Standards at 49 C.F.R. § 24.103. In turn, these appraisal Standards presume full compliance with all applicable provisions of the Uniform Act and

related regulations. The full Uniform Act is codied at 42 U.S.C. §§ 4601 to 4655, and enforced by federal regulations at 49 C.F.R. Part 24.

2 Some federal agencies have adopted appraisal and/or appraisal review handbooks or manuals that may modify these Standards to meet other criteria

for specic acquisition programs.

Uniform Appraisal Standards for Federal Land Acquisitions / Introductory Material4

the resulting appraisal will be a credible, reliable, and accurate opinion of market value that can be used

for purposes of just compensation.

0.2. Governing Principles. Federal acquisitions entail dierent appraisal standards than other types

of property transactions because they involve payment of just compensation. As the measure of just

compensation is a question of substantive right “grounded upon the Constitution of the United States,”

just compensation must be determined under federal common law—that is, case law.

Federal case law

holds that just compensation must reect basic principles of fairness and justice for both the individual

whose property is taken and the public which must pay for it. To achieve this, an objective and practical

standard was required, and the Supreme Court has long adopted

the concept of market value to measure just compensation. As a

result, just compensation is measured by the market value of the

property taken. “To award [a landowner] less would be unjust to

him; to award him more would be unjust to the public.”

Most of the case law on just compensation stems from the federal

exercise of eminent domain, but the resulting practical, objective

rules for determining market value have been adopted in numerous federal statutes, rules and regulations,

and programs and agency policies. As a result, the federal eminent domain-based valuation requirements

reected in these Standards apply to all types of federal acquisitions.

And because these Standards

require appraisers to provide an opinion of market value and not just compensation, they also apply to

the appraisal of property for many types of government transactions that require a reliable determination

of market value without reference to just compensation, such as land exchanges under the Federal Land

Policy and Management Act (FLPMA).

Certain types of transactions may require exceptions to specic valuation rules contained in these

Standards—for example, to comply with special legislation—but the underlying principles of just

compensation remain in force. In addition, while just compensation does not exceed market value fairly

determined, Congress has the power to allow or require the United States to pay more than the just

compensation required under the Fifth Amendment. For example, under the Uniform Act, people and

businesses displaced by public projects receive moving and relocation expenses in addition to the market-

value-based just compensation received for the acquisition.

Just compensation is determined under federal rather than state law. Appraisers must apply federal

law throughout the process of opining on market value, recognizing that federal and state laws dier

in important respects. Most appraisals for federal acquisitions involve straightforward application of

established law to the facts. But some valuation problems require nuanced legal instructions to address

complicated or undecided questions of law. These Standards address both routine and complex legal

issues that arise in federal acquisitions.

3 United States v. Miller, 317 U.S. 369, 380 (1943); see Marbury v. Madison, 5 U.S. 137 (1803).

4 Bauman v. Ross, 167 U.S. 548, 574 (1897).

5 Similarly, the appraisal requirements set forth in the Uniform Act regulations “are necessarily designed to comply with . . . Federal eminent domain

based appraisal requirements.” 49 C.F.R. app. A § 24.103(a).

6 See Sections 1.12 and 4.10 for a discussion of special considerations arising in the appraisal of property for federal land exchanges under FLPMA, 43

U.S.C. § 1716, and other statutes.

“. . . nor shall private property

be taken for public use, without

just compensation.”

— U.S. Constitution,

amendment v

Uniform Appraisal Standards for Federal Land Acquisitions / Introductory Material 5

Where just compensation is concerned, a reliable process is

necessary to ensure a just result. For federal acquisition purposes,

the appraisal process must result in opinions of market value

that are credible, reliable, and accurate. These federal Standards

governing the appraisal process protect against allowing

“mere speculation and conjecture to become a guide for the

ascertainment of value—a thing to be condemned in business

transactions as well as in judicial ascertainment of truth.”

0.3. Scope. These Standards cover the following areas:

(1) Appraisal Development

(2) Appraisal Reporting

(3) Appraisal Review

(4) Legal Foundations

Section 1: Appraisal Development sets forth the standards

that must be followed in developing an appraisal for federal acquisition purposes to ensure a

credible, reliable, and accurate valuation that reects just compensation mandated by the United

States Constitution. Section 1 derives from generally accepted professional appraisal standards

and federal law. Competent development of an appraisal under these Standards requires an

understanding of applicable law, described in Section 4: Legal Foundations and Guidance.

Section 2: Appraisal Reporting presents the content and documentation required for

appraisals developed in compliance with these Standards and applicable law. Section 2 also

includes a recommended appraisal report format. Agencies may modify these documentation

and formatting requirements in certain circumstances to ensure appropriate exibility to

accomplish agency program goals.

Section 3: Appraisal Review addresses technical and administrative reviews of appraisals by

appraisers and non-appraisers, and is derived from generally accepted appraisal review standards

and federal law and regulations. The purpose of Section 3 is to ensure that appraisals used by the

government in its land acquisitions are credible, reliable and accurate and have been conducted

in an unbiased, objective, and thorough manner, in accordance with applicable law.

Section 4: Legal Foundations explains the federal law that dictates these appraisal Standards,

which apply to appraisals for all federal acquisitions involving the measure of just compensation.

Federal case law, cited throughout the section, has long held that market value is normally

the measure of just compensation; the rare departures from the market value standard are

also discussed. Appraisers who make market value appraisals for federal acquisitions must

understand and apply federal law in the development, reporting, and review of appraisals in

federal acquisitions. Section 4 also includes a discussion of the legal standards that apply to many

recurring valuation problems, as well as guidance on specialized appraisal issues that are unique

to federal acquisitions.

7 Olson v. United States, 292 U.S. 246, 257 (1934).

“[O]ur cases have

set forth a clear and

administrable rule for

just compensation: ‘The

Court has repeatedly held

that just compensation

normally is to be

measured by ‘the market

value of the property at

the time of the taking.’”

— Horne v. Dep’t of Agric.,

135 S. Ct. 2419, 2432

(2015) (quoting United

States v. 50 Acres of Land

(Duncanville), 469 U.S. 24,

29 (1984))

Uniform Appraisal Standards for Federal Land Acquisitions / Introductory Material6

As a whole, these Standards aim to encourage uniform, reliable, and fair approaches to appraisal

problems, and to ensure consistent, eective practices for evaluating appraisal reports for federal

acquisition purposes. Nothing in these Standards is intended to limit the scope of appraisal

investigations or to undermine the independence and objectivity of appraisers engaged in

providing opinions of market value for just compensation purposes.

With appropriate modications, these Standards—or rather, portions of these Standards—may

be applied to valuations for non-acquisition purposes, such as appraisals for conveyance, sale, or

other disposals of federal property. Some rules that must be followed in valuing real property for

federal acquisition purposes are inapt or impossible to apply to federal disposals. As discussed

in Section 1.2.8, these Standards do not prohibit adapting these valuation rules to address the

distinct challenges of appraising federal property for disposal purposes.

0.4. About the Sixth Edition to the “Yellow Book.” In this sixth edition, the Uniform Appraisal

Standards for Federal Land Acquisitions have been updated to reect developments in appraisal

methodology and theory, case law, and other federal requirements since the fth edition was

published in 2000. These Standards have also been restructured for clarity, convenience, and

consistency with professional appraisal standards, as appropriate.

The four-part structure is designed to follow the appraisal process, from development, to

reporting, to review, while the nal section explains the legal foundations for the appraisal

development, reporting, and review requirements, and provides practical examples of how the

underlying law applies to actual valuation problems in federal acquisitions. This sixth edition

is also broadly consistent with the structure of the current Uniform Standards of Professional

Appraisal Practice (USPAP) and federal regulations implementing the Uniform Relocation

Assistance and Real Property Acquisition Policies Act of 1970 (Uniform Act or URA).

The sixth edition’s structure reects the evolution of USPAP (which did not exist in early

editions of these Standards) as the congressionally authorized minimum standards for the

appraisal profession. It also continues the fth edition’s focus on the practical eects of federal

valuation requirements on appraisals in federal acquisitions.

Broadly speaking, this sixth

edition incorporates previous editions as follows:

Section 1: Appraisal Development addresses the appraisal process and the scope of work appropriate

for appraisals in federal acquisitions, integrating appraisal development topics from the fth

edition’s Parts A, B, C, and D with USPAP’s Scope of Work Rule (created since the fth edition);

Section 2: Appraisal Reporting incorporates the contents of the fth edition’s Part A, Data

Documentation and Appraisal Reporting Standards;

8 Recognizing that the vast majority of federal acquisitions are accomplished by voluntary means, the fth edition placed technical appraisal

requirements up front. Previous editions led o with discussion of federal law on valuation issues, primarily focusing on eminent domain

litigation. To reduce confusion, topics in this sixth edition are organized by number, unlike the lettered subparts in earlier editions. A detailed

cross-reference table is included in the Appendix.

Uniform Appraisal Standards for Federal Land Acquisitions / Introductory Material 7

Section 3: Appraisal Review incorporates the contents of the fth edition’s Part C, Standards for

the Review of Appraisals; and

Section 4: Legal Foundations integrates and updates the topics in the fth edition’s Part B, Legal

Basis for Appraisal Standards for Federal Land Acquisitions, and several legal topics previously

in Part D as miscellaneous. Of particular note, the fth edition’s lengthy Part D-9, Comparable

Sales Requiring Extraordinary Verication and Treatment, is now addressed in Section 1.5.2.4,

and the legal foundations for these heightened requirements are explained in Section 4.4.2.4. A

verication checklist is also included in the Appendix.

0.5. Policy. In acquiring real property, or any interest in real

property, the United States will impartially protect the interests

of the public and ensure the fair and equitable treatment

of those whose property is needed for public purposes. As a

general policy, the United States bases its property acquisitions

on appraisals of market value, the standard adopted

by the courts as the practical, objective measure of just

compensation.

“[I]t is the duty of the state,

in the conduct of the inquest

by which the compensation is

ascertained, to see that it is just,

not merely to the individual

whose property is taken but to

the public which is to pay for it.”

— Bauman v. Ross, 167 U.S. 548,

574 (1897)

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development8

1.1. Introduction. These Standards reect the application of the appraisal process to valuation

assignments for federal property acquisitions. The goal of every appraisal prepared under these

Standards is a well-supported opinion of market value that is credible, reliable, and accurate.

These requirements and rules are set forth to ensure that the appraiser’s opinion of market

value can be used for purposes of just compensation under the United States Constitution.

The appraisal process provides a logical framework for the identication and proper solution

of an appraisal problem. The general steps of the appraisal process are:

• Problem identication

• Scope of work

• Data collection

• Data analysis

• Application of approaches to value

• Reconciliation and nal opinion of market value

• Report of opinion of market value

The rst step in the appraisal process is to identify the appraisal problem to be solved. To do

so, the appraiser and the client

must address seven critical assignment elements presented in

Section 1.2. This discussion summarizes each of the seven elements and in particular addresses

the assignment conditions associated with appraisals prepared for federal property acquisitions.

The special legal rules and methods required under these Standards are identied and briey

addressed. This section is intended to assist appraisers and agencies in determining the

appropriate scope of work for each appraisal assignment.

Section 1 also addresses the next four steps in the appraisal process. Section 1.3 addresses data

collection concerning the subject property and the market, respectively. Section 1.4 addresses

data analysis, including highest and best use, and larger parcel and market analysis. Section

1.5 addresses the application of the approaches to value including land valuation, the sales

comparison approach, the income capitalization approach, and the cost approach. Section 1.6

addresses the reconciliation process and the nal opinion of market value. Section 1 also contains

appraisal development requirements specic to certain types of federal acquisitions including

partial acquisitions, leasehold acquisitions, temporary acquisitions, natural resources acquisitions,

inverse takings, and federal land exchanges. Finally, Section 1 provides guidance concerning the

use of reports by other experts and the appraiser’s responsibilities in litigation.

Section 1 is generally consistent with Standard 1 of USPAP, but provides more in-depth

discussion of each topic to address the heightened requirements for appraisals prepared for

just compensation purposes. These Standards do not cover all of the valuation problems that

9 See Section 1.2.1 for discussion concerning the client.

1. APPRAISAL DEVELOPMENT

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 9

might be encountered in the appraisal of real property for government acquisitions. Instead,

the Standards address the fundamental scope of work issues associated with preparing sound

appraisals for federal agencies. Proper application of the scope of work will ensure that federal

agencies obtain appraisals that are credible, reliable, and accurate and result in uniform, fair

treatment of property owners during the acquisition process.

The acquisition of private property by government agencies can create dicult and complex

valuation problems, the solutions to which must be developed with great care. It is critical that in

those instances when proposed acquisitions are complex, high value, sensitive, or controversial or

when the matter must be referred to the Department of Justice for litigation, the full scope of work

described in these Standards must be applied. In other assignments, it is appropriate to modify

the scope of work when the acquisition is noncomplex and/or to ensure the cost of the appraisal

is consistent with the requirements of the client agency. Under no circumstances may the scope of

work result in an appraisal that does not meet the minimum requirements under the Uniform Act.

1.2. Problem Identication. The problem identication process ensures that the appraiser

identies and understands the critical assignment elements associated with developing an

appraisal for federal acquisition purposes under these Standards. Federal appraisal requirements

are often dierent than those of private clients, and the appraiser must fully understand and

comply with these requirements.

The scope of work

must address seven critical assignment elements for each appraisal assignment:

• Client

• Intended users

• Intended use

• Type and denition of value

• Eective date

• Relevant characteristics about the subject property

• Assignment conditions

1.2.1. Client. The client is the party or parties engaging an appraiser in an assignment. The client is

the appraiser’s primary contact and provides all of the information about the assignment. Most

importantly, the client is the entity to whom the appraiser owes condentiality. The client must

be established before the appraiser begins the assignment. Under these Standards, the client is

the federal agency that is requesting the appraisal.

1.2.2. Intended Users. All intended users of an appraisal must be identied at the outset of the

assignment. Intended users often include not only the client agency but also other federal,

state, or local agencies. In appraisals for land exchanges, discussed in more detail in Section

1.12, intended users may include landowners. In appraisals for acquisitions referred to the

Department of Justice for condemnation litigation purposes, the intended users may include

10 The ApprAisAl FoundATion, uniForm sTAndArds oF proFessionAl ApprAisAl prAcTice (USPAP) 17-18 (2016-2017) [hereinafter USPAP].

See Scope of Work Rule and Standards Rule 1-2.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development10

the federal court, landowners, and their counsel. The appraiser must fully identify and

understand who the intended users are before initiating the appraisal assignment.

1.2.3. Intended Use. The intended use of the appraisal is one of the most important elements of

the problem identication process. In most assignments, the intended use of the appraisal is

to assist the client agency in its determination of the amount to be paid as just compensation

for the property rights acquired or conveyed. In those cases that have been referred to the

Department of Justice for litigation, the intended use will be to assist government’s trial counsel

and the court in determining market value for the purpose of just compensation.

1.2.4. Type of Opinion. In all assignments for federal acquisitions under these Standards, the type

of opinion to be developed is market value. It is imperative that the appraiser utilize the correct

denition of market value. In all federal acquisitions except leasehold acquisitions, appraisers

must use the following federal denition of market value:

Appraisers should not link opinions of value under these Standards to a specic opinion of

exposure time, unlike appraisal assignments for other purposes under USPAP Standards Rule

1-2(c). This requires a jurisdictional exception to USPAP because, as discussed in Section 4.2.1.2,

the federal denition of market value already presumes that the property was exposed on the

open market for a reasonable length of time, given the character of the property and its market.

Similarly, estimates of marketing time are not appropriate for just compensation purposes, and

must not be included in appraisal reports prepared under these Standards.

While estimates

of marketing time may be appropriate in other contexts and are often required by relocation

companies, mortgage lenders, and other users, “provid[ing] a reasonable marketing time

opinion exceeds the normal information required for the conduct of the appraisal process”

and is beyond the scope of the appraisal assignment under these Standards.

1.2.5. Eective Date. The eective date of value for the assignment is dependent on the intended

use, which depends on the legal nature of the acquisition and is further discussed in Section

4.2.1.1. In most direct acquisitions (such as voluntary purchases), the eective date of value

will be as near as possible to the date of the acquisition—typically the date of nal inspection.

In “quick-take” condemnations under the Declaration of Taking Act, the date of value is the

earlier of (1) the date the United States les a declaration of taking and deposits estimated

compensation with the court, or (2) the date the government enters into possession of the

property. In “complaint-only” straight condemnations under the General Condemnation

11 See Section 4.2.1 for the legal basis for this denition.

12 Marketing time refers to the period of time it would take to sell the appraised property, after the eective date of value, at its appraised value.

13 USPAP, Advisory Opinion 7, Marketing Time Opinions.

Denition of Market Value

Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in

all probability the property would have sold on the eective date of value, after a reasonable

exposure time on the open competitive market, from a willing and reasonably knowledgeable

seller to a willing and reasonably knowledgeable buyer, with neither acting under any

compulsion to buy or sell, giving due consideration to all available economic uses of the property.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 11

Act in which no declaration of taking is led, there may be two valuation dates: the rst date

will likely be the date of nal inspection; the second date is when the appraiser is asked to

form a new opinion of value (a new appraisal assignment) eective as of the date of trial.

In inverse takings, the date of value is the date of taking, typically established by the court.

When necessary, the client must provide the appraiser with a legal instruction regarding the

appropriate eective date of value and the legal basis for the date to be used in the assignment.

For assignments in which the eective date of value is prior to the date of the report, the

appraiser should consult USPAP guidance regarding retrospective value opinions.

The

identication of the eective date of value does not preclude consideration of market data

after that date. Comparable sales and rentals occurring after the eective date of value may be

considered (see Section 4.4.2.4.7). Market data after the eective date of value that conrms

market trends identied as of the eective date of value may also be considered.

1.2.6. Relevant Characteristics of the Subject Property. The subject property is the property

that is being appraised.

In the context of these Standards the term may refer to the property

that is the larger parcel. In developing an appraisal under these Standards the appraiser must

complete a comprehensive study of the physical, legal, and economic characteristics of the

subject property as well as the neighborhood and market in which it is located.

1.2.6.1. Property Interest(s) to be Appraised. It is the responsibility of the acquiring agency to

provide the appraiser with an accurate description of the property interest(s) to be appraised in

each assignment.

Often, the property interest being acquired and appraised is the fee simple estate. This is so

even when the real estate has been divided into multiple estates with dierent owners. This is

an application of the unit rule, which will be discussed in greater detail in Section 1.2.7.3.2 and

4.2.2. Federal agencies can also acquire something less than the fee simple interest in property,

for example by excluding easements for roads and utilities, mineral rights, water rights, or mineral

leases. Agencies can also acquire partial interests such as permanent and temporary easements,

rights of entry, and leaseholds. The appraiser must fully understand the nature of the estate(s) to

be acquired, and request legal instructions if clarication is needed, for each assignment.

1.2.6.2. Legal Description. It is the responsibility of the agency to provide the appraiser with an

accurate legal description of the subject property prior to initiating the assignment. If the

assignment is a partial acquisition, the appraiser should receive both a legal description of

the larger parcel and a legal description of the remainder property, or alternatively, a legal

description of the area to be acquired and/or encumbered. Since the larger parcel is determined

by the appraiser as part of the highest and best use analysis, it is possible that a legal description

for the larger parcel must be developed at that point in the appraisal development process.

The appraiser should verify the legal description (1) on the ground during a physical inspection

of the property; (2) with the owner of the property (if possible); (3) by comparing it with aerial

or other maps available in city, county, or other governmental oces; and (4) by comparing it

14 USPAP, Advisory Opinion 34, Retrospective and Prospective Value Opinions.

15 Subject Property, The dicTionAry oF reAl esTATe ApprAisAl (6th ed. 2015).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development12

with public records in the recorder’s, auditor’s, assessor’s, tax collector’s, or other appropriate

city or county oces. If the appraiser discovers a signicant error or inconsistency, the

appraiser should consult the client for clarication before proceeding with the appraisal.

1.2.6.3. Property Inspections. The appraiser must personally inspect the subject property in every

assignment. Appraisers should recognize that they may have only one opportunity to physically

inspect the property and should ensure that they have collected all information required to

identify all property characteristics (land and improvements) that inuence value.

In partial acquisitions in which the appraiser’s inspection precedes the acquisition, the

appraiser should request that the agency stake the portion(s) of the property to be acquired

before the inspection so that the impact of the acquisition on the remainder can be visualized.

If the appraiser’s inspection occurs after construction of the government’s project begins (most

commonly in Declaration of Taking cases), the appraiser must learn about the property as it

existed before the taking to ensure that the property characteristics inuencing value before the

taking are properly accounted for.

In acquisitions of such large or inaccessible properties that

a physical on-the-ground inspection may be impossible or not useful, the client may modify the

scope of work to allow for an aerial inspection of the property.

In most assignments, the appraiser should also conduct a physical inspection of all properties

used as sales or rental comparables. The level of detail of these inspections is dependent on

the complexity of the appraisal problem to be solved. Physical inspection of all properties

used as sales or rental comparables is required for any appraisal being prepared for the U.S.

Department of Justice for litigation purposes.

1.2.6.4. Contacting Landowners. During the course of inspecting the subject property, the

appraiser is expected to meet with the property owner or, in the owner’s absence, the owner’s

agent or representative. If a property owner is represented by legal counsel, all owner contact

and property inspections must be arranged through the owner’s attorney, unless the attorney

specically authorizes the appraiser to make direct contact with the owner. Owners are

generally a prime source of detailed information concerning the history, management, and

operation of the property.

Under the Uniform Act, the owner or the owner’s designated representative must be given an

opportunity to accompany the acquiring agency’s appraiser during the appraiser’s inspection

of the property.

1.2.7. Assignment Conditions. In developing an appraisal under these Standards, appraisers must

understand the special assignment conditions associated with the valuation of property being

acquired by federal agencies. These special assignment conditions include the use of instructions,

hypothetical conditions, extraordinary assumptions, and jurisdictional exceptions from USPAP as

well as the special rules and methods required in these appraisals.

16 J.D. eATon, reAl esTATe VAluATion in liTigATion 272-73 (2d ed. 1995) [hereinafter eATon].

17 42 U.S.C. § 4651(2).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 13

1.2.7.1. Instructions, Hypothetical Conditions, Extraordinary Assumptions. Application

of these Standards may require instructions from the acquiring agency. For example, agency

instructions can provide clarication about the legal description of the property to be appraised

and/or the property rights being acquired. Agency instructions that result in assumptions,

hypothetical conditions, or extraordinary assumptions that impact the appraisal process or the

appraisal results should be carefully considered before being issued. An appraiser cannot make

an assumption or accept an instruction that is unreasonable or misleading, nor can an appraiser

make an assumption that corrupts the credibility of the opinion of market value

or alters the

scope of work required by the appraiser’s contract. For example, it is improper (unless specically

instructed otherwise) for an appraiser to make an assumption that the property being appraised is

free of contamination when there is evidence from the property inspection or the past use of the

property that contamination may exist. Instructions should always be in writing, retained in the

appraiser’s workle, and included in the addenda of the report.

Hypothetical Conditions. “A hypothetical condition

may be used in an assignment only if:

• use of the hypothetical condition is clearly required for legal purposes, for purposes of

reasonable analysis, or for purposes of comparison;

• use of the hypothetical condition results in a credible analysis; and

• the appraiser complies with the disclosure requirements set forth in USPAP for hypothetical

conditions.”

The appraiser must always consult with the client and/or counsel before employing a

hypothetical condition. If utilization of a hypothetical condition is required by the facts or

nature of the acquisition, then written legal instructions must be provided to the appraiser

and included within the appraisal report. The appraiser must also comply with USPAP

requirements regarding disclosure and impact on the value conclusion.

Extraordinary Assumptions. “An extraordinary assumption

may be used in an

assignment only if:

• it is required to properly develop credible opinions and conclusions;

• the appraiser has a reasonable basis for the extraordinary assumption;

• use of the extraordinary assumption results in a credible analysis; and

• the appraiser complies with the disclosure requirements set forth in USPAP for extraordinary

assumptions.”

18 See Section 4.4 (Valuation Process).

19 “Hypothetical conditions are contrary to known facts about physical, legal, or economic characteristics of the subject property; or about

conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.” USPAP, Denitions, 3.

20 USPAP, Comment to Standards Rule 1-2(g), 19.

21 USPAP, Standards Rule 2-2(a)(xi), (b)(xi), 25, 27.

22 “Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the

subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an

analysis.” USPAP, Comment to Extraordinary Assumption, 3.

23 USPAP, Comment to Standards Rule 1-2(f), 19.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development14

It is improper for an appraiser to classify conclusions reached after investigation and analysis

as assumptions. For example, after proper investigation and analysis, an appraiser can conclude

that a probability of rezoning for the subject property exists, but it would be improper to

assume such a probability. The appraiser must also comply with USPAP requirements regarding

disclosure and impact on the value conclusion.

Circumstances arise in which a legal instruction is necessary to properly complete the

appraisal assignment. Examples of situations in which a legal instruction may be required

include: unity of title questions in a larger parcel analysis, scope of the government’s project

questions, compensability of damages questions, special benets questions, and eective date

of value questions. Resolving questions such as these is a proper role for agency counsel (and

Department of Justice trial attorneys) and appraisers must follow their guidance. In situations

where the legal outcome is uncertain, counsel may direct the appraiser to develop a dual

premise appraisal.

1.2.7.2. Jurisdictional Exceptions. While these Standards generally conform to USPAP,

in certain

instances it is necessary to invoke USPAP’s Jurisdictional Exception Rule to comply with

federal law relating to the valuation of real estate for just compensation purposes. Areas of

these Standards that preclude compliance with USPAP and therefore require invoking the

Jurisdictional Exception Rule are briey discussed here.

USPAP’s Jurisdictional Exception Rule simply provides that “[i]f any applicable law or

regulation precludes compliance with any part of USPAP, only that part of USPAP becomes

void for that assignment.” Further, a Comment in the Jurisdictional Exception Rule states, in

part, “When an appraiser properly follows this Rule in disregarding a part of USPAP, there is

no violation of USPAP.”

As made clear below, the conicts between these Standards and USPAP that require invocation

of USPAP’s Jurisdictional Exception Rule are limited and supported by clearly established

federal law, which is further discussed in Section 4. The Jurisdictional Exception Rule should

never be invoked lightly or without reference to the overriding federal law, rule, or regulation

that requires it. USPAP and these Standards require full and prominent disclosure to avoid

misleading intended users (or even casual readers) of the appraisal report.

While these Standards are not law in and of themselves, they are based on, and describe,

federal law (including case law, legislation, administrative rules, and regulations). These

Standards have also been specically incorporated by reference into a number of statutes and

regulations, including the regulations that implement the Uniform Act.

It is clear that the

deviations between the requirements of these Standards and USPAP noted below fall under

24 For purposes of this discussion, the 2016-2017 edition of USPAP has been used. Appraisers are cautioned that USPAP changes frequently

and, thus, additional jurisdictional exceptions to USPAP may be required.

25 USPAP, Jurisdictional Exception Rule, 16.

26 49 C.F.R. § 24.103; see, e.g., 113 Stat. 1693 § 4(b), (Pub. L. No. 106-138); 112 Stat. 879 § 1(c), (Pub. L. No. 105-208); 112 Stat. 2681 §357(1),

§ 605(a)(3), (Pub. L. No. 105-277); 110 Stat. 4093 § 304(c)(4)(A) (Pub. L. No. 104-333); 106 Stat. 2112 § 7(b) (Pub. L. No. 102-415); 106

Stat. 2258 § 2(d)(2)(A) (Pub. L. No. 102-453); 105 Stat. 1150 § 8126(a) (Pub. L. No. 102-172); 102 Stat. 1086 § 3(a) (Pub. L. No. 100-409),

amending 43 U.S.C. § 1716; 100 Stat. 4274 § 8(o) (Pub. L. No. 99-663); 36 C.F.R. § 254.9; 43 C.F.R. § 2201.3.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 15

USPAP’s Jurisdictional Exception Rule; the legal authority justifying these exceptions consists

of these Standards and the federal case law, legislation, and federal regulations upon which

these Standards are based.

Linking Estimate of Value to Specic Exposure Time. Section 1.2.4 provides that the

appraiser shall not link an opinion of market value for federal acquisition purposes to a specic

exposure time. The legal basis for this jurisdictional exception to USPAP Standards Rule 1-2(c)

and may be found in Section 4.2 of these Standards.

Consideration of Land Use Regulations and Anticipated Public Projects. Section

1.2.7.3.3 of these Standards provides that the appraiser disregard any changes in a property’s

neighborhood brought about by the government’s project. Section 1.4.3 further instructs

appraisers to disregard recent rezoning (or the probability of rezoning) of the subject property

if such action was the result of the government’s project. Section 4.3.2.4.1 (Exceptions, under

Zoning and Permits) explains the legal basis for these instructions. These instructions are

contrary to USPAP Standards Rule 1-3(a), which requires appraisers to identify and analyze

the eect on use and value of existing land use regulations and probable modications thereof,

and to USPAP Standards Rule 1-4(f), which requires appraisers to analyze the eect on value

of anticipated public improvements located on or o site. Therefore, the instructions to

appraisers in these Standards in this regard are considered jurisdictional exceptions.

Specic Legislation and Regulations. Each land acquisition agency has its own rules and

regulations relating to its land acquisition activities. While all of these rules and regulations

work from a base of the Uniform Act and its implementing regulations, specic agency

program activities sometimes make it necessary to adopt rules and regulations that are, or may

be construed to be, contrary to USPAP.

Also, it is not uncommon for Congress to enact specic legislation relating to the acquisition of

a specic property or properties to be acquired for a specic public project. In some instances,

adherence to the provisions of that specic legislation may require the appraiser to invoke

USPAP’s Jurisdictional Exception Rule and/or prepare an appraisal under a hypothetical

condition or extraordinary assumption. In such instances, it is the agency’s responsibility to

advise the appraiser of the special conditions under which the appraisal is to be conducted,

of the specic law requiring the invocation of USPAP’s Jurisdictional Exception Rule, and, if

applicable, of the hypothetical condition or extraordinary assumption.

Any time appraisers confront a potential conict between USPAP and these Standards or the

client’s instructions, they should always analyze the apparent conict and avoid invocation

of USPAP’s Jurisdictional Exception Rule whenever possible. Often, these Standards and the

agency’s special appraisal instructions do not require a jurisdictional exception, but rather

merely that the appraiser conduct an appraisal under a hypothetical condition or by adopting

an extraordinary assumption.

1.2.7.3. Special Rules and Methods. An important aspect of assignment conditions under these

Standards is compliance with the special rules and methods that apply to the development of

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development16

appraisals of market value for federal acquisition purposes. These special rules and methods are

summarized briey below, and explained in greater detail throughout these Standards. The legal

foundations for these rules are found in the appropriate sections of Section 4 (Legal Foundations).

1.2.7.3.1. Larger Parcel. Essential to the appraiser’s conclusion of highest and best use is the

determination of the larger parcel.

The appraiser must make a larger parcel determination in

every appraisal conducted under these Standards, even in minor partial acquisitions in which

the appraiser is instructed not to do a complete before and after appraisal.

1.2.7.3.2. Unit Rule. There are several aspects of the unit rule that are important for appraisers to

understand in developing appraisals under these Standards. The unit rule requires valuing

property as a whole rather than by the sum of the values of the various interests into which it

has been carved—such as lessor and lessee, or life tenant and the holder of the remainder. This

requirement holds true in circumstances where the physical components of the property are held

under dierent ownership such as the surface estate, mineral rights, water rights, or timber. Even

when the physical components of a property are under the same ownership, it is improper to

separately value the various components (improvements, minerals, standing timber, crops, and

land) and then add them up. This procedure results in an improper summation or cumulative

appraisal, which is inconsistent with both federal appraisal standards and USPAP.

1.2.7.3.3. Government Project Inuence and the “Scope of the Project” Rule. Any increase

or decrease in the market value of real property prior to the date of valuation caused by the

government project for which the property is being acquired

must be disregarded in developing the appraisal. Under

federal law, valuations for just compensation purposes must

disregard any government project inuence on a property’s

market value once it is within the scope of the government’s

project. The resulting scope of the project rule, when properly

applied, ensures fair results for both landowners and the

public, as discussed in Section 4.5.

The scope of the project rule applies only to changes in value

attributable to the government’s project; it does not allow an

appraiser to disregard changes in value attributable to other factors. For this reason, changes in value

prior to the date of valuation due to physical deterioration within the landowner’s reasonable control

must be considered.

In partial acquisitions, the scope of the project rule typically excludes consideration of government

project inuence on the value of the larger parcel before the acquisition, and includes consideration

of government project inuence on the value of the remainder after the acquisition.

27 As discussed in Section 4.3.3, the larger parcel, for purposes of these Standards, is dened as that tract or those tracts of land that possess

a unity of ownership and have the same, or an integrated, highest and best use. Elements of consideration by the appraiser in making a

determination in this regard are contiguity, or proximity, as it bears on the highest and best use of the property, unity of ownership, and

unity of highest and best use.

28 USPAP, Standards Rule 1-4(e).

29 See Sections 4.5 and 4.6 (especially 4.6.1, 4.6.2, and 4.6.3).

Proper application of the

scope of the project rule is

complex, and virtually always

requires a legal instruction.

Simply directing appraisers

to follow these Standards

is not a sucient legal

instruction for purposes of

the scope of the project rule.

See Section 4.5.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 17

Because the scope of the project rule involves interrelated factual and legal questions, the

appraiser must request appropriate legal instruction if there is evidence the government’s

project aected the market value of the property being appraised.

The appraiser may be

asked to gather and/or analyze data to inform the legal analysis. Counsel (or the Court) will

instruct the appraiser as to (1) whether the scope of the project rule applies; (2) how the rule must

be applied to the specic property under appraisal; and, if applicable (3) when the scope of the

project rule applies, i.e., the date as of which the rule is triggered. As discussed in Section 4.5,

these legal instructions are the criteria the appraiser must follow in determining the fair market

value of the property. As with other complex legal questions, counsel may direct the appraiser

to perform a dual-premise appraisal if the legal outcome is uncertain.

1.2.7.3.4. Before and After Rule. In partial acquisitions, these Standards require application of the

before and after rule, also known as the federal rule, in which the appraiser estimates both the

market value of the larger parcel before the government’s acquisition and the market value

of the remainder property after the government’s acquisition.

Requiring this method of

valuation allows acquiring agencies, the Department of Justice, and the courts to calculate

a reasonable measure of compensation by deducting the appraiser’s estimated remainder

or after value from the appraiser’s estimate of the larger parcel’s before value. The result

of this procedure is a gure that includes the value of the property acquired as well as any

compensable damages and/or special benets to the remainder property.

Appraisers should note that these are two separate appraisals within the same assignment

and require the appraiser to perform a new analysis and valuation of the remainder after

the acquisition.

1.2.7.3.5. Damages. Because damage to the remainder is automatically included in the before and after

valuation, damages are not separately appraised in federal acquisitions. However, to properly

estimate the value of the remainder after the acquisition, appraisers must understand the

concept of damages for federal acquisition purposes. The legal terminology associated with

damages is confusing, perhaps because the same terms have been applied to dierent concepts

under federal and state laws. Under federal law, damage to a property’s market value is either

compensable and must be considered, or non-compensable and must be disregarded.

The

term severance damages has been used to describe those damages for which the United States

must pay compensation. The term consequential damages has been used to describe damages

for which the United States is not obligated to pay compensation. For the purposes of these

Standards and to reduce confusion, appraisers should use the term compensable rather than

severance and non-compensable instead of consequential. Further discussion regarding the

proper development of appraisals concerning partial acquisitions is found in Section 1.7.

30 See Section 4.5. If there is no evidence the government’s project aected the market value, the scope of the project rule does not apply. See id.

31 See Section 1.2.7.

32 See Section 4.6.1.

33 As discussed in Section 4.6.2, the United States reimburses landowners for many types of non-compensable damage through administrative

payments under the Uniform Act. These statutory benets to persons and businesses aected by federal acquisitions are separate from, and

in addition to, just compensation paid for the property acquired.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development18

1.2.7.3.6. Benets. Broadly, benets are positive eects on market value that result from the public

project for which the property was acquired. There are two categories of benets for federal

acquisition purposes: direct (special) benets, which must be oset against total compensation,

and general (indirect) benets, which must be ignored. As with damages, whether a benet is

general or direct is a mixed fact/law question that requires a legal instruction.

1.2.8. Scope of Work. A full understanding of the critical assignment elements discussed above is

essential to a proper scope of work that will enable appraisers to solve the appraisal problem

they have been hired to solve. It is ultimately the appraisers’ responsibility to discuss these

critical elements with the client at the time they are engaged to perform the assignment to

ensure the resulting appraisal is credible, reliable, and accurate. The scope of work should

reect the complexity of the property and the market. The intended use and intended users

are also critical factors that will impact scope of work decisions.

It is recognized that federal agencies may use (or are directed by statute or other authority to use)

these Standards outside the realm of acquisitions/exchanges (for sales or conveyances of federal

land, leases, and fee determinations). In these situations, the scope of work may be modied.

For example, some of the special rules and methods, including the larger parcel analysis and

the before and after methodology, may not apply in these appraisal assignments. Additional

hypothetical conditions related to highest and best use and ownership may be required as

well. The protection of the public trust remains paramount and must be the foundation that

appraisers and client agencies operate from when making these determinations.

1.3. Data Collection. As discussed in Section 1.2 (Problem Identication), the starting point

for developing an appraisal under these Standards is the legal description of the property to

be acquired and the property rights to be appraised. All of the information concerning the

characteristics of the land and improvements that inuence the value of the subject property

must be collected by the appraiser during the process of property inspection and market research.

1.3.1. Property Data.

1.3.1.1. Land. In the development of the appraisal, the appraiser must collect and properly analyze

data about the subject property. The appraiser must identify all characteristics that impact

value, which may include access and road frontage, topography, soils, vegetation (including

timber and crops), views, land area and shape, utilities, mineral deposits, water rights,

and easements or other encumbrances. The presence of hazardous substances should be

considered by appraisers in accordance with the assignment conditions.

1.3.1.2. Improvements. The appraiser must collect and properly analyze data about all

improvements located on the subject property. This includes building dimensions; square foot

measurements; chronological and eective ages; type and quality of construction; present

use and occupancy; interior nishes; type and condition of the roof; type and condition of

mechanical, electrical, and plumbing systems; and dates of any signicant remodeling or

renovations. The appraiser must identify and properly calculate the appropriate method of

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 19

measurement used in determining rentable areas. In addition, the appraiser must identify the

type, quality, and condition of all site improvements, including fencing, landscaping, paving

(both roadways and parking areas), irrigation systems, and domestic and private water systems.

Questions regarding whether an item is a xture (real estate) or equipment (personal property)

must be referred to legal counsel for clarication. In making this referral, appraisers should

bear in mind that the determination of whether an item is a xture or equipment, for federal

acquisition purposes, may not always be consistent with laws of the state in which the property

is located.

In those instances where specialty xtures are encountered or when the xtures

will represent a substantial portion of the property’s value, consideration should be given to the

retention of a xture valuation specialist.

1.3.1.3. Zoning and Land Use Controls. Zoning is a factor to be considered in evaluating property.

Accordingly, if the property to be appraised is subject to zoning, the appraiser must identify the

applicable restrictions and interpret the impact of such restrictions on the utility and value of

the subject property. If zoning is uncertain, legal instruction may be required. In selecting

comparable sales for use in the appraisal, the appraiser should select those sales that have the

same or similar zoning as the property being appraised.

The appraiser must consider not only the use restrictions of the zoning ordinance, but also

other provisions of the zoning ordinance that may aect value. Examples include lot area

requirements, building setback requirements, oor/area ratios, lot coverage ratios, o-street

parking, landscaping requirements, height limitations, treatment of preexisting nonconforming

uses, and treatment of uses that became nonconforming after adoption of the zoning ordinance.

If the appraisal involves a partial acquisition, the appraiser must consider the eect of the zoning

provisions on both the larger parcel and the remainder property.

Special care must be taken to determine the eect of a zoning ordinance on a remainder

property that has been converted to a nonconforming use by the government’s partial acquisition.

Some ordinances have specic provisions to reclassify or “grandfather in” properties that have

become nonconforming by reason of a partial acquisition by a governmental agency. Other

ordinances contain no mechanism for converting a property that has become nonconforming

after adoption of the zoning ordinance into a conforming property or classifying it as a preexisting

nonconforming use. Penalties for nonconformity can be severe under such circumstances.

The appraiser must consider not only the eect of existing land use regulations, but also the

eect of reasonably probable modications of such land use regulations,

such as what impact

on value any probability of a rezoning of the subject property might have. Although an appraiser

might conclude that a property could be put to a more protable highest and best use if it were

zoned dierently, this does not in itself suggest that a probability of rezoning exists.

34 See Section 4.1.

35 See Section 1.13.

36 See Sections 4.3.2.4 (Zoning and Permits), 4.4.2.1 (Comparability), and 4.4.2.4.5 (Contingency Sales).

37 See Section 4.3.2.4; see also USPAP, Standards Rule 1-3(a).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development20

An investigation of the probability of rezoning should include:

• interviews of zoning administrators and members of the legislative body that make nal

zoning determinations;

• reviews of all rezoning activity of nearby property (both approvals and denials), land use

patterns in the neighborhood (and any recent changes), physical characteristics of the subject

and nearby properties, neighborhood growth patterns, and land use planning document

provisions;

• investigation of neighborhood attitudes concerning rezones;

• determination of the age of the zoning ordinance; and

• analysis of sales of similar property to determine whether the sale prices reect anticipated

rezoning.

If the probability of a rezoning is impacted, either positively or negatively, by the government project

for which the subject property is being acquired, such impact must be disregarded under the scope

of the project rule.

In partial acquisitions, the probability of

rezoning must be separately analyzed in regard to the larger parcel

before acquisition, and the remainder property after acquisition.

If the remainder property has a greater probability of rezoning,

there may be a direct benet to the property that must be oset

against the total;

if such probability has been diminished, a

compensable damage may have occurred.

In addition to zoning, the appraiser must consider the impact of

other land use regulations on the utility and value of the subject

property. These land use regulations may be of local, state,

regional, or national origin. Many common land use regulations

that may have an impact on property value are listed in the

sidebar. The client agency should advise the appraiser of any

special or unique land use regulations it has identied that may

aect the value of the property.

1.3.1.4. Use History. In developing the appraisal, the appraiser

must identify the purpose for which the improvements were

designed and the dates of original construction and major

renovations, additions, and/or conversions. This is particularly

important for properties located in transitional areas (such as

a residential neighborhood being converted to higher density

residential and commercial uses) or special-use properties

(such as church buildings converted to a commercial or residential use). The appraiser should

identify a 10-year history of the use and occupancy of the property, if available. Past uses of

the property may suggest historical contamination by hazardous substances.

38 See Section 4.5.

39 See Section 4.3.3.

40 See Section 4.3.4.

Common land use

regulations that can aect

market value:

• building codes

• health code regulations

• subdivision regulations

• development moratoria

• other development restrictions

• environmental impact

statements

• shorelines management

requirements

• coastal zone management

• ood plain management

regulations

• comprehensive land use plans

• mining regulations

• timber harvesting regulations

• wetland regulations

• open space requirements

• endangered species protections

• noise, air, or water pollution

controls

• hazardous or toxic waste

controls

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 21

1.3.1.5. Sales History. Since any recent, unforced sale of the subject

property can be the best evidence of its value, it is important

to collect data on all sales of the property for the 10 years

prior to the eective date of value.

Any oers to buy or sell

the subject property should also be identied and evaluated if

available. If no sale of the property has occurred in the past

10 years, the appraiser shall identify the most recent sale of

the property, whenever it occurred.

Information to be identied and reported under Section 2 shall include name of the seller,

name of the buyer, date of sale, price, terms, and conditions of sale.

As part of this process, the

appraiser should verify the information with a party to the transaction and determine whether

the transaction met the conditions required for a comparable sale under Section 1.5.2.1.

1.3.1.6. Rental History. The appraiser must collect historical rental or lease history of the property

for at least the past three years, if this information can be ascertained. All current leases should

be identied and information collected, including: the date of the lease, name of the tenant,

rental amount, term of the lease, parties responsible for property expenses, and other lease

provisions that impact whether the lease reects market rent.

1.3.1.7. Assessed Value and Annual Tax Load. The appraiser must collect all information related

to the current assessment and dollar amount of real estate taxes. If assessed value is statutorily

a percentage of market value, determine the percentage. If the property is not assessed or

taxed, the appraiser should collect all necessary information to support an estimate of the

assessment and the tax rate to support an estimate of the dollar amount of tax. In some

jurisdictions, certain types of property may be assessed based on current use rather than highest

and best use. These programs often relate to farmlands, timberlands, and open space; to be

eligible, owners may have to agree to leave the property in its existing use for a certain period

of time.

In such situations, the appraiser should collect the data necessary to support both the

current assessed value and taxes for the property’s existing use and the estimated assessed value

and tax load for the property at its highest and best use.

1.4. Data Analysis. A well-supported market analysis is a

critical element in every appraisal prepared under these

Standards. The data and analysis developed in this process are

fundamental to the highest and best use and the larger parcel

analyses that follow. The area and neighborhood analysis leads directly to a more detailed

marketability study focused on the market characteristics of the subject property.

41 In comparison, USPAP requires a three-year sales history, while the Uniform Act requires at least a ve-year sales history.

42 Terms and conditions of sale cannot, of course, conclusively be determined from the public record. Therefore, appraisers should conrm

the sales of the subject property with one of the parties to the transaction.

43 Many of these programs require owners to pay back taxes and a substantial penalty if land is converted from its existing use before the

agreed time period. These back taxes and penalties become an encumbrance on the land when it is converted to an alternate use. However,

since appraisers should estimate the market value of property as if free and clear, the indebtedness, or potential indebtedness, imposed under

these programs is not to be considered by the appraiser in estimating the property’s market value.

These Standards require

a 10-year sales history—

longer than that required in

appraisals for many other

purposes—for the reasons

discussed in Section 4.4.2.

Market decides the use. Use

determines value.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development22

1.4.1. Area and Neighborhood Analysis. In developing an area and neighborhood analysis,

the appraiser must identify the characteristics of the area or neighborhood that directly

inuence the subject property. These data (demographic and economic) should include only

the information that directly aects the appraised property, together with the appraiser’s

conclusions as to signicant trends. The use of “boilerplate” or general demographic and

economic data is unnecessary and should not be included unless the specic data directly

impacts the current market value of the subject property. As discussed in Section 4.6 and

Section 1.2.7.3.3, the appraiser must disregard changes in the neighborhood brought about

by the government’s project for which the subject property is being acquired. This specic

standard regarding government project influence requires a jurisdictional exception to USPAP

Standards Rule 1-4(f).

1.4.2. Marketability Studies. In complex or unusual appraisal problems, a marketability study may

be required as part of the scope of work. Marketability studies are often required for appraisals

of properties located in transitional areas, properties that contain special-use improvements, or

properties for which the highest and best use is unclear without in-depth study. In acquisitions

referred to the U.S. Department of Justice, a marketability study will be required.

A marketability study should include a detailed analysis of the subject property and its economic

environment. This should include an analysis of the potential physically possible and legally

permissible uses of the subject property and its competitive position within the market. A

detailed supply and demand analysis should be developed for the various uses possible for

the subject property. In appraisals of properties with income producing improvements, the

marketability study should identify the quality class of the improvements and the existing and

future competitive supply of similar improvements. Vacancy levels in the market, rental rates,

and operating expenses should also be addressed.

1.4.3. Highest and Best Use. The appraiser’s determination of highest and best use is one of the

most important elements of the entire appraisal process.

Therefore, appraisers must apply

their skill with great care and provide market support for the highest and best use conclusion(s)

developed in the appraisal.

1.4.4. Denition. For just compensation purposes, market value must be determined with reference

to the property’s highest and best use, that is,

The highest and most protable use for which the property is adaptable and needed or likely

to be needed in the reasonably near future.

1.4.5. Four Tests. First, the appraiser should form an opinion of the highest and best use of the

land, as if vacant. If the land is improved, the appraiser forms an opinion of the highest and

best use of the property, as improved. The highest and best use of some property cannot

be reliably estimated without extensive marketability and/or feasibility studies, which may

44 See Section 4.3.

45 See Section 4.3 for the legal basis for this denition.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 23

require the assistance of special consultants in particularly complex assignments.

To be a

property’s highest and best use, the use must be (1) physically possible; (2) legally permissible;

(3) nancially feasible; and (4) must result in the highest value. Each of these four tests must

be fully analyzed in the appraisal development process. A property’s highest and best use will

ordinarily be its existing use, as an owner will normally put property to its maximum (highest-

value) use. A determination that the property has a dierent highest and best use than its

existing use requires evidence that the property is physically and legally adaptable for that use

and there is market demand for that use in the reasonably near future.

In assignments involving improved properties, it is important to fully develop both analyses of

highest and best use (as if vacant and as improved). Land can be inuenced by the size, shape,

function, and remaining life of the improvements. For example, there may be surplus or excess

land when considered in light of the existing pattern of development. For this reason, all four tests

of highest and best use must be addressed in the analysis of highest and best use as improved.

For any highest and best use that will require a property to be rezoned, the probability of that

rezoning must be thoroughly investigated and analyzed. Likewise, the probability of obtaining

any other forms of government approvals necessary for a proposed highest and best use must

be investigated and analyzed. The extent of the investigation and analysis required to meet this

requirement can be found in Section 1.3.1.3.

Generally, the government’s intended use of the property after acquisition is an improper highest

and best use and cannot be considered. It is the property’s market value that is to be estimated,

not the property’s value to the government. If it is solely the government’s need that creates a

market for the property, this special need must be excluded from consideration by the appraiser.

The government’s intended use of the property can only be considered as a potential highest and

best use if there is competitive demand for that use in the private market, separate and apart from the

government project for which the property is being acquired. Section 4.3 discusses the legal bases

for these requirements.

1.4.5.1. Economic Use. For purposes of just compensation, opinions of market value must be based

on an economic highest and best use. Therefore, appraisals in federal acquisitions cannot be

based on noneconomic or nonmarket uses. To be an economic use, the use must contribute to

the property’s actual market value, and there must be competitive supply and demand for that

use in the private market. Whether or not a particular use is economic and therefore appropriate

to consider depends on the relevant market, not the use itself. This topic is discussed in depth in

Section 4.3.2.3.

1.4.6. Larger Parcel Analysis. Essential to the appraiser’s analysis

of highest and best use is the determination of the larger

parcel. These Standards dene the larger parcel as that tract,

or those tracts, of land that possess a unity of ownership

and have the same, or an integrated, highest and best use.

46 See Section 1.13.

The larger parcel is that tract

of land which possesses a

unity of ownership and has

the same, or an integrated,

highest and best use.

Determining unity of

ownership may require

legal instruction.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development24

Elements to be considered in determining the larger parcel are contiguity (or proximity) as it

bears on the highest and best use of the property, unity of ownership, and unity of highest and

best use.

The appraiser must make a larger parcel determination in every appraisal developed under these

Standards.

It is not uncommon for an appraiser’s conclusion regarding the larger parcel to be

dierent from the specic parcel the client agency identied to be appraised, as the appraiser

cannot determine highest and best use without considerable investigation and analysis. In such

instances, the appraiser shall inform the client agency of the determination of the larger parcel

and the agency shall amend the appraisal assignment accordingly.

The appraiser must make a larger parcel determination regardless of whether the agency designated

an acquisition as a total acquisition or a partial acquisition. This is so because whether an acquisition

is a total or partial acquisition cannot be determined until the appraiser has determined the highest

and best use and the larger parcel. Under the rules for larger parcel determination, as described

in Section 4.3.4, two physically separate tracts may constitute a single larger parcel, or a single

contiguous physical tract may constitute multiple larger parcels. This can be important not only in

consideration of damages and benets, but also in the selection and analysis of comparable sales.

In light of the discussion in Section 4.3.4 regarding the larger parcel, it is recommended that

the appraiser begin an analysis of the unity of ownership test with the premise that, in making

a larger parcel determination, it is allowable to consider all lands that are under the benecial

control of a single individual or entity even though title is not identical in all areas of the tract(s). If

the appraiser then concludes that the larger parcel constitutes lands that are under the benecial

control of a single entity (but title is not identical), the appraiser’s larger parcel determination,

together with the facts upon which it is based, should be submitted to the client agency’s legal

counsel for review before the appraiser proceeds. Based on applicable case law and the facts of the

case, legal counsel can then determine whether, as a matter of law, the unity of ownership test of

the larger parcel is present, and provide written legal instructions to the appraiser accordingly.

Larger parcel determinations in appraisals for federal land exchanges, or in connection with

inverse condemnation claims, may require dierent considerations than those described above.

For a discussion of those potential dierences, appraisers should refer to Section 1.12 regarding

federal land exchange appraisals and to Section 1.11 regarding inverse condemnation appraisals.

1.4.7. Highest and Best Use Conclusion. In reaching a conclusion regarding a property’s highest

and best use and regarding the larger parcel, the appraiser must identify the most probable buyer

and/or the most probable user of the subject property under that highest and best use. The

appraiser must also reach a conclusion concerning the timing of any highest and best use that is

dierent than the current use.

47 The appraiser must make a larger parcel determination even for minor partial acquisitions in which the appraiser is instructed not to

perform a complete before and after appraisal. See Section 4.6.4.1.

48 For instance, if an appraiser determined that the larger parcel was a 10-acre tract out of a total ownership of 200 acres, the unit (e.g., per

square foot or per acre) value may well be dierent for the smaller tract and the appraiser would utilize comparable sales similar in size to

the 10-acre larger parcel rather than sales similar in size to the entire 200-acre ownership.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 25

1.5. Application of Approaches to Value. The following sections outline the standards for the

application of the three approaches to value. The approaches to be used to value land as if vacant

are presented rst. The application of the sales comparison approach, the income capitalization

approach, and the cost approach for the valuation of the property as improved follows.

1.5.1. Land Valuation. When the subject property is unimproved or the cost approach is being used,

the primary method of land valuation is the sales comparison approach as described below. The

subdivision development method and the capitalization of ground leases are to be used only

in rare cases when the property has a highest and best use for subdivision development or the

property is subject to a long-term ground lease. Even when those situations exist, the latter two

methods are better used as additional support for the sales comparison approach.

1.5.1.1. Sales Comparison Approach. The appraiser shall develop an opinion of the value of

the land for its highest and best use, as if vacant and available for such use. In doing so, the

appraiser’s opinion of value shall be supported by conrmed sales of comparable or nearly

comparable lands

having like optimum uses. Dierences shall be weighed and considered to

determine how they indicate the value of the subject land. Items of comparison shall include

property rights conveyed, nancing terms, conditions of sale, market conditions, location, and

physical characteristics. The appraiser shall obtain adequate information concerning each

comparable sale used and perform a comparative analysis to form a supported opinion of the

market value of the subject property as if vacant. See Section 1.5.2 for a full discussion of the

Sales Comparison Approach.

1.5.1.2. Subdivision Development Method. When the highest and best use of a property is for

subdivision purposes and comparable sales do not exist, resorting to the subdivision development

method

to land value may be appropriate if adequate market and/or technical data are

available to reliably estimate the property value. This method of estimating land value can also

be used to test the appraiser’s highest and best use conclusion and to check against the indicated

value of the land developed by the use of comparable sales when the sales data is limited.

However, this approach to value is complex, often requires the assistance of other experts,

and

always requires substantial amounts of research, analysis, and supporting documentation.

In applying this technique, appraisers must bear in mind that a property must be valued in

its as-is condition. Therefore, consideration must be given to the time lag that is typically

necessary between the date of value and the projected date when developed lots would become

marketable. This time lag must provide for the time necessary to procure all land use permits and

approvals, as well as the time necessary for the physical construction of the infrastructure that

will be required to convert the land into marketable lots. One of the most critical factors in the

application of this technique is, of course, selection of the appropriate discount rate to be applied

to the income streams generated by the development. This discount rate should be derived from

and supported by direct market data whenever possible.

49 For a discussion of what legally constitutes a comparable sale and the admissibility of comparable sales information, see Section 4.4.2.

50 For a discussion of the courts’ view of this valuation technique, see Section 4.4.5.

51 Such as marketing and feasibility consultants, land use planners, civil engineers, and contractors. See Section 4.12 (Appraisers’ Use of

Supporting Experts’ Opinions); USPAP Competency Rule (acquiring competency).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development26

1.5.1.3. Ground Leases. In those rare circumstances when the property being appraised is under

a long-term ground lease, the appraiser must analyze the lease and determine whether it is

appropriate to use a direct capitalization of the ground lease to develop an opinion of the market

value of the land. The appraiser must be able to identify comparable properties in the area that

are subject to similar ground leases in order to ensure that the ground lease is a market rent, as

well as adequate market data to support the selection of a capitalization rate. This procedure

should be used to support a conclusion of land value developed by the sales comparison

approach rather than as the only method used to develop an opinion of market value.

1.5.2. Sales Comparison Approach. The sales comparison approach is normally the preferred

method of valuation for property being acquired under these Standards. The sales comparison

approach is a systematic procedure in which appraisers study the market for sales of properties

with the same highest and best use as the subject property that are as close in proximity and

time as possible. Each sale is veried with parties to the transaction to ensure that information

is accurate and the sale is a market transaction. Each sale is adjusted for elements that are

dierent from the subject property and the resulting array of sales data is reconciled to a

nal opinion of market value. Analysis of sales shall be made using a market derived unit

of comparison such as price per acre, price per square foot, or animal unit month. In some

markets, more than one unit of comparison may be used by market participants and care

should be used to maintain consistency.

1.5.2.1. Prior Sales of Subject Property. Since any recent and unforced sale of the subject

property can be the best evidence of its value,

any such sale is treated as a comparable

sale in this approach to value. It must be analyzed like any other comparable sale and given

appropriate weight by the appraiser in forming a nal opinion of the market value of the

subject property. As noted in Section 1.3.1.5, the appraiser must verify the most recent sale

of the subject property with the parties to the transaction to ensure that the sale provides an

indication of market value.

1.5.2.2. Selection and Verication of Sales. In selecting the comparable sales to be used in

valuing a given property, it is fundamental that all sales have the same economic highest and

best use as the subject property and that the greatest weight be given to the properties most

comparable to the subject property. In this regard, appraisers must recognize that when valuing

a property with a highest and best use that will require rezoning or extensive permitting, sales

of similar properties may require extensive analysis and adjustment before they can be deemed

economically comparable. The analysis and adjustment of such sales is discussed below.

All comparable sales used must be conrmed by the buyer, seller, broker, or other person

having knowledge of the price, terms, and conditions of sale.

When a comparable sale is of

questionable nature and/or admissibility (e.g., sales to a government entity), special care must be

52 See Section 4.4.2.4.1.

53 These Standards require that sales verication be conducted by competent and reliable personnel, and if the case goes into condemnation,

the sale must be personally veried by the appraiser who will testify. However, appraisers should recognize that some agencies may require in

their appraisal contracts that initial verication be made by the appraiser who will sign the appraisal report.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 27

taken in the verication of the circumstances of the sale.

The appraiser must collect adequate

information about each sales transaction to support a detailed analysis in the adjustment process.

In most cases this would include a physical inspection of each property selected as a comparable

sale. If the appraisal is being prepared for the Department of Justice, a physical inspection of

each sale selected as a comparable is required.

The appraiser should collect and analyze the recent sales history of properties selected as

comparable sales. This information can be useful in analyzing trends in the market and

evaluating the impact of the government project on market value after acquisition.

1.5.2.3. Adjustment Process. Comparison of sales transactions to the subject property is the essence

of the sales comparison approach to value. The basic elements of comparison to be considered

are recognized as:

• Property rights conveyed

• Financing terms

• Conditions of sale

• Expenditures made immediately after purchase

• Market conditions (historically referred to as a time or date of sale adjustment)

• Location

• Physical characteristics

• Economic characteristics

• Legal characteristics (land use, zoning)

• Non-realty components of value included in the sale property

The comparable sales should be adjusted through quantitative and/or qualitative analysis,

depending on the market data available, to derive an indication of the market value of the subject

property.

Quantitative adjustments should be made whenever adequate market data exist to

support dollar or percentage amount adjustments. Qualitative adjustments (i.e., inferior, superior)

can be made when market data is not sucient to support reliable quantitative adjustments.

Quantitative and qualitative adjustments are not mutually exclusive methodologies: because one

factor of adjustment cannot be quantied by market data does not mean that all adjustments

to a sale property must be qualitative. All factors that can be reliably quantied should be

adjusted accordingly. When using quantitative adjustments, appraisers must recognize that not

all factors are suitable for percentage adjustments. Percentage and dollar adjustments may, and

often should, be combined.

Each item of adjustment must be carefully analyzed to determine

54 For a description of the verication process required by these Standards for such sales, see Section 1.5.2.4. See Section 4.4.2.4 for the legal

bases for these requirements.

55 See generally ApprAisAl insTiTuTe, The ApprAisAl oF reAl esTATe 403-37 (14th ed. 2013) (discussing elements of comparison).

56 See Section 4.4.2.2.

57 Both quantitative and qualitative adjustments have strengths and weaknesses—and both can be misleading and unreliable without careful

support. Without adequate market data, the apparent precision of quantitative adjustments can convey a false sense of accuracy. Similarly,

without careful explanation of each element of comparison for each sale, qualitative adjustments can improperly obscure key aspects of the

appraiser’s analysis.

58 For instance, a percentage adjustment for market conditions (time) may be appropriate, but an adjustment for the fact that the property

under appraisal is 300 feet from a sewer connection and all of the comparable sales are connected to sewer should often be made in a lump

sum dollar amount to reect the cost to cure the subject property’s comparative deciency. If a percentage adjustment were applied to the

price per unit (e.g., per acre, per square foot) of each comparable, the adjustment to each of the comparables would vary, depending on the

price per unit of the comparable, and might have no relationship to the cost to cure the subject property’s deciency.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development28

whether a percentage or dollar adjustment is appropriate. When both quantitative and qualitative

adjustments are used, all quantitative adjustments should be made rst.

When appraisers must resort to qualitative adjustments, more extensive discussion of the

appraiser’s reasoning is generally required. This methodology may also require the presentation

of a greater number of comparable sales to develop a reliable opinion of value. It is essential that

the appraiser specically state whether each comparable sale is generally either overall superior

or inferior to the property under appraisal. The comparable sales utilized should include both

sales that are overall superior and overall inferior to the property being appraised, rather than

merely demonstrating the property is worth more (if all sales are inferior to the subject property)

or less than a certain amount (if all sales are superior to the subject property).

The denition of market value used in these Standards requires that the opinion of value be

made in terms of cash or its equivalent, as discussed in Section 4.2. Therefore, the appraiser

must make a diligent investigation to determine the nancial terms of each comparable sale.

When comparing the sale to the property being appraised, the appraiser shall analyze and make

appropriate adjustments to any comparable sale that included favorable or unfavorable nancing

terms as of the date of sale. Such adjustment must reect the dierence between what the

comparable sold for with the favorable or unfavorable nancing and the price at which it would

have sold for cash or its equivalent.

While cash equivalency of favorable or unfavorable nancing can be estimated by discounting

the contractual terms at current market or yield rates for the same type of property and loan term

over the expected holding period of the property, the preferred method of estimating a proper

cash equivalency adjustment is by the analysis of actual market data, if such data is available.

In developing a nal opinion of market value by the sales comparison approach, the appraiser

shall consider the comparative weight given to each comparable sale, regardless of whether

quantitative or qualitative adjustments or a combination thereof are used.

1.5.2.4. Sales Requiring Extraordinary Verication. Certain types of sales can be used only

under certain circumstances or for limited purposes in appraisals for federal acquisitions.

As a result, these sales require extraordinary verication to ensure the appraiser’s opinion

does not reect any legally improper considerations. Section 4.4.2.4 addresses several types

of sales that require this extraordinary treatment and the legal reasons for this requirement.

This Section explains the verication process required for sales to government entities, sales to

environmental organizations, and contingency sales.

59 The ApprAisAl oF reAl esTATe, supra note 55, at 433-36.

60 See Sections 4.4.2.4.2., Item (5) (Sales Involving the Government or Other Condemnation Authority), 4.4.2.4.2., Item (6) (Sales Involving

Environmental or Other Public Interest Organizations), and 4.4.2.4.5 (Contingency Sales); see generally Section 4.4.2.4 (Transactions

Requiring Extraordinary Care).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 29

Sales to Government Entities. Because sales to government entities routinely involve

nonmarket considerations, sales to the government should be immediately viewed by appraisers

as suspect in appraisals for federal acquisitions.

Sales to the government should not be used

as comparable sales unless there is such a paucity of private market data as to make a reliable

estimate of market value impossible without the use of government purchases. The types of

transactions conducted and lands acquired by governments are often unique. For instance, lands

acquired for conservation or preservation are often of extraordinary size, have little economic

utility or value, and are located in remote areas with little market activity. To develop a reliable

and supported estimate of market value in these situations, appraisers may be forced to consider

sales to the government in the sales comparison approach to value.

If the appraiser determines, after careful analysis and verication required under these

Standards, that a sale to the government was a true open-market transaction, the sale may

be appropriate to consider as a potential comparable sale. There are certain steps that the

appraiser must take before a sale to the government can be qualied as a valid comparable sale.

Comprehensive and documented verication of government transactions is essential.

The type and amount of sales documentation and other information available to an appraiser

about a sale to the government that is potentially comparable to the subject property will vary,

depending on the land acquisition documentation requirements of the entity that acquired the

potentially comparable property. Small governmental entities, such as local service districts, may

acquire property without written appraisals, appraisal reviews, or written records of negotiations.

On the other hand, state and federal government acquisitions are usually subject to the Uniform

Act (or comparable state statutes) and require extensive documentation of land acquisitions,

including formal documented appraisals, written appraisal reviews, and written records of the

negotiating process.

First, the appraiser should review the legislation that authorized

and/or mandated the government’s acquisition of the

potentially comparable property to determine whether the

legislation provided that such property would be acquired at

market value. Legislation that mandates acquisition at a price

other than market value or provides for acquisition at a price

unaected by particular market forces (e.g., disregard of the

inuence of the Endangered Species Act) may not result in a

valid comparable sale representative of market value. Likewise,

legislation that allows the acquiring agency to deviate from the

market value measure if it nds it in the public interest to do so

will often not result in a price representative of market value.

The appraiser should next contact the acquiring agency and ask to inspect the appraisal upon

which the acquisition was based, the agency review of that appraisal, the negotiator’s report (or

le) in conjunction with the acquisition, and the agency’s acquisition le.

61 See Section 4.4.2.4.2, Item (5) (Sales Involving the Government or Other Condemnation Authority).

The availability of sales

documentation for inspection

and analysis may vary by

agency.

The appraisal report must

note any sales documentation

that was not available for

inspection, and explain the

impact on the reliability

of the transaction as a

comparable sale.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development30

Examination and analysis of the agency’s appraisal should include:

• Determination of whether the sale was a total acquisition of the landowner’s property

indicating the value of the property acquired or a partial acquisition that reects not only the

value of the part acquired but also damage to the remainder.

• Determination of whether the sale was for the fee simple interest in the property or a total

interest similar to the interest being appraised (e.g., leasehold of the entire property). Sales of

something less than the fee simple interest in an entire property (e.g., easement acquisitions)

may not be valid comparable sales.

• A review of the highest and best use determination. The highest and best use upon which

the value opinion was based must be an economic use, and must be the same as, or highly

similar to, the highest and best use of the property under appraisal before the transaction

can be considered a reliable comparable sale. A highest and best use of sale to the government,

conservation, or any use that contemplates noneconomic considerations is not a valid highest

and best use upon which to estimate market value.

• A review of the appraiser’s nal opinion of value. Determine whether the price paid for the

property was equivalent to its appraised value. If not, determine whether the price paid was

within the range of values indicated by the appraiser’s comparable sales in the sales comparison

approach and/or by the dierent approaches to value developed by the appraiser.

• A review of the sales used by the appraiser in developing an opinion of value. If the sales

relied on by the appraiser were inuenced by nonmarket factors (e.g., political pressure), they

would be invalid indicators of market value; thus, any value conclusion reached based on

such sales may, likewise, be invalid.

• A review of any value allocation or breakdown included in the appraisal report, such as

dierent unit values for dierent land types included in the sale property or the contributory

value of improvements.

Next, the appraiser must examine the agency’s appraisal review, and make particular note of

any technical or factual errors reported by the review appraiser. The requirements for appraisal

reviews for federal acquisition purposes can be found in Section 3.

The appraiser must also review the negotiator’s report and the agency’s acquisition le regarding

the process of negotiation between the agency and the property owner. Any suggestion that the

property would be condemned if agreement could not be reached should be noted. Likewise,

any indication that the property owner accepted the price paid with the understanding that the

agency would support (or not oppose) the property owner’s attempt to take a tax write-o for a

donation for some amount in excess of the actual price paid should be noted. Either of these

circumstances may suggest a price below market value. Any suggestion that a property owner

may have threatened to damage the property for the government’s intended use (e.g., cutting the

timber from land slated for acquisition as a park) if the owner’s asking price was not paid can

result in a price in excess of market value. Sales involving the exchange of property are generally

unreliable for use as comparable sales.

62 See Section 4.4.2.4.3.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 31

A determination should be made whether the property owner or the owner’s representative

submitted an appraisal or any meaningful market data to the agency that may have supported a

value higher than the government’s appraisal and the agency’s subsequent determination to pay

more than its appraisal. If so, the submitted material should be analyzed.

The appraiser should read any correspondence from the property owner’s political

representatives, and the agency’s response thereto, to determine whether there may have been

nonmarket pressure to consummate a sale at something other than market value. The appraiser

should also review any media coverage concerning the property and the government project to

determine whether there was an undue amount of public pressure on the agency or the property

owner to consummate a quick sale. Such public pressure can result in a price that is above or

below the market value of the property.

Conveyance and closing documents will reveal the exact estate conveyed to the government. It

should be conrmed that the estate that was conveyed is the same estate that was appraised. In

negotiations, some agencies may allow the property owner to retain some rights in the property

after acquisition not contemplated by the government’s appraiser (for example, a life estate in the

property or an estate for years, at zero or nominal rent, or the right to continue to grow crops on

the land or use it for grazing or a physical reduction in the land area acquired).

If the estate acquired was only an easement, the sale is not a valid comparable either as an

indication of fee simple value or of the value of the easement. If only an easement is being

acquired from the subject property, the measure of value should not be based on the price paid

for similar easements but rather upon the federal before and after method.

There are a number of legitimate reasons why a government agency would pay a price in excess

of its approved appraisal for a specic acquisition. A reading and analysis should be undertaken

of any documents produced by the agency or others in an attempt to justify payment in excess of

the approved appraisal. An agency’s appraisal does not represent the only reasonable estimate of

market value. But if the government paid more for the property than its approved appraisal, the

appraiser must determine the government’s justication for doing so and whether it was based on

market considerations.

A price in excess of an agency’s approved appraisal may still represent a valid indication of market

value if:

• The appraisal is outdated in a rapidly appreciating market.

• The price remains within the range of values indicated by the comparable sales developed by

the appraiser.

• The price remains within the range of values indicated by the dierent approaches to value

developed by the appraiser.

• Factual information about the property, the appraisal, or the comparable sales used came

to light after the appraisal and review that revealed errors in the appraisal that could be

mechanically corrected.

63 See Section 4.6.1.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development32

On the other hand, a price in excess of an agency’s approved appraisal would not be a valid

indication of market value, and therefore would not be a valid comparable sale (at least without

adjustment) if:

• The price in excess of market value was warranted due to costs and risks inherent in a

condemnation trial.

• The threat of imminent destruction of the property for the government’s intended use

existed.

• The cost of project delay caused by the failure to acquire the property osets the price paid

in excess of its market value.

• The administrator of the public agency found it to be in the public interest to pay in excess

of market value.

• The tract acquired was a key tract, or the last tract to be acquired, for the government’s

project.

• The economy of land management of a consolidated ownership by the government

outweighed the price in excess of market value paid for the tract.

Once the foregoing investigation and analysis have been completed, the appraiser should

personally verify the sale with the purchaser and the seller or their representatives. In conducting

this verication, the appraiser should clear up any questions that may have arisen as a result of

earlier research.

Sales to Environmental or Other Public Interest Organizations. Sales to environmental

or other public interest organizations are also prone to reecting nonmarket considerations,

as discussed in Section 4.4.2.4.2., Item (6). As a result, these transactions are subject to the

same extraordinary verication measures as sales to government entities. When public interest

organizations work closely with government agencies that administer conservation or similar

projects, extensive sale documentation may be available. Before using such a transaction as a

comparable sale, the appraiser must determine whether the sale was based on a competent

appraisal of market value of the property for its economic highest and best use, whether any

tax write-os were taken, and whether the transaction was impacted by the pendency of the

government’s project.

If the purchase price was not based on the market value of the property

for an economic highest and best use, the sale will normally have to be discarded as a comparable

sale. The same is true if tax write-os were involved or if project inuence was present, although

it is sometimes possible to make adjustments to the sale for these factors. If, subsequent to the sale,

the property has been transferred by the environmental group to the government, the facts and

circumstances of the transfer must be reported.

Contingency Sales. Potentially comparable sales for a property with a highest and best use that

requires procurement of rezoning or a land use permit must also be veried and treated with

great care. Sales of such property in the private market generally take the form of initial options

or contingency sales, with the contingency being the purchaser’s ability to procure the necessary

rezoning or permitting to develop the property to its highest and best use. If the rezoning or

64 Such transactions may well reect project inuence, as discussed in Section 4.5.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 33

permitting is denied, the contingency is not met and the sale does not close (or the option is

not exercised). Therefore, when consummated, such sales reect the price of property already

rezoned or permitted for development to its highest and best use. All of the risks, time delays, and

costs associated with a rezoning or permitting have been removed from the transaction.

Such sales are typically not comparable to the property being appraised for federal acquisition

purposes. Generally, properties under appraisal for government acquisition purposes that have a

highest and best use that requires a rezone and/or permits to be developed to their highest and

best use do not have the zoning or permitting in place. Thus, on the theoretical date of the sale’s

closing (i.e., the eective date of valuation), the purchaser must assume the risks, time delay, and

costs of procuring the rezone and/or permitting. Properties seldom sell in such a condition in

the private market; thus, there are few truly comparable sales available for the appraiser’s use in

developing a value for the property under appraisal by the sales comparison approach.

Accordingly, appraisers must often resort to using sales that already have, on the date of

consummation, their needed zoning/permitting in place. Under these circumstances, it

is essential that the appraiser adjust the sales to reect the dierences in the regulatory

environments of both the sales at the time of closing and the subject property as of the eective

date of the appraisal. Such adjustments must account for the risks inherent in the procurement

of a rezoning or permitting, including the possibility that the regulatory agency may deny such a

request or place conditions on it.

The time delays encountered in procurement of the rezoning

and/or permitting and the costs associated with their procurement must also be considered.

In certain circumstances, a purchaser may require an entrepreneurial prot in addition to an

adjustment for risk.

Appraisers cannot merely assume that such a rezoning/permit is in place for the subject property,

or assume that such a rezone/permit will be granted. They must appraise the property only in

light of the probability of obtaining the rezone/permit. If appraisers use sales of properties with

zoning/permitting in place at the time of sale, they must clearly and specically explain how

they accounted for the regulatory environmental dierences between these sales and the subject

property and how they quantied the adjustment(s) for this factor, based on market evidence

whenever possible.

1.5.3. Cost Approach. In the cost approach, the market value of the vacant land is added to the

depreciated reproduction or replacement cost (contribution) of the improvements to arrive

at an indication of the value of the property. The value of the land, vacant and subject to

improvement, is generally developed by the sales comparison approach for land (see Section

1.5.1.1.). The estimate of the reproduction or replacement cost of the improvements is based on

current local market cost of labor and materials for construction of improvements. All forms of

depreciation are deducted from the cost new estimate, as discussed below. This approach to value

is most useful in developing the value of a property in which the improvements are new (and

actual costs are known) and there is no evidence of depreciation. The cost approach is also used

65 See Section 4.3.2.4 regarding the consideration of the possibility of rezoning or permitting.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development34

as a check on the opinion of market value indicated by the sales comparison approach and for

appraising highly improved properties with no known comparable sales.

In the case of special-purpose properties

that are not generally bought and sold, it is sometimes

necessary to resort to reproduction cost new less depreciation for want of any more reliable

method of determining market value. If it is necessary to resort to the cost approach, all forms

of depreciation—physical deterioration, functional obsolescence, and external (or economic)

obsolescence—must be accurately reected and deducted from the reproduction or replacement

cost before the value of the land and the contributory value of the improvements are added

together to develop an indication of market value by the cost approach. Whenever the cost

approach is utilized and it can be determined at what time and at what cost the improvements

were erected, a trending up—or down, as appropriate—of such initial costs becomes an

important part of the analysis.

1.5.3.1. Critical Elements. In developing an opinion of market value by the cost approach, the

appraiser must recognize the critical elements that must be well supported by market evidence:

reproduction and replacement costs, depreciation, and entrepreneurial prot.

1.5.3.1.1. Reproduction and Replacement Costs. The appraiser must recognize the distinction

between reproduction cost and replacement cost.

Reproduction cost is the present cost of

reproducing the improvement with an exact replica; replacement cost is the present cost of

replacing the improvement with one having equal utility. If the cost approach is applicable,

the appraiser may use either the reproduction or replacement cost method, but must account

for all forms of depreciation appropriate under the particular method chosen. In developing

the cost estimate, the appraiser must account for all direct and indirect costs associated with

constructing the improvements. Direct (hard) costs include the labor and materials required

to construct the improvements. Indirect (soft) costs include such items as architectural and

engineering design fees, legal fees, costs of permits and other similar expenses associated with

obtaining approvals, and designing and overseeing the construction of the improvements.

If a national cost-estimating service is used, the appraiser should ensure that the most similar

improvement type is selected and that all adjustment factors such as locality adjustments

developed for the service are properly accounted for. If the appraiser may place considerable

weight on the cost approach to value in reaching a nal opinion of value, a contractor or

professional cost estimator should be retained to assist in developing the reproduction or

replacement cost estimate.

1.5.3.1.2. Depreciation. The depreciation from all causes—including physical deterioration, functional

obsolescence, and economic or external obsolescence—must be properly identied and

analyzed. The estimated dollar amounts associated with each form of depreciation must be

supported by market data using the breakdown method or the market extraction method.

Depreciation should not be estimated by the use of published tables or age-life computations.

66 Also referred to as special-use properties or limited-market properties.

67 See Section 4.4.3.3.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 35

1.5.3.1.3. Entrepreneurial Prot. The estimate of the contribution of entrepreneurial prot should

be supported by market data developed from properties similar to the subject improvements.

1.5.3.1.4. Unit Rule. In developing the cost approach, appraisers must distinguish between calculating

an improvement’s replacement cost and estimating market value. It is the contribution of the

improvements (and all of its components) to the market value of the whole that is being measured.

1.5.4. Income Capitalization Approach. In appraising property that generates income, it may be

appropriate to develop an opinion of market value using the income capitalization approach.

This approach should generally be used in addition to the sales comparison approach and

can serve as additional support for the nal opinion of market value. In developing the

income capitalization approach, it is critical that the appraiser have market support for every

component such as income, expenses, capitalization, and/or discount rates.

1.5.4.1. Market Rent. The income that is to be capitalized in the income approach is the market or

economic rent for the subject property. These Standards use the following denition of market

rental value:

Denition of Market Rental Value

Market rental value is the rental price in cash or its equivalent that the leasehold would have

brought on the date of value on the open market, at or near the location of the property

acquired, assuming reasonable time to nd a tenant.

The appraiser should not consider the fact that a property may be under lease to a third party,

except to the extent that the rent specied in the lease may be indicative of the property’s market

rental value. The value to be appraised is the market value of the property as a whole, not the

value of the various interests into which it may have been carved.

1.5.4.2. Comparable Leases. The opinion of market rent should be based on an analysis of comparable

leases extracted from the market. As with the sales comparison approach, the comparable leases

selected in this analysis should have the same or similar highest and best use as the subject property

and reect leases as close as possible to the eective date of value. The lease data shall be veried

with a party to the transaction. It is important to identify the operating expenses paid by each

party (landlord and tenant), the basis for the calculation of the leased area, and any concessions

(free rent and/or tenant improvements) oered by the landlord. A physical inspection of each

rent comparable is necessary to identify the quality of tenant nishes, overall building condition,

and quality and location dierence with the subject. As with the sales comparison approach, the

appraiser must collect market data to support adjustments (quantitative and/or qualitative) to the

comparable leases for dierences between them and the subject property.

1.5.4.3. Expense Analysis. In developing the estimate of net operating income that will be capitalized to

develop an opinion of the market value of the subject property, the appraiser must collect market

68 See Section 4.4.3.1.

69 See Section 4.7 for the legal basis for this denition.

70 See Section 4.2.2 concerning the Unit Rule.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development36

data to support the estimated vacancy and credit loss, as well as operating expenses and any set

asides for reserves for replacement. If available, the operating history of the subject property

provides an important basis for these estimates, but data collected from other similar competitive

buildings in the market area is also important to provide market support for these determinations.

1.5.4.4. Direct Capitalization. Capitalization of the net operating income shall be at a rate prevailing

for the type of property and location. The preferred source of an applicable capitalization rate is

from actual capitalization rates reected by comparable sales. The selection of the capitalization

rate is one of the most critical factors to be applied in the income capitalization approach to value.

Accordingly, developing capitalization rates from the improved sales used in the sales comparison

approach provides the best market support for the rate selected for the subject property.

Capitalization rates identied in national publications can be used as support for the estimated

capitalization rate selected for the subject but should not be the only source for this determination.

1.5.4.5. Yield Capitalization (Discounted Cash-Flow [DCF] Analysis). A second method

of valuation used in the income capitalization approach is known as the yield capitalization

method. This method is also often referred to as the discounted cash-ow (DCF) analysis and

has been an accepted valuation method within the appraisal profession for several decades.

This method is often used in the valuation of investment grade properties such as multi-tenant

oce buildings, retail centers, apartment complexes, and industrial warehouse facilities and

reects the way sophisticated buyers and sellers consider the potential income generated by a

property to arrive at a purchase or sale price.

The yield capitalization method has limited use in an eminent domain setting because it requires

the appraiser to forecast a number of dierent factors into the future such as income change,

holding period, property value at the end of the holding period, and the yield rate or discount

rate to be applied to the future stream of income in order to arrive at the present value of the

property. Because of this, valuations based on this method can be complicated, confusing, and

speculative. If this method is to be used in developing an appraisal under these Standards, it

is critical that the appraiser develop market support for each of the many factors that must be

forecasted in order to show that the analysis reects what buyers and sellers for that property

type are considering on the eective date of value. If appraisers are considering the use of this

method, they should discuss it with their client as part of the scope of work conversation.

The yield capitalization method can be a useful tool in testing feasibility in highest and best

analysis and as support for the other approaches to value. This method can be very useful in

appraisals of leasehold acquisition involving potential damages to a remainder after the taking.

It is useful as a means of determining the value of the property before and after the leasehold

taking in order to identify the dierence.

1.6. The Reconciliation Process and Final Opinion of Value. A critical part of developing an

appraisal under these Standards and forming a nal opinion of market value is the reconciliation

process. This process requires a careful examination of the factual data about the subject property

71 eATon, supra note 16, at 414.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 37

and the market. The highest and best use and larger parcel analyses are considered in light of

the factual data to ensure consistency and accuracy. All of the supporting data for each of the

approaches to value is examined for consistency and accuracy with the subject property and

market data as well as the highest and best use and larger parcel analyses. For example, if both

the sales comparison and income capitalization approaches were developed, the appraiser should

examine the adjustment processes in both approaches to ensure that adjustments for location and

other physical characteristics of the subject property were consistently applied in both.

Each of the approaches to value developed in the analysis are examined for the quality and extent

of the supporting data. In the sales comparison approach, the appraiser should consider the

proximity in time and location of the sales to the subject property. The level of market support for

the adjustment process and the number and size of the adjustments should also be considered. A

similar analysis should be followed in the income capitalization approach. The appraiser should

also evaluate the market support for estimates of vacancy, credit loss, and expenses as well as

capitalization and discount rates. If the cost approach has been developed, the appraiser should

consider the level of support for all of the elements of cost new, depreciation, and entrepreneurial

prot. Every calculation in each approach should be double-checked for accuracy.

The nal opinion of market value should not be derived by applying a formulaic approach

such as averaging the values from the various approaches developed in the appraisal. The goal

is to provide the client agency and intended users with a clear, logical analysis of the results of

each approach to value developed in the appraisal and the reasons for the weight given to each

approach in forming a nal opinion of market value.

1.7. Partial Acquisitions. There are many situations in which a client agency is only acquiring a

part of a larger parcel. This can occur when the client agency is acquiring an interest less than

the fee simple, such as an easement, water rights, subsurface rights, or air rights. This can also

occur when the agency is acquiring the fee interest in only a portion of a larger parcel. This

section of the Standards addresses the appraisal requirements under these circumstances.

1.7.1. Before and After Rule (Federal Rule). The federal rule—also known as the before and

after rule—applies in all appraisals involving partial acquisitions. Under this procedure, the

appraiser develops opinions of both the market value before the acquisition and the market

value after the acquisition. Requiring this valuation procedure allows acquiring agencies, the

Department of Justice, and the courts to calculate a reasonable measure of compensation by

deducting the remainder or after value from the larger parcel’s before value. The result is a

gure that includes the value of the property acquired as well as any compensable damages

and/or direct (special) benets to the remainder property. It should be noted that these are

two separate appraisals within the same assignment requiring the appraiser to perform a

new analysis and valuation of the remainder after the taking. It should also be noted that it is

improper for an appraiser to develop an opinion of the market value of the larger parcel in the

before situation and then deduct the opinion of value of the property acquired together with

separately calculated damages to arrive at the value of the remainder.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development38

If the appraisal is prepared for the Department of Justice, the scope of work will typically not

include allocation of the dierence between the before and after values into the components of

the contributory value of the property acquired and compensable damages to the remainder.

However, in assignments for other client agencies the scope of work may include such an

allocation in order to assist the agency in meeting their obligations under the Uniform Act.

1.7.1.1. Damages. When considering damages to remainder properties, appraisers must understand

that state and federal rules may dier on which items of damage may be compensable

(severance) and which items may be non-compensable (consequential). It is recommended that

appraisers seek guidance from agency legal counsel if there is any question about whether an

element of damage is compensable.

The fundamental basis for a claim of compensable damages is a diminution in the market

value of the remainder. The extent to which the utility of a property has been impacted by the

acquisition must be established by factual information and analysis and must never be assumed

or based on speculation. Evidence that the highest and best use of the remainder property has

changed as a result of the taking provides support for the existence of damages. Factual evidence

of a change in the intensity of the highest and best use, such as from a balanced farm to an

unbalanced farm, may also provide support for the conclusion.

In certain circumstances, damage to the remainder may be cured by remedial action. This is

generally called the cost to cure and is a proper measure of damage only when it is no greater

in amount than the decrease in the market value of the remainder if left as it stood. When the

cost to cure is less than the compensable damages if the cure were undertaken, the cost to cure

is the proper measure of damage and the United States is not obligated to pay in excess of that

amount. Developing the cost to cure requires that the appraiser develop a well-supported cost

estimate in the same manner as described in Section 1.5.3, which describes the critical elements

in developing a cost approach.

If a consultant’s services are used to assist an appraiser in estimating a cost to cure damage

amount in a partial acquisition, the appraiser must review and analyze the cost estimate with

great care. Even though a cost to cure method of estimating the diminution of value may

be appropriate, it must be remembered that the remainder property is still to be valued in its

uncured condition. Therefore, it is important that any cost to cure estimate of damage include

not only the direct costs of the cure, but also the indirect cost, any eects of delay, and if

appropriate, an entrepreneurial prot factor.

1.7.1.2. Benets. As with damages, appraisers must be aware that the legal rules regarding what

constitutes indirect (general) benets and what constitutes direct (special) benets may dier

between state and federal rules. The extent of a benet to a remainder parcel is a fact question

that must be well supported by the appraiser. Whether the benet is general or direct (special)

is a mixed fact/law question and client agency counsel should be consulted to resolve any

question about this classication.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 39

Appraisers should give the same consideration to benets as they do to damages in developing

an opinion of the market value of remainder properties. Benets can take many forms, such as

when the project has caused the remainder to have lake frontage, frontage on a better road, more

convenient access, improved drainage, irrigated land, and an improved view. An upward shift in

highest and best use of the remainder property is often an indication of direct (special) benets,

and direct benets must be considered when appraisers develop an opinion of the value of

remainder properties, even though other lands may have the same benets from the project.

1.7.1.3. Osetting of Benets. Direct (special) benets may oset the contributory value of the part

taken and any damages to the remainder caused by the government’s project. To take into

account any direct benets from the project, appraisers must apply the before and after rule by

forming an opinion of the market value of the larger parcel at the time of acquisition (excluding

any enhancement or diminution resulting from the project) and deducting the market value of

the remainder property (including any direct benet or diminution from the project).

Appraisers should note that the federal rule in this regard may be dierent from state rules and

they should consult client agency counsel if there is a question.

1.7.1.4. Takings Plus Damages Procedure (State Rule). There may be rare circumstances in

federal acquisitions when strict adherence to the before and after rule will create costly and/or

dicult burdens on the appraiser. Examples of such situations are minor fee or easement

acquisitions (for owage, wetland or habitat protection, roads, pipelines) from large parcels,

where the cost of performing a full before and after appraisal is unwarranted in view of the

minor nature of the acquisition and there are clearly minor or no damages to the remainder.

In those rare situations, the client agency may alter the scope of work to allow a takings plus

damages procedure, sometimes called the state rule. Under this procedure, the appraiser must

still determine the larger parcel and develop an opinion of the value of the part taken as it

contributes to the larger parcel. Minor damages are added to the opinion of value of the part

taken to provide an estimate of the compensation to be paid by the client agency.

1.8. Leasehold Acquisitions. The government will sometimes acquire only a leasehold estate in

all or a portion of a property, thus acquiring the right of use and occupancy of the property

for an identied period of time. This section of the Standards will address the requirements for

developing an appraisal for this purpose.

1.8.1. Market Rent and Highest and Best Use. As discussed in the income capitalization

approach section of these Standards, in developing an appraisal for a leasehold acquisition, the

appraiser must use the denition of market rental value found in Section 1.5.4.1.

As part of the development of an appraisal for a leasehold acquisition, the appraiser must

determine the highest and best use of the property (as improved) that is the subject of the leasehold.

This requirement is critical to the selection of comparable rents used in the valuation process.

Where necessary, the appraiser may need to perform a marketability study to aid in this analysis.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development40

1.8.2. Leasehold Estate Acquired. It is critical that the client agency provide the appraiser with

a description of the leasehold estate it plans to acquire. In turn, the appraiser must fully

understand the estate to be appraised and the impact on the market value of the property.

It is important for the appraiser to recognize the characteristics of the rental or income streams

being evaluated. Most often rent is paid periodically (e.g., monthly) in advance. However, when

the government acquires a leasehold interest or right of use and occupancy in a property, it will

usually pay rent in a manner that is inconsistent with the market. If the leasehold interest is

acquired by condemnation, all of the rent due for the entire term of its occupancy is usually paid

in a lump sum at the beginning of the occupancy (or on the date of acquisition). Therefore, an

appraiser must convert any opinion of periodic market rent into a single lump sum present value

or payment to be paid in advance. If the leasehold is acquired by negotiation, the rent may be

paid in arrears or at dierent frequencies than is typical in the market, and the appraiser must

account for this dierence.

If rent is paid by the government in a single lump sum, adjustment for this factor is typically

accomplished by applying an ordinary annuity factor (present worth of 1 per period factor) to the

periodic market rent (if the opinion of rent is projected to remain constant over the government’s

occupancy). If the appraiser concludes that the market rent will not be constant throughout the

government’s occupancy, the periodic rent is typically converted into a lump sum present worth

by the use of present worth of 1 factors or by discounted cash-ow (DCF) analysis.

The discount rate to be applied to the periodic rent should reect the rates of return typical for

the type of property involved. The selected discount rate should be supported by market data

whenever possible.

Appraisers must bear in mind that the leasehold estate acquired by the government may vary

substantially from the terms of a typical lease in the private market. For instance, the term of

the lease may be longer or shorter than typical for the type of space under appraisal. Expenses

paid by the government may dier from those paid by the typical lessee, and there may be no

provisions for expense stops and rental escalations during the lease term. The parking ratio for

the space occupied by the government may vary from the market standard and there will be

no provisions for rent concessions or lessor buildout of the occupied space. The appraiser must

consider all of these factors when estimating the market or economic rent for the acquired space,

and comparable rentals must be adjusted to account for these dierences. Table 1 summarizes

the most commonly encountered dierences between private and government leases which must

be accounted for in the adjustment process.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 41

Table 1. Common Dierences Between Private and Government Leases

Adjustment Factors Private Leases Federal Leases

Measurements

Typical for market—often

BOMA based

Generally inconsistent with

local market and/or stan-

dards such as BOMA or

IPMS

Term (duration)

Typical for market (e.g., ve

years)

Shorter or longer terms—of-

ten unusual (e.g., 33 months)

Base rent

Dollar per square foot

monthly in advance

Lump sum in advance, or

monthly in arrears

Rent adjustments

Index leases, graduated

leases, percentage leases

Level payment over term (no

adjustments) or adjustments

built into lump sum

Expenses

Full service, gross, modied

gross, net

Expense stops not included.

May include excess janitorial,

security services

Parking

x spaces per x square feet More or less spaces than

market norm

Tenant improvements

(TIs)

Landlord provides

dollar amount for tenant

improvements (TIs)

No tenant improvements

(TIs)

Rent concessions

Landlord provides free rent

dependent on size and length

of lease

No rent concessions

Renewal options

Established in lease May condemn another term

if needed

At lease end

Lessor retains TIs May allow the government to

destructively remove special-

ized equipment

At lease extension/

renewal

Market rent for nished out

space

Government won’t pay twice

for TIs already paid for

1.8.3. Larger Parcel Concerns. There are occasions when the government acquires the leasehold

interest in only a portion of a larger property. In those instances, the appraiser must consider

the possibility of damages to the remainder property (i.e., that portion not to be occupied by the

government). In those instances where severance damages may be signicant, appraisers should

consult with their client agency and/or its legal counsel before proceeding with the appraisal

assignment to ensure that the appraisal will be prepared in accordance with current applicable law.

1.9. Temporary Acquisitions. In addition to leasehold acquisitions, there are generally two

situations in which the acquisition by the government may be temporary: temporary construction

easements (TCEs), and temporary acquisitions by inverse condemnations. TCEs and temporary

inverse condemnation acquisitions will be discussed separately below because of their uniquely

dierent characteristics.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development42

1.9.1. Temporary Construction Easements (TCEs). A temporary construction easement

(TCE) is generally acquired in conjunction with a permanent acquisition and often abuts

the boundaries of the permanent acquisition. The permanent acquisition area is used for

permanent placement of the public improvement, whereas the TCE is used in addition to the

permanent acquisition area for initial construction of the public improvement. After initial

construction of the public improvement is completed, the construction easement expires and

the unencumbered fee interest in the land reverts back to the owner. Similar to TCEs but

shorter in nature is an easement for a right of entry onto the land for purposes of surveying,

inspection, and/or testing for contamination. These rights of entry are generally very short

term in nature and are treated in the same manner as TCEs.

Damages that result from TCEs are usually based on the economic or market rent of the aected

area for the term of the temporary easement. Usually, the land area aected is so small and the

term of the easement so short that compensation for the TCE is nominal. As a result, many

agencies and appraisers have adopted a shortcut for its estimation. A reasonable return rate,

rather than the economic or market rent based on comparable rentals, is estimated and applied

to the encumbered land’s fee value for the term of the easement. The rent loss or appropriate

return is often not converted to a present value through the application of a discount rate because

of the short term of the easement and the nominal nature of the indicated rent loss.

Even though technically incorrect, as discussed below, this shortcut is generally acceptable

to agencies because of the nominal nature of the TCE acquisition and the cost/time savings

associated with the shortcut. However, appraisers must recognize that the shortcut methodology

will be found unacceptable under these Standards if the indicated compensation is more than

nominal. When the indicated compensation for the acquisition of a TCE is more than nominal,

the appraiser must use proper appraisal methodology to develop the present value of the rent

loss. This will entail the use and presentation of properly documented comparable rentals, and

the discounting of the lost rental income stream into a present value.

The appraiser must also consider whether the existence of a TCE will restrict the property owner

from using the unencumbered portion of the land for its highest and best use during the easement’s

term. Often an appropriate method to estimate the proper adjustment to reect the diminution

in the land’s value by reason of the temporary easement is to apply the rent loss to all lands so

aected. (If the property can be rented for a lesser use during the term of the TCE, the measure of

damage is usually measured by the rent dierential between the before and after situations.)

Appraisers must remember that the loss in value caused by a TCE acquisition is not an

independent acquisition, and the compensation for it cannot be added to the indicated

diminution in value by reason of the associated permanent acquisition. The rent loss associated

with a TCE should be used as the basis for an adjustment to the remainder property’s after value,

not as something to be added to the dierence between the before and after value of the property.

72 These rights of entry are often so short term in nature (sometimes as short as 24 hours) and their purpose so restricted that agencies do not have

an appraisal conducted of such properties, but rather they make an administrative determination of a nominal compensation for the acquisition.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 43

1.9.2. Temporary Inverse Takings. Temporary acquisitions by inverse condemnation may be by

either a physical invasion of the property by the government (or an agent of the government)

or by regulation.

The measure of value in a temporary inverse case is the same as in the

acquisition of a TCE, that is, the rental value of the land taken for the term of the taking. The

substitution of a return on the fee value of the land for an opinion of the rental value of the

land is not generally an accepted alternative.

What generally makes temporary acquisitions by inverse condemnation uniquely dierent from

the acquisition of a TCE is the amount of indicated compensation. An inverse condemnation

acquisition usually involves whole ownerships rather than a small geographical portion of the

ownership, and the term of the alleged inverse taking is generally of a substantially longer

period of time than the duration of a TCE. For that reason, greater care must be employed by

the appraiser in developing an opinion of the value of such properties. Department of Justice

legal counsel will generally provide the appraiser with the eective date of the appraisal and the

duration and extent of the alleged taking.

In a regulatory taking situation, it is possible that the regulation temporarily precludes the use

of the land for its highest and best use, but secondary uses of the property remain available to

the property owner. In such a case, opinions of the before and after market rent are developed

to determine the dierence in the rent that could have been commanded by the property during

the inverse taking period. The before rent is the market or economic rent of the property for its

highest and best use for the duration of the taking, and the after rent is the market or economic

rent of the property for its secondary, but allowable, use during the taking period. In estimating

the potential use of the subject property during the taking period, appraisers must take into

account the limited duration of the period of use.

Because inverse condemnation cases (either permanent or temporary) are very fact-specic,

it is essential that the appraiser work very closely with the Department of Justice attorney

assigned to the case. Both appraiser and attorney must understand the precise question that

must be addressed by the appraiser and the acceptable methodology to be used to answer it.

This will often involve substantial legal research by the attorney, concluding with written

legal instructions to the appraiser.

1.10. Acquisitions Involving Natural Resources. The appraisal of properties containing

valuable natural resources such as minerals, timber, and water is a complex subject requiring

specialized training and experience (see USPAP Competency Rule). A critical rst step in

developing an appraisal of properties containing resource assets is identifying the property

73 See, e.g., 767 Third Ave. Assocs. v. United States, 30 Fed. Cl. 216 (1993), aff ’d 48 F. 3d 1575 (Fed. Cir. 1995).

74 See, e.g., First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304 (1987).

75 United States v. 883.89 Acres of Land in Sebastian Cty., 442 F.2d 262, 264, 265 (8th Cir. 1971), aff’g 314 F. Supp. 238 (W.D. Ark. 1970); United

States v. Michoud Indus. Facilities, 322 F.2d 698, 707 (5th Cir. 1963); United States v. 117,763 Acres of Land in Imperial Cty., 410 F. Supp. 628

(S.D. Cal. 1976), aff ’d sub nom. United States v. Shewfelt Inv. Co., 570 F.2d 290 (9th Cir. 1977).

76 For instance, if the denial of a permit for a period of three years precluded the use of a property for commercial purposes, a secondary use

of industrial warehousing during the taking period would not be appropriate because the short-term life of the secondary use would not be

economically feasible. However, a secondary use as an industrial equipment storage yard might be a suitable secondary use because such a

use would not involve the construction of substantial improvements or a commitment to a long-term use.

77 See Section 1.9 for additional discussion of inverse condemnations.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development44

rights to be acquired and the ownership interests into which they may be divided. The

appraiser and the client agency must work together to obtain title information and legal

descriptions to ensure that the appraisal properly addresses these components and their

contribution to the value of the larger parcel.

While the valuation of these diverse resource assets requires dierent considerations, there are

common elements that apply in all appraisals of these properties: the unit rule, highest and best

use, and larger parcel analyses.

1.10.1. The Unit Rule. In the development of an appraisal concerning properties containing

resource assets, it is particularly important to understand the unit rule.

Property must

be valued as a whole for federal acquisition purposes, with due consideration of all of the

components that make up its value. Its constituent parts are considered only in light of how

they enhance or diminish the value of the whole, with care being exercised to avoid so-called

cumulative or summation appraisals.

Accordingly, it is improper to estimate the value of the surface of the property, add to it a

valuation of the minerals or other resource such as water or timber (as estimated by a separate

expert), and thereby conclude an opinion of total market value for the property. Not only would

this result in an improper summation appraisal, as a practical matter it would also mean that no

one individual could testify to the market value of the property as a whole should the matter go

to litigation. For these reasons, when consultants’ reports are used in the valuation of mineral

property, appraisers must strictly adhere to the requirements of Section 1.13 of these Standards

relating to the use of consultants’ reports.

1.10.2. Highest and Best Use Considerations. Highest and best use analysis is a critical element

in the development of a reliable appraisal of property containing valuable natural resources.

As a rst step, a market analysis should be performed to identify the market supply and

demand for the resource located on the property. If no market exists for the resource, then

the quantity and quality of the commodity need not be determined. The market analysis

provides the foundation for the appraiser’s conclusions regarding the marketability, price, and

competition for the commodity found on the property.

If a market exists for a mineral or other resource, then a supported determination must be

made concerning both the legal permissibility of extracting the mineral (or harvesting the

timber) and the physical characteristics of the minerals or timber located on the property. These

determinations often require special expertise, including:

• Interpretation of permitting and other environmental requirements that may necessitate the

assistance of a consultant with specialized knowledge and experience in the relevant market.

• Studies regarding the physical characteristics of the minerals that are usually conducted by

specialists (usually geologists and/or engineers) who make determinations concerning such

78 See Section 4.2.2 for a discussion of the legal basis for the unit rule.

79 See Section 4.2.2.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 45

important factors as the location, quantity, quality of the mineral deposit, and any variations

in the quality that might be found on the property.

• Additional determinations regarding such factors as accessibility (due to topographical constraints

or distance to road or rail line, for example) and problems and costs of extraction or harvest.

• A cruise plan, timber cruise, and check cruise for land containing valuable timber.

This information provides the basis for developing an opinion of the value of the property

using the sales comparison and income capitalization approaches to value. However, before the

adoption of these interpretations, studies, or determinations, it is the professional responsibility

of the appraiser to thoroughly analyze and understand the reports prepared by other experts

and adopt them only if the analysis and conclusions were prepared according to appropriate

standards, are sound, and are adequately supported.

As with all other appraisals prepared under these Standards, the appraiser must identify the most

likely purchaser and user of the subject property as well as the timing of the use (for example,

mineral extraction or timber harvesting). In addition, a larger parcel analysis must be completed.

For property containing valuable natural resources, this analysis may require an examination of

minerals or timber holdings beyond the land being acquired by the government that meet the

three tests of the larger parcel.

1.10.3. Special Considerations for Minerals Properties.

Property Rights and Interests. It is fundamental that the property rights and interests in

minerals properties are identied as part of the problem identication process. The client

agency must identify the property rights and interests that are to be acquired and valued. A

comprehensive understanding of the rights and interests to be appraised is critical to the proper

development of both the sales comparison and income capitalization approaches to value.

In the oil and gas industry there is a distinction between the working interest and the royalty

interest. For example, in a federal lease sale the successful bidder acquires a working interest through

payment of a bonus bid while the United States retains the royalty interest. In hard rock mining,

these two interests are sometimes referred to as the contributing and noncontributing interests. The

contributing interest is controlled by the mining company, which contributes the capital required

for exploration, ore denition, and mining of a property. The noncontributing interest is a passive

interest in the land and is essentially a nonparticipating royalty interest. Both contributing and

noncontributing interests can be present in leased fee and fee simple estates. In the case of fee

ownership, the contributing and noncontributing interests may be held by the same party.

The selection and evaluation of comparable sales in the sales comparison approach and the

methodology selected for the income capitalization approach are both driven by the interests

being acquired and valued. For example, when valuing a noncontributing interest, the sales

selected for analysis should be transfers of property with the same interest. The income analyzed

would be the present worth of the anticipated future royalty income.

80 See Section 1.13 for further discussion of an appraiser’s reliance on the work of other experts.

81 See Section 4.3.3 for further discussion of the legal requirements for a larger parcel analysis.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development46

Appraisers valuing mineral properties impacted by the 1872 Mining Law are advised to

coordinate with client agency sta to clarify the approaches to valuing those interests.

Sales Comparison Approach to Value. Despite the common use of the income

capitalization approach for industry purposes, in federal acquisitions the sales comparison

approach is normally considered the most reliable approach for minerals as for other property

types.

As a result, the appraiser cannot default to using an income approach or other valuation

method that may be acceptable for typical industry or other purposes. It is unacceptable for

an appraiser to simply state that there are no comparable sales transactions without providing

adequate support for the conclusion.

To properly develop a sales comparison approach to value for a mineral-bearing property, the

appraiser must understand the level of information available concerning the mineralization found

on the subject property. It is then important to identify comparable sales that had similar levels

of information about mineralization available at the time of sale. Signicant variables typically

include rights conveyed, conditions of sale, the presence of multiple ores on the same property,

access for extraction purposes, topography and cover (stripping ratios), transportation availability

and cost, and distance to smelters or reneries. All of these factors may require adjustment.

In analyzing a sale of a mining property as a comparable sale, the sale may include the mine,

mill, extraction plant, oces, and various other support facilities. These capital improvements

are part of the real property and are also components of the business of mining and selling the

mineral. The appraiser must understand the complex interplay of the real property components

and identify where the real property ends and the business interests begin.

The verication of comparable sales data is a critical component

of this analysis, and the assistance of experts in identifying all

necessary areas of inquiry during the verication process may

be required. The appraiser may need to consult geologists,

engineers, and other experts for producing or nonproducing oil

and gas, ssionable and hard rock, or other locatable minerals.

Also important in the sales comparison approach is the selection

of the appropriate unit of comparison. Such selection should

generally mirror that unit of comparison used by participants

in the market and, as such, will generally result in the tightest

bracket of value for the subject property.

Income Capitalization Approach to Value. The income capitalization approach to value

is also a valid means for developing an opinion of the market value of mineral properties, but

should never be used exclusively if comparable sales are available for use in the sales comparison

approach. The income capitalization approach can be especially applicable when the subject

82 See Section 4.8.

83 For a general discussion of the application of the sales comparison approach, see Sections 1.5.2 and 4.4.2.

84 See Section 4.8.

In valuing mineral

properties using the income

capitalization approach,

“[g]reat care must be taken,

or such valuations can reach

wonderland proportions.”

— United States v. 47.14 Acres

of Land in Polk Cty., 674 F.2d

722, 726 (8th Cir. 1982).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 47

property is already being mined, and thus the historical income stream from the property is

available for analysis. In applying the income capitalization approach, appraisers must take care

to consider only the income that the property itself will produce—not income produced from the

business enterprise conducted on the property (i.e., the business of mining).

An appraiser who is

not thoroughly experienced in the appraisal of mineral properties should not attempt to employ

the income capitalization approach. Even when used by an appraiser experienced in this eld,

this appraisal approach can be highly speculative, and great care must be exercised in its use.

In developing an opinion of value by the income capitalization approach for a mineral

property, it is generally recognized that the most appropriate method of capitalization is yield

capitalization, most notably discounted cash ow (DCF) analysis. The income that may be

capitalized is the royalty income, and not the income or prot generated by the business of

mining and selling the mineral. For this reason, the income capitalization approach, when

applied to mineral properties, is sometimes referred to as the royalty income approach.

In conducting a DCF analysis, the appraiser must avoid estimating a property-specic investment

value to a particular owner instead of developing an opinion of the market value of the property

if it were placed for sale on the open market. Like application of the subdivision development

method to value, DCF analysis in the valuation of mineral properties can be highly complex.

Creation of a detailed mining plan for the property is often required. The essential components

of this approach are: (1) the royalty rate; (2) the unit sale price of the mineral to which the

royalty rate is applied (e.g., $20 per ton); (3) the projected annual amount of mineral production

(e.g., 100,000 tons per year)—with the product of this ingredient and the prior two ingredients

yielding the annual income; (4) the projected number of years of production and the year when

the production will begin; and (5) the proper capitalization or discount rate.

In developing an estimated income stream, the proper royalty rate can be derived from

comparable mineral lease transactions, and the mineral unit price to which the royalty rate is

applied may be derived from appropriate market transactions. The annual amount of production

and the number of years of production are more dicult (and speculative) to estimate, and at a

minimum require not only physical tests of the property to determine the quantity and quality

of the mineral present, but also market studies to determine the volume and duration of the

demand for the mineral in the subject property. Production level estimates should be supported

by documentation regarding production levels achieved in similar operations. Production levels

should also be consistent with the mining plan’s labor and equipment estimates. Numerous

other factors may have to be considered, such as the amount of overburden, the method of

mining (e.g., surface or deep mining), the requirements of permitting and applicable reclamation

laws, the hauling distance to market, competition from other sites, the size and timing of the

investment needed to construct any necessary access or processing plant, and so on.

When the interest to be acquired and appraised includes the working or contributing interest, the

income analysis should also consider the size and timing of the investment needed. Capital costs

will include expenditures for services, construction, and equipment related to mine development,

85 See Sections 4.4.4 and 4.8.

86 See Sections 1.5.1.2 for discussion of the subdivision development method.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development48

preproduction, and production. Among the factors to be considered in this portion of the

analysis are preliminary studies such as exploration and environmental and engineering studies

required to dene the location and nature of the resource suciently to support the mining plan

and ensure compliance with all applicable governmental permitting and land use regulations.

The engineering costs related to the mining operation design must include contractors’ fees and

management. Other elements to be considered include the costs of site preparation, facilities and

improvements (including o-site improvements, such as rail or road facilities), mining equipment,

and preproduction (including all of the costs required to bring the extraction process to full

production, including the costs of time lag and permitting).

Operating costs are the expenditures incurred during the ongoing extraction process. These cost

elements include labor, materials, supplies, utility costs, payroll overhead, management, indirect

costs, and contingencies. Also, appropriate deductions for all relevant taxes associated with the

operation must be made. As in the subdivision development approach, the estimation of an

appropriate level of entrepreneurial prot is a critical element in the DCF analysis of any mineral

property and is a factor that should be supported by direct market data whenever possible.

One of the most critical factors in the application of DCF analysis is the selection of the discount

rate. Attempts have been made to apply various statistical techniques (such as probability

weighted scenarios, Monte Carlo analysis, marketing uncertainty analysis, and timing of

development analysis) to mineral valuations to account for the extraordinary high risks associated

with such operations. However, the application of various statistical techniques is not a substitute

for discount rate selection derived from and supported by direct market data,

which is the

preferred and most widely accepted approach.

1.10.4. Special Considerations for Forested Properties. In developing an appraisal of forested

properties, the appraiser must determine whether any merchantable timber is located on the

property and whether the tree products located on the property are marketable and saleable.

There must be sucient volumes for protable harvesting under existing state forest practice

rules (or other applicable jurisdiction if appropriate). Merchantable timber may contribute

value to the property. Pre-merchantable timber may or may not contribute value to the

property and in some cases is included in the land value.

A critical part of the valuation of forested property is a timber cruise. A cruise plan should be

developed that establishes the cruise procedures to be used in accordance with current market

practices for the area and type of timber. The objective is to establish cruise standards and

sampling errors based on private market expectations in the local market when timber is sold

with the land.

87 This factor can have a signicant impact on the value of mineral property because the time lag between the eective date of an appraisal

and the projected date upon which all studies have been completed, all permits issued, all construction completed, and an actual income

stream can be generated may be extended.

88 For a discussion of market extraction of discount rates, see the American Society of Farm Managers and Rural Appraisers’ 2012 course,

“Appraising Natural Resources,” 18-19.

89 See Section 1.5.1.2.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 49

The sales comparison and income capitalization approaches are both appropriate for use in

valuing properties with a highest and best use for timber production. In developing the sales

comparison approach, the selection of the unit of comparison should be based on common local

market practices. In developing the income capitalization approach, the appraiser must consider

all factors including lumber selling price and absorption period (based on supply and demand

analysis in the market), all harvesting and transportation costs, costs of sales, and prot. The

discount rate used to estimate present value must be market supported and should reect timber

investment rates and risk associated with the subject property.

1.10.5. Water Rights. In appraising properties in which water rights contribute to the overall value

of the property, the appraiser must recognize that water rights are established under state law.

Appraisers should research sales in the same district or drainage basin and take into account

water-rights seniority, past demand, drought, past depletion type of use, historic place of use,

conversion, and statutory limitations on transferring place of use. There may be many other

market factors that should be considered, such as costs of hydrologic and engineering studies as

well as legal fees that must be addressed. The appraiser should consult with the client agency

and agency counsel to ensure that the characteristics of the water rights that contribute value

to the larger parcel are properly accounted for.

1.11. Special Considerations in Appraisals for Inverse Condemnations. Unlike direct

condemnations and other intentional acquisitions, inverse taking or inverse condemnation

claims involve a threshold question of government liability. In ling a direct condemnation,

the United States expressly acknowledges the actual or proposed acquisition and its obligation

to pay compensation. In the inverse taking claim, on the other hand, the United States may

contest the landowner’s claim that a taking occurred for which just compensation must be

paid under the Fifth Amendment. Accordingly, in an inverse taking claim, the court must

rst determine whether a taking of property occurred for which just compensation must be

paid. Appraisers may be retained to develop opinions in connection with the liability phase,

the compensation phase, or both. If the government’s action resulted in the government’s

permanent physical occupation of the land in question, the liability issue is a rather

straightforward one.

However, in the context of a taking by regulation, the federal courts

have developed various tests to determine whether a taking has occurred: the character of

the government action; the extent to which the regulation interferes with distinct, investment-

backed expectations; and the economic impact of the regulation.

The economic impact test above involves the valuation of the property in question before and

after the government’s action.

When conducting such an analysis, the appraiser’s application of

the larger parcel tests may vary from those applied in the direct acquisition or condemnation

because of the investment-backed expectations test noted above. Investment-backed expectations

90 “[A] permanent physical occupation is a government action of such a unique character that it is a taking without regard to other factors that

a court might ordinarily examine.” Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 432 (1982).

91 Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978).

92 Such action generally relates to the denial of a government permit, such as a permit to ll wetlands.

93 In the context of inverse condemnation cases the courts have sometimes referred to the larger parcel determination as the issue of the

denominator. See, e.g., Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 497 (1987). For a discussion of the larger parcel tests in

direct acquisitions, see Sections 1.2.7.3.1 and 4.3.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development50

are typically considered as of the date upon which the owner acquired the property and in the

regulatory environment that existed at that time. But, on the date of the alleged taking, the

owner may have sold portions of the property previously acquired. For the court to accurately

assess the economic impact of the regulation, it must know how the regulation impacted the

owner’s reasonable investment-backed expectations.

For that reason, it may be necessary for

the appraiser to disregard the unity of title test of the larger parcel and to value the entirety of

the tract that was originally acquired. Because the tests applied by the courts to determine the

question of liability (i.e., whether a compensable taking has occurred) are quite complex, it is

essential for the appraiser to conrm with legal counsel the appropriateness of the larger parcel

determination before proceeding with the appraisal assignment.

In providing appraisal services to the government in connection with the liability phase of an

inverse condemnation action, it is imperative for both the appraiser and the trial attorney to

completely understand what the appraiser’s valuations are intended to measure. For that reason,

continual contact and conferencing between the appraiser and trial counsel throughout the

development of the appraisal is essential. Government’s trial counsel must determine what is to

be measured, while the appraiser determines how to measure it.

If the court nds that a compensable taking has occurred, the appraiser’s function generally is

to develop an opinion of the market value of the aected property before and after the taking,

as of the date of the taking, which should be provided to the appraiser by legal counsel. In this

valuation phase of the inverse condemnation litigation, the appraiser will generally utilize the

same larger parcel tests that are applied in direct acquisitions or condemnations. In other words,

the larger parcel used in the liability phase of the trial may be dierent than the larger parcel

used in the valuation phase of the trial. Inverse condemnation actions relating to temporary

takings are discussed in Section 1.9.2.

1.12. Special Considerations in Appraisals for Federal Land Exchanges. Federal land

exchanges dier from other federal land acquisitions in that an exchange must always be

voluntary and the parties must reach agreement on the value of the properties. In direct

acquisitions, the government has the authority to force owners to transfer their land by the

exercise of its power of eminent domain as long as the government’s use of the land will be for

a public purpose and the government pays the owner just compensation for the land. However,

the government does not have the authority to force individuals to convey their lands and

accept federal lands as compensation. Likewise, the government “is not required to exchange

any Federal lands. Land exchanges are discretionary, voluntary real estate transactions between

the Federal and non-Federal parties.”

This does not mean that such transactions are exempt

from litigation relating to the valuation of the property involved and/or the adequacy of the

appraisal report upon which the transaction was based.

94 For example, the owner may have acquired 100 acres, but as of the date of the alleged taking may have sold 75 acres of the tract, leaving an

ownership on the date of valuation of only 25 acres.

95 36 C.F.R. § 254.3(a). See also 43 C.F.R. § 2200.0-6(a).

96 See, e.g., Desert Citizens Against Pollution v. Bisson, 231 F.3d 1172 (9th Cir. 2000).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 51

Most federal land exchanges are accomplished pursuant to the Federal Land Policy and

Management Act of 1976 (FLPMA), as amended (43 U.S.C. § 1701 et seq.). There are a number

of specic statutes authorizing land trades that may not be entirely consistent with the provisions

of FLPMA, as for example, certain National Wildlife Refuge System and National Park System

exchange acts; the Alaska Native Claims Settlement Act, as amended (43 U.S.C. § 1621); and the

Alaska National Interest Lands Conservation Act (16 U.S.C. 3192). Appraisers must therefore

confer with the agency to ensure complete understanding of the appraisal development and

appraisal report requirements applicable to the specic appraisal assignment.

The two agencies most actively involved in federal land exchanges are the U.S. Forest Service

and the Bureau of Land Management (BLM). Both the Forest Service and BLM have adopted

regulations that implement FLPMA and control their land exchange activities.

Forest Service

and BLM regulations are similar and both require some modications of these Standards. These

regulations dene appraisal, highest and best use, and market value,

and appraisers must use

these denitions when conducting appraisals for federal land exchanges.

Exchanges can be proposed by the Forest Service, BLM, or any person, state, or local

government. To assess the feasibility of an exchange proposal, the agency may complete a

feasibility analysis of the lands involved in the proposal. Valuation input into the feasibility

analysis may or may not include an appraisal, but shall always be prepared by a qualied agency

appraiser in compliance with the requirements of USPAP.

If the feasibility analysis does not provide an opinion of value, it may not fall under these Standards

but would still be considered part of appraisal practice under USPAP.

100

The requirements for

classication as a qualied appraiser under these exchange regulations are essentially the same as

those for a contract appraiser under 49 C.F.R. § 24.103(d)(2) and these Standards.

101

One of the initial steps in an exchange involving federal lands is the formulation of an

Agreement to Initiate an Exchange (ATI).

102

This nonbinding agreement outlines the exchange

process, identies the proposed lands or interests in lands to exchange, and memorializes the

responsibilities of each party (including the appraisal costs and other costs associated with

processing the exchange). The ATI also documents whether the proposed land exchange will be

processed as an assembled or non-assembled land exchange.

A qualied appraiser shall be an individual acceptable to all parties and approved by the

authorized ocer. The appraiser shall be competent, reputable, impartial, and have training and

experience in appraising property similar to the property involved in the appraisal assignment

pursuant to these Standards. The appraisal report must reference and be prepared according to

the applicable regulations and, to the extent appropriate, these Standards.

103

All appraisal reports

97 Forest Service regulations may be found in 36 C.F.R. § 254 et seq., and BLM regulations may be found in 43 C.F.R. § 2200 et seq.

98 36 C.F.R. § 254.2; 43 C.F.R. § 2200.0-5.

99 43 C.F.R. § 2201.1(b); see also 36 C.F.R. § 254.4(b).

100 If the feasibility analysis provides a value opinion, it would fall under these Standards and must comply with USPAP’s Standard 1 and

Standard 2.

101 See 36 C.F.R § 254.9(a)(2); 43 C.F.R. § 2201.3-1(b).

102 43 C.F.R. § 2201.1; 36 C.F.R. § 254.4.

103 36 C.F.R. § 254.9; 43 C.F.R. § 2201.3.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development52

prepared for federal exchanges are subject to review by federal agency review appraisers.

104

Therefore, appraisers conducting appraisals for federal exchange purposes have a professional

responsibility to recognize the federal agency as the client and the private landowners as intended

users of the appraisal report and to identify them as such in the appraisal report.

105

If any party issues an instruction to the appraiser to make an extraordinary assumption or to

employ a hypothetical condition in the conduct of the appraisal that would conict with the

exchange regulations, the ATI, or these Standards, the appraiser must advise the client of the

conict. If the client provides written instructions to the appraiser to make the assumption or

employ the condition in conducting the appraisal, the appraiser may make the appraisal but must

clearly identify the assumption and/or condition in the appraisal report and also report that the

opinion of value has not been prepared in accordance with the exchange regulations, the ATI,

and/or these Standards, so as to ensure that the intended users of the report are not misled.

The major technical dierence between appraisals prepared for federal land exchange purposes

and those typically prepared under these Standards relates to the appraisal of multiple tracts

and the appraiser’s determination of the larger parcel.

106

For a non-assembled land exchange

appraisal (similar to the typical acquisition appraisal, although the estate to be appraised has been

identied in the ATI), the appraiser will apply the tests of unity of ownership, of unity of highest

and best use, and of contiguity or proximity as it bears on unity of use in determining the larger

parcel. However, for purposes of an assembled exchange appraisal, the tracts to be appraised

are dened in the property description contained in the ATI. The nonfederal ownerships

being assembled for exchange shall be appraised based on the sum of the value of the separate

ownerships in the manner they were acquired and conveyed as individual transactions.

If an appraiser concludes that the property described in the ATI constitutes two or more separate

larger parcels, the method of valuation is generally fact dependent and, in most cases, will be

controlled by the provisions of the ATI. In some instances, the appraiser may be instructed

to value the dierent larger parcels as separate entities, while under other circumstances the

appraiser may be instructed to value the larger parcels only as they contribute to the whole,

as if the property described in the ATI would be sold from one seller to one buyer in one

transaction.

107

If appraiser instructions are contrary to the appraiser’s highest and best use or

larger parcel conclusion, the appraiser must advise the client that it may be necessary to identify

the instruction as an extraordinary assumption or hypothetical condition under USPAP. It is

important, however, for the appraiser to recognize that the same method of valuation must be

utilized for both the federal and nonfederal lands.

108

104 36 C.F.R. § 254.9(d); 43 C.F.R. § 2201.3-4.

105 USPAP, Standards Rule 2-2(a)(i) and 2-2(b)(i), 23, 25.

106 For discussion of the larger parcel, see Sections 1.4.6 and 4.3.3.

107 In other words, the value of the whole property cannot be estimated by simply adding together the independently appraised values of

the larger parcels, unless market evidence demonstrates that the larger parcels would contribute their full value to the value of the whole

property as dened in the ATI.

108 36 C.F.R. § 254.9(b)(v); 43 C.F.R. § 2201.3-2(a)(5).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 53

The regulations provide for special treatment of the larger parcel issue in assembled land

exchanges.

109

This term is dened dierently in Forest Service and BLM regulations

110

and, for

that reason, assembled land exchanges may be administered dierently by these agencies. Again,

depending on the provisions of the ATI, the value of the various parcels may be estimated as

independent parcels, or as a single tract to be sold in a single transaction.

When appraising the federal land portion of the exchange, the regulations require that the

appraiser “estimate the value of the lands and interests as if in private ownership and available

for sale in the open market.”

111

This is an assignment condition that requires a legal instruction

and creates a hypothetical condition. Because the federal land is appraised as if in private

ownership, to its highest and best use, any other surrounding federal land cannot be part of a

larger parcel because (due to the hypothetical condition) it is under dierent ownership and has a

dierent highest and best use.

Because of the complexity of appraising multiple tracts of land for exchange purposes and the

fact that their treatment is often fact specic, it is essential that agencies provide clear written

instructions to the appraiser in this regard and that the appraiser insist upon such instructions at

the initiation of the appraisal assignment.

1.13. Supporting Experts Opinions and Reports. Real estate appraisal is becoming increasingly

sophisticated. Preparation of an adequately supported opinion of market value often requires the

assistance of consultants with special expertise. Before issuing an appraisal assignment, agencies

should attempt to identify the need for such special consultants and make arrangements for such

services, either by contracting with the consultant directly or by providing for the appraiser’s

retention of the consultant in the appraisal contract. If an agency retains the consultant directly,

it should select the consultant in cooperation with the appraiser, who will ultimately have to

rely on the consultant’s analysis and conclusions. The agency and the appraiser should jointly

determine the scope of work and establish qualication criteria for any consultant retained.

Regardless of whether the consultant is retained by the agency or the appraiser, selection of the

consultant must be by concurrence of both the appraiser and the agency.

If the appraiser nds that an appraisal cannot be completed without a consultant’s assistance,

the appraiser should notify the agency involved immediately. The appraiser may not adopt

unauthorized, unreasonable, or unsupported assumptions in making an appraisal in lieu of

obtaining specialized consultant assistance.

Types of special consultants often needed include:

• Fixture appraisers

• Environmental engineers and auditors

109 36 C.F.R. § 254.5; 43 C.F.R. § 2201.1-1.

110 An “[a]ssembled land exchange means an exchange of Federal land for a package of multiple ownership parcels of non-Federal land

consolidated for purposes of one land exchange transaction.” 36 C.F.R. § 254.2; An “[a]ssembled land exchange means the consolidation of

multiple parcels of Federal and/or non-Federal lands for purposes of one or more exchange transactions over a period of time.” 43 C.F.R. §

2200.0-5(f).

111 43 C.F.R. § 2201.3-2(2); 36 C.F.R. § 254.9(b)(ii).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development54

• Civil engineers

• Cost estimators and contractors

• Market experts

• Feasibility and planning experts

• Statisticians

• Geologists/mining engineers/mineral specialists

• Hydrologists

• Timber cruisers/foresters/forestry engineers

• Communications experts

In using these opinions and reports, the appraiser cannot merely accept such consultant reports

as accurate, but rather must analyze such reports and adopt them only if reasonable and

adequately documented and supported. The results of secondary valuation reports (minerals,

xtures, or timber valuations) cannot simply be added to the value of the land to arrive at a

value of the property as a whole without proper analysis by the appraiser. To do so would violate

the unit rule and professional standards. The appraiser must consider these components of the

property in light of how they contribute to the market value of the property as a whole.

1.14. Appraisers as Expert Witnesses. When contracting for appraisals, it is important to require

the individual appraiser with whom the contract is made to actually prepare or be principally

responsible for developing the appraisal and the appraisal report, and to be prepared to testify

in court if it becomes necessary. There are additional reporting requirements for appraisals

prepared for trial purposes (refer to Section 2.2.3 for additional requirements).

The appraiser’s role as an expert witness in litigation carries with it a heavy responsibility that

should not be taken lightly no matter how many times the appraiser has testied before. In

addition, federal eminent domain cases are generally complex matters involving discovery,

depositions, and testimony that require the appraiser to be well prepared and thorough. Unlike

other forms of litigation such as bankruptcy cases, attorneys involved in eminent domain cases

are often as knowledgeable about appraisal standards, methodology, and theory as the appraisers

appearing as expert witnesses. Section 4.13.1 of these Standards is required reading for any

appraiser who has been identied as an expert witness by the U.S. Department of Justice.

1.15. Condentiality. Appraisers’ valuations and supporting appraisal reports are condential

information and appraisers shall strictly abide by the following condentiality of USPAP’s

Ethics Rule:

(1) An appraiser must protect the condential nature of the appraiser-client relationship.

(2) An appraiser must act in good faith with regard to the legitimate interests of the client in

the use of condential information and in the communication of assignment results.

(3) An appraiser must not disclose condential information or assignment results prepared for

a client to anyone other than: a) the client and persons specically authorized by the client;

b) state appraiser enforcement agencies and such third parties as may be authorized by due

process of law; and c) a duly authorized professional peer review committee.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Development 55

Under item (1) above, appraisers must obtain written authorization from the client agency (or

the Department of Justice if a case has been led) before disclosure. The passage of time in

and of itself does not extinguish either the appraiser’s responsibility for condentiality or the

appraiser/client relationship. The appraiser/client relationship is extinguished only upon written

release from the client agency or upon the consummation of the government’s acquisition of the

property appraised. Even though the appraiser/client relationship may terminate, the appraiser

remains subject to the condentiality provisions of USPAP.

Appraisers have an extraordinary duty to maintain condentiality when the acquisition of the

property appraised may have to be accomplished by condemnation, and any appraisal report

prepared for the purposes of government acquisition should be considered the subject of

potential litigation until such time as the government has consummated its acquisition.

If an appraiser receives a request or order, under items (2) or (3) above, to provide condential

information relating to an appraisal conducted for the government to a state appraiser

enforcement agency or professional peer review committee, the appraiser must provide the

government with written notice of the request or order prior to providing the condential

information to the state appraiser enforcement agency or professional peer review committee.

If litigation is pending, the Department of Justice may elect to intercede if it determines such

intercession would be in the best interest of the government.

Appraisers must use extreme caution in choosing what information to cite in developing their

opinions of value. While it is common practice for appraisers in non-litigation appraisals to

report that they have relied upon condential information (such as information learned in the

conduct of other appraisals, or information provided to the appraiser by market participants on

the condition that it not be disclosed) in addition to the supporting data reported, in developing

their opinion of value such a reference in a litigation report may subject the information to

discovery. Appraisers should not reference such information in litigation reports unless they are

prepared to reveal the information, which occurs often by order of the court.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting56

2.1. Introduction. These Standards address the content and level of information and analysis

required to communicate the results of an appraisal prepared for federal property acquisitions.

These Standards are intended to establish requirements for appraisal report content and

documentation. These Standards are not, however, intended to establish an absolute requirement

for appraisal report formatting. The report formats described in Section 2.3, consisting of a

four-part appraisal report for total acquisition appraisals and a seven-part appraisal report

for partial acquisition appraisals, are recommended guides that agencies can modify as

appropriate for agency needs. Appraisers are cautioned to closely examine their appraisal

contract or assignment letter for report formatting requirements, as many agencies mandate

report formatting in accordance with the recommendations herein. For ease of reference, the

recommended formatting for appraisal reports is shown in the addenda of these Standards,

marked as Appendix B and Appendix C.

These Standards also address the additional content and documentation requirements

for appraisal reports to be used by appraisers who will testify as expert witnesses in federal

court under Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure. Finally, the reporting

requirements for leasehold acquisitions and project appraisal reports are addressed under

Sections 2.4 and 2.5 respectively.

2.2. Appraisal Reports. There are two written reporting options established under USPAP:

an appraisal report and a restricted appraisal report. In addition, USPAP permits an appraiser

to provide an oral report. For the reasons discussed under Sections 2.2.1 and 2.2.2 below,

oral reports and restricted appraisal reports are not permitted under these Standards. The

reporting formats set forth under Sections 2.3, 2.4, and 2.5 below are consistent with and/or

exceed the requirements for an appraisal report under Standard 2 of USPAP.

2.2.1. Oral Appraisal Reports. Oral appraisal reports are not permitted under these Standards. An

oral report is inconsistent with the intended use and intended users of an appraisal prepared for

federal acquisitions. Even with the appraiser’s workle available, an oral report does not satisfy

agency record-keeping requirements, and cannot be reliably reviewed. The number of intended

users of appraisals in federal acquisitions also makes such a practice impossible.

2.2.2. Restricted Appraisal Reports. For most acquisitions and all litigation matters, restricted

appraisal reports are not permitted.

112

These reports cannot be reviewed to the level of detail

required for federal acquisition appraisals; the intended user of the report is restricted to the

client only,

113

a condition that cannot be met for federal acquisition appraisals because it should

112 This does not prevent agencies from using restricted appraisal reports performed by internal agency appraisal sta for low value noncomplex

acquisitions (in general accordance with the waiver valuation procedures established under the URA) or for internal portfolio valuation

purposes.

113 USPAP, Standards Rule 2-2 and Advisory Opinion 12, Use of the Appraisal Report Options of Standards Rules 2-2, 8-2, and 10-2, 22 and 103.

2. APPRAISAL REPORTING

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 57

be anticipated that others such as landowners, legislators, or the courts will be asked to use and

rely on the appraisal report.

2.2.3. Compliance with Rule 26 of the Federal Rules of Civil Procedure. If an appraiser

may testify as an expert witness in a federal trial or deposition, the appraiser’s report must

satisfy not only these appraisal Standards, but also the content requirements of Rule 26(a)(2)(B)

of the Federal Rules of Civil Procedure.

Rule 26(a)(2)(B) requires a written report, prepared and signed by the expert, that contains:

i. a complete statement of all opinions the witness will express and the basis and reasons for

them;

ii. the facts or data considered by the witness in forming them;

iii. any exhibits that will be used to summarize or support them;

iv. the witness’s qualications, including a list of all publications authored in the previous 10

years;

v. a list of all other cases in which, during the previous 4 years, the witness testied as an

expert at trial or by deposition; and

vi. a statement of the compensation to be paid for the study and testimony in the case.

114

Appraisal reports prepared in accordance with these appraisal Standards will normally satisfy

parts (i), (ii) and (iii) of Rule 26(a)(2)(B).

115

However, many appraisers’ qualication resumes

or curriculum vitae typically do not include the information required in parts (iv), (v), and

(vi). Appraisers must therefore supplement their customary qualication resumes to list (iv)

all publications authored in the previous 10 years; all trial or deposition testimony within the

previous four years; and (vi) the appraiser’s fees for the appraisal assignment and for potential

testimony. The appraiser must comply with Rule 26 if an appraisal report may be used for

litigation purposes. In addition, because litigation may arise even when testimony is not

anticipated, appraisers may wish to include such information in any report being prepared for

federal acquisition purposes.

2.2.4. Electronic Transmission of Appraisal Reports. It is common for appraisers to deliver

appraisal reports electronically. The appraiser is responsible for the security of the report

when it is submitted in this manner.

2.2.5. Draft Reports. Agencies may request that the appraiser provide a draft of all or a portion of

the appraisal report prior to delivery of a nal report. This requirement should be addressed as

part of the scope of work with the agency before initiating the assignment. A draft should not

be signed and must be clearly marked as a draft or a work in progress.

2.3. Content of Appraisal Report.

114 Fed. R. CiV P. 26(a)(2)(B) (through amendments eective Dec. 1, 2015).

115 See, e.g., United States v. 12.94 Acres of Land in Solano Cty., No. CIV. S-07-2172, 2009 WL 4828749, at *4, *7, 2009 U.S. Dist. LEXIS

114581, at *11, *20-*21 (E.D. Cal. Dec. 9, 2009).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting58

2.3.1. Introduction.

2.3.1.1. Title Page. This should include (1) the name, street address, and agency assigned tract or

parcel number (if any) of the property appraised; (2) the name and address of the individual(s)

making the report; and (3) the eective date of the appraisal.

2.3.1.2. Letter of Transmittal. This should include the date of the letter; identication of the

property and property rights appraised; a reference that the letter is accompanied by an

appraisal report; a statement of the eective date of the appraisal; identication of any

hypothetical conditions, extraordinary assumptions, limiting conditions, or legal instructions;

the value opinion (or, in a partial acquisition, opinions of the value of the larger parcel before

the acquisition and the remainder property after the acquisition, the dierence); and the

appraiser’s signature.

2.3.1.3. Table of Contents. The major parts of the appraisal report and their subheadings should be

listed. Items in the addenda of any report shall be listed individually in the table of contents.

2.3.1.4. Appraiser’s Certication. The appraisal report shall include an appraiser’s signed

certication statement that is consistent with the certication requirements of USPAP

Standard 2. In addition, the following statements related to these Standards must be included:

• the appraisal was developed and the appraisal report was prepared in conformity with the

Uniform Appraisal Standards for Federal Land Acquisitions;

• the appraisal was developed and the appraisal report prepared in conformance with the

Appraisal Standards Board’s Uniform Standards of Professional Appraisal Practice and complies

with USPAP’s Jurisdictional Exception Rule when invoked by Section 1.2.7.2 of the Uniform

Appraisal Standards for Federal Land Acquisitions; and

• the appraiser has made a physical inspection of the property appraised and that the property

owner, or [his][her] designated representative, was given the opportunity to accompany the

appraiser on the property inspection.

The appraiser’s certication shall also include the appraiser’s opinion of the market value of

the subject property as of the eective date of the appraisal. If the government’s acquisition

comprises only a portion of the whole property or property rights appraised, the certication

shall include both the appraiser’s opinion of the market value of the whole property as of the

eective date of the appraisal and the appraiser’s opinion of the remainder property’s market

value after the government’s acquisition and the dierence between them as of the eective date

of the appraisal.

Appraisers may also add to their certications certain items that may be required by law and the

appraiser’s professional organization(s). However, appraisers should avoid adding certications that

are not pertinent to the specic appraisal (e.g., that the report was prepared in accordance with

the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 [FIRREA]) or that are

beyond the scope of the appraisers’ assignment (e.g., certifying an opinion of just compensation).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 59

2.3.1.5. Executive Summary. The appraiser shall report the major facts and conclusions that led to

the nal opinions(s) of value. This summary should include an identication of the property

appraised; the highest and best use of the property (both before and after the acquisition if a

partial acquisition); brief description of improvements (both before and after the acquisition if a

partial acquisition); the indicated value of the property by each approach to value employed (both

before and after the acquisition if a partial acquisition); the nal opinion of value (both before

and after the acquisition if a partial acquisition); any hypothetical conditions, extraordinary

assumptions, limiting conditions, or instructions; and the eective date of the appraisal.

2.3.1.6. Photographs. Photographs shall show the front elevation of the major improvements, any

unusual features, views of the abutting properties on either side, views of the property directly

opposite, and interior photographs of any unique features. When a large number of buildings

are involved, including duplicates, one photograph may be used for each type. Except for an

overall view, photographs may be incorporated in the body of the report as appropriate, or

may be placed in the addenda of the report.

Each photograph should be numbered and show the identication of the property, the date

taken, and the name of the person taking the photograph. The location from which each

photograph was taken and the direction the camera lens was facing should be shown on the plot

plan of the property in the report’s addenda.

In selecting photographs for inclusion in their reports, appraisers should bear in mind that some

government appraisal reviewers and other readers of the report may never have an opportunity

to personally view the property. Therefore, they must rely on the photographs and the narrative

description of the property provided by the appraiser to gain an adequate understanding of

the physical characteristics of the property to judge the accuracy and reasonableness of the

appraiser’s analyses and value estimate(s). Thus, the appraiser may need to include aerial

photographs in the report to ensure that readers can accurately visualize the property.

In taking photographs, appraisers should also be guided by the knowledge that the government

may be unable to acquire the property voluntarily and may take possession of the property

well before the question of value is settled; thus, the land may be substantially altered and

improvements demolished prior to a nal decision in a condemnation trial.

2.3.1.7. Statement of Assumptions and Limiting Conditions. Any assumptions and limiting

conditions that are necessary to the background of the appraisal shall be stated. Any agency or

special legal instructions provided to the appraiser shall be referenced and a copy of such

instructions shall be included in the addenda of the appraisal report.

116

If the appraisal has been made subject to any encumbrances against the property, such as

easements, these shall be stated. In this regard, it is unacceptable to state that the property has

116 Appraisers must bear in mind that if a client or legal instruction has not been provided to them in writing, it is not considered a binding

instruction. Therefore, if the appraiser accepts an oral instruction from the client or legal counsel, the appraiser becomes wholly responsible

for it. Reference to a client or legal instruction, a copy of which is not in the addenda of the appraisal report, will not be acceptable

justication for acceptance or adoption of the instruction and may result in disapproval of the appraisal report.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting60

been appraised as if free and clear of all encumbrances, except as stated in the body of the report;

the encumbrances must be identied in this portion of the report.

The appraiser must avoid including “boilerplate” assumptions and limiting conditions. For

instance, an assumption that improvements are free from termite infestations is inappropriate

in the appraisal of vacant land. Also, assumptions and limiting conditions cannot be used

by an appraiser to alter an appraisal contract, assignment letter, or the appraiser’s scope of

work. Unauthorized hypothetical conditions, assumptions, or limiting conditions may result in

disapproval of the appraisal report.

In a partial acquisition, the appraiser should identify those hypothetical conditions, assumptions,

and limiting conditions that apply to both the before and after acquisition appraisals, those that

apply only to the appraisal of the larger parcel before the acquisition, and those that apply only

to the appraisal of the remainder. Appraiser assumptions and limiting conditions, as well as client

and legal instructions, are discussed in greater detail in Section 1.2 of these Standards.

2.3.1.8. Description of Scope of Work. The appraiser shall use this section of the report to identify

the seven critical elements that dened the appraisal problem to be solved:

• Client

• Intended users

• Intended use

• Denition of market value

• Eective date

• Property characteristics

• Assignment conditions

This section shall include an explanation of the intended use for the appraisal, and a description

of the property rights appraised, which should be provided to the appraiser by the client agency.

In most instances the intended use of the appraisal will be to provide an opinion of the market

value as of a specic date.

117

In an appraisal assignment involving a partial acquisition, the

intended use of the appraisal will be to provide an opinion of the market value of the larger

parcel before the acquisition and an opinion of the market value of the remaining property after

the acquisition.

It is imperative that the appraiser utilize the correct denition of market value. For appraisals

prepared under these Standards, appraisers shall use the denition of market value found in

Section 1.2.4 of these Standards.

This denition must be placed in this portion of the appraisal report. No other denition of

market value for purposes of appraisals made under these Standards is acceptable,

118

unless

otherwise required by a specic and cited federal law or regulation.

117 For a discussion of the legal requirements regarding the eective date of value, see Section 4.2.1.1.

118 For a discussion of the legal basis for this denition of market value and this specic requirement, see Section 4.2.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 61

The appraiser should describe the investigation and analysis that was undertaken in developing

the appraisal. The geographical area and time span searched for market data should be

included, as should a description of the type of market data researched and the extent of market

data conrmation. The appraiser should state the references and data sources relied upon in

developing the appraisal.

The applicability of all approaches to value shall be discussed and the exclusion of any approach

to value shall be explained.

The appraiser has the burden of clearly identifying and explaining the implications of any

hypothetical condition or extraordinary assumption adopted. The required explanation and

discussion of the implications of such hypothetical conditions or extraordinary assumptions

must be included in this portion of the appraisal report. Each hypothetical condition and

extraordinary assumption must be labeled as such and any legal instructions must be included in

the addenda of the report.

2.3.2. Factual Data—Before Acquisition.

119

2.3.2.1. Legal Description. This description must be suciently detailed to properly identify

the property appraised. If lengthy, it should be referenced and included in the addenda

of the report. If the client agency has assigned a parcel or tract number to the property,

that information should also be referenced. A more detailed standard concerning the legal

description of the property to be appraised appears in Section 1.1.1 of these Standards.

2.3.2.2. Area, City, and Neighborhood Data. This data (mostly demographic and economic) must

be kept to an absolute minimum and should only include information that directly aects the

subject property, together with the appraiser’s conclusions as to signicant trends. The use

of “boilerplate” demographic and economic data is unnecessary and, unless the appraiser

demonstrates that the specic data directly impacts the current market value of the subject

property, it should be excluded.

Changes in the neighborhood brought about by the government’s project for which the property

under appraisal is being acquired shall be disregarded. This specic Standard is contrary to

USPAP Standards Rule 1-4(f) and is considered a jurisdictional exception. See Section 4.5

(Project Inuence) for a discussion of the legal basis for this specic Standard.

2.3.2.3. Property Data.

2.3.2.3.1. Site. Describe the present use, accessibility and road frontage, land contours and elevations,

soils, vegetation (including timber), views, land area, land shape, utilities, mineral deposits,

water rights associated with the property, and relevant easements, etc. A statement must be

made concerning the existence or nonexistence of commercially valuable mineral deposits.

119 If the government’s acquisition is a partial acquisition, it is imperative that the sections of the appraisal report in Section 2.3.2 relate only

to the before situation. The appraiser must not attempt to combine the discussion of the factual data after acquisition with the factual data

relating to the before situation.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting62

Also discuss the benecial and detrimental factors inherent in the location of the property.

120

The presence of hazardous substances should be addressed in accordance with Sections

1.3.1.1 of these Standards. An armative statement is required if the property is located

within a ood hazard area.

121

2.3.2.3.2. Improvements. Describe the following: all improvements including their dimensions;

square foot measurements, chronological and eective age, and dates of any signicant

remodeling/renovation; condition; type and quality of construction; and present use and

occupancy. This description may be in narrative or schedule form. Where appropriate, a

statement of the method of measurement used in determining gross building area and net

rentable areas should be included. All site improvements, including fencing, landscaping,

paving, irrigation systems, and domestic and private water systems require description. The

appraiser should coordinate such description with the photographs of the property included in

the report and with the plot plan (and oor plan, if included). If the appraiser will rely on the

cost approach to value, or if the acquisition is a partial acquisition that will structurally impact

the improvements, a more comprehensive improvement description is required. These items

are described in more detail in Section 2.3.7.

2.3.2.3.3. Fixtures. All xtures are to be described in narrative or schedule report form with a

statement of the type and purpose of each. The current physical condition, relative utility, and

obsolescence should be stated for each item or group included in the appraisal, and whenever

applicable the repair or replacement requirements to bring the xture to a usable condition.

122

2.3.2.3.4. Use History. State briey the history of the use of the property as vacant and as improved.

If improved, state the purpose for which the improvements were designed and the dates of

original construction and major renovations, additions, and/or conversions. Include a 10-year

history of the use and occupancy of the property.

123

If any of the foregoing information is

indeterminable, the appraiser must report that fact.

2.3.2.3.5. Sales History. Include a 10-year record of all sales and, if the information is available, any

oers to buy or sell the subject property. If no sale of the property has occurred in the past 10

years, the appraiser must report the last sale of the property, irrespective of date.

Information to be reported must include the name of the seller, name of the buyer, date of

sale,

124

price, terms and conditions of sale, and the appraiser’s verication of the sale and

whether the transaction met the conditions required for a comparable sale under Section 1.5.2.2.

120 Benecial factors may include such items as desirable views, proximity to desirable public or cultural facilities, or proximity to dedicated

open space or greenbelts. Detrimental factors may include such items as oensive odors, undesirable land uses, contamination, and noxious

weeds. Farm properties can be especially impacted by environmental factors such as noxious weeds, frost, incidence of hail, oods and

droughts, and variations in crop yields. Appraisers should list and describe those benecial and detrimental factors that may impact the

utility and value of the land.

121 For this purpose, appraisers should refer to Federal Emergency Management Agency (FEMA) ood hazard maps.

122 See Section 1.3.1.2.

123 Past uses of the property may suggest its historical contamination by hazardous substances.

124 Terms and conditions of sale cannot, of course, be conclusively determined from the public record. Therefore, appraisers should conrm

the sales of the subject property with one of the parties to the transaction.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 63

2.3.2.3.6. Rental History. Report the historical rental or lease history of the property for at least the past

three years, if this information can be ascertained. All current leases should be reported, including

the date of the lease, name of the tenant, rental amount, term of the lease, parties responsible

for property expenses, and other pertinent lease provisions. The appraiser must describe the

verication process and whether the lease(s) meets the conditions required for a comparable lease.

2.3.2.3.7. Assessed Value and Annual Tax Load. Include the current assessment and dollar amount of

real estate taxes. If assessed value is statutorily a percentage of market value, state the percentage.

Some jurisdictions have developed programs wherein property will be assessed based on its

current use rather than its highest and best use. These programs often relate to farmlands,

timberlands, and open space; for purposes of eligibility, owners may have to agree to leave the

property in its existing use for a certain period of time.

125

In such a case, the appraiser should

report both the current assessed value and taxes for the property’s existing use and the estimated

assessed value and tax load for the property at its highest and best use.

2.3.2.3.8. Zoning and Other Land Use Regulations. Identify the zoning for the subject property.

This must be reported in descriptive terms (e.g., multifamily residential, 5000 sq. ft. of land

per unit) rather than by zoning code (e.g., MF-2). Other local land use regulations that have an

impact on the highest and best use and value of the property, including setback requirements,

o-street parking requirements, and open space requirements must be reported. The appraiser

should also note any master or comprehensive land use plan in existence that may aect the

utility or value of the property.

If the property was recently rezoned, that must be reported. The appraiser must determine

whether such rezoning was a result of the government’s project for which the subject property

is being acquired. If so, the appraiser must justify this conclusion and disregard the rezoning.

126

If the rezoning of the property is imminent or probable, discuss in detail the investigation and

analysis that led to that conclusion under Section 2.3.3.1 (Highest and Best Use).

127

The mere

assertion by an appraiser that a property could be rezoned is insucient.

128

In addition to zoning,

the appraiser must identify all other land use and environmental regulations that have an impact

on the highest and best use and value of the property.

129

The impact of the regulations must also

be discussed in the highest and best use analysis. The appraiser must also discuss the impact of

any private restrictions on the property, such as deed and/or plat restrictions.

2.3.3. Data Analysis and Conclusions – Before Acquisition.

2.3.3.1. Highest and Best Use. The appraiser’s determination of highest and best use is one of the most

important elements of the entire appraisal process. Therefore, appraisers must apply their skill

with great care and clearly support the highest and best use conclusion in the appraisal report.

125 See Section 1.3.1.7.

126 For the legal basis for this standard, see Section 4.5.3. Under USPAP, invocation of this standard would result in an appraisal prepared

under a hypothetical condition.

127 For a discussion of the extent of the required investigation that must be taken by the appraiser in this regard, see Section 1.3.1.3.

128 See Section 1.3.1.3.

129 See Section 1.3.1.3.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting64

The highest and best use of the land, as if vacant, is addressed rst. If the land is improved, the

highest and best use of the property, as improved, is then addressed. In some cases, the highest

and best use of property cannot be reliably determined without extensive marketability and/or

feasibility studies, which in complex cases may require the assistance of special consultants.

2.3.3.1.1. Four Tests. The four tests of highest and best use are physically possible, legally permissible,

nancially feasible, and highest value. Each of these four criteria must be addressed in the

appraisal report. The level of supporting data and analysis presented in the report for each

criteria will depend in part on the complexity of the appraisal problem.

In all assignments, the appraiser must describe the analysis developed under Section 1.4

concerning the highest and best use of the property as if vacant. The physical characteristics of

the property that impact value must be addressed. Property size, shape, topography, access, road

frontage, and utilities are all examples of physical characteristics of a property that may inuence

use and value and should be described in adequate detail for the client and intended users to

understand how they may inuence the determination of highest and best use.

The appraiser must describe the legal constraints on the property that were identied and

analyzed under Sections 1.3.1.3 and 1.4.5. Zoning requirements, height restrictions, setback

and open space requirements, and all other legal constraints on the property should be described

and their impact discussed. If the appraiser concludes a highest and best use that will require

rezoning of the property, the investigations and analyses developed under Section 1.3.1.3

concerning the probability of obtaining that zoning change should be reported here in sucient

detail for the client and intended users to understand the reasons for the conclusion. If the

appraiser concludes that the highest and best use requires some other form of government

approval, the investigations and analyses developed under Sections 1.3.1.3 and 1.4.5 concerning

the probability of obtaining those approvals must be described in sucient detail for the client

and intended users to understand the reasons for the conclusion.

The nancial feasibility of those uses, which are both physically possible and legally permitted,

should be addressed. All feasibility or comparative studies developed under Section 1 should

be described here, so the client and intended users can understand those uses that may have

been eliminated in that analysis. Finally, the appraiser should discuss the use of the property as

if vacant, which results in the highest value, and the analysis that supports that conclusion. The

appraiser should identify the timing of the use and the likely purchaser and user.

If the property contains improvements, the appraiser must address the highest and best use as

improved. The same process described above should be followed. This analysis is focused on

the contribution of the improvements to the property overall, taking into account the highest

and best use of the property as if vacant. After addressing each of the four tests and making a

determination of the highest and best use as improved, the appraiser should identify the timing

of the use and the likely purchaser and user.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 65

2.3.3.1.2. Larger Parcel. In every appraisal report prepared under these Standards, the appraiser must

describe the factual basis and analysis underlying the conclusion of the larger parcel analysis.

The three tests developed under the larger parcel analysis—unity of highest and best use, unity

of title, and contiguity—should be addressed here.

130

Each of the three tests (with emphasis

on the unity of highest and best use) must be reported in sucient detail for the client and

intended users to fully understand the factual and analytical basis for the conclusion.

Application of the Approaches to Value

2.3.3.2. Land Valuation. The appraiser shall report the opinion of value of the land for its highest

and best as if vacant and available for such use. See Sections 1.5.1 and 4.4.2 for a detailed

discussion concerning the approaches to value and the legal foundation for these Standards. In

all assignments, the sales comparison approach is the preferred valuation approach for forming

an opinion of the market value of the land as if vacant. However, in some assignments the

subdivision development method may be appropriate. The following sections describe the

reporting requirements for the land valuation process.

2.3.3.2.1. Sales Comparison Approach. In reporting the results of the sales comparison approach

for land valuation, the appraiser shall provide detailed descriptions of conrmed sales of lands

that have the same or similar highest and best use as the subject property. The description

of each sale transaction used as a comparable sale should at a minimum include the date of

the transaction, the price paid, the name of the seller, the name of the buyer, the size of the

property, the location of the property, the zoning or other legal constraints on the property,

and a description of the physical characteristics of the property. The person with whom the

transaction was veried should also be identied.

Dierences between the comparable sales and the subject property shall be considered and

adjustments made to the sales to address these dierences. Items of comparison shall include

property rights conveyed, nancing terms, conditions of sale, market conditions, location, physical

characteristics, economic characteristics, legal characteristics, and non-realty components of

value. The adjustments must be summarized in an adjustment grid and each adjustment (whether

qualitative or quantitative) should be supported with market data. The data and analysis must

provide sucient detail for the client and intended users to understand the data, the analysis, and

the logic of the appraiser’s opinion of market value for the subject land as if vacant.

2.3.3.2.2. Subdivision Development Method. In those circumstances where the property has a

highest and best use for subdivision purposes and the appraiser has developed the subdivision

development method, the report must address all of the factors and assumptions used in sucient

detail for the client and intended users to understand the outcome of this method. The market

support for each factor (lot sale price, absorption rate, development costs, expenses, time lag, and

discount rate) used in this analysis must be clearly presented in the report. The discounted cash

ow analysis prepared as part of this analysis must be included in the report.

130 See Sections 1.5.3, 4.3.3, and 4.3.4 for an in-depth discussion of the analysis required and the legal basis for the larger parcel analysis.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting66

2.3.3.3. Cost Approach. This portion of the report should be in the form of computational data,

arranged in sequence, beginning with reproduction or replacement cost. The report should

state the source (book and page—including last date of page revision—if a national service) of

all gures used. Entrepreneur’s prot, as an element of reproduction or replacement cost, must

be considered and discussed and if applicable, should be derived from market data whenever

possible. If the appraiser retained the services of a contractor or professional cost estimator

to assist in developing the reproduction or replacement cost estimate, this data should be

referenced and the estimator’s report included in the addenda of the appraisal report.

The dollar amount of depreciation from all causes, including physical deterioration, functional

obsolescence, and economic or external obsolescence shall be explained and deducted from

reproduction or replacement cost. See Section 1.5.3 for a discussion concerning the preferred

methods of estimating depreciation under these Standards.

2.3.3.4. Sales Comparison Approach. Each appraisal report must contain a sucient description

of the comparable sales

131

used so that it is possible for the reader to understand the

conclusions drawn by the appraiser from the comparable sales data. Photographs of the

comparable sales are valuable visual aids that indicate the comparability of the property

recently sold with the subject property. Such photographs must accompany each appraisal

report not only to aid the review appraiser but also for the agency’s records and for later use

in possible condemnation litigation. In addition to the identication of the property, every

photograph should show the date taken and the name of the person taking the photograph.

Documentation of each comparable sale shall include the name of the buyer and seller, date of

sale, legal description,

132

type of sale instrument, document recording information, price, terms

of sale, location, zoning, present use, highest and best use, and a brief physical description of

the property. A plot plan or sketch of each comparable property should be included, not only to

facilitate the reader’s understanding of the relationship between the sale property and the subject

property, but also to locate the sale property in the eld. This information may be summarized

for each sale on a comparable sales form and included in this section or in the addenda of the

report. As noted, a photograph of each comparable sale shall also be included. A comparable

sales map showing the relative location of the comparable sales to the subject property

133

shall be

included, either in this section or in the addenda of the report. Inclusion of a copy of the transfer

document (e.g., deed, contract) in the report is neither required nor desirable, unless there is

something in the document that is unusual or particularly revealing.

As discussed in Section 1.5.2.3, the preferred method of adjusting comparable sales is through

the use of quantitative adjustments (whenever adequate market data exists to support them).

Only when adequate market data does not exist to support quantitative adjustments should the

appraiser resort to qualitative adjustments (i.e., inferior, superior). Appraisers must bear in mind

that quantitative and qualitative adjustments are not mutually exclusive methodologies. Because

131 See Section 1.5.2 for discussion of Selection and Verication of Comparable Sales, The Adjustment Process, and Sales Requiring

Extraordinary Verication.

132 This may be abbreviated if lengthy, or reference may be made to a tax parcel number.

133 It is important that the locations of the comparable sales and the subject property are shown on the same map so that a reader of the report

who may not be familiar with the area can understand the relative proximity of the properties and locate them in the eld.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 67

one factor of adjustment cannot be quantied by market data does not mean that all adjustments

to a sale property must be qualitative. All factors that can be quantied should be adjusted

accordingly. When quantitative and qualitative adjustments are both used in the adjustment

process, all quantitative adjustments should be made rst. When using quantitative adjustments,

appraisers must recognize that not all factors are suitable for percentage adjustments. Percentage

and dollar adjustments may and often should be combined.

134

Each item of adjustment must be

carefully analyzed to determine whether a percentage or dollar adjustment is appropriate.

When appraisers must resort to qualitative adjustments, they must recognize that this form of

comparative analysis will often require more extensive discussion of the appraiser’s reasoning.

This methodology may also require the presentation of a greater number of comparable sales.

It is essential, of course, that the appraiser specically state whether each comparable sale is

generally either overall superior or inferior to the property under appraisal. To develop a valid

indication of value of the property under appraisal by the use of qualitative analysis, it is essential

that the comparable sales utilized include both sales that are overall superior and overall inferior

to the subject property. If this is not done, the appraiser will have merely demonstrated that

the property is worth more than a certain amount (if all of the sales are inferior to the subject

property) or less than a certain amount (if all of the sales are superior to the subject property).

In developing a nal opinion of value by the sales comparison approach, the appraiser shall

explain the comparative weight given to each comparable sale, no matter whether quantitative

or qualitative adjustments or a combination thereof are used. A comparative adjustment chart or

graph is required and may assist appraisers in explaining their analysis in this regard.

2.3.3.5. Income Capitalization Approach. The appraisal report shall include adequate factual data

to support each gure and factor used and should be arranged in detailed form to show at least

(1) estimated gross economic (or market) rent, or income; (2) allowance for vacancy and credit

losses; (3) an itemized estimate of total expenses; and (4) an itemized estimate of the reserves for

replacements, if applicable. Section 1.5.4 discusses the income capitalization approach in detail.

Capitalization of net income shall be at the rate prevailing for this type of property and location.

The capitalization technique, method, and rate used should be explained in narrative form

and supported by a statement of the sources of rates and factors. The preferred source of an

applicable capitalization rate is from actual capitalization rates reected by comparable sales.

135

As with a recent and unforced sale of the subject property (see Section 2.3.3.4), if the property

is actually rented, its current rent is often the best evidence of its economic (or market) rent

and should be given appropriate consideration by the appraiser in developing an opinion of

the gross economic rent of the property. Likewise, the appraiser should attempt to obtain at

least the last three years’ historical income and expense statements for the property. These

134 For instance, a percentage adjustment for market conditions (time) may be appropriate, but an adjustment for the fact that the subject

property is 300 feet from a sewer connection and all of the comparable sales are connected to sewer should often be made in a lump sum

dollar amount to reect the cost to cure the subject property’s comparative deciency. If a percentage adjustment were applied to the price-

per-unit (e.g., per acre, per square foot) of each comparable, the adjustment to each of the comparable sales would vary depending on the

price-per-unit of the comparable and might have no relationship to the cost to cure the subject’s deciency.

135 See Section 4.4.4.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting68

can generally be developed into a reliable reconstructed operating statement. If this historical

income and expense information is available, it should be included in this portion of the

appraisal report or in the addenda.

2.3.3.6. Reconciliation and Final Opinion of Market Value. The appraiser must explain the

reasoning applied to arrive at the nal opinion of value and how the results of each approach

to value were weighed in that opinion, and the reliability of each approach to value for solving

the particular appraisal problem. See Section 1.6.

The appraiser shall also state the nal opinion of value of all of the property under appraisal

as a single amount, including the contributory value of xtures, timber, minerals, and water

rights, if any. The appraiser must avoid making a summation appraisal.

136

The appraiser is

solely responsible for the nal opinion of value. If that value opinion includes elements of value

that were based on estimates developed by others (e.g., timber cruisers, mineral appraisers), the

appraiser cannot merely assume their accuracy. The reasonableness of the subsidiary estimates

must be conrmed in accordance with Section 1.13.

2.3.4. Factual Data—After Acquisition (Partial Acquisitions Only).

2.3.4.1. Legal Description. The legal description of the remainder property shall be included. If a

legal description of the remainder property is not available, appraisers may develop their own

by utilizing the before acquisition legal description and excluding from it the legal description

of the real estate acquired by the government.

If the estate acquired is less than a fee interest (e.g., an easement), the legal description under

Section 2.3.2.1 may be referenced and the legal description of the property encumbered by the

estate acquired should be included. If lengthy, the legal description should be briey referenced

and the full legal description should be included in the report’s addenda.

2.3.4.2. Neighborhood Factors. The appraiser shall describe the government project for which the

property is being acquired and its impact, if any, on the neighborhood and the remainder

property. The degree of detail regarding the government’s project included in this section

should relate directly to the complexity of the government’s project and its impact on the

remainder property.

137

The aspects of the government’s project that will result in damages to

the remainder property should be described in specic detail.

136 See Section 4.2.2.

137 For example, in a fee acquisition of a portion of the property for inclusion in a wildlife refuge without any substantial construction, the

description of the government’s project could probably be brief. If, on the other hand, the government’s acquisition was a permanent

easement through the parcel for construction of a ood control levee with associated temporary construction easements, a detailed

description of the government’s project may be necessary. Such a description might include such things as height of the levee; width at

the base and at the top of the levee; degree of side slopes of the levee; nish material (e.g., riprap, seeded soil) of the slopes; any provisions

for access over the levee; any provisions for drainage; duration of temporary construction easements and the use to which the government

will put the easement areas during construction; anticipated condition of the temporary construction easement areas at termination; and

anticipated impact on future ooding, as compared to historical ooding.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 69

2.3.4.3. Property Data.

2.3.4.3.1. Site. The appraiser must describe the remainder site, paying particular attention to the shape,

size, available utilities, and available access to the remainder site, addressing all requirements

listed in Section 2.3.2.3.1.

2.3.4.3.2. Improvements. The appraiser must describe those improvements remaining in whole or in

part, addressing all requirements listed in Section 2.3.2.3.2.

2.3.4.3.3. Fixtures. The appraiser must describe those xtures remaining, addressing all requirements

listed in Section 2.3.2.3.3.

2.3.4.3.4. History. If the appraisal is prepared after the date of acquisition, the appraiser must report

the utilization of the remainder property since the date of acquisition as well as any sales or

rentals of the remainder property, addressing all requirements listed in Sections 2.3.2.3.4 (Use

History), 2.3.2.3.5 (Sales History), and 2.3.2.3.6 (Rental History).

2.3.4.3.5. Assessed Value and Tax Load. The appraiser must estimate what the assessed value and

annual tax load will be on the remainder property. This estimate is particularly critical if the

income capitalization approach is to be utilized in developing an opinion of the value of the

remainder property. In this connection, discussions with local assessing authorities are often

helpful in making these estimates. All requirements listed in Section 2.3.2.3.7 must be addressed.

2.3.4.3.6. Zoning and Other Land Use Regulations. The appraiser must report the inuence of

zoning and other land use regulations on the remainder property.

138

Specic attention should

be given to the probability of a rezone, either up or down, of the property caused by the

government’s project and the possibility that because of the acquisition, the remainder property

has become nonconforming to land use regulations in areas such as lot area requirements,

setbacks, and o-street parking. All requirements in Section 2.3.2.3.8 must be addressed.

2.3.5. Data Analysis and Conclusions—After Acquisition (Partial Acquisitions Only).

Introductory Note: These analyses and valuation sections relating to the remainder property

constitute a new appraisal. In cases of an insignicant taking, the remainder may be so similar

to the larger parcel before the acquisition that the same highest and best use analysis and the

same cost, market, and income data and analysis will remain applicable and can therefore be

referenced and employed in reporting the opinion of the market value of the remainder property.

However, a change in the basic physical or economic character of the remainder may result in

a change in the remainder’s highest and best use or the intensity of that use and may result in

damages or benets, which will require dierent market data and/or analysis than that which

was used in the larger parcel valuation.

139

138 See Sections 2.3.2.3.4 to 2.3.2.3.6 and Section 2.3.2.3.8.

139 See Section 4.3.4.5.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting70

2.3.5.1. Analysis of Highest and Best Use. The appraiser shall state and explain the highest and

best use of both the remainder land (as if vacant) and the remainder property (as improved).

Impacts of the acquisition on the property’s highest and best use or the intensity of that use

shall be specically addressed and described. If restoration or rehabilitation of the remainder

property will be required before it can be put to its highest and best use, the physical and

economic feasibility of such restoration or rehabilitation shall be explained and justied. Major

restoration or rehabilitation may require the services of an expert in the eld, such as an

architect, engineer, and/or contractor.

140

If the acquisition includes a temporary construction

easement, or other temporary property interest, the eect of such temporary acquisition on the

remainder property’s highest and best use must be discussed.

141

2.3.5.2. Land Valuation. The appraiser will develop an opinion of the market value of the remainder

land for its highest and best use as if vacant and available for such use.

142

If the acquisition includes one or more temporary construction easements, the impact of those

easements on the value of the remainder property must be accounted for in the valuation of the

land after acquisition. Any diminution in the remainder land value by reason of the temporary

easements must be measured in accordance with Section 1.9.1, and then be used as the basis for

an adjustment to the remainder’s land value in this section of the report. The diminution in the

remainder’s land value by reason of temporary easements should not be treated as an additive to

be added to the dierence between the before and after value of the property.

2.3.5.3. Cost Approach – See Section 2.3.3.3.

2.3.5.4. Sales Comparison Approach – See Section 2.3.3.4.

2.3.5.5. Income Capitalization Approach – See Section 2.3.3.5.

2.3.5.6. Reconciliation and Final Opinion of Market Value. The appraiser must describe the

reasoning applied to arrive at the nal opinion of value of the remainder property, addressing

all the requirements in Section 2.3.3.6.

2.3.6. Acquisition Analysis (Partial Acquisitions Only). This part of these Standards is

applicable only in partial acquisition appraisals. The requirements in Sections 2.3.6.2 and

2.3.6.3 are identied to assist agencies in meeting their obligations under the Uniform Act. If

the appraisal report is being prepared for condemnation trial purposes, trial counsel for the

United States may instruct the appraiser to omit these sections.

2.3.6.1. Recapitulation. The appraiser must report the dierence between the value of the larger parcel

and the value of the remainder by deducting the property’s after value from its before value.

140 See Section 1.13.

141 See Section 1.9.1.

142 For requirements of land valuation, see Section 2.3.3.2.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 71

2.3.6.2. Allocation and Damages. Damages, as such, are not appraised. However, the appraiser

shall briey explain any damages to the remainder property and allocate the dierence in the

value of the property before and after the acquisition between the value of the acquisition and

damages to the remainder. The appraiser should note that such allocation is an accounting

tabulation and not necessarily indicative of the appraisal method employed.

If damages have been measured by a cost to cure, the appraiser must justify the cost to cure

143

and

demonstrate that the cost to cure is less than the damage would be if the cure was not undertaken.

2.3.6.3. Special Benets. The appraiser shall identify any special or direct benets accruing to the

remainder property and explain how and why those benets have occurred.

2.3.7. Exhibits and Addenda.

Legal Instructions. Any legal instructions must be presented.

Location Map. This exhibit should display the location of the subject property within the

city or area in which the property is located. All maps should include a north arrow and the

identication of the subject property.

Comparable Data Maps. These maps might include, among other items, a comparable land

sales map, a comparable improved sales map, and a comparable rentals map. The maps should

include a north arrow and show the locations of both the comparable sales and/or rentals and

the subject property. If this requires the use of a map that is not of a readable scale, secondary

maps showing the specic location of each comparable should be included.

Details of Comparable Sales and Rental Data. This data may be included in the body of

the report. Photographs of each comparable property must be included.

Plot Plan. A plot plan should help the reader to visualize the property and the scope

of the appraisal considerations. The plot plan should depict the entire subject property,

including dimensions and street frontages. Structural improvements should be shown in their

approximate locations; signicant on-site improvements and easements should also be shown.

The dimensions of improvements should be noted. The plot plan should include a directional

north arrow. The location from which each of the subject photographs was taken should be

identied on the plot plan, as well as the photograph identication number and the direction

in which the photo was taken.

In a partial acquisition, the plot plan should identify the remainder area and its dimensions.

Any signicant construction features of the government project for which the property is being

acquired should be shown. If the subject property or area acquired is complex, a separate plot

plan of the remainder property may be desirable.

143 This may require the services of a consultant. See Section 1.13.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting72

Floor Plan. Floor plans are required only for reports related to leasehold acquisitions or when

they are necessary to describe a unique property feature.

Title Evidence Report. If the agency provided a title evidence report to the appraiser it should

be included, but if it is lengthy it may be referenced.

Other Pertinent Reports and Exhibits. These would include, for example, any written

instructions given to the appraiser by the agency or its legal counsel, any specialist reports

(such as timber appraisals, environmental studies, mineral or water-rights studies or appraisals,

reproduction cost estimates, cost to cure estimates, xture valuations), any pertinent title

documents (such as leases or easements), and any charts or illustrations that may have been

referenced in the body of the report.

Qualications of the Appraiser. Include the qualications of all appraisers or technicians

who made signicant contributions to the completion of the appraisal assignment. If appraisal

reports are being prepared for trial purposes, appraisers must ensure that the content of their

qualications conform with Rule 26(a)(2)(B) of the Federal Rules of Civil Procedure.

2.4. Reporting Requirements for Leasehold Acquisitions. The reporting Standards

presented above provide the framework for reporting the results of an appraisal developed for

a leasehold acquisition. The following are additional reporting requirements that apply to these

special assignments.

2.4.1. Property Rights Appraised. The terms of the leasehold estate acquired must be clearly

discussed in the appraisal. Any dierences between the government’s lease and typical leases in

the market must be described and analyzed. The analysis should address all of the dierences

identied in Section 1.8.

2.4.2. Improvements Description. The description of the improvements must address all exterior

and interior features of the building improvements in which the leasehold will be located. The

physical location of the government’s leasehold space within the building must be described in

sucient detail to allow the client and intended users to understand the impact (if any) of the

government’s leasehold on the rest of the building.

2.4.3. Highest and Best Use and Larger Parcel. The appraiser must describe the factual basis

and analysis concerning the highest and best use of the building in which the government’s

leasehold is located, including those situations in which the leasehold is the entire building.

This analysis is critical in determining the position of the building within the market. This

analysis is critical in situations where the property is located in a market in transition. The

appraiser must also present the larger parcel analysis developed under Section 1.8. The result

of this analysis will dictate whether a before and after valuation must be performed.

2.5. Project Appraisal Reports. Some government projects require the acquisition of many

parcels of real property, and individual appraisers are assigned to appraise a number of these

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 73

properties at the same time. On occasion, it is logical to include

the appraisal of more than one parcel in a single report. Such

project appraisal reports (or multiple-parcel appraisal reports)

are not appraisal shortcuts; they are clerical shortcuts. A

separate opinion of market value must still be developed for each

acquisition; but the results of each valuation can be reported in

a more ecient form. Project appraisal reports that meet the

criteria set forth here may be acceptable for agency negotiation

purposes under the Uniform Act and for initial review purposes

by the Department of Justice.

Project appraisal reports are rarely conducive to litigation

purposes, as they typically contain opinions of value of

properties owned by persons not parties to the lawsuit and

introduce a myriad of collateral issues.

144

But they can be

a useful tool to assist in fair and ecient acquisitions for

agencies engaged in large projects in which the vast majority

of acquisitions can be completed voluntarily without

condemnation litigation.

The project appraisal report consists of three major parts: Part I contains an introduction,

factual data, and analysis relating to all properties included in the report; Part II includes the

individual parcel reports; and Part III provides addenda and exhibits relating to all properties

included in the report.

Part I—Introduction, General Factual Data, and Analysis

(1) Title Page. This should include the government project title, the number of individual

parcels included in the report, the name and address of the individual(s) making the

report, and the date on which the appraisals were prepared.

(2) Letter of Transmittal. This should include the date of the letter; identication of the

government project; the number of parcels included in the appraisal report; statement

of the range of eective dates of the appraisals; identication of any hypothetical

conditions, extraordinary assumptions, limiting conditions or legal instructions relating

to all parcels included in the report; and the appraiser’s signature.

(3) Table of Contents. The major parts of the appraisal report and their subheadings shall

be listed. The location of each individual parcel report shall be specically identied and

items in the addenda of the report shall be individually listed in the table of contents.

(4) Executive Summary. The appraiser should report the value ndings for each parcel

144 For the same reasons, project appraisal reports generally should not be used for acquisitions in which an agency will need to release

the underlying appraisals to comply with specic statutory or other requirements, unless the agency and the appraiser are prepared to

signicantly revise the appraisal scope of work. See Section 1.2.6.

A project appraisal report

may be appropriate if:

(1) All parcels are total

acquisitions OR all are partial

acquisitions of a nominal

and/or consistent nature;

(2) All parcels are vacant OR all

have similar improvements;

(3) All parcels are located within

a geographic area with a

relatively similar land use

pattern;

(4) All parcels have the same or

similar highest and best use;

(5) The most relevant approach

to value is the same for all

parcels; and

(6) The same array of market

data can be relied on in the

valuation of each parcel.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting74

appraised. These ndings should include the agency-assigned parcel number, the owner

of the property, the eective date of the value estimate(s), and the value conclusion(s).

In partial acquisitions, the before value, after value, and dierence should be shown. If

the project appraisal encompasses a larger number of parcels, it is desirable to include a

second summary listed alphabetically, by owners’ names.

(5) Statement of Assumptions and Limiting Conditions. The requirements

of Section 2.3.1.7 must be addressed. All assumptions and limiting conditions that

universally apply to the appraisal of all parcels in the project appraisal report must be

listed. Assumptions and limiting conditions that are not applicable to all parcels included

in the project appraisal report should not be included in this section, but rather should be

noted in the individual parcel reports.

(6) Scope of Work. The requirements of Section 2.3.1.8 must be addressed.

(7) Area, City, and Neighborhood Data. The requirements of Section 2.3.2.3.2 must be

addressed. In partial acquisitions, this discussion should be clearly broken down into two

subsections: before the acquisitions and after the acquisitions.

(8) Zoning and Other Land Use Regulations. Include a general discussion of the zoning

and other land use regulations that aect all parcels in the report. General trends in

land use regulations in the area and recent zoning activity should be discussed. In partial

acquisitions, this discussion should be clearly broken down into two subsections: before

the acquisitions and after the acquisitions.

(9) Analysis of Highest and Best Use. The general content requirements of Section

2.3.3 must be addressed. Inasmuch as all parcels in the report will have the same or similar

highest and best use, the appraiser should discuss and develop the highest and best use of

the parcels in this section. If, after in-depth analysis an appraiser determines that the highest

and best use of a parcel is not the same as or similar to that of the other parcels to be

included in the report, the unique parcel should be excluded from the project report and a

separate narrative appraisal report should be prepared for this unique parcel in accordance

with Section 2.3 of these Standards. In partial acquisitions, this discussion should be clearly

divided into two subsections: before the acquisitions and after the acquisitions.

(10) Discussion of Approaches to Value. The appraiser should discuss the standard

approaches to value and their applicability or non-applicability to the subject parcels

in the project appraisal report. If any modication to the typical application of the

approaches to value is required, such modication should be discussed. In partial

acquisitions, this discussion should be clearly broken down into two subsections: before

the acquisitions and after the acquisitions.

(11) Land Valuation. The appraiser should identify, describe, and discuss all comparable

land sales that will be used in the individual parcel reports. A discussion of how the

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 75

comparable sales will be used in the individual reports can be included in this section

of the report. Reference should be made to comparable sales data sheets, photos, and a

comparable sales map, which shall be included in the addenda of the report.

Universal adjustments to the comparable sales should be discussed and developed in this

section of the report. Adjustments classied as universal would include such adjustments

as time (or market conditions), cash equivalency, and those adjustments that are not subject

property dependent. Also, the general results of any study relating to land value (e.g., a

size adjustment study) developed under item (15) (Special Studies) should be discussed. In

partial acquisitions, this discussion should be clearly divided into two subsections: before the

acquisitions and after the acquisitions.

If a parcel requires land valuation by means other than comparable sales, as a general rule

that parcel is not appropriate for inclusion in a project report.

(12) Cost Approach. The appraiser should describe the methodology used to develop

reproduction or replacement cost and depreciation estimates. If a national cost service

has been used in estimating reproduction or replacement costs, that publication should

be specically identied. If entrepreneur’s prot has been included in reproduction or

replacement cost, its derivation should be explained.

If depreciation studies using the market extraction or sales comparison method have been

developed, their content and development should be discussed and the general conclusions

reached should be reported. Discussion of partial acquisitions should be clearly divided into

two subsections: before the acquisitions and after the acquisitions.

(13) Sales Comparison Approach. The appraiser should identify, describe, and discuss

all improved property comparable sales that will be used in the individual parcel reports.

A discussion of how the comparable sales will be used in the individual reports can be

included in this section of the report. Reference should be made to comparable sales

data sheets, photos, and a comparable sales map, which shall be included in the addenda

of the report. Universal adjustments to the comparable sales should be discussed and

developed in this section of the report. Adjustments classied as universal would include

time, market conditions, cash equivalency adjustments; i.e., those adjustments that are

not subject property dependent. The discussion of partial acquisitions should be clearly

divided into two subsections: before the acquisitions and after the acquisitions.

(14) Income Capitalization Approach. The appraiser should identify, describe, and discuss

all comparable rental properties to be used in the individual parcel reports. A discussion of

how the comparable rentals will be used in the individual reports can be included in this

section of the report. Reference should be made to comparable rental data sheets, photos,

and a comparable rentals map, which shall be included in the addenda of the report.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting76

Because a high degree of similarity exists between all individual parcels included in the

project report, capitalization rates applicable to each should be the same or t into a

relatively narrow bracket. Therefore, the development of applicable capitalization rates

should be presented in this section of the report. Discussion of partial acquisitions should be

clearly broken down into two subsections: before the acquisitions and after the acquisitions.

(15) Special Studies. Present any special studies that are appropriate and apply to all, or

most, of the individual parcels included in the project appraisal report. Such studies

might include easement studies (the impact of easements on encumbered areas and

abutting unencumbered areas), size adjustment studies, proximity studies (impact on

remainder property values due to proximity to various public improvements), land lock

studies, special benet studies, and project inuence studies. These studies may relate to

the before situation, the after situation, or both, and are in addition to the capitalization

rate, time or market conditions, entrepreneurial prot, depreciation, and cash equivalency

studies previously mentioned.

Part II—Individual Parcel Report

Each individual parcel report should contain the following information. In partial acquisitions,

item (26) through (34) should be repeated in the after situation, which is further discussed in

Section 2.3.4.

(16) Title Page. See Section 2.3.1.1 for content requirements.

(17) Table of Contents. See Section 2.3.1.3 for content requirements.

(18) Appraiser’s Certication. See Section 2.3.1.4 for content requirements.

(19) Summary of Salient Facts and Conclusions. See Section 2.3.1.7 for content

requirements.

(20) Photographs of Subject Property. See Section 2.3.1.6 for content requirements.

(21) Statement of Assumptions and Limiting Conditions. The appraiser should state

that the assumptions and limiting conditions stated in item (5) of Part I of the project

report are applicable to this parcel. If any additions, modications, or deletions to the

general assumptions and limiting conditions are necessary, they shall be noted.

(22) Scope of Work. The appraiser should state that the scope of work for this appraisal

stated in item (6) of Part I of the project report is applicable to this parcel. If any additions,

modications, or deletions to the general discussion are necessary, they shall be noted.

(23) Executive Summary. The appraiser should discuss any specic appraisal problem

unique to the individual subject parcel and briey describe its treatment.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 77

(24) Legal Description. See Section 2.3.2.1 for content requirements.

(25) Area, City, and Neighborhood Data. The appraiser should reference the area, city,

and neighborhood data in item (7) of Part I of the project report, discuss the parcel’s

location within the neighborhood, and note any specic neighborhood factors uniquely

aecting the subject parcel.

(26) Property Data.

a. Site. See Sections 2.3.2.3.1 and 2.3.4.3.1 for content requirements.

b. Improvements. See Sections 2.3.2.3.2 and 2.3.4.3.2 for content requirements.

c. Fixtures. See Sections 2.3.2.3.3 and 2.3.4.3.3 for content requirements .

d. Use History. See Sections 2.3.2.3.4 and 2.3.4.3.4 for content requirements.

e. Sales History. See Sections 2.3.2.3.5 and 2.3.4.3.4 for content requirements.

f. Rental History. See Sections 2.3.2.3.6 and 2.3.4.3.4 for content requirements.

g. Assessed Value and Annual Tax Load. See Sections 2.3.2.3.7 and 2.3.4.3.5 for

content requirements.

h. Zoning and Other Land Use Regulations. The appraiser should reference the

discussion of zoning and other land use regulations in Part I, item (8) of the project

report. If additions, modications, or deletions from that general discussion are

required as they relate to the specic parcel, this should be noted.

(27) Analysis of Highest and Best Use. The appraiser should reference the discussion

of highest and best use in item (9) of Part I of the project appraisal report and relate

that discussion specically to the subject parcel. The appraiser shall specically state the

highest and best use of the property, both in the before and after situations if a partial

acquisition, and thoroughly explain the reasoning that led to the conclusion.

(28) Land Valuation. For content requirements, see Section 2.3.3.2. The appraiser should

reference the data and discussion of land sales in item (11) of Part I of the project

appraisal report and shall specically identify which of those sales are most comparable

to the parcel under appraisal and have been relied upon in developing an opinion of the

parcel’s value. A comparative analysis between each of the selected comparable sales and

the subject property shall be included.

If adjustments are based on universal adjustments and/or studies discussed and

developed in Part I of the appraisal, the discussion or study should be specically

referenced and related to the subject property.

(29) Value Indication by the Cost Approach. For content requirements, see Section

2.3.3.3. The appraiser should reference the general discussion of the cost approach in

item (12) of Part I of the project report. If computations or estimates are based on studies

discussed and developed in Part I of the project appraisal report, the studies should be

specically referenced and related to the subject parcel.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting78

(30) Value Indication by the Sales Comparison Approach. For content requirements,

see Section 2.3.3.4. The appraiser should reference the data and discussion of the whole

property sales in item (13) of Part I of the project appraisal report and shall specically

identify which of these sales are most comparable to the subject parcel and have been

relied upon in developing an opinion of the parcel’s value. A comparative analysis

between each of the selected comparable sales and the subject property shall be included.

If adjustments are based on universal adjustments and/or studies discussed and

developed in Part I of the project appraisal report, the discussion or study should be

specically referenced and related to the subject property.

(31) Value Indication by the Income Capitalization Approach. For content

requirements, see Section 2.3.3.5. The appraiser should reference the data and discussion

of whole property rentals in item (14) of Part I of the project appraisal report and shall

specically identify which of those rentals are most comparable to the subject parcel and

have been relied upon in developing an opinion of the parcel’s economic (or market) rent.

A comparative analysis between each of the selected comparable rentals and the subject

property shall be included.

If the capitalization rate selected for the subject property is based on studies discussed

and developed in Part I of the project appraisal report, the study should be specially

referenced and related to the subject property.

(32) Reconciliation and Final Opinion of Value. For content requirements, see

Section 2.3.3.6.

(33) Acquisition Analysis. In a partial acquisition, the appraisal report shall include an

analysis of the government’s acquisition in accordance with the requirements of Section

2.3.6 of these Standards.

(34) Exhibits and Addenda. For content requirements, see Section 2.3.7 of these Standards.

a. Location Map

b. Comparable Data Maps. If the comparable data maps included in Part III of

the project report are not clear enough to ensure complete understanding of the

relationship between the subject property and the comparable data relied on in the

individual parcel report, comparable data maps should be included in the addenda of

the individual parcel reports.

c. Details of Comparable Sales and Rental Data. Detailed comparable data sheets must

be included in Part III of the project report. Those comparable data sheets relating to

the specic comparable sales and/or rentals relied on in estimating the value of the

individual parcel may also be included here for ease of reference.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Reporting 79

d. Plot Plan

e. Floor Plan

f. Title Evidence Report

g. Other Pertinent Reports and Exhibits

Part III—General Exhibits and Addenda

Exhibits and addenda items should relate to all or most of the parcels included in the project

appraisal report. Exhibits and addenda items relating only to one or a small portion of the

parcels appraised should be included in the addenda of the individual parcel reports.

(35) Location Map. (Within the city or area.) All maps should include a north arrow and the

identication of the subject parcels.

(36) Comparable Data Maps. These maps might include, among others things, a

comparable land sales map, a comparable improved sales map, and a comparable rentals

map. The maps should include a north arrow that shows the locations of the comparable

sales and/or rentals, and shows the parcels appraised. If this requires use of a map that is

not of a readable scale, secondary maps showing the specic location of each comparable

relied on in making the individual parcel appraisals should be included in the addenda of

the individual parcel reports.

(37) Detail of Comparable Sales and Rental Data. See Section 2.3.7.

(38) Other Pertinent Exhibits. These would include, for example, any written instructions

given the appraiser by the agency or its legal counsel relating to all parcels in the project

report, such as environmental studies relating to all parcels; xture, timber, and/or

mineral appraisals relating to multiple parcels; and any charts or illustrations that may

have been referenced in the body of the report and relate to all or most of the parcels in

the project report.

(39) Qualications of Appraiser.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review80

3.1. Introduction. The appraisal review process in federal acquisitions should be developed

and reported in conformity with these Standards, which are compatible with standards and

practices of the appraisal profession and with the current edition of USPAP. This Section of

the Standards addresses the types of reviews completed by government appraisers (technical

reviews and administrative reviews) as well scope of work considerations.

3.1.1. Government Review Appraisers. Government review appraisers are often assigned

administrative duties in addition to the technical review of individual appraisal reports. Those

administrative duties vary from agency to agency and may range from contract administration

or counseling management for general valuation issues to assisting the agency to meet both its

non-appraisal and appraisal obligations under the Uniform Act. Some of these duties may fall

outside the scope of valuation services as dened in USPAP.

145

These administrative duties are

also considered to fall outside the scope of these Standards and are therefore not covered in the

following discussion.

The review of appraisal reports by a qualied reviewing appraiser is required. The federal

regulations implementing the Uniform Act require agencies to have an appraisal review process

that at a minimum requires the following:

(a) A qualified review appraiser shall examine the presentation and analysis of market

information in all appraisals to ensure that they meet all applicable appraisal

requirements and support the appraiser’s opinion of value. The level of review analysis

depends on the complexity of the appraisal problem. As needed, the review appraiser

shall, prior to acceptance, seek necessary corrections or revisions.

The review appraiser shall identify each appraisal report as recommended (as the basis for

the establishment of the amount believed to be just compensation), accepted (meets all

requirements, but not selected as recommended or approved), or not accepted.

If authorized by the agency to do so, the sta review appraiser shall also approve the appraisal

(as the basis for the establishment of the amount believed to be just compensation), and if

also authorized to do so, develop and report the amount believed to be just compensation.

(b) If the review appraiser is unable to recommend (or approve) an appraisal as an adequate

basis for the establishment of the oer of just compensation and it is determined

by the acquiring agency that it is not practical to obtain an additional appraisal, the

review appraiser may, as part of the review, present and analyze market information in

conformance with § 24.103 to support a recommended (or approved) value.

145 USPAP, Denitions, 4.

3. APPRAISAL REVIEW

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review 81

reviewed and documents the ndings and conclusions arrived at during the review of the

appraisal(s). Any damages or benets to any remaining property shall be identied in the

review appraiser’s report. The review appraiser shall also prepare a signed certication

that states the parameters of the review. The certication shall state the approved

value, and if the review appraiser is authorized to do so, the amount believed to be just

compensation for the acquisition.

146

Federal agencies have adopted various policies and rules to implement these regulations.

147

Therefore, review appraisers should refer to the agency-specic review standards for a detailed

discussion of appraisal review requirements. Agency appraisal review standards generally set

appraisal review requirements from USPAP as minimum appraisal review standards.

In accordance with agency requirements, prior to approving an appraisal of property having

more than nominal value, the review appraiser for each agency should prepare a written review

report indicating the scope of work for the review and the reviewer’s analysis and support for

the action recommended. It is the review appraiser’s responsibility to determine whether the

appraisal is adequately supported, complies with recognized appraisal principles and practices,

complies with the appraiser’s contract (or assignment letter) and these Standards, and conforms

to all governing legal premises prescribed by written legal instruction.

Appraisals provided by an agency to the U.S. Department of Justice in support of a request to

initiate condemnation proceedings shall be reviewed by the Appraisal Unit of the Department. It

is the responsibility of the Appraisal Unit to ensure that credible, reliable, and accurate appraisals

are available for litigation purposes, including settlement negotiations and trial. In this regard,

the Appraisal Unit shall conrm both technical conformance with these Standards and the

reasonableness of the appraiser’s opinion of value. In addition, the Appraisal Unit shall determine

the suitability of the appraisal report for trial purposes: it will identify weaknesses and strengths

of the report under review and recommend actions that the government’s appraiser and/or

trial counsel can take prior to trial to improve the appraisal report and provide better support

for its conclusions. Appraisal reports may be found to be unsuitable for trial purposes even if

they are in technical conformance with these Standards and the appraiser’s opinion(s) of value

are reasonable.

148

Due to the intended use and intended user of these appraisal reviews, review

appraisers within the Appraisal Unit shall not develop their own independent opinions of value.

3.1.2. Contract Review Appraisers. Some agencies may have the authority to engage a qualied

non-agency review appraiser to review an appraisal report. In most instances the contract

review appraiser will be bound by the requirements discussed in Section 3.1.1 above and

Section 3.2 below. But dierent requirements may apply in some instances (e.g., review

146 49 C.F.R. § 24.104(a)-(c); see also 49 C.F.R. § 24.103(d)(1) (requiring agencies to establish qualications for review appraisers) and app. A, §

24.104 (review of appraisals).

147 E.g., U.S. depT oF Agric., ForesT serVice mAnuAl Fsm § 5400 (2005) and ForesT serVice hAndbook FSH 5409.12 (2006); U.S. Army

corps oF eng’rs, reAl esTATe engineer regulATions, EC 405-1-04 (2016).

148 For instance, a prior appraisal of the same property by the appraiser, which may have been provided to the property owner by the agency

during the negotiating process or may be subject to discovery, may have contained inconsistent or erroneous conclusions and if brought to

light during trial, could undermine the credibility of the appraiser and the ultimate opinion(s) of value and testimony.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review82

appraisers engaged as rebuttal experts). Not all agencies have authority to engage non-agency

review appraisers. Refer to specic agency regulations, guidelines, and authorities.

3.1.3. Rebuttal Experts. Contract review appraisers may be

engaged as rebuttal experts in litigation. Rebuttal is a legal

term meaning evidence introduced by a party to meet new

facts brought out in the opponent’s case in chief.

149

Its function

is to “explain, repel, counteract or disprove evidence of the

adverse party.”

150

Rebuttal experts are typically engaged by the Department of

Justice in condemnation trial proceedings to contradict or rebut

the analysis and conclusions of another appraiser. As a rebuttal

expert, a review appraiser may be asked to review an entire

appraisal report or to focus on a specic element of an appraisal (for example, the quality and

reasonableness of the highest and best use conclusion or a specic approach to value employed).

Review appraisers who prepare rebuttal reports for federal litigation purposes must comply with

USPAP and the Federal Rules of Civil Procedure, particularly Rule 26(a)(2) regarding expert

reports.

151

As with all assignments, review appraisers must never allow the assignment conditions

or a client’s objectives to cause the results of a rebuttal assignment to be biased or not credible.

152

3.2. Types of Appraisal Reviews. Federal acquisitions generally involve two types of agency

appraisal reviews: a technical review, which can only be developed and reported by an appraiser,

and an administrative (or compliance) review, which may be performed by a non-appraiser.

153

A technical review is developed and reported by an appraiser in accordance with these

Standards, which require conformity with USPAP and with agency polices, rules, and regulations.

In completing a technical review, the review appraiser renders opinions on the quality of an

appraisal report and whether the opinion(s) of value are adequately supported and in compliance

with all appropriate standards, laws, and regulations relating to the appraisal of property for

federal acquisition purposes. In addition, as a part of a technical review, the review appraiser may

reach a conclusion regarding whether to approve (or recommend approval of), modify, or not

accept or modify the conclusions presented in the appraisal report under review. If appropriate to

the assignment, the agency review appraiser performing a technical review may render a separate

opinion of value. However, if the review appraiser renders a separate opinion of value, the value

opinion must be developed and reported in accordance with the appraisal development and

content requirements for these Standards. The development of such opinions and further review

149 Morgan v. Commercial Union Assurance Cos., 606 F.2d 554, 555 (5th Cir. 1979).

150 United States v. Finis P. Ernest, Inc., 509 F.2d 1256, 1263 (7th Cir. 1975), cert. denied, 423 U.S. 893.

151 See Standard 2.2.3 for an explanation of the requirements under Rule 26 of the Federal Rules of Civil Procedure.

152 USPAP, Scope of Work Rule, 14-15.

153 USPAP formerly included guidance discussing both types of review in Advisory Opinion 6 (AO-6), which was retired in 2004. While USPAP

no longer addresses administrative reviews, they continue to be a useful tool for many agencies to ensure quality control and inform agency

decisions, among other purposes.

In federal condemnation

cases, proper rebuttal of an

appraisal report typically

addresses aws in the

appraiser’s data and basic

assumptions, but does not

itself contain an independent

opinion of value. E.g. United

States v. 4.0 Acres of Land, 175

F.3d 1133, 1141 (9th Cir. 1999).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review 83

of the initial reviewer’s opinion of value and the support therefore may also be subject to the

pertinent agency’s policies, rules, and/or regulations.

An administrative review may be performed by an appraiser or a non-appraiser and is sometimes

referred to as a compliance review. The content and scope of an administrative review will vary

with the intended use and intended user of the administrative review. Some federal agencies have

specic policies regarding the development and use of administrative reviews. An administrative

review may include conrmation that the appraisal report conforms to contract/assignment

letter requirements and to applicable federal law for federal land acquisition appraisals, and/

or that the report includes a signed certication stating that the report has been prepared in

compliance with these Standards. The administrative reviewer may also verify if the correct

subject property has been appraised, if photographs of the subject property and comparable

market data are included, if the analyses reect the government’s most recent project plans,

and if the factual data and the mathematics presented in the appraisal report are correct. The

administrative reviewer shall not, however, form an opinion regarding the quality of the analysis,

judgment, or opinion(s) of value contained within the appraisal report under review.

154

As such,

administrative reviews do not meet the requirements of 49 C.F.R. § 24.104. Administrative

reviewers often use a checklist as a guide in making their determinations; a model checklist is

provided in the Appendix of these Standards for convenience.

155

3.3. Problem Identication. The research and analyses necessary to develop credible

assignment results will vary depending on the scope of work for an appraisal review

assignment. For example, technical reviews may be conducted as either desk reviews or eld

reviews. In addition to conrmation that the report was prepared in accordance with these

Standards, a desk review involves a thorough review and analysis of the information and

analysis contained in the appraisal report under review and a careful examination of the

internal logic and consistency. In a desk review, the review appraiser limits the examination to

the information and analysis presented within the appraisal report. The data contained within

the appraisal report may or may not be conrmed and the review appraiser may or may not

identify additional comparative market data.

The most signicant dierence between a desk review and a eld review is the level of evaluation

accorded the factual data presented in the appraisal report. A eld review always requires at

least an exterior eld inspection of the subject property and often of the properties used as

comparable data in the appraisal report. In addition, the data contained within the appraisal

report is usually independently conrmed during the review process. A eld review may be used

to obtain additional market data beyond that provided by the appraiser or to resolve factual

dierences between two appraisals with divergent market value estimates. The eld review

represents the highest level of due diligence within the appraisal review practice.

154 If the administrative reviewer is an appraiser and forms an opinion regarding the analysis, judgment, or opinion(s) of value contained in the

appraisal report, the review becomes a technical review and falls under the requirements of Standard 3 of USPAP. If appraisers complete a

compliance review they must still comply with the portions of USPAP related to appraisal practice such as the Denitions, Preamble, Ethics

Rule, Competency Rule, and Jurisdictional Exception Rule.

155 This checklist is not intended to be used as part of a technical appraisal review and is included merely for easy reference by appraisers and

reviewers.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review84

The appropriate scope of work to be performed within the review process may be based on

the dollar value of the property and/or the complexity of the valuation problem, as dictated

by the regulatory and policy requirements of the acquiring agency. The degree of controversy

surrounding a particular acquisition (or the agency’s project generally) may also play a role in

determining the scope of work.

It is critical that the review appraiser clearly identify the precise scope of work and extent of the

review process for each appraisal review assignment. Terms such as administrative or technical

review, desk review and eld review may not be understood by all users or readers of the

review, and require precise denition if used. This can be done while disclosing the mandatory

assignment elements for a scope of work

156

that are outlined in sections 3.3.1 through 3.3.7 below.

If an appraisal review results in a request for corrective action by the appraiser, the review

appraiser should maintain a complete le memorandum of the results of the preliminary

review and the requested corrective action. The practice of maintaining only the nal corrected

appraisal report and the nal review thereof should be avoided.

3.3.1. Client. The review appraiser must identify who engaged the review appraiser to perform the

appraisal review assignment together with all relevant contact information for the client(s).

3.3.2. Intended Users. The review appraiser must disclose the review appraiser’s understanding of

who intends to use the appraisal review assignment results.

3.3.3. Intended Use. The review appraiser must disclose the review appraiser’s understanding of the

intended use of the appraisal review assignment results by both the client and intended users.

3.3.4. Type of Opinion. The review appraiser must disclose the type of opinion being rendered,

which in an appraisal review assignment is generally an opinion about the quality of the

appraisal work under review. If applicable, the review appraiser should discuss the actions to

be taken in accordance with the implementing regulations of the Uniform Act (e.g., accept,

approve, or not accept the appraisal, etc.).

3.3.5. Eective Date. The date of the review appraiser’s report will normally reect the eective

date of the review appraiser’s opinions and conclusions. The appraisal review report must

clearly disclose the date of the report and the eective date of the appraisal under review.

3.3.6. Subject of the Assignment. An appraisal review must identify what is being reviewed by

the review appraiser. Typically, this will be an appraisal report so the review appraiser must

provide identifying details relating to the report under review, its author(s), the subject of the

report, etc. However, review appraisers should also recognize that a specic scope of work

may call for a review to include the workle for the appraisal assignment, just a portion of the

appraisal report, or any combination of these items.

156 USPAP, Scope of Work Rule, Problem Identication section, 14.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review 85

3.3.7. Assignment Conditions. The type and extent of research and analyses undertaken as part

of the appraisal review process must be clearly identied. If the review appraiser required

signicant assistance in arriving at conclusions, then the extent of that assistance should be

summarized in the scope of work together with the names of those providing assistance (which

must also be stated in the certication). Other assignment conditions to be discussed can

include assumptions, extraordinary assumptions, hypothetical conditions, laws and regulations,

or other conditions that aect the scope of work. Care should be taken to focus on assignment

conditions applied to the appraisal review assignment itself and not just those adopted in the

report that has been reviewed.

3.4. Responsibilities of the Review Appraiser. Like the appraiser, review appraisers

must remain objective in their appraisal review activities. They cannot let agency goals or

adversarial pressure inuence their opinions of an appraisal report’s appropriateness or of

the value opinion(s) it reports, nor can they let their personal opinions regarding an agency’s

proposed acquisition enter into the review process. Also, review appraisers should not attempt

to substitute their judgment for that of the appraiser unless they are willing and able to develop

their own opinions of value and become the appraiser of record.

Review appraisers must recognize that technical deciencies can be found in nearly every

appraisal report. However, minor technical nonconformance with these Standards or USPAP

Standards should not be the reason to not accept an appraisal report, unless the deciency

aects the credibility of the opinion of value, or the opinion of value itself. Minor technical

nonconformance with these Standards should never be used as an excuse to not accept a report

if the underlying reason for not accepting it is the review appraiser’s diering opinion of the

market value of the property appraised.

In conducting an appraisal review the review appraiser must:

• Identify the scope of work performed in the review consistent with the seven elements

described above under problem identication.

• Develop an opinion as to the completeness of the appraisal report under review within the

scope of work applicable to the appraisal assignment, which shall include these Standards.

• Develop an opinion as to the adequacy and relevance of the data and the adequacy of

market support for any adjustments to the data.

• Develop an opinion as to the appropriateness of the appraisal methods and techniques used

and describe the reasons for any disagreements.

• Develop an opinion as to whether the analyses, opinions, and conclusions in the appraisal

report under review are appropriate, reasonable, and adequately supported by market data

and describe the reasons for any disagreement.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review86

• Prepare an appraisal review report in compliance with agency policies, rules, and regulations

and in accordance with these Standards, which include USPAP.

3.5. Review Appraiser Expressing an Opinion of Value. If a review appraiser cannot accept

or recommend approval of an appraisal report reviewed for Uniform Act purposes and it is

determined that it is not practical to obtain an additional appraisal, the review appraiser may be

authorized to develop an independent opinion of value.

157

Various federal agencies have adopted

policies, rules, and procedures that regulate the circumstances in which a reviewing appraiser

may develop an independent opinion of value and become the agency’s appraiser of record.

158

The review appraiser may recommend, accept, or not accept an appraisal report based upon

compliance with these Standards and the appropriateness of the methods and analyses employed

in the appraisal report. Such actions do not constitute an opinion of value on the part of the

review appraiser, nor do they infer that the reviewing appraiser has taken ownership of, or is

responsible for, the value opinion expressed in the appraisal report under review.

When it is appropriate for a review appraiser to develop an opinion of value and become the

appraiser of record, that value opinion must be supported and documented in accordance with

these Standards. This does not require the review appraiser to replicate the steps completed by

the original appraiser. The data and analysis that the reviewer determined to be credible and in

compliance with these Standards can be incorporated by reference into the review appraiser’s

review report using an extraordinary assumption.

159

Those portions of the appraiser’s report

that the reviewer determined not credible or inconsistent with these Standards must be replaced

in the review report with additional data and analysis by the review appraiser.

160

The reviewer

may use additional information that was not available to the original appraiser, but under such

circumstances the eective date of the reviewer’s opinion of value will generally be later in time

than the eective date of the original appraiser’s opinion of value. Therefore, in most cases, the

original appraiser’s opinion of value generally cannot be compared directly to the reviewer’s later

opinion of value for any legitimate purpose.

3.6. Review Appraiser’s Use of Information Not Available to Appraiser. The scope

of work for an appraisal review assignment involving a federal acquisition typically exceeds

that of the usual appraisal review because Uniform Act regulations require the reviewer to

determine whether the appraisal report under review can be the basis for the establishment

of an oer of just compensation.

161

In making that determination, the review appraiser

may need to consider information that was not available to the appraiser who prepared the

157 Under 49 C.F.R. § 24.104, the independent opinion of value must be developed and reported in accordance with the appraisal criteria set

forth in 49 C.F.R. § 24.103.

158 Some of those policies, rules, and procedures may require invocation of USPAP’s Jurisdictional Exception Rule. If so, reviewers must

specically identify the jurisdictional exception and the section(s) of USPAP to which it applies and include that information in the appraisal

review report.

159 The extraordinary assumption would be to assume that the facts relied upon and reported by the original appraiser that are incorporated

into the reviewer’s report are accurate.

160 While this procedure may produce a report suitable for the establishment of an oer of just compensation under 49 C.F.R. § 24.104, it

would not, of course, produce a report suitable for litigation purposes.

161 See 49 C.F.R. § 24.104(a)-(c).

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review 87

appraisal report under review.

162

In light of the intended use (i.e., establishing a basis for oer

of just compensation) and intended user (i.e., agency management), the reviewer is required to

consider all available information in making a recommendation. A recommendation based on

outdated or incomplete information would fail to meet the agency’s obligation to determine

a current oer of just compensation, and would not conform to the intent of the Uniform Act

and its implementing regulations.

Consideration of information not available to the original appraiser is also consistent with

USPAP requirements.

163

The current USPAP document expressly contemplates that review

appraisers may need to consider such information to produce credible assignment results:

Information that should have been considered by the original appraiser can be used by the

reviewer in developing an opinion as to the quality of the work under review.

Information that was not available to the original appraiser in the normal course of business

may also be used by the reviewer; however, the reviewer must not use such information in

the reviewer’s development of an opinion as to the quality of the work under review.

164

Accordingly, a review appraiser’s use of subsequent information necessary to produce

credible assignment results for the scope of work does not require a jurisdictional exception

to USPAP. Of course, an appraisal reviewer may nd that an appraisal report under review

was prepared in accordance with these Standards and that the opinion of value reported

was reasonable and reliable as of the eective date of the appraisal, and yet still nd that the

opinion of value is unreliable as the basis for an oer to purchase by the government because

of changed circumstances or new information that has become available. In such an instance,

the review appraiser must clearly explain all pertinent ndings in the review report to avoid

any impression that the appraisal report under review was not accepted because of its quality

or the reasonableness of the opinion of value as of the eective date of the appraisal. In these

circumstances, some agency reviewers accept but do not approve the appraisal report.

3.7. Review Reporting Requirements. Oral appraisal review reports are contrary to Uniform

Act regulations and these Standards. Therefore, oral appraisal review reports as the end-result or

nal conclusion of an appraisal review assignment are not permitted. However, an oral appraisal

review may be reported if the scope of work for an appraisal review assignment requires an

oral review to be conducted in advance of a nal written appraisal review report and there is

adequate support for the oral review in the review appraiser’s workle for the assignment.

These Standards do not require a specic review report format or structure. A number of federal

agencies have required or recommended formats for review reports to provide consistency and

162 Information not available until after completion of the original appraisal report might include additional market activity that occurred after

the eective date of the appraisal, a change in the estate to be acquired by the government, information from other appraisals of dierent

properties by dierent appraisers for the same project, or information that became available as a result of negotiations or though the

discovery process in litigation.

163 Previously, USPAP was more restrictive of review appraisers’ consideration of information not available to the appraiser. Compare USPAP

Standards Rule 3-1(c) (2000 ed.) with USPAP Standards Rule 3-2(g) (2016-2017 ed.). But USPAP has since been updated to allow reviewers

“broad exibility and signicant responsibility in determining the appropriate scope of work in an appraisal review assignment.”

164 USPAP, Comment to Standards Rule 3-2(g), 31.

Uniform Appraisal Standards for Federal Land Acquisitions / Appraisal Review88

eciency in the review reporting process. Review appraisers for these agencies should, of course,

be familiar with and follow these agency-required or recommended formats. Irrespective of the

review report format, all appraisal review reports must be in writing and contain, at a minimum,

the following:

• Identication of the client and intended users of the review report, the intended use of the

review, and the purpose of the review assignment;

• Identication of the appraisal report under review, the date of the review report, the

property and ownership interest appraised in the report under review, the date of the report

under review and the eective date of the value opinion(s) reported, and the names of the

appraisers that completed the report under review; and

• Description of the scope of work performed in the review;

• Statement of opinions, reasons, and conclusions reached concerning the appraisal report

under review; and

• Review appraiser’s signed certication, in accordance with these Standards and USPAP.

The scope of work undertaken in the review assignment must be adequately described so that the

intended user of the review report will understand the type and level of review completed.

3.8. Certication. The technical appraisal review report shall include the reviewing appraiser’s

signed certication statement consistent with the certication requirements in Standard 3 of

the current edition of USPAP and the following statements related to these Standards:

• The appraisal review was developed and the review report prepared in conformity with the

Uniform Appraisal Standards for Federal Land Acquisitions.

• My analyses, opinions, and conclusions were developed and this review report was prepared

in conformity with the Uniform Standards of Professional Appraisal Practice, and complies with

those areas of the Uniform Appraisal Standards for Federal Land Acquisitions that might require

invocation of USPAP’s Jurisdictional Exception Rule (see scope of work for details).

• Review appraisers should also include any additional certication statements required by

professional organizations in which they are members.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 89

4.1. Introduction to Legal Foundations. This Section explains the legal foundations for Sections

1, 2, and 3. It is written for both lawyers and non-lawyers—including appraisers, who must

correctly apply federal law in the development, reporting, and review of market value appraisals

in federal acquisitions. This Section discusses the legal standards that govern many recurring

valuation problems, and provides guidance on specialized appraisal issues that are unique to

federal acquisitions. The legal foundations discussed here hold signicance even for those who

are not bound to follow these Standards but must adhere to the federal law these Standards

summarize and explain.

4.1.1. Requirement of Just Compensation. Federal acquisitions entail

dierent appraisal standards than other types of valuation problems

because they involve payment of just compensation, and the meaning

of just compensation is a question of substantive right “grounded

upon the Constitution of the United States.”

165

Because only the

United States Supreme Court can make binding interpretations of

the Constitution,

166

questions with respect to just compensation must

be resolved under federal common law—that is, case law.

167

These

questions most frequently arise in federal condemnation cases. As the Supreme Court observed:

“Our jurisprudence involving condemnations…is as old as the Republic and, for the most part,

involves the straightforward application of per se rules.”

168

Those rules form the basis of these

Standards. While most of the case law cited in these Standards stems from the federal exercise

of eminent domain, just compensation must be paid in many other types of federal acquisitions,

whether or not condemnation may be involved.

169

These Standards explain the valuation requirements that apply to all federal acquisitions involving

“the measure of compensation…grounded upon the Constitution of the United States.”

170

The underlying principles of just compensation remain in force even if special legislation or

other considerations may require exceptions to certain aspects of these Standards. Where just

compensation is concerned, a reliable process is necessary to ensure a just result,

171

“and it is the

duty of the state, in the conduct of the inquest by which the compensation is ascertained, to see

165 United States v. Miller, 317 U.S. 369, 380 (1943); U.S. CONST. amend. v.

166 Marbury v. Madison, 5 U.S. 137 (1803).

167 Miller, 317 U.S. at 380; Norfolk Redev. & Hous. Auth. v. Chesapeake & Potomac Tel. Co., 464 U.S. 30, 36 (1983); see United States v. New River

Collieries Co., 262 U.S. 341, 343-44 (1923); Kohl v. United States, 91 U.S. 367, 376-77 (1875).

168 Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 322 (2002); cf. 1 lewis orgel, VAluATion under The lAw oF

eminenT domAin v (2d ed. 1953) [hereinafter ORGEL] (“eminent domain furnishes perhaps the richest case law on the valuation of real

property[, giving the] subject a signicance even for [those] who may never be faced with a condemnation case”).

169 See ORGEL, supra note 191, at v; see, e.g., Uniform Act, § 301, 42 U.S.C. § 4651.

170 Miller, 317 U.S. at 380.

171 Rasmuson v. United States, 807 F.3d 1343, 1346 (Fed. Cir. 2015) (vacating compensation award based on valuation that applied incorrect

methodology under federal law).

4. LEGAL FOUNDATIONS FOR

APPRAISAL STANDARDS

“. . . nor shall private

property be taken for

public use, without just

compensation.”

– U.S. Constitution,

amendment v

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards90

that it is just, not merely to the individual whose property is taken, but to the public which is to pay

for it.”

172

4.1.2. Market Value: The Measure of Just Compensation. To ensure a fair, objective and

practical standard, federal courts have long held that market value is normally the measure

of just compensation.

173

The market value measure “has an external validity which makes it

a fair measure of public obligation to compensate the loss incurred by an owner as a result

of the taking of his property for public use.”

174

The “appraiser’s function is to assist…in [the]

determination of just compensation by furnishing an opinion of market value.”

175

Opinions of

market value for federal acquisition purposes must follow federal law to provide a fair measure

of just compensation. Otherwise, “a nding on the value of a [property interest] that ‘is

derived from the application of an improper legal standard to the facts’ must be remanded for

new factual ndings for application of the correct legal standard.”

176

4.1.3. Federal Law Controls. Just compensation is determined in accordance with federal rather

than state law.

177

Both appraisers and attorneys must correctly apply federal law as it aects the

appraisal process in the estimations of market value, recognizing that federal and state laws

dier in important respects. Appraisals for federal acquisitions must follow the appropriate

legal standards.

178

Most appraisals for federal acquisitions involve straightforward application

of established legal standards to the facts.

179

But some valuation problems require nuanced

legal instructions to address complicated or undecided questions of law.

180

If the correct

legal standard is unclear, agencies may nd it prudent to procure a dual-premise appraisal.

181

Federal courts have jurisdiction to determine title (ownership) questions in federal condemnation

proceedings, but sometimes refer to state law in resolving the nature of property rights

acquired.

182

The United States Supreme Court has stated that “[t]hough the meaning of

‘property’…in the Fifth Amendment is a federal question, it will normally obtain its content by

172 Bauman v. Ross, 167 U.S. 548, 574 (1897); Searl v. Sch. Dist. in Lake Cty., 133 U.S. 553, 562 (1890); cf. Kelo v. City of New London, 545 U.S.

469, 489 n.21 (2005) (noting importance of “questions about the fairness of the measure of just compensation”).

173 E.g., Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2432 (2015); United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 29 (1984); Miller, 317

U.S. at 374; Olson v. United States, 292 U.S. 246, 255 (1934); Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403, 407-08 (1878).

174 Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949).

175 eATon, supra note 16, at 19-22 (“[A]ppraisers are experts in estimating value, not just compensation.”).

176 Rasmuson, 807 F.3d at 1345 (quoting Walther v. Sec’y of Health & Human Servs., 485 F.3d 1146, 1152 (Fed. Cir. 2007)); cf. Gen. Elec. Co. v.

Joiner, 522 U.S. 136, 149-50 (1997) (Breyer, J., concurring) (observing that subjecting expert opinions to appropriate legal standards “will help

secure the basic objectives of . . . the ascertainment of truth and the just determination of proceedings” (citing Fed. R. eVid. 102)); Olson,

292 U.S. at 257 (“[T]o allow mere speculation and conjecture to become a guide for the ascertainment of value [is] a thing to be condemned

in business transactions as well as in judicial ascertainment of truth.”).

177 United States v. Miller, 317 U.S. 369, 379-80 (1943) (“We need not even determine what is the local law . . . [on] the measure of

compensation,—grounded upon the Constitution of the United States.”).

178 Cf. Rasmuson, 807 F.3d at 1345.

179 Kimball Laundry, 338 U.S. at 4; cf. Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2432 (2015); Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning

Agency, 535 U.S. 302, 322 (2002).

180 See Kimball Laundry, 338 U.S. at 4 (“novel and serious questions in determining what is ‘just compensation’ are not resolved by the familiar

formulas available for the conventional situationswhich gave occasion for their adoption”).

181 See, e.g., United States v. Eastman (Eastman III), 714 F.2d 76, 77 (9th Cir. 1983), adopting 528 F. Supp. 1177 (D. Or. 1981), and a’g 528 F.

Supp. 1184, 1184 (D. Or. 1981) (“dual set of ndings” of market value so that “if the Court of Appeals reverses my preliminary [legal]

ruling, it may then evaluate the correctness of the alternative nding”); see United States v. Reynolds, 397 U.S. 14, 15 (1970) (“There being a

conict between the circuits on this question, we granted certiorari to consider a recurring problem of importance in federal condemnation

proceedings.”).

182 See United States v. Causby, 328 U.S. 256, 266 (1946); United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 279 (1943); United States

v. 0.073 Acres of Land (Mariner’s Cove), 705 F.3d 540, 544 (5th Cir. 2013); United States v. 79.31 Acres of Land, 717 F.2d 646, 647-48 (1st Cir.

1983); United States v. 1,629.6 Acres of Land in Sussex Cty. (Island Farm III), 503 F.2d 764, 766-67 & n.3 (3d Cir. 1974).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 91

reference to local law.”

183

It is also established that the United States can acquire any property

interest it deems necessary, whether or not the interest is recognized under state laws.

184

Federal

law is “wholly applicable” to condemnations by federal agencies,

185

controlling procedural as well

as substantive matters under Rule 71.1 of the Federal Rules of Civil Procedure.

186

4.1.4. Dening Property Interests. An appraiser cannot develop an

opinion of market value for just compensation purposes without

knowing what, exactly, the United States will acquire.

187

A legal

description identies a property’s precise physical or geographic

location. The property interest or interests to be acquired must

be described with equal precision. The nature and extent of any

property interest being acquired is determined by the acquiring

agency, as delegated by Congress—not the appraiser, the landowner,

or the courts.

188

Under federal title regulations, the property interest

must be sucient for the government’s purpose in acquiring it,

189

balanced against “the Government’s natural desire and duty to

deplete the public purse no further than necessary in carrying out its projects”

190

and other

considerations that may be imposed by specic statutes and regulations. “Of course, payment

need only be made for what is taken, but for all that the Government takes it must pay.”

191

It is

therefore critical for the agency to carefully and precisely dene the property interest(s) being

acquired and expressly state what interest(s), if any, will remain with the landowner.

192

Agencies are well advised to follow the maxim “measure twice, cut once” in dening the property

interests to be acquired. An opinion of market value can only be used for just compensation

183 Powelson, 319 U.S. at 279; cf. Rogers v. United States, 814 F.3d 1299, 1307-08 (Fed. Cir. 2015) and Rogers v. United States, 184 So.3d 1087,

1090 (Fla. 2015) (Federal Circuit’s certication of property law question to Florida Supreme Court). But this does not mean “that every local

idiosyncrasy . . . will be accepted.” Nebraska v. United States, 164 F.2d 866, 868 (8th Cir. 1947).

184 United States v. Little Lake Misere Land Co., 412 U.S. 580, 604 (1973); United States v. Certain Interests in Prop. in Champaign Cty., 271 F.2d

379, 384 (7th Cir. 1959); see United States v. 32.42 Acres of Land in San Diego Cty., 683 F.3d 1030, 1039 (9th Cir. 2012) (“Having paid just

compensation, the United States is entitled to the interest it sought.”).

185 United States v. 93.970 Acres of Land (Illinois Aircraft), 360 U.S. 328, 332-33 & n.7 (1959).

186 Rule 71.1 (formerly Rule 71A) ended the use of state procedures in federal condemnations in 1951, establishing “a uniform set of

procedures governing federal condemnation actions.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 3-4 & n.2 (1984) (discussing Rule

71A); Fed. R. ciV. P. 71.1. However, condemnations by pipeline companies under the Natural Gas Act are governed by state law in some

circuits. E.g., Rockies Express Pipeline LLC v. 4.895 Acres of Land, 734 F.3d 424, 429-30 (6th Cir. 2013); but see, e.g., S. Nat. Gas Co. v. Land,

Cullman Cty., 197 F.3d 1368 (11th Cir. 1999) (applying federal procedural law); see also Portland Nat. Gas Transmission Sys. v. 19.2 Acres of

Land, 318 F.3d 279, 282 n.1 (1st Cir. 2003) (“Perhaps surprisingly, several circuits [apply] state substantive law as well as formal practice [in

Natural Gas Act condemnations].”). Cases decided on state law grounds are not applicable to federal acquisitions, in which compensation

must be determined under federal law. United States v. Miller, 317 U.S. 369, 379-80 (1943).

187 See United States v. Causby, 328 U.S. 256, 268 (1946) (“Since [the terms of the property interests acquired are] not clear…, it would be

premature for us to consider whether the amount of the award…was proper.”); United States v. 21.54 Acres of Land in Marshall Cty., 491 F.2d

301, 305 (4th Cir. 1973) (discrepancies in legal description of easement boundaries required determination “whether the government has, in

fact, accurately described the land in which it intends to take easements”).

188 See Berman v. Parker, 348 U.S. 26, 35-36 (1954); Shoemaker v. United States, 147 U.S. 282, 298 (1893); United States v. Gettysburg Elec. Ry. Co., 160 U.S.

668, 685 (1896); United States v. 3,218.9 Acres of Land in Warren Cty., 619 F.2d 288, 291 (3d Cir. 1980); cf. United States v. Meyer, 113 F.2d 387, 392

(7th Cir. 1940) (citing cases); United States ex rel. Tenn. Valley Auth. v. Russell, 87 F. Supp. 386, 389 (E.D. Tenn. 1948) (citing cases).

189 Regulations of the Attorney General Governing the Review and Approval of Title for Federal Land Acquisitions (2016); cf. United States v.

City of Tacoma, 330 F.2d 153, 155, n.6 (9th Cir. 1964) (noting Attorney General could not “render . . . a written opinion as to the validity of

the Government’s title, without noticing the very serious impediment on that title left undecided by the judgment” of the lower court).

190 See United States v. 62.17 Acres of Land in Jasper Cty., 538 F.2d 670, 676 (5th Cir. 1976); cf. United States ex rel. Tenn. Valley Auth. v. Welch,

327 U.S. 546, 554 (1946) (“The cost of public projects is a relevant element in all of them, and the government, just like anyone else, is not

required to proceed oblivious to elements of cost.”).

191 United States v. Dickinson, 331 U.S. 745, 750 (1947).

192 See Causby, 328 U.S. at 268; see also Sections 4.6, 4.7, and 4.8.

An interest is a legal share

in property, such as a right

to possess, use or convey it

to another. An estate is the

amount, degree, nature, and

quality of a person’s interest

in property. The broadest

possible estate is fee simple

absolute (often shortened to

fee simple or fee).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards92

purposes if it reects the market value of the precise property

interest being acquired.

193

If an appraiser is provided an

incorrect or outdated property interest, the resulting opinion of

market value—no matter how well supported—will be of little

or no use for purposes of just compensation.

194

Moreover, in

condemnation, agencies must stand by and pay compensation

for the stated terms of the property interest taken.

195

If those

terms are not carefully dened, a condemning authority may

well “‘discover[ ] that the judgment it won gave it more of a

title than it wanted to pay for,’ but it must pay for what it won

nonetheless.”

196

4.1.5. About the Sixth Edition. As noted, this is the sixth edition

of the Uniform Appraisal Standards for Federal Land Acquisitions.

With the passage of 16 years since publication of the previous

edition, some topics of great importance in past decades

have become less signicant, and some issues that were

controversial or unsettled have been resolved by the courts.

Of course, some valuation problems remain as vital today as in years past. And while the

underlying legal principles are unchanged, recent court rulings contain practical examples of

how to apply the underlying law to actual valuation problems. Therefore, this Section includes

case studies and citations to instructive court opinions. Most of these citations are eminent

domain cases, which are often dicult to distinguish by case name.

197

To assist the reader,

frequently cited cases include common names or reference a distinctive property location,

landowner name, or public project for which property was acquired.

198

A table of all cases and

other authorities cited in these Standards is included in the Appendix.

4.2. Market Value Standard. Under established law, the measure of just compensation is the

market value of the property acquired. As stated by the United States Supreme Court, just

compensation “means in most cases the fair market value of the property on the date it is

appropriated. Under this standard, the owner is entitled to receive what a willing buyer would

pay in cash to a willing seller at the time of the taking.”

199

The Supreme Court has often

repeated this “clear and administrable rule for just compensation: ‘The court has repeatedly

193 See Causby, 328 U.S. at 268; Benecke v. United States, 356 F.2d 439, 441 (5th Cir. 1966) (remanding for new trial where appraisal witnesses

“valued somewhat less than the entire tract” actually taken).

194 As a result, in the appraisal review process under the Uniform Act, an appraisal may be accepted as meeting applicable standards but not

recommended or approved as a basis for establishing just compensation, and the agency may need to obtain an additional appraisal. See Section 3.

195 See, e.g., Transwestern Pipeline Co. v. O’Brien, 418 F.2d 15, 19-21 (5th Cir. 1969) (proper to measure compensation based on actual easement

language in pleadings, not condemnor’s assertions that landowner would be allowed to make more extensive use of remainder).

196 Vector Pipeline, L.P. v. 68.55 Acres of Land, 157 F. Supp. 2d 949, 958 (N.D. Ill. 2001); see United States v. Dickinson, 331 U.S. 745, 750 (1947).

197 Federal condemnation cases are generally styled (named) as United States v. [#] Acres of Land, rather than United States v. [Landowner],

because a condemnation proceeding is an action in rem, that is, a taking of a thing itself—the real property. In contrast, a legal proceeding

against a person is an action in personam, taking the rights of persons in the thing. See Dunnington, 146 U.S. at 352-53; In Personam and In

Rem, BLACK’S LAW DICTIONARY (10th ed. 2014); see also Fed. R. ciV. P. 71.1(c)(1) (requiring case caption to name “the property—

designated generally by kind, quantity, and location—and at least one owner of some part of or interest in the property”).

198 For example, the Supreme Court case United States v. 50 Acres of Land (Duncanville) concerned the United States’ condemnation of 50 acres

owned by the City of Duncanville, Texas. 469 U.S. 24 (1984).

199 Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 9-10 (1984) (internal quotations & citations omitted); accord Miss. & Rum River Boom Co. v.

Patterson, 98 U.S. 403, 407-08 (1878).

Measure Twice, Cut Once

An opinion of market value can

be useful for just compensation

purposes only if it reects the

market value of the precise

property interest to be acquired.

Agencies must carefully dene

the interest(s) to be acquired and

expressly state what interests

(if any) will remain with the

landowner.

Appraisers must ensure they

understand the precise property

interest(s) invloved and request

legal instruction to clarify any

uncertainty.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 93

held that just compensation normally is to be measured by “the market value of the property

taken at the time of the taking.”’”

200

As a result, these Standards require use of the following

denition of market value in the appraisal of property for federal acquisitions:

4.2.1. Market Value Denition.

The federal denition of market value is based on Supreme Court cases that establish and

explain the market value standard as the measure of just compensation.

201

It applies to all

types of federal acquisitions that involve payment of just compensation, whether or not

condemnation may be involved.

202

In most situations, the market value measure “achieves a

fair ‘balance between the public’s need and the claimant’s loss.’”

203

Thus, while the “Court has

never attempted to prescribe a rigid rule for determining what is ‘just compensation’ under all

circumstances and in all cases[,] market value has normally been accepted as a just standard.”

204

These Standards follow the practical, objective, clear, and administrable rule of market value as

the measure of just compensation, established by the Supreme Court nearly 140 years ago.

205

4.2.1.1. Date of Value. The date of value is generally determined by law (or a legal instruction, for

the appraiser’s purposes) based on the nature of the acquisition.

206

200 Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2432 (2015) (quoting Duncanville, 469 U.S. at 29, and Olson v. United States, 292 U.S. 246, 255 (1934)).

201 E.g., Kirby Forest Indus., Inc., 467 U.S. at 10; Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470, 471-72, 474 (1973);

United States v. Reynolds, 397 U.S. 14, 17 (1970); United States v. Miller, 317 U.S. 369, 374 (1943); McCoy v. Union Elevated R.R. Co., 247 U.S.

354, 359 (1918); Kerr v. S. Park Comm’rs, 117 U.S. 379, 386-87 (1886).

202 As discussed in Section 0.2.4, only the Supreme Court can dene just compensation. See Miller, 317 U.S. at 380; United States v. New River

Collieries Co., 262 U.S. 341, 343-44 (1923); Marbury v. Madison, 5 U.S. 137 (1803).

203 Duncanville, 469 U.S. at 33. Other measures of just compensation “are employed only ‘when market value [is] too dicult to nd, or when

its application would result in manifest injustice to owner or public.’” Kirby Forest Indus., Inc., 467 U.S. at 10 n.14 (quoting United States v.

Commodities Trading Corp., 339 U.S. 121, 123 (1950)).

204 Commodities Trading, 339 U.S. at 123; see Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949) (“The value of property springs from

subjective needs and attitudes, its value to the owner may therefore dier widely from its value to the taker. Most things, however, have a

general demand which gives them a value transferable from one owner to another. As opposed to such personal and variant standards as

value to the particular owner whose property has been taken, this transferable value has an external validity which makes it a fair measure of

public obligation to compensate the loss incurred by an owner as a result of the taking of his property for public use.”).

205 Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2432 (2015) (“clear and administrable rule for just compensation”); United States v. 564.54 Acres

of Land (Lutheran Synod), 441 U.S. 506, 511 (1979) (“relatively objective working rule . . . a useful . . . tool”); Kimball Laundry, 338 U.S. at 5

(“a fair measure of public obligation to compensate the loss incurred by an owner as a result of the taking of his property for public use”);

Miller, 317 U.S. at 374 (“practical standard”); Bauman v. Ross, 167 U.S. 548, 574 (1897) (“The just compensation required by the constitution

to be made to the owner is to be measured by the loss caused to him by the appropriation. He is entitled to receive the value of what he has

been deprived of, and no more.”); Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403, 408 (1878) (“The inquiry in such cases must be what

is the property worth in the market . . . from its availability for valuable uses.”).

206 See United States v. Dow, 357 U.S. 17, 22 (1958) (“that event which gives rise to the claim for compensation and xes the date as of which the

land is to be valued”).

Denition of Market Value

Market value is the amount in cash, or on terms reasonably equivalent to cash, for which in

all probability the property would have sold on the eective date of value, after a reasonable

exposure time on the open competitive market, from a willing and reasonably knowledgeable

seller to a willing and reasonably knowledgeable buyer, with neither compelled to buy or sell,

giving due consideration to all available economic uses of the property.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards94

• In most direct acquisitions (such as voluntary purchases), the date of value should be as near

as possible to the date of the acquisition—typically the date of the appraiser’s last property

inspection.

207

• In “quick-take” condemnations involving a declaration of taking, the date of value is the earlier

of (1) the date the United States les a declaration of taking and deposits estimated compensation

with the court, or (2) the date the government enters into possession of the property.

208

• In “complaint-only” straight condemnations in which no declaration of taking is led, the

date of value is the date trial commences.

209

• In inverse takings, the date of value is the date of taking, which should be provided by legal

counsel.

210

• For property exchanges, the date of value may be set by the parties or established by statute,

and should be provided by legal counsel or the appraiser’s client.

211

In each type of acquisition, a property’s market value is to be ascertained as of the appropriate

date of value, considering the property as it existed on that date.

212

The appraiser must

disregard physical changes (such as government construction) as well as changes in market

value that occur after the date of value.

213

But this does not necessarily prohibit consideration

of market data or events that occurred after the date of value: For example, market data after

the date of value may be considered for the purpose of corroborating the market expectations

or trends that existed on the date of value.

214

Sales that occurred after the date of value may

be appropriate to consider, as discussed in Section 4.4.2.4.7. And in acquisitions under the

207 Cf. 49 C.F.R. § 24.102(g) (updating oer of just compensation under Uniform Act); United States v. 790.71 Acres of Land in Cotton, Comanche

& Stephens Ctys., 550 F. Supp. 690, 691 (W.D. Okla. 1981) (holding changes in appraisals of same property were due to later appraisal’s

inclusion of recently discovered additional comparable sales, not bad faith or unfair treatment).

208 Dow, 357 U.S. at 21-22; see Declaration of Taking Act, 40 U.S.C. § 3114 (corresponds to Act of February 26, 1931, 46 Stat. 1421, originally

codied at 40 U.S.C. §§ 258a-258b).

209 See Kirby Forest Indus., Inc., 467 U.S. at 16-17; General Condemnation Act, 40 U.S.C. § 3113 (corresponds to Act of August 1, 1888, 25 Stat.

357, originally codied at 40 U.S.C. § 257).

210 See United States v. Clarke, 445 U.S. 253, 258 (1980); see generally Section 4.9.

211 E.g., Greer Coal., Inc. v. U.S. Forest Serv., 470 F. App’x 630, 636 (9th Cir. 2012) (unpubl.); Desert Citizens Against Pollution v. Bisson, 231 F.3d

1172, 1185-86 & nn.17-18 (9th Cir. 2000); see generally Section 4.10.

212 Kerr v. S. Park Comm’rs, 117 U.S. 379, 385-87 (1886); accord United States v. Reynolds, 397 U.S. 14, 16 (1970); United States v. Miller, 317 U.S.

369, 374 (1943); see, e.g., United States v. 125.2 Acres of Land in Nantucket, 732 F.2d 239, 244 (1st Cir. 1984) (“well-settled rule”); United States

v. 161.99 Acres of Land in Collins Cty., 512 F.2d 65, 66 (5th Cir. 1975); see also Rasmuson v. United States, 807 F.3d 1343, 1346 (Fed. Cir. 2015)

(“A proper appraisal methodology has to account for those physical conditions [that existed on the date of value].”).

213 See Kirby Forest Indus., Inc., 467 U.S. at 16-18 & n.29; United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 76 (1913); Searl v. Sch.

Dist. in Lake Cty., 133 U.S. 553, 562-65 (1890); United States v. Certain Land in Lincoln, 343 F. Supp. 155 (D. Neb. 1972).

214 Ga.-Pac. Corp. v. United States, 640 F.2d 328, 337 n.5 (Ct. Cl. 1980) (allowing post-taking data “for purposes of corroborating the

reasonableness of the views of a . . . prospective purchaser and seller as to their anticipations” as of the date of taking); e.g., United States v.

Certain Lands in Wappinger, 67 F. Supp. 905, 907-08, 909-11 (S.D.N.Y. 1946) (considering market trends); see Hickey v. United States, 208 F.2d

269, 277-78 (3d Cir. 1953) (“A witness may state that his conclusion on an initial examination was conrmed by later events, when additional

information is available.”); United States v. 765.56 Acres of Land in Southampton (765.56 Acres I), 164 F. Supp. 942, 947 (E.D.N.Y. 1958), aff ’d

sub nom. United States v. Glanat Realty Corp., 276 F.2d 264 (2d Cir. 1960) (noting “zoning regulations [that] had been under consideration .

. . for some time” as of date of value “had become a fact” at time of trial); see also USPAP Advisory Opinion 34 (“Data subsequent to the

eective date may be considered in developing a restrospective value as a conrmation of trends that would reasonably be considered by a

buyer or seller as of that date.”); cf. Dugan v. Rank, 372 U.S. 609, 624 (1963) (noting “[p]arenthetically” that federal dam project had indeed

been operating in accordance with previously stated plans).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 95

Uniform Act, the assignment may instruct the appraiser to consider changes in value due to

physical deterioration within the owner’s reasonable control.

215

4.2.1.2. Exposure on the Open, Competitive Market. The

federal denition of market value presumes that the property,

prior to the date of value, was on the open market for a

reasonable length of time to nd a buyer who was ready,

willing, and able to consummate a purchase on the date of

valuation.

216

Value is to be determined by what the property

“would sell for in the market for cash in the due course of

business . . . under ordinary circumstances . . . .”

217

In determining just compensation, federal courts have neither

dened a “reasonable” length of time nor required that an

estimate of market value be linked to a specied exposure time on the open market. For these

reasons, appraisers should not link opinions of market value for federal acquisitions to a specic

exposure time.

218

To do so in an appraisal for federal acquisition purposes would needlessly place

a limiting condition on the opinion that is irrelevant and could undermine the reliability of the

entire appraisal.

219

4.2.1.3. Willing and Reasonably Knowledgeable Buyers and Sellers. Willing and reasonably

knowledgeable buyers and sellers are not dened as all-knowing, but rather as having the

knowledge possessed by the “typical ‘willing buyer-willing seller’” in the marketplace.

220

An arm’s-length transaction cannot be disregarded solely because a buyer or seller lacked

“perfect” knowledge.

221

For example, the Federal Circuit held that it was appropriate to

consider “a relevant market made up of investors who are real but are speculating in whole or

major part.”

222

And as the same court held in a later appeal, “uncontroverted evidence of an

active real estate market compels the conclusion that the typical ‘willing buyer-willing seller’

215 See Uniform Act, § 301 (3), 42 U.S.C. § 4651(3). This is an express statutory exception to the rule that property must be valued as it existed

on the date of value. E.g., Rasmuson, 807 F.3d at 1346 (noting that a calculation that does not consider existing conditions “will result in an

articially inated value and yield a windfall”); cf. 161.99 Acres in Collins, 512 F.2d at 66 (holding compensation must be measured as of date

of taking, regardless of subsequent changes in property’s market value).

216 See, e.g., Kimball Laundry Co. v. United States, 338 U.S. 1, 6 (1949) (“the equivalent arrived at by the haggling of the market”); McCoy v. Union

Elevated R.R. Co., 247 U.S. 354, 359 (1918).

217 McCoy, 247 U.S. at 359; see Kerr v. S. Park Comm’rs, 117 U.S. 379, 386-87 (1886) (“what land would have sold for in cash, or on such time

and terms as would be equivalent to cash”).

218 This jurisdictional exception to USPAP Standards Rule 1-2(c) is required for appraisals for federal acquisitions—i.e., appraisals applying

the federal denition of market value—to ensure the opinion of value can be used as a reliable measure of just compensation under the

Fifth Amendment to the U.S. Constitution. See USPAP Advisory Opinion 35, Reasonable Exposure Time in Real Property and Personal Property

Opinions of Value; USPAP Frequently Asked Question 108. Appraisers may be accustomed to linking opinions of value to specic exposure

times in other types of assignments. Cf. Robinson v. United States, 305 F.3d 1330, 1332 (Fed. Cir. 2002) (distinguishing “quick sale value” as

amount expected if property’s market exposure was limited to specic term, and “liquidation value” as amount expected if property “is sold

without reasonable market exposure”); In re Dyevoich, No. 11–2551 (MLC), 2012 WL 194677 (D.N.J. Jan. 23, 2012) (unpubl.) (distinguishing

“reasonable market exposure time” from “restricted market exposure time”).

219 See eATon, supra note 16, at 18-19.

220 See Fla. Rock Indus., Inc. v. United States (Florida Rock III), 18 F.3d 1560, 1567 (Fed. Cir. 1994).

221 See id. at 1566 n.12 (“The market from which a fair market value may be ascertained need not contain only legally trained (or advised)

persons who fully investigate current land use regulations; ignorance of the law is every buyer’s right.”); id. at 1567 (“When the market

provides a well-substantiated value for a property, a court may not substitute its own judgment as to what is a wise investment. . . . Should a

landowner wish to pick and choose her buyers, that luxury is not chargeable to the federal sc.”).

222 Fla. Rock Indus. v. United States (Florida Rock II), 791 F.2d 893, 903 (Fed. Cir. 1986); see United States v. 69.1 Acres of Land (Sand Mountain),

942 F.2d 290, 294 (4th Cir. 1991) (“The buyers in the sand reserve market are limited to those with foresight and patience, but they are

nonetheless real buyers in a real market.”).

Appraisers should not

link an opinion of market

value made for federal

acquisition purposes

to a specic exposure

time. This jurisdictional

exception to USPAP is

required for appraisals

applying the federal

denition of market value.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards96

requirement of fair market value had been met . . . .”

223

As a result, “[w]hile an [appraiser] might be justied in

adjusting the fair market value gure by discarding aberrational

values based upon sales between related entities or fraudulent

sales . . . , an [appraiser] may not discard an entire market as

aberrational.”

224

The hypothetical buyer and seller under the federal denition

of market value are objective market participants, motivated

by typical market considerations: “

[

]

he same considerations

are to be regarded as in the sale of property between private

parties[,]”

225

having regard for “the existing business or wants

of the community . . . .”

226

As the Supreme Court warned, “care

must be taken to avoid . . . supposing the hypothetical purchaser

to have either the same idiosyncrasies as the owner, or the same opportunities for use of the

property as a taker armed with the power of eminent domain.”

227

4.2.1.4. All Available Economic Uses. Compensation “is to be arrived at upon just consideration

of all the uses for which [a property] is suitable.”

228

As the Supreme Court stated in Olson v.

United States, “[t]he highest and most protable use for which the property is adaptable and

needed or likely to be needed in the reasonably near future is to be considered . . . .”

229

That

use must be considered “to the full extent that the prospect of demand for such use aects the

market value while the property is privately held.”

230

As discussed in Section 4.3, in valuations

for just compensation purposes, only protable—i.e., economic—uses can be considered.

231

Nonmarket considerations such as value to the public “aord[ ] no just criterion for estimating

what the owner should receive” and must be disregarded.

232

223 Florida Rock III, 18 F.3d at 1567; accord Sand Mountain, 942 F.2d at 294 (4th Cir. 1991) (“The existence of six other recent sales of properties

in the area to sand producers lends further support . . . that a market exists for minable reserves . . . .”).

224 Florida Rock III, 18 F.3d at 1567; cf. United States v. 381.76 Acres of Land (Montego Group), No. 96-1813-CV, 2010 WL 3734003, at *7 (S.D.

Fla. Aug. 3, 2010) (qualitative analysis of comparable sales was the “superior” approach “to determine the value of peculiar properties in a

peculiar market while taking complex factors into account”), adopted sub nom. United States v. 10.00 Acres of Land, No. 99-0672-CIV, 2010

WL 3733994 (S.D. Fla. Sept. 22, 2010), aff ’d sub nom. United States v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (per curiam).

225 Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403, 407-08 (1878); see United States v. 6.24 Acres of Land (Weber), 99 F.3d 1140, 1996 WL 607162,

at *5 (6th Cir. 1996) (per curiam) (unpubl.) (“We assume that buyers and sellers of ordinary prudence are knowledgeable and that they are not

motivated by speculation or conjecture.”); accord United States v. 760.807 Acres of Land in Honolulu, 731 F.2d 1443, 1446 (9th Cir. 1984).

226 United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 77-78 (1913); Kimball Laundry Co. v. United States, 338 U.S. 1, 5-6 (1949); see

Olson v. United States, 292 U.S. 246, 257 (1934) (In estimating market value, “there should be taken into account all considerations that fairly

might be brought forward and reasonably be given substantial weight” in “fair negotiations between an owner willing to sell and a purchaser

desiring to buy.”).

227 Kimball Laundry, 338 U.S. at 6 n.3; Chandler-Dunbar, 229 U.S. at 79-81; see United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S.

506, 514 (1979) (“[N]ontransferable values arising from the owner’s unique need for the property are not compensable . . . .”); see also Boom

Co., 98 U.S. at 408 (“Others may be able to use [the property], and make it subserve the necessities or conveniences of life. Its capability of

being made thus available gives it a market value which can be readily estimated.”); Florida Rock III, 18 F.3d at 1567 (“Dollars are fungible . .

. . Should a landowner wish to pick and choose her buyers, that luxury is not chargeable to the federal sc.”).

228 Olson v. United States, 292 U.S. 246, 255 (1934).

229 Id.; see Section 4.3 (Highest and Best Use).

230 Olson, 292 U.S. at 255.

231 See id.; see also Monongahela Nav. Co v. United States, 148 U.S. 312, 328 (1893).

232 Chandler-Dunbar, 229 U.S. at 80.

“Speculation”

While market participants may

speculate, appraisers cannot.

The nder of fact “must not,

itself, speculate, i.e., guess,

about potential end uses or

markets when the speculation

is so remote or improbable

that one would not invest his

money in it.” Fla. Rock Indus.,

Inc. v. United States (Florida Rock

Il), 791 F.2d 893, 903 (Fed. Cir.

1986); see Section 4.3.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 97

4.2.2. The Unit Rule. The market value concept in federal acquisitions generally requires application of

the so-called unit rule, a principle developed by the federal courts that dictates what is to be valued

for just compensation purposes.

233

Under the unit rule, the property being appraised must be valued

as a unitary whole and held in single ownership.

234

The value of the whole cannot be derived by

adding together the separate values of various interests or components.

235

As a result, summation or

cumulative appraisals are improper under federal law.

236

The unit rule relates to ownership interests

(estates) in real estate—such as landlord and tenant, or mortgagor and mortgagee—and to various

physical components of real estate—such as timber, mineral deposits, farmland, and buildings.

237

As discussed in Section 4.6, the unit rule can raise particularly challenging valuation issues in

appraisals for partial acquisitions, especially if easements are involved.

4.2.2.1. Ownership Interests (the Undivided Fee). A property with multiple ownership interests

or estates—such as lessor and lessee, life tenant and the holder of the remainder, or mortgagor

and mortgagee—must be valued as a whole, embracing all of the rights, estates, and interests

of all who may claim, and as if in one ownership.

238

For example, in an acquisition of property

in fee simple absolute, the property must be appraised as an undivided fee.

239

Similarly, in

acquisitions of less-than-fee interests, the interests being appraised must be valued as if

under single ownership.

240

The market value of the whole is later apportioned among “the

respective interest holders . . . either by contract or judicial intervention.”

241

This is because just

compensation is for the property itself, not the various ownership interests; thus, “the appraised

value of the property represents the whole fee.”

242

This aspect of the unit rule ensures the

public is not charged twice in federal acquisitions.

243

4.2.2.2. Physical Components. Buildings and improvements, timber, crops, sand, gravel, minerals, oil,

and so forth, in or upon the property are to be considered to the extent they contribute to the market value

of the property as a whole. “

[

]

t is rmly settled that one does not value the [ ]land as one factor and

then value the improvements as another factor and then add the two values to determine market

233 See United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139, 146 & n.13 (3d Cir. 2005) (“[W]e have applied the unit rule as the

legal procedure by which just compensation is to be determined and apportioned.”); United States v. 1.377 Acres of Land (Hotel San Diego),

352 F.3d 1259, 1269 (9th Cir. 2003) (government provides just compensation, then respective interest holders apportion award).

234 United States v. Dunnington, 146 U.S. 338, 351 (1892); United States v. 25.936 Acres of Land in Edgewater, 153 F.2d 277, 279 (3d Cir. 1946).

235 E.g., Dunnington, 146 U.S. at 351; Bogart v. United States, 169 F.2d 210, 213 (10th Cir. 1948); Nebraska v. United States, 164 F.2d 866, 868 (8th

Cir. 1947); 25.936 Acres in Edgewater, 153 F.2d at 279; Meadows v. United States, 144 F.2d 751, 753 (4th Cir. 1944).

236 See, e.g., United States v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (per curiam).

237 United States v. 91.90 Acres of Land in Monroe Cty. (Cannon Dam), 586 F.2d 79, 87 (8th Cir. 1978).

238 E.g., Dunnington, 146 U.S. at 351; Bogart, 169 F.2d at 213; Nebraska, 164 F.2d at 868; 25.936 Acres in Edgewater, 153 F.2d at 279; Meadows,

144 F.2d at 753; cf. United States v. 499.472 Acres of Land in Brazoria Cty., 701 F.2d 545, 552 (5th Cir. 1983) (emphasizing “importance of

presenting in a single trial to a single jury all interests of all parties in the condemned property.”).

239 Gettysburg Tower, 409 F.3d at 145-47 & nn.12-13; United States v. 1.377 Acres of Land (Hotel San Diego), 352 F.3d 1259, 1269 (9th Cir. 2003);

Nebraska, 164 F.2d at 868-69.

240 E.g., United States v. 237,500 Acres of Land, 236 F. Supp. 44, 55 (S.D. Cal. 1964) (valuing placer mining claims as a whole, then apportioning

locators’, lease and option interests). Applying the unit rule can be particularly complex in acquisitions of less-than-fee estates such as easement

(Section 4.6.5) or leasehold (Section 4.7) interests, or in acquisitions involving minerals, timber or other natural resources (Section 4.8).

241 Hotel San Diego, 352 F.3d at 1269. This apportionment is generally beyond the scope of the appraiser’s assignment.

242 Dunnington, 146 U.S. at 351; see Gettysburg Tower, 409 F.3d at 146.

243 Dunnington, 146 U.S. at 353-54.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards98

value.”

244

Rather, the measure of just compensation is the market value of the entire property—

not the total of the money values of the separate items. As a result, in developing an opinion of

value for federal acquisitions, the appraiser must consider all the elements that “contribute to

make the property valuable, all . . . that detract from it, and nally, weighing all those elements,

determine [the market value of] the single piece of property . . . .” acquired.

245

The unit rule is often misapplied in valuations involving natural resources such as minerals, oil, and

gas.

246

As with any other component, the possible or actual existence of such resources can only

be considered to the extent it would contribute to the market value of the whole property. Section

4.8 discusses valuation issues that commonly arise in appraising natural resource properties.

4.2.2.2.1. Existing Government Improvements. The presence of government-constructed buildings

and improvements on the property on the date of value may signicantly aect the analysis of

market value. Proper treatment of improvements often turns on the legal eects of a lease, if

one exists, as “any valuation should take into account the lease terms covering improvements”

of signicance to a reasonable buyer.

247

But regardless of a contractual agreement, “the

equitable principle which condemns unjust enrichment [may] prevent[ ] the value of

[government-built] premises becoming a windfall to the owner of the land in the guise of

fair compensation.”

248

Depending on the facts of the acquisition, the appraiser may need to

determine a buyer’s cost to remove such improvements, estimate any contributory value, or

exclude them from consideration entirely, among other courses.

249

Therefore, appraisers should

request legal instructions on how to treat government-constructed improvements that

predate the date of value.

250

4.2.2.3. Allocations and Administrative Payments Under the Uniform Act. Valuations for

federal acquisitions must follow the unit rule. But some appraisal assignments may require

the appraiser to subsequently allocate the market value of the whole property, once properly

determined under the unit rule, for administrative or other purposes. Thus, the appraiser

may be directed to apportion the whole property’s value among separate estates or interests

244 United States v. 91.90 Acres of Land in Monroe Cty. (Cannon Dam), 586 F.2d 79, 87 (8th Cir. 1978) (“[T]he value of the improved property

may be greater than, equal to, or even less than the property in its unimproved state.”); accord United States v. 6.24 Acres of Land (Weber), 99

F.3d 1140, 1996 WL 607162 (6th Cir. 1996) (per curiam) (unpubl.); United States v. Lewis, 308 F.2d 453, 457-59 (9th Cir. 1962); United States

v. 158.76 Acres of Land in Townshend, 298 F.2d 559, 561 (2d Cir. 1962); United States v. Certain Parcels of Land in Rapides Par., 149 F.2d 81,

82 (5th Cir. 1945); United States v. Meyer, 113 F.2d 387, 397 (7th Cir. 1940); United States v. 33.92356 Acres of Land (Piza-Blondet Trial Op.),

No. 98-1664, 2008 WL 2550586, at *10-*11 (D.P.R. June 13, 2008), a’d, 585 F.3d 1, 11 (1st Cir. 2009); United States ex rel. Tenn. Valley

Auth. v. Harralson, 43 F.R.D. 318, 321 (W.D. Ky. 1966) (mem.); see Morton Butler Timber Co. v. United States, 91 F.2d 884, 888 (6th Cir. 1937);

United States v. Wise, 131 F.2d 851, 852-53 (4th Cir. 1942); cf. United States v. Sowards, 370 F.2d 87, 90-91 (10th Cir. 1966) (improper to value

property by multiplying amount of coal in situ by price per ton).

245 Wise, 131 F.2d at 852-53 (“[When a] shrewd, able purchaser who was interested in that property . . . nally came to determine what he

would pay, it would be a single gure.”).

246 See, e.g., Cannon Dam, 586 F.2d at 88-89 (“serious error” to permit aggregation of estimated surface value and estimated value of underlying clay).

247 United States v. 32.42 Acres of Land (Fleet ASW), No. 05cv1137 DMS, 2009 WL 2424303, at *6 (S.D. Cal. Aug. 6, 2009) (citing Kimball

Laundry Co. v. United States, 338 U.S. 1, 16 (1949)); United States v. Certain Space in Rand McNally Bldg., 295 F.2d 381, 383-84 (7th Cir. 1961).

248 Bibb Cty. v. United States, 249 F.2d 228, 230 (5th Cir. 1957); see also Searl v. Sch. Dist. in Lake Cty., 133 U.S. 553, 562-65 (1890); United States v.

Del., Lackawana & W.R.R. Co., 264 F.2d 112, 116-17 (3d Cir. 1959).

249 See Fleet ASW, 2009 WL 2424303, at *6; cf. United States v. City of Columbus, 180 F. Supp. 775, 775 (S.D. Ohio 1959) (lease provision allowed

tenant United States reasonable time to remove improvements); San Nicolas v. United States, 617 F.2d 246 (Ct. Cl. 1980) (lease provision

obligated tenant United States to restore property to condition at lease onset).

250 See, e.g., Old Dominion Land Co. v. United States, 269 U.S. 55, 65 (1925); Searl, 133 U.S. at 562-65; Wash. Metro. Area Transit Auth. v. One Parcel

of Land, 780 F.2d 467, 471 (4th Cir. 1986); Del., Lackawana, 264 F.2d at 116-17; Bibb Cty., 249 F.2d at 230; but see Rand McNally Bldg., 295

F.2d at 383-84.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 99

for negotiating purposes and/or to comply with agency obligations under the Uniform Act.

Such an allocation should be reported in a separate, supplemental report, rather than in the

appraisal report of the market value of the whole property.

251

Similarly, some assignments

may require a determination of the contributory value of buildings, structures, or other

improvements that will be removed or adversely aected due to the government project.

252

If applicable, the appraiser should clearly state that any such allocations do not indicate the

appraisal method(s) employed.

253

4.2.2.4. Departure from the Unit Rule. Federal courts have repeatedly

emphasized that the unit rule is “a ‘carefully guarded’ one and

that only in rare and exceptional types of situations [should]

departures from it be[ ] permitted.”

254

Thus, while the courts

recognize the unit rule “manifestly is not without hardships in

practical operation,”

255

under federal law departure from the unit

rule is permitted only in “extraordinary,” “unique,” “rare and

compelling” circumstances.

256

Any departure from the unit rule

requires a legal instruction, as “the determination as to [the

unit rule’s] applicability is one made by a court as a matter of law

rather than by an appraiser.”

257

4.2.3. Objective Market Evidence; Conjectural and

Speculative Evidence. For compensation to be “just, not

merely to the individual whose property is taken, but to the

public which is to pay for it[,]” its measure must be objective.

258

The determination of market value must therefore take into

account all considerations that might fairly be brought forward

251 Unless specically instructed, apportionment (allocation) of the market value of the whole property is generally beyond the scope of the

appraiser’s assignment. See United States v. Dunnington, 146 U.S. 338, 351 (1892); United States v. 6.45 Acres of Land (Gettysburg Tower), 409

F.3d 139, 146-47 & n.13 (3d. Cir. 2005); United States v. 1.377 Acres of Land (Hotel San Diego), 352 F.3d 1259, 1269 (9th Cir. 2003).

252 Section 302 of the Uniform Act directs agencies to acquire proportional interest in such structures. 42 U.S.C. § 4652; see United States

v. 158.00 Acres in Clay Cty., 562 F.2d 11, 13 (8th Cir. 1977) (noting “contributory value of improvements may be only a subsidiary fact

supporting the ultimate nding of just compensation” but “has independent signicance” under the Act). Administrative benets under the

Act or other statutes are separate from compensation under the Fifth Amendment. See United States v. Gen. Motors, 323 U.S. 373, 379-80

(1945); United States v. Willow River Power Co., 324 U.S. 499, 510 (1945); Ackerley Commc’ns of Fla. v. Henderson, 881 F.2d 990, 992-93 & n.2

(11th Cir. 1989) (“[S]uch benets should be viewed as administrative payments to displaced persons.” (quoting H.R. REP. NO. 91-1656, at

5-6 (1970), as reprinted in 1970 U.S.C.C.A.N. 5854)).

For a thorough analysis of the legislative history and intent of the Uniform Act, see Barnhart v. Brinegar, 362 F. Supp. 464 (W.D. Mo. 1973)

(adopted by Ackerley Commc’ns, 881 F.2d at 992); United States v. 320 Acres of Land, 605 F.2d 762, 823 (5th Cir. 1979); Roth v. U.S. Dep’t of

Transp., 572 F.2d 183, 184 (8th Cir. 1978), Rhodes v. City of Chi. for Use of Sch., 516 F.2d 1373, 1378 (7th Cir. 1975); cf. Clear Sky Car Wash,

LLC v. City of Chesapeake, 910 F. Supp. 2d 861, 878 n.13 (E.D. Va. 2012).

253 See United States v. 91.90 Acres of Land in Monroe Cty. (Cannon Dam), 586 F.2d 79, 87 (8th Cir. 1978) (“[I]t is rmly settled that one does not value

the []land as one factor and then value the improvements as another factor and then add the two values to determine market value. That is

true because the value of the improved property may be greater than, equal to, or even less than the property in its unimproved state.”).

254 United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139, 148 (3d Cir. 2005) (quoting Nebraska v. United States, 164 F.2d 866, 869

(8th Cir. 1947)).

255 Nebraska, 164 F.2d at 868.

256 Gettysburg Tower, 409 F.3d at 147-48 (citing, inter alia, United States v. Welch, 217 U.S. 333, 338 (1910); Bos. Chamber of Commerce v. City of

Boston, 217 U.S. 189, 195 (1910); United States v. 499.472 Acres of Land in Brazoria Cty., 701 F.2d 545, 549 (5th Cir. 1983); United States v.

Corbin, 423 F.2d 821, 828 (10th Cir. 1970)).

257 Gettysburg Tower, 409 F.3d at 142 n.5.

258 Bauman v. Ross, 167 U.S. 548, 574 (1897); see United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 511 (1979) (“we have

recognized the need for a relatively objective working rule”); United States v. Miller, 317 U.S. 369, 375 (1943); cf. City of New York v. Sage, 239

U.S. 57, 61 (1915) (“[I]t is to be considered only so far as the public would have considered it if the land had been oered for sale . . . .”).

Any departure from the

unit rule requires a legal

instruction, because the

applicability of the rule is

a matter of law that cannot

be determined by an

appraiser.

“

[

]

t is the owner’s loss,

not the taker’s gain,

which is the measure of

compensation . . . .”

—United States ex rel. Tenn.

Valley Auth. v. Powelson,

319 U.S. 266, 281 (1943)

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards100

and reasonably be given substantial weight in bargaining between buyer and seller.

259

But the

appraiser must disregard any special value to the owner “who may not want to part with his land

because of its special adaptability to his own use” as well as any special value to the government

because of the government’s needs or the property’s “peculiar tness” for the government’s

purposes.

260

Only “value transferable from one owner to another . . . has an external validity

which makes it a fair measure of public obligation to compensate the loss incurred by an

owner as a result of the taking of his property for public use.”

261

As a result, “loss to the

owner of nontransferable values deriving from his unique need for property or idiosyncratic

attachment to it, like loss due to an exercise of the police power, is properly treated as part of

the burden of common citizenship.”

262

Similarly, “the Fifth Amendment allows the owner only

the fair market value of his property; it does not guarantee him a return of his investment.”

263

Moreover, just compensation cannot be based on mere speculation or conjecture. As the

Supreme Court stated in Olson v. United States:

Elements aecting value that depend upon events or combinations of occurrences which,

while within the realm of possibility, are not fairly shown to be reasonably probable, should

be excluded from consideration, for that would be to allow mere speculation and conjecture

to become a guide for the ascertainment of value—a thing to be condemned in business

transactions as well as in judicial ascertainment of truth.

264

4.2.4. Renements of Market Value Standard. The Fifth

Amendment requirement of just compensation “derives as

much content from the basic equitable principles of fairness as

it does from technical concepts of property law.”

265

With this

in mind, the Supreme Court has honed the basic foundation

of market value “with certain renements developed over

the years in the interest of eectuating the constitutional

guarantee” of just compensation.

266

Valuations for federal

acquisitions must comply with these renements, which reect

the Supreme Court’s recognition that “strict adherence to the criterion of market value may

involve . . . elements which, though they aect such value, must in fairness be eliminated.”

267

These renements reect the practical applications of the principles of fairness underlying

259 Olson v. United States, 292 U.S. 246, 257 (1934); Rasmuson v. United States, 807 F.3d 1343, 1346 (Fed. Cir. 2015).

260 Miller, 317 U.S. at 375; see Section 4.4.2.4.2.5 (Sales to a Party with Condemnation Authority); see also United States v. Fuller, 409 U.S. 488,

491 (1973). In developing the market value standard as the measure of just compensation, the federal courts have used terms such as value,

market value, fair market value, and market value fairly determined interchangeably without altering the meaning of market value for federal

acquisition purposes. See Miller, 317 U.S. at 374 & nn.10-14 (citing cases).

261 United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 36 (1984) (quoting Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949)).

262 Duncanville, 469 U.S. at 36.

263 United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 285 (1943); see Olson, 292 U.S. at 255 (“The public may not by any means

conscate the benets, or be required to bear the burden, of the owner’s bargain.”); see, e.g., United States v. 15,478 Square Feet of Land (Balaji

Sai), No. 2:10-cv-00322, 2011 WL 2471586, at *6 (E.D. Va. June 20, 2011).

264 Olson, 292 U.S. at 257.

265 Fuller, 409 U.S. at 490.

266 United States v. Reynolds, 397 U.S. 14, 16 (1970).

267 United States v. Miller, 317 U.S. 369, 375 (1943); see also Fuller, 409 U.S. at 491. In developing the market value standard as the measure

of just compensation, the federal courts have employed terms such as value, market value, fair market value, and market value fairly determined

interchangeably; the adding of adjectives such as fair or cash to the term market value does not alter its meaning for federal acquisition

purposes. See Miller, 317 U.S. at 374 & nn.10-14 (citing cases).

Appraisers estimate

market value, not just

compensation. Departure

from the market value

standard is rarely justied

in federal acquisitions,

and inevitably requires

appropriate legal

instruction.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 101

the Fifth Amendment.

268

They include the analysis of highest and best use (Section 4.3) and

determination of the larger parcel (Section 4.3.3); acceptable approaches to value (Section

4.4); the treatment of government project inuence on market value (Section 4.5); partial

acquisitions and the before and after valuation method (Section 4.6.1), compensable damages

(4.6.2), osetting benets (4.6.3), and easement valuation issues (4.6.5); and the market rental

value standard for leasehold and other temporary acquisitions (Section 4.7). These renements

can lead to particularly complex valuation problems in acquisitions involving natural resources

(Section 4.8), inverse takings (Section 4.9), and land exchanges (Section 4.10).

4.2.5. Special Rules. Certain types of federal acquisitions raise unique compensation questions that

have led the courts to craft special valuation rules with limited applicability, which is discussed

in Section 4.11. The general principle that just compensation does not include value created

by the United States has specic implications in the appraisal of riparian lands involving the

United States’ navigational servitude (Section 4.11.1) and of ranch lands involving federal

grazing permits (Section 4.11.2). Similarly, the valuation of public roads, infrastructure, and

facilities sometimes requires special treatment to ensure that compensation will reect the

owner’s loss, not the government’s gain (Section 4.11.3).

4.2.6. Exceptions to Market Value Standard. These Standards direct appraisers to estimate a

property’s market value—not the just compensation due for a government acquisition

269

—

because appraisers do not have the authority to determine just compensation under the Fifth

Amendment.

270

Rarely, deviation from market value as the measure of just compensation

may be required in federal acquisitions, but “only ‘when market value has been too dicult

to nd, or when its application would result in manifest injustice to owner or public.’”

271

Such situations are highly unusual,

272

and moreover, inevitably require appropriate legal

instruction.

273

Whether departure from the established market value standard is appropriate

in a given set of facts is a legal question beyond the scope of an appraiser to determine.

274

4.3. Highest and Best Use. Market value must be determined by considering a property’s

highest and best use, a term of art dened by the Supreme Court in 1934 as the “highest and

most protable use for which the property is adaptable and needed or likely to be needed in

the reasonably near future.”

275

The Court went on to explain that a property’s highest and

best use must be considered “not necessarily as the measure of value, but to the full extent

268 See Powelson, 319 U.S. at 285; Bauman v. Ross, 167 U.S. 548, 574 (1897); Shoemaker v. United States, 147 U.S. 282 (1893); Kerr v. S. Park

Comm’rs, 117 U.S. 379 (1886).

269 See United States v. New River Collieries Co., 262 U.S. 341, 343-44 (1923); cf. United States v. 33.92356 Acres of Land (Piza-Blondet Trial Op.), No. 98-

1664, 2008 WL 2550586, at *1-*2, *6 (D.P.R. June 13, 2008) (distinguishing valuation evidence from determination of just compensation),

aff ’d, 585 F.3d 1 (1st Cir. 2009); cf. United States v. Foster, 131 F.2d 3, 6-7 (8th Cir. 1942).

270 See Monongahela Nav. Co. v. United States, 148 U.S. 312, 327-28 (1893).

271 United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 29 (1984) (quoting United States v. Commodities Trading Corp., 339 U.S. 121, 123

(1950), and Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 10 n.14 (1984)).

272 See Duncanville, 469 U.S. at 30 (“This case is not one in which an exception to the normal measure of just compensation is required because

fair market value is not ascertainable. Such cases, for the most part, involve properties that are seldom, if ever, sold in the open market.”).

273 See Monongahela, 148 U.S. at 327 (“what shall be the measure of compensation . . . . is a judicial . . . question”); see Rasmuson v. United States,

807 F.3d 1343, 1345 (Fed. Cir. 2015); United States v. 4.105 Acres of Land in Pleasanton, 68 F. Supp. 279, 292-93 (N.D. Cal. 1946).

274 See Kimball Laundry Co. v. United States, 338 U.S. 1, 4 (1949) (granting certiorari in case “rais[ing] novel and serious questions in determining

what is ‘just compensation’ under the Fifth Amendment” that “are not resolved by the familiar formulas available for the conventional

situations which gave occasion for their adoption”).

275 Olson v. United States, 292 U.S. 246, 255 (1934); see United States ex rel. Tenn. Valley Auth. v. 1.72 Acres of Land, 821 F.3d 742, 752 (6th Cir.

2016) (“a term of art” (citing Olson)).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards102

that the prospect of demand for such use aects the market value while the property is

privately held.”

276

4.3.1. Highest and Best Use Denition.

Denition of Highest and Best Use

The highest and most protable use for which the property is adaptable and needed or likely

to be needed in the reasonably near future.

A highest and best use must be reasonably probable. The determination of market value must

take into account all considerations that might fairly be brought forward and reasonably be given

substantial weight in bargaining between buyer and seller.

277

But the Supreme Court has stated:

“Elements aecting value that depend upon events or combinations of occurrences which, while

within the realm of possibility, are not fairly shown to be reasonably probable, should be excluded

from consideration.”

278

A signicant practical implication of this legal rule is that a specic highest and best use can only

be considered “if the use is likely to be reasonably probable ‘in the reasonably near future.’”

279

Accordingly, there must be proof of “present or future demand, the connecting link from

adaptability to value.”

280

Similarly, if a property could not legally

be used for residential development without rezoning or some

variance or permit, that use cannot be considered in determining

value unless there is “a reasonable probability that the property

would be rezoned or that a variance could have been obtained in

the near future.”

281

This requirement “ensures that the landowner

is put in as good a position as he would have occupied if his

property had not been taken, but that he does not prot” from a

government acquisition for public purposes.

282

The fact that a parcel’s highest and most protable use “can be made only in combination

with other lands does not necessarily exclude that use from consideration if the possibility of

combination is reasonably sucient to aect market value.”

283

But “there must be a reasonable

probability of the lands in question being combined with other tracts for that purpose in the

reasonably near future.”

284

4.3.2. Criteria for Analysis. As discussed in Section 1.5.2, in determining a property’s highest and

best use, each potential use must be analyzed using four criteria: (1) physical possibility, (2) legal

276 Olson, 292 U.S. at 255; cf. Kerr v. S. Park Comm’rs, 117 U.S. 379, 386 (1886) (“What would any one needing lands for residence, business, or

any other purpose have paid for them in cash?”).

277 Olson, 292 U.S. at 257; Rasmuson, 807 F.3d at 1346.

278 Olson, 292 U.S. at 257; see also United States v. 320 Acres of Land, 605 F.2d 762, 814-20 (5th Cir. 1979).

279 United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 7-8 (1st Cir. 2009) (quoting Olson, 292 U.S. at 255-56); accord TVA v. 1.72

Acres, 821 F.3d at 752-53.

280 St. Joe Paper Co. v. United States, 155 F.2d 93, 97 (5th Cir. 1946); accord TVA v. 1.72 Acres, 821 F.3d at 755-56; see Section 4.3.2.2 (Market Demand).

281 Piza-Blondet, 585 F.3d at 7-8; see Section 4.3.2.4 (Zoning and Permits).

282 TVA v. 1.72 Acres, 821 F.3d at 752-53 (citing Olson, 292 U.S. at 255, 257).

283 Olson, 292 U.S. at 256.

284 United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 275-76 (1943) (citing Olson, 292 U.S. at 255).

Criteria for Analysis

Each potential highest and best

use must be analyzed using four

criteria as stated in Section 1.5.2:

(1) Physical possibility,

(2) Legal permissibility,

(3) Financial feasibility, and

(4) Degree of protability.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 103

permissibility, (3) nancial feasibility and (4) degree of protability. Because most property is

adaptable to several uses, the highest and best use is the physically possible, legally permissible,

and nancially feasible use that results in the highest value.

285

4.3.2.1. All Possible Uses. As “economic demands normally result in an owner’s putting his land

to the most advantageous use[,]”

286

a property’s highest and best use is ordinarily its existing

use on the date of value.

287

Many courts describe this precept as a presumption in favor of a

property’s existing use;

288

others simply regard an existing use as “compelling evidence” of

highest and best use when a dierent proposed use is asserted.

289

Either rationale has the

same result: to assert a highest and best use other than a property’s existing use, there must be

evidence “that this [dierent] use is ‘reasonably probable’ and that the probability has a real

market value.”

290

Similarly, in litigation (such as condemnation proceedings), the party claiming

a property’s highest and best use is not the existing use bears the burden of proof.

291

Any presumption favoring the existing use does not preclude consideration of other uses in the

highest and best use analysis. In fact, any reasonably probable use should be considered to the

extent a property’s potential for such use aects its market value.

292

As the Fifth Circuit stated:

owners of property [may seek] to prove, if they can, that the actual use to which they are

putting it is not the highest and best use for the property as viewed by a potential purchaser.

[But where] there has been no such proof[, t]here is nothing more than speculation that…a

purchaser could be interested in buying the land [for another use].

293

Moreover, a potential future use, even if protable, is not necessarily the measure of the

property’s value: “Instead, it is to be considered to the extent the prospect of demand for the use

aects market value.”

294

285 See United States v. 69.1 Acres of Land (Sand Mountain), 942 F.2d 290, 292 (4th Cir. 1991); Section 1.6.

286 United States v. Buhler, 305 F.2d 319, 328 (5th Cir. 1962).

287 United States v. L.E. Cooke Co., 991 F.2d 336, 341 (6th Cir. 1993); United States v. 62.50 Acres of Land in Jefferson Par., 953 F.2d 886, 890 (5th

Cir. 1992); Sand Mountain, 942 F.2d at 292.

288 E.g., United States ex rel. Tenn. Valley Auth. v. 1.72 Acres of Land, 821 F.3d 742, 753 (6th Cir. 2016); L.E. Cooke, 991 F.2d at 341 (“In the

absence of proof to the contrary, the current use is presumed to be the best use.”); 62.50 Acres in Jefferson, 953 F.2d at 890 (“A landowner

can overcome this presumption only by showing a reasonable probability that the land is adaptable and needed for the potential use in the

near future.”); Sand Mountain, 942 F.2d at 292; United States v. 158.24 Acres of Land in Bee Cty., 515 F.2d 230, 233 (5th Cir. 1975).

289 E.g., Buhler, 305 F.2d at 328-29; see United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 177-79 (N.D.N.Y. 2010) (“A potential

use should be considered only to the extent that the prospect of demand for such use would have aected the price that a willing buyer

would have oered for the property just prior to the taking.”), aff ’d, 502 F. App’x 43, 45 (2d Cir. 2012).

290 United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 679-81 (E.D. Va. 2011); accord 62.50 Acres in Jefferson, 953 F.2d at 890;

United States v. 27.93 Acres of Land in Cumberland Cty., 924 F.2d 506, 512-14 (3d Cir. 1991).

291 E.g., TVA v. 1.72 Acres, 821 F.3d at 753-54, 756; United States v. 100.00 Acres of Land in Livingston Cty., 369 F. Supp. 195, 200 (W.D. Ky.

1973); United States v. 429.59 Acres of Land (Imperial Beach), 612 F.2d 459, 460, 461-62 (9th Cir. 1980); 62.50 Acres in Jefferson, 953 F.2d at

890; see United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 7-8 (1st Cir. 2009) (“If a claimed use is prohibited by zoning, the

property owner must show that it is reasonably probable that the relevant restrictions will be removed in the reasonably near future.”), a’g

2008 WL 2550586, at *7 (D.P.R. June 13, 2008) (“[E]vidence of a proposed use must be excluded if the landowner fails to demonstrate

reasonable probability that a permit would be issued for the proposed use.”).

292 Olson v. United States, 292 U.S. 246, 255 (1934); Sand Mountain, 942 F.2d at 292; United States v. 8.41 Acres of Land in Orange Cty., 680 F.2d

388, 394 (5th Cir. 1982).

293 Buhler, 305 F.2d at 329; see TVA v. 1.72 Acres, 821 F.3d at 754 (“[T]here must be demonstrated an actual protable use or a market demand

for the prospective use.”).

294 62.50 Acres in Jefferson, 953 F.2d at 890; accord Olson, 292 U.S. at 255.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards104

4.3.2.2. Market Demand. Any highest and best use requires a

showing of market demand. As the Supreme Court observed,

“most things…have a general demand which gives them a value

transferable from one owner to another…

[

]

his transferable

value has an external validity which makes it a fair measure” of just compensation.

295

Accordingly, “it is generally accepted that there must be demonstrated an actual protable use

or a market demand for the prospective use.”

296

To meet this standard, “objective evidence

substantiating [the appraiser’s] market demand analysis” is required.

297

“Value implies demand

and a buyer”—and each must be proven, never assumed.

298

Highest and best use cannot be predicated on demand created solely by the government

project for which the property is acquired; as the Supreme Court held, “[i]t is not fair that the

government be required to pay the enhanced price which its demand alone has created.”

299

illustrate, a property’s highest and best use cannot be commercial rock quarrying if there is no

likely market demand for gravel except in connection with the public highway project for which

the property is acquired.

300

Similarly, the government’s intended use of the property—such as a military bombing range,

national monument, or habitat conservation—cannot be considered unless there is competitive

demand for that use in the private market.

301

As the Ninth Circuit reasoned:

[

]

alues resulting from the urgency or uniqueness of the government’s need for the property

or from the uniqueness of the use to which the property will be put do not reect what a

willing buyer would pay to a willing seller . . . .

[

]

overnment projects may render property

valuable for a unique purpose. Value for such a purpose, if considered, would cause “the

market to be an unfair indication of value,” because there is no market apart from the

government’s demand.

302

The Sixth Circuit recently explored what must be shown “to prove the existence of a market

demand for something.”

303

To show market demand for a proposed use of hotel development,

examples of “objective evidence substantiating [a] market demand analysis” would include

proof of preliminary discussions with a prospective hotel chain, market studies showing sucient

295 Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949) (rejecting “such personal and variant standards as value to the particular owner

whose property has been taken” or “gain to the taker [which] may be wholly unrelated to the deprivation imposed upon the owner”).

296 TVA v. 1.72 Acres, 821 F.3d at 754 (quoting United States ex rel. Tenn. Valley Auth. v. An Easement & Right-of-Way (Hadley), 447 F.2d 1317,

1319 (6th Cir. 1971)).

297 TVA v. 1.72 Acres, 821 F.3d at 755; accord United States v. 341.45 Acres of Land in St. Louis Cty., 633 F.2d 108, 113 (8th Cir. 1980).

298 341.45 Acres in St. Louis, 633 F.2d at 113 (quoted in TVA v. 1.72 Acres, 821 F.3d at 755); see Olson, 292 U.S. at 256 (highest and most

protable use is to be considered “to the full extent that the prospect of demand for such use aects the market value while the property is

privately held”).

299 United States v. Cors, 337 U.S. 325, 333 (1949); accord United States v. 320 Acres of Land, 605 F.2d 762, 811 n.107 (5th Cir. 1979); United States

v. 46,672.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13, 15, 16 (10th Cir. 1975); J.A. Tobin Constr. Co. v. United States, 343 F.2d 422, 423

(10th Cir. 1965); United States v. 158.76 Acres of Land in Townshend, 298 F.2d 559, 560 (2d Cir. 1962).

300 J.A. Tobin, 343 F.2d 422.

301 United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 80-81 (1913); 320 Acres, 605 F.2d at 783 n.26, 811 n.107; 46,672.96 Acres

in Doña Ana, 521 F.2d at 15-16; United States v. 275.81 Acres of Land (Flight 93 Memorial), No. 09-233, 2014 WL 1248205, at *4 (W.D. Pa.

March 26, 2014) (compensation cannot reect change in value due to United States’ development of public Flight 93 National Memorial).

302 United States v. Weyerhaeuser Co., 538 F.2d 1363, 1366, 1367 (9th Cir. 1976) (internal citations omitted); accord 46,672.96 Acres in Doña Ana,

521 F.2d at 15-17; United States v. Whitehurst, 337 F.2d 765 (4th Cir. 1964).

303 TVA v. 1.72 Acres, 821 F.3d at 755 (citing 341.45 Acres in St. Louis, 633 F.2d 108).

Government demand

cannot support a highest

and best use.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 105

demand for a hotel, or market sales of land for hotel development

purposes.

304

With no such evidence presented, hotel development

was correctly excluded from consideration as the property’s highest

and best use.

305

4.3.2.3. Economic Use. For just compensation purposes, market value

must be based on a property’s highest and most protable use—that

is, an economic use.

306

The inquiry must be “what is the property

worth in the market . . . from its availability for valuable uses.”

307

And valuable uses are those which “the prospect of demand for

such use aects the market value while the property is privately

held.”

308

Because “[c]onsiderations that may not reasonably

be held to aect market value are excluded[,]”

309

noneconomic uses

cannot be considered in determining market value for federal

acquisitions.

310

Federal courts have also rejected valuations that

improperly fail to consider an economic use.

311

“The federal concept of market value is intimately related to

selling price on the market” in federal case law.

312

Indeed, the

Supreme Court has recognized that “the ‘market price’ becomes

so important a standard of reference” because it reects the value

“arrived at by the haggling of the market . . . .”

313

Accordingly,

in determining market value for just compensation purposes, a

use cannot be considered unless there is competitive demand for

that use in the private market.

314

This means that a use can be

considered as a highest and best use only if that use contributes

to the property’s actual market value—that is, to the amount for

304 TVA v. 1.72 Acres, 821 F.3d at 755.

305 Id. at 755-56.

306 See Olson v. United States, 292 U.S. 246, 255-56 (1934) (“highest and most protable use”); Monongahela Nav. Co v. United States, 148 U.S. 312,

328 (1893) (“The value of property, generally speaking, is determined by its productiveness,—the prots which its use brings to the owner.”).

307 Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403, 407-08 (1878) (“[C]ompensation to the owner is to be estimated by reference to the

uses for which the property is suitable, having regard to the existing business or wants of the community, or such as may be reasonable

expected in the immediate future.”); see Olson, 292 U.S. at 255-57 (“The highest and most protable use . . . is to be considered, not

necessarily as the measure of value, but to the full extent that the prospect of demand for such use aects the market value while the

property is privately held.”).

308 Olson, 292 U.S. at 255 (citing Boom Co., 98 U.S. at 408 (“In determining the value of land appropriated for public purposes, the same

considerations are to be regarded as in a sale of property between private parties.”)).

309 Olson, 292 U.S. at 256 (emphasis added), quoted in United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 29 (1984).

310 See, e.g., United States v. 46,672.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13, 17 (10th Cir. 1975); United States v. 1.57 Acres of Land

in San Diego Cty., No. 12cv3055, 2015 WL 5254558 (S.D. Cal. Sept. 9, 2015) (excluding from consideration all evidence not “relating to

market value” in valuation of conservation easement); see also United States v. 275.81 Acres of Land (Flight 93 Memorial), No. 09-233, 2014

WL 1248205, at *4 (W.D. Pa. March 26, 2014); United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 679-81 (E.D. Va. 2011)

(excluding all evidence of proposed highest and best use not shown to be nancially feasible).

311 See, e.g., Desert Citizens Against Pollution v. Bisson, 231 F.3d 1172, 1185 (9th Cir. 2000).

312 United States v. Sowards, 370 F.2d 87, 89 (10th Cir. 1966).

313 Kimball Laundry Co. v. United States, 338 U.S. 1, 6 (1949).

314 United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 80-81 (1913); United States v. 320 Acres of Land, 605 F.2d 762, 783 n.26, 811

n.107 (5th Cir. 1979); United States v. Weyerhaeuser Co., 538 F.2d 1363, 1366, 1367 (9th Cir. 1976); 46,672.96 Acres in Doña Ana, 521 F.2d at

15-16; United States v. Whitehurst, 337 F.2d 765 (4th Cir. 1964); Flight 93 Memorial, 2014 WL 1248205, at *4; see, e.g., 1.57 Acres in San Diego,

2015 WL 5254558, at *3 (evidence unrelated to market value cannot be considered in determining whether conservation easement had

“signicant private market value”).

Market Value and

Economic Use

“Value is a word of many

meanings”—but “the value

compensable under the Fifth

Amendment … is only that

which is capable of transfer from

owner to owner and thus of

exchange for some equivalent.”

Kimball Laundry Co. v. United

States, 338 U.S. 1, 4-5 (1949).

Thus market value, as the

measure of just compensation,

cannot reect nonmarket or

noneconomic considerations.

The federal concept of market

value is fundamentally dierent

from the real estate appraisal

concept of public interest value,

which links highest and best

use to noneconomic uses and

public policy benets rather

than market considerations.

Because noneconomic uses

reect something other than

market value, appraisals for

federal acquisitions cannot

consider public interest

value or related concepts

(such as habitat value or

preservation value).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards106

which the property would sell in the open competitive market.

315

As to what constitutes an open

competitive market, the Supreme Court held that where prices are “controlled by the supply and

demand[, t]hese facts indicate a free market.”

316

Federal courts consistently reject alternative measures of compensation that reect something

other than market value based on an economic use indicated by supply and demand in the open,

competitive market.

317

Uses based on preservation, conservation or open space, among other priorities,

typically lack the competitive supply and demand necessary to indicate a free market and therefore

cannot be considered in determining market value for federal acquisitions.

318

As the Supreme

Court has held for over a century: “That [a] property may have to the public a greater value than

its fair market value aords no just criterion for estimating what the owner should receive.”

319

The Supreme Court bluntly rejected the addition of nonmarket, noneconomic considerations

to market value in City of New York v. Sage, in which land commissioners improperly awarded

compensation “over and above the market value” of the property acquired due to “what they

thought a fair proportion of the increase” for its availability and adaptability for a public reservoir.

320

Upon that point . . . they were wrong . . . .

[

]

hat the owner is entitled to is the value of the

property taken, and that means what it fairly may be believed that a purchaser in fair market

conditions would have given for it in fact,—not what a tribunal at a later date may think a

purchaser would have been wise to give . . . . Any rise in value before the taking, not caused

by the expectation of that event, is to be allowed, but we repeat, it must be a rise in what a

purchaser might be expected to give.

321

315 See, e.g., 46,672.96 Acres in Doña Ana, 521 F.2d at 17 (“[T]he land had little, if any, market value. . . . The fact that [the property] has very

little value cannot justify . . . using an inapplicable measure, namely, its highest and best use being a missile range.”). A related issue is that

sales to government entities and certain other transactions frequently involve noneconomic or nonmarket considerations. As discussed in

Section 4.4.2.4, such sales cannot be used without “great caution” because they are “an inaccurate indicator of market value.” Id. at 17. See

Section 1.5.2.4 and the appendix regarding the extraordinary verication and treatment necessary to rely on such sales.

316 United States v. New River Collieries Co., 262 U.S. 341, 345 (1923); see also L. Vogelstein & Co. v. United States, 262 U.S. 337, 338 (1923)

(“market price as xed by supply and demand and other elements in normal trading”) (decided the same day as New River); Desert Citizens,

231 F.3d at 1185 (“A regional market and the presence of competitors sponsoring similar projects made reasonably probable . . . that use of

the lands for landll purposes was nancially feasible [and should have been considered as a potential highest and best use].”).

317 See, e.g., New River, 262 U.S. at 345 (refusing to depart from market value standard where prices “were controlled by the supply and demand.

These facts indicate a free market”).

318 Cf. United States v. 15.00 Acres of Land in Miss. Cty., 468 F. Supp. 310, 314-16 & n.9 (E.D. Ark. 1979) (“The court is not unmindful of the

special signicance of this land to the [landowners], their families, friends and associates. And, while the court is sympathetic to the unique

problems posed by the increasing demand for the limited natural resources involved in this case, the court must resolve the issues herein on

the same basis as a jury, without regard to sympathy or prejudice or like or dislike of any party to this suit. . . . [W]hile the value of the . . .

tract for duck hunting purposes is conceded, it does not follow that the [landowners] are to be compensated on the basis of that particular

value . . . .”); ApprAisAl insTuTuTe, The ApprAisAl oF reAl esTATe 331 (14th ed. 2013) (“[H]ighest and best use . . . is an economic

concept”); id. 334 (“[C]onservation and preservation are not uses of land. Rather, they are the motivations of individuals or groups for

acquiring certain properties.”).

As discussed in Section 4.4.2.4, sales of properties for conservation or similar purposes may also reect project inuence from the

government project, which must be disregarded. As a result, such sales cannot be relied on as comparable sales without great caution.

319 Chandler-Dunbar, 229 U.S. at 80.

320 239 U.S. 57, 61 (1915).

321 Id. at 61; accord Five Tracts of Land in Cumberland Twp. v. United States, 101 F. 661, 664-65 (3d Cir. 1900) (“There is no doubt that historic association

may enter into the market value of the land, but you are not to give, as separate items- First, market value; and, second, historic value.”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 107

Whether a specic use is economic and therefore appropriate to consider depends on the market,

not the use itself.

322

For example, in a market in which real estate developers are required to

acquire and set aside suitable land to mitigate the impacts of and obtain approvals for real

estate development projects, competitive demand in the private market could make mitigation

an economic use.

323

But in a market lacking private competitive demand—due to insucient

development activity, absence of mitigation requirements, excess supply of suitable mitigation

land, or other reasons—mitigation would not be an economic use.

324

A recent example can be

found in a condemnation involving an existing conservation easement.

325

Recognizing “private

market value” as the measure of compensation for the easement, the district court excluded all

evidence not “relating to market value” from consideration, as “[c]onsiderations that may not

reasonably be held to aect market value are excluded.”

326

Thus, under federal law, whether

mitigation or a similar use is economic (and therefore appropriate to consider) in a given

valuation assignment cannot be assumed, but rather must be demonstrated on the specic facts

of the property being appraised and the relevant market.

327

4.3.2.4. Zoning and Permits. A proposed highest and best use cannot be considered reasonably

probable unless it is legally permissible.

328

Zoning regulations, permits, and other land use

restrictions are therefore of critical importance in analyzing highest and best use because they

restrict the uses to which property can lawfully be devoted.

329

Indeed, “regulatory restrictions

may preclude an otherwise possible use even more decisively than the inherent physical

characteristics of a property.”

330

And “it is clear that just compensation must be determined in

322 Compare United States v. Whitehurst, 337 F.2d 765, 775 (4th Cir. 1964) (rejecting valuation based on use of gravel quarrying because “under the facts

of this case, . . . extensive use to supply . . . sand and gravel demand is merely a gment of the imagination”), with United States v. 237,500 Acres

of Land, 236 F. Supp. 44, 53 (S.D. Cal. 1964), a’d sub nom. United States v. Am. Pumice Co., 404 F.2d 336 (9th Cir. 1968) (allowing valuation based

on use of pumice mining because “in this case, there was not only a prior market, but an existing and rising one on the date of taking, and the

[landowners] were in active operation of the pumice mines”).

323 E.g., Otay Mesa Property, L.P. v. United States, 110 Fed. Cl. 732, 734 n.1 (2013) (Otay Mesa II), a’d in relevant part, 779 F.3d 1315 (Fed. Cir. 2015)

(Otay Mesa III); see Olson v. United States, 292 U.S. 246, 256 (1934) (“[P]ublic service corporations and others having that power [of eminent

domain] frequently are actual or potential competitors [for property]. And, to the extent that probable demand by prospective purchasers or

condemnors aects market value, it is to be taken into account.”); see also Sage, 239 U.S. at 61 (“Any rise in value before the taking, not caused by

the expectation of that event, is to be allowed, but we repeat, it must be a rise in what a purchaser might be expected to give.”).

324 See United States v.15.00 Acres of Land in Miss. Cty., 468 F. Supp. 310, 315 n.9, 316 (E.D. Ark. 1979) (Despite “special signicance of this land to

the [landowners and others, and] increasing demand for the limited natural resources[, . . . ] it does not follow that the [landowners] are to

be compensated on the basis of that particular value[;]” rather, “all factors should be considered which would inuence a person of ordinary

prudence desiring to purchase the property involved.”); see also United States v. 46,572.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13, 16 (10th Cir.

1975) (“In our case there is absolutely no evidence that anyone other than the government could or would use the land for a missile range.”);

Olson v. United States, 67 F.2d 24, 30 (8th Cir. 1933), aff ’d, 292 U.S. 246 (1934) (“In using this dened standard [of market value] no account is

given to values or necessities peculiar to the seller, or the buyer, but only such matters as would aect the ordinary seller and buyer in negotiating

a fair price.”); cf. Chandler-Dunbar, 229 U.S. at 80 (“no just criterion for estimating what the owner should receive”); Sage, 239 U.S. at 62 (rejecting

compensation award reecting not only market value but also “additional value gained by the [government’s acquisition that a commission felt]

should be taken into account and shared between the [government] and the owner of the land,—a proposition to which we cannot assent”).

325 United States v. 1.57 Acres of Land in San Diego Cty., No. 12-cv-3055, 2015 WL 5254558 (S.D. Cal. Sept. 9, 2015).

326 Id. at *2-3 (quoting United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 29 (1984). Similarly, in a condemnation of land being used as

a park, the Eighth Circuit found no “justication for a departure from the concept of market value as the standard of just compensation”

and ordered a new trial in which “market value is not [to be] abandoned as the ultimate test . . . .” United States v. S.D. Game, Fish & Parks

Dep’t, 329 F.2d 665, 666-69 (8th Cir. 1964) (citing, inter alia, Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949); Olson, 292 U.S. at 254;

Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403, 408 (1878); and L. Vogelstein & Co. v. United States, 262 U.S. 337, 340 (1923)).

327 1.57 Acres in San Diego, 2015 WL 5254558. Note that even if mitigation is an economic use appropriate for consideration in a given

assignment, the price of mitigation credits does not equate to the value of property suitable for mitigation use.

328 See United States v. 480.00 Acres of Land (Fornatora), 557 F.3d 1297, 1312 (11th Cir. 2009); United States v. 429.59 Acres of Land (Imperial

Beach), 612 F.2d 459, 462 (9th Cir. 1980); United States v. 320 Acres of Land, 605 F.2d 762, 818 & n.128 (5th Cir. 1979); see also Olson, 292

U.S. at 256-57 (“physical adaptability alone cannot be deemed to aect market value”).

329 See, e.g., United States ex rel. Tenn. Valley Auth. v. 1.72 Acres of Land, 821 F.3d 742, 753-54 (6th Cir. 2016); United States v. 33.92356 Acres of Land (Piza-

Blondet), 585 F.3d 1, 7-9 (1st Cir. 2009); Fornatora, 557 F.3d 1297, 1313; Imperial Beach, 612 F.2d at 462; 320 Acres, 605 F.2d at 818.

330 320 Acres, 605 F.2d at 818.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards108

light of such regulatory restrictions.”

331

As a result, any zoning or other use restrictions that are

applied to the property and its proposed use on the date of valuation must be considered.

332

Under federal law, a “use is not possible and probable if it is prohibited by a zoning regulation

that is not likely to change.”

333

For any use that requires a permit, license, or rezoning, “it must

be shown that there is a reasonable probability that such permit or license will be issued or that a

re-zoning will occur to make the use legal.”

334

Of course, zoning regulations may change, and prospective purchasers may well consider the

potential for a zoning change or variance when determining the price they would pay for the

property.

335

Thus, if there was “a reasonable probability that the property would be rezoned

or that a variance could have been obtained in the near future[,]” this probability should be

considered in arriving at the value estimate

336

—but only to the extent that this probability

would have affected the price a willing buyer would have paid for the property at the time of the

government’s acquisition.

337

It is legally improper to assume that a permit, license, or rezoning

would be obtained.

338

Rather, the appraiser’s opinion as to whether there is a reasonable

probability of a zoning change must have a factual foundation; an unsupported statement that a

zoning change is reasonably probable is insucient.

339

To demonstrate a reasonable probability

of rezoning or obtaining a variance requires concrete factual support; examples of such support

might include, as the First Circuit recently suggested, instances of similar properties receiving

similar variances, permits being granted to develop the subject property for the proposed use

(not merely pending applications), or actual development of the proposed use on similarly zoned

properties.

340

The test is not the probability (or possibility) of rezoning in absolute terms, but

rather the market value of the property “in the light of the chances as they would appear to the

hypothetical willing buyer and seller.”

341

331 Id. at 818 & n.128 (citing United States v. Commodities Trading Corp., 339 U.S. 121 (1950)); United States v. 765.56 Acres of Land in Southampton

(765.56 Acres I), 164 F. Supp. 942, 947 (E.D.N.Y. 1958) (“of course it is necessary . . . to consider the possibility and probability of the future

use of this land . . . and the appropriate zoning for such use”), aff ’d sub nom. United States v. Glanat Realty Corp., 276 F.2d 264 (2d Cir. 1960).

332 TVA v. 1.72 Acres, 821 F.3d at 753-54; Piza-Blondet, 585 F.3d at 7-9; United States v. 27.93 Acres of Land in Cumberland Cty., 924 F.2d 506,

512-14 (3d Cir. 1991); United States v. 174.12 Acres of Land in Pierce Cty., 671 F.2d 313, 315-16 (9th Cir. 1982); 320 Acres, 605 F.2d 762, 818;

United States v. Eden Mem’l Park Ass’n, 350 F.2d 933, 936 (9th Cir. 1965); H & R Corp. v. District of Columbia, 351 F.2d 740, 742-43 (D.C. Cir.

1965); Rapid Transit Co. v. United States, 295 F.2d 465, 466-67 (10th Cir. 1961); United States v. Meadow Brook Club, 259 F.2d 41, 45 (2d Cir.

1958); see, e.g., Wash. Metro. Area Transit Auth. v. One Parcel of Land (Old Georgetown), 691 F.2d 702, 703-04 (4th Cir. 1982).

333 Fornatora, 557 F.3d at 1312; see Piza-Blondet, 585 F.3d at 7-8 (use can only be considered if it is “likely to be reasonably probable ‘in the

reasonably near future,’” quoting Olson, 292 U.S. at 255-56)); 320 Acres, 605 F.2d at 818 & n.129 (“if existing zoning restrictions preclude a

more protable use, ordinarily such use should not be considered in the evaluation”); Meadow Brook, 259 F.2d at 45.

334 Fornatora, 557 F.3d at 1300.

335 E.g., 320 Acres, 605 F.2d at 818-19 & nn.128-29; see Piza-Blondet, 585 F.3d at 7-8.

336 Piza-Blondet, 585 F.3d at 7-8; see 320 Acres, 605 F.2d at 818-19.

337 Olson, 292 U.S. at 255, 256; Virgin Islands v. 2.7420 Acres of Land, 411 F.2d 785, 786 (3d Cir. 1969); Wolff v. Puerto Rico, 341 F.2d 945, 946

n.3 (1st Cir. 1965); Meadow Brook, 259 F.2d at 45; H & R Corp., 351 F.2d at 743.

338 E.g., United States ex rel. Tenn. Valley Auth. v. 1.72 Acres of Land, 821 F.3d 742, 753-54 (6th Cir. 2016); Piza-Blondet, 585 F.3d at 8; see United

States v. 62.50 Acres of Land in Jefferson Par., 953 F.2d 886, 888-93 (5th Cir. 1992); see also H & R Corp., 351 F.2d at 742-43 (“[A] witness’

bare assertion that zoning change was probable [does not allow the probability of a change in zoning to be considered]. His opinion must

have some foundation in fact.”).

339 320 Acres, 605 F.2d at 819 & n.130; H & R Corp., 351 F.2d at 742-43.

340 See Piza-Blondet, 585 F.3d at 8 (excluding appraiser’s opinion that “failed to document a single instance in which the Board has ever, or is

likely to, approve residential housing developments” on land with same zoning as the subject property); accord United States ex rel. Tenn. Valley

Auth. v. 1.72 Acres of Land, 821 F.3d 742, 754 (6th Cir. 2016).

341 Wolff, 341 F.2d at 946 n.3; see United States v. 62.50 Acres of Land in Jefferson Par., 953 F.2d 886, 890 (5th Cir. 1992) (“If regulatory

contingencies mean that a buyer would consider the use insignicant in deciding how much to pay for the property, the use does not

contribute to the property’s market value.”); United States v. 8,968.06 Acres of Land in Chambers & Liberty Ctys., 326 F. Supp. 546, 548 (S.D.

Tex. 1971) (requiring proponent of prospective use requiring permit to “demonstrate that a willing buyer and seller would have regarded the

issuance of the permit as reasonably probable”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 109

These principles apply with equal force to regulations that preclude a particular use unless

permits are issued by regulating authorities.

342

As held in a case recently armed by the Eleventh

Circuit, the issue is whether there is a reasonable probability that permits for the proposed use

would have been granted: if so, the market value “would be based on the property value as if

it had obtained the necessary permits”—while if not, the value “would be based on conditions

at the time” of the acquisition.

343

As with the possibility of rezoning, a reasonable possibility of

obtaining necessary permits must be demonstrated with concrete factual support. The fact that

the parcels under appraisal “are adjacent and proximate to established and permitted [uses] is

not, without more, determinative.”

344

Permitting issues often arise in connection with a proposed

use of wetlands, which require permits to discharge dredged or ll material under the Clean

Water Act as administered by the U.S. Army Corps of Engineers.

345

Such uses of wetlands may

require not only federal but also state and/or municipal permits.

346

Other frequently encountered

permits are discussed in Section 1.3.1.3.

4.3.2.4.1. Exceptions. A narrow exception to the general rule that

zoning and other land use regulations must be considered in

determining a property’s highest and best use may arise under

the scope of the project rule.

347

As discussed in Section 4.5,

the scope of the project rule ensures that compensation does

not reect changes in market value due to the inuence of

the government project prompting the acquisition. In most valuation assignments, zoning

and other land use restrictions are not a form of project influence—they are simply “the legal

framework of land use restrictions to which virtually all private real estate is subject,” and so

they must be considered regardless of whether the scope of the project rule applies.

348

However, in limited circumstances—and only with appropriate legal instructions—application

of the scope of the project rule may allow or require the appraiser to disregard the impact of

a zoning restriction on a piece of property.

349

The Eleventh Circuit recently stated this narrow

exception as follows:

[

]

n order to have a zoning restriction excluded from a calculation of a property’s value, a

landowner must show that the primary purpose of the regulation was to depress the property

342 See, e.g., United States v. 381.76 Acres of Land (Montego Group), No. 96-1813-CV, 2010 WL 3734003, at *3-5 (S.D. Fla. Aug. 3, 2010), adopted

sub nom. United States v. 10.00 Acres of Land, No. 99-0672-CIV, 2010 WL 3733994 (S.D. Fla. Sept. 22, 2010), aff ’d sub nom. United States

v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (per curiam); 62.50 Acres in Jefferson, 953 F.2d at 890-93; 8,968.06 Acres in Chambers, 326 F.

Supp. at 548.

343 Montego Group, 2010 WL 3734003, at *4.

344 Id.; see also 320 Acres, 605 F.2d at 819 n.130 (“[A] party obviously cannot . . . simply . . . assert[ ] that a particular use is reasonably practicable

and reasonably probable, or that there is a reasonable possibility of obtaining a permit; . . . there must be some foundation in fact.”).

345 Section 301(a) of the Clean Water Act prohibits the discharge of pollutants into the nation’s water, except for discharges made in compliance

with other sections of the Act, including Section 404. Pursuant to Section 404, the U.S. Army Corps of Engineers administers a permit

program for the discharge of dredged or ll material (“pollutants” under the Act) into navigable waters, including wetlands. The Clean

Water Act is codied at 33 U.S.C. § 1251 et seq. See 33 C.F.R. § 323.2 (implementing regulations).

346 See generally Montego Group, 2010 WL 3734003.

347 United States v. 480.00 Acres of Land (Fornatora), 557 F.3d 1297, 1307 (11th Cir. 2009).

348 320 Acres, 605 F.2d at 818 (“[I]t is clear that just compensation must be determined in light of such regulatory restrictions.”); see id. at 818

n.128 (citing cases, including United States v. Commodities Trading Corp., 339 U.S. 121 (1950) (wartime price controls); United States v. Eden

Mem’l Park Ass’n, 350 F.2d 933, 936 (9th Cir. 1965); Fairfield Gardens, Inc. v. United States, 306 F.2d 167, 170 (9th Cir. 1962); United States v.

Delano Park Homes, Inc., 146 F.2d 473, 474 (2d Cir. 1944)); see also Fornatora, 557 F.3d at 1311.

349 Fornatora, 557 F.3d at 1307; 320 Acres, 605 F.2d at 820 n.131.

Whether the scope of the

project rule applies and

if so, how to apply it, are

complex questions that

require legal instruction.

See Section 4.5.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards110

value of land or that the ordinance was enacted with the specific intent of depressing property

value for the purpose of later condemnation.

350

Federal case law makes clear that this narrow test is not satised simply because the government

advocated for or against a local zoning decision. Thus, the Second Circuit held it was improper

to consider an improbable prospective rezoning (and therefore a more protable use) even

though the government’s opposition was the primary obstacle to rezoning: “Clearly the United

States, like any adjoining landowner, was a proper party to resist zoning.”

351

The Second Circuit’s

reasoning has been widely adopted by federal courts, most recently by the Eleventh Circuit.

352

4.3.3. Larger Parcel. In adopting “working rules in order to do substantial justice[,]” the Supreme

Court established that “a parcel of land which has been used and treated as an entity shall be so

considered in assessing compensation for the taking of part or all of it.”

353

That “parcel of land,”

reecting the whole property to be considered for compensation purposes, is called the larger

parcel. It is the economic unit to be valued.

354

Under federal law, the larger parcel is the tract or

tracts of land that possess a unity of ownership and have the same, or an integrated, highest and

best use.

355

Denition of Larger Parcel

The tract or tracts of land that possess a unity of ownership and have the same, or an

integrated, highest and best use.

The larger parcel may or may not have the same boundaries

as the government’s acquisition.

356

As a result, the appraiser

must determine the larger parcel in every appraisal for federal

acquisition purposes. This determination will distinguish whether a

total or partial acquisition is involved, and therefore will dictate the

valuation method to be used.

357

In a total acquisition, the United

States acquires an entire larger parcel, and compensation is measured by the market value of the

350 Fornatora, 557 F.3d at 1311 (emphases added); accord United States v. Land & Cris Realms Inc., 213 F.3d 830, 834-36 (5th Cir. 2000); United

States v. 27.93 Acres of Land in Cumberland Cty., 924 F.2d 506 (3d Cir. 1991); United States v. Meadow Brook Club, 259 F.2d 41 (2d Cir. 1958);

see also 320 Acres, 605 F.2d at 820 n.131.

351 Meadow Brook, 259 F.2d at 45; accord Fornatora, 557 F.3d at 1311; see also Cris Realms, 213 F.3d at 836.

352 See, e.g., Fornatora, 557 F.3d at 1311; Cris Realms, 213 F.3d at 834-36; 27.93 Acres in Cumberland, 924 F.2d at 511.

353 United States v. Miller, 317 U.S. 369, 375-76 (1943); see Sharp v. United States, 191 U.S. 341, 354-55 (1903), aff ’g Sharpe v. United States, 112 F.

893 (3d Cir. 1902).

354 See United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139, 147-48 & n.15 (3d Cir. 2005); United States v. 0.21 Acres of Land, 803

F.2d 620, 623-24 (11th Cir. 1986); United States v. 429.59 Acres of Land (Imperial Beach), 612 F.2d 459, 461 (9th Cir. 1980); United States v.

Buhler, 254 F.2d 876, 882 & n.10 (5th Cir. 1958); United States v. Waymire, 202 F.2d 550, 554-55 (10th Cir. 1953).

355 See Miller, 317 U.S. at 375-76; Sharp, 191 U.S. at 351-56; United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 10 (1st Cir.

2009); United States v. 8.41 Acres of Land in Orange Cty., 680 F.2d 388, 392-93 & n.6 (5th Cir. 1982); Imperial Beach, 612 F.2d at 464-65; Bank

of Edenton v. United States, 152 F.2d 251, 253 (4th Cir. 1945); United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 179-81

(N.D.N.Y. 2010), a’d, 502 F. App’x 43, 45-46 (2d Cir. 2012); cf. Gettysburg Tower, 409 F.3d at 148 & n.15, and on remand, No. 1:CV-99-2128,

2006 WL 839375 (M.D. Pa. March 27, 2006).

356 See United States v. Grizzard, 219 U.S. 180, 181-85 (1911). As discussed in Section 1.4.6, if the appraiser determines the boundaries of

the larger parcel are dierent than those of the specic parcel initially identied for appraisal, the appraisal assignment may need to be

modied. Cf. eATon, supra note 16, at 89-90 (“Appraisers, whether they are retained by the condemnor or the condemnee, have a tendency

to estimate the value of the parcel shown on the condemnor’s right-of-way map, often without adequately analyzing the larger parcel.” (emphasis

added)).

357 See Miller, 317 U.S. at 375-76; Piza-Blondet, 585 F.3d at 10; see, e.g., Winn v. United States, 272 F.2d 282 (9th Cir. 1959); see generally eATon,

supra note 16, at 88-92 (stating “appraisers must make a determination of the larger parcel in all cases” and rejecting “myth that the larger

parcel determination is only important in damage and/or benet cases”).

A total acquisition is

an acquisition of an

entire larger parcel. A

partial acquisition is an

acquisition of only part of

a larger parcel.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 111

property acquired. In a partial acquisition, the United States acquires only part of a larger parcel,

and compensation is measured by the dierence between the market value of the larger parcel

before the government’s acquisition and the market value of the remainder after the government’s

acquisition.

358

A single acquisition for government purposes may involve more than one larger

parcel (or parts of more than one larger parcel) for compensation and valuation purposes.

359

The larger parcel determination is integral to the analysis of highest and best use.

360

It is fact-

specic and rarely simple, but it is necessary for purposes of just compensation. As the Supreme

Court explained:

It is often dicult . . . to determine what is a distinct and independent tract; but the character of

the holding, and the distinction between the residue of a tract whose integrity is destroyed by the

taking, and what are merely other parcels or holdings of the same owner, must be kept in mind

in the practical application of the requirement to render just compensation for property taken

for public uses. How it is applied must largely depend upon the facts of the particular case . . . .

361

4.3.4. Criteria for Analysis. In determining the larger parcel, federal courts consider unity of use,

unity of ownership (title), and physical unity (proximity or contiguity) as it relates to highest

and best use—factors historically called the three unities.

362

Because this analysis typically involves questions of law as well as

fact, appropriate legal instructions are often required.

363

4.3.4.1. Unity of Use. The key question in determining the larger

parcel is whether parcels have an integrated use.

364

To meet the

unity of use test in federal acquisitions, the lands in question

must have the same or an integrated highest and best use.

365

Lands with dissimilar uses are not part of the same larger

parcel, and must be considered as separate and distinct tracts for

compensation and valuation purposes.

366

358 The before and after method of valuation and other issues specic to partial acquisitions are discussed in depth in Section 4.6.

359 See, e.g., Gettysburg Tower, 409 F.3d at 148 & n.15; United States v. 6.24 Acres of Land (Weber), 99 F.3d 1140, 1996 WL 607162 (6th Cir. 1996)

(per curiam) (unpubl.). The unit rule (Section 4.2.2) would not prohibit a well-supported determination that an acquisition encompasses more

than one larger parcel. As reasoned in Weber, considering a property’s distinct features and then arriving at a value for the land as a whole

does “not violate the spirit nor the application of the unit rule as employed by the courts.” Weber, 1996 WL 607162 at *4.

360 See, e.g., Piza-Blondet, 585 F.3d at 3-4, 10; 8.41 Acres in Orange, 680 F.2d at 390-91 & n.1 (“[Y]ou must rst determine the fair cash market

value, immediately before the taking, of the entire tract of land of which the portion taken was a part, in the light of the highest and best

use at the time of the entire tract as a single unit. You must next determine the fair cash market value, immediately after the taking, of the

remainder of the tract not taken, bearing in mind that the highest and best use of the remainder after the taking may not be the same as the

highest and best use of the entire tract before the taking.”).

361 Sharp v. United States, 191 U.S. 341, 354 (1903) (quoting and arming Sharpe v. United States, 112 F. 893, 896 (1902)).

362 See, e.g., 8.41 Acres in Orange, 680 F.2d at 390-91, 394-95.

363 See, e.g., Sharp, 191 U.S. at 354; Gettysburg Tower, 409 F.3d at 148 & n.15; United States v. 429.59 Acres of Land (Imperial Beach), 612 F.2d

459, 463-64 (9th Cir. 1980) (approving instruction “to value the property as a unit” because “it was ‘reasonably probable that the properties

would be used in combination’”); 8.41 Acres in Orange, 680 F.2d at 393.

364 Piza-Blondet, 585 F.3d at 10 (quoting Baetjer v. United States, 143 F.2d 391, 394-95 (1st Cir. 1944)); 8.41 Acres in Orange, 680 F.2d at 393; United States

v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 179 (N.D.N.Y. 2010), aff ’d, 502 F. App’x 43, 45 (2d Cir. 2012); see Wash. Metro. Area Transit

Auth. v. One Parcel of Land (Old Georgetown), 691 F.2d 702, 704-05 (4th Cir. 1982); Imperial Beach, 612 F.2d at 463-64; cf. United States v. 105.40 Acres of

Land in Porter Cty., 471 F.2d 207, 211-12 (7th Cir. 1972); United States v. Evans, 380 F.2d 761, 763-64 (10th Cir. 1967).

365 Old Georgetown, 691 F.2d 702, 704-05 (4th Cir. 1982); United States v. 158.24 Acres of Land in Bee Cty., 515 F.2d 230, 232 (5th Cir. 1975);

United States v. Wateree Power Co., 220 F.2d 226, 231-32 (4th Cir. 1955); Baetjer, 143 F.2d 391.

366 See, e.g., Piza-Blondet, 585 F.3d at 4-5, 9-10; Winn v. United States, 272 F.2d 282, 286-87 (9th Cir. 1959).

Determination of the

larger parcel is necessary

in both total and partial

acquisitions.

Partial acquisitions (Section

4.6) require two larger

parcel determinations.

The larger parcel before

acquisition is also called the

parent tract, and the larger

parcel after acquisition is

the remainder.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards112

As with any other aspect of the highest and best use analysis, actual use is compelling evidence

of highest and best use.

367

An integrated use that is merely planned or hoped for is not sucient

to meet the unity of use test.

368

In determining the larger parcel, a potential use “may be

weighed only if there is a ‘reasonable probability’ the lands in question will be put to that use

in the reasonably near future.”

369

Even then, “potential use is only one factor to consider in

determination of the ‘unity’ issue, along with unity of ownership, contiguity, and existing use.”

370

The federal unity of use test turns on an integrated highest and best use. But some courts have

invoked a dierent unity of use test (rarely applicable in federal acquisitions) to determine whether

to allow separate valuations of property taken and of damage to property not taken

371

—loosely,

and misleadingly, called severance damage.

372

This taking plus damages compensation formula,

also known as the State Rule, is generally improper in federal acquisitions regardless of unity

of use.

373

Still, based on the State Rule measure of compensation, courts have required proof

of actual unitary use with the part taken to allow consideration of separately calculated severance

damage to a landowner’s other property.

374

The actual unitary use test reects the requirement that

compensation cannot be charged for damage to separate and independent parcels belonging to the

same owner as the property taken.

375

Under the Federal Rule, compensation in partial acquisitions

is measured by the dierence in the market value of the landowner’s property before and after the

government’s acquisition, as discussed in Section 4.6. Using this federal measure, “there is no

occasion for the making of any special award or determination of ‘severance damage,’ because the

matter is included in the nding of what the remainder of the land was worth immediately after

the taking.”

376

For this reason, severance damage “concepts have no application” to acquisitions

367 See, e.g., United States v. 50.50 Acres of Land, 931 F.2d 1349, 1359 (9th Cir. 1991); United States v. 33.92356 Acres (Piza-Blondet Trial Op.), No.

98-1664, 2008 WL 2550586 (D.P.R. June 13, 2008), aff ’d, Piza-Blondet, 585 F.3d 1.

368 8.41 Acres in Orange, 680 F.2d at 394 n.8 (citing United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266 (1943)); United States v. Mattox,

375 F.2d 461, 463-64 (4th Cir. 1967) (“there must exist a reasonable probability that the separate tracts would have been combined for such

integrated use”); Cole Inv. Co. v. United States, 258 F.2d 203, 205 (9th Cir. 1958) (nding no unity of use where evidence “would only show a

planned unity of use”); cf. Powelson, 319 U.S. at 284 (“the possibility or probability of [a future] action, so far as it aects present values, is a

proper subject for consideration in valuing property for purposes of a condemnation award” (emphasis added)).

369 E.g., Piza-Blondet Trial Op., 2008 WL 2550586; 8.41 Acres in Orange, 680 F.2d at 394 n.8 (citing Powelson, 319 U.S. 266); Imperial Beach, 612

F.2d at 463-64.

370 8.41 Acres in Orange, 680 F.2d at 394 n.8.

371 United States v. Certain Land Situated in Detroit (DIBCO I (for Detroit Int’l Bridge Co.)), 188 F. Supp. 2d 747, 755 (E.D. Mich. 2002), aff ’d, 450

F.3d 205 (6th Cir. 2006); United States v. Honolulu Plantation Co., 182 F.2d 172, 179 (9th Cir. 1950); see United States v. 10.0 Acres of Land, 533

F.2d 1092, 1095 n.1 (9th Cir. 1976).

372 United States v. Miller, 317 U.S. 369, 376 (1943) (“loosely”); United States v. 9.20 Acres of Land in Polk Cty., 638 F.2d 1123, 1125 n.2 & 1127

(8th Cir. 1981) (discussing “misleading” nature of term and concept of ‘severance damages’); United States v. 91.90 Acres of Land in Monroe

Cty. (Cannon Dam), 586 F.2d 79, 86 (8th Cir. 1978) (“[W]hile the solution to the problem [of measuring compensation in partial takings] is

simple, it seems to be frequently missed. And, the diculty seems to arise out of the concept of ‘severance damage.’”); Honolulu Plantation,

182 F.2d at 175 n.1 (“The use of this term is to be criticized because it is apt to lead to loose thinking.”).

373 As discussed in Section 4.6.4.1, the taking plus damages or State Rule formula not only is more complicated than the before and after or Federal

Rule, but also frequently results in something other than just compensation under the Fifth Amendment.

374 See DIBCO I, 188 F. Supp. 2d at 749-55 (rejecting “severance damages” for owner’s other property not in actual unitary use with part

taken, and rejecting before and after valuation because there was no reasonable probability that owner’s other property would be used in

conjunction with part taken in reasonably near future).

375 See Miller, 317 U.S. at 376; 8.41 Acres in Orange, 680 F.2d at 393 & n.6; Cole Inv. Co. v. United States, 258 F.2d 203, 205 (9th Cir. 1958) (“The

test in severance damage cases [is] that market value is the criterion for severance damages and that ‘strict proof of the loss in market value

to the remaining parcel is obligatory.’” (quoting Honolulu Plantation, 182 F.2d at 179)); United States v. Certain Parcel of Land in Jackson Cty.,

322 F. Supp. 841, 850 (W.D. Mo. 1971) (“‘Adaptability to a common use, or an intention on the part of the owner to put the property to

a common use, is not enough to admit their being treated as a separate subject of damages.’” (quoting 6 A.L.R. 2d 1197, 1202)); see also

United States v. Mattox, 375 F.2d 461, 463 (4th Cir. 1967) (“[I]t does not follow that the mere proximity or possibility of the integrated use will

confer upon the owner a right to severance damages.”).

376 United States v. 403.14 Acres of Land in St. Clair Cty., 553 F.2d 565, 567 n.2 (8th Cir. 1977); accord United States v. 6.24 Acres of Land (Weber),

99 F.3d 1140, 1996 WL 607162, at *4 (6th Cir. 1996) (per curiam) (unpubl.); United States v. 2.33 Acres of Land in Wake Cty., 704 F.2d 728,

730 (4th Cir. 1983); see United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 9 (1st Cir. 2009) (“The before and after method is

particularly advantageous where either it is dicult to value fairly the condemned tract as a separate parcel or one of the parties contends

that the remainder was harmed or benetted by the condemnation.”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 113

that are subject to “a before-and-after valuation . . . .”

377

With no separate calculation of severance

damage under the Federal Rule, actual unitary use is not determinative, but merely a factor to be

considered in determining the larger parcel in federal acquisitions.

378

For a full discussion of the

Federal Rule, the State Rule, appropriate treatment of damages and benets, and other issues

arising in partial acquisitions, see Section 4.6.

In federal acquisitions, whether under the Federal Rule or (with appropriate legal instructions)

the State Rule, the ultimate goal is to fairly measure the owner’s actual compensable loss.

379

As a

result, “strict proof of the loss in market value to the remaining parcel is obligatory.”

380

Similarly,

the availability of replacement property for the part acquired must be considered, as reasonable

buyers and sellers would do.

381

4.3.4.2. Unity of Ownership (Title). The larger parcel must also have unity of ownership—that is,

there must be uniform control over the ownership and future of all property making up the

larger parcel.

382

Principles of fairness underlie the unity of ownership concept and form the

basis of the Supreme Court’s reasoning in Campbell v. United States:

[

]

f the land taken from plainti had belonged to another, or if it had not been deemed part

and parcel of this estate, he would not have been entitled to anything on account of the

diminution in value of his estate. It is only because of the taking of a part of his land that he

became entitled to any damages resulting to the rest.

383

Thus, to allow landowners to receive compensation not only for their property but for

diminution in value to land owned by another would be a windfall and an unfair enrichment

rather than just compensation.

384

Historically, unity of ownership (or unity of title) was held to require all property comprising a

single larger parcel to be owned to precisely the same extent (e.g., in fee simple) by precisely the

377 United States v. 10.0 Acres, 533 F.2d 1092, 1095 n.1 (9th Cir. 1976) (noting “severance-damage cases . . . are not in point” regarding “a

before-and-after valuation”); accord Cannon Dam, 586 F.2d at 86; United States v. 765.56 Acres of Land in Southampton (765.56 Acres II), 174 F.

Supp. 1, 13-14 (E.D.N.Y. 1959), aff’d sub nom. United States v. Glanat Realty Corp., 276 F.2d 264 (2d Cir. 1960).

378 See 8.41 Acres in Orange, 680 F.2d at 393-94 & n.8; United States v. 105.40 Acres of Land in Porter Cty., 471 F.2d 207, 210-12 (7th Cir. 1972);

Baetjer v. United States, 143 F.2d 391, 394 (1st Cir. 1944); see 403.14 Acres in St. Clair, 553 F.2d at 567 n.2; see also United States v. 429.59 Acres

of Land (Imperial Beach), 612 F.2d 459, 463 (9th Cir. 1980) (arming valuation of properties as a unit because it was “reasonably probable

that the properties would be used in combination”); cf. United States v. Grizzard, 219 U.S. 180, 185-86 (1911) (“The determining factor was

that the value of that part of the Grizzard farm not taken was $1,500, when the value of the entire place before the taking was $3,000.”).

379 See, e.g., Bauman v. Ross, 167 U.S. 548, 574 (1897) (“The just compensation required by the constitution to be made to the owner is to be

measured by the loss caused to him by the appropriation. He is entitled to receive the value of what he has been deprived of, and no more.

To award him less would be unjust to him; to award him more would be unjust to the public.”).

380 Cole Inv., 258 F.2d at 205 (quoting Honolulu Plantation, 182 F.2d at 179)).

381 See Section 4.6 and cases cited therein. This federal requirement may dier from state law.

382 Imperial Beach, 612 F.2d at 463-64; United States v. 17.69 Acres of Land in San Diego (Nat’l Enterprises), No. 99cv1248 DMS (JMA), slip op. at

8 (S.D. Cal. Aug. 30, 2004) ECF No. 272; United States v. 14.36 Acres of Land in McMullen Cty., 252 F. Supp. 2d 361, 363 (S.D. Tex. 2002).

383 Campbell v. United States, 266 U.S. 368, 371 (1924); see Sharp v. United States, 191 U.S. 341, 355 (1903) (“‘It is solely by virtue of his ownership

of the tract invaded that the owner is entitled to . . . damages.’”).

384 See Campbell, 266 U.S. at 371; United States v. Grizzard, 219 U.S. 180, 184 (1911) (“The ‘just compensation’ thus guaranteed obviously

requires that the recompense to the owner for the loss caused to him by the taking of a part of a parcel, or single tract of land, shall be

measured by the loss resulting to him from the appropriation.” (emphases added)); Sharp, 191 U.S. at 354; see also United States ex rel. Tenn.

Valley Auth. v. Stewart, 429 F. Supp. 658, 659-61 (E.D. Tenn. 1976) (“it would be wholly inequitable to allow other parties owning . . .

dierent tracts . . . [to] secure damages to which they are not entitled”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards114

same owner.

385

But modern case law has recognized that at times, the strict traditional rule may

ignore market realities that should in fairness be considered.

386

As a result, the unity of ownership

inquiry focuses on whether a single decision maker has actual legal control of all property at

issue.

387

Ultimately, unity of ownership turns on what “is more consistent with the goal of just

compensation . . . .”

388

Because unity of ownership raises not only factual but legal questions,

appraisers must obtain legal instructions if they conclude that a single larger parcel exists

when the ownership interests in all parts of the whole are not identical.

389

This is one of many

issues on which federal and state law may dier.

390

Federal courts have held that fairness compels consideration of market realities in determining unity

of ownership. Accordingly, the Ninth Circuit found unity of title was satised for properties owned

by three corporations because a single person served as the president, chairman of the board, and

chief executive ocer for all three entities.

391

As one district court recently reasoned, a person with

personal control of Parcel A and actual control of Parcel B as the sole owner of a corporation

“would never negotiate against or attempt to undermine himself in a transaction. The relevant

‘economic realities of the marketplace simply do not produce those kind of results.’”

392

Moreover,

as another district court observed, “the buyer in the marketplace could readily acquire both parcels

from the same operative vendors, exercising the same business judgment in the transaction.”

393

But “a group of individuals is signicantly dierent than a single decision maker operating

through a variety of corporate forms.”

394

Fairness and market realities therefore dictate that

unity of ownership does not exist when multiple decision makers are involved—that is, as one

district court recently stated, “when the wishes of dierent individuals, and not a single individual

wearing multiple hats, must be spanned to achieve unity of title.”

395

As a result, unity of

ownership has been ruled lacking when one tract was owned by one person and a second tract by

a spouse,

396

sibling,

397

or adult child.

398

Similarly, the existence of common or overlapping owners

among multiple decision makers is not sucient for unity of ownership. Thus, a court found

unity of ownership was lacking among three tracts: one owned by one person, the second owned

by the same person and a sibling, and the third owned by the same person and his spouse.

399

385 United States v. 87.30 Acres of Land, 430 F.2d 1130, 1133 (9th Cir. 1970); Stewart, 429 F. Supp. at 660-61; United States v. Certain Parcel of

Land in Jackson Cty., 322 F. Supp. 841, 848-49 (W.D. Mo. 1971).

386 See Imperial Beach, 612 F.2d at 464; 14.36 Acres in McMullen, 252 F. Supp. 2d at 363-64.

387 E.g., Se. Supply Header, LLC v. 110 Acres in Covington Cty. (SESH), No. 2:07-CV-291 KS-MTP, 2008 WL 127490, at *2 (S.D. Miss. Jan. 10, 2008);

Nat’l Enterprises, slip op. at 4-8, ECF No. 272; 14.36 Acres in McMullen, 252 F. Supp. 2d at 363-64; see Imperial Beach, 612 F.2d at 463-64.

388 14.36 Acres in McMullen, 252 F. Supp. 2d at 364; accord United States v. Miller, 317 U.S. 369, 375-76 (1943) (larger parcel requirement and

subsidiary rules developed “in order to do substantial justice”).

389 See 14.36 Acres in McMullen, 252 F. Supp. 2d at 364; see also Miller, 317 U.S. at 375-76; Sharp, 191 U.S. at 354.

390 See 14.36 Acres in McMullen, 252 F. Supp. 2d at 363 (disregarding state law on unity of use because federal law controls in federal

condemnation cases); see also Oncor Elec. Delivery Co. v. Brown, 451 S.W.3d 128, 132 (Tex. Ct. App. 2014) (citing 14.36 Acres and noting

dierences in federal and state law).

391 Imperial Beach, 612 F.2d at 463-64.

392 SESH, 2008 WL 127490, at *2 (quoting 14.36 Acres in McMullen, 252 F. Supp. 2d at 364).

393 14.36 Acres in McMullen, 252 F. Supp. 2d at 363-64 (quoting Julius l. sAckmAn eT Al., nichols on eminenT domAin § 1202[1] (rev. 3d ed.

2001)).

394 SESH, 2008 WL 127490, at *2.

395 Id.

396 United States ex rel. Tenn. Valley Auth. v. Stewart, 429 F. Supp. 658, 660-61 (E.D. Tenn. 1976).

397 Id.

398 United States v. 87.30 Acres of Land in Whitman & Garfield Ctys., 430 F.2d 1130, 1133 (9th Cir. 1970) (cited with approval in United States v.

50.50 Acres of Land, 931 F.2d 1349, 1350 (9th Cir. 1991)); SESH, 2008 WL 127490, at *2-3; see Stewart, 429 F. Supp. at 660 n.3 (“familial

relationship to the other owners [is] a consideration not relevant to this analysis” (citing 87.30 Acres in Whitman, supra)).

399 Stewart, 429 F. Supp. at 660-61 (“For whatever reason, they have treated the three tracts as independent with regard to the ownership

interests held therein.”); accord SESH, 2008 WL 127490, at *1-3 (no unity of ownership among two adjacent tracts, one owned in fee by one

person and the second owned by the same person and his parents).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 115

Tracts that lack unity of ownership cannot be treated as a single larger parcel for just

compensation purposes, regardless of whether they share an integrated or actual use. Accordingly,

a district court recently found no unity of ownership among one tract owned by one person in

fee, and a second tract owned by the same person and his parents, observing that “[d]espite the

present harmony of the . . . family, either [the son] or his parents could prevent a transaction to

acquire a present possessory interest in the [combined tracts].”

400

The court ultimately concluded:

Although both parents and son benet from the uninterrupted use of the whole, the division

of ownership between the . . . parents and their son has legal consequences in an eminent

domain proceeding. The potentially conicting interests between the parents’ use of their

life estates and the son’s vested remainder make it impossible . . . to recognize a unity of title

consistent with available case law.

401

4.3.4.3. Physical Unity (Contiguity or Proximity). Under federal law, physical unity is considered within

the context of integrated use rather than as a stand-alone test. As the First Circuit emphasized:

Physical contiguity is important, however, in that it frequently has great bearing on the

question of unity of use. Tracts physically separated from one another frequently, but we

cannot say always, are not and cannot be operated as a unit, and the greater the distance

between them the less is the possibility of unitary operation . . . .

402

Accordingly, the physical unity (proximity) or separation of a tract is an important consideration,

but not necessarily determinative of the ultimate question of what constitutes a single tract.

403

The availability of replacement property for the part acquired must always be considered (as noted

above) and can be particularly important in partial acquisitions involving noncontiguous parcels

devoted to a unitary use, such as a livestock ranch or a timber and milling operation.

404

The eect

of the existence (or absence) of replacement property on the market value of the remainder

property must be shown, as it will vary depending on the property, its use, and the relevant

market. For example, in International Paper Co. v. United States, the Fifth Circuit found no unitary

use between woodland acres and the same landowner’s paper mill in another state, as neither the

existing operation nor any reasonable expectation in the foreseeable future showed any dierence

between the owner’s small woodland tracts and “the tracts of small owners whose products would

be available on a competitive basis.”

405

Moreover, the landowner could “turn right around and

400 SESH, 2008 WL 127490, at *2.

401 Id. at *3.

402 Baetjer v. United States, 143 F.2d 391, 395 (1st Cir. 1944); cf. Sharpe v. United States, 112 F. 893, 895-96 (3d Cir. 1902), aff ’d sub nom. Sharp

v. United States, 191 U.S. 341 (1903) (discussing “22 acres of meadow . . . not adjoining or a part of [the farm tract with which it had been

purchased], nor was it used in connection therewith, but was such a considerable distance away, and of so little value, that no attention was

paid to it by either [party], either as to value or damages”).

403 Baetjer, 143 F.2d at 395.

404 See, e.g., United States v. Evans, 380 F.2d 761, 764 (10th Cir. 1967) (livestock ranch); Int’l Paper Co. v. United States, 227 F.2d 201, 206-07

(5th Cir. 1955) (paper mill operation); Baetjer, 143 F.2d at 396-97 (sugar cane production); Ga.-Pac. Corp. v. United States, 640 F.2d 328 (Ct.

Cl. 1980) (per curiam) (burden to show that “replacement old-growth timber was not available, or if available, at least, the burden to show

persuasively that under existing circumstances it would be economically unfeasible to obtain available replacement timber”); cf. United States

v. 711.57 Acres of Land in Alameda Cty., 51 F. Supp. 30, 33 (N.D. Cal. 1943) (awarding compensation reecting availability of alternative

access to severed tract).

405 Int’l Paper, 227 F.2d at 206. The Fifth Circuit went on to state that regardless of whether a unitary tract existed (which it called “quite

doubtful”), there was “no doubt whatever about the correctness” of the nding that the taking of woodland acreage did not diminish the

value of the remainder property (the paper mill). Id. at 206-07.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards116

make its acreage whole by buying [similarly located timber property to replace that taken] with

the proceeds of the condemnation award.”

406

Meanwhile in United States v. Evans, dierent facts

led the Tenth Circuit to uphold a nding that pastureland was part of a single economic unit

with noncontiguous but “integrated” and “interdependent” croplands, feeding yards, and ranch

headquarters with silage land within economical hauling distance.

407

In Evans, there was evidence

that such physical separation of integrated tracts was not only common for ranching in the area

but considered desirable to take advantage of variations in rainfall, soil types, and other factors,

and that “pasture land sold separately would bring a lower price than if sold as part of a ranch—a

balanced unit.”

408

Even so, the Tenth Circuit cautioned, the Evans case “must be considered to be

an extreme one, as to the noncontiguous tract problem; however, the record shows unusually clear

evidence on the point. The damages have been well limited to the integrated lands.”

409

Critically,

both Evans and International Paper “restricted damages to the realities of the situation . . . .”

410

Of course, depending on “the realities of the situation,” even a demonstrated lack of available

replacement property may not diminish the value of remainder property.

411

4.3.4.4. Legal Instructions. While the larger parcel must ultimately be determined by the appraiser,

legal instructions are often required to address questions of law that arise within the

appraiser’s analysis. For example, whether unity of ownership exists based on the quality of the

property interests held in dierent tracts raises not only factual but legal questions.

412

Thus, an

appraiser must obtain legal instructions if the ownership interests in all parts of the whole

are not identical in a potential larger parcel. Similarly, whether there is sucient evidence to

support a nding of an integrated use involves legal as well as factual analysis.

413

In addition, in

federal condemnation litigation, the appraiser’s larger parcel analysis and conclusions will be

evaluated by the court and/or the nder of fact (jury, land commission, or judge).

414

4.3.4.5. Special Considerations in Partial Acquisitions. In partial acquisitions, the appraiser

must make two separate determinations of highest and best use: once for the larger parcel

406 Id. at 207 (noting that the landowner in fact “actually purchased [such replacement property] subsequent to the taking here involved”).

407 Evans, 380 F.2d at 764.

408 Id. at 764; cf. ApprAisAl insT. & Am. soc’y oF FArm mAnAgers, The ApprAisAl oF rurAl properTy 343, 323-60 (2d ed. 2000) (“[T]he highest

and best use of a ranch property is directly related to ranch balance.” (Chapter 19: The Valuation of Livestock Ranches)).

409 Evans, 380 F.2d at 764.

410 Id. (analyzing Int’l Paper, 227 F.2d 201).

411 Id.; e.g., Baetjer, 143 F.2d at 396, and on remand, United States v. 7936.6 Acres of Land, 69 F. Supp. 328, 332 (D.P.R. 1947) (“[W]hile there

has been a severance in the legal sense such severance has caused no compensable damage to the market value of the properties not

taken.”); see also Int’l Paper, 227 F.2d at 207 n.7 (discussing Baetjer and result on remand).

412 See, e.g., United States v. 429.59 Acres of Land (Imperial Beach), 612 F.2d 459, 463-64 (9th Cir. 1980); United States v. 14.26 Acres of Land

in McMullen Cty., 252 F. Supp. 2d 361, 363-64 (S.D. Tex. 2002); United States v. 17.69 Acres of Land in San Diego (Nat’l Enterprises), No.

99cv1248 DMS (JMA) (S.D. Cal. Aug. 30, 2004), ECF No. 272; Se. Supply Header, LLC v. 110 Acres in Covington Cty. (SESH), No. 2:07-CV-

291 KS-MTP, 2008 WL 127490, at *2 (S.D. Miss. Jan. 10, 2008).

413 See, e.g., United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 10 (1st Cir. 2009); United States v. 8.41 Acres of Land in Orange Cty.,

680 F.2d 388, 393 (5th Cir. 1982); United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 179-81 (N.D.N.Y. 2010), aff ’d, 502

F. App’x 43, 45-46 (2d Cir. 2012); SESH, 2008 WL 127490, at *3; United States v. Certain Land Situated in Detroit (DIBCO I (for Detroit Int’l

Bridge Co.)), 188 F. Supp. 2d 747, 755 (E.D. Mich. 2002), aff ’d, 450 F.3d 205 (6th Cir. 2006).

414 There is a split of authority among federal courts on this issue, although it does not aect the appraiser’s role of determining the larger parcel in

keeping with appropriate legal instructions. The Supreme Court has held that in a federal condemnation case, “except for the single issue of just

compensation, the trial judge is to decide all issues, legal and factual, that may be represented.” United States v. Reynolds, 397 U.S. 14, 19 (1970); see

Fed. R. ciV. P. 71.1(h). Many federal circuits hold based on Reynolds that “[u]nity of use is an issue for the court to decide.” Amexx I, 860 F. Supp.

2d at 179; accord DIBCO, 450 F.3d at 208-11; Imperial Beach, 612 F.2d at 463-64; United States v. 105.40 Acres of Land in Porter Cty., 471 F.2d 207,

212 (7th Cir. 1972); see Piza-Blondet, 585 F.3d at 10 (“While unity of use is an issue for the court to decide, unless some party objects, there is no

ground for overturning a decision by the trial judge to submit the question to the jury in an advisory capacity.”). But some federal courts hold that

“the issue of unity or separateness of tracts is a question of fact to be presented to the trier of fact.” 8.41 Acres in Orange, 680 F.2d at 393; see also

Nat’l Enterprises, slip op. at 2 n.1 (S.D. Cal. Aug. 30, 2004), ECF No. 271 (“The Court also questions Defendants’ assertion that the issue of unity

or separateness of tracts is a matter of law to be decided by the Court.”). Even under the latter rule, however, the court will reject the fact-nder’s

identication of the unitary parcel if it is unsupported, speculative, or otherwise legally erroneous. E.g., 8.41 Acres in Orange, 680 F.2d at 393-94 &

n.8 (rejecting commission’s “clearly erroneous . . . nding that the strips of condemned land were ‘severed’ from their parent tracts”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 117

before acquisition, and once for the remainder after acquisition. As J.D. Eaton cautioned: “If

the appraiser does not estimate the property’s highest and best use correctly in both the before

and after situations, it will be impossible to estimate the property’s value correctly.”

415

The existence and extent of any change in highest and best use due to the government’s

acquisition requires careful analysis.

416

The highest and best use of the remainder may reect a

complete change, a change in intensity, or no change from the highest and best use of the larger

parcel before acquisition.

417

A change in a property’s highest and best use may have a positive,

negative, or negligible impact on its market value. For example, if what was farmland before

acquisition becomes lakefront property with a highest and best use for recreational home sites,

osetting special or direct benets may apply, as discussed in Section 4.5.5.

418

On the other hand,

if a remainder property has a less valuable highest and best use after acquisition, the dierence in

the values before and after acquisition will reect any compensable diminution in the value of the

remainder resulting from acquisition, as discussed in in Section 4.5.2.

4.3.4.6. Special Considerations in Riparian Land Acquisitions. When developing an opinion

of the highest and best use of land riparian to navigable water, there are special considerations

that must be taken into account, as discussed in Section 4.11.1.

4.3.4.7. Special Considerations in Land Exchanges. Dierent considerations may be required in

determining the larger parcel in appraisals for federal land exchanges (see Section 1.12). In such

situations, legal instructions for the appraiser to assume a specic

larger parcel determination may be necessary to comply with statutes

or other federal requirements, as discussed in Section 4.10.

4.3.4.8. Special Considerations in Inverse Takings. Determining the

larger parcel in connection with inverse taking claims for liability

purposes requires dierent considerations than in eminent domain-

based valuations because of the distinct—and complex—legal issues involved.

419

As the Ninth

Circuit explained, in eminent domain cases the issue is how much is due the landowner as just

compensation: “[But i]n inverse condemnation the issue is liability: Has the government’s action

eected a taking of the landowner’s property?

[

]

he boundaries of the property allegedly taken

must be determined by taking jurisprudence rather than the laws of eminent domain.”

420

415 eATon, supra note 16, at 104; see Olson v. United States, 292 U.S. 246, 255 (1934).

416 See, e.g., Rousseaux v. United States, 394 F.2d 123, 124 (5th Cir. 1968) (per curiam) (“The parties did not dispute that the highest and best use

of the land after the easement was imposed was for growing timber. However, the highest and best use of the land before the taking was

sharply contested, as was the issue of value.”).

417 E.g., E. Tenn. Nat. Gas Co. v. 7.74 Acres of Land, 228 F. App’x 323 (4th Cir. 2007) (unpubl.) (highest and best use changed from commercial

development before taking to agricultural or residential use after taking); Wash. Metro. Area Transit Auth. v. One Parcel of Land (Old

Georgetown), 691 F.2d 702, 703 (4th Cir. 1982) (change in intensity from low-density to high-density residential development in new mass-

transit “impact zone”); United States v. Werner, 36 F.3d 1095 (4th Cir. 1994) (no change in highest and best use of large-lot residential

development); 8.41 Acres in Orange, 680 F.2d at 394-95 (no change in highest and best use for industrial plant sites).

418 E.g., United States v. Trout, 386 F.2d 216 (5th Cir. 1967).

419 See Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 322 (2002) (“Our regulatory takings jurisprudence . . . is characterized

by ‘essentially ad hoc, factual inquiries,’ designed to allow ‘careful examination and weighing of all relevant circumstances.’” (quoting Penn Cent.

Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978), and Palazzolo v. Rhode Island, 533 U.S. 606, 636 (2001) (O’Connor, J., concurring))).

420 Am. Savings & Loan Ass’n v. County of Marin, 653 F.2d 364, 369 (9th Cir. 1981).

Determining the larger

parcel in inverse takings

claims raises complex legal

issues. Close consultation

between appraisers and

legal counsel is essential.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards118

In the context of regulatory inverse takings claims, the larger parcel is commonly referred to as

the parcel as a whole or the denominator.

421

It is the relevant parcel against which to measure the

economic impact of the regulation being challenged.

422

As a result, determination of the parcel

as a whole plays a critical role in regulatory takings cases in determining liability—i.e., whether a

compensable taking occurred.

423

This complex legal determination requires careful consideration

of all relevant facts, making close consultation between the appraiser and legal counsel essential.

424

The typical starting point is “the metes and bounds that describe [the] geographic dimensions”

of contiguous acres held under common ownership,

425

with a focus on the property owned by

the plainti at the time of the government action giving rise to the taking. As a result, the unity-

of-ownership test may need to be disregarded, or applied on an earlier date, so that the parcel as

a whole will include properties originally (but no longer) held in common ownership on the date

of valuation.

426

The owner’s actual and projected use of the property must also be considered.

Other relevant factors include the timing of an owner’s acquisition of property interests,

the timing of the imposition of the regulations being challenged, the owner’s demonstrated

expectations for the property, whether the extent to which property is linked through a common

development scheme, and the extent to which regulated portions are integrated with and enhance

the value of unregulated portions of the property.

The Supreme Court has consistently rejected the “circular” approach of “dening the [relevant

parcel] in terms of the very regulation being challenged.”

427

But lower federal courts’ rulings

weighing the various factors listed above have resulted in contradictory opinions, with some

facing Supreme Court review as these Standards went to publication.

428

4.4. Valuation Process.

4.4.1. The Three Approaches to Value. For purposes of just compensation, market value must be

determined “with an approach which seeks with the aid of all relevant data to nd an amount

representing value to any normally situated owner or purchaser of the interests taken . . . .”

429

Three approaches to value are recognized in federal acquisitions: (1) the sales comparison

approach, (2) the cost approach, and (3) the income capitalization approach.

430

421 E.g., Palazzolo, 533 U.S. at 631 (“the dicult, persisting question of what is the proper denominator in the takings fraction”); Penn Cent., 438

U.S. at 130-31 (“In deciding whether a particular governmental action has eected a taking, this Court focuses rather both on the character

of the action and on the nature and extent of the interference with rights in the parcel as a whole . . . .”).

422 See Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 497 (1987) (“Because our test for regulatory taking requires us to compare the

value that has been taken from the property with the value that remains in the property, one of the critical questions is determining how to

dene the unit of property ‘whose value is to furnish the denominator of the fraction.’”).

423 See, e.g., Tahoe-Sierra, 535 U.S. at 330-31; Penn Cent., 438 U.S. at 130-31.

424 Cf. Tahoe-Sierra, 535 U.S. at 322; Palazzolo, 533 U.S. at 636 (O’Connor, J., concurring); Penn Cent., 438 U.S. at 124.

425 See Tahoe-Sierra, 535 U.S. at 331.

426 E.g., Norman v. United States, 429 F.3d 1081, 1087, 1091 (Fed. Cir. 2005) (including previously sold property in parcel as a whole).

427 Tahoe-Sierra, 535 U.S. at 331.

428 See, e.g., Lost Tree Village Corp. v. United States, 787 F.3d 1111 (Fed. Cir. 2015), petition for cert. docketed, No. 15-1192 (March 23, 2016); Murr v.

Wisconsin, 359 Wis. 2d 675 (Wis. Ct. App. 2014), review denied, 366 Wis. 2d 59 (2015), cert. granted, 136 S. Ct. 890 (2016).

429 Kimball Laundry v. United States, 338 U.S. 1, 20 (1949).

430 See generally United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 174-75 (N.D.N.Y. 2009), adopted by 860 F. Supp. 2d 165

(N.D.N.Y. 2010), a’d, 502 F. App’x 43, 45 (2d Cir. 2012). As discussed in Section 4.4.5, it may be appropriate to incorporate aspects of

all three approaches to value in the development method, a technique for appraising undeveloped acreage with a highest and best use for

subdivision into lots. E.g., United States v. 99.66 Acres of Land (Sunburst Invs.), 970 F.2d 651, 655-56 (9th Cir. 1992).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 119

Because the “federal conception of market value . . . is intimately related to selling prices in the

market,”

431

the sales comparison approach is normally preferred as the best evidence of market

value in federal acquisitions, but not to the exclusion of other relevant evidence of value based

on market data.

432

One or more approaches to value may be appropriate—even necessary—to

derive a reliable estimate of market value in a given appraisal problem.

433

As the Supreme

Court recognized:

Valuation is not a matter of mathematics . . . . Rather, the calculation of true market value is

an applied science, even a craft. Most appraisers estimate market value by employing not one

methodology but a combination. These various methods generate a range of possible market

values which the appraiser uses to derive what he considers to be an accurate estimate of

market value, based on careful scrutiny of all the data available.

434

Of course, not every approach to value is appropriate for every valuation assignment: in

determining market value in federal acquisitions, appraisers must not use an approach that “though

perhaps making it easier to reach some solution, only ma[kes] the proper solution more dicult.”

435

Federal courts have repeatedly prohibited the use of an approach to value that is unreliable in

light of the facts and circumstances of a given valuation problem.

436

Where just compensation is

concerned, a reliable valuation process is necessary to ensure a just result, “and it is the duty of the

state, in the conduct of the inquest by which the compensation is ascertained, to see that it is just, not

merely to the individual whose property is taken, but to the public which is to pay for it.”

437

4.4.2. Sales Comparison Approach. Under federal law, unforced, arm’s-length transactions of

properties in the vicinity of and comparable to the property being appraised, reasonably near the

431 United States v. 60.14 Acres of Land, 362 F.2d 660, 665 (3d Cir. 1966).

432 See United States v. Toronto, Hamilton & Buffalo Nav. Co., 338 U.S. 396, 402-404 (1949); United States v. Miller, 317 U.S. 369, 374-75 (1943);

United States v. 320 Acres of Land, 605 F.2d 762, 798-99 & n. 61 (5th Cir. 1979) (citing cases).

433 Toronto, Hamilton, 338 U.S. at 402-405 (“Were market conditions normal, we could hardly call an award ‘just compensation’ unless relevant . . .

sales, in available markets, were considered….The question is of course one of degree, and we do not mean to foreclose the consideration

of each case upon its facts.”); see CSX Transp., Inc. v. Ga. State Bd. of Equalization, 552 U.S. 9, 17 (2007) (“Appraisers typically employ a

combination of methods because no one approach is entirely accurate, at least in the absence of an established market for the type of

property at issue. The individual methods yield sometimes more, sometimes less reliable results depending on the peculiar features of the

property evaluated.”); Seravalli v. United States, 845 F.2d 1571, 1575 (Fed. Cir. 1988) (“The method of valuation that is most appropriate in

the light of the facts of the particular case . . . . may be a single method or some combination of dierent methods.”); Sill Corp. v. United

States, 343 F.2d 411, 416 (10th Cir. 1965).

434 CSX Transp., 552 U.S. at 16-17.

435 United States v. Benning Hous. Corp., 276 F.2d 248, 253 (5th Cir. 1960); cf. CSX Transp., 552 U.S. at 18 (rejecting contention that it is “as likely

to get an accurate result by [one valuation method] as it is by employing another method altogether” because “some approximations [a]re

better than others”).

436 See, e.g., United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 174-179 (N.D.N.Y. 2009), adopted by 860 F. Supp. 2d 165

(N.D.N.Y. 2010), aff ’d, 502 F. App’x 43, 45 (2d Cir. 2012); United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 7-8 (1st Cir.

2009); see United States v. Wise, 131 F.2d 851, 851-52 (4th Cir. 1942); cf. Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146-47 (1997) (expert opinions

are to be rejected when “there is simply too great an analytical gap between the data and the opinion proered”); Daubert v. Merrell Dow

Pharms., Inc., 509 U.S. 579, 589 (1993) (expert opinions must be “not only relevant, but reliable”).

437 Bauman v. Ross, 167 U.S. 548, 574 (1897) (emphasis added) quoting Searl v. Sch. Dist. in Lake Cty, 133 U.S. 553, 562 (1890); cf. Gen. Elec., 522

U.S. at 149-50 (Breyer, J., concurring) (observing that subjecting expert opinions to appropriate legal standards “will help secure the basic

objectives of . . . the ascertainment of truth and the just determination of proceedings” and citing Fed. R. eVid. 102); Olson v. United States,

292 U.S. 246, 257 (1934) (“to allow mere speculation and conjecture to become a guide for the ascertainment of value [is] a thing to be

condemned in business transactions as well as in judicial ascertainment of truth”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards120

time of acquisition, are normally the best evidence of market value.

438

The process of forming an

opinion of a property’s market value through comparison with such comparable sales is known as

the sales comparison approach to value.

439

The sales comparison approach is normally preferred

in federal acquisitions as the best evidence of value, but not to the exclusion of other relevant

evidence of value based on market data.

440

The essence of the sales comparison approach to

value is the comparison of sales transactions to the property being appraised.

441

“Generally, the

more comparable a sale is, the more probative it will be of the fair market value” of the property

being appraised.

442

The converse is also true, as one court observed:

Signicant dierences as to location, size, topography, market area, and recreational potential

existed between most comparable sales and the subject property. This makes comparison

extremely shaky because of the necessity of substantial adjustments required between the

comparable and the subject.

443

As a result, the most recent sale of the property being appraised may well be the most

comparable of all the comparable sales, as discussed further in Section 4.4.2.4.1.

444

4.4.2.1. Comparability. A sale’s comparability “is largely a function of three variables: characteristics

of the properties, their geographic proximity to one another, and the time dierential.”

445

The

signicance of dierent elements of comparison will vary with the type of property being

appraised and the relevant market. For example, as the Sixth Circuit explained:

438 E.g., El Paso Nat. Gas Co. v. Fed. Energy Regulatory Comm’n, 96 F.3d 1460, 1464 (D.C. Cir. 1996); United States v. 819.98 Acres of Land, 78 F.3d

1468, 1471 (10th Cir. 1996); United States v. 24.48 Acres of Land, 812 F.2d 216, 218 (5th Cir. 1987); United States v. 47.14 Acres of Land in

Polk Cty., 674 F.2d 722, 725 (8th Cir. 1982); United States v. 103.38 Acres of Land in Morgan Cty. (Oldfield), 660 F.2d 208, 211 (6th Cir. 1981);

United States v. 320 Acres of Land, 605 F.2d 762, 798 & n.61 (5th Cir. 1979) (citing cases); United States v. 100 Acres of Land, 468 F.2d 1261,

1265 (9th Cir. 1972); United States v. Upper Potomac Props. Corp., 448 F.2d 913, 918 (4th Cir. 1971); United States v. 344.85 Acres of Land, 384

F.2d 789, 791-92 (7th Cir. 1967); United States v. 60.14 Acres of Land, 362 F.2d 660, 665 (3d Cir. 1966).

439 The sales comparison approach was formerly called the market data approach, a problematic term because “[i]n essence, all approaches

to value (particularly when the purpose of the appraisal is to establish market value) are market data approaches since the data inputs are

presumably market derived.” byrl n. boyce, reAl esTATe ApprAisAl Terminology 136 (1st ed. 1975) (dening “market data approach”);

compare The ApprAisAl oF reAl esTATe 273-314 (7th ed. 2d prtg. 1979) (“market data approach”) and United States v. Eden Mem’l Park Ass’n, 350

F.2d 933, 935 (9th Cir. 1965) (“market data approach or consideration of comparable sales”) with The ApprAisAl oF reAl esTATe (8th ed. 1983)

309-31 (“sales comparison approach”) and Amexx I, 860 F. Supp. 2d at 174 (“market approach (also known as the sales comparison approach)”).

440 El Paso Nat. Gas, 96 F.3d at 1464; 819.98 Acres of Land, 78 F.3d at 1471; Seravalli v. United States, 845 F.2d 1571, 1575 (Fed. Cir. 1988);

United States v. 421.89 Acres of Land, 465 F.2d 336, 338-39 (8th Cir. 1972); Upper Potomac, 448 F.2d at 917; 344.85 Acres, 384 F.2d at 792.

441 Cf. United States v. New River Collieries Co., 262 U.S. 341, 344 (1923) (“Where private property is taken for public use, and there is a market

price prevailing at the time and place of the taking, that price is just compensation.”).

442 320 Acres, 605 F.2d at 798.

443 United States v. Eastman (Eastman II), 528 F. Supp. 1184, 1186 (D. Or. 1981), aff ’d, 714 F. 2d 76, 77 (9th Cir. 1983).

444 Cf. Hickey v. United States, 208 F.2d 269, 273 (3d Cir. 1953).

445 320 Acres, 605 F.2d at 798 & n.61 (citing cases). In appraisal terminology, typical elements of comparison include property rights conveyed,

nancing terms, conditions of sale (i.e., buyer and seller motivations), expenditures made immediately after purchase, market conditions (i.e.,

time- or date-of-sale adjustment), location, physical characteristics, economic characteristics, legal characteristics (i.e., zoning and permits)

and non-realty components of value included in sale. See Section 1.5.2.3; ApprAisAl insT., The ApprAisAl oF reAl esTATe 390-92, 404-25

(14th ed. 2013); see, e.g., United States v. 480.00 Acres of Land (Fornatora), 557 F.3d 1297, 1304-05, 1312 (11th Cir. 2009) (applicable zoning

restrictions, buyer motivations, conditions of sale); United States v. 124.84 Acres of Land in Warrick Cty., 387 F.2d 912, 915 (7th Cir. 1968)

(physical characteristics including soil type and susceptibility to ooding); Knollman v. United States, 214 F.2d 106 (6th Cir. 1954) (character

and location); United States v. 68.94 Acres of Land in Kent Cty., 736 F. Supp. 541, 549-550 (D. Del. 1990) (time, size, tillable soil percentage,

eects of easements on property rights conveyed, buyer motivations); Eastman II, 528 F. Supp. at 1185-86 (time, size, location, topography);

cf. BFP v. Resolution Trust Corp., 511 U.S. 531, 537-40 (1994) (noting “‘fair market value’ presumes market conditions that, by denition,

simply do not obtain in the context of a forced sale”); United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 513-14 (1979)

(noting new facilities would bear nancial burdens imposed by regulations that did not apply to comparable existing facilities).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 121

On the point of similarity in character and locality, obviously if part of an allotment is

condemned, sales, in order to be evidence of market value, should be of lots either within the

immediate vicinity or very close. But when large areas of open country are involved, similarity

of character and locality depends not upon mere propinquity. The character of such land

situated several miles from land condemned may well be more comparable than that within a

few hundred feet.

446

4.4.2.2. Adjustments. Depending on the property involved and the relevant market, the appraiser

may need to adjust each comparable sale through quantitative and/or qualitative analysis to

derive an indication of the market value of the subject property. Adjustments are made “up

or down, depending upon such factors as time of sale, size of parcel, location, topography,

and other such variables.”

447

Quantitative adjustment, qualitative analysis, or both may be

appropriate depending on the specic facts of the valuation problem.

448

Quantitative adjustment is appropriate when there are adequate market data to reliably quantify

the eect of a sale characteristic in terms of a percentage or dollar amount:

For example, if the comparable sale occurred one year before the taking of the subject

property and during a period of rising prices, the appraiser will adjust upward, that is, he

will derive a value (either on a per-acre or per-parcel basis) for the comparable. This will be

adjusted in accord with the percent by which sales of that kind of property increased over the

period of time between the two relevant dates.

449

Some characteristics may require quantitative rather than qualitative adjustment, such as market

conditions (time) as described above, or expenditures made immediately after purchase.

450

But

quantitative adjustment is not appropriate for characteristics for which reliable numerical

adjustments cannot be derived from market data.

451

Indeed, without adequate market support,

the apparent precision of quantitative adjustments would convey a false sense of accuracy.

452

Qualitative adjustment may also be appropriate—and necessary—where market data does not

support a quantitative adjustment. As another court recognized:

[

The appraiser’s

]

decision to make qualitative rather than quantitative adjustments to his

identied comparable sales . . . is reasonable in light of the multiple factors involved in each

of the sales and the complex market in which the subject tracts are located. Further, . . . [the

446 Knollman v. United States, 214 F.2d 106, 109 (6th Cir. 1954) (citation omitted).

447 Eastman II, 528 F. Supp. at 1186.

448 E.g., Childers v. United States, 116 Fed. Cl. 486, 498-99 (Fed. Cl. 2013); United States v. 381.76 Acres of Land (Montego Group), No. 96-1813-

CV, 2010 WL 3734003, at *7 (S.D. Fla. Aug. 3, 2010), adopted sub nom. United States v. 10.00 Acres of Land, No. 99-0672-CIV, 2010 WL

3733994 (S.D. Fla. Sept. 22, 2010), aff ’d sub nom. United States v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (per curiam).

449 Eastman II, 528 F. Supp. at 1186; see also McCann Holdings, Ltd. v. United States, 111 Fed. Cl. 608, 619-22 (Fed. Cl. 2013).

450 See Eastman II, 528 F. Supp. at 1186; Section 1.5.2.3; Section 4.4.2.1.

451 McCann Holdings, 111 Fed. Cl. at 622-23 (“This Court is not persuaded that [the appraiser’s] numbers were derived from sucient market

data. While [the] expert applied various percentage-based adjustments, it is not clear what market data supported a particular adjustment or

why a given numerical adjustment was chosen.”).

452 Cf. Borman v. Raymark Indus., Inc., 960 F.2d 327, 334 n.12 (3d Cir. 1992) (“Requiring the experts to speak in terms of numerical percentages

introduces a false precision into the evidence. . . . Honest, but more exible, words such as ‘substantial factor,’ ‘major contribution’ or

‘signicant cause’ are more suitable to the . . . function of justly and fairly resolving uncertainties.”); In re Gulf Oil/Cities Serv. Tender Offer

Litig., 142 F.R.D. 588, 596 (S.D.N.Y. 1992).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards122

appraiser] initially attempted to use a quantitative approach to appraise one of the [tracts] but

found that method to be problematic . . . . While [qualitative analysis] is not without aws, it

appears to this Court that it is the superior approach, especially considering the . . . market

and . . . the parcels at issue.

453

Qualitative analysis can be particularly useful in evaluating considerations such as development

restrictions, particular land use restrictions, allowable density, the presence of environmental

lands, and the impact of easements or encumbrances.

454

4.4.2.3. Sales Verication. In developing an opinion of market value for the purpose of determining

just compensation, the appraiser must verify sales amounts and ascertain whether terms and

conditions of a sale were conventional and under open competitive market conditions.

455

Verication typically requires interviews and discussions with the seller, the buyer, the closing

agency, and/or the broker handling the transaction in addition to conrming recordation.

456

As federal courts recognize, prices reported in public records may not tell the whole story:

[

]

ertainly most transactions are likely to be inuenced by the motives of the parties thereto,

such as the special needs or the strong desires of the buyer, the nancial or other exigencies

of the seller, and the whims, follies, fancies or ignorance of local values on the part of one

or both of them . . . .

[

]

hese are all matters of which persons . . . such as a party to the sale

itself or the broker or agent who aected it, can be expected to know at least something . . . .

More often than not the true consideration paid is not stated in a deed . . . . And . . . accurate

knowledge of the price paid cannot be calculated from revenue stamps without accurate

knowledge of liens and encumbrances on the land at the time of the sale which might or

might not appear in the records . . . .

457

Verication must be accomplished by competent and reliable personnel, and if the case goes into

condemnation, the appraiser who will testify must personally verify the sale. As the Third Circuit

explained, the appraiser’s function is “to express his opinion of the value of real estate which

he has personally examined and studied . . . .”

458

A real estate appraiser, “no matter how well

qualied he may be in general, . . . is not an expert on the value of property which is unknown to

him or is situated in an area which is unfamiliar to him.”

459

4.4.2.4. Transactions Requiring Extraordinary Care. Not all property transactions can be

used as potential comparable sales in valuations for federal acquisitions. While few types of

453 Montego Group, 2010 WL 3734003, at *7 (citations omitted) (accepting valuation opinions derived from qualitative analysis as “honest

attempts to determine the value of peculiar properties in a peculiar market while taking complex factors into account”).

454 Childers, 116 Fed. Cl. at 498-99.

455 Accord United States v. 5,139.5 Acres of Land, 200 F.2d 659, 662 (4th Cir. 1952); see United States v. 429.59 Acres of Land (Imperial Beach), 612

F.2d 459, 462 (9th Cir. 1980) (“[T]he proper inquiry is whether the expert has made careful inquiry into the facts of the other sales, and

whether his opinion is founded upon such careful inquiry.”).

456 See United States v. Katz, 213 F.2d 799, 800 (1st Cir. 1954).

457 Id.

458 United States v. 60.14 Acres of Land, 362 F.2d 660, 668 (3d Cir. 1966).

459 Id. (“Instead the essential elements of the real estate expert’s competency include his knowledge of the property and of the real estate

market in which it is situated, as well as his evaluating skill and experience as an appraiser.”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 123

transactions are categorically excluded from consideration under

modern jurisprudence,

460

as a matter of law several types of

sales can be considered only under certain circumstances or for

limited purposes. Accordingly, careful verication and analysis

of each sale is required to ensure the appraiser’s opinion of

value does not reect any legally improper considerations.

461

Of course, extraordinary verication alone would not allow an

appraiser to rely on a sale that cannot be considered for other

reasons, such as a sale involving a dierent property interest

than the property under appraisal,

462

or a sale excluded from

consideration under a legal instruction applying the scope of

the project rule.

463

4.4.2.4.1. Prior Sales of the Same Property. Prior sales of the same

property, if unforced, arm’s-length, for cash or its equivalent,

and reasonably recent to the date of valuation, are extremely

probative evidence of market value.

464

Accordingly, the appraiser

must determine what the owner paid for the property being appraised.

465

In analyzing prior

sales, adjustments may be necessary to account for changes in market conditions, transaction

conditions, or other factors.

466

Prior sales of the same property are not categorically entitled to

more weight than sales of other comparable properties: the relative importance of each must be

analyzed under the particular facts of the appraisal assignment.

467

Each appraisal report must state and support the consideration accorded to the immediate past

sale of the property under appraisal, even if the appraiser concludes the circumstances of the

prior sale may have rendered it irrelevant to the determination of the market value as of the date

of valuation.

468

An unsupported statement that the sale did not represent market value, or was

not an arm’s-length transaction is not sucient: as the Eighth Circuit admonished, disregarding

460 United States v. 320 Acres of Land, 605 F.2d 762, 798-99 & nn.65-66 (5th Cir. 1979) (citing cases); see, e.g., United States v. 4.85 Acres of Land in

Lincoln Cty., 546 F.3d 613, 618-19 (9th Cir. 2008) (post-acquisition sales) (citing cases).

461 See Olson v. United States, 292 U.S. 246, 256 (1934) (“Considerations that may not reasonably be held to aect market value are excluded.”);

see, e.g., 4.85 Acres, 546 F.3d at 619 (requiring “. . . separate ndings of the comparability of each of the proered comparable properties to

the [subject] property . . . .” (quoting United States v. 68.94 Acres of Land, 918 F.2d 389, 399 (3d Cir. 1990))).

462 United States v. 46,672.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13, 17 (10th Cir. 1975).

463 See Section 4.5; see generally 320 Acres, 605 F.2d at 798-803 & nn.61-81.

464 United States v. 100.01 Acres of Land, 102 F. App’x 295, 298 (4th Cir. 2004) (unpubl.); United States v. 428.02 Acres of Land, 687 F.2d 266,

271 (8th Cir. 1982); Surfside of Brevard, Inc. v. United States, 414 F.2d 915, 917 (5th Cir. 1969); United States v. Leavell & Ponder, Inc., 286 F.2d

398, 403-04 (5th Cir. 1961); Simmonds v. United States, 199 F.2d 305, 307-08 (9th Cir. 1952); Baetjer v. United States, 143 F.2d 391, 397 (1st Cir.

1944); United States ex rel. Tenn. Valley Auth. v. Harralson, 43 F.R.D. 318, 323-24 (W.D. Ky. 1966) (mem.).

465 During litigation, the appraiser should consult with the attorney on how to obtain this information, as communications with landowners

may need to go through counsel.

466 See, e.g., United States v. 633.07 Acres of Land, 362 F. Supp. 451, 453 (M.D. Pa. 1973) (upholding admission of prior sale, reecting payment

of preexisting debt, because it was a “bona de and voluntary transaction” and circumstances were fully explained and went to weight,

not admissibility; court warned that if the prior sale had been admitted “without explanation as to the circumstances surrounding the

transaction, . . . reversible error would have been committed”); cf. United States v. Certain Land Situated in Detroit (DIBCO III (for Detroit Int’l

Bridge Co.)), 600 F. Supp. 2d 880, 897 (E.D. Mich. 2009), aff ’d, 633 F.3d 418 (6th Cir. 2011) (reasonable for appraiser to discount prior sale

of property “due to evidence that it was not an arms length transaction”).

467 Hickey v. United States, 208 F.2d 269, 273 (3d Cir. 1953) (“While it is true that prior sales of the condemned property eliminate any question

as to whether another sale was of a comparable piece of property, nevertheless the comparison of sales of other properties have their

advantages too. For example, the sale of another property may be closer in time to the date of the taking, and therefore would reect more

accurately the condition of the market at the time of the taking.”).

468 See Section 1.3.1.5. Appraisals subject to the Uniform Act must include “at least a 5-year sales history of the property.” 49 C.F.R. § 24.103(a)(2)(i).

Some transactions

require special attention,

verication, and analysis,

including:

• Prior sales of the same

property

• Transactions with

potential nonmarket

motivations

• Exchanges of property

• Sales that include

personal property

• Contingency sales

• Oers, listings, contracts,

and options

• Sales after the date of

valuation

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards124

a prior transaction without rst contacting the participants

“to ascertain their motives” would be based on “nothing but

speculation[.]”

469

These requirements reect the federal courts’ recognition that

considering a property’s sale and use history is simply good

practice in “forming an intelligent opinion” of its value.

470

Because a prior sale of the property being acquired is extremely

pertinent, such evidence has been allowed even when a

considerable period of time has elapsed between the sale and the

date of valuation.

471

The sales history should also include prior

transactions involving a portion of the property under appraisal,

such as sales of individual parcels that were subsequently

assembled to form the single property under appraisal.

472

4.4.2.4.2. Transactions with Potential Nonmarket Motivations.

Not all property transactions can be used as potential comparable sales in valuations for federal

acquisitions. While few types of transactions are categorically excluded from consideration

under modern jurisprudence,

473

as a matter of law several types of sales can be considered

only under certain circumstances or for limited purposes. Accordingly, careful verication and

analysis of each sale is required to ensure the appraiser’s opinion of value does not reect any

legally improper considerations.

474

Transactions that involve potential nonmarket motivations

include: (1) forced sales, (2) distress sales, (3) settlement negotiations, (4) sales between related

parties or entities, (5) sales to government or other entities with condemnation authority, (6)

sales to environmental or other public interest organizations, and (7) project-inuenced sales.

(1) Forced Sales. Forced sales are transactions that occur under a form of legal compulsion such

as foreclosure or condemnation, are nonmarket transactions as a matter of law, and therefore

cannot be considered as comparable sales.

475

Forced sales include sales “at foreclosure, under

deed of trust securing indebtedness, at execution of attachment, at auction, under the pressure

of the exercise of the power of eminent domain, or other coercion sui generis—types of legal

469 428.02 Acres, 687 F.2d at 270-72, 271 n.5; see Olson v. United States, 292 U.S. 246, 257 (1934) (prohibiting “mere speculation and conjecture”

as basis for determining value).

470 See Int’l Paper Co. v. United States, 227 F.2d 201, 208 (5th Cir. 1955).

471 E.g. Carlstrom v. United States, 275 F.2d 802, 809 (9th Cir. 1960) (sale six or seven years prior to valuation date); Dickinson v. United States, 154

F.2d 642,43 (4th Cir. 1946) (six years); United States v. Becktold Co., 129 F.2d 473, 479 (8th Cir. 1942) (passage of 14 years “went to the weight

of the evidence, rather than to its admissibility.”).

472 See United States v. 1.604 Acres of Land (Granby III), 844 F. Supp. 2d 685, 688-89 (E.D. Va. 2011) (nding more facts were needed to

determine admissibility of prior sales of individual parcels in valuation of ensuing assembled property; prior sales of parcels were ultimately

admitted for purpose of comparison with concurrent comparable sales, but not as evidence of value of the property as assembled).

473 United States v. 320 Acres of Land, 605 F.2d 762, 798-99 & nn.65-66 (5th Cir. 1979) (citing cases); see, e.g., United States v. 4.85 Acres of Land in

Lincoln Cty., 546 F.3d 613, 618-19 (9th Cir. 2008) (refusing to categorically exclude post-acquisition sales) (citing cases).

474 See Olson, 292 U.S. at 256 (“Considerations that may not reasonably be held to aect market value are excluded.”); see, e.g., 4.85 Acres, 546

F.3d at 619 (requiring “‘separate ndings of the comparability of each of the proered comparable properties to the [subject] property’”),

quoting United States v. 68.94 Acres of Land, 918 F.2d 389, 399 (3d Cir. 1990).

475 United States v. Certain Land in Fort Worth, 414 F.2d 1029, 1031-32 (5th Cir. 1969); D.C. Redev. Land Agency v. 61 Parcels of Land, 235 F.2d

864, 865-66 (D.C. Cir. 1956); Hickey v. United States, 208 F.2d 269, 275 (3d Cir.1953) (“A forced sale is one which has no probative value

whatever and therefore must be excluded from evidence.”); United States v. 5139.5 Acres of Land, 200 F.2d 659, 661 (4th Cir. 1952); Baetjer

v. United States, 143 F.2d 391, 397 (1st Cir. 1944); see United States v. 79.95 Acres of Land, 459 F.2d 185, 187 (10th Cir. 1972); cf. BFP v.

Resolution Trust Corp., 511 U.S. 531, 538 (1994) (“‘[F]air market value’ presumes market conditions that, by denition, simply do not obtain

in the context of a forced sale.”).

Under these Standards,

appraisal reports must

include:

• a 10-year sales history

of the subject property

(including the whole

property or portions);

• the most recent sale of

the subject property

(regardless of when it

occurred); and

• an analysis of the most

recent sale’s relevance (or

lack of relevance) to the

property’s market value

on the date of valuation.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 125

compulsion generally disclosed by public records.”

476

Appraisers must carefully investigate

the circumstances of a potential forced sale to ensure they do not consider a transaction in

which “elements of compulsion so aected the seller that the sale could not be said to be fairly

representative of market value at the time made.”

477

(2) Distress Sales. Similarly, distress sales and sales with atypical nancing terms are

questionable indicators of value and can be used only with great care.

478

If limited market data

necessitates reference to such a sale or sales, the appraiser must carefully analyze the circumstances

of each transaction

479

and make proper adjustments to account for any nonmarket motivations.

480

(3) Settlement Negotiations. It is generally recognized that oers of settlement are not reliable

indicators of market value because such oers are often in the nature of compromise to avoid

the expense and uncertainty of litigation.

481

As a result, appraisers cannot rely on settlement

negotiations or completed settlements as evidence of market value. As early as its October 1876

term, the Supreme Court noted that well-recognized principles made an oer of compromise

inadmissible.

482

The prohibition against the admissibility of oers to compromise and completed

compromises is also codied in Rule 408 of the Federal Rules of Evidence.

483

As with any sale,

the appraiser should not simply assume that a transaction was a settlement to avoid or resolve

litigation, but rather should contact the participants to ascertain their motives.

484

(4) Sales Between Related Parties or Entities. Sales between members of a family or

closely related business entities are not arm’s-length transactions, and since they may involve

other factors than market value considerations, such sales generally cannot be considered.

485

(5) Sales Involving the Government or Other Condemnation Authority. Sales to

government entities are inherently problematic for federal appraisal purposes because they routinely

476 Fort Worth, 414 F.2d at 1031-32 (quoting 61 Parcels, 235 F.2d at 865-66); see 79.95 Acres, 459 F.2d at 187 (“[A] foreclosure sale is not an arms

length transaction involving a willing buyer and a willing seller. The amount of money one has ‘invested’, i.e., paid, in the acquisition of

property by foreclosure is not relevant . . . . It is not evidence of fair market value.”); cf. BFP, 511 U.S. at 537 (“Market value . . . is the very

antithesis of forced-sale value.”).

477 Hickey, 208 F.2d at 275; Baetjer, 143 F.2d at 397 (“Only sales on foreclosure and similar forced transactions not on the open market are without

probative force as a matter of law. The motivation behind other transactions can be shown . . . .”); accord 5139.5 Acres, 200 F.2d at 661.

478 United States v. 480.00 Acres of Land (Fornatora), 557 F.3d 1297, 1305 (11th Cir. 2009) (“distress sales . . . oer[] little insight”); Hickey, 208

F.2d at 275 (“[C]ompulsion may also be that created by business circumstances. For example, a property taken in discharge of a debt may be

considered a forced sale, where the creditor had little choice in the matter.”); cf. United States v. Deist, 442 F.2d 1325, 1327 (9th Cir. 1971) (“a

‘forced’ or ‘distress’ sale wherein the seller was shown to have been in nancial diculty and in need of making a sale”).

479 See, e.g., Hickey, 208 F.2d at 275-76.

480 See, e.g., Fornatora, 557 F.3d at 1305; Deist, 442 F.2d at 1327 (nders of fact “recognized the [forced or distress] sales for what they were and

gave little weight to either”).

481 United States v. 10.48 Acres of Land, 621 F.2d 338, 339-40 (9th Cir. 1980); Slattery Co. v. United States, 231 F.2d 37, 41 (5th Cir. 1956); United

States v. 46,672.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13 (10th Cir. 1975); Evans v. United States, 326 F.2d 827 (8th Cir. 1964); United

States v. Foster, 131 F.2d 3 (8th Cir. 1942).

482 Home Ins. Co. v. Balt. Warehouse Co., 93 U.S. 527, 548 (1876); United States v. Playa De Flor Land & Improvement Co., 160 F.2d 131, 136 (5th

Cir. 1947); cf. Barnes v. S.C. Pub. Serv. Auth., 120 F.2d 439, 440 (4th Cir. 1941).

483 Rule 408 is designed “to encourage settlements which would be discouraged if such evidence were admissible.” Fed. r. eVid. 408, notes of

Committee on the Judiciary, Senate Report No. 93-1277.

484 See United States v. 428.02 Acres of Land, 687 F.2d 266, 270-72, 272 n.5 (8th Cir. 1982).

485 See Deist, 442 F.2d at 1327 (“purported sale was shown to have been an ‘intra-family’ transaction”); see United States v. 47.14 Acres of Land,

674 F.2d 722, 726 (8th Cir. 1982) (“[C]omparable sales are the best evidence of the value . . . , which sales on the whole reect the principle

of a willing seller and a willing buyer concluding arms-length negotiations.”); Welch v. Tenn. Valley Auth., 108 F.2d 95, 101 (6th Cir. 1939)

(“Sales at arms length of similar property are the best evidence of market value.”); cf. United States v. Leavell & Ponder, Inc., 286 F.2d 398,

405-06 (5th Cir. 1961) (describing transaction in which the parties “ ‘reach(ed) up in mid-air and pull(ed) down a gure—any gure they

wanted to,’ and that is what they reported for income tax purposes”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards126

involve nonmarket considerations, making them inaccurate indicators

of market value and therefore improper to consider as comparable

sales.

486

For example, as recognized by the federal courts, such

transactions tend to reect payments “in the nature of compromise

to avoid the expense and uncertainty of litigation and are not fair

indications of market value.”

487

Courts also exclude such evidence

in litigation because it “complicates the record, confuses the issue, is

misleading, and especially in condemnation cases, raises collateral issues

as to the conditions under which such sales were made . . . .”

488

Sales to government entities must therefore be viewed as suspect from the outset, but they cannot,

and should not, be rejected by appraisers as categorically invalid comparable sales.

489

If the

appraiser determines, after careful analysis and verication, that a sale to a government entity was

a true open-market transaction, the sale may be appropriate to consider,

490

particularly if there is

a paucity of private sales available for use in the sales comparison approach to value.

491

But such

a determination requires extraordinary verication due to the nonmarket considerations inherent

in most government acquisitions.

492

Mere conclusory statements that a transaction was voluntary

or did not involve the threat of condemnation are not sucient.

493

For example, the Tenth Circuit

barred consideration of the government transactions at issue despite one witness’s testimony that

the transactions were “voluntary,” pointing out that the same witness “also admitted that the

government was eager to obtain the [properties] without using the condemnation process.”

494

While some cases allude to a split of legal authority on the admissibility of prices paid by entities

with the power of eminent domain,

495

the federal courts uniformly hold that such sales cannot

486 See United States v. 0.59 Acres of Land, 109 F.3d 1493, 1498 (9th Cir. 1997); 10.48 Acres, 621 F.2d at 339; United States v. 25.02 Acres of Land,

495 F.2d 1398, 1403 (10th Cir. 1974); Transwestern Pipeline Co. v. O’Brien, 418 F.2d 15, 17-18 (5th Cir. 1969); Evans, 326 F.2d at 831; Slattery,

231 F.2d at 40-41.

487 10.48 Acres, 621 F.2d at 339 (quoting Slattery, 231 F.2d at 41).

488 United States ex rel. Tenn. Valley Auth. v. Bailey, 115 F.2d 433, 434 (5th Cir. 1940); see also Duk Hea Oh v. Nat’l Capital Revitalization Corp., 7 A.3d 997,

1010-11 (D.C. 2010) (barring evidence of other government acquisitions that would “bias the [government] by requiring it to explain its

compromise decision and ‘what’s going on with the government’ and would occasion a ‘frolic and detour’ that would ‘bias’ the [government]”).

489 See 10.48 Acres, 621 F.2d at 339-40; cf. Olson v. United States, 292 U.S. 246, 256 (1934) (“[T]o the extent that probable demand by prospective

purchasers or condemnors aects market value, it is to be taken into account. But . . . . [v]alue to the taker of a piece of land combined with

other parcels for public use is not the measure of or a guide to the compensation to which the owner is entitled.”) (citation omitted).

490 Transwestern, 418 F.2d at 18 (Sales to condemnors can be considered “only when it is certain that those sales truly represent the market

value of the land in question.”); 25.02 Acres, 495 F.2d at 1403 (Such sales “often involve compulsion, coercion or compromise . . . . [A]

condemning party might be willing to give more than the property is worth, and the owner might be willing to take less than it is worth

rather than undergo a lawsuit.”).

491 E.g., United States v. 264.80 Acres of Land in Ramsey Cty., 360 F. Supp. 1381, 1383 (D. N.D. 1973) (“[T]his purchase of land in the area by [a

government agency] was not an isolated transaction. The [agency] had made several other purchases in the area, and . . . taken together, all

of these purchases had a signicant impact on the general market value of land in that community.”); see Olson, 292 U.S. at 257.

492 E.g., United States v. 46,672.96 Acres in Doña Ana Ctys., 521 F.2d 13, 17 (10th Cir. 1975) (“[G]reat caution should be used . . . since [the price

paid by a condemnor] is an inaccurate indicator of market value.”); see also United States v. 2.739 Acres of Land in Santa Cruz Cty., 609 F.

App’x 436, 437-38 (9th Cir. 2015) (unpubl.) (upholding use of sale to government entity given “evidence that the sale had been voluntary”);

cf. Olson, 292 U.S. at 256 (“Considerations that may not reasonably be held to aect market value are excluded. Value to the taker of a piece

of land combined with other parcels for public use is not the measure of or a guide to . . . compensation . . . .”).

493 Transwestern, 418 F.2d at 19; see, e.g., 264.80 Acres in Ramsey, 360 F. Supp. at 1383.

494 46,672.96 Acres in Doña Ana, 521 F.2d at 17.

495 See Duk Hea Oh v. Nat’l Capital Revitalization Corp., 7 A.3d 997, 1010-11 (D.C. Cir. 2010) (noting D.C. Circuit’s conicting holdings in

Nash, 395 F.2d at 573, 575-76, and Hannan v. United States, 131 F.2d 441, 442-43 (D.C. Cir. 1942)). Compare Transwestern, 418 F.2d at 18-19

(“generally prevailing rule” excludes sales to buyers with the power of eminent domain, subject to “sensible exception” if party “show[s]

that the sales in question were made willingly, without coercion, compulsion, or compromise”) with Nash v. D.C. Redev. Land Agency, 395 F.2d

571, 575 (D.C. Cir. 1967) (McGowan, J., explaining why petition for rehearing en banc should be denied) (“minority rule . . . [admits] such

evidence . . . provided the purchase by the condemnor was made without compulsion”).

Sales to government

entities are inherently

suspect and cannot be

relied on as comparable

sales without a

determination that they

are true open-market

transactions.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 127

be considered if they are compelled by nonmarket considerations, but may be considered if they

are true open-market transactions free of compulsion.

496

Indeed, the federal courts have recognized

a multitude of motivations that may compel a government entity (or other entity with the

power of eminent domain

497

) to acquire lands at a price other than market value. For example,

“the necessity of the purchaser, the disposition of the vendor, and peculiar circumstances

and conditions may be such as to oblige a purchaser to submit to severe exactions in order

to consummate a purchase without delay.”

498

Or, “in an accumulation for a project such as a

large airplane plant, the last parcels are undoubtedly more dicult to obtain, at their fair value,

since the purpose of the acquisition is then usually known[,]” and due to “the exigencies which

necessitated speed[, the] . . . parcels were urgently wanted and they were bought without regard

to the real value . . . .”

499

Moreover, “a condemning party might be willing to give more than

the property is worth, and the owner might be willing to take less than it is worth rather than

undergo a lawsuit.”

500

Because of the likelihood of such nonmarket motivations, appraisers can

consider sales to buyers with the power of eminent domain as “evidence of market value only

when it is certain that those sales truly represent the market value of the land in question.”

501

To ensure compliance with federal case law, the appraiser must identify, analyze, and rule out

or appropriately adjust for all potential nonmarket motivations before relying on a sale to a

government entity as a comparable sale.

502

Appraisers must carefully verify the circumstances

surrounding a sale to a government entity to ensure that it meets the criteria of market value or

can be accurately adjusted to reect market value.

503

See Section 1.5.2.4 and Appendix E.

(6) Sales Involving Environmental or Other Public Interest Organizations. Sales to

environmental or other public interest organizations may be similarly suspect. For example,

acquisitions may be authorized for a government conservation or preservation project before

adequate funds are appropriated to acquire the entire project area.

504

Conservation or other

environmental organizations may then voluntarily acquire lands within the project area for the sole

purpose of transferring them to the government once funding becomes available.

505

Sales made

496 United States v. 0.59 Acres of Land, 109 F.3d 1493, 1498 (9th Cir. 1997); 46,672.96 Acres in Doña Ana, 521 F.2d at 17; Transwestern, 418 F.2d

at 18-19; Evans v. United States, 326 F.2d 827, 831 (8th Cir. 1964); Slattery Co. v. United States, 231 F.2d 37, 40-41 (5th Cir. 1956).

497 For example, Congress can delegate a limited right of eminent domain to private entities “to be exercised by them in the execution of works

in which the public is interested.” Miss. & Rum R. Boom Co. v. Patterson, 98 U.S. 403, 406 (1878); e.g., Natural Gas Act, 15 U.S.C. § 717f(h)

(giving gas companies power of eminent domain for construction of natural gas pipelines).

498 United States v. Freeman, 113 F. 370, 371 (D. Wash. 1902) (excluding “the price of adjoining lands, which was xed by agreement, and was

paid by the government” from consideration); see Justice v. United States, 145 F.2d 110, 111 (9th Cir. 1944) (rejecting consideration of “the

sum paid by the Government for comparable lands” (citing Freeman, 113 F. at 371)).

499 Phillips v. United States, 148 F.2d 714, 716 (2d Cir. 1945); see Olson, 292 U.S. at 257.

500 25.02 Acres, 495 F.2d at 1403; see 46,672.96 Acres in Doña Ana, 521 F.2d at 17.

501 Transwestern, 418 F.2d at 19.

502 As J.D. Eaton observed, “unlike most private purchases, a government purchase and the decision-making process that led to it are usually

well documented. The appraiser can take advantage of that documentation in the sales verication process. In fact, the appraiser must take

advantage of it.” eATon, supra note 16, at 222.

503 Sales to a buyer with condemnation authority are inherently suspect, and cannot be relied on as comparable sales without a determination

that they are true open-market transactions. But sales involving a seller with condemnation authority are a dierent matter.

504 For example, Congress authorized an expansion of the boundaries of Everglades National Park in 1989, but did not provide funding for the

private land acquisition necessary for expansion until 1992, and the expansion was not fully funded until 1999. See 16 U.S.C. §§ 410r-5 et

seq.; United States v. 480.00 Acres of Land (Fornatora), 557 F.3d 1297, 1300 (11th Cir. 2009) (discussing East Everglades Acquisition Project);

see also Section 4.5 (Project Inuence).

505 See, e.g., 16 U.S.C. § 410r-9(2)(B) (authorizing acquisition “from willing sellers by donation, purchase with donated or appropriated funds, or

exchange” of property interests “within the area . . . to be added to Everglades National Park”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards128

under such circumstances may well reect project inuence, which cannot be considered.

506

And

of course, where “a market for a particular use is created solely as a result of the project for which

the land is condemned, value based on that use must be excluded.”

507

Moreover, such sales, like

direct sales to the government, typically involve nonmarket motivations and considerations beyond

the property’s market value for its “highest and most protable use….”

508

But “[c]onsiderations

that may not reasonably be held to aect market value are excluded.”

509

Thus, as with sales to

government entities, sales to public interest organizations cannot be used as comparable sales

without careful analysis to identify and rule out or adjust for potential nonmarket motivations.

510

(7) Project-Inuenced Sales. As discussed in depth in Section 4.5, valuations must disregard any

value attributable to the government project prompting the acquisition.

511

Consideration of project

inuence on market value is prohibited under the scope of the project rule. Whether the rule

applies and how to apply it in a particular valuation assignment will require legal instructions.

4.4.2.4.3. Exchanges of Property. Sales involving an exchange of property generally introduce too

many collateral issues to be reliable indicators of market value. As the Fifth Circuit explained,

if evidence of an exchange “is to be considered as proof of present valuation, the values of

such exchanged lands obviously must be proved by the same standards as attends proof of

value of the property being condemned.”

512

4.4.2.4.4. Sales that Include Personal Property. Sales that include personal property cannot be

considered unless they can be adjusted to reliably reect only the real property transaction.

513

For example, in considering the sale of a farm in which the price included personal property,

the Second Circuit held it was legal error to exclude reliable evidence of “the actual

consideration received for [the] realty.”

514

In the sale of a farm, the purchase price often

includes equipment, livestock, and other items of consideration.

515

506 See Section 4.5; cf. United States v. Miller, 317 U.S. 369, 376-77 (1943) (“If, however, the public project from the beginning included the taking

of certain tracts but only one of them is taken in the rst instance, the owner of the other tracts should not be allowed an increased value

for his lands which are ultimately to be taken any more than the owner of the tract rst condemned is entitled to be allowed an increased

market value because adjacent lands not immediately taken increased in value due to the projected improvement.”).

507 United States v. 46,672.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13, 15-16 (10th Cir. 1975); cf. Miss. & Rum River Boom Co. v. Patterson,

98 U.S. 403, 410 (1878) (“[T]he proper inquiry was, ‘What is the value of the property for the most advantageous uses to which it may be

applied?’” (quoting In re Furman Street, 17 Wend. 649 (N.Y. Sup. Ct. 1836)).

508 Olson v. United States, 292 U.S. 246, 255 (1934); see Section 4.3. This may be true of not only the buyer’s but also the seller’s motivations (e.g.,

sellers may claim such sales as a tax write-o). Cf. United States v. Leavell & Ponder, Inc., 286 F.2d 398, 405-06 (5th Cir. 1961).

509 Olson, 292 U.S. at 256; cf. Boom Co., 98 U.S. at 407-08 (“In determining the value of land appropriated for public purposes, the same

considerations are to be regarded as in a sale of property between private parties. . . . [The amount] is to be estimated by reference to the

uses for which the property is suitable, having regard to the existing business or wants of the community . . . .”).

510 Where public interest organizations work closely with the government agency administering conservation or similar projects, extensive

sale documentation may be available. In such sales, the government agency commonly approves an organization’s selection of appraisers,

provides or assists in the development of appraiser instructions, and reviews the appraisal before the organization makes an oer to purchase

the property. See note 528, supra, quoting eATon, supra note 16, at 221-23.

511 United States v. Reynolds, 397 U.S. 14, 16-17 (1970); Miller, 317 U.S. at 376-77; United States v. 320 Acres of Land, 605 F.2d 762, 781-90 (5th

Cir. 1979).

512 Leavell & Ponder, 286 F.2d at 406.

513 Cf. Stephenson Brick Co. v. United States ex rel. Tenn. Valley Auth., 110 F.2d 360, 361 (5th Cir. 1940) (“the fair value . . . , excluding personal

property, ought to be ascertained”).

514 United States v. 18.46 Acres of Land in Swanton, 312 F.2d 287, 289 (2d Cir. 1963).

515 See ApprAisAl insT. & Am. soc’y oF FArm mAnAgers, The ApprAisAl oF rurAl properTy 234-35 (2d ed. 2000).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 129

4.4.2.4.5. Contingency Sales. Sales of property with a highest and best use for some form of

development that requires rezoning or land use permits generally take the form of contingency

sales or initial options.

516

Such sales are contingent on the would-be purchaser’s ability to procure

the rezoning or permitting necessary to develop the property to its highest and best use; if the

rezoning or permitting is denied, the contingency is not met and the sale does not close (or the

option is not exercised). Therefore, when such sales are actually consummated, they reect the

price of property already rezoned or permitted for development to its highest and best use. If, on the date

of value, the property being appraised would require rezoning or permits to be developed to

its highest and best use, completed contingency sales cannot be considered as comparable sales

without appropriate adjustments to account for the risks, time delays, and costs associated with

rezoning or permitting.

517

As discussed in Section 4.3.2.4, appraisers cannot merely assume

that such a rezoning/permit is in place for the property under appraisal or assume that such a

rezoning/permit will be granted.

518

4.4.2.4.6. Oers, Listings, Contracts, and Options. Unconsummated transactions are generally

not reliable indicators of value and therefore cannot be used as comparable sales. Appraisers

should still carefully analyze such data, which may be appropriate to consider for certain limited

purposes.

519

“An opinion, however, largely based on owners’ asking prices ought to be rejected,

for the courts have decided that even oers by buyers are too unreliable to be considered.”

520

A binding and unconditional contract of sale can generally be considered as evidence of value,

even if title has yet to be conveyed.

521

By contrast, mere nonbinding oers or unexercised options

are not permissible evidence of value, and therefore the appraiser should give little or no weight

to such options except to the extent that they may set limits of value.

522

Listings and other nonbinding oers to buy or sell real estate generally cannot be relied on as

comparable sales.

523

As the Supreme Court explained:

It is frequently very dicult to show precisely the situation under which these oers were

516 See, e.g., United States v. 429.59 Acres of Land (Imperial Beach), 612 F.2d 459 (9th Cir. 1980); United States v. Meadow Brook Club, 259 F.2d 41,

46 (2d Cir. 1958), aff ’g United States v. 50.8 Acres of Land in Hempstead, 149 F. Supp. 749 (E.D.N.Y. 1957).

517 Meadow Brook Club, 259 F.2d at 46; see Imperial Beach, 612 F.2d at 462-63; Foster v. United States, 2 Cl. Ct. 426, 447-48 & n.19 (1983) (Sale

was “of questionable comparability” because “it was unlikely that a conditional use permit could be obtained.”).

518 See Olson v. United States, 292 U.S. 246, 257 (1934); United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 4-5, 7-9 (2009); United

States v. 320 Acres of Land, 605 F.2d 762, 818 & n.128 (5th Cir. 1979) (citing cases); Meadow Brook Club, 259 F.2d at 45.

519 See note 498, infra; cf. USPAP, Standards Rule 1-5 (appraisers must analyze “all agreements of sale, options, and listings of the subject

property current as of the eective date of the appraisal” in developing opinion of market value).

520 United States v. Dillman, 146 F.2d 572, 575 (5th Cir. 1944) (quoting Atlantic Coast Line R. Co. v. United States, 132 F.2d 959, 963 (5th Cir.

1943)); United States v. 0.59 Acres of Land in Pima Cty., 109 F.3d 1493, 1496 (9th Cir. 1997) (“[a] letter containing a mere oer to buy

‘comparable’ property [was] plainly inadmissible.”); accord United States v. 10,031.98 Acres of Land, 850 F.2d 634, 637 (10th Cir. 1988)

(Where witness “used the oering price of replacement property as the basis for guring the value of his own property . . . , his opinion of

the value . . . cannot be separated from the basis on which he arrived at that opinion even though [he] factored in the dierence” between

the subject property and those on which the oers were received.).

521 United States v. 312.50 Acres of Land, 812 F.2d 156, 157 (4th Cir. 1987); United States v. 428.02 Acres of Land, 687 F.2d 266, 270-71 (8th Cir.

1982); United States v. 114.64 Acres of Land, 504 F.2d 1098, 1100 (9th Cir. 1974); United States v. Smith, 355 F.2d 807, 811-12 (5th Cir. 1966).

522 0.59 Acres in Pima, 109 F.3d at 1495-96; 10,031.98 Acres, 850 F.2d at 637; United States v. 158.24 Acres of Land, 696 F.2d 559, 565 (8th Cir.

1982); United States v. Certain Land in Fort Worth, 414 F.2d 1029, 1032 (5th Cir. 1969).

523 10,031.98 Acres, 850 F.2d at 637 (“It has long been held in condemnation suits that the oering price of replacement properties cannot be

used to show the fair market value of the condemned land.”); 158.24 Acres, 696 F.2d at 565 (landowner demand/oer to sell); Smith, 355

F.2d at 811-13 (“transactions which were in fact mere oers and not sales and which were, therefore, of no probative value on the question

of market value”); Bank of Edenton v. United States, 152 F.2d 251, 253 (4th Cir. 1945).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards130

made. In our judgment they do not tend to show value, and they are unsatisfactory, easy of

fabrication and even dangerous in their character as evidence upon this subject.

524

These risks are still greater “when the oers are proved only by the party to whom they are

alleged to have been made, and not by the party making them.”

525

An option to purchase is a form of an oer; it is an oer that is irrevocable for the period

stipulated. Unexercised options “represent only what a willing seller would take for his land

but not, unless and until exercised by the holder of the option, what a willing buyer would give

for it.”

526

As a result, even if consideration has been paid for it, an unexercised option—like an

unaccepted oer—is inadmissible to establish market value. As the Fifth Circuit reasoned:

We cannot agree that paying a consideration for the granting of an option to purchase

property at a stipulated price changes its basic character or increases its reliability as an indicia

of value. The payment of consideration makes the landowner’s oer irrevocable for the

period of time stipulated in the option, . . . and thus assures the holder that amount of time

in which to consider all the facts which he deems relevant and to decide at his leisure whether

or not to buy. The payment thus merely binds the landowner and indicates the bona des of

his asking price. It does not in any way bind the holder to buy at that price or indicate that he

regards that price as a fair one from a purchaser’s standpoint. An option, even though paid for,

may well have been acquired for purely speculative reasons.

527

Exercised options, on the other hand, “when they result in a binding agreement between buyer

and seller, do not dier, from a probative standpoint, from completed transactions.”

528

4.4.2.4.7. Sales After the Date of Valuation. Sales that occurred after

the date of valuation may be considered if they are not otherwise

incompetent as evidence of value.

529

In the words of the

Eleventh Circuit: “While post-taking sales are not automatically

appropriate evidence of comparable value, neither are they

automatically inappropriate.”

530

But post-acquisition sales may be

tainted by government project inuence and reect elements of

value that cannot be considered under the scope of the project

524 Sharp v. United States, 191 U.S. 341, 349 (1903).

525 Id. In condemnation proceedings, evidence of owners’ oers to sell their own property may be permitted as admissions of value. Albert

Hanson Lumber Co. v. United States, 261 U.S. 581, 589 (1923) (“the specied price was xed with perfect freedom; they show a completed

agreement of purchase and sale; and there is no reason why they should not be considered as the owner’s admission of the then value of the

property”); cf. United States v. Hart, 312 F.2d 127, 130 (6th Cir. 1963) (“The testimony was that of the oerors themselves under oath, and

not that of the oerees. [It] was not tendered primarily for valuation purposes, negativing any apparent motive for fabrication.” citing Erceg

v. Fairbanks Expl. Co., 95 F.2d 850, 853-54 (9th Cir. 1938)).

526 Smith, 355 F.2d at 811.

527 Id. at 812 (quoting Sharp, 191 U.S. at 348 (“Pure speculation may have induced it . . . .”)).

528 Smith, 355 F.2d at 812 (citing, inter alia, United States v. Certain Parcels of Land in Phila., 144 F.2d 626, 629-30 (3d Cir. 1944)).

529 United States v. 4.85 Acres of Land in Lincoln Cty., 546 F.3d 613, 618-19 (9th Cir. 2008); United States v. 68.94 Acres of Land in Kent Cty., 918

F.2d 389, 398-99 & n.6 (3d Cir. 1990): United States v. 0.161 Acres of Land in Birmingham, 837 F.2d 1036, 1044 (11th Cir. 1988); United States

v. 312.50 Acres of Land in Prince William Cty., 812 F.2d 156, 157 n.3 (4th Cir. 1987): United States v. 428.02 Acres of Land in Newton & Searcy

Ctys., 687 F.2d 266, 270 (8th Cir. 1982); United States v. 320 Acres of Land, 605 F.2d 762, 799-803 (5th Cir. 1979); United States v. 691.81 Acres

of Land in Clark Cty., 443 F.2d 461, 462 (6th Cir. 1971); United States v. 63.04 Acres of Land at Lido Beach, 245 F.2d 140, 144 (2d Cir. 1957).

530 0.161 Acres in Birmingham, 837 F.2d at 1044.

Sales after the date

of valuation may be

considered if they are

reliable indicators of value.

Post-acquisition sales may

be particularly useful in

valuing the remainder

property in partial

acquisitions.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 131

rule.

531

As a result, before considering such sales, the appraiser must analyze “whether the sales

are tainted and how much the taint distorts true market value . . . .”

532

In partial acquisitions, post-acquisition sales that reect the inuence of the government project

can be highly comparable in valuing the remainder property after acquisition.

533

For example,

“[s]uch sales should be particularly useful when the measure of [compensation] … is the

dierence between the market value before and after imposition of an easement.”

534

4.4.3. Cost Approach. Where appropriate, appraisers can

employ the cost approach in valuing property with existing

physical improvements.

535

In this approach, the reproduction

or replacement cost of the improvements, less appropriate

depreciation, is added to the estimated market value of the

land as if vacant to derive an indication of the market value

of the property as a whole.

536

It bears noting that the cost

approach can yield an indication of market value, but “cost is not

synonymous with market value. A fortiori, cost of land and cost

of improvements taken separately and added are not to be equalized with fair market value.”

537

Rather, the elements are considered under the cost approach in developing an opinion of the

market value of the property as a whole.

538

While not inherently awed, the cost approach has often been misused, leading a number of

courts to identify the cost approach as “one of the least reliable indicia of market value” for

the purpose of measuring just compensation.

539

Indeed, as the Fifth Circuit observed, when

improperly applied, “reproduction cost evidence, though perhaps making it easier to reach some

solution, only ma[kes] the proper solution more dicult.”

540

As a result, the cost approach is rarely

531 See 4.85 Acres in Lincoln, 546 F.3d at 618; 68.94 Acres in Kent, 918 F.2d at 398-99; 320 Acres, 605 F.2d at 799; Section 4.5.

532 320 Acres, 605 F.2d at 802. In some cases, post-acquisition sales may be so distorted by project inuence that they must be categorically excluded,

particularly if sucient untainted sales are available for a fair comparison – but this would be a legal determination beyond the scope of the

appraiser. See id. at 802-03; 68.94 Acres in Kent, 918 F.2d at 398-99; see also United States v. Reynolds, 397 U.S. 14, 20-21 (1970); 4.85 Acres in Lincoln, 546

F.3d at 618-19 (noting “necessity of a case-by-case approach”); Lido Beach, 245 F.2d at 144 (“In every case it is a question of judgment . . . .”).

533 Project inuence on market value normally must be disregarded, as discussed in Section 4.5. But partial acquisitions present a special

situation, as explained in Section 4.6: the measure of compensation for a partial acquisition is the dierence in the market value of the

landowner’s property before and after the government’s acquisition. As a result, the impact of the government project would normally be

disregarded for the “before” value but considered for the “after” value.

534 United States v. 1129.75 Acres of Land in Cross & Pointsett Ctys., 473 F.2d 996, 999 (8th Cir. 1973).

535 Compare United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 682 (E.D.Va. 2011) (allowing cost approach in valuation of

partially improved property), with United States v. 15,478 Square Feet of Land (Balaji Sai), No. 2:10-cv-00322, 2011 WL 2471586 at *5

(E.D.Va. June 20, 2011) (rejecting cost approach in valuation of vacant property).

536 Granby I, 844 F. Supp. 2d at 682; see United States v. 100 Acres of Land, 468 F.2d 1261, 1265 (9th Cir. 1972) (citing United States v. Toronto,

Hamilton & Buffalo Nav. Co., 338 U.S. 396, 402, 403 (1949)). While replacement cost and reproduction cost are distinct appraisal concepts as

discussed below, the terms sometimes appear interchangeably in case law.

537 Kinter v. United States, 156 F.2d 5, 7 (3d Cir. 1946).

538 See, e.g., United States v. Becktold Co., 129 F.2d 473, 478-79 (8th Cir. 1942) (question is “the value of the land as enhanced by the buildings

thereon” (citations omitted)); United States v. Wise, 131 F.2d 851, 853 (4th Cir. 1942) (whether existence of improvements “contributes

anything to the fair market value of the whole”).

539 United States v. Certain Interests in Prop. in Champaign Cty., 271 F.2d 379, 382 (7th Cir. 1959); accord United States v. 55.22 Acres of Land in

Yakima Cty., 411 F.2d 432, 435 (9th Cir. 1969); United States v. 49,375 Square Feet of Land in Manhattan (252 Seventh Ave.), 92 F. Supp. 384,

387-88 (S.D.N.Y. 1950), aff ’d sub nom. United States v. Tishman Realty & Constr. Co., 193 F.2d 180 (2d Cir. 1952) (per curiam) (arming on

opinion of trial court) (“[The cost approach] is in itself absurd in the ordinary case, because even in ordinary times it is ridiculous to suppose

that anyone would think of reproducing this or any like property, and that same thing would be true in the vast majority of cases, I should

think.”); see eATon, supra note 16, at 159 (noting “agrant misuse of the approach by appraisers [who err] from lack of knowledge [or] use

the cost approach to intentionally exaggerate the market value of property”).

540 United States v. Benning Hous. Corp., 276 F.2d 248, 253 (5th Cir. 1960).

Cost of improvements (incl.

entrepreneurial prot)

- depreciation

+ land value

= indication of market

value of whole property

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards132

acceptable as a stand-alone indication of value for federal acquisitions;

541

instead, it is typically

employed either to test the nancial feasibility of a potential highest and best use

542

or to “check”

or test the reasonableness of estimates of value indicated by other approaches.

543

Use of the cost

approach may be appropriate in the valuation of properties with highly specialized improvements

that have no known comparable sales in the area.

544

Proper application of the cost approach for

any purpose under these Standards requires an understanding of its underlying foundations in the

context of determining just compensation, as well as the specic elements involved.

545

4.4.3.1. Foundations of the Cost Approach. Like the sales comparison and income capitalization

approaches to value, the cost approach is based on the principle of substitution: a prudent

buyer will pay no more for one property than for a similarly desirable property.

546

Likewise,

when several similar properties are available, the one with the lowest price will attract the

greatest demand.

547

The cost approach specically “reects the notion that one will not

pay more for an existing property than it would cost to construct one’s own replacement

for the property.”

548

But as the Supreme Court recognized, “the value of property may be

greater or less than its cost . . . . It is the property and not the cost of it that is protected by

the Fifth Amendment.”

549

Thus, the cost approach as a means of measuring value “may

have relevance—but only, of course, as bearing on what a prospective purchaser would

have paid.”

550

Its relevance to market value therefore cannot be merely assumed in federal

acquisitions; rather, the appraiser must demonstrate that application of the cost approach to

a specic property would be relevant to market participants.

551

The Ninth Circuit suggested

possible ways to make the necessary showing in United States v. 55.22 Acres of Land, such

541 E.g., 55.22 Acres in Yakima, 411 F.2d at 435 & n.2 (rejecting reproduction cost as direct evidence of value (citing Toronto, Hamilton, 338 U.S. at 403)).

542 See also United States v. 0.59 Acres, 109 F.3d 1493, 1497 (9th Cir. 1997) (holding it is improper to “articially increase or decrease the value

of the condemnees’ land by ignoring a condition that the Government did not create”); cf. 252 Seventh Ave., 92 F. Supp. at 389 (“it is obvious

that to make [the building] suitable for the particular industry would mean . . . a very large expense and a considerable diminution of

income . . . .”). Of course, “the determination of a highest and best use does not obviate the need to determine the fair market value in light

of the physical condition of the property.” Rasmuson v. United States, 807 F.3d 1343, 1346 n.1 (Fed. Cir. 2015) (citing Olson, 292 U.S. at 255).

543 See United States v. Certain Interests in Prop. in Brooklyn, 326 F.2d 109, 114-15 (2d Cir. 1964); Fairfield Gardens, Inc. v. United States, 306 F.2d

167, 173-74 (9th Cir. 1962); cf. 252 Seventh Ave., 92 F. Supp. at 396 (award of compensation “is not based upon any one abstraction or

method of valuation, nor on any one isolated circumstance or even set of circumstances[;]” rather it “take[s] into consideration the physical

characteristics of the property, the peculiarities of the area in which it is located, the teachings of the history of property in that area and

adjacent areas, [an] inspection of the building and of comparable properties, sales which were brought forward on the theory that they

involved equivalent buildings, and every bit of information that seemed relevant”). See generally USPAP Standards Rule 1-4(b) (specifying

appraisers’ professional obligations “[w]hen a cost approach is necessary for credible assignment results”), Section 1.6 (The Approaches to

Value); Section 1.6.5 (Reconciliation Process and Final Opinion of Value).

544 E.g., United States v. Becktold Co., 129 F.2d 473 (8th Cir. 1942) (allowing cost approach in valuation of book bindery plant with large, heavy

machinery bolted in place, where no bindery sales had occurred in 20 years and no other sales upon which to base valuation had occurred in

vicinity, and under state law, machinery was part of realty (see Section 4.1.3)); see 55.22 Acres in Yakima, 411 F.2d at 435-36 (prohibiting cost

approach as direct evidence of value where improvements were not “of an unusual nature, such as a church, for which comparable sales or

other indicia of market value would probably be unavailable”).

545 Cf. Standard Oil Co. of N.J. v. S. Pac. Co., 268 U.S. 146, 155-56 (1925) (“It is to be borne in mind that value is the thing to be found and that neither

cost of reproduction new, nor that less depreciation, is the measure or sole guide.” (citing Minnesota Rate Cases, 230 U.S. 352, 434 (1913)).

546 See United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 682 (E.D.Va. 2011); cf. Int’l Paper Co. v. United States, 227 F.2d 201,

207 (5th Cir. 1955).

547 Cf. United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 178 (N.D.N.Y. 2009), adopted by 860 F. Supp. 2d 165 (N.D.N.Y. 2010),

aff ’d, 502 F. App’x 43 (2d Cir. 2012).

548 Granby I, 844 F. Supp. 2d at 682.

549 Brooks-Scanlon Corp. v. United States, 265 U.S. 106, 123 (1924).

550 United States v. Toronto, Hamilton & Bualo Nav. Co., 338 U.S. 396, 402-03 (1949) (naming reproduction cost a “‘false standard of the past’ . . .

when no one would think of reproducing the property”).

551 United States v. 55.22 Acres of Land in Yakima Cty., 411 F.2d 432, 435-36 (9th Cir. 1969); United States v. Certain Interests in Prop. in Cumberland

Cty., 296 F.2d 264, 269-70 (4th Cir. 1961) (“It seems plain that a showing . . . that a reasonable investor would reproduce the project for the

amount given as reproduction or replacement cost would be required before a willing vendee would consider such a gure relevant in his

negotiations with a willing vendor.”); see Toronto, Hamilton, 338 U.S. at 402-03.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 133

as with evidence that “a prudent investor would reproduce the

improvements at the reproduction cost gure [stated],” or that

“willing vendees and vendors would deem reproduction cost less

depreciation relevant in negotiating a purchase and sale of the

property.”

552

The court further suggested that limited use of the cost

approach as but “one guide” considered by the appraiser in arriving

at a fair market value might have been acceptable.

553

Federal courts agree that reliance on the cost approach is improper

“when no one would think of reproducing the property,” or when

no prudent investor would reproduce it for the gure or amount

estimated as replacement or reproduction cost.

554

Thus courts reject the cost approach without

“unequivocal evidence that the [improvements] involved would be reproduced by private

investors at the risk of private capital.”

555

Because the cost approach is designed to inform the valuation of properties with existing physical

improvements, it is generally inapplicable to vacant lands, regardless of costs the landowner may

have incurred to remove prior improvements. As a district court recently explained in rejecting

any use of the cost approach to value a vacant site:

Eorts and expenditures made by the landowner to bring the property to its present, vacant

state, and to maintain it as such, are reected in the comparison of the parcel to the prices

paid on the market for other vacant parcels. Costs to demolish buildings extant on the

property and the associated site work, and property maintenance costs such as real estate taxes

capitalized, do not inure to the benet of a prospective buyer over and above any increase in

value from the property’s status as vacant land.

556

Moreover, the mere existence of improvements does not automatically justify application

of the cost approach; its use is inappropriate where the improvements would be of no value

to a prudent buyer due to the nature or condition of the improvements or of the market or

other factors,

557

or simply because “the original builder guessed wrong.”

558

Again, “cost is

not synonymous with market value.”

559

Thus the Fourth Circuit emphasized the distinction

552 55.22 Acres in Yakima, 411 F.2d at 435-36 (citations omitted).

553 Id. at 435-36; see 2 orgel, supra note 191, at 57 (“The really important problem is that of the use to be made of the evidence [of

value derived from the cost approach] rather than the technical question as to its admissibility.”).

554 Toronto, Hamilton, 338 U.S. at 403; 55.22 Acres in Yakima, 411 F.2d at 435-36; Interests in Cumberland, 296 F.2d at 269-70; United States v.

Benning Hous. Corp., 276 F.2d 248, 253 (5th Cir. 1960); Buena Vista Homes, Inc. v. United States, 281 F.2d 476, 478 (10th Cir. 1960).

555 Benning Hous. Corp., 276 F.2d at 253.

556 United States v. 15,478 Square Feet of Land (Balaji Sai), No. 2:10-CV-00322, 2011 WL 2471586, at *6 (E.D. Va. June 20, 2011) (citing United

States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 285 (1943)).

557 E.g., United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 178 (N.D.N.Y. 2009), adopted by 860 F. Supp. 2d 165 (N.D.N.Y.

2010), aff ’d, 502 F. App’x 43 (2d Cir. 2012) (cost approach did not apply in acquisition where “only structure was an old building that had

not been used in years and whose demolition was necessary in any event”); 55.22 Acres in Yakima, 411 F.2d at 436 (“No doubt, having regard

for [the landowner’s] personal circumstances, these improvements were satisfactory for his purposes, but they were not shown to be of such a

character that, if not on the land, one purchasing the acreage would have wished to construct generally similar improvements.”).

558 United States v. 49,375 Square Feet of Land in Manhattan (252 Seventh Ave.), 92 F. Supp. 384, 387-88 (S.D.N.Y. 1950), aff ’d sub nom. United

States v. Tishman Realty & Constr. Co., 193 F.2d 180 (2d Cir. 1952) (per curiam) (arming on opinion of trial court); Balaji Sai, 2011 WL

2471586, at *6 (“To the extent the inclusion of [demolition and other] costs in the valuation is an attempt to collect reimbursement for [the

landowner’s] prior investment in the property, the costs are impermissible, as the Fifth Amendment does not guarantee the landowner a

return on his investment.” (citing Powelson, 319 U.S. at 285)).

559 Kinter v. United States, 156 F.2d 5, 7 (3d Cir. 1946).

The cost approach is

generally inapplicable to

vacant land, as any value

contributed by bringing

a property to its vacant

state are reected in the

comparison of the parcel

to the prices paid on the

market for other vacant

parcels.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards134

between merely calculating a building’s replacement cost and actually determining a property’s

market value:

[

]

he purpose behind determining replacement cost, or original cost, or any of those things[,] is

to aid you in determining whether or not the existence of those buildings on the land contributes

anything to the fair market value of the whole, and, if it does contribute to it, how much does it

contribute? That applies to each and every structure that was on or in the property.

560

To ensure a reliable indication of market value, every element of the cost approach methodology

and its underlying assumptions must be carefully scrutinized, supported by market research, and

directly linked to the property’s highest and best use.

561

4.4.3.2. Value of the Land (Site) as if Vacant. The value of the site as if vacant and available

for its highest and best use is generally estimated by analysis of comparable sales (i.e., by

application of the sales comparison approach).

562

Of course, this does not allow an appraiser to

disregard actual physical conditions that a reasonably prudent buyer would consider: “A proper

appraisal methodology has to account for those physical conditions.”

563

4.4.3.3. Reproduction Cost and Replacement Cost. The appraiser must distinguish between

reproduction cost and replacement cost, despite the fact that many courts have used the terms

interchangeably.

564

Reproduction cost is the present cost of reproducing the improvement

with an exact replica using the same physical materials; replacement cost is the present cost of

replacing the improvement with one of equal utility.

565

The appraiser may typically use either

measure, but must demonstrate the relevance of the selected measure to the market value of

the specic property being appraised and account for all forms of depreciation appropriate to

the selected method.

566

The estimate of the reproduction or replacement cost of the improvements must be based

on current local market cost of labor and materials for construction of improvements; to be

considered, such improvements and any associated cost data must be relevant to the property’s

highest and best use.

567

560 United States v. Wise, 131 F.2d 851, 853 (4th Cir. 1942) (quoting trial court’s instructions to jury); see 55.22 Acres in Yakima, 411 F.2d at 435-36

(accepting valuation of improved property derived from analysis of comparable sales and incremental value of improvements).

561 See United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 683-84 (E.D. Va. 2011); USPAP SR 1-4(b) (“When a cost approach

is necessary for credible assignment results, an appraiser must: (i) develop an opinion of site value by an appropriate appraisal method or

technique; (ii) analyze such comparable cost data as are available to estimate the cost new of the improvements (if any); and (iii) analyze

such comparable data as are available to estimate the dierence between the cost new and the present worth of the improvements (accrued

depreciation).”); see also Olson v. United States, 292 U.S. 246, 257 (1934) (“Elements aecting value that depend upon events or combinations

of occurrences which . . . are not fairly shown to be reasonably probable should be excluded from consideration . . . .”).

562 E.g., 55.22 Acres in Yakima, 411 F.2d at 436; cf. Morris v. Comm’r, 761 F.2d 1195, 1196 (6th Cir. 1985) (tax case).

563 Rasmuson v. United States, 807 F.3d 1343, 1346 (Fed. Cir. 2015) (holding valuation of agricultural property that “does not take into account the

costs of removing [existing] physical remnants of [a] railway will result in an articially inated value and yield a windfall to the landowner”).

564 E.g., Winston v. United States, 342 F.2d 715, 724 (9th Cir. 1965). In particular, the phrases “reproduction cost new less depreciation” and

“replacement cost new less depreciation” often appear with little precision or explanation. Nonetheless, “[i]n appraisal the distinction

between reproduction cost and replacement cost is quite clear.” eATon, supra note 16, at 161.

565 eATon, supra note 16, at 161.

566 See In re U.S. Comm’n to Appraise Wash. Mkt. Co. Prop., 295 F.950, 957-58 (D.C. Cir. 1924) (discussing forms of depreciation to be considered

in reproduction cost method);

567 United States v. 1.604 Acres (Granby I), 844 F. Supp. 2d 668, 684 (E.D. Va. 2011); see United States v. Wise, 131 F.2d 851, 853 (4th Cir. 1942);

see also Olson v. United States, 292 U.S. 246, 255 (1934).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 135

4.4.3.4. Depreciation. All appropriate forms of depreciation, including physical deterioration,

functional obsolescence, and economic obsolescence, must be derived from market data and

deducted from the estimated reproduction or replacement cost.

568

Depreciation may vary

depending on the locality, purpose, and type of improvements, among other factors.

569

“The

sales comparison or abstraction method of estimating depreciation is particularly reliable.”

570

4.4.3.5. Entrepreneurial Incentive and Entrepreneurial Prot. Current appraisal methodology

recognizes entrepreneurial incentive—the amount an entrepreneur expects to receive from

developing a real estate project—as an element of the cost approach to valuation.

571

Similarly,

entrepreneurial prot (also developer’s prot) is the amount actually received, reecting the

dierence between the total cost of development and its market value after completion.

572

Of course, not all developments live up to expectations: “It must be remembered that an

entrepreneur is not guaranteed a prot.”

573

The Supreme Court has yet to address the propriety of entrepreneurial incentive or

entrepreneurial prot in the cost approach to valuation in federal acquisitions.

574

Still, rulings

from one of the only federal courts to consider this issue are instructive:

Because the [amount] due an entrepreneur or developer for assuming the risk of a

development project and coordinating and managing the development is a real cost to

constructing a replacement for the existing property, inclusion of entrepreneurial incentive

may be necessary to ensure the accuracy of the cost approach valuation methodology. The

goal of the cost approach is to estimate the market value of the property. Thus, consideration

of entrepreneurial incentive comports with current law.

575

If considered as a potential element of reproduction or replacement cost, entrepreneurial prot

or entrepreneurial incentive must be “based on market research and data” and reect the subject

property’s highest and best use,

576

and will “be scrutinized to ensure that [estimates] do not take

568 Wash. Mkt. Co. Prop., 295 F.at 957-58; see United States v. Certain Interests in Prop. in Cumberland Cty., 296 F.2d 264, 266 n.1 (4th Cir. 1961)

(“replacement cost, or reproduction costs, may be considered only when proper deductions are made for physical and economic depreciation

and obsolescence”); cf. United States v. 3,727.91 Acres of Land in Pike Cty. (Elsberry Drainage Dist.), 563 F.2d 357, 360 n.4 (8th Cir. 1977)

(noting challenged nding on depreciation was “supported by substantial evidence”).

569 See, e.g., United States v. Becktold Co., 129 F.2d 473, 479 (8th Cir. 1942).

570 eATon, supra note 16, at 169; cf. Becktold, 129 F.2d at 479-80.

571 United States v. 15,478 Square Feet of Land (Balaji Sai), No. 2:10-cv-00322, 2011 WL 2471586, at *6 (E.D. Va. June 20, 2011); see United States

v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 682-84 (E.D. Va. 2011); eATon, supra note 16, at 168-170.

572 See Entrepreneurial Profit, The dicTionAry oF reAl esTATe ApprAisAl (6th ed. 2015).

573 eATon, supra note 16, at 168; cf. United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 285 (1943) (“[T]he Fifth Amendment allows

the owner only the fair market value of this property; it does not guarantee him a return of his investment.”).

574 Granby I, 844 F. Supp. 2d at 683; see United States v. 8.34 Acres of Land in Ascension Par., No. 04-5-D-MI, 2006 WL 6860387, at *5 (M.D. La.

June 12, 2006) (describing “‘entrepreneur’s prot’” as “a controversial legal-economic issue”); eATon, supra note 16, at 168 (“Entrepreneurial

prot is a relatively new concept, at least as a separate item of cost in the cost approach.”); cf. 2 orgel, supra note 191, at 57 (“The failure

of the courts to keep abreast of current appraisal theory is not to be explained entirely on the ground that the law lags behind the times. It is

partly due to the peculiar problem of nding satisfactory judicial proof.”).

575 Granby I, 844 F. Supp. 2d at 683; see United States v. 1.604 Acres of Land (Granby III), 844 F. Supp. 2d 685, 690 (E.D. Va. 2011); Balaji Sai, 2011 WL

2471586, at *4-7; see also United States v. 1.604 Acres of Land (Granby II), No. 2:10-cv-00320, 2011 WL 1810594, at *3 (E.D. Va. May 11, 2011).

The Granby and Balaji cases, involving concurrent acquisitions of adjacent properties, were decided by the same district judge.

576 Granby I, 844 F. Supp. 2d at 683-84; see Granby III, 844 F. Supp. 2d at 690; Granby II, 2011 WL 1810594, at *1, *3 (barring consideration of

costs premised on unsupported highest and best use); see also Olson, 292 U.S. at 255.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards136

into account any improper considerations.”

577

It is impermissible to calculate entrepreneurial

incentive (in whole or in part) as a percentage of land value or land cost because “the fair market

value of the land already encapsulates the incentive necessary to entice an entrepreneur or

developer to [acquire] the property.”

578

4.4.3.6. Unit Rule and the Cost Approach. Valuations derived from the cost approach and any

other approach to value must follow the unit rule, which requires property to be valued as a

whole, as discussed in Section 4.2.2. Indeed, “it is rmly settled that one does not value the

[ ] land as one factor and then value the improvements as another factor and then add the

two values to determine market value.”

579

In using the cost approach, it is therefore critical to

distinguish between calculating the cost of improvements and estimating the market value of

the property as a whole, considering the contributory value of improvements.

580

As discussed in Section 4.2.2.3, some assignments may require separate allocation of the

contributory value of improvements that will be removed or adversely aected due to the

government project (if applicable, the appraiser should clearly state that any such allocations do

not indicate the appraisal method(s) employed).

581

4.4.4. Income Capitalization Approach. The third recognized approach to value in federal

acquisitions is the income capitalization approach, which involves capitalizing

582

a property’s

anticipated net income to derive an indication of its present market value.

583

When properly

applied, the income approach can indicate what a buyer would pay at the present time for the

anticipated future benets, discounted for risk and other variables, of owning a property.

584

The income capitalization approach is relevant only in certain circumstances—namely, in the

577 Granby I, 844 F. Supp. 2d at 683-84; cf. Kimball Laundry Co. v. United States, 338 U.S. 1, 5-6 (1949) (“The value compensable under the Fifth

Amendment, therefore, is only that value which is capable of transfer from owner to owner and thus of exchange for some equivalent.”);

Olson, 292 U.S. at 257 (“Elements aecting value that . . . are not fairly shown to be reasonably probable, should be excluded from

consideration . . . .”).

578 Granby III, 844 F. Supp. 2d at 690; see Powelson, 319 U.S. at 285 (“[T]he Fifth Amendment . . . does not guarantee [a landowner] a return of his

investment.”); Olson, 292 U.S. at 255 (“It is the property and not the cost of it that is safeguarded by [the Fifth Amendment].”); Granby I, 844 F.

Supp. 2d at 684; cf. United States v. Gen. Motors Corp., 323 U.S. 373, 379 (1945) (“compensation . . . does not include future loss of prots”).

579 United States v. 91.90 Acres of Land in Monroe Cty. (Cannon Dam), 586 F.2d 79, 87 (8th Cir. 1978); accord Kinter v. United States, 156 F.2d 5, 7

(3d Cir. 1946) (“[C]ost is not synonymous with market value. A fortiori, cost of land and cost of improvements taken separately and added

are not to be equalized with fair market value.”).

580 See United States v. Wise, 131 F.2d 851, 853 (4th Cir. 1942); United States v. Becktold Co., 129 F.2d 473, 478 (8th Cir. 1942) (noting it may

be proper to consider evidence “‘as to the value of the building separate from the land, and all the land separate from the building, where

from such evidence the [factnder] can reach . . . the market value of the land including the building’” (quoting Devou v. City of Cincinnati,

162 F. 633, 636 (6th Cir. 1908))); cf. United States v. 158.00 Acres of Land in Clay Cty., 562 F.2d 11, 13 (8th Cir. 1977) (“As just compensation

is determined by valuing a parcel as a whole, not mechanically adding together its separate components, the contributory value of

improvements may be only a subsidiary fact supporting the ultimate nding of just compensation.”).

581 See 158.00 Acres in Clay, 562 F.2d at 13 (“the contributory value of the [improvements] has independent signicance in the comprehensive

statutory scheme [of the Uniform Act]”).

582 Capitalization is the conversion of income into value. Capitalization, The dicTionAry oF reAl esTATe ApprAisAl (6th ed. 2015).

583 United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 174-75 (N.D.N.Y. 2009), adopted by 860 F. Supp. 2d 165 (N.D.N.Y. 2010),

aff ’d 502 F. App’x 43 (2d Cir. 2012); United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139, 143 n.6 (3d Cir. 2005); Foster v.

United States, 2 Cl. Ct. 426, 447 (1983), aff ’d, 746 F.2d 1491 (Fed. Cir. 1984); eATon, supra note 16, 173-96; see United States v. 47.14 Acres of

Land in Polk Cty., 674 F.2d 722, 725-26 (8th Cir. 1982); Income Capitalization Approach, The dicTionAry oF reAl esTATe ApprAisAl (5th ed.

2010); cf. ApprAisAl insT. & Am. soc’y oF FArm mAnAgers, The ApprAisAl oF rurAl properTy 506-11 (2d ed. 2000).

584 See United States v. 25.202 Acres of Land (Amexx II), No. 5:06-CV-428, 2011 WL 4595009, at *2 n.4 (N.D.N.Y. Sept. 30, 2011), aff ’d, 502

F. App’x 43 (2d Cir. 2012) (“evidence of income-producing potential of the property is relevant only to the extent that it would aect how

much a willing buyer would be willing to pay.”); see Gettysburg Tower, 409 F.3d at 143 n.6.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 137

valuation of income-producing property with no available comparable sales.

585

Even then,

“[g]reat care must be taken, or such valuations can reach wonderland proportions.”

586

For this reason, federal courts have often found iterations of the income capitalization approach

to value “ill-suited to the purposes” of just compensation.

587

These valuations almost always achieve chimerical magnitude, because, in the mythical

business world of income capitalization, nothing ever goes wrong. There is always a demand;

prices always go up; no competing material displaces the market.

588

As the Fourth Circuit warned, “to allow value to be proved in such a suspect manner, impeccably

objective and convincing evidence is required.”

589

Accordingly, every factor to be considered in the

income capitalization approach in federal acquisitions must be properly supported.

590

In valuations

for just compensation purposes, the goal is “to duplicate marketplace calculations to the greatest

possible extent.”

591

Courts have therefore rejected income capitalization without evidence that “rates

are in fact xed in the marketplace by a process which parallels [the expert’s] calculations.”

592

Proper application of the income capitalization approach requires a distinction between income

generated by the property itself (such as rental or royalty income), which can be considered, and

income generated by a business conducted on the property, which must be disregarded.

593

4.4.4.1. Applications. While federal courts recognize the income capitalization may be a valid and

reliable approach to value in certain cases, they uniformly hold that it should be used only

585 Amexx I, 860 F. Supp. 2d at 176-77; United States v. 33.92356 Acres of Land (Piza-Blondet Trial Op.), No. 98-1664, 2008 WL 2550586, at

*11-12 (D.P.R. June 13, 2008), aff ’d, 585 F.3d 1, 11 (1st Cir. 2009); United States v. 100.80 Acres of Land (Parrish), 657 F. Supp. 269, 274

(M.D.N.C. 1987); see United States v. Toronto, Hamilton & Buffalo Nav. Co., 338 U.S. 396, 403 (1949) (“past earnings are signicant only when

they tend to reect future returns”).

586 47.14 Acres in Polk, 674 F.2d at 726; see United States v. 69.1 Acres of Land (Sand Mountain), 942 F.2d 290, 293-94 (4th Cir. 1991) (“These

valuations almost always achieve chimerical magnitude, because, in the mythical business world of income capitalization, nothing ever goes

wrong.”); cf. United States v. Whitehurst, 337 F.2d 765, 772 (4th Cir. 1964) (“[A] change of even a fraction of one per cent will produce a

surprisingly material change in the result.”); eATon, supra note 16, at 174 (“To address the increasing complexity of real estate investment

and nancing, and the inationary and recessionary trends of the 1970s and 1980s, more sophisticated investment analysis was developed.

New techniques of analysis probably contributed in some degree to the nancial woes of the banking industry, not because these techniques

are awed, but because they can easily be misused and manipulated.”).

587 United States v. 103.38 Acres of Land in Morgan Cty. (Oldfield), 660 F.2d 208, 214 (6th Cir. 1981); accord Sand Mountain, 942 F.2d at 294 (“As

the seminal case on the subject stated, ‘it would require the enumeration of every cause of business disaster to point out the fallacy of using

this method of arriving at just compensation.’” (quoting United States ex rel. Tenn. Valley Auth. v. Indian Creek Marble Co., 40 F. Supp. 811,

822 (E.D. Tenn. 1941))); see Parrish, 657 F. Supp. at 274 (“[D] angers present in the discounted royalty method [include] the dangers of

speculation about future market demand and the vagaries of operating a business.”).

588 Sand Mountain, 942 F.2d at 293.

589 Id. at 294; see, e.g., Oldfield, 660 F.2d at 214-15 (requiring strict evidence of basis in market for use of income capitalization approach);

Parrish, 657 F. Supp. at 275 (accepting well-supported income capitalization approach that is “substantial, rational, nonspeculative, credible,

and based upon the realities of the market place”).

590 47.14 Acres in Polk, 674 F.2d at 726; Oldfield, 660 F.2d at 214-15 (requiring “evidence derived from or demonstrably related to the actual

market” as “essential characteristics”); Whitehurst, 337 F.2d at 771-74; United States v. 158.76 Acres of Land in Townshend, 298 F.2d 559, 561

(2d Cir. 1962); Parrish, 657 F. Supp. at 275-77 (approving analysis that “relied on market and economic realities”); see, e.g., Amexx I, 860 F.

Supp. 2d at 176-78, a’d, 502 F. App’x at 45 (noting lower court’s “thorough report exposing the unreliability of the expert’s methods”); see

also United States v. Sowards, 370 F.2d 87, 90-92 (10th Cir. 1966); Likins-Foster Monterey Corp. v. United States, 308 F.2d 595, 597-99 (9th Cir.

1962), aff ’g United States v. Certain Interests in Prop. in Monterey Cty., 186 F. Supp. 167 (N.D. Cal. 1960); United States v. Leavell & Ponder, Inc.,

286 F.2d 398, 406-08 (5th Cir. 1961).

591 Oldfield, 660 F.2d at 212; see Cementerio Buxeda, Inc. v. Puerto Rico, 196 F.2d 177, 181 (1st Cir. 1952) (allowing consideration of income and

expense gures that “are factors which would be considered by a prospective buyer”).

592 Oldfield, 660 F.2d at 214 (“The fatal aw in the owners’ . . . method is its lack of demonstrable relationship with this ‘real’ market . . . .”); see

Parrish, 657 F. Supp. 275-77 (accepting analysis of expert who “relied on market and economic realities to derive his opinion on a royalty”).

593 Parrish, 657 F. Supp. at 274, 277; see United States v. Toronto, Hamilton & Buffalo Nav. Co., 338 U.S. 396, 403 n.6 (1949) (citing Kimball

Laundry Co. v. United States, 338 U.S. 1 (1949)); Cementerio Buxeda, 196 F.2d at 180-81; Section 4.6.2.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards138

“when there are no comparable sales and market value must be estimated.”

594

Accordingly, the

fact that a property produces (or could potentially produce) income will not, on its own, justify

use of the income capitalization approach. Rather, its relevance to what a willing buyer would

pay to a willing seller must be demonstrated.

595

The income capitalization approach may refer to either direct capitalization or yield

capitalization techniques:

• Direct capitalization techniques are used to derive an indication of the market value of

a stabilized income-producing property by applying an overall capitalization rate to a

property’s single-year net income.

596

• Yield capitalization techniques are used to derive an indication of the market value of an

income-producing property with varying forecasted income or expenses, typically using

discounted cash-ow (DCF) analysis. Forecasts of net income, expenses, cash ow and other

factors over a holding or projection period are required.

597

Due to the relatively recent development of these techniques in the appraisal of real estate, some

specic iterations have faced little or no scrutiny in federal courts.

598

But existing case law makes

clear that regardless of the technique used, there must be sucient market data to ensure a

reliable indication of value for the specic property being appraised.

599

Use of the income capitalization approach is improper when the future use or demand for that

use is speculative.

600

As stated in an opinion armed by the Second Circuit:

594 United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165, 176-77 (N.D.N.Y. 2009), adopted by 860 F. Supp. 2d 165 (N.D.N.Y. 2010),

aff ’d, 502 F. App’x 43 (2d Cir. 2012); accord Oldfield, 660 F.2d at 211-13; Sowards, 370 F.2d at 89; United States v. 33.92356 Acres of Land

(Piza-Blondet Trial Op.), No. 98-1664, 2008 WL 2550586 (D.P.R. June 13, 2008), aff ’d, 585 F.3d 1, 11 (1st Cir. 2009); Parrish, 657 F. Supp. at

274; see United States v. Whitehurst, 337 F.2d 765, 775 (4th Cir. 1964).

595 Oldfield, 660 F.2d at 212-15 (“[T]o validate [this] approach in our eyes, the owners would have to establish that royalty rates are in fact xed

in the marketplace by a process which parallels [the expert’s] calculations.”); see Foster v. United States, 2 Cl. Ct. 426, 448 (1983), aff ’d, 746

F.2d 1491 (Fed. Cir. 1984) (“situations where income producing potential is a key element for both buyer and seller . . . in arriving at a fair

price”); Whitehurst, 337 F.2d at 775; Cementerio Buxeda, 196 F.2d at 180; see also Sowards, 370 F.2d at 90 (“whatever method is employed, the

evidence oered must have a bearing upon what a willing buyer would pay a willing seller for the property on the date of the taking”); cf.

Kimball Laundry, 338 U.S. at 5-6.

596 See Amexx I, 860 F. Supp. 2d at 174-75; United States v. 15.00 Acres of Land in Miss. Cty., 468 F. Supp. 310, 315 (E.D. Ark. 1979) (discussing

direct capitalization); Direct Capitalization, The dicTionAry oF reAl esTATe ApprAisAl (6th ed. 2015).

597 See Amexx I, 860 F. Supp. 2d at 174-75; Yield Capitalization, The dicTionAry oF reAl esTATe ApprAisAl (6th ed. 2015); cf. United States v.

6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139 (3d Cir. 2005), and on remand, No. 1:CV-99-2128, 2006 WL 839375 (M.D. Pa. March 27,

2006) (yield capitalization technique).

598 See eATon, supra note 16, at 173 (“In the past 25 years, the income capitalization approach has been modied and expanded more

dramatically than any other procedure in real estate appraisal.”).

599 See Whitehurst, 337 F.2d at 776 (“[I]f all of the factors which must necessarily be taken into account are established by proper evidence,

there would appear to be no valid reason to judicially condemn, prohibit or outlaw the use of [the income capitalization approach].We do

hold, however, in the instant case that the determination of the several elements or factors which were here relied upon was based upon

pure speculation and was without objective evidential support.”); accord United States v. 69.1 Acres of Land (Sand Mountain), 942 F.2d 290,

293-94 (4th Cir. 1991) (discussing Whitehurst, 337 F.2d at 771); United States v. 47.14 Acres of Land in Polk Cty., 674 F.2d 722, 726 (8th Cir.

1982) (“[W]here such method is used all of the factors that must necessarily be taken into account should be established by proper evidence.

. . . [W]ithout objective evidential support, that method is faulty and can obviously lead to unfounded and enhanced valuations.”); Oldfield,

660 F.2d at 214-15 (holding royalties in cash ow analysis must be “derived from or demonstrably related to the actual market in mineral

royalties”); Sowards, 370 F.2d at 90-92 (“[T]o have probative value, that opinion or estimate [of value] must be founded upon substantial

data, not mere conjecture, speculation or unwarranted assumption. It must have a rational foundation.”); Parrish, 657 F. Supp. at 274-75.

600 Amexx I, 860 F. Supp. 2d at 176-77; accord United States v. 75.13 Acres in Polk Cty., 693 F.2d 813, 816 (8th Cir. 1982).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 139

The mere physical adaptability to a given use is insucient to invoke the capitalization

method, and the landowner must show that “an income producing market existed at the date

of the taking or will exist in the reasonably near future.”

601

Of course, the highest and best use of a property may increase the value of vacant land

because a buyer may pay more for property that is capable of being developed into a protable

operation.

602

But “if there is no currently operating business, it would be ‘improper to value the

property as if it were actually being used for the more valuable purpose.’”

603

Direct capitalization techniques cannot be used to value property that is not generating income as

of the date of value:

[

]

irect capitalization of net income is an appropriate method of valuation only when

the landowner can establish actual income, application of the capitalization approach is

thus necessarily limited to those situations where eminent domain proceedings impinge an

established, on-going business’ opportunity for continued as opposed to prospective prot. There

can be no capitalization of income unless the fact of income is itself rst established. Any

other rule would permit a valuation, speculative ab initio, to be seriously compounded.

604

Yield capitalization techniques may be appropriate to value property with a highest and best

use of development into a protable operation that is not yet generating income on the date of

value.

605

But such property “may not be valued on the basis of conjectural future demand for [the

proposed use]. There must be some objective support for the future demand, including volume

and duration.”

606

Accordingly, the Sixth Circuit rejected a valuation based on costs xed on the

date of value because it did not reect the fact that the property interest being valued—the right

to remove sand—“extended over a period of years: the value of the deposit might be aected by

prospects of future increase or decrease in the cost of similar sand.”

607

Well-documented market support is critical because “[t]his method is highly susceptible to

overvaluation, because of the tendency to overestimate the [annual income] and the tendency

to employ a capitalization rate that is too low to reect the hazards of the industry.”

608

Market

support for yield capitalization techniques should include investigation and analysis of potentially

relevant sales. Even if there are insucient sales to support a reliable sales comparison approach,

601 Amexx I, 860 F. Supp. 2d at 176-77 (quoting 75.13 Acres in Polk, 693 F.2d at 816); accord United States v. 1,291.83 Acres of Land in Adair &

Taylor Ctys., 411 F.2d 1081, 1084-85 (6th Cir. 1969); see also Hembree v. United States, 347 F.2d 109, 111-14 (8th Cir. 1965).

602 See Olson v. United States, 292 U.S. 246, 255 (1934); Amexx I, 860 F. Supp. 2d at 176-77.

603 Amexx I, 860 F. Supp. 2d at 177 (quoting United States v. Meadow Brook Club, 259 F.2d 41, 45 (2d Cir. 1958), and Olson, 292 U.S. at 255); see

1,291.83 Acres, 411 F.2d at 1084-85.

604 United States v. 15.00 Acres of Land in Miss. Cty., 468 F. Supp. 310, 315 (D. Ark. 1979); (citation omitted); accord Amexx I, 860 F. Supp. 2d at

175-81 & n.20; Foster v. United States, 2 Cl. Ct. 426, 448 (1983), aff ’d, 746 F.2d 1491 (Fed. Cir. 1984) (“Direct capitalization of net income is

an appropriate method only when actual income from the property can be established in a continuing ongoing business.”).

605 See Olson, 292 U.S. at 255; Amexx I, 860 F. Supp. 2d at 176-77.

606 United States v. Whitehurst, 337 F.2d 765, 771-72 (4th Cir. 1964); accord Mills v. United States, 363 F.2d 78, 81 (8th Cir. 1966); see United States

v. 237,500 Acres of Land, 236 F. Supp. 44, 49-51 (S.D. Cal.1964), aff ’d with qualifications sub nom. United States v. Am. Pumice Co., 404 F.2d

336 (9th Cir. 1968).

607 United States v. Pa.-Dixie Cement Corp., 178 F.2d 195, 200 (6th Cir. 1949).

608 Whitehurst, 337 F.2d at 773; United States v. 69.1 Acres of Land (Sand Mountain), 942 F.2d 290, 293-94 (4th Cir. 1991) (“[I]n the mythical

business world of income capitalization, nothing ever goes wrong. There is always a demand; prices always go up; no competing material

displaces the market.”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards140

“that does not put out of hand the bearing which the scattered sales may have on what an

ordinary purchaser would have paid for the claimant’s property.”

609

This holds true for all types

of properties, including mineral properties: “There may be cases where quite distant properties

can be shown to be comparable in an economic or market sense, due allowance being made

for variables” such as (for a mineral property) “quantity, quality, mining costs and access to

market . …”

610

And sales prices may support a “bonus value” due to a property’s potential for

development

611

—or “demonstrate[ ] that there

[

]

s no such enhanced value in the market.”

612

4.4.4.2. Income to Be Considered. The Supreme Court has instructed that “separation…must

be made, in any case, between the value of the property and the value of the claimant’s own

business skill . . . .”

613

As a result, in determining the market value of the property, only income

generated by the real estate itself—typically rental or royalty income—can be considered and

capitalized.

614

In contrast, income generated by a business conducted on the property (such

as a farming operation) is not considered.

615

As the First Circuit stated: “It is the value of the

real estate, not the business that we are concerned with in this case. To allow evidence of past

and future business prots would only confuse the value of the business with the value of the

real estate.”

616

The Supreme Court has recognized a single exception to this rule, allowing

consideration of business income, rather than real estate income, only in those rare instances

where the United States has condemned a business or franchise itself, and not merely a

property on which business is conducted.

617

4.4.4.3. Capitalization Rate or Discount Rate. Determination of the capitalization or discount

rate in an income capitalization approach is critical. This rate “reects the degree of risk in

the undertaking involved. It is an extremely important gure in the computation because a

change of even a fraction of one percent will produce a surprisingly material change in the

result.”

618

As a result, federal courts have rejected use of the income capitalization approach if

the discount rate is not supported by appropriate market evidence.

619

609 United States v. Toronto, Hamilton & Buffalo Nav. Co., 338 U.S. 396, 402 (1949); Mills, 363 F.2d at 80-81; Whitehurst, 337 F.2d at 775.

610 Am. Pumice Co., 404 F.2d at 336-37.

611 Mills, 363 F.2d at 80-81.

612 Whitehurst, 337 F.2d at 775.

613 Toronto, Hamilton, 338 U.S. at 403 n. 6 (citing Kimball Laundry Co. v. United States, 338 U.S. 1 (1949)); Cementerio Buxeda, Inc. v. Puerto Rico,

196 F.2d 177, 180-81 (1st Cir. 1952).

614 See Toronto, Hamilton, 338 U.S. at 403 & n.6 (citing Kimball Laundry, 338 U.S. 1); A.G. Davis Ice Co. v. United States, 362 F.2d 934, 936-37 (1st

Cir. 1966); United States v. 100.80 Acres of Land (Parrish), 657 F. Supp. 269, 274 (M.D.N.C. 1987).

615 United States v. 33.92356 Acres of Land (Piza-Blondet Trial Op.), No. 98-1664, 2008 WL 2550586, at *11-12 (D.P.R. June 13, 2008), a’d,

585 F.3d 1, 11 (1st Cir. 2009); Stipe v. United States, 337 F.2d 818, 820-21 & nn.3-4 (10th Cir. 1964); see also In re Cool, 81 B.R. 614, 616 (D.

Mont. 1987) (discussing “the failings made by appraisers in cases where the appraiser attempts to capitalize the prots of the particular farm

operation as opposed to xing the intrinsic value of the land based on production or reasonable rental value”).

616 A.G. Davis Ice, 362 F.2d at 936-37; see, e.g., Parrish, 657 F. Supp. at 274 (accepting opinion of value by expert who “was careful to rely on the

income generable by the mineral itself (a royalty)—which is correctly attributable to the value of the land—and did not rely on an estimate

of an operator’s prot—which would not be attributable to the land”).

617 See Kimball Laundry, 338 U.S. at 15 (“It is a dierence in degree wide enough to require a dierence in result.”); United States ex rel. Tenn.

Valley Auth. v. Powelson, 319 U.S. 266, 281-85 (1943); Monongahela Nav. Co. v. United States, 148 U.S. 312, 326-29, 343-44 (1893); Stipe, 337

F.2d 818 (rejecting valuation based on business income where owner’s loss was “due to the destruction or frustration of his business, and not

the taking of the property” because “[s]uch losses are not compensable”).

618 United States v. Whitehurst, 337 F.2d 765, 771-72 (4th Cir. 1964).

619 E.g., Whitehurst, 337 F.2d at 771-72; United States v. 158.76 Acres of Land in Townshend, 298 F.2d 559, 561 (2d Cir. 1962); United States v.

Leavell & Ponder, Inc., 286 F.2d 398, 407 (5th Cir. 1961); see Parrish, 657 F. Supp. at 274 (noting discount rate was “supported” unlike in

Whitehurst, supra).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 141

The capitalization or discount rate must be derived from actual market data, through comparison

if possible:

[A] capitalization rate…should be ascertained by reference to the best evidence—the most

similar property—as well as dissimilar investments if that proves necessary. “The selection of a

capitalization rate by comparison is perhaps the most widely accepted approach. It recognizes

the behavioristic nature of economics, because by comparison one gets the reaction of people

in the market place.”

620

4.4.4.4. Unit Rule Implications. The unit rule, discussed in Section 4.2.2, applies in valuations using

the income capitalization approach as in all other approaches to value.

621

“The subsidiary

interests in a fee cannot add to its market value and compensation for these interests must be

paid out of the amount awarded for the whole.”

622

Accordingly, in federal acquisitions, if using

the income capitalization approach to value, appraisers must value the property being acquired

as if in single ownership—not by “computing separately the value of the various constituent

legal interests” (such as lessor/lessee or operator/owner) in the property.

623

For example, in United States v. 6.45 Acres of Land (Gettysburg Tower), the United States acquired

two adjacent tracts in fee simple: Tract 4-203, owned in fee by landowner Enggren and under a

99-year lease to landowner Overview, and Tract 4-204, owned in fee by landowner Overview.

624

On the date of value, Overview had built an observation tower on Tract 4-203 overlooking the

Gettysburg Battleeld and was operating the tower as a tourist attraction and making payments

to Enggren under the lease; Overview also owned and operated a gift shop, restaurant, and

parking lot on Tract 4-204. The Third Circuit determined the following appraisal methodology

correctly followed the unit rule for this property:

[The appraiser] explained that because he was valuing the fee as a whole, lease payments

were not considered an expense but merely a transfer of funds between interest holders that

would cancel out under a unit valuation. Because [the appraiser’s] task was neither to appraise

Overview’s interest nor the Enggrens’ interest, but rather the composite value of all interests,

he did not count as an expense what was simply a transfer of value between interest holders

that had no bearing on the land’s inherent capacity to generate income.

625

620 United States v. Certain Interests in Prop. in Monterey Cty., 186 F. Supp. 167, 170 (N.D. Cal. 1960), aff’d sub nom. Likins-Foster Monterey Corp. v.

United States, 308 F.2d 595 (9th Cir. 1962); see 158.76 Acres in Townshend, 298 F.2d at 561 (“Capitalization of income comprehends the use

of a rate of return in comparable investments.”); Leavell & Ponder, 286 F.2d at 407.

621 See, e.g., United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139 (3d Cir. 2005).

622 A.G. Davis Co. v. United States, 362 F.2d 934, 936-37 (1st Cir. 1966); see Eagle Lake Improvement Co. v. United States (Eagle Lake II), 160 F.2d

182, 184 n.1 (5th Cir. 1947) (“For example, . . . the owner of the surface . . . claimed a value of $350 to $400 per acre on the theory that

the best use of the tract was for subdivision purposes. The owners of the mineral interests on that same parcel claimed values of $350 to

$700 per acre for the leasehold and $175 to $300 per acre for the royalty interest. Certainly, the surface could not be used for a residential

subdivision if oil wells were drilled and producing. These are inconsistent uses.”).

623 Gettysburg Tower, 409 F.3d at 148.

624 Id. at 148. The acquisition also included easements and other interests and other tracts not relevant to this issue. See id. at 142-43.

625 Id. at 149. The court noted that it also would be acceptable under the unit rule to value Tracts 4-203 and 4-204 separately—i.e., valuing

each unit (each tract) as if it was held in fee simple ownership. Id. at 148 n.15. “What the [fact-nder] could not do, consistent with the unit

rule, was… [to] comput[e] separately the value of the various constituent legal interests in the Condemned Properties.” Id. at 148.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards142

The Third Circuit therefore reversed the district court’s ruling, which had improperly added

to the valuation just described above a separate valuation of the Enggrens’ interest in the lease

payments—thereby “double-count[ing] the substantial value of the lease.”

626

As discussed in Section 4.8.1, the unit rule is frequently misapplied in valuations of properties

containing minerals or other natural resources.

4.4.4.5. Further Guidance. The income capitalization approach to value in the appraisal of real

estate generally—not only in the context of federal acquisitions—has evolved signicantly

in recent decades.

627

The basic parameters for its use for just compensation purposes can be

found in Supreme Court cases such as United States v. Toronto, Hamilton & Buffalo Navigation

Co.,

628

and several recent circuit court cases cited in this Section provide more concrete

analysis.

629

The district court rulings armed by or on remand from three recent circuit court

opinions are also instructive—see the Gettysburg Tower litigation in the Third Circuit, the Amexx

litigation in the Second Circuit, and the Piza-Blondet litigation in the First Circuit.

630

The

Parrish case, an older district court ruling from the Middle District of North Carolina, provides

a sound analysis of the appropriate determination and use of royalty rates in estimating

market value.

631

Also informative are In re Cool, a bankruptcy case discussing the income

approach based on legal principles derived from eminent domain case law,

632

and Denver v.

Quick, a state law case—cited with approval by a number of federal circuit courts—analyzing

the consideration of income derived from the land itself.

633

4.4.5. Subdivision Valuation and the Development Method. When appropriate, aspects of the

sales comparison, income capitalization, and cost approaches to valuation can be incorporated

into a technique for appraising undeveloped acreage having a highest and best use for

subdivision into lots. A federal court recently explained this development method

634

as follows:

626 Id. at 150 & n.17 (aggregated award “includes ‘$2.7 million worth of prejudice’”).

627 See eATon, supra note 16, at 173-75.

628 Toronto, Hamilton, 338 U.S. 396, 403 & n.6 (1949) (“[P]ast earnings are signicant only when they tend to reect future returns. We see

no relevance in the [property’s] earnings between 1916 and 1932 on the issue of capacity to earn after 1942 . . . . On this record they are

entirely too remote to bear on [its] value when taken.”); see Mitchell v. United States, 267 U.S. 341 (1925); Joslin Co. v. Providence, 262 U.S.

668, 675 (1923) (“Injury to a business carried on upon lands taken for public use, it is generally held, does not constitute an element of just

compensation, in the absence of a statute expressly allowing it.”) (citations omitted) (applying state law).

629 E.g., United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139 (3d Cir. 2005); United States v. 25.202 Acres of Land (Amexx I), 860

F. Supp. 2d 165 (N.D.N.Y. 2009), adopted by 860 F. Supp. 2d 165 (N.D.N.Y. 2010), aff ’d, 502 F. App’x 43 (2d Cir. 2012) (arming in all

respects, “[l]argely for the reasons that the district court articulated in its memorandum-decision and order”).

630 United States v. 6.45 Acres of Land, No. 1:CV-99-2128, 2006 WL 839375 (M.D. Pa. Mar. 27, 2006) (on remand from Gettysburg Tower, 409

F.3d 139); United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165 (N.D.N.Y. 2009), new trial denied, No. 5:06-CV-428, 2011 WL

4595009 (N.D.N.Y. Sept. 30, 2011), aff ’d, 502 F. App’x 43 (2d Cir. 2012); United States v. 33.92356 Acres of Land (Piza-Blondet Trial Op.), No.

98-1664, 2008 WL 2550586 (D.P.R. June 13, 2008), aff ’d, 585 F.3d 1, 11 (1st Cir. 2009).

631 United States v. 100.80 Acres of Land (Parrish), 657 F. Supp. 269, 272-80 (M.D.N.C. 1987). Modern technology allows for more sensitive

formula to determine the present value of royalty income than the “Morkill formula” adopted by the court in 1987. See id. at 278 & n. 15.

But the court’s analysis of the concepts underlying proper discounting of future income to value as of the date of taking, the considerations

that must be taken into account and those that must be disregarded, the market support necessary for elements of the income capitalization

approach, and the aws in the formula applied by the fact-nder, remains sound. See id. at 273-79.

632 In re Cool, 81 B.R. 614, 616-18 (D. Mont. 1987).

633 Denver v. Quick, 108 Colo. 111 (1941) (cited in Hicks v. United States ex rel. Tenn. Valley Auth., 266 F.2d 515, 519 (6th Cir. 1959); Cementerio

Buxeda, Inc. v. Puerto Rico, 196 F.2d 177, 180-81 (1st Cir. 1952); Chapman v. United States, 169 F.2d 641, 644 (10th Cir. 1948); and In re Cool,

81 B.R. at 618).

634 The development method is not an approach to value; it is a valuation method or technique. The development method is also referred to as

the lot method, land residual approach, developer’s residual approach, anticipated use method, or subdivision development method.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 143

[

]

ne rst determines or projects both how the land would be subdivided and the prices at

which those lots would sell. The projected gross sale proceeds for all lots in the tract are then

aggregated and a deduction is made for all projected direct and indirect costs of maintenance

and sale, including development [i.e., the developer’s anticipated prot] and marketing.

Finally, the net amount is discounted to present value to reect that the lots would be sold over

time, i.e., an absorption period, considering projected market demand.

635

The remaining sum (the residual) is said to represent the market value of the raw land on the

date of value. This highly sensitive and complex method of valuation “relies upon layers of

hypothetical assumptions regarding the prospects, costs, and timing of subdivision, development,

and sales of multiple lots in an uncertain future.”

636

As a result, under federal law it can be used

only in limited circumstances, and then only with rigorous evidentiary support.

637

4.4.5.1. Reasonable Probability of Development. Under federal law, the development method

cannot be used unless the property was “‘needed or likely to be needed in the reasonably near

future’ for residential subdivision.”

638

And showing “that a few new homes had been built in

the area around the time” of valuation is insucient: There must be “evidence ‘of…current

demand or potential for subdivisions in the neighborhood[.]’”

639

To credibly establish demand

for such lots, “there must be some evidence that others have developed and sold such lots, so as

to establish a trend, at least, toward that type of development of [similar] property.”

640

Use of the development method requires evidence that on the date of value, there was a

reasonable probability that the property could be developed as a residential subdivision and

that its lots would be sold within a reasonable time.

641

It cannot be used “if the subdivision is

improbable or unrealistic or merely theoretical or speculative or capable of realization only in the

remote future . . . .”

642

As practical guidance, consider these district court instructions in one case regarding the evidence

necessary to support the use of the development method:

[

]

f you conclude that this property by map was subdivided into individual lots; that the

property was adaptable for residential subdivision purposes; that physical changes were made

on the land, such as the digging of a well with a sucient water supply for development

635 United States ex rel. Tenn. Valley Auth. v. An Easement & Right-of-Way over 6.09 Acres of Land (TVA v. 6.09 Acres), 140 F. Supp. 3d 1218, 1247-

48 (N.D. Ala. 2015); see generally id. at 1247-56; see also United States v. 99.66 Acres of Land (Sunburst Invs.), 970 F.2d 651, 655-56 (9th Cir.

1992); United States v. 47.3096 Acres of Land, 583 F.2d 270, 271-72 (6th Cir. 1978).

636 TVA v. 6.09 Acres, 140 F. Supp. 3d at 1251; see generally eATon, supra note 16, at 245-70.

637 See TVA v. 6.09 Acres, 140 F. Supp. 3d at 1247-56; Sunburst Invs., 970 F.2d at 655-56; eATon, supra note 16, at 246 (“[I]n many cases the

development approach has been applied under the wrong circumstances or in the wrong way. If all of the land that has been appraised by

the development approach were actually subdivided, there would be enough subdivision lots on the market to last hundreds of years and

little, if any, farmland left in the United States.”).

638 47.3096 Acres, 583 F.2d at 272 (quoting Olson v. United States, 292 U.S. 246, 255 (1934)); Sunburst Invs., 970 F.2d at 655-56; United States v.

341.45 Acres of Land, 633 F.2d 108, 112 (8th Cir. 1980); United States v. 147.47 Acres of Land (Delagap), 352 F. Supp. 1055, 1061-62 & n.7

(M.D. Pa. 1972).

639 47.3096 Acres, 583 F.2d at 272 (quoting United States v. 478.34 Acres, 578 F.2d 156, 159 (6th Cir. 1978)); 341.45 Acres, 633 F.2d at 112

(“more than a few sporadic sales of such lots are necessary”); see Olson, 292 U.S. at 255.

640 341.45 Acres, 633 F.2d 108, 112 (8th Cir. 1980). In fact, “if there is an actual demand for [such] lots we believe the landowners will be able

to show such demand.” Id.

641 Delagap, 352 F. Supp. at 1061-62 & n.7.

642 Id.; see Olson, 292 U.S. at 255-56.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards144

purposes; constructing a lake; road grading and other physical changes in the condition of the

land; that some lot sales had actually taken place; that there was a reasonable probability that

this property could be developed as a residential subdivision; that the anticipated expenses of

development would be as [estimated]; that there would be a market for the sale of these lots

and that these lots would be sold within a reasonable time…then you may accept the opinion

based upon [this method].

643

4.4.5.2. Application to Undeveloped Land. It is rarely appropriate to apply the development

method to undeveloped land.

644

As a district court recently explained, the development method

eectively values a parcel of land, even if undivided and unimproved, virtually as if it has

already been subdivided and sold. Such a valuation calculation…requires more than just that

a hypothetical purchaser at the time of the taking would consider development potential; it

generally requires that landowner demonstrate that subdivision of the unimproved land was

reasonably certain in the near future at the time of the taking.

645

Use of the development method cannot be justied based on a landowner’s “inchoate plans,

intention, or prot expectations” for a property as assumptions underlying the development

method are too speculative when a landowner has “not actually subdivided, improved, or sold

any of the land .…”

646

As the Supreme Court admonished in Olson v. United States, “allow[ing]

mere speculation and conjecture to become a guide for the ascertainment of value [is] a thing

to be condemned in business transactions as well as in judicial ascertainment of truth.”

647

a result, “even though the highest and best use of a property is for a residential subdivision, if

no meaningful steps have been taken in that direction, viz., construction expenses and actual

lot sales, then a ‘[development] method’ appraisal…would be inappropriate.”

648

Rather, in

such cases, “the appropriate market [is] for the entire tract as investment property for future

subdivision development.”

649

4.4.5.3. Credible Cost Estimate. Even if subdivision was a demonstrably reasonable certainty, federal

law requires credible evidence of projected subdivision costs: “In the absence of credible cost

evidence, [one should] exclude[ ] the [development] method valuation altogether.”

650

Mere

unsupported assertions are insucient.

651

Costs that must be reliably estimated and considered

643 Delagap, 352 F. Supp. at 1061-62 & n.7.

644 See United States ex rel. Tenn. Valley Auth. v. An Easement & Right-of-Way over 6.09 Acres of Land (TVA v. 6.09 Acres), 140 F. Supp. 3d 1218,

1250-51 (N.D. Ala. 2015) (citing cases); compare United States v. 99.66 Acres of Land (Sunburst Invs.), 970 F.2d 651, 655-56 (9th Cir. 1992)

(arming exclusion of method for valuation of “paper subdivision and nothing more”) and United States v. 100 Acres of Land, 468 F.2d 1261,

1266-67 (9th Cir. 1972) (permitting method for valuation of property which was part of a subdivision that was partially under development

on date of value).

645 TVA v. 6.09 Acres, 140 F. Supp. 3d at 1255; see generally id. at 1247-56. Courts express similar concerns outside federal condemnation. E.g., United

States v. Hickey, 360 F.2d 127, 137 (7th Cir. 1966) (“Whatever its merit to builders and developers might be, the speculative and unrealistic character

of ‘lot-method’ appraisals in assessing the value of vacant land as security for mortgage loans is apparent. ‘Lot-method’ appraisal is a reection

of a value which may be achieved at some time in the future when the land is subdivided, improved, and ready to be sold in individual residential

lots. It does not reect the present fair market value of the vacant land . . . .”).

646 TVA v. 6.09 Acres, 140 F. Supp. 3d at 1252-53.

647 Olson, 292 U.S. at 257.

648 Delagap, 352 F. Supp. at 1060.

649 Sunburst Invs., 970 F.2d at 655-56; see Section 4.2.2 (Unit Rule).

650 United States v. 47.3096 Acres of Land, 583 F.2d 270, 272 (6th Cir. 1978).

651 Id.; see Sunburst Invs., 970 F.2d at 655-56; United States v. 341.45 Acres of Land, 633 F.2d 108, 112-13 (8th Cir. 1980).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 145

include direct costs of development (such as surveying, design, engineering, permitting, grading,

clearing, sewers, street paving, curbs and gutters, water lines, and other utilities); indirect costs

(including nancing, insurance, real property taxes, sales, advertising, accounting, legal and

closing costs, project overhead, and supervision); and the developer’s expected prot.

652

4.4.5.4. Availability of Comparable Sales. When a property’s market value can be reliably

estimated using comparable sales, the development approach should not be relied upon as

a primary indicator of value, as its underlying assumptions are “largely speculative” and

“subjective elements…enhance the risk of error[.]”

653

However, the development method can

be utilized in such situations to test a highest and best use conclusion

654

or to support a value

indicated by the sales comparison approach.

655

It also bears noting that “[w]hile a lack of sales

and/or development activity may indicate an insucient supply of land suitable for such use, it

can also indicate a lack of demand.”

656

And without “credible evidence that there is an actual

demand for [subdivision development] or that such demand will occur in the reasonably near

future[,]” subdivision cannot be considered as a highest and best use.

657

4.5. Project Inuence. At times, the market value of the property

being acquired may be aected, positively or negatively, by

the very project prompting the government’s acquisition. This

project inuence on value is potentially problematic in federal

acquisitions because “to permit compensation to be either reduced

or increased because of an alteration in market value attributable

to the project itself would not lead to the ‘just compensation’ that the Constitution requires.”

658

The Supreme Court has ruled that in fairness, the United States cannot be charged for value it

created in constructing the government project for which the property is being acquired. Similarly,

an owner cannot be penalized for any diminution in value due to that very government project.

659

Accordingly, in valuations for just compensation purposes, once a property is “within the scope” of

the government project, all project inuence on the property’s market value must be disregarded.

660

652 See TVA v. 6.09 Acres, 140 F. Supp. 3d at 1247-48 (“all projected direct and indirect costs of maintenance and sale, including development

and marketing”); 47.3096 Acres, 583 F.2d at 272 (“expense of clearing and improving the land, surveying and dividing it into lots,

advertising and selling, holding it, and paying taxes and interest until all lots are sold”); United States v. 100 Acres of Land, 468 F.2d 1261,

1266 (9th Cir. 1972) (“selling and advertising expenses, engineering and development costs, overhead costs, taxes, buyers’ anticipated prots,

and for acreage loss for streets, etc.”); Section 4.4.3.5 (Entrepreneurial Incentive and Entrepreneurial Prot).

653 See TVA v. 6.09 Acres, 140 F. Supp. 3d at 1250-52 (quoting United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 36 & n.23 (1984));

see also Norman v. United States, 63 Fed. Cl. 231, 271 (Ct. Cl. 2004) (“approach ‘is highly speculative [and] prone to error’”), aff ’d, 429 F.3d

1081 (Fed. Cir. 2005); cf. Olson v. United States, 292 U.S. 246, 257 (1934). Courts have also found the development method unreliable in other

contexts. E.g., Rockies Express Pipeline LLC v. Hopkins, 131.495 Acres, No. 1:08-cv-00751-RLY-DML, 2012 WL 1622532, at *4 (S.D. Ind.

May 9, 2012) (noting “susceptibility to misuse” and “speculative nature” in valuation under state law).

654 See, e.g., United States v. 125.07 Acres of Land (Pond Road I), 667 F.2d 243, 246 (1st Cir. 1981); United States v. 1,291.83 Acres of Land in Adair

& Taylor Ctys., 411 F.2d 1081, 1087 (6th Cir. 1969).

655 eATon, supra note 16, at 247, 268; see, e.g., United States v. 3.544 Acres of Land, 147 F.2d 596 (3d Cir. 1945); United States v. 147.47 Acres of

Land (Delagap), 352 F. Supp. 1055, 1059 (M.D. Pa. 1972) (using lot values as market data in addition to comparable sales).

656 eATon, supra note 16, at 248; e.g., United States v. 341.45 Acres of Land in St. Louis Cty., 633 F.2d 108, 112-13 (8th Cir. 1980) (“[T]here must

be some evidence that others have developed and sold such lots . . . . [I]f there is an actual demand for [such] lots we believe the landowners

will be able to show such demand.”); cf. Delagap, 352 F. Supp. at 1058 n.4, 1057-61.

657 341.45 Acres in St. Louis Cty., 633 F.2d at 112-14; see Olson, 292 U.S. at 255.

658 United States v. Reynolds, 397 U.S. 14, 16 (1970)

659 Shoemaker v. United States, 147 U.S. 282, 303-05 (1893); United States v. Miller, 317 U.S. 369, 376-79 (1943); United States v. Va. Elec. & Power Co.,

365 U.S. at 636; Reynolds, 397 U.S. at 16-18; see United States v. 320 Acres, 605 F.2d 762, 781-82 (5th Cir. 1979).

660 Reynolds, 397 U.S. at 16-18; Miller, 317 U.S. at 376-77; 320 Acres, 605 F.2d at 781-84 & nn.24-27; United States v. Crance, 341 F.2d 161, 165 (8th Cir.

1965) (“[A] landowner cannot claim a benet from a proximate improvement when inclusion of his land in the improvement from the outset renders

impossible enjoyment of the claimed benet.”). As discussed below, whether a particular property was within the scope of a particular government

project on a particular date is one of several legal questions that must be determined by the court (or a legal instruction), not by the appraiser.

Change in market value due

to the government project—

project inuence—must be

disregarded under the scope

of the project rule.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards146

The scope of the project rule excluding project inuence is “one of the secondary rules rening

the concept of market value as the basic measurement of compensation so that injustice does not

result . . . .”

661

The rule functions to adjust, limit, or exclude certain evidence from consideration

to ensure the appraisal does not unfairly reect any change in market value caused by the

government project for which the property is acquired, or by the likelihood the property would

be acquired for such public project.

662

Proper application of the scope of the project rule requires

careful legal and factual analysis of the government project and its inuence on market value.

663

Legal instruction is required, as the scope of the project rule raises questions of law “which

limit[ ] the factors necessary to the determination of ‘just compensation’”

664

and go beyond the

appraiser’s function of assessing the government project’s inuence, if any, on market value.

665

The mere existence of a government project does not automatically invoke the scope of the

project rule; it merely marks the beginning of a complex legal and factual inquiry to determine

whether the evidence warrants application of the rule.

666

In a scope of the project rule inquiry,

legal determinations will be required regarding: (1) the date as of which the property was probably

within the scope of the project;

667

(2) whether application of the scope of the project rule is

warranted;

668

and (3) if so, how to apply the scope of the project rule to ensure a just result.

669

4.5.1. The Scope of the Project Test. To fairly apply the principle excluding project inuence, the

Supreme Court created the scope of the project test in United States v. Miller: “[I]f the ‘lands

were probably within the scope of the project from the time the Government was committed

to it,’ no [change] in value attributable to the project is to be considered in awarding

compensation.”

670

Accordingly, if the scope of the project rule applies, project inuence on

market value must be disregarded.

671

Conversely, if properties not originally within the scope

of the project are later acquired by the government, the United States “must pay their market

value as enhanced [or diminished] by this factor of proximity” to the project—so any project

inuence on value, positive or negative, must in fairness be considered.

672

661 320 Acres, 605 F.2d at 782; United States v. 428.02 Acres of Land, 687 F.2d 266, 269 (8th Cir. 1982); see Cors, 337 U.S. at 332 (“Any increase in

value due to [the government’s planned project] in fairness should be excluded from the determination of what compensation would be

just.”); cf. United States v. 480.00 Acres of Land (Fornatora), 557 F.3d 1297, 1311 (11th Cir. 2009) (“Courts have only applied exceptions to a

general takings doctrine when it is necessary to do so in order to protect the rights of both the taking body and the landowner.”).

662 E.g., 320 Acres, 605 F.2d at 800 (discussing application of rule by exclusion of “evidence of sales possibly tainted by the Government’s

condemnation activities”), 798-803 & nn.61-80 (citing cases applying rule); Kerr v. S. Park Comm’rs, 117 U.S. 379, 386 (1886) (sales aected by

government project were properly excluded); cf. Fornatora, 557 F.3d at 1313 (valuation must consider preexisting zoning regulations because

regulations’ impact was not “project inuence”).

663 See generally 320 Acres, 605 F.2d 762 (comprehensive analysis of scope of the project rule); see also Reynolds, 397 U.S. 14; Miller, 317 U.S. 369;

Fornatora, 557 F.3d at 1311-13.

664 Reynolds, 397 U.S. at 20 & n.14 (quoting and adopting Wardy v. United States, 402 F.2d 762, 763 (5th Cir. 1968)).

665 E.g., Fornatora, 557 F.3d at 1312; United States v. Eastman (Eastman I), 528 F. Supp. 1177, 1178 & n.1 (D. Or. 1981), a’d, 714 F.2d 76 (9th Cir.

1983); see Reynolds, 397 U.S. at 21.

666 See United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 674, 675-76 (E.D. Va. 2011).

667 Reynolds, 397 U.S. at 20-21; Miller, 317 U.S. at 377.

668 Fornatora, 557 F.3d at 1313; see Cors, 337 U.S. at 332-34 (“a value which the government itself created and hence in fairness should not be

required to pay”); Wardy, 402 F.2d at 763 (scope of the project is “equitable” rule), adopted by Reynolds, 397 U.S. at 20.

669 See 320 Acres, 605 F.2d at 796 (“But what is the ‘just’ application of the rule with respect to [these properties]? . . . [T]he rule is not to be

divorced from its objective – compensation awards that are just to both the public and the dispossessed landowner.”).

670 Reynolds, 397 U.S. at 21 (quoting Miller, 317 U.S. at 377).

671 As the Old Fifth Circuit noted in 320 Acres, the scope of the project rule “is primarily concerned with awards that are unjust from the

perspective of the public footing the bill” – i.e., enhancements in value due to the project. 605 F.2d at 782. But “the scope-of-the-project rule

is also applicable to ‘depreciations in value . . . attributable to the Government project for which property is taken.’” United States v. Land &

Cris Realms Inc., 213 F.3d 830, 834 (5th Cir. 2000) (alteration in original) (quoting 320 Acres, 605 F.2d at 787 n.32).

672 Miller, 317 U.S. at 376. The scope of the project rule applies to both positive and negative eects on market value. See supra note 694.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 147

The Miller test concerns “whether the . . . lands were probably within the scope of the project

from the time the Government was committed to it.”

673

This determination can be particularly

complex in connection with acquisitions in later stages of large government projects that span

several years or require boundary adjustments, such as ood control and reservoir projects.

674

In making this determination, courts typically consider the government’s representations to

the landowner or the public regarding the property and/or the project boundaries;

675

how

foreseeable it was at the outset of the project that the property would be needed for it;

676

and the

length of time between the original and subsequent acquisitions, if applicable.

677

The rule does

not require that the land ultimately acquired was actually specied in the original project plans.

It need only be shown that during the course of the planning or original construction it became

evident that land so situated would probably be needed for the public project.

678

Some courts have framed this inquiry in terms of reasonable expectations, i.e., whether, after

announcement of the government project, a reasonable buyer could reasonably anticipate being

able to devote the subject property to its highest and best use without serious apprehension that

it would soon be condemned for the government project.

679

For example, the Tenth Circuit held

that landowners could not have reasonably believed that their property had been removed from

the scope of a reservoir project despite mistakenly being left o some project maps: the property

not only was clearly covered by the government’s statements of intent, but also had been partly

“covered with water nearly all of the time since the lake lled . . . ; obviously the government

intended this property to be part of the project.”

680

But both frameworks reect a common aim:

Regardless of how the inquiry is framed, however—whether in terms of the Miller test or in

terms of reasonable expectations—the object is the same: to distinguish value attributable to

Government demand from true fair market value of Government-conferred benets, and to

ensure that the landowner is not awarded a premium for the former but, at the same time, is

justly compensated for the latter.

681

The date on which the government’s project commences also requires legal determination. In

making this determination, courts typically consider three legal requirements of a “project”: a

public purpose for which property is to be acquired, identication of the particular properties to be acquired

for that public purpose, and imminent acquisition that is evident to the public.

682

As the former Fifth

673 Miller, 317 U.S. at 377; Reynolds, 397 U.S. at 21.

674 E.g., Miller, 317 U.S. at 370-73; United States v. Eastman (Eastman III), 714 F.2d 76 (9th Cir. 1983); United States v. 49.01 Acres of Land in Osage

Cty., 669 F.2d 1364, 1366-69 (10th Cir. 1982); United States v. 62.17 Acres of Land in Jasper Cty., 538 F.2d 670, 678 (5th Cir. 1976) (“We cannot

straitjacket the government in dening scope of the project, but on the other hand, we cannot permit global meanderings to enclave areas

not reasonably to have been conceived as included at its inception.”); United States v. 172.80 Acres of Land in Mercer Cty., 350 F.2d 957 (3d Cir.

1965); United States v. Crance, 341 F.2d 161 (8th Cir. 1965).

675 62.17 Acres in Jasper, 538 F.2d at 680-681.

676 United States v. Eastman (Eastman I), 528 F. Supp. 1177, 1182-83 (D. Or. 1981), a’d, Eastman III, 714 F.2d at 77; 62.17 Acres in Jasper, 538 F.2d at

680-81.

677 62.17 Acres in Jasper, 538 F.2d at 681(“time can be a factor in removing the mote of potential acquisition from the eyes of area landowners”);

Eastman I, 528 F. Supp. at 1183.

678 Reynolds, 397 U.S. at 21.

679 See 320 Acres, 605 F.2d at 792-93 & nn.44-46; Eastman III, 714 F.2d at 77; 49.01 Acres in Osage, 669 F.2d at 1367-69; 62.17 Acres in Jasper, 538

F.2d at 678-81.

680 49.01 Acres in Osage, 669 F.2d at 1369.

681 320 Acres, 605 F.2d at 793 (quoted in Eastman I, 528 F. Supp. at 1182).

682 United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 674, 674-75 (E.D. Va. 2011); see United States v. Miller, 317 U.S. 369, 376, 377

(1943); Reynolds, 397 U.S. 14, 21 (1970); 320 Acres, 605 F.2d at 808.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards148

Circuit reasoned:

It is the date as of which the landowners or prospective purchasers no longer could

reasonably anticipate being able to devote these properties to their highest and

best use in the context of the surrounding governmental project, without serious

apprehension that the properties would soon be condemned. In other words, it is

the date as of which the prospect of imminent condemnation becomes suciently

denite that it would be a major factor in the decision of any reasonable person to

buy or develop the property.

683

Once that date has been legally determined, the appraiser “must disregard any . . . alterations in

value [due to the project] which it nds to have occurred thereafter.”

684

The nature of the government project and its alleged inuence on value may also require legal

analysis. For example, in United States v. 480.00 Acres of Land (Fornatora), the Eleventh Circuit

determined that the scope of the project rule did not allow appraisers to disregard preexisting

zoning restrictions that aected the market value of property being acquired for the East

Everglades expansion of Everglades National Park.

685

There, county regulations had restricted

development of the properties being acquired since 1981, well before the properties were

acquired by condemnation starting in 2000.

686

The landowners argued the county regulations

should be disregarded under the scope of the project rule, claiming they reected the inuence

of the federal government in an attempt to depress market value in anticipation of future federal

acquisitions. To determine this legal question, the lower court correctly conducted an extensive

review of evidence surrounding the county’s passage of the 1981 zoning ordinance, ultimately

nding that the evidence failed to show that “the primary purpose of the regulation was to

depress the property value of land or that the ordinance was enacted with the specic intent of

depressing property value for the purpose of later condemnation.”

687

As a result, the 1981 county

ordinance “was not within ‘the scope’ of [the federal government’s] decision seven years later

to expand Everglades National Park or its decision nineteen years later to begin condemning

properties.”

688

The Eleventh Circuit armed, holding that the district court “acted correctly in

ruling on [the landowners] objection regarding the zoning restrictions as a matter of law and in

then excluding evidence regarding this objection from the fact-nding Commission.”

689

683 320 Acres, 605 F.2d at 807; cf. Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc) (adopting as binding precedent all decisions

rendered by the former Fifth Circuit prior to October 1, 1981); Fifth Circuit Court of Appeals Reorganization Act of 1980, Pub. L. No. 96-

452, 94 Stat. 1994 (1980) (codied as amended in scattered sections of 28 U.S.C.).

684 Id. at 807 n.90 (emphasis added).

685 United States v. 480.00 Acres (Fornatora), 557 F.3d 1297 (11th Cir. 2009); see 16 U.S.C. §§ 410r-5 et seq. (authorizing expansion).

686 Fornatora, 557 F.3d at 1300; see id. (discussing Dade County’s 1981 East Everglades Zoning Overlay restricting development to one dwelling

per 40 acres with no agricultural use allowed); cf. Code of Miami-Dade Cty., Fla., Municipal Code §1-4.2 (renaming Dade County).

687 Fornatora, 557 F.3d at 1299; see id. at 1304 (“The evidence instead shows that the purpose and intent of the regulations was for the ecological

reasons set out in the Ordinance . . . . Additionally, . . . there is clearly insucient evidence to show that the United States acted in concert

or agreement to depress the property values. All the evidence . . . shows is that the federal government shared the concerns expressed by

the state and local governments in ensuring the continued vitality of the natural resources of South Florida.” (quoting magistrate judge’s

ndings adopted by district court)).

688 Id. at 1313. Congress authorized the East Everglades expansion project in 1989, but did not provide any funding for acquisitions until 1992,

and the expansion was not fully funded until 1999. Once “[a]rmed with sucient funding,” the United States began acquiring properties by

condemnation in 2000. Id. at 1300.

689 Id. at 1313.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 149

4.5.2. Application of the Scope of the Project Rule. Application of the scope of the project

test to any set of facts “requires discriminating judgment.”

690

Thus, even if a property is

unquestionably within the scope of the government project, a “mechanical application of

the . . . rule” is insucient.

691

Rather, “the rule is not to be divorced from its objective—

compensation awards that are just to both the public and the dispossessed landowner.”

692

nuanced factual and legal inquiry is necessary to determine what must be considered and what

must be disregarded to ensure the appraiser’s opinion of market value does not unfairly reect

project inuence. Depending on the specic facts of each acquisition, it may be appropriate or

necessary to carefully scrutinize, adjust, or even entirely disregard potentially comparable sales

that may have been tainted by the government’s acquisition activities, as indicated by date,

location, applicable zoning or other factors.

693

4.5.3. Legal Instructions. Because the scope of the project rule

involves interrelated factual and legal questions, the appraiser

must request appropriate legal instruction if there is evidence

the government’s project aected the market value of the

property being appraised.

694

The appraiser may be asked to

gather and/or analyze data to inform the legal analysis. Counsel

(or the Court) will instruct the appraiser as to (1) whether the

scope of the project rule applies, and, if so, (2) how the rule

must be applied to the specic property under appraisal, and, if

applicable (3) when the scope of the project rule applies, (i.e., the

date as of which the rule is triggered).

695

These legal instructions

are “the criteria [the appraiser] must follow in determining” the

fair market value of the property.

696

As with other complex legal

questions, counsel may direct the appraiser to perform a dual-

premise appraisal if the legal outcome is uncertain.

697

4.5.4. Impact on Market Value. The scope of the project rule only arises if there is evidence the

government’s project aected the market value of the property being appraised. If there is no

evidence the government project inuenced the property’s market value, no determination

of the scope of the project is required because there is no project inuence to disregard.

698

And while possible project inuence on market value can prompt an analysis of the scope of

690 United States v. Reynolds, 397 U.S. 14, 21 (1970).

691 United States v. 320 Acres, 605 F.2d 762, 796, 782 (5th Cir. 1979); see also United States v. 49.01 Acres of Land in Osage Cty., 669 F.2d 1364, 1369

(10th Cir. 1982) (refusing to apply scope of the project rule where landowners could not have reasonably believed their submerged property

was no longer within the scope of a government reservoir project).

692 320 Acres, 605 F.2d at 796.

693 See, e.g., Kerr v. S. Park Comm’rs, 117 U.S. 379, 386 (1886); Fornatora, 557 F.3d at 1311-13; see generally 320 Acres, 605 F.2d at 798-803 & nn.61-80

(citing cases).

694 See 320 Acres, 605 F.2d at 789-90; Reynolds, 397 U.S. at 21 (“application to any particular set of facts requires discriminating judgment”);

United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 674 (E.D. Va. 2011). If there is no evidence the government’s project

aected the market value, the scope of the project rule does not apply. Granby I, 844 F. Supp. 2d at 675.

695 See 320 Acres, 605 F.2d at 806 & nn.87-88, 808-09.

696 Reynolds, 397 U.S. at 20; accord 320 Acres, 605 F.2d at 809; Granby I, 844 F. Supp. 2d at 674.

697 Note that simply directing an appraiser to follow these Standards is not a sucient legal instruction for purposes of the scope of the project rule.

698 Granby I, 844 F. Supp. 2d at 675-76 (“[The Court] need not resolve whether imminent acquisition of the property was evident to the

public [before the date of valuation] because there is scant evidence that the government’s actions actually aected the market value of the

property.”).

Proper application of the

scope of the project rule

requires careful legal

and factual analysis.

The appraiser should

request legal instructions

from counsel.

If the legal outcome is

uncertain, the agency/client

may nd it prudent to direct

the appraiser to perform a

dual-premise appraisal.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards150

the project, project inuence on a property’s marketability cannot: Even a substantial decrease

in marketability, decreasing the number of potential buyers, must be disregarded if the price

at which the property would be sold is not aected.

699

This is because the federal denition

of market value assumes the property has already had reasonable exposure time on the open

market on the eective date of value.

700

Similarly, a substantial decrease in the number of market

sales within an announced project boundary would not be considered unless the project has

aected the price at which the property could be sold.

4.5.5. Limits of the Scope of the Project Rule. The scope of the project rule “is designed to

ensure that the landowner is neither hurt nor helped in a takings valuation by any action done

by the Government within the scope of the project leading to the taking.”

701

The scope of the

project rule applies only to changes in value attributable to the government’s project: the rule

does not allow an appraiser to disregard changes in value attributable to other factors.

702

For

this reason, changes in value prior to the date of valuation due to physical deterioration within

the landowner’s reasonable control must be considered.

703

Similarly, the scope of the project

rule does not permit the appraiser to ignore market realities beyond the government project.

704

It also bears noting that the requirement to consider the government project’s direct and special

benets to remainder property in partial acquisitions (discussed in Section 4.6) does not conict

with the scope of the project rule.

705

Rather, as the Fifth Circuit explored at length in 320 Acres,

these requirements stem from the same underlying principles.

706

4.5.6. Further Guidance. As often observed, the scope of the project rule may “be stated easily

enough” but “is not so easily understood or applied.”

707

For further guidance, the two major

Supreme Court decisions on the scope of the project rule are United States v. Miller and United

States v. Reynolds.

708

The Fifth Circuit’s inuential opinion in United States v. 320 Acres analyzes

699 See Marketability, The dicTionAry oF reAl esTATe ApprAisAl (6th ed. 2015) (“The relative desirability of a property (for sale or lease) in

comparison with similar or competing properties in the area.”); United States v. 881.39 Acres of Land, 254 F. Supp. 294, 297 (E.D. Okla.

1966) (discussing marketability); United States v. 48.10 Acres of Land in New Windsor, 144 F. Supp. 258, 264-265 (S.D.N.Y. 1956) (allowing

compensation for taking of easements where not only marketability, but market value was aected); see also United States v. 58.1 Acres of Land in

Hempstead, 151 F. Supp. 631, 634 (E.D.N.Y. 1957) (discussing market value impacts in 48.10 Acres in New Windsor); Section 1.4.2 (marketability

studies); cf. United States v. 6.24 Acres of Land (Weber), 99 F.3d 1140, 1996 WL 607162, at *6 (6th Cir. 1996) (per curiam) (unpubl.) (“diminution

in value caused by fear may be recoverable when such fear aects the price a knowledgeable and prudent buyer would pay to a similarly

well-informed seller”); accord United States v. 760.807 Acres of Land, 731 F.2d 1443, 1446-1447 (9th Cir. 1984).

700 See Section 4.2.1.2.

701 United States v. 480.00 Acres (Fornatora), 557 F.3d 1297, 1312 (11th Cir. 2009).

702 320 Acres, 605 F.2d at 803 (“The [scope of the project] rule renes the concept of fair market value only with respect to alterations in

value attributable to the [specic government project at issue]. It has no bearing whatsoever upon alterations in value attributable to other

events or market forces.”); Granby I, 844 F. Supp. 2d at 674, 675-79 (nding scope of the project rule did not apply, “given the multitude of

other plausible—and more likely—explanations for the nancial diculties” of landowner’s proposed development besides alleged project

inuence); see City of New York v. Sage, 239 U.S. 57, 60-62 (1915) (“The [government] is not to be made to pay for any part of what it has

added to the land by thus uniting it with other lots, if that union would not have been practicable or have been attempted except by the

intervention of eminent domain. Any rise in value before the taking, not caused by the expectation of that event, is to be allowed, but we

repeat, it must be a rise in what a purchaser might be expected to give.”).

703 Uniform Act, § 301(3), 42 U.S.C. § 4651(3) (2012); Granby I, 844 F. Supp. 2d at 674; cf. Rasmuson v. United States, 807 F.3d 1343, 1346 (Fed. Cir.

2015) (“proper appraisal methodology has to account for those physical conditions . . . a reasonably prudent buyer would consider . . . when

formulating an oer”).

704 320 Acres, 605 F.2d at 803; Granby I, 844 F. Supp. 2d at 674, 675-79.

705 See United States v. Fuller, 409 U.S. 488, 492 (1973)

706 320 Acres, 605 F.2d at 781-89.

707 Id. at 781-82; see United States v. Reynolds, 397 U.S. 14, 21 (1970) (“application to any particular set of facts requires discriminating judgment”);

United States v. Eastman (Eastman I), 528 F. Supp. 1177, 1179 n.2 (D. Or. 1981), a’d, 528 F. Supp. 1177 (9th Cir. 1983).

708 United States v. Miller, 317 U.S. 369 (1943); Reynolds, 397 U.S. 14 (1970).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 151

applications of the rule as well as its historical and legal origins.

709

Two more recent cases on

the applicability of the scope of the project rule are also instructive: United States v. 480.00 Acres

(Fornatora), from the Eleventh Circuit, and United States v. 1.604 Acres (Granby I), from the Eastern

District of Virginia.

710

4.6. Partial Acquisitions. Just compensation must put a landowner

“in the same position monetarily as he would have occupied if

his property had not been taken.”

711

The landowner “must be

made whole but is not entitled to more.”

712

Under this principle,

compensation for a partial acquisition—when the United States

acquires only part of a unitary holding—must reect not only the

property interest acquired, but also any change in the value of

the remainder directly caused by the government’s acquisition or

planned use of the part acquired.

713

As a result, the federal measure of compensation in partial

acquisitions is the dierence between the value of the landowner’s property before and after

the government’s acquisition.

714

Accordingly, appraisers must apply the before and after method of

valuation in partial acquisitions under federal law, developing opinions of both (1) the market

value of the whole property before the acquisition, and (2) the market value of the remainder

property after the acquisition.

715

Valuations must analyze and reect all compensable damages

and direct (special) benets to the value of the remainder property due to the government’s

acquisition and disregard all non-compensable damages and indirect (general) benets.

716

There are important dierences between federal and many state laws governing the valuation

of partial acquisitions for just compensation purposes.

717

Valuations in federal acquisitions must

apply the correct valuation method, analyze and consider compensable damages and benets,

and disregard non-compensable damages and benets in accordance with federal law.

718

discussed below, these critical distinctions are often complex and always require careful analysis.

Of course, the overarching goal is to ensure that compensation reects “the value of what [the

landowner] has been deprived of, and no more. To award him less would be unjust to him; to

award him more would be unjust to the public.”

719

709 320 Acres, 605 F.2d 762 (5th Cir. 1979); see generally id. at 781-85 (historical and legal foundations of rule), 785-90 (analysis of Miller and Reynolds),

790-98 (applicability of rule), 798-803 (implementation of rule) & 803-811 (case-specic analysis). The opinion is widely cited across the federal

courts. See, e.g., United States v. 480.00 Acres (Fornatora), 557 F.3d 1297, 1306-07, 1311-13 (11th Cir. 2009); Eastman I, 528 F. Supp. at 1179 n.2;

United States v. 428.02 Acres of Land, 687 F.2d 266, 270 (8th Cir. 1982); United States v. 49.01 Acres of Land in Osage Cty., 669 F.2d 1364 (10th Cir.

1982); United States v. 125.07 Acres of Land (Pond Road I), 667 F.2d 243, 248-49 (1st Cir. 1981); Granby I, 844 F. Supp. 2d at 674-75.

710 Fornatora, 557 F.3d at 1307, 1311; Granby I, 844 F. Supp. 2d at 674-75.

711 United States v. Reynolds, 397 U.S. 14, 16 (1970); accord United States v. Va. Elec. & Power Co., 365 U.S. 624, 633 (1961); Olson v. United States, 292 U.S.

246, 255 (1934); United States v. New River Collieries Co., 262 U.S. 341, 343 (1923); Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 304 (1923).

712 Va. Elec., 365 U.S. at 633 (quoting Olson, 292 U.S. at 255).

713 United States v. Miller, 317 U.S. 369, 376 (1943); United States v. Grizzard, 219 U.S. 180, 183 (1911); Bauman v. Ross, 167 U.S. 548, 574-75 (1897).

714 Va. Elec., 365 U.S. at 632. Partial acquisitions are distinct from temporary acquisitions. See United States v. Banisadr Bldg. Joint Venture, 65 F.3d 374,

378 (4th Cir. 1995); Section 4.7.

715 Va. Elec., 365 U.S. at 632; United States v. 68.94 Acres of Land, 918 F.2d 389, 393 n.3 (3d Cir. 1990); United States v. 91.90 Acres of Land in

Monroe Cty. (Cannon Dam), 586 F.2d 79, 86 (8th Cir. 1978); Ga.-Pac. Corp. v. United States, 640 F.2d 328, 336 (Ct. Cl. 1980) (per curiam).

716 See Bauman, 167 U.S. at 574.

717 See Mitchell v. United States, 267 U.S. 341, 345-46 & n.1 (1925); Ga.-Pac., 640 F.2d at 361 & n.43.

718 See Miller, 317 U.S. at 376 & nn.20-21.

719 Bauman, 167 U.S. at 574.

In partial acquisitions the

measure of compensation

is the dierence between

the market value of the

landowner’s property

before and after the

government’s acquisition.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards152

While outside the appraiser’s assignment, it bears noting that landowners are reimbursed

for many types of non-compensable damage—such as moving expenses and relocation

costs—through the Uniform Act or other federal statutes.

720

As the Supreme Court

explained, “[s]uch losses may be compensated by legislative authority, not by force of the

Constitution alone.”

721

These administrative payments for people or businesses aected by

federal acquisitions are separate from, and in addition to, just compensation for the property

acquired.

722

Accordingly, an appraisal that improperly includes non-compensable elements

not only would be legally incorrect for just compensation purposes, but also could result in

double payment.

723

4.6.1. The Federal Rule: Before and After Methodology. The

before and after method of valuation for partial acquisitions

is accepted in all federal courts.

724

It is often called the federal

rule, although it also applies in many (but not all) state

jurisdictions.

725

A before and after valuation requires careful

determination of the larger parcel (or parent tract) at issue—

which may dier before and after the acquisition—and proper

consideration of damages and benets to the remainder

property due to the government acquisition. Each of these

issues will be addressed below, along with limited exceptions to

the before and after method.

The before and after method is “particularly advantageous”

where the remainder may have been damaged and/or benetted

by the government’s acquisition.

726

As recognized by the federal

courts, proper application of the before and after method will result in a gure that reects

the value of the land actually acquired as well as any compensable damages and direct and

special benets to the remainder property.

727

“All of the elements of value entering into just

compensation”—i.e., the part acquired, compensable damage to the remainder and compensable

720 State laws governing relocation benets vary. See generally Nicole Stelle Garnett, The Neglected Political Economy of Eminent Domain, 105 mich. l.

reV. 101, 121-26 & nn.111-53 (2006) (discussing federal and state relocation benets and empirical studies of same).

721 United States v. Willow River Power Co., 324 U.S. 499, 510 (1945); see also United States v. Gen. Motors Corp., 323 U.S. 373, 382 (1945).

722 See United States v. 3.66 Acres of Land in S.F., 426 F. Supp. 533, 537 (N.D. Cal. 1977) (“While Congress has recognized that landowners

sometimes deserve more compensation than the fair market value alone would provide, it did not intend such compensation to be recovered

. . . in a condemnation action.”). The Uniform Act expressly states that it does not “creat[e] . . . any element of value or of damage” in

eminent domain proceedings to determine just compensation. 42 U.S.C. § 4602(b); see generally note 1, supra.

723 Cf. Gen. Motors, 323 U.S. at 379-80, 382.

724 E.g., United States v. Va. Elec. & Power Co., 365 U.S. 624, 632 (1961); Rasmuson v. United States, 807 F.3d 1343, 1345 (Fed. Cir. 2015); United States

v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 9 (1st Cir. 2009); United States v. 4.27 Acres of Land, 271 F. App’x 424, 425 (5th Cir. 2008)

(per curiam) (unpubl.); United States v. 6.24 Acres of Land (Weber), 99 F.3d 1140, 1996 WL 607162 (6th Cir. 1996) (per curiam) (unpubl.); United

States v. Banisadr Bldg. Joint Venture, 65 F.3d 374, 376 (4th Cir. 1995); United States v. 760.807 Acres of Land in Honolulu, 731 F.2d 1443, 1445-46

(9th Cir. 1984); United States v. 68.94 Acres of Land in Kent Cty., 918 F.2d 389, 393, n.3 (3d Cir. 1990); United States v. 91.90 Acres of Land in Monroe

Cty. (Cannon Dam), 586 F.2d 79, 86 (8th Cir. 1978); United States v. 105.40 Acres of Land in Porter Cty., 471 F. 2d 207, 210 (7th Cir. 1972); United

States v. 901.89 Acres of Land in Davidson & Rutherford Ctys. (Davenport), 436 F.2d 395 (6th Cir. 1970); Transwestern Pipeline Co. v. O’Brien, 418 F.2d

15, 21 (5th Cir. 1969); United States v. Evans, 380 F.2d 761, 765 (10th Cir. 1967); United States v. Glanat Realty Corp., 276 F.2d 264, 265 (2d

Cir. 1960), a’g United States v. 765.56 Acres of Land in Southampton (765.56 Acres II), 174 F. Supp. 1 (E.D.N.Y. 1959), and United States v. 765.56

Acres of Land in Southampton (765.56 Acres I), 164 F. Supp. 942 (E.D.N.Y. 1958). The before and after method is the only method of valuation

allowed for partial acquisitions in the Fifth Circuit. United States v. 8.41 Acres of Land in Orange Cty., 680 F.2d 388, 392, n.5 (5th Cir. 1982).

725 See generally eATon, supra note 16, at 23-43; 4A-14 nichols on eminenT domAin § 14.02 (Just Compensation for Partial Takings).

726 Piza-Blondet, 585 F.3d at 9-10 & n.6 (citing United States v. Miller, 317 U.S. 369, 375-76 (1943)).

727 Piza-Blondet, 585 F.3d at 9-10 & n.6 (citing Miller, 317 U.S. at 375-76).

In partial acquisitions,

compensable damages

and direct (special) benets

to the remainder must

be reected.

Non-compensable

damages and indirect

(general) benets must

be disregarded.

These federal rules may

dier from state law or

local practice.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 153

benet to the remainder—“are contained

in the federal formula.”

728

4.6.1.1. Larger Parcel Determination. By

denition, a partial acquisition involves

property that is some part of a unitary

holding (the “whole”),

729

commonly

called the larger parcel or parent

tract.

730

In a partial acquisition, “[i]t is

often dicult . . . to determine what is

a distinct and independent tract”—the

whole property, comprising the part

acquired and the remainder.

731

But

this determination of the larger parcel

is critical for proper consideration of

compensable damages and osetting

benets.

732

As discussed in Section 4.3.3,

the key factors in determining the larger

parcel are (1) unity of use (i.e., highest

and best use), (2) unity of ownership,

and (3) physical unity (proximity or

contiguity).

Certain aspects of the larger parcel

determination merit particular emphasis

in partial acquisitions. Appraisers must

bear in mind “the distinction between

a residue of a tract whose integrity

is destroyed [or impaired] by the

[acquisition] and what are merely other

parcels or holdings of the same owner”

that are not part of the remainder for

compensation or valuation purposes.

733

Also, the availability of replacement

property for the parcel acquired must

be considered—as reasonable buyers

728 United States ex rel. Tenn. Valley Auth. v. Indian Creek Marble Co., 40 F. Supp. 811, 820 (E.D. Tenn. 1941), cited with approval by City of Van

Buren v. United States, 697 F.2d 1058, 1062 (Fed. Cir. 1983), and United States v. 2,847.58 Acres of Land in Bath Ctys., 529 F.2d 682, 686 (6th

Cir. 1976); see United States v. 760.807 Acres of Land in Honolulu, 731 F.2d 1443, 1445 (9th Cir. 1984) (“Using [the before and after] method,

any diminution in value of the remainder resulting from the taking and use of part of the original parcel, sometimes termed ‘severance

damages,’ would be included in the award.”).

729 See Sharp v. United States, 191 U.S. 341, 353-55 (1903), a’g Sharpe v. United States, 112 F.893, 896 (3d Cir. 1902).

730 See United States v. 14.38 Acres of Land, 80 F.3d 1074, 1077 (5th Cir. 1996). Otherwise, the property under appraisal would be a total

acquisition, leaving no remainder.

731 Sharpe, 112 F. at 896.

732 See id.

733 See id.; see also United States v. 8.41 Acres of Land in Orange Cty., 680 F.2d 388, 393 (5th Cir. 1982).

Availability of Replacement Property

In Baetjer v. United States, the United States acquired

more than 7,900 acres of land from a large, integrated

sugar cane operation spanning 30,000 acres in Puerto

Rico and the neighboring island of Vieques. 143

F.2d 391 (1st Cir. 1944). The landowners claimed the

sugar cane capacity of the condemned land could

not be economically replaced. The court found that a

compensable loss could result—if a lack of available

replacement property would aect market value for a

hypothetical willing buyer. The court therefore remanded

the case to determine whether the sugar mills had an

uneconomic over-capacity so that they could not be

operated by anyone as protably after the taking, such

that market value would be aected. Id. at 396.

In contrast, take the case of International Paper Co. v.

United States, a condemnation of over 9,500 acres of

timber property, which the landowner claimed shared

an integrated use with a paper mill under the same

ownership. 227 F.2d 201 (5th Cir. 1955). Citing an

industry “rule of thumb” that a paper mill should have

one acre of woodland for every ton of paper it produced

annually, the landowner claimed that falling below this

acreage threshold because of the taking had signicantly

decreased the value of its paper mill. The court rejected

this claim because the landowners’ experts failed to

consider the availability of replacement property that

would in all respects make up the deciency in acreage

due to the taking. Without proof that similar land was

unavailable, the court held, damage to the paper mill

could not be considered, as the landowner could simply

buy replacement acreage to eectively restore the value

of the paper mill. Id. at 207.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards154

and sellers would do.

734

This may be contrary to some state law

and practice.

735

But in federal acquisitions, failing to consider the

availability of replacement property may result, in the words of the

Fifth Circuit, in a valuation that “oends any rules relating to the

awarding of just compensation for property taken for public use.”

736

4.6.2. Damage. Just compensation is measured by the owner’s loss, not

the government’s gain.

737

In partial acquisitions when only part of a larger parcel is acquired, the

value of the part acquired is not the sole measure of compensation; the “injury or benet to the

part not taken is also to be considered.”

738

If the part not acquired, the landowner’s remainder, is

“left in such shape or condition as to be in itself of less value than before, the owner is entitled

to additional damages on that account.”

739

In legal terms, decreases in the market value of the

remainder property for which compensation must be paid are compensable damage and must be

considered in valuations for federal acquisitions. Compensable diminution in value is also loosely,

and misleadingly, referred to as severance damages.

740

Compensable damages are not a distinct

item to be added to compensation; rather, they are already reected and automatically included

in a before and after method of valuation.

741

But “not all losses suered by the owner are compensable under

the Fifth Amendment.”

742

Non-compensable damages cannot be

considered in valuations for federal just compensation purposes.

743

The distinction between compensable and non-compensable

losses is rooted in the market value standard as the measure of

just compensation: under the Fifth Amendment, the Supreme

Court held, just compensation does not include “indirect or

remote injuries” beyond market value “which would ensue the

sale of the property to someone other than the sovereign.”

744

Such losses are not compensable because they uctuate with the

734 Baetjer v. United States, 143 F.2d 391 at 396-97 (1st Cir. 1944); accord Int’l Paper Co. v. United States, 227 F.2d 201 (5th Cir. 1955); Porrata v. United

States, 158 F.2d 788, 790 (1st Cir. 1947) (“Certainly one of the elements which would be considered by the mythical ‘willing buyer’ of the

[remainder property] would be the availability of a suitable substitute . . . to take the place of the one formerly on [the part taken].”); see

Ga.-Pac. Corp. v. United States, 640 F.2d 328, 359 (Ct. Cl. 1980) (per curiam) (burden to show that “replacement old-growth timber was not

available, or if available, at least, the burden to show persuasively that under existing circumstances it would be economically unfeasible

to obtain available replacement timber”); see also United States v. 711.57 Acres of Land in Alameda Cty., 51 F. Supp. 30, 33 (N.D. Cal. 1943)

(awarding compensation reecting availability of alternative access to severed tract).

735 See Miller v. United States, 620 F.2d 812, 831-32 & n.17 (1980). (noting that while some state law cases hold otherwise, “the better rule” applied

in federal court holds that “the future availability of other land should be considered as the hypothetical ‘willing buyer’ of the [remainder]

would consider such a factor”) (citing Porrata, 158 F.2d 788).

736 Int’l Paper, 227 F.2d at 207 (case study).

737 Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910); United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 281 (1943).

738 Bauman v. Ross, 167 U.S. 548, 574 (1897).

739 Id.

740 See, e.g., United States v. Miller, 317 U.S. 369, 376 (1943) (“loosely”); United States v. 9.20 Acres of Land in Polk Cty., 638 F. 2d 1123, 1127 (8th Cir.

1981) (discussing “misleading nature of the term ‘severance damages’ as used in partial taking cases”); see United States v. Honolulu Plantation

Co., 182 F.2d 172, 175 & n.1 (9th Cir. 1950) (“The use of this term is to be criticized because it is apt to lead to loose thinking.” (citing Miller,

317 U.S. at 376)); United States v. 760.807 Acres of Land in Honolulu, 731 F.2d 1443, 1448 (9th Cir. 1984).

741 United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 9 & n.6 (1st Cir. 2009); United States v. 91.90 Acres of Land in Monroe Cty. (Cannon

Dam), 586 F.2d 79, 86 (8th Cir. 1978); United States v. 711.57 Acres of Land in Alameda Cty., 51 F. Supp. 30, 33 (N.D. Cal. 1943) (“Such . . .

damage is a part of the whole damage suered by the owner upon the taking.”); see Miller, 317 U.S. at 375-76.

742 Powelson, 319 U.S. at 281.

743 United States v. Westinghouse Elec. & Mfg. Co., 339 U.S. 261, 264 (1950).

744 United States v. Gen. Motors Corp., 323 U.S. 373, 382, 379 (1945).

Damage to a property’s

market value is

compensable or non-

compensable for federal

acquisition purposes.

The confusing terms

severance damage and

consequential damage can

generally be avoided.

The availability of

replacement property

to restore the usability

of the remainder must

be considered in federal

partial acquisitions.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 155

needs of the owner, not the market; they are “apart from the value of the thing taken.”

745

Non-

compensable damages have often been called consequential damages, but this term has caused

confusion in both valuation and legal analyses.

746

Federal law prohibits consideration of non-compensable damages that may be compensable

under many state laws and therefore considered in other contexts.

747

Under federal law, some

types of damage may be compensable if proved. Some other types of damage—such as lost

prots—are never compensable, even if proved, because “not all losses are compensable.”

748

And

some types of damage may be compensable (if proved) in specic types of acquisitions, but are

never compensable in other types of acquisitions.

4.6.2.1. Compensable (Severance) Damages. In the context of the

Fifth Amendment, damage is simply “the equivalent for the injury

done,” just as compensation, “standing by itself, carries the idea of

an equivalent.”

749

Yet the concept of compensable damage is

often misunderstood, as the Eighth Circuit explained:

It is incorrect to think of “severance damages” as a separate

and distinct item of just compensation apart from the

dierence between the market value of the entire tract immediately before the taking and

the market value of the remainder immediately after the taking. In the case of a partial taking,

if the “before and after” measure of compensation is properly [applied], there is no occasion

. . . to talk about “severance damages” as such, and indeed it may be confusing to do so. The

matter is taken care of automatically in the “before and after” submission.

750

745 United States v. Petty Motor Co., 327 U.S. 372, 377-78 (1946); United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 33 (1984); see also United

States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 76 (1913) (“These additional values represent, therefore, no actual loss, and there would

be no justice in paying for a loss suered by no one in fact.”).

746 See Ga.-Pac. Corp. v. United States, 640 F.2d 328, 361 n.44 (Ct. Cl. 1980) (per curiam) (“The concept of consequential damages, however, is

sometimes troublesome and confusing in severance damage situations.”); see also eATon, supra note 16, at 289-90 (“[T]he term consequential

damages introduces nothing but confusion to what, from a valuation standpoint, would merely appear [to] be a question of compensability.”).

747 See Mitchell v. United States, 267 U.S. 341, 345-46 (1925); Batten v. United States, 306 F.2d 580, 583-84 (10th Cir. 1962) (citing Richards v. Wash. Terminal

Co., 233 U.S. 546, 554 (1914)); cf. Bauman v. Ross, 167 U.S. 548, 575-84 (1897) (quoting state constitutional provisions regarding just compensation).

748 United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 281 (1943); cf. United States v. 101.88 Acres of Land in St. Mary Par. (Avoca Island), 616

F.2d 762, 770 (5th Cir. 1980) (noting case law draws “distinction between damages allowable in the condemnation proceeding, and claims

for damages that are not allowable . . . in a condemnation proceeding”).

749 Monongahela Nav. Co. v. United States, 148 U.S. 312, 326 (1893) (distinguishing “damages by way of compensation . . . from punitive or

exemplary damages”).

750 United States v. 9.20 Acres of Land in Polk Cty., 638 F.2d 1123, 1127 (8th Cir. 1981) (quoting United States v. 91.90 Acres of Land in Monroe Cty.

(Cannon Dam), 586 F.2d 79, 86 (8th Cir. 1978)); accord United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165 (N.D.N.Y. 2010), a’d,

502 F. App’x 43, 45 (2d Cir. 2012) (unpubl.); United States v. 6.24 Acres of Land (Weber), 99 F.3d 1140, 1996 WL 607162 (6th Cir. 1996) (per

curiam) (unpubl.); United States v. Werner, 36 F.3d 1095, 1994 WL 507461, *6 (4th Cir. 1994) (per curiam) (unpubl.); United States v. 50.50 Acres

of Land, 931 F.2d 1349, 1358 (9th Cir. 1991); United States v. 2,560.00 Acres of Land in Wash. Cty., 836 F.2d 498, 502 (10th Cir. 1988); United

States v. 8.41 Acres of Land in Orange Cty., 680 F.2d 388, 390-92 & n.1 (5th Cir. 1982); see also United States v. 33.92356 Acres of Land (Piza-Blondet),

585 F.3d 1, 8-10 & n.6 (1st Cir. 2009); Baetjer v. United States, 143 F.2d 391, 395-96 (1st Cir. 1944).

It is incorrect to think

of severance damages

as a separate item apart

from the dierence in

the property’s market

value before and after the

government’s acquisition.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards156

Compensable damages may reect a decrease in the market value of the remainder arising

from (1) the government’s planned use of the part acquired, and/or (2) the relation of the part

acquired to the larger parcel.

751

4.6.2.2. Necessary Support. Of course, the mere fact of a partial acquisition will not necessarily

entitle a landowner to damages.

752

It may well be “that while there has been a severance in

the legal sense such severance has caused no compensable damage to the market value of the

properties not taken.”

753

And legally compensable damages can only be considered if proved: as with any element

aecting value, damage to the remainder (i.e., diminution in value) can never be assumed

but must always be fully supported by the facts of each situation.

754

Damage that is “vague

and speculative in character” or premised on “possibilities more or less remote” cannot be

considered.

755

As a result, it is improper to use damage as a catchall, simply stating an amount

without specifying the basis for the opinion. One court criticized parties who failed to furnish

factual data to support claimed diminution in value to the remainder as follows: “Not only were

the opinions of their experts based largely on speculation and conjecture, but these witnesses

totally disregarded available evidence of comparable sales before and after the taking of the

easement.”

756

In short, damage is “compensable only if the landowner incurs a direct loss

reected in the market place that results from the [acquisition].”

757

Moreover, not merely damage,

but causation must be proved: for compensation to reect diminution in value to the remainder, the

“landowner must demonstrate that the taking caused the . . . damage[ ].”

758

Conjecture and Speculation. Of course, even potentially compensable damages must be

disregarded if based on mere speculation and conjecture.

759

Thus, the federal courts have barred

751 Baetjer, 143 F.2d at 392 n.2; see, e.g., Sharpe v. United States, 112 F. 893, 896 (3d Cir. 1902), a’d sub nom. Sharp v. United States, 191 U.S. 341 (1903)

(“proper to include the damages in the shape of deterioration in value which will result to the residue of the tract from the occupation of the

part so taken”); United States v. Miller, 317 U.S. 369, 376 (1943) (“compensation . . . includes any element of value arising out of the relation of

the part taken to the entire tract”); cf. United States v. 105.40 Acres of Land in Porter Cty., 471 F.2d 207, 211 n.8 (7th Cir. 1972) (“It might be argued

that recovery of damages arising from a) the relation of the ‘remainder tract’ to the whole, and b) the relation of the ‘condemned tract’ to the

whole, have both been ‘loosely spoken of ’ and treated as severance damages.” (quoting Miller, 317 U.S. at 376)); Ga.-Pac. Corp. v. United States, 640

F.2d 328, 336 (Ct. Cl. 1980) (per curiam).

752 United States v. Mattox, 375 F.2d 461, 463-64 (4th Cir. 1967); Baetjer, 143 F.2d at 395-96.

753 United States v. 7,936.6 Acres of Land, 69 F. Supp. 328, 332 (D.P.R. 1947), on remand from Baetjer, 143 F.2d at 395-96.

754 Olson v. United States, 292 U.S. 246, 257 (1934); Baetjer, 143 F.2d at 395-96 (remanding for evidence on “whether or not the [landowners] have

suered a compensable loss, and if they have, its extent”); Sharpe, 112 F. at 897.

755 Sharpe, 112 F. at 897.

756 United States v. 26.07 Acres of Land in Nassau Cty., 126 F. Supp. 374, 377 (E.D.N.Y. 1954). In contrast, “the Government’s expert made a

detailed survey of sales of residential and industrial parcels in the immediate vicinity of the defendants’ properties, before and after the

appropriation of the easement, which plainly indicated that there was no appreciable depreciation in the market value of similar parcels as a

result of the imposition of the easement.” Id.

757 United States v. 760.807 Acres of Land in Honolulu, 731 F.2d 1443, 1448 (9th Cir. 1984); United States v. 6.24 Acres of Land (Weber), 99 F.3d 1140,

1996 WL 607162, at *5 (6th Cir. 1996) (per curiam) (unpubl.).

758 760.807 Acres in Honolulu, 731 F.2d at 1448; Hendler v. United States, 175 F.3d 1374, 1384-85 (Fed. Cir. 1999) (arming nding that diminution

in market value of contaminated property was due to preexisting contamination caused by third parties, not government’s subsequent

remediation activities). Proof of causation is also required to consider the eects of the government project in total acquisitions. See, e.g.,

United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 675-76 (E.D. Va. 2011) (“[The court] need not resolve [project inuence

issues] because there is scant evidence that the government’s actions actually aected the market value of the property.”).

759 United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 275-76 (1943); Olson v. United States, 292 U.S. 246, 257 (1934).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 157

consideration of damages that are not supported by actual market evidence.

760

These items

must be disregarded in determining market value for federal acquisitions because consideration

of such elements would “add to just compensation something that the law does not allow.”

761

Elements that have been excluded from consideration because they were not shown to be

reasonably probable run the gamut from an assertion that “buyers would suddenly become

fearful of explosive hazards” due to a safety buer zone “created to ease public fear of explosive

hazards”

762

to claimed damage due to the threat that “marauding bears” would “specically foray

from [a] newly created park” to attack young-growth trees on remainder property.

763

Anticipated Physical Invasion of the Remainder. Damage due to anticipated physical

invasion of the remainder resulting from the intended use of the land acquired is not

compensable in federal acquisitions.

764

For example, in the federal acquisition of a owage

easement for construction of a reservoir, an opinion of market value must disregard any damage

to the remainder from anticipated wave action above the line of the acquisition during periods

of high winds.

765

To do otherwise would in essence expand the government’s acquisition, which

neither appraisers nor landowners—nor the courts—have the power to do.

766

Use of Others’ Lands. Similarly, diminution in value of a landowner’s remainder caused by the

United States’ use of other lands is not compensable and cannot be considered in valuations for just

compensation purposes.

767

The Supreme Court created this rule in Campbell v. United States, reasoning:

If the former private owners [of adjacent property] had devoted their lands to the identical

uses for which they were acquired by the United States . . . , they would not have become

liable for the resulting diminution in value of [the remainder] property. The liability of the

United States is not greater than would be that of the private users.

768

760 E.g., United States v. Honolulu Plantation Co., 182 F.2d 172, 179 (9th Cir. 1950) (“[S]trict proof of the loss in market value to the remaining parcel

is obligatory.”); 26.07 Acres in Nassau, 126 F. Supp. at 377; see 760.807 Acres in Honolulu, 731 F.2d at 1448 (nding appraiser’s determination was

“insucient” without “market surveys or other data” that showed damages actually recognized in the market); United States v. 122.63 Acres of

Land in Norfolk Cty., 526 F. Supp. 539 (D. Mass. 1981) (declining to award damages for taking of easement where there was no proof of such

damage); see also Weber, 99 F.3d 1140, 1996 WL 607162, at *4-6 (rejecting one appraiser’s nding of stigma damage where record was “devoid

of evidence” showing such damage, and accepting another appraiser’s nding that no stigma damage existed based on comparison of similar

properties and interviews of market participants involved with the purchase of similar property); Sharpe, 112 F. at 897.

761 Intertype Corp. v. Clark-Congress Corp., 240 F.2d 375, 380 (7th Cir. 1957).

762 760.807 Acres in Honolulu, 731 F.2d at 1448-49 (noting government’s acquisition of safety buer zone “could very well have increased the value

of the remainder” due to public condence that remainder was safe from explosive hazards).

763 Ga.-Pac. Corp. v. United States, 640 F.2d 328, 362-63 & n.47 (Ct. Cl. 1980) (per curiam) (nding “no reasonable probability supportive of such a

belief in this record” (citing Olson, 292 U.S. at 257) and noting it “is questionable, in any event, if such intrusions provide a basis for recovery

of severance damages” (citing United States v. Pope & Talbot, Inc., 293 F.2d 822, 826 (9th Cir. 1961))).

764 Such damage may be compensable in a separate acquisition or inverse taking claim (Section 4.9). United States v. 38.60 Acres of Land in Henry

Cty., 625 F.2d 196, 199-200 (8th Cir. 1980); United States v. 101.88 Acres of Land in St. Mary Par. (Avoca Island), 616 F.2d 762, 768 (5th Cir. 1980).

765 E.g., 38.60 Acres in Henry, 625 F.2d at 199-200; see also Avoca Island, 616 F.2d at 768 (improper to value as if United States would deposit

dredging spoil on remainder land); United States v. 3,317.39 Acres of Land in Jeerson Cty., 443 F.2d 104 (8th Cir. 1971) (error to consider

damage for possible ooding of remainder property); United States v. Brondum, 272 F.2d 642 (5th Cir. 1959) (error to value taking of easement

to cut trees and remove obstructions as if it also included avigation rights to y aircraft over area).

766 38.60 Acres in Henry, 625 F.2d at 199-200; Avoca Island, 616 F.2d at 768; United States v. 3,317.39 Acres of Land in Jeerson Cty., 443 F.2d 104,

105-06 (8th Cir. 1971); see Berman v. Parker, 348 U.S. 26, 35-36 (1954); United States v. 3,218.9 Acres of Land in Warren Cty., 619 F.2d 288, 290-93

(3d Cir. 1980); United States v. 40.60 Acres of Land in Contra Costa Cty., 483 F.2d 927, 928 (9th Cir. 1973); see also United States v. 21.54 Acres of Land

in Marshall Cty., 491 F.2d 301, 304-06 (4th Cir. 1973).

767 Campbell v. United States, 266 U.S. 368, 371-72 (1924); 760.807 Acres in Honolulu, 731 F.2d at 1447; Avoca Island, 616 F.2d at 769; United States v.

Kooperman, 263 F.2d 331, 332 (2d Cir. 1959); Winn v. United States, 272 F.2d 282, 286-87 (9th Cir. 1959); Boyd v. United States, 222 F.2d 493, 494

(8th Cir. 1955).

768 Campbell, 266 U.S. at 371-72 (noting a landowner “ha[d] no right to prevent the taking and use of the lands of others”); accord United States v.

15.65 Acres of Land in Marin Cty. (Marin Ridgeland Co.), 689 F.2d 1329, 1331-32 (9th Cir. 1982).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards158

The Ninth Circuit created a narrow exception to the Campbell rule in United States v. Pope & Talbot,

Inc. to allow compensation for damage resulting from the use of another’s property in limited

circumstances.

769

Thus, in the Ninth Circuit, damage to the remainder resulting from the use

of others’ property may be considered if (1) the part acquired is indispensable to the government

project; (2) the part acquired contributes substantially (not inconsequentially) to the project and

the resulting damage; and (3) damage to the remainder due to the use of the part acquired is

inseparable from damage to the remainder due to the government’s use of its adjoining land in the

project.

770

For example, consider a partial taking of a tract for construction of a contaminated

soils depository, which would be constructed partly on the property taken and partly on property

acquired from others: it might not be practical to separate the diminution in value of the

remainder caused by the use of the property acquired from that caused by the use of lands acquired

from others. In such situations, the appraiser should seek legal guidance. The Ninth Circuit’s

exception to the Campbell rule has not been adopted by other federal courts,

771

and even in the

Ninth Circuit is rarely invoked.

772

And as the Ninth Circuit made clear in subsequent rulings,

regardless of the Pope & Talbot exception, damage is “compensable only if the landowner incurs a

direct loss reected in the market place that results from the [acquisition].”

773

Moreover, causation

must be proved: a “landowner must demonstrate that the taking caused the . . . damage[ ].”

774

Stigma, Fear, and Contamination. If stigma or fear of a “hazard would aect the price a

knowledgeable and prudent buyer would pay to a similarly well-informed seller, diminution in

value caused by that fear may be recoverable as part of just compensation.”

775

The threshold

question is not whether the fear or stigma is rational or well-founded, but rather whether and to

what extent it aects the market.

776

There must be evidence “connecting the safety issue to the real

estate market.”

777

Moreover, it is improper to simply assume that a hazard, or the fear of a hazard,

has an eect on market value. As the Ninth Circuit explained in a condemnation for construction

of high-voltage transmission lines and potential fears of electromagnetic elds (EMFs):

In the absence of relevant and probative evidence, a [fact-nder] could only speculate

concerning the eect of a particular measurement on public perception. Perhaps the

general public, unschooled in the signicance of the milligauss, is afraid of actual

EMFs in any quantity, so long as they come from a big power line. Or perhaps the

levels of EMFs that exist on [the subject property] would even ease public fears in the

marketplace. There is simply no way for a [fact-nder] to tell. Without any evidence

. . . that higher levels of EMF generate higher levels of buyer aversion and lower sale

prices, [evidence] about specic EMF levels has little to no probative value.

778

769 United States v. Pope & Talbot, Inc., 293 F.2d 822 (9th Cir. 1961).

770 Marin Ridgeland Co., 689 F.2d at 1332; Pope & Talbot, 293 F.2d at 825.

771 See E. Tenn. Nat. Gas Co. v. 2.93 Acres of Land, No. 4:02CV00179, 2007 WL 2688414, *2 (W.D. Va. Sept. 13, 2007) (citing cases); cf. Ga.-Pac.

Corp. v. United States, 640 F.2d 328, 363 (Ct. Cl. 1980) (per curiam) (citing but not applying Pope & Talbot analysis).

772 See, e.g., 760.807 Acres in Honolulu, 731 F.2d at 1447-48 (nding Pope & Talbot exception did not apply where “alleged severance damage, if

resulting from any use, could not be caused by any use of the condemned property”); St. Regis Paper Co. v. United States, 313 F.2d 45 (9th Cir.

1962) (nding reduced access to remainder was due to use to which adjoining land owned by others was put, and therefore not compensable

under Campbell, and Pope & Talbot did not apply).

773 760.807 Acres in Honolulu, 731 F.2d at 1448.

774 Id.

775 Id. at 1447.

776 United States v. 87.98 Acres of Land in Merced Cty., 530 F.3d 899, 904-05 (9th Cir. 2008); Basset, New Mexico LLC v. United States, 55 Fed. Cl. 63, 75 (2002).

777 87.98 Acres in Merced, 530 F.3d at 905 (analyzing 760.807 Acres in Honolulu, 731 F.2d at 1449).

778 87.98 Acres in Merced, 530 F.3d at 905-06 (internal citations omitted).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 159

Further, fear or stigma associated with anticipated damage may also be recoverable if it would

aect the market price a knowledgeable and prudent buyer would pay for the property on the

date of value.

779

Causation between the stigma or fear and the government’s acquisition must

be shown.

780

And diminution in value resulting from fear or stigma due to the actions of a

third party or to pre-existing conditions cannot be considered.

781

For these reasons, appraisers

must obtain clear written instructions regarding appropriate consideration of environmental

contamination or other hazards, as discussed in Section 1.2.7.1.

782

4.6.2.3. Non-Compensable (Consequential) Damages. Because the compensability of a particular

aspect of damage stems from its treatment in the open market between willing buyers and

sellers, losses that are not reected in sales prices in the private market cannot be considered in

federal acquisitions. Applying this principle, federal courts have determined that the following

losses are not compensable under the Fifth Amendment: loss of business value or going

concern value;

783

loss of or damage to goodwill;

784

future loss of prots;

785

frustration of plans;

786

frustration of contract or contractual expectations;

787

loss of opportunity or business prospect;

788

frustration of an enterprise;

789

loss of customers;

790

expenses of moving removable xtures and

personal property;

791

depreciation in value of furniture and removable equipment;

792

increased

production or management costs;

793

damage to inventory or equipment;

794

expense of adjusting

or restructuring manufacturing operations;

795

incurrence of removal or relocation costs;

796

loss or

cancellation of revocable permits or licenses;

797

loss of ability to collect assessments;

798

uncertainty

premium due to tenant’s status as a government entity;

799

and interference with development

779 United States v. 33.5 Acres of Land, 789 F.2d 1396, 1398 (9th Cir. 1986).

780 760.807 Acres in Honolulu, 731 F.2d at 1447.

781 Hendler v. United States, 175 F.3d 1374, 1384-85 (Fed. Cir. 1999); 760.807 Acres in Honolulu, 731 F.2d at 1448.

782 See, e.g., Hendler, 175 F.3d at 1384-85; 760.807 Acres in Honolulu, 731 F.2d at 1448.

783 Mitchell v. United States, 267 U.S. 341, 345 (1925); United States v. 1735 N. Lynn St., 676 F. Supp. 693, 697-98 (E.D. Va. 1987).

784 United States v. Gen. Motors Corp., 323 U.S. 373, 378 (1945).

785 Id.; United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 283 (1943); Yuba Nat. Res., Inc. v. United States, 904 F.2d 1577, 1581-82 (Fed.

Cir. 1990); Ga.-Pac. Corp. v. United States, 640 F.2d 328, 360-61 (Ct. Cl. 1980) (per curiam).

786 1735 N. Lynn St., 676 F. Supp. at 701 (citing Powelson, 319 U.S. at 281-82 & n.12, and Omnia Commercial Co. v. United States, 261 U.S. 502, 513 (1923)).

787 Omnia, 261 U.S. at 513; United States v. 57.09 Acres of Land in Skamania Cty. (Peterson II), 757 F.2d 1025, 1027 (9th Cir. 1985); United States v.

677.50 Acres of Land, 420 F.2d 1136, 1138-39 (10th Cir. 1970); Hooten v. United States, 405 F.2d 1167, 1168 (5th Cir. 1969); United States v. 1.604

Acres of Land (Granby I), 844 F. Supp. 2d 668, 681-82 (E.D. Va. 2011); United States v. Gossler, 60 F. Supp. 971, 976-77 (D. Or. 1945).

788 Omnia, 261 U.S. at 513; United States v. Grand River Dam Auth., 363 U.S. 229, 236 (1960); Powelson, 319 U.S. at 283.

789 Omnia, 261 U.S. at 513; Grand River, 363 U.S. at 236.

790 S. Ctys. Gas Co. of Cal. v. United States, 157 F. Supp. 934, 935-36 (Ct. Cl. 1958), cert. denied, 358 U.S. 815 (1958); R.J. Widen Co. v. United States,

357 F.2d 988, 990, 993-94 (Ct. Cl. 1966); see Stipe v. United States, 337 F.2d 818, 819-21 & n.3 (10th Cir. 1964).

791 United States v. Gen. Motors Corp., 323 U.S. 373, 378 (1945).

792 Certain Land in City of Washington v. United States, 355 F.2d 825, 826 (D.C. Cir. 1965); see County of Ontonagon v. Land in Dickinson Cty., 902 F.2d

1568, 1990 WL 66813, *3-*4 (6th Cir. 1990) (unpubl.).

793 PVM Redwood Co. v. United States, 686 F.2d 1327, 1328-29 (9th Cir. 1982); Ga.-Pac. Corp. v. United States, 640 F.2d 328, 360 n.44, 363-65 (Ct. Cl.

1980) (per curiam).

794 Klein v. United States, 375 F.2d 825, 829 (Ct. Cl. 1967).

795 United States v. 91.90 Acres of Land in Monroe Cty. (Cannon Dam), 586 F.2d 79, 87-88 (8th Cir. 1978); Klein, 375 F.2d 825 at 829.

796 United States v. Westinghouse Elec. & Mfg. Co., 339 U.S. 261, 264 (1950); United States v. Petty Motor Co., 327 U.S. 372, 377-78 (1946); Intertype Corp.

v. Clark-Congress Corp., 240 F.2d 375 (7th Cir. 1957); Ga.-Pac., 640 F.2d at 361 n.44. But see exception discussed below regarding temporary

acquisitions that interrupt but do not terminate a longer term.

797 Acton v. United States, 401 F.2d 896, 897-900 (9th Cir. 1968); United States v. Cox, 190 F.2d 293, 295-96 (10th Cir. 1951); see also Section 4.11.2

(Federal Grazing Permits).

798 United States v. 0.073 Acres of Land (Mariner’s Cove), 705 F.3d 540, 546-49 (5th Cir. 2013); but see Adaman Mut. Water Co. v. United States, 278 F.2d

842 (9th Cir. 1960) (regarding restrictive covenants for collection of assessments for water extracted from burdened properties).

799 United States v. 131,675 Rentable Square Feet of Space (GSA-VA St. Louis I), No. 4:14-cv-1077 (CEJ), 2015 WL 4430134, *4 (E.D. Mo. July 20, 2015);

see United States v. Gen. Motors Corp., 323 U.S. 373, 379-80 (1945); United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 276 (1943).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards160

agreements,

800

among others.

801

Such losses must be disregarded—even if proved—because by

law, they are not compensable under the Fifth Amendment.

Acquisitions of Fee or Other Full-Term Interests. Under federal law, compensation for a

fee acquisition does not include “future loss of prots, the expense of moving removable xtures

and personal property from the premises, the loss of good-will which inheres in the location of

the land, or other like consequential losses which would ensue the sale of the property to someone

other than the sovereign.”

802

The Supreme Court explained the reasons for this rule as follows:

Whatever of property the citizen has the government may take. When it takes the property,

that is, the fee, the lease, whatever he may own, terminating altogether his interest, under

the established law it must pay him for what is taken, not more; and he must stand whatever

indirect or remote injuries are properly comprehended within the meaning of “consequential

damage” as that conception has been dened in such cases. Even so the consequences often

are harsh. For these whatever remedy may exist lies with Congress.

803

While beyond the scope of the appraiser’s assignment, Congress has enacted remedies: people

and businesses aected by federal acquisitions receive replacement housing, moving expenses,

and relocation services under the Uniform Act.

804

Similarly, Congress authorized administrative

payments for losses due to the cancellation of federal grazing permits for war purposes.

805

Administrative benets under the Uniform Act or other statutes are separate from compensation

under the Fifth Amendment (and again, beyond the scope of the appraiser’s assignment to

develop an opinion of market value for a federal acquisition).

806

Temporary Acquisitions. The rules above apply with equal force to temporary acquisitions

(Section 4.7) that acquire or terminate the full remaining term, because in such situations a

“lessee would have to move at the end of his term unless the lease was renewed” regardless of the

federal acquisition.

807

“The compensation for the value of his leasehold covers the loss from the

premature termination . . . .”

808

As a result, the Supreme Court held, when there is an acquisition

of an entire property interest, “whether that property represents the interest in a leasehold or a

fee, the expenses of removal or of relocation are not to be included in valuing what is taken.”

809

Temporary Acquisitions Interrupting a Longer Term. The valuation of a temporary

acquisition that interrupts but does not terminate a longer interest—such as a sublet for less

than the outstanding term of an existing leasehold—may involve a nuanced renement of the

800 United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 681-82 (E.D. Va. 2011); Kaiser Dev. Co. v. Honolulu, 649 F. Supp. 926, 936-37

(D. Haw. 1986), a’d for reasons stated by district court, 898 F. 2d 112 (9th Cir. 1990) (mem.).

801 As observed in a leading appraisal text, “[i]t is simply impossible to develop an all-inclusive list of the potential damages that could accrue to

property in a partial taking case.” eATon, supra note 16, at 309.

802 Gen. Motors, 323 U.S. at 379-80 (footnotes omitted).

803 Id. at 382.

804 See note 1, supra; 49 C.F.R. §§ 24.1 to 24.603 (implementing regulations).

805 43 U.S.C. § 315q; see United States v. Cox, 190 F.2d 293, 296 (10th Cir. 1951); Section 4.11.2 (Federal Grazing Permits).

806 See Gen. Motors, 323 U.S. at 379-80; United States v. Willow River Power Co., 324 U.S. 499, 510 (1945); Cox, 190 F.2d at 296.

807 United States v. Petty Motor Co., 327 U.S. 372, 378-79 (1946); Intertype Corp. v. Clark-Congress Corp., 240 F.2d 375 (7th Cir. 1957).

808 Petty Motor, 327 U.S. at 379; Intertype Corp., 240 F.2d 375.

809 United States v. Westinghouse Elec. & Mfg. Co., 339 U.S. 261, 264 (1950) (citing Gen. Motors, 323 U.S. at 379); Intertype Corp., 240 F.2d at 380-81

(“the measure of its damages would have been . . . just compensation—which does not include . . . the cost of removal and other such

consequential items”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 161

rule stated above.

810

As a result, the market value of this type of temporary interest may need

to reect reasonable costs for tenant relocation, preparing the space for the new occupant, and

storage of goods pending the displaced tenant’s return.

811

Such items may be considered “not as

independent items of damage but to aid in the determination of what would be the usual—the

market—price which would be asked and paid for such temporary occupancy of the building

then in use under a long term lease.”

812

The Supreme Court has emphasized that consideration of reasonable relocation costs in temporary

interrupting acquisitions does not “depart from the settled rule against allowance for ‘consequential

losses’ in federal condemnation proceedings.”

813

Rather, relocation costs may be relevant to the

market value of a temporary interrupting acquisition of less than the outstanding term—such

as a sublet of an occupied building—and therefore compensable and appropriate to consider

in such acquisitions. But relocation costs are merely incidental to the value of an acquisition

of the entire interest (whether temporary or permanent) and therefore must be disregarded in

acquisitions of the entire interest.

814

In short, as the Seventh Circuit stated, “if the Government

takes over only a portion of a lease, then the cost of removal may be considered in determination

of just compensation” but if it acquires “the entire lease, such consequential losses are not to be

considered.”

815

The reasons for this distinction can be found in United States v. Petty Motor Co.:

There is a fundamental dierence between the taking of a part of a lease and the taking of

the whole lease. That dierence is that the lessee must return to the leasehold at the end of the

Government’s use or at least the responsibility for the period of the lease, which is not taken,

rests upon the lessee. . . . Because of that continuing obligation in all takings of temporary

occupancy of leaseholds, the value of the rights of the lessees, which are taken, may be aected

by evidence of the cost of temporary removal.

816

Exceptions. Federal courts have recognized rare exceptions to the foregoing rules, allowing

normally non-compensable damage to be reected in unusual circumstances, such as the

temporary acquisition of a business property or a partial acquisition with the eect of a total

taking.

817

Such exceptions always require legal instruction.

810 Kimball Laundry Co. v. United States, 338 U.S. 1 (1949); Gen. Motors, 323 U.S. 373. These temporary interrupting acquisitions have chiey

occurred in “‘response to the uncertainties of the Government’s needs in wartime.’” Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511,

519 (2012) (quoting Westinghouse, 339 U.S. at 267); see United States v. 1735 N. Lynn St., 676 F. Supp. 693, 696 (E.D. Va. 1987) (“Exigencies of

[World War II] moved the government to adopt a policy of acquiring properties for short periods with options to renew.”).

811 Gen. Motors, 323 U.S. at 383. Unlike benets under the Uniform Act (see note 828, supra), consideration of relocation costs in this specic

circumstance would be within the scope of the appraiser’s assignment because they bear on market value and just compensation. See

Westinghouse, 339 U.S. at 263-64 & n.2 (“This holding in the General Motors case was the Court’s determination, without any congressional

action, of what constituted ‘just compensation’ under the Fifth Amendment.”); see also United States v. Willow River Power Co., 324 U.S. 499, 510

(1945) (“Such losses may be compensated by legislative authority, not by force of the Constitution alone.”).

812 Gen. Motors, 323 U.S. at 383; see United States v. 131,675 Rentable Square Feet of Space (GSA-VA St. Louis I), No. 4:14-cv-1077 (CEJ), 2015 WL

4430134, *4 (E.D. Mo. July 20, 2015); see also 1735 N. Lynn St., 676 F. Supp. at 696-99.

813 Westinghouse, 339 U.S. at 264; accord Gen. Motors, 323 U.S. at 383.

814 United States v. Petty Motor Co., 327 U.S. 372, 379-80 (1946); see Kimball Laundry, 338 U.S. at 15 (“The temporary interruption as opposed to

the nal severance of occupancy so greatly narrows the range of alternatives open to the condemnee that it substantially increases the

condemnor’s obligation to him. It is a dierence in degree wide enough to require a dierence in result.”).

815 Intertype Corp. v. Clark-Congress Corp., 240 F.2d 375, 380 (7th Cir. 1957).

816 Petty Motor, 327 U.S. at 379-80.

817 Kimball Laundry, 338 U.S. 1 (allowing compensation for going concern value where government temporarily took business); United States

v. 38,994 Net Usable Square Feet at 910 S. Mich. Ave., No. 87 C 8569, 1989 WL 51395 (N.D. Ill. May 11, 1989) (government’s holdover and

subsequent condemnation of a lease interest in part of an otherwise vacant oce building slated for demolition and renovation was

eectively temporary taking of entire building; court directed compensation to be measured as dierence between property before and after

government announced holdover, including in “after” valuation costs buyer would consider such as anticipated carrying costs, etc.).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards162

4.6.3. Benets. Federal acquisitions and the projects they serve can also enhance properties’ market

value, often raising complicated valuation questions.

818

Under federal law, compensation for

a partial acquisition must reect any direct and special benets to the remainder due to the

government project.

819

Indirect and general benets, on the other hand, are not considered

because they are enjoyed by the public as a whole rather than arising from an acquisition’s

particular impact on a specic property.

820

Distinctions between these types of benets are

discussed in more detail below.

The same principles guide the analysis of benets and damages

in valuations for federal acquisitions.

821

Just compensation turns

on the question, “What has the owner lost? not, What has the

taker gained?”

822

In legal terms, direct and special benets are a

form of just compensation, no dierent than a monetary award

or payment.

823

As a result, any direct and special benets must be

set o against the total compensation because when a landowner’s

remainder property “is specially and directly increased in value

by the public improvement, the damages to the whole parcel by the appropriation of part of it

are lessened.”

824

One federal court explained the fairness of this principle as follows:

It is not in contemplation of law . . . that after the sovereign has taken from a citizen and paid

him for that which it has taken, that the citizen can on the same market sell his residue for an

amount which, added to the compensation he has received, aggregates more than the value of

the whole from which the part was taken. That cannot be just compensation . . . .

825

Direct and special benets commonly include “new access to a waterway or highway, or lling in

of swampland.”

826

An upward shift in the remainder property’s highest and best use is often an

indication of special and direct benets. For example, a partial acquisition for the extension of a

mass transit system had a special and direct benet on remainder property that was eligible for

special zoning that would allow higher-density residential development due to its location within

818 See Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2432 (2015).

819 See Bauman v. Ross, 167 U.S. 548, 574 (1897).

820 Id. at 581-82.

821 See id. at 574-75 (“injury or benet to the part not taken is also to be considered”).

822 Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910) (quoted in Brown v. Legal Found. of Wash., 538 U.S. 216, 236 (2003)); see

Bauman, 167 U.S. at 574; Olson v. United States, 292 U.S. 246, 255 (1934); see also United States v. Sponenbarger, 308 U.S. 256, 266-67 (1939).

823 McCoy v. Union Elevated R.R. Co., 247 U.S. 354, 366 (1918) (“[I]n arriving at the amount of damage to property not taken allowance should

be made for peculiar and individual benets conferred upon it; compensation to the owner in that form is permissible.”); United States ex rel.

Tenn. Valley Auth. v. Indian Creek Marble Co., 40 F. Supp. 811, 819 (E.D. Tenn. 1941) (“compensation shall be paid, whether in cash or in benets

incident to the use to which the property taken is put by the condemnor”); see Bauman, 167 U.S. at 581; Sponenbarger, 308 U.S. at 265-70

(nding taking without compensation had not occurred as “lands were not damaged, but actually beneted”); United States v. 901.89 Acres of

Land (Davenport), 436 F.2d 395, 397-98 (6th Cir. 1970) (discussing historical consideration of benets in assessing compensation); cf. Horne,

135 S. Ct. at 2432 (reiterating that special benets are deducted from compensation in partial takings while rejecting contention that general

regulatory activity can constitute just compensation for a specic physical taking).

824 Bauman, 167 U.S. at 574; see Indian Creek Marble Co., 40 F. Supp. at 818 (“compensation is simply that amount of money required to leave the

owner with property, including his compensation, of the same market value as that which he had prior to the taking”).

825 Indian Creek Marble Co., 40 F. Supp. at 818; accord Bauman, 167 U.S. at 581-82 (quoting Justice Brewer’s analysis in Pottawatomie Cty. Comm’rs v.

O’Sullivan, 17 Kan. 58, 59-60 (1876)); Sponenbarger, 308 U.S. at 266-67 (“[I]f governmental activities inict slight damage upon land in one respect

and actually confer great benets when measured in the whole, to compensate the landowner further would be to grant him a special bounty.”)

826 Horne, 135 S. Ct. at 2432; see, e.g., Davenport, 436 F.2d 395 (proximity to and view of lake created by reservoir project was a special and direct

benet). Special valuation rules apply to partial acquisitions aected by the federal navigational servitude. See Section 4.11.1.

Distinguishing special and

direct benets from general

and indirect benets can

raise complicated factual

and legal questions, and

virtually always requires a

legal instruction.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 163

a certain distance of a new mass transit station.

827

Comparable

sales typically provide the best evidence of special and direct

benets.

828

The existence or absence of special and direct benets

turns not on the specications of the government project, but on

its impact in the market. For instance, in a partial acquisition for

reservoir purposes: “The question is whether the market value of

the remainder was increased by its prospective frontage on the

[new reservoir created by the government project, which spurred

demand for lakeside subdivision]. Market value ‘is . . . a reection

of the state of mind of the public with respect to the property.’”

829

General and indirect benets, in contrast, are those “which

result to the public as a whole, and therefore to the individual as

one of the public; for he pays in taxation for his share of such

general benets.”

830

Thus, compensation would not be oset by

the benet of a “general increase in the value of property in the

neighborhood” caused by a government project.

831

In modern

federal acquisitions, appraisers are rarely—if ever—asked to

analyze and estimate general and indirect benets, which relate to

taxation, not just compensation.

832

But this makes the distinction

between the types of benets no less critical.

833

The extent of a special and direct benet is a fact question to be

determined by the appraiser.

834

But correctly distinguishing special

and direct benets (to be considered) from general and indirect

benets (to be ignored) “can raise complicated questions” in

practice,

835

and virtually always requires a legal instruction.

836

The distinction stems from principles of fairness:

[I]f the proposed road or other improvement inure to the direct and special benet of

the individual out of whose property a part is taken, he receives something which

none else of the public receive, and it is just that this should be taken into account

in determining what is compensation. Otherwise, he is favored above the rest, and,

827 See, e.g., Wash. Metro. Area Transit Auth. v. One Parcel of Land (Old Georgetown), 691 F.2d 702 (4th Cir. 1982).

828 United States v. Trout, 386 F.2d 216, 222-24 (5th Cir. 1967) (“If the best evidence of market value, i.e., evidence of comparable sales, indicates

that there were special benets to the remainder, it cannot be rejected . . . without an adequate explanation.”).

829 Id. at 223 & n.9, 224 (noting that “in demanding evidence pertaining to the structure of the reservoir, the commission misconceived the issue

of special benets”).

830 Bauman, 167 U.S. at 581.

831 Id. at 580; United States v. River Rouge Improvement Co., 269 U.S. 411 (1926); Davenport, 436 F.2d at 397-99; 6,816.5 Acres of Land v. United States,

411 F.2d 834, 837 (10th Cir. 1969); United States v. 2,477.79 Acres of Land in Bell Cty., 259 F.2d 23, 28-29 (5th Cir. 1958).

832 See Bauman, 167 U.S. at 574-75, 587-88 (discussed in sidebar); cf. Trout, 386 F.2d at 220 (same amount before and after taking attributed to

general benets of increased property values over county resulting from contemplated government project).

833 See, e.g., Hendler v. United States, 175 F.3d 1374 (Fed. Cir. 1999); Davenport, 436 F.2d at 397-99.

834 2,477.79 Acres in Bell, 259 F.2d at 28.

835 See Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2432 (2015).

836 See, e.g., Davenport, 436 F.2d at 400-01 (valuation by appraiser who was correctly “instructed to appraise the ‘after’ value of the subject

property considering the reservoir enhancement,” as a direct and special benet of the government’s acquisition, was “the only [opinion]

which has probative value and discloses the proper compensation”); see also Hendler, 175 F.3d 1374.

Benets: Bauman v. Ross

Bauman v. Ross, 167 U.S. 548

(1897), illustrates the distinction

between benet types: in 1893,

Congress authorized an expansion

of the highway grid system in

Washington, D.C., to be funded

by an assessment (tax) against area

landowners generally beneted by the

expansion. The expansion also

conferred special benets on some

remainder properties after partial

takings for the project.

As a result, the fact-nder had to

(1) determine just compensation

for the property taken, osetting

any special and direct benets to the

remainder, and (2) quantify the

general and indirect benets to all

area landowners for assessment

purposes to fund the project.

In contemporary federal

acquisitions, appraisers are rarely

asked to quantify indirect and

general benets in making valuations

for just compensation purposes.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards164

instead of simply being made whole, he prots by the appropriation, and the taxes of

the others must be increased for his special advantage.

837

Applying these principles, “any special and direct benets [that are] capable of present estimate

and reasonable computation” must be deducted for purposes of just compensation.

838

Special and direct benets can accrue to more than one property, such as a new or widened

street beneting multiple abutting properties. “The benet is not the less direct and special to

the [property at issue], because other estates upon the same street are beneted in a similar

manner.”

839

The Supreme Court reasoned:

[t]he advantages of more convenient access to a particular lot of land in question,

and of having a front upon a more desirable avenue, are direct benets to that lot,

giving it increased value in itself. It may be the same, in greater or less degree, with

each and every lot of land upon the same street. But such advantages are direct and

special to each lot.

840

On the other hand, “sharing in the common advantage and convenience of increased public

facilities, and the general advance in value of real estate in the vicinity by reason thereof ” would

be indirect and general benets.

841

To take into account any special benets from the project, appraisers apply the before and after

rule of valuation, developing opinions of the market value of the larger parcel (the entire tract)

before acquisition excluding any enhancement or diminution from the project, and the market

value of the remainder after acquisition including any special benet or diminution due to the

government project. In a practical example, the Sixth Circuit described the valuation of a partial

acquisition for construction of a dam and lake:

An appraiser . . . valued [the landowner’s entire tract before acquisition] at $80,000, or

about $365 per acre, as of the day of the taking. That was its market value without any

enhancement because of its proximity to the already projected development of the [dam and

lake]. The [appraiser] buttressed his valuation by referring to comparable sales.

He then valued the [remainder property], title to which would remain in [the landowner

after acquisition], at $30,000 or about $404 an acre. In valuing this remainder, he gave

consideration to the enhancement that would accrue to it from its proximity to the lake and

the advantage of an unobstructed view thereof.

837 Bauman, 167 U.S. at 581-82 (quoting Justice Brewer’s analysis in Pottawatomie Cty. Comm’rs v. O’Sullivan, 17 Kan. 58, 59-60 (1876) (emphasis added)).

838 Id. at 584. In a regulatory inverse taking case, the Supreme Court recently rejected the contention that the eects of general regulatory

activity—such as higher consumer demand due to government enforcement of quality standards and promotional activities—can oset the

total just compensation due for a specic physical taking. Horne, 135 S. Ct. at 2432. The Court expressly claried that this ruling, concerning

certain regulatory benets, does not aect the deduction of special benets from the amount of compensation paid in partial takings. Id.

(discussing concerns raised in dissent); see id. at 2435-36 (Breyer, J., concurring in part and dissenting in part) (“it is unclear to me what

distinguishes this case from . . . other types of partial takings”).

839 United States v. River Rouge Improvement Co., 269 U.S. 411, 416 (1926).

840 Id.

841 Id.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 165

Deducting this $30,000 from the $80,000 value placed on the entire tract, he came up with a

gure of $50,000 representing the fair compensation that should be paid . . . . This appraiser’s

method was correct.

842

In this way, the value of any special or direct benets is oset against the total value.

843

Consideration and oset of the government project’s direct and special benets to remainder

property does not violate the scope of the project rule, discussed in Section 4.5. Rather, the

general principle, as the Supreme Court expressly stated in United States v. Fuller, is that the

United States “may not be required to compensate a [landowner] for elements of value that

the Government has created . . . .”

844

And this general principle does not prevent application

of the scope of the project rule to exclude increments in value due to the government’s project

when necessary “to do substantial justice.”

845

Application of the scope of the project rule turns

on the question: “Should the owner have the benet of any increment of value added to the

property taken by the action of the public authority[?]”

846

As discussed in Section 4.5, the answer

to this question depends on the precise facts of each acquisition, and “requires discriminating

judgment” and legal instructions.

847

4.6.4. Exceptions to the Federal Rule. The federal courts’ universal preference for the before and

after method makes clear that departures may be appropriate, if at all, only in “very unique

and complex” circumstances.

848

“[A]ny other method of arriving at compensation could

conceivably arrive at something else, either more or less, than compensation.”

849

Nevertheless,

some federal courts have accepted valuation methods other than the before and after rule in

partial acquisitions where necessary to reach a fair and practical result.

850

But in those unusual

circumstances, as the Court of Claims warned, “[t]he particular evaluation approach utilized

by a party in severance damage situations can sometimes serve to increase the burden it must

842 United States v. 901.89 Acres of Land (Davenport), 436 F.2d 395, 396 (6th Cir. 1970).

843 Agencies may need to instruct the appraiser to allocate the result of a before and after valuation between the value of the property being

acquired, and damages (and/or benets) to the remainder – for example, for negotiating purposes and/or to comply with agency obligations

under the Uniform Act. See 42 U.S.C. § 4561(3). Such an allocation should be reported in a separate, supplemental report, rather than in

the appraisal report of the market value of the property as a whole. Cf. United States v. Grizzard, 219 U.S. 180, 185-86 (1911) (“That the [fact-

nder allocated] the damages for the land and for the easement of access separately is not controlling. The determining factor was that the

value of that part of the Grizzard farm not taken was $1,500, when the value of the entire place before the taking was $3,000. . . . Judgment

[of $1,500] armed.”).

844 United States v. Fuller, 409 U.S. 488, 492 (1973).

845 Id. (quoting United States v. Miller, 317 U.S. 369, 374, 375 (1943); see also United States v. 320 Acres of Land, 605 F.2d 762, 781-89 (5th Cir. 1979)

(exploring history and underlying principles of scope of the project rule and treatment of benets due to government project).

846 Miller, 317 U.S. at 375.

847 United States v. Reynolds, 397 U.S. 14, 21 (1970); 320 Acres, 605 F.2d at 796; see generally Section 4.5.

848 See Ga.-Pac. Corp. v. United States, 640 F.2d 328, 336-37 (1980) (per curiam); cf. United States v. Va. Elec. & Power Co., 365 U.S. 624, 632 (1961)

(before and after method is “an acceptable method of appraisal, indeed the conventional method”). As noted, the Fifth Circuit “requires the

exclusive use of the before-and-after method of valuation.” United States v. 8.41 Acres of Land in Orange Cty., 680 F.2d 388, 392, n.5 (5th Cir.

1982); see United States v. 4.27 Acres, 271 F. App’x 424, 425 (5th Cir. 2008).

849 United States ex rel. Tenn. Valley Auth. v. Indian Creek Marble Co., 40 F. Supp. 811, 818 (E.D. Tenn. 1941), cited with approval in United States v.

2,847.58 Acres of Land in Bath Ctys., 529 F.2d 682, 686 (6th Cir. 1976).

850 See, e.g., Ga.-Pac., 640 F.2d at 336-37 (“The approaches to severance damages herein represent practical eorts by the parties to reach

valuation determinations in a very unique and complex set of circumstances.”); but see United States v. 33.92356 Acres of Land (Piza-Blondet), 585

F.3d 1, 9 (1st Cir. 2009) (refusing alternative valuation method when there was “no persuasive reason why the before and after method would

be unfair in assessing the value” in a partial taking).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards166

carry in persuading that speculation and conjecture are not the

essence of its presentation.”

851

4.6.4.1. Taking Plus Damages (the “State Rule”). Many appraisers

may be familiar with an alternative taking plus damages (or taking

+ damages) method for valuing partial acquisitions, also referred

to as the state rule. Because the taking plus damages method

is apt to “arrive at something else, either more or less, than

compensation” under the Fifth Amendment,

852

it is generally

improper in valuations for federal acquisition purposes, and

cannot be used without legal instruction from the acquiring

agency or the U.S. Department of Justice.

853

The taking plus damages method lacks the “eectiveness of the

before and after method in clearly and simply dealing with . . .

damages” and benets in partial acquisitions.

854

Moreover, as

recognized by the federal courts, the taking plus damages method

is subject to error and apt to result in improper duplication or

double damage.

855

As a result, the taking plus damages method is

generally improper in valuations for federal acquisitions: “It is

not compensation but more than compensation to twice give the

owner severance damage.”

856

For example, the Fourth Circuit

857

was forced to vacate a compensation award based on a taking

plus damages calculation that was nearly four times greater than

851 Ga.-Pac., 640 F.2d at 337; see United States ex rel. Tenn. Valley Auth. v. Robertson, 354 F.2d 877, 880-81 (5th Cir. 1966) (“[Elements] which make the

property less desirable and thus diminish the market value of the property are proper to be considered, though as a separate item of damage

might be too speculative and conjectural to be submitted . . . .”); see also United States v. Honolulu Plantation Co., 182 F.2d 172, 179 (9th Cir.

1950) (“[S]trict proof of the loss in market value to the remaining parcel is obligatory.”).

852 Indian Creek Marble Co., 40 F. Supp. at 818.

853 See Piza-Blondet, 585 F.3d at 9 (refusing alternative valuation method when there was “no persuasive reason why the before and after method

would be unfair in assessing the value”); United States v. 12.94 Acres of Land in Solano Cty., No. CIV. S-07-2172, 2009 WL 4828749, at *5-*6,

2009 U.S. Dist LEXIS 114581, at *15-*21 (E.D. Cal. Dec. 9, 2009) (error to analyze value of the part taken separately from the total); cf.

United States v. Miller, 317 U.S. 369, 375-76 (1943) (discussing “working rules” that have been “adopt[ed] in order to do substantial justice” in

partial takings).

854 Piza-Blondet, 585 F.3d at 9 n.6 (citing 4A nichols, The lAw oF eminenT domAin § 14.02[4] (rev. 3d ed. 1981)); United States v. 760.807 Acres

of Land in Honolulu, 731 F.2d 1443, 1445 (9th Cir. 1984) (“Using [the before and after] method, any diminution in value of the remainder

resulting from the taking and use of part of the original parcel, sometimes termed ‘severance damages,’ would be included in the award.”);

cf. United States v. 901.89 Acres of Land in Davidson & Rutherford Ctys. (Davenport), 436 F.2d 395, 399 (6th Cir. 1970) (reversing lower court’s

rejection of before and after valuation that reected direct and special benets to remainder after taking); United States v. Werner, 36 F.3d

1095, 1994 WL 507461, at *5 (4th Cir. 1994) (unpubl.) (“‘[T]he taking may not aect the value of the remainder in any way [or] it may

either damage or benet the remainder. . . . In any such situation the measure of just compensation is the same, that is, the dierence

between the fair and reasonable market value of the land immediately before the taking and the fair and reasonable market value of the

portion that remains after the taking.’” (alterations in original)).

855 Indian Creek Marble Co., 40 F. Supp. at 818-19 (“the inevitable result would be that the land owner would twice receive incidental damages,

either in cash compensation or partly in cash and partly in incidental benets”); see, e.g., eATon, supra note 16 at 32-33 (noting a “chronic and

dangerous problem—double damage, i.e., the duplication of just compensation” and illustrating “how easy it is to double damage using the

taking plus damages (state) rule”).

856 Indian Creek Marble Co., 40 F. Supp. at 818.

857 While the Fourth Circuit previously broke from other federal courts in adopting the taking plus damages method, it subsequently embraced the

federal before and after rule, observing “it is well settled that in the event of a ‘partial taking’ . . . the measure of just compensation is the dierence

between the fair and reasonable market value of the land immediately before the taking and the fair and reasonable market value of the portion

that remains after the taking.” United States v. Banisadr Bldg. Joint Venture, 65 F.3d 374, 378 (4th Cir. 1995); cf. United States v. 97.19 Acres of Land, 582

F.2d 878, 881 (4th Cir. 1978) (“this circuit measures damages as the fair market value of the parcel actually taken plus the severance damages, if

any, to the portion of the tract retained by the landowner”), abrogated by Banisadr, 65 F.3d at 378, and United States v. 2.33 Acres of Land in Wake Cty., 704

F.2d 728, 730 (4th Cir. 1983), as recognized in United States v. 0.39 Acres of Land, No. 2:11-0259, 2013 WL 3874472, at *4 (S.D.W. Va. July 25, 2013).

Some assignments may

require allocation of the

dierence in the property’s

value before and after

acquisition, between (1)

the part acquired and (2)

damage to the remainder,

to meet agency obligations

under the Uniform Act, 42

U.S.C. § 4561(3).

This accounting exercise

is not an exception to the

federal rule that partial

acquisitions must be

valued using the before

and after method.

Any allocations must be

clearly labeled as accounting

tabulations that do not

indicate the appraisal

method(s) employed.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 167

the landowners’ actual loss revealed by applying the before and after method to the same facts.

858

The court remanded for new proceedings “to the end that duplications in just compensation are

eliminated.”

859

The taking plus damages method may be appropriate or even mandated in nonfederal

acquisitions, as certain state laws oset benets against “severance damage” to the remainder but

not against the value of the part acquired, necessitating separate ndings of “severance damage”

and the value of the part acquired.

860

But federal law makes no such distinction,

861

recognizing

that under the U.S. Constitution, just compensation turns on the question, “What has the owner

lost? not, What has the taker gained?”

862

Based on this principle, under federal law, compensation

must reect “the eect of the appropriation of a part of a single parcel upon the remaining

interest of the owner, by taking into account both the benets which accrue and the depreciation

which results to the remainder in its use and value.”

863

The taking plus damages method was

developed to measure a dierent question, and thus generally has no place in valuations for

federal acquisition purposes.

864

Still, there may be “persuasive reason[s] why the before and after

method would be unfair in assessing the value” of a specic partial

acquisition.

865

Whether the taking plus damages method can

be relied on for federal just compensation purposes in a specic

valuation assignment is a legal determination, not one that

can be made by an appraiser.

866

For example, partial acquisitions

aected by the federal navigational servitude may require use

of a taking plus damages method due to the unique constitutional and statutory requirements

governing compensation for such acquisitions.

867

The taking plus damages method may also be

appropriate in certain minor partial acquisitions, such as acquisitions of easements or other minor

interests for owage or road purposes from large ranches or industrial complexes.

868

Whether

a partial acquisition is suciently “minor” to make the taking plus damages method a fair and

practical alternative to the before and after rule depends on the acquisition’s impact on the

858 2.33 Acres, 704 F.2d at 729-31. The vacated award valued the larger parcel before the taking at $296,870 and the remainder after the taking

at $240,663, a dierence of approximately $56,000, yet would have awarded total compensation in excess of $200,000. See id.

859 Id. at 731 (“Again the conclusion that the landowner was overcompensated . . . ineluctably follows.”); see also Indian Creek Marble Co., 40 F.

Supp. at 818-19.

860 See McCoy v. Union Elevated R.R. Co., 247 U.S. 354, 365 (1918); Harris v. United States, 205 F.2d 765, 767 (10th Cir. 1953) (distinguishing between

federal and state constitutional provisions for just compensation); cf. eATon, supra note 16, at 41-42 & nn.26-31 (“most authorities argue that

the complexity of the state rule and its potential for double damages are so great that the before and after rule should be adopted”).

861 Under federal law, “if the taking has in fact benetted the remainder, the benet may be set o against the value of the land taken.” United

States v. Miller, 317 U.S. 369, 376 (1943); Bauman v. Ross, 167 U.S. 548, 584 (1897).

862 Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910), quoted in Brown v. Legal Found. of Wash., 538 U.S. 216, 236 (2003); Bauman,

167 U.S. at 574.

863 United States v. Grizzard, 219 U.S. 180, 184-85 (1911).

864 See Indian Creek Marble Co., 40 F. Supp. at 819 (state rule method of determining “so-called compensation is and must be grounded upon . . . an

articial measure based upon neither justice nor the settled conception of the meaning of the word ‘compensation’”); cf. eATon, supra note 16, at

40-43 (“The state rule is generally used in jurisdictions that do not allow benets to be set o against the value of the part taken and/or damages.”).

865 See United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 9-10 (1st Cir. 2009); cf. Miller, 317 U.S. at 375-76 (recognizing need to

“adopt working rules in order to do substantial justice” in measuring compensation for partial takings).

866 Piza-Blondet, 585 F.3d at 9 (refusing alternative valuation method when there was “no persuasive reason why the before and after method

would be unfair in assessing the value”); Ga.-Pac. Corp. v. United States, 226 Ct. Cl. 95, 107, 640 F.2d 328, 336-37 (1980) (per curiam); United

States v. 12.94 Acres of Land in Solano Cty., No. CIV. S-07-2172, 2009 WL 4828749, at *5-*6, 2009 U.S. Dist. LEXIS 114581, at *15-*17 (E.D.

Cal. Dec. 9, 2009) (error to analyze value of the part taken separately from the total).

867 See Section 4.11.1.

868 See, e.g., Ga.-Pac. Corp. v. United States, 640 F.2d 328, 336-37 (1980) (per curiam).

Whether the taking plus

damages method can be

used in a specic valuation

assignment is a legal

determination that cannot

be made by an appraiser.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards168

owner’s property.

869

As a result, use of the taking plus damages method is generally limited to

acquisitions that cause no damage to the remainder. If the “usefulness and value of the remainder”

are or may be aected, however,

[t]o say that such an owner would be compensated by paying him only for the narrow

strip actually appropriated, and leaving out of consideration the depreciation to the

remaining land by the manner in which the part was taken, and the use to which it was

put, would be a travesty upon justice.

870

4.6.5. Easement Valuation Issues. In general terms, an easement

is a limited right to use or control land owned by another for

specied purposes.

871

An easement is a property interest less

than the fee estate, with the owner of the underlying fee (the

servient estate) retaining full dominion over the realty, subject

only to the easement (the dominant estate); the fee owner may

make any use of the realty that does not interfere with the

easement holder’s reasonable use of the easement and is not

specically excluded by the terms of the easement.

Easements are either appurtenant or in gross. An appurtenant easement benets another tract

of land, and typically is useful only in conjunction with other property but has no independent

utility—for example, a highway access easement for adjacent land. An easement in gross

benets a person or entity, and typically has utility in and of itself or in conjunction with other

easements—such as a continuous easement across multiple tracts of land, forming a right of way.

Federal acquisitions involve a wide variety of easements, including road, pipeline, transmission

line, levee, owage, clearance, avigation, scenic, conservation, tunnel, sewer line, construction,

access, and safety zone easements, among others.

872

Easements may be permanent (perpetual)

or temporary.

873

Easement-related valuation problems typically arise in federal

acquisitions in one of three scenarios: (1) direct acquisition of an

easement—that is, a dominant easement interest—and its resulting

impact on the value of the larger parcel; (2) acquisition of a servient

estate encumbered by an existing (dominant) easement; or (3)

acquisition that aects or extinguishes an existing easement benetting another

869 See United States v. Grizzard, 219 U.S. 180, 184 (1911) (“‘just compensation’ . . . obviously requires that the recompense to the owner for

the loss caused to him by the taking of a part of a parcel, or single tract of land, shall be measured by the loss resulting to him from the

appropriation”); Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910) (“What has the owner lost? not, What has the taker

gained?”); cf. Miller, 317 U.S. at 375 (“Since the owner is to receive no more than indemnity for his loss, his award cannot be enhanced by

any gain to the taker.”).

870 Grizzard, 219 U.S. at 184, 185-86.

871 Black’s Law Dictionary denes an easement as “[a]n interest in land owned by another person, consisting in the right to use or control the

land, or an area above or below it, for a specic limited purpose . . . .” Easement, Black’s Law Dictionary (10th ed. 2014).

872 Easements that aect or relate to riparian uses—such as owage, levee or irrigation easements—may raise special valuation issues due to the

United States’ dominant navigational servitude. See Section 4.11.1; cf. Weatherford v. United States, 606 F.2d 851 (9th Cir. 1979).

873 See Section 4.7; cf. Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511, 517-19 (2012).

A dual-premise appraisal

may be useful to evaluate

how acquisitions of various

partial interests aect

market value.

In easement acquisitions,

the agency must provide

the appraiser with a written

description of the precise

estate(s) being acquired.

There is no “generic” road

easement, conservation

easement, or any other type

of easement.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 169

parcel (the aected easement may be appurtenant or in gross). In each scenario addressed below, the

eect of the easement must be analyzed to reach a supported opinion of value.

As discussed in Section 4.1.4, the nature and extent of the easement (or any other interest in

property) being acquired will be determined by the agency, as delegated by Congress. In easement

acquisitions, this means the agency must carefully and precisely dene the property interest(s)

being acquired and expressly state what interest(s), if any, will remain with the landowner.

874

the Supreme Court held, if the terms of the easement being acquired are unclear, “it would be

premature for us to consider whether the amount of the award . . . was proper.”

875

4.6.5.1. Dominant Easement Interests. Compensation for the acquisition of a dominant easement

interest is measured by “the dierence in the value of the servient land before and after the

Government’s easement was imposed.”

876

Accordingly, federal acquisitions of dominant

easement interests must be valued using a before and after methodology, reecting compensable

damage and special (direct) benets to the remainder, as with all other partial acquisitions.

877

If an acquisition imposes an easement upon an entire ownership, there is a remainder estate in

the land within the easement.

878

If the easement is impressed upon less than the full area of the

larger parcel, the remainder will also include the portion of the parcel outside the easement.

879

In either setting, it is well established that “[t]he valuation of an easement upon the basis of

its destructive impact upon other uses of the servient fee is a universally accepted method of

determining worth.”

880

Accordingly, in a valuation involving acquisition of a dominant easement,

the appraiser must clearly understand the specic terms of the easement involved to analyze

the burden the easement imposes on the servient estate and the resulting impact on the value

of the aected land.

881

As the Sixth Circuit observed, “for the commissioners to determine the

‘before and after’ value of the land, it was necessary that they clearly understood what rights the

landowner would retain in the land subject to the easement.”

882

874 Compare United States v. 3,218.9 Acres of Land in Warren Cty., 619 F.2d 288, 289-91 (3d Cir. 1980) (noting “explicit” description of “the nature

of the estate to be taken” and “clear” language that “third party mineral rights are not intended to be aected”), with United States v. City of

Tacoma, 330 F.2d 153, 155-56 (9th Cir. 1964) (reversing judgment of compensation that did not resolve “the nature of the easement taken,”

as leaving “this critical issue undecided” was detrimental to both the United States and the landowner).

875 United States v. Causby, 328 U.S. 256, 268 (1946); see City of Tacoma, 330 F.2d at 155-56.

876 United States v. Va. Elec. & Power Co., 365 U.S. 624, 626 n.2, 632 (1961); Dugan v. Rank, 372 U.S. 609, 626 (1963).

877 Va. Elec., 365 U.S. at 632; Rasmuson v. United States, 807 F.3d 1343, 1345 (Fed. Cir. 2015); United States v. 8.41 Acres of Land in Orange Cty., 680

F.2d 388, 392 (5th Cir. 1982); United States v. 38.60 Acres of Land in Henry Cty., 625 F.2d 196, 198-99 (8th Cir. 1980); Transwestern Pipeline Co. v.

O’Brien, 418 F.2d 15, 21 (5th Cir. 1969); see United States v. Banisadr Bldg. Joint Venture, 65 F.3d 374 (4th Cir. 1995).

878 E.g., United States v. 68.94 Acres of Land in Kent Cty., 918 F.2d 389 (3d Cir. 1990).

879 E.g., United States v. 38.60 Acres of Land, 625 F.2d 196 (8th Cir. 1980); Transwestern Pipeline, 418 F.2d 15.

880 Va. Elec., 365 U.S. at 630; see 68.94 Acres, 918 F.2d at 393 n.3; 38.60 Acres, 625 F.2d at 198 & n.1; Transwestern Pipeline, 418 F.2d at 21.

881 United States v. Causby, 328 U.S. 256, 268 (1946) (“Since . . . it is not clear whether the easement taken is a permanent or a temporary one, it

would be premature for us to consider whether the amount of the award . . . was proper.”).

882 Evans v. Tenn. Valley Auth., 922 F.2d 841, 1991 WL 1113, at *2 (6th Cir. 1991) (unpubl.) (discussing United States ex rel. Tenn. Valley Auth. v. An

Easement & Right-of-Way, 182 F. Supp. 899 (M.D. Tenn. 1960)); cf. Monongahela Nav. Co. v. United States, 148 U.S. 312, 344 (1893) (“doubtless the

existence of [a] reserved right to take the property upon certain specied terms may often, and perhaps in the present case, materially aect

the question of value”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards170

For example, consider the acquisition of an easement with the right “to cut and remove any and

all trees now or hereafter growing” alongside a right of way.

883

To develop an opinion of market

value, the appraiser must understand whether or not the tree-cutting privilege is “coupled with

liability for future cuttings” under the terms of the easement:

884

It is conceivable that the market value of [remainder] land would vary as between the

alternatives. . . . What dierence would the choice make to a prospective purchaser? What

dierence would it make in the market value of the land? . . . [S]peculative damages need not

be considered, except as an estimate of them might aect market value.

885

A district court explained these considerations as follows:

The question is, how does the easement aect the market price of the property? Here again

we have the willing and intelligent buyer and seller, neither acting under compulsion. They

agree upon a price before the easement is imposed.

But before the sale is closed the easement is imposed. They meet again, both willing to deal on

the basis, of course, of the fair market value. But the situation is changed in one particular—

the imposition of the easement or easements. The question is, how does the changed situation

aect the market price?

The willing prospective buyer examines the instrument creating the outstanding easement as

to its terms, whether it is perpetual; to what extent does it limit the use of the servient estate,

and what are the maximum uses granted by the instrument? All in all, how much less valuable

do the outstanding easements make the whole property?

886

Federal courts have rejected other methods for valuing dominant easement interests—even

though those methods may be accepted in other settings—because they do not reect just

compensation under the Fifth Amendment.

887

Thus, where only an easement is acquired, the full

fee value of the land within the easement is not a proper measure of damages since the rights

remaining in the owners of the servient estate may be substantial.

888

Moreover, valuing only the

area subject to the easement (i.e. “strip valuation”) fails to “compar[e] the fair market value of the

entire tract aected by the taking before and after the taking . . . [that is] the correct measure of

value in federal court condemnation.”

889

883 Similar easements are acquired to remove “danger trees” near high-voltage transmission lines, where they can present potentially serious

hazards. See, e.g., Evans, 1991 WL 1113, at *2 n.2.

884 United States ex rel. Tenn. Valley Auth. v. Russell, 87 F. Supp. 386, 389 (E.D. Tenn. 1948).

885 Id. (citing Olson v. United States, 292 U.S. 246 (1934)); cf. Monongahela Nav., 148 U.S. at 344 (existence of a reserved right in property may often

materially aect value).

886 United States ex rel. Tenn. Valley Auth. v. Indian Creek Marble Co., 40 F. Supp. 811, 821 (E.D. Tenn. 1941), cited with approval in United States v.

2,847.58 Acres of Land, 529 F.2d 682, 686 (6th Cir. 1976).

887 E.g., Transwestern Pipeline Co. v. O’Brien, 418 F.2d 15, 21 (5th Cir. 1969); see United States v. 33.92356 Acres of Land (Piza-Blondet), 585 F.3d 1, 4,

9-10 (1st Cir. 2009); Calvo v. United States, 303 F.2d 902, 909 (9th Cir. 1962); United States v. Glanat Realty Corp., 276 F.2d 264, 265 (2d Cir. 1960).

888 E.g., United States v. An Easement & Right-of-Way Over Two Strips of Land, 284 F. Supp. 71, 73 (W.D. Ky. 1968), citing United States v. Cress, 243 U.S.

316, 328-29 (1917) (“If any substantial enjoyment of the land still remains to the owner . . . . less than the whole has been taken and is to be

paid for . . . .”), discussed in Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511, 518-20 (2012); United States v. Va. Elec. & Power Co., 365 U.S.

624, 633-35 (1961); see United States v. Grizzard, 219 U.S. 180, 185-86 (1911).

889 Transwestern Pipeline Co. v. O’Brien, 418 F.2d 15, 21 (5th Cir. 1969) (emphasis added); Grizzard, 219 U.S. at 185-86.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 171

4.6.5.1.1. “Going Rates” and Nonmarket Considerations. For some types of easements, such

as for electric, telephone, ber optics, cable, transmission line, or pipeline purposes, there

may be a customary “going rate” (per pole, per line-mile, or per rod, for example). But

while customary rates may oer a convenient pricing system in other settings, going rates

cannot be used as a proxy for market value in federal acquisitions requiring payment of

just compensation.

890

Going rates tend to reect non-compensable considerations above the

market value of the property acquired, such as avoiding the cost of condemnation or other

litigation, and economic pressures to complete construction and place the planned facility or

infrastructure in operation. As the Fifth Circuit recognized, “consideration of the expense

and lost motion involved in relocation, additional construction, pipe and material costs and

delay—none of which relate to the fair market value—are inevitably involved.”

891

Amid such

nonmarket considerations, “[t]here is no basis for translating a dollar per rod settlement gure

into a market value per acre gure.”

892

Moreover, the use of a “going rate” improperly assumes

the easement acquired is a separate economic unit to be valued based on the government’s

planned use of the property—assumptions the federal courts reject as improper.

893

For these

reasons, appraisals of easements for federal acquisitions cannot be based upon going rates but

rather must be based upon the accepted before and after appraisal method.

894

4.6.5.1.2. Temporary Easements. For temporary easements, like other temporary acquisitions,

compensation is measured by the market rental value for the term of the easement, adjusted as

may be appropriate for the rights of use, if any, reserved to the owner.

895

Federal courts apply this

measure even to acquisitions of temporary property interests that are “seldom exchanged.”

896

“After all, what . . . is required . . . is to determine the gure which would compensate [the

landowner] for the loss it suered by being deprived of this property for this period of time.”

897

4.6.5.1.3. Sale or Disposal of Easements. Although the before and after method of valuation is

required by these Standards when the government acquires easements,

898

use of the before and

after method of valuation is not required when the government sells or otherwise disposes of an

easement interest. In disposing of easement interests, agencies are therefore free to consider the

value of the easement to the acquirer, customary “going rates” or other measures, as well as

the diminution to the government’s property by reason of the encumbrance.

890 Cf. Olson v. United States, 292 U.S. 246, 256-57 (1934); Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403, 408-10 (1878). These Standards do

not prohibit consideration of customary going rates in federal disposals of easement interests. See Section 4.6.5.1.3.

891 Transwestern Pipeline, 418 F.2d at 18; see also United States v. 10.48 Acres of Land, 621 F.2d 338, 339 (9th Cir. 1980) (prices paid by entity with

condemnation authority to acquire easements “are in the nature of compromise to avoid the expense and uncertainty of litigation and are

not fair indications of market value”).

892 Transwestern Pipeline, 418 F.2d at 18.

893 E.g., United States v. 8.41 Acres of Land in Orange Cty., 680 F.2d 388, 392 (5th Cir. 1982); see Etalook v. Exxon Pipeline Co., 831 F.2d 1440, 1447

n.4 (9th Cir. 1987) (“improperly attributes to the tract an increase in value caused by the very improvements for which condemnation was

sought”), citing United States v. 320 Acres of Land, 605 F.2d 762, 811-20 (5th Cir. 1979); cf. United States v. Va. Elec. & Power Co., 365 U.S. 624,

633 (1961) (“no evidence of a market in owage easements of the type here involved”).

894 8.41 Acres in Orange, 680 F.2d at 392.

895 See Kimball Laundry Co. v. United States, 338 U.S. 1, 7 (1949) (“[T]he proper measure of compensation [in a temporary taking] is the rental

that probably could have been obtained . . . .”); Section 4.7; cf. United States v. 883.89 Acres of Land in Sebastian Cty., 442 F.2d 262, 265 (8th

Cir. 1971), a’g 314 F. Supp. 238 (W.D. Ark. 1970) (“The comparable sales of other leaseholds in the immediate area were adequate and

substantial evidence of the market value of this leasehold.”).

896 E.g., Yuba Nat. Res., Inc. v. United States, 904 F.2d 1577, 1582 (Fed. Cir. 1990).

897 See United States v. Michoud Indus. Facilities, 322 F.2d 698, 707 (5th Cir. 1963).

898 See Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910) (“[T]he question is, What has the owner lost? not, What has the taker gained?”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards172

4.6.5.2. Lands Encumbered by Easements. In federal acquisitions of property already

encumbered by an easement, the appraiser must value the property in light of the preexisting

easement—and not as an unencumbered fee.

899

As the Supreme Court held:

[T]he Constitution does not require a disregard of the mode of ownership—of the state of

the title. It does not require a parcel of land to be valued as an unencumbered whole when

it is not held as an unencumbered whole. It merely requires that an owner of property taken

should be paid for what is taken from him. It deals with persons, not with tracts of land. And

the question is what has the owner lost,? not What has the taker gained?

900

As a result, it is improper to disregard preexisting encumbrances and their impact on the

property, as “there is ‘no justice in (requiring the Government to pay) for a loss suered by no one

in fact.’”

901

In a total acquisition of property encumbered by a preexisting easement, the measure

of compensation is the market value of the property as encumbered.

902

In a partial acquisition of

property encumbered by a preexisting easement, the measure of compensation is the dierence

between the market value of the property as encumbered before the acquisition, and the market

value of the remainder property—subject to the preexisting and newly acquired easements—after

acquisition.

903

Regarding an appraiser who misunderstood the nature and extent of the interests

being acquired and failed to consider preexisting encumbrances, one court held, “his appraisals

and estimates of damage are largely, if not entirely, based upon unwarranted and unjustied

theories of law and assumptions of fact and, as such, must be completely rejected . . . .”

904

Appraisals must “take into account all encumbrances on the land” as the question is “the fair

market [value] of what the [landowners] had left . . . .”

905

Depending on the nature of the

preexisting and newly acquired easements, the dierence in market value may be nominal.

906

4.6.5.3. Appurtenant Easements to the Servient Estate. Slightly dierent valuation issues arise

when the United States’ acquisition of a servient estate also acquires or extinguishes a third

party’s appurtenant easement; for example, in a fee acquisition

of Owner A’s parcel through which Owner B has an access

easement to connect B’s other property to a highway. In such

an acquisition, Owner A is entitled to compensation for “what

the owner has lost”—i.e., the encumbered fee.

907

And Owner

B, “the owner of a condemned access easement[,] is entitled to

899 United States v. 765.56 Acres of Land in Southampton (765.56 Acres I), 164 F. Supp. 942, 946, 948 (E.D.N.Y. 1958), a’d sub nom. United States v.

Glanat Realty Corp., 276 F.2d 264, 267 (2d Cir. 1960); see also United States v. 765.56 Acres of Land in Southampton (765.56 Acres II), 174 F. Supp. 1,

10 (E.D.N.Y. 1959), a’d sub nom. Glanat Realty, 276 F.2d 264.

900 Bos. Chamber of Commerce, 217 U.S. at 195.

901 United States v. Va. Elec. & Power Co., 365 U.S. 624, 642 (1961) (Whittaker, J., dissenting) (quoting United States v. Chandler-Dunbar Water Power Co.,

229 U.S. 53, 76 (1913)).

902 Cf. Nebraska v. United States, 164 F.2d 866, 869 (8th Cir. 1947), cert. denied, 334 U.S. 815 (1948) (no compensation for “a diminution in the market

value of the [landowner’s] rights through the creation of a leasehold, easement, or other interest in the land by the [landowner’s] own acts”

preceding United States’ acquisition); United States v. 32.42 Acres of Land, No. 05cv1137 DMS, 2009 WL 2424303 (S.D. Cal. Aug. 6, 2009)

(measure of compensation for acquisition of leased fee excluding existing leasehold is market value of lessor’s reversionary leased-fee interest).

903 See, e.g., United States v. 3.6 Acres of Land in Spokane Cty., 395 F. Supp. 2d 982 (E.D. Wash. 2004); 765.56 Acres I, 164 F. Supp. at 945-47.

904 765.56 Acres I, 164 F. Supp. at 948.

905 United States v. 79.20 Acres of Land in Stoddard Cty., 710 F.2d 1352, 1355 (8th Cir. 1983).

906 E.g., 3.6 Acres, 395 F. Supp. 2d at 992 (nding $1.00 was just compensation for acquisition of easement that did not exceed preexisting easement).

907 Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910); 79.20 Acres in Stoddard, 710 F.2d at 1354-55.

Legal instruction is required

for any departure from

the unit rule, as the rule’s

application is a matter

of law that cannot be

determined by an appraiser.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 173

compensation for the diminution in value of the property which it serves.”

908

In such instances,

departure from the unit rule “may be necessary to avoid grossly unjust results[,]”

909

as the usual

valuation of the property as an undivided fee would not result in just compensation.

910

The federal courts’ solution to this valuation challenge reects “[t]he guiding principle of

just compensation . . . that the owner of the condemned property ‘must be made whole but is

not entitled to more.’”

911

Acquisitions of this sort involve two larger parcels and require two

appraisal assignments:

• To measure compensation for Owner A, one appraisal must develop an opinion of the value

of the encumbered fee (discussed in Section 4.6.5.2), “tak[ing] into account all encumbrances on

the land.”

912

This is because “the Constitution does not require a disregard of the mode of

ownership,—of the state of the title.”

913

Just compensation will not result if a parcel of land

is “valued as an unencumbered whole when it is not held as an unencumbered whole.”

914

The appraisal of the encumbered fee may require a before and after valuation if the

acquisition is only a portion of a larger parcel.

915

• To measure compensation for Owner B, another appraisal must develop an opinion of the

value of the appurtenant easement (discussed in Section 4.6.5.1), which “cannot be ascertained

without reference to the dominant estate to which it was attached.”

916

As a partial

acquisition, the before and after rule applies, so the appraiser must develop an opinion of the

value of the property served by the easement before (with the easement) and after (without

the easement) the government’s acquisition.

917

The dierence between the before and after

values is the measure of compensation.

In neither appraisal will the appraiser develop an opinion of the market value of the property as

if unencumbered. The value of the undivided fee is simply not relevant to compensation for such

peculiar acquisitions, as the Fourth Circuit reasoned:

908 United States v. 57.09 Acres of Land in Skamania Cty. (Peterson I), 706 F.2d 280, 281 (9th Cir. 1983), citing United States v. Grizzard, 219 U.S. 180

(1911), and United States v. Welch, 217 U.S. 333, 339 (1910) (“the value of the easement cannot be ascertained without reference to the

dominant estate to which it was attached”).

909 United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139, 148 (3d Cir. 2005); cf. United States v. 499.472 Acres of Land in Brazoria Cty.,

701 F.2d 545, 552 (5th Cir. 1983) (emphasizing that “limited” holding to permit separate valuations in particular condemnation did not

“sanction any departure from valuation of condemned property as a unit” and “simply acknowledges that there are rare circumstances

where separate trials are justied”).

910 See Section 4.2.2 (The Unit Rule); Grizzard, 219 U.S. at 184-85 (“[J]ustice . . . required that regard be had to the eect of the appropriation

of a part of a single parcel upon the remaining interest of the owner, by taking into account both the benets which accrue and the

depreciation which results to the remainder in its use and value.”); Bos. Chamber, 217 U.S. at 194-95 (The government cannot “be made

to pay for a loss of theoretical creation, suered by no one in fact. . . . [The] Constitution does not require a disregard of the mode of

ownership . . . .”); see also Gettysburg Tower, 409 F.3d at 145-48 & nn.11-15 (analyzing unit rule principle and rare exceptions and citing cases).

911 United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 516 (1979) (quoting Olson v. United States, 292 U.S. 246, 255 (1934)); see

Gettysburg Tower, 409 F.3d at 145-46 & nn.11-12.

912 79.20 Acres in Stoddard, 710 F.2d at 1355.

913 Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910).

914 Id.

915 See Section 4.5.1; see generally eATon, supra note 16, at 365-68.

916 United States v. Welch, 217 U.S. 333, 339 (1910).

917 United States v. Grizzard, 219 U.S. 180, 184-85 (1911); United States v. 57.09 Acres of Land in Skamania Cty. (Peterson I), 706 F.2d 280, 281 (9th Cir. 1983).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards174

[W]ith property whose use is divided, . . . the compensation to be paid to any one

whose interest is taken must be reckoned by the value of the use to which he is

entitled and not by the value which the land, if unencumbered, would have.

918

Moreover, as the Fourth Circuit recognized, while the “sum of these values may at times

approximate the value of the unencumbered fee[,]” it may be “much less. Indeed, the sum of

these values may be only nominal.”

919

4.7. Leaseholds and Other Temporary Acquisitions. When the government acquires a

leasehold or other temporary interest in property, the measure of compensation is the market

rental value of the premises acquired for the term acquired.

920

Denition of Market Rental Value

The rental price in cash or its equivalent that the leasehold would have brought on the date

of value on the open competitive market, at or near the location of the property acquired,

assuming reasonable time to nd a tenant.

As with market value, the federal denition of market rental value

921

requires willing and reasonably

knowledgeable market participants, not compelled to buy or sell, giving due consideration to

all available economic uses of the property.

922

Temporary acquisitions also require a rigorous,

well-supported analysis of highest and best use—as in permanent acquisitions.

923

As a district

court recently held, “only direct evidence of market rental value, to the exclusion of remote,

hypothetical conjecture, should be considered in ascertaining just compensation for a taking.”

924

In keeping with the unit rule (Section 4.2.2), market rental value must be determined for the

918 Mayor & City Council of Baltimore v. United States, 147 F.2d 786, 789 (4th Cir. 1945).

919 Id.

920 Kimball Laundry Co. v. United States, 338 U.S. 1, 7 (1949); United States v. Gen. Motors Corp., 323 U.S. 373, 382-83 (1945); United States v. Petty Motor

Co., 327 U.S. 372, 378-79 (1946); United States v. Banisadr Bldg. Joint Venture, 65 F.3d 374, 378 (4th Cir. 1995); Yuba Nat. Res., Inc. v. United States,

904 F.2d 1577, 1580-81 (Fed. Cir. 1990).

921 Kimball Laundry, 338 U.S. at 7; Gen. Motors, 323 U.S. at 382-383; Banisadr, 65 F.3d at 378; United States v. 46,672.96 Acres in Doña Ana Ctys., 521

F.2d 13, 17-18 (10th Cir. 1975); United States v. 1735 N. Lynn St., 676 F. Supp. 693, 706 (E.D. Va. 1987); see First English Evangelical Lutheran

Church of Glendale v. County of Los Angeles, 482 U.S. 304, 319 (1987) (“[T]he Just Compensation Clause of the Fifth Amendment requires that

the government pay the landowner for the value of the use of the land during this period.”); Carlock v. United States, 60 App. D.C. 314, 315-

16 (D.C. Cir. 1931) (“The present money value of a leasehold interest is the present market value of the residue of the term yet to run with

reference to the most valuable use or uses to which the same may be lawfully put; that is, what would be its present money worth over and

above the obligations of the lease, to an assignee or purchaser willing and able to assume and perform the obligation of the lease for the

residue of the term after the return of the award.”); cf. 46,672.96 Acres in Doña Ana, 521 F.2d 13, 17-18 (10th Cir. 1975) (“[T]he evidence

oered must have a bearing upon what a willing buyer would pay a willing seller for the property on the date of the taking. . . . [W]e are

here concerned with leasehold interests and . . . the amount of the award . . . must bear a realistic relationship to reasonable market value.”).

922 Kimball Laundry, 338 U.S. at 7 (“[D]etermination of the value of temporary occupancy can be approached only on the supposition that free

bargaining between petitioner and a hypothetical lessee of that temporary interest would have taken place in the usual framework of such

negotiations.”); cf. Section 4.2.1 (Market Value Denition).

923 E.g., Banisadr, 65 F.3d at 378 (arming nding that highest and best use of building was for regular oce space at low-end rent based on

detailed analysis of leases on several comparable buildings, rather than for specialized high-tech use, which lacked any supporting data).

924 United States v. 131,675 Rentable Square Feet of Space (GSA-VA St. Louis I), No. 4:14-cv-1077, slip op. at *9, 2015 WL 4430134 (E.D. Mo. July 20,

2015) (citing Olson v. United States, 292 U.S. 246, 257 (1934)).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 175

property as an unencumbered whole, regardless of any sub-leases or other subsidiary interests

into which it may have been divided.

925

The measure of compensation for temporary acquisitions rarely arose in federal jurisprudence

until the World War II era, when war-time exigencies prompted condemnations of leaseholds

and other temporary interests.

926

As Justice Reed observed in 1951, “[t]he relatively new

technique of temporary taking . . . is a most useful administrative device[,]” allowing for

properties to be occupied for public uses “for a short time to meet war or emergency needs,”

and then “returned to their owners.”

927

But temporary acquisitions present “a host of dicult

problems . . . in the xing of just compensation.”

928

Of these

valuation problems, perhaps the most frequently encountered

arise in the context of federal leasehold acquisitions—particularly

leaseholds of oce space.

4.7.1. Leaseholds. As in appraising a fee estate, the best evidence

of the market rental value of a leasehold estate is comparable

transactions—for leaseholds, comparable lease transactions.

929

As the Eighth Circuit stated, “comparable sales of other

leaseholds in the immediate area [a]re adequate and substantial

evidence of the market value of this leasehold.”

930

Generally,

“the more comparable a sale is, the more probative it will be” of

the market value of the property being appraised.

931

Elements

of comparability in leasehold valuations include the familiar

elements of size, time, location, and so forth (discussed in

Section 4.4.2),

932

as well as the period (term) of the lease (e.g.,

six months, one year, ve years, etc.),

933

the number and terms

925 See Carlock, 53 F.2d at 927; A.G. Davis Ice Co. v. United States, 362 F.2d 934, 937 (1st Cir. 1966); see also Autozone Dev. Corp. v. District of Columbia, 484

F. Supp. 2d 24, 31 (D.D.C. 2007) (“Put simply, when all of the interests in a land are condemned, the total amount paid by the condemning

authority to everyone with an interest should not be more than the amount it would pay if only one person owned the land.” (discussing Carlock)).

If the government’s acquisition will interrupt or extinguish an existing lease of the property, the lessee’s compensation (if any) is a question

of distribution, not of valuation, and therefore generally beyond the scope of the appraiser’s assignment. Thus, under these Standards the

appraiser should not separately value a third-party leasehold estate unless specically instructed to do so—for example, if needed for negotiating

purposes and/or to comply with agency obligations under the Uniform Act. Similarly, the appraiser should not apportion values of subsidiary

interests unless instructed. See Section 4.2.2; cf. United States v. Rodgers, 461 U.S. 677, 704-05 & n.33 (1983) (noting challenges of apportioning

compensation in eminent domain proceedings involving subsidiary homestead or life-estate interests, and citing cases); Pa. Ave. Dev. Corp. v.

One Parcel of Land in D.C., 670 F.2d 289, 292 (D.C. Cir. 1981) (“Under most leases, allocation of the award between lessor and lessee is not

problematical because ‘leases generally include a clause which makes them terminate in case of condemnation.’”).

926 E.g., United States v. Westinghouse Elec. & Mfg. Co., 339 U.S. 261 (1950); Kimball Laundry Co. v. United States, 338 U.S. 1 (1949); United States v. Petty

Motor Co., 327 U.S. 372 (1946); United States v. Gen. Motors Corp., 323 U.S. 373 (1945); see Ark. Game & Fish Comm’n v. United States, 133 S. Ct.

511, 519-520 (2012); United States v. 1735 N. Lynn St., 676 F. Supp. 696-97 (E.D. Va. 1987); United States v. Flood Bldg., 157 F. Supp. 438, 440-42

(N.D. Cal. 1957).

927 United States v. Pewee Coal Co., 341 U.S. 114, 119 (1951) (Reed, J., concurring).

928 Id.

929 United States v. Banisadr Bldg. Joint Venture, 65 F.3d 374, 378 (4th Cir. 1995); United States v. 883.89 Acres of Land in Sebastian Cty., 442 F.2d 262,

265 (8th Cir. 1971), a’g 314 F. Supp. 238 (W.D. Ark. 1970).

930 883.89 Acres in Sebastian, 442 F.2d at 265. Note that the term sale refers to a transaction involving the property interest at issue – here, a

leasehold. Id.

931 United States v. 320 Acres of Land, 605 F.2d 762, 798 (5th Cir. 1979); United States v. 46,672.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13, 17

(10th Cir. 1975).

932 See, e.g., 883.89 Acres in Sebastian, 442 F.2d at 265.

933 See United States v. Gen. Motors Corp., 323 U.S. 373, 382 (1945) (long-term rental value did not reect market rental value of short-term

occupancy of same space); see also 46,672.96 Acres in Doña Ana, 521 F.2d at 17 (“A further reason for rejecting the [proposed comparable]

lease evidence is that these interests are dissimilar to the interest [being valued].”).

A lease is a contract

arrangement in which an

owner (landlord or lessor)

conveys to another (tenant

or lessee) the rights to use

and occupy property for a

period of time in exchange

for payment.

During the lease, the

tenant/lessee owns a

possessory interest called

the leasehold estate, and the

landlord/lessor owns the

remaining interest, called

the leased fee estate.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards176

of any option(s) to renew,

934

tenant build-out,

935

and the nature and extent of services provided

by the lessor and/or the lessee.

936

Section 1.6 notes several terms and services in government

leases that often dier from those typically encountered in the market and therefore require

careful adjustment. All terms must be evaluated in regard to the market rental value of the

space in the open, competitive market.

937

In no event can the market rental value reect the

government’s special need for the property or the risk that the government may exercise the

power of eminent domain at some future point.

938

The period of the leasehold being acquired may require careful consideration. For example, as

the Supreme Court recognized in United States v. General Motors Corp., if a short-term occupancy is

being acquired, its market rental value may not be accurately reected by the long-term market

rental value of the same space.

939

Rather, the market rental value of the short-term occupancy

“is to be ascertained, not treating what is taken as an empty warehouse to be leased for the long

term, but what would be the market rental value of such a building on a lease by the long-term

tenant to the temporary occupier.”

940

It is improper to develop an opinion of the market rental value of a leasehold estate based on the

value of the underlying fee—that is, a percentage-of-fee value method.

941

Among other problems,

this method (1) does not reect how rental rates are established in the market;

942

(2) assumes full

utilization of—and payment for—all leasable space, regardless of existing supply and demand in

the competitive market;

943

and (3) relies on a supposed return on value or a return on an owner’s

investment, rather than market value.

944

As a result, use of a percentage-of-fee-value method can

lead to “gross over-valuation” of a leasehold interest.

945

Moreover, federal courts have rejected

percentage-of-fee-value methods even if comparable lease transactions are not available.

946

934 See United States v. 131,675 Rentable Square Feet of Space (GSA-VA St. Louis I), No. 4:14-cv-1077, slip op. at *10, 2015 WL 4430134 (E.D. Mo. July

20, 2015) (condemned leasehold interest contained no option to renew, holdover, or terminate early); see also 883.89 Acres in Sebastian, 442 F.2d

at 265 (valuation properly reected no value for renewal options because “[t]here was no evidence . . . that these options had any value”);

United States v. Right to Use & Occupy 3.38 Acres in Alexandria, 484 F.2d 1140, 1145 (4th Cir. 1973) (no evidence of any dierence in value

whether renewal option required 30 or 90 days’ notice to exercise).

935 See United States v. Bedford Assocs., 548 F. Supp. 732, 743-45 (S.D.N.Y. 1982) (considering whether property should be valued in ‘as is’ condition

or whether determination of market rental price should include renovations), modied in other respects, 713 F.2d 895 (2d Cir. 1983); United

States v. Flood Bldg., 157 F. Supp. 438, 442-44 (N.D. Cal. 1957) (tenant alterations “did not wreak havoc and destruction to the interior” but

rather made space “suitable for occupation by commercial type tenants, and owing to the excellent location of the building . . . its continuing

utility can readily be perceived”).

936 See Bedford Assocs., 548 F. Supp.at 743-45 (nding operating expenses borne by tenant must be deducted from expected rental income to

lessor), modied in other respects, 713 F.2d 895 (2d Cir. 1983).

937 See, e.g., id.

938 See, e.g., GSA-VA St. Louis I, 2015 WL 4430134, at *10-*11 (“The market value of the property taken should be assessed uninuenced by [the

government’s] right to exercise its power of eminent domain in the future. . . . In the event of a future taking, [a landowner] may be assured

that the law would require [the government] to provide just compensation again [i.e., in a separate proceeding].”); cf. United States ex rel. Tenn.

Valley Auth. v. Powelson, 319 U.S. 266, 276 (1943).

939 United States v. Gen. Motors Corp., 323 U.S. 373, 382 (1945).

940 Id. at 382; United States v. 1735 N. Lynn St., 676 F. Supp. 693, 696-97 (E.D. Va. 1987).

941 See United States v. 883.89 Acres of Land in Sebastian Cty., 314 F. Supp. 238, 240-42 (W.D. Ark. 1970), a’d, 442 F.2d 262, 264-65 (8th Cir. 1971);

United States v. Michoud Indus. Facilities, 322 F.2d 698, 707 (5th Cir. 1963); United States v. 117,763 Acres of Land in Imperial Cty., 410 F. Supp. 628,

631 (S.D. Cal. 1976), a’d sub nom. United States v. Shewfelt Inv. Co., 570 F.2d 290, 291-92 (9th Cir. 1977).

942 See 883.89 Acres in Sebastian, 314 F. Supp. at 240-42; Michoud, 322 F.2d at 706-08.

943 Michoud, 322 F.2d at 706-08.

944 Id. at 707; see United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 285 (1943) (“[T]he Fifth Amendment allows the owner only the

fair market value of this property; it does not guarantee him a return of his investment.”); Olson v. United States, 292 U.S. 246, 255 (1934)

(“[T]he market value of the property at the time of the [acquisition] . . . may be more or less than the owner’s investment. . . . The public

may not by any means conscate the benets, or be required to bear the burden, of the owner’s bargain.”).

945 Michoud, 322 F.2d at 707; cf. 117,763 Acres in Imperial, 410 F. Supp. at 631 (“[T]here is no rule that, where what is taken has a minimal value,

something more than that value must be allowed.”).

946 Shewfelt Inv., 570 F.2d at 291-92.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 177

temporary acquisitions, as in permanent acquisitions, “lack of comparable [transactions] does

not change the measure of compensation[.]”

947

Temporary acquisitions may be partial or total. At times, the acquisition of a leasehold estate over

only a portion of a larger property may cause the diminution in the market rental value of the

area not leased by the government that must be considered.

948

For example, in an acquisition of

a leasehold of a portion of a commercial oce building, if the rental value of the remainder is

diminished unless oered together with the space acquired by the government, then the diminution

in rental value of the remainder would be compensable and must be considered.

949

However,

appraisers must take care to disregard non-compensable damage such as frustration of plans or lost

opportunities.

950

As discussed in Section 4.6, specic aspects of diminution in value may be legally

compensable, and therefore must be considered in a partial leasehold acquisition—but are legally

non-compensable, and therefore must be disregarded, in a complete leasehold acquisition.

951

“By the

same token, a taking may conceivably enhance the value of a residue[,]” meaning such benets must

also be considered in the remainder’s value after acquisition.

952

Valuation issues in partial acquisitions,

including treatment of compensable damages and benets, are addressed in Section 4.6.

4.7.2. Temporary Inverse Takings. The measure of compensation

for temporary inverse takings is the same as for other temporary

acquisitions—that is, the market rental value of the property

acquired for the term of the acquisition.

953

Temporary inverse

takings may be physical or regulatory in nature.

954

And whether a

compensable temporary inverse taking occurred will be determined

by the court, using a “more complex balancing process” than in

alleged permanent takings.

955

Similarly, whether an alleged inverse taking is temporary or permanent is a legal question requiring

legal instruction. In deciding this issue, “[t]he essential element of a temporary taking is a

nite start and end to the taking.”

956

This determination can have a signicant impact on the

947 United States v. 46,672.96 Acres in Doña Ana Ctys., 521 F.2d 13, 18 (10th Cir. 1975) (quoting United States v. Sowards, 370 F.2d 87, 90 (10th Cir.

1966)); see United States v. Toronto, Hamilton & Bualo Nav. Co., 338 U.S. 396, 402-03 (1949).

948 United States v. 1735 N. Lynn St., 676 F. Supp. 693, 698-99 (E.D. Va. 1987).

949 Id.

950 Id. at 701; United States v. 131,675 Rentable Square Feet of Space (GSA-VA St. Louis I), No. 4:14-cv-1077, slip op. at *8-*11, 2015 WL 4430134

(E.D. Mo. July 20, 2015). Damages are discussed in detail in Section 4.6.

951 See United States v. Petty Motor Co., 327 U.S. 372, 379-80 (1946) (explaining “fundamental dierence between the taking of a part of a lease and

the taking of the whole lease”); Intertype Corp. v. Clark-Cong. Corp., 240 F.2d 375, 380 (7th Cir. 1957) (analyzing Petty Motor, supra; United States v.

Gen. Motors Corp., 323 U.S. 373 (1945); and United States v. Westinghouse Elec. & Mfg. Co., 339 U.S. 261 (1950)).

952 1735 N. Lynn St., 676 F. Supp. at 698-99 (citing United States v. Miller, 317 U.S. 369, 376 (1943)).

953 First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304, 318 (1987) (citing, inter alia, United States v. Dow, 357 U.S. 17 (1958);

Kimball Laundry Co. v. United States, 338 U.S. 1 (1949); United States v. Causby, 328 U.S. 256 (1946); Petty Motor, 327 U.S. 372; and Gen. Motors, 323

U.S. 373); Yuba Nat. Res., Inc. v. United States, 904 F.2d 1577, 1580-81 (Fed. Cir. 1990).

954 See, e.g., 767 Third Ave. Assocs. v. United States, 48 F.3d 1575 (Fed. Cir. 1995) (arming dismissal of alleged temporary physical and regulatory

takings); First English, 482 U.S. 304 (alleged regulatory inverse taking).

955 See Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511, 521 (2012) (“temporary limitations are subject to a more complex balancing

process [than permanent occupations] to determine whether they are a taking” (quoting Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S.

419, 435 n.12 (1982))).

956 Otay Mesa Property, L.P. v. United States (Otay Mesa I), 670 F.3d 1358, 1365 n.5 (Fed. Cir. 2012) (quoting Wyatt v. United States, 271 F.3d 1090, 1097

n.6 (Fed. Cir. 2001)).

Whether an inverse

taking occurred, and if so

whether it is temporary

or permanent, are legal

questions that require

legal instruction.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards178

valuation, and therefore on the amount of compensation awarded.

957

Indeed, the Supreme Court

has held that until it is determined a taking is permanent or temporary, “it would be premature

. . . to consider whether the amount of the award . . . was proper.”

958

Accordingly, the appraiser

must receive appropriate legal instructions regarding the precise terms of the property

interest(s) to be valued in an alleged inverse taking.

The Supreme Court recently held that recurrent oodings, even if of nite duration (i.e.,

temporary), are not categorically exempt from Takings Clause liability.

959

Alleged takings of this sort

are therefore subject to the same liability and valuation inquiries as other types of inverse takings.

960

4.8. Natural Resources Acquisitions. Property acquisitions involving natural resources—such as

minerals, timber, or water rights—are subject to the same valuation standards as any other type

of property acquisition.

961

While such acquisitions may present particularly complex valuation

problems for purposes of just compensation, “whatever the diculties may be in making such

appraisals with complete accuracy, it does not defeat the existence of a ‘market value’ . . . and

it does not suce as a reason to depart from the ordinary requirements that the law imposes on

such transactions.”

962

Moreover, “the degree of speculation can and should be minimized.”

963

Specialized expertise is typically required, either by the appraiser or through appropriate

subsidiary experts, subject to the requirements discussed in Sections 1.11 and 4.12.

964

Several

frequently encountered (and often confused) valuation issues are discussed below.

4.8.1. Unit Rule and Natural Resources. The unit rule, discussed in Section 4.2.2, is often

misapplied in the valuation of properties with possible or proven natural resources such as

minerals, timber, or oil and gas. For just compensation purposes, property must be valued as a

whole—not by summation of its constituent parts.

965

Thus, the possible or actual existence of a

resource in a property can only be considered to the extent its possible or actual existence would

contribute to the market value of the whole property.

966

For example,

957 See, e.g., Otay Mesa I, 670 F.3d 1358 (rejecting compensation award of approximately $3 million based on erroneous nding of temporary

taking), and on remand, 110 Fed. Cl. 732 (2013) (Otay Mesa II) (awarding $455,520 based on nding of permanent taking), a’d, 779 F.3d 1315

(Fed. Cir. 2015) (Otay Mesa III).

958 Causby, 328 U.S. at 268.

959 Ark. Game, 133 S. Ct. at 515.

960 Id. at 519-23.

961 Mont. Ry. Co. v. Warren, 137 U.S. 348, 352-53 (1890) (reiterated in ASARCO, Inc. v. Kadish, 490 U.S. 605, 628 n.3 (1989)); United States v. Consol.

Mayower Mines, Inc., 60 F.3d 1470, 1477 (10th Cir. 1995).

962 ASARCO, 490 U.S. at 628 n.3 (citing Mont. Ry., 137 U.S. at 352-53); accord. Mayower Mines, 60 F.3d at 1476; see Eagle Lake Improvement Co. v.

United States (Eagle Lake I), 141 F.2d 562, 564 (5th Cir. 1944) (“[if] mineral interests . . . are bought and sold in arms-length transactions for a

valuable consideration, they have a market price translative into a fair market value”).

963 United States v. 103.38 Acres in Morgan Cty. (Oldeld), 660 F.2d 208, 212 (6th Cir. 1981).

964 See, e.g., United States v. 100.80 Acres of Land (Parrish), 657 F. Supp. 269, 276 (M.D.N.C. 1987) (rejecting valuation of real estate appraiser whose

expertise did not extend to minerals); see also USPAP Competency Rule; cf. United States v. Sowards, 370 F.2d 87, 92 (10th Cir. 1966) (“owner’s

qualication to testify does not change the ‘market value’ concept and permit him . . . to establish a value based entirely upon speculation”).

965 E.g., United States v. 381.76 Acres of Land (Montego Group), No. 96-1813-CV, 2010 WL 3734003 (S.D. Fla. Aug. 3, 2010), a’d, Doc. No. 239

(S.D. Fla. Sept. 22, 2010), a’d sub nom. United States v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (unpubl.) (per curiam).

966 United States v. 499.472 Acres in Brazoria Cty., 701 F.2d 545, 549 (5th Cir. 1983); Oldeld, 660 F.2d at 212; United States v. 91.90 Acres of Land in Monroe

Cty. (Cannon Dam), 586 F.2d 79, 87 (8th Cir. 1978); United States v. 158.76 Acres in Townshend, 298 F.2d 559, 561 (2d Cir. 1962); Ga. Kaolin Co. v.

United States, 214 F.2d 284, 286 (5th Cir. 1954); United States v. Meyer, 113 F.2d 387, 397 (7th Cir. 1940); United States v. 33.92536 Acres of Land

(Piza-Blondet Trial Op.), No. 98-1664, 2008 WL 2550586, at *11 (D.P.R. June 13, 2008), a’d, 585 F.3d 1 (1st Cir. 2009); United States ex rel. Tenn.

Valley Auth. v. Indian Creek Marble Co., 40 F. Supp. 811, 817-18, 822 (E.D. Tenn. 1941); see Sowards, 370 F.2d at 91 (“The mere adaptability of the

coal deposit to a use does not establish a market.”); accord United States v. Whitehurst, 337 F.2d 765, 771-72 (4th Cir. 1964); see also United States v.

22.80 Acres in San Benito Cty., 839 F.2d 1362, 1364 n.2 (9th Cir. 1988) (distinguishing taking of “land on which mineral resources are incidentally

located” from taking of “the limestone and granite itself, not the overlying parcel of land”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 179

[for] land that is underlaid with marketable minerals, . . . the existence of those minerals is

a factor of value to be considered in determining the market value of the property, but the

landowner is not entitled to have the surface value of the land and the value of underlying

minerals aggregated to determine market value.

967

Indeed, in any given acquisition, it is possible that “the whole property is worth more than, the

same as, or even less than the mineral [or other resource] it contains.”

968

4.8.2. Highest and Best Use and Natural Resources. The mere presence of minerals or other

resources in a property does not allow the appraiser to forego a careful analysis of highest and

best use (discussed in Section 4.3).

969

“The mere adaptability of [a mineral] deposit to a use does

not establish a market.”

970

Federal courts require “a showing of some sort of sort of market,

poor or good, great or small, for the commodity in question before the quantity and price of the

commodity or substance may . . . be used as a factor in the expert’s opinion . . . .”

971

In valuing property with mineral or other subsurface resources, appraisers must carefully

distinguish between a highest and best use of mineral extraction

972

and a highest and best use

of mineral exploration.

973

“Where a proered highest and best use is extraction of some sort

of mineral, the landowner must show not only the presence of the mineral in commercially

exploitable amounts, but also that a market exists for the mineral that would justify its extraction

in the reasonably foreseeable future.”

974

For example, a highest and best use of quarrying requires

supporting evidence that is

specic as to the suitability and availability of the property for a quarry, considering all factors,

such as . . . plant expense, operation expense, transportation, and the presence or reasonable

probability of a commercial market, . . . that would have aected the market price of the

property on that date.

975

On the other hand, a highest and best use of mineral exploration requires a reasonable

probability that market participants would attempt to explore the property for such a use—and

would pay more for property on the date of value with such a prospect than without.

976

That

967 Cannon Dam, 586 F.2d at 87.

968 Oldeld, 660 F.2d at 212; see, e.g., Cameron Dev. Co. v. United States, 145 F.2d 209, 210 (5th Cir. 1944) (“The mere physical adaptability of the

property to use as a source of supply of shell marl, in the absence of a market for its commercial production, did not eect an increase in its

market value.”).

969 Olson v. United States, 292 U.S. 246, 255, 257 (1934); see, e.g., United States v. Consol. Mayower Mines, Inc., 60 F.3d 1470, 1476-77 (10th Cir. 1995)

(rejecting contention that “the Olson standard for considering a use not yet undertaken must be relaxed where the use is the extraction of

minerals”).

970 Sowards, 370 F.2d at 89-90; accord Whitehurst, 337 F.2d at 771-72; Cameron Dev., 145 F.2d at 210.

971 United States v. Land in Dry Bed of Rosamond Lake, 143 F. Supp. 314, 322 (S.D. Cal. 1956).

972 E.g., Oldeld, 660 F.2d 208; United States v. 1,629.6 Acres in Sussex Cty. (Island Farm II), 360 F. Supp. 147, 151-53 (D. Del. 1973), a’d, 503 F.2d

764, 766 (3d Cir. 1974); United States v. Upper Potomac Props. Corp., 448 F.2d 913, 914-15 (4th Cir. 1971).

973 E.g., Mont. Ry. Co. v. Warren, 137 U.S. 348 (1890); Mayower Mines, 60 F.3d at 1477; Phillips v. United States, 243 F.2d 1 (9th Cir. 1957); Eagle

Lake I, 141 F.2d at 564; see also United States v. 69.1 Acres (Sand Mountain), 942 F.2d 290, 292-94 (4th Cir. 1991) (highest and best use of holding

sand reserves for future development based on “reasonable probability that the sand will be needed and wanted at a near enough point in

the future to aect the current value of the property” (emphasis added)).

974 Sand Mountain, 942 F. 2d at 292.

975 United States v. 599.86 Acres of Land in Johnson & Logan Ctys., 240 F. Supp. 563, 570 (W.D. Ark. 1965), a’d sub nom. Mills v. United States, 363 F.2d

78 (8th Cir. 1966).

976 Phillips v. United States, 243 F.2d 1, 6 (9th Cir. 1957); Eagle Lake I, 141 F.2d at 564 (“[if] mineral interests . . . are bought and sold in arms-length

transactions for a valuable consideration, they have a market price translative into a fair market value”); see, e.g., Montana Ry., 137 U.S. at 352-53.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards180

reasonable probability can be demonstrated “from the fact that such prospects are the constant

subject of barter and sale.”

977

With a proposed highest and best use of holding for future mineral extraction, the timing of future

use and its relation to current market value (i.e., as of the date of valuation) are critical.

978

Similarly,

extraction of a mineral or other resource cannot be considered as a highest and best use absent

“proof that it would be legally permissible to exploit that resource” in the reasonably near

future.

979

Accordingly, the First Circuit recently held that sand extraction could not be considered

as a highest and best use because there was no proof of “a reasonable probability that the

property would be rezoned or that a variance could have been obtained in the near future” to

make sand extraction legally permissible.

980

Moreover, to prevent confusion, injustice, and improper

duplication of value, market value cannot be premised on

inconsistent or incompatible uses.

981

Of particular importance

in properties with minerals or oil and gas resources, “[t]he fact

that the minerals, if any, are located beneath the surface of the

parcels condemned cannot be ignored.”

982

Thus, while a parcel’s

surface might be suitable for subdivision purposes and the

same parcel’s subsurface oil and gas resources suitable for extraction, “[c]ertainly, the surface

could not be used for a residential subdivision if oil wells were drilled and producing. These

are inconsistent uses.”

983

This would not prevent a well-supported determination that dierent

parts of a property have dierent highest and best uses—as long as those uses are compatible

and consistent (for example, residential or commercial use along highway frontage and

agricultural use for the rear land).

984

To avoid improper duplication of value, a determination

of multiple highest and best uses must not (1) attribute two highest and best uses to the same

acres, or (2) accept conicting and incompatible uses.

985

4.8.3. Valuation Approaches for Mineral Resources. Under federal law, the sales comparison

approach is normally the most reliable approach to value for properties involving minerals.

986

977 Montana Ry., 137 U.S. at 352-53; Phillips, 243 F.2d at 6; Eagle Lake I, 141 F.2d at 564.

978 Sand Mountain, 942 F.2d at 292-94 & n.3; United States v. 494.10 Acres in Cowley Cty., 592 F.2d 1130, 1131-32 (10th Cir. 1979).

979 United States v. 33.92536 Acres of Land (Piza-Blondet Trial Op.), No. 98-1664, 2008 WL 2550586, at *9 (D.P.R. June 13, 2008), a’d, 585 F.3d 1

(1st Cir. 2009).

980 United States v. 33.92536 Acres (Piza-Blondet), 585 F.3d 1, 7-8 (1st Cir. 2009).

981 United States v. 320 Acres of Land, 605 F.2d 762, 817 n.124 (5th Cir. 1979) (“To the extent that potential uses are inconsistent or incompatible

uses, whatever value the land possesses because of its suitability for each of these uses cannot be aggregated in determining fair market value

and just compensation.”); United States v. Carroll, 304 F.2d 300, 306 (4th Cir. 1962); Eagle Lake Improvement Co. v. United States (Eagle Lake II), 160

F.2d 182, 184 & n.1 (5th Cir. 1947) (“It becomes manifest . . . that separate valuation [of surface rights and mineral rights] . . . would bring

about confusion and injustice in condemnation cases. . . . [S]eparate awards . . . might include valuation based on inconsistent uses of the

property, and consequent duplication of value.”); see, e.g., United States v. 15.00 Acres in Miss. Cty., 468 F. Supp. 310 (E.D. Ark. 1979).

982 Eagle Lake II, 160 F.2d at 184 n. 1.

983 Id.

984 E.g., United States v. 179.26 Acres in Douglas Cty., 644 F.2d 367, 371 (10th Cir. 1981) (consistent uses of commercial rock quarry and improved

livestock and grain farm); United States v. 1,629.6 Acres in Sussex Cty. (Island Farm II), 360 F. Supp. 147, 152-53 (D. Del. 1973), a’d, 503 F.2d

764, 766 (3d Cir. 1974) (“we arm on the basis of the district court’s ne opinions”).

985 Island Farm II, 360 F. Supp. at 153.

986 United States v. 24.48 Acres of Land, 812 F.2d 216, 218 (5th Cir. 1987); Cloverport Sand & Gravel Co. v. United States, 6 Cl. Ct. 178, 189 (1984);

United States v. 103.38 Acres of Land in Morgan Cty. (Oldeld), 660 F.2d 208, 212 (6th Cir. 1981) (“the value of the coal in place would be fully

reected in the sale price of comparable properties”); United States v. Upper Potomac Props. Corp., 448 F.2d 913, 916-18 (4th Cir. 1971); see United

States v. Sowards, 370 F.2d 87, 89-90 (10th Cir. 1966); United States v. Whitehurst, 337 F.2d 765, 775-76 (4th Cir. 1964).

Market value cannot be

premised on inconsistent

or incompatible uses.

Disregarding this rule is a

common error in mineral

property valuations.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 181

As a result, in federal acquisitions the appraiser cannot default to using an income approach

or other valuation method that may be acceptable for typical industry purposes.

987

Indeed,

both federal courts and industry professionals have criticized valuations of mineral property

for just compensation purposes that improperly disregard the sales comparison approach.

988

An unsupported statement that comparable sales do not exist is insucient.

989

Moreover, in

appraising property involving minerals, “[e]lements of sales of quite distant properties, even

those with dierent mineral content, may be comparable in an economic or market sense when

due allowance is made for variables.”

990

Signicant variables or elements for mineral properties

may include location (relative to market demand, processing facilities, transportation options,

etc.), certainty (e.g., proven or unproven deposits), mineral content or type, mineral quality,

mineral quantity, and zoning or permitting status.

991

The sales comparison approach and

comparability generally are discussed in Section 4.4.2.

Use of the sales comparison approach requires the appraiser to determine the appropriate unit

of comparison (per acre, per square foot, etc.). The unit of comparison should generally reect

that used by market participants. Regardless of what unit of comparison is selected, however,

“arriving at a valuation by multiplying an assumed quantity of mineral reserves by a unit price is

almost universally disapproved by the courts.”

992

Under certain circumstances, it may be appropriate to apply

the income capitalization approach to value mineral properties.

As discussed in Section 4.4.4, the income approach involves

capitalizing a property’s anticipated net income to derive an

indication of its present market value. This approach cannot be

used as a stand-alone approach to value if comparable sales are

available.

993

Even if comparable sales are lacking, however, federal

courts have repeatedly held that the income approach can be used

only with great caution for purposes of just compensation. As the

Eighth Circuit warned:

Great care must be taken, or such valuations can reach

wonderland proportions. It is necessary to take into

consideration manifold and varied factors, like future supply and demand, economic

conditions, estimates of mineral recoverability, the value of currency, changes in the

987 Foster v. United States, 2 Cl. Ct. 426, 448-455 (1983); Upper Potomac, 448 F.2d at 917.

988 See, e.g., United States v. Am. Pumice Co., 404 F.2d 336, 336-37 (9th Cir. 1968) (rejecting assumption that mineral properties could rarely be

comparable to one another unless nearly adjacent), modifying in relevant part United States v. 237,500 Acres in Inyo & Kern Ctys., 236 F. Supp. 44, 51

(S.D. Cal. 1964); Whitehurst, 337 F.2d at 775 (nding valuation that ignored or rejected comparable sales evidence in valuing alleged mineral

property was “grossly mistaken”); A.K. Stagg, P.G., A.I.M.A., Federal Condemnation and Takings – A Journey Down the Yellow Book Road, to Soc’y of

Mining, Metallurgy, & Exploration, Inc. (Denver, Colo., March 1, 2011) (noting “predisposition on the part of many mineral appraisers to

believe that the sales comparison approach simply cannot be used” and stating that sales comparison approach “can be used quite adequately

in mineral appraisals, albeit, perhaps, with a little extra eort involved”); see generally Trevor R. Ellis, Sales Comparison Valuation of Development and

Operating Stage Mineral Properties, mining eng’g 89 (April 2011).

989 See, e.g., Whitehurst, 337 F.2d at 770-72.

990 Foster, 2 Cl. Ct. at 448; accord Am. Pumice, 404 F.2d at 336-37.

991 United States v. 100.80 Acres of Land (Parrish), 657 F. Supp. 269, 276 n.13 (M.D.N.C. 1987); Am. Pumice, 404 F.2d at 336-37; Foster, 2 Cl. Ct.

at 448-55; see United States v. 33.92356 Acres (Piza-Blondet), 585 F.3d 1 (1st Cir. 2009) (arming exclusion of highest and best use of sand

extraction without evidence of reasonable probability permit could be obtained).

992 Cloverport, 6 Cl. Ct. at 188.

993 E.g., Whitehurst, 337 F.3d at 770-72; see United States v. 24.48 Acres of Land, 812 F.2d 216, 218 (5th Cir. 1987).

If comparable sales are not

available, use of the income

capitalization approach may

be appropriate in valuing

mineral property. When

applying this approach to

mineral properties, yield

capitalization techniques

(e.g. discounted cash-ow

[DCF] analysis) are typically

more appropriate than direct

capitalization techniques.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards182

marketplace, and technological advances. Many of these factors are impossible to predict

with reasonable accuracy.

994

Similarly, the Fourth Circuit observed, valuations of mineral property based on the income

capitalization approach “almost always achieve chimerical magnitude, because, in the mythical

business world of income capitalization, nothing ever goes wrong. There is always a demand;

prices always go up; no competing material displaces the market.”

995

As a result, the Fourth

Circuit concluded, “to allow value to be proved in such a suspect manner, impeccably objective

and convincing evidence is required.”

996

Stated another way, “failure to anchor assumptions

to information corroborated by demonstrable facts renders the computations mathematical

exercises unrelated to reality.”

997

As discussed in Section 4.4.4, the income capitalization approach may include direct capitalization

or yield capitalization techniques.

998

When applicable to mineral properties, yield capitalization is

generally the more appropriate of these two techniques, and typically involves a discounted

cash-ow (DCF) analysis.

999

The income capitalization approach requires a distinction between

income generated by the property itself (the royalty income in producing mining properties), which

can be considered, and income generated by a business conducted on the property (i.e., a mining

enterprise), which must be disregarded.

1000

For this reason, the income capitalization approach is

sometimes called the royalty income approach when applied to mineral properties.

Every factor considered in an income capitalization approach must be properly supported.

1001

DCF analysis, one of the most critical factors is the selection of the discount rate, which should

be derived from and supported by direct market data.

1002

Because the market value measure

of just compensation is intended “to duplicate marketplace calculations to the greatest possible

extent[,]”

1003

courts have rejected income capitalization without evidence that “rates are in fact

xed in the marketplace by a process which parallels [the expert’s] calculations.”

1004

994 United States v. 47.14 Acres of Land, 674 F.2d 722, 726 (8th Cir. 1982).

995 United States v. 69.1 Acres of Land (Sand Mountain), 942 F.2d 290, 293-94 (4th Cir. 1991).

996 Id. at 294; United States ex rel. Tenn. Valley Auth. v. Indian Creek Marble Co., 40 F. Supp. 811, 822 (E.D. Tenn. 1941) (“It would require the

enumeration of every cause of business disaster to point out the fallacy of using this method of arriving at just compensation.”).

997 Foster, 2 Cl. Ct. at 451 (“Although the calculation may be internally consistent, the capitalization of income approach frequently does not

produce reasonably persuasive evidence of value.”).

998 Direct capitalization techniques apply an overall capitalization rate to a property’s single-year net income. Yield capitalization techniques typically

use a discounted cash-ow (DCF) analysis to evaluate varying forecasted income or expenses. See Section 4.4.4 (Income Capitalization

Approach).

999 Whitney Benets v. United States, 18 Cl. Ct. 394, 408 (1989); Foster, 2 Cl. Ct. at 448-49.

1000 Cloverport, 6 Cl. Ct. at 191; see United States v. Toronto, Hamilton & Bualo Nav. Co., 338 U.S. 396, 403 n.6 (1949); see generally Section 4.4.4

(Income Capitalization Approach).

1001 47.14 Acres, 674 F.2d at 726; United States v. 103.38 Acres of Land in Morgan Cty. (Oldeld), 660 F.2d 208, 214-15 (6th Cir. 1981) (requiring

“evidence derived from or demonstrably related to the actual market” as “essential characteristics”); Whitehurst, 337 F.2d at 771-74; United

States v. 158.76 Acres of Land in Townshend, 298 F.2d 559, 561 (2d Cir. 1962); see, e.g., United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp.

2d 165, 176-78 (N.D.N.Y. 2010), a’d, 502 F. App’x 43, 45 (2d Cir. 2012) (noting lower court’s “thorough report exposing the unreliability of

the expert’s methods”); see also United States v. Sowards, 370 F.2d 87, 90-92 (10th Cir. 1966); Likins-Foster Monterey Corp. v. United States, 308 F.2d

595, 597-99 (9th Cir. 1962), a’g United States v. Certain Interests in Prop. in Monterey Cty., 186 F. Supp. 167 (N.D. Cal. 1960); United States v. Leavell

& Ponder, Inc., 286 F.2d 398, 406-08 (5th Cir. 1961).

1002 Prop. in Monterey, 186 F. Supp. at 170; see also Leavell & Ponder, 286 F.2d at 407; 158.76 Acres in Townshend, 298 F.2d at 561.

1003 Oldeld, 660 F.2d at 212; see Cementerio Buxeda, Inc. v. Puerto Rico, 196 F.2d 177, 181 (1st Cir. 1952) (allowing consideration of income and

expense gures that “are factors which would be considered by a prospective buyer”).

1004 Oldeld, 660 F.2d at 214 (“The fatal aw in the owners’ . . . method is its lack of demonstrable relationship with this ‘real’ market . . . .”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 183

4.8.4. Timber. The sales comparison approach is also typically the most reliable approach to value

for properties involving timber.

1005

Appraising property with a potential highest and best use for

timber production typically requires special expertise and analysis, including a timber cruise to

inventory the timber involved, evaluation of logging conditions, and investigation of potential

timber sales.

1006

Such information may be particularly useful as a “check” on the appraiser’s

estimate of contributory timber values gleaned from comparable sales and other market

data.

1007

But it is never appropriate to simply add timber value to land value to determine the

market value of the property as a whole.

1008

Important considerations in valuing timber properties may include the quantity and quality

of merchantable timber, topography, and feasible logging methods.

1009

In addition, applicable

local, state, and federal laws may signicantly aect the value of forested properties and must

be considered in valuations for federal acquisitions. For example, the Ninth Circuit held that “in

appraising privately owned forest land in California, . . . evaluation witnesses must determine the

highest and best use of the land in a manner that is not violative of the Forest Practice Act of the

State of California.”

1010

4.8.5. Water Rights. Water rights may have a substantial impact on the uses to which property can

be put and, as a result, on market value.

1011

The laws governing water rights vary signicantly

by state, county, or other local jurisdiction. Water-rights law may also be an important

consideration in determining liability in inverse takings.

1012

Applicable water laws must be

taken into account in determining market value for purposes of just compensation,

1013

and

appropriate legal instructions may be required.

State laws on surface water rights generally follow one of three systems. In most Eastern states,

water law is based on the doctrine of riparian rights. Broadly, water rights are allocated to owners

of riparian land—that is, land adjacent to a body of water. Various laws in riparian-doctrine

states regulate reasonable use to protect other riparian owners. In most Western states, where the

water supply is more limited, water law is based on a prior appropriation system. Under this “rst

in time, rst in right” concept, water rights are allocated based on when a person puts a quantity

of water to actual benecial use, regardless of whether that person owns riparian land. Finally,

1005 United States v. 2,175.86 Acres in Hardin & Jeerson Ctys., 687 F. Supp. 1079, 1085-86 (E.D. Tex. 1988), on remand from Kirby Forest Indus., Inc. v.

United States, 467 U.S. 1 (1984).

1006 E.g., United States v. 15.00 Acres of Land in Miss. Cty., 468 F. Supp. 310, 313 & n.6 (E.D. Ark. 1979); 2,175.86 Acres in Hardin & Jeerson, 687 F.

Supp. at 1085-86.

1007 E.g., 2,175.86 Acres in Hardin & Jeerson, 687 F. Supp. at 1085-87.

1008 Id. at 1086-87; see generally Section 4.2.2.

1009 E.g, Ga.-Pac. Corp. v. United States, 640 F.2d 328, 345-46 (Ct. Cl. 1980) (per curiam); 2,175.86 Acres in Hardin & Jeerson, 687 F. Supp. at

1085-87.

1010 E.g., Scott Lumber Co. v. United States, 390 F.2d 388, 395-96 (9th Cir. 1968); see also United States v. 320 Acres of Land, 605 F.2d 762, 818-19 & n.

128 (5th Cir. 1979) (legal framework aecting uses of property must be taken into account).

1011 E.g., Wilson v. United States, 350 F.2d 901, 908 (10th Cir. 1965) (rejecting proposed use of hay production through projected irrigation

installations because of “question[able] feasibility of the development of some of the lands for which water rights were pending”) (citing

Olson v. United States, 292 U.S. 246, 255 (1934)); see United States v. 46,672.96 Acres in Doña Ana Ctys., 521 F.2d 13, 14-15 (10th Cir. 1975)

(noting evidence that value of properties with potential uses of grazing purposes, rural homesites, recreational sites or roadside businesses

“depend[ed] on availability of water and roads”).

1012 Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511, 522 (2012) (noting that bearing of Arkansas water-rights law on whether taking

occurred should be addressed on remand).

1013 See, e.g., United States v. 320 Acres of Land, 605 F.2d 762, 818-19 & n.128 (5th Cir. 1979) (legal framework aecting uses of property must be

taken into account). Note that this is not an exception to the rule that federal, not state, law controls. Scott Lumber Co., 390 F.2d at 395-96

(rejecting valuation based on proposed highest and best use that violated state law); see Section 4.1.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards184

several Western states (including California, Texas, and Oklahoma) originally recognized riparian

rights but later incorporated an appropriation system, creating a hybrid system with both riparian

and appropriation elements. Beyond these three surface-water-rights systems, unique variations

apply in Hawaii and Louisiana, and pueblo water rights aect a few places in the Southwest.

Groundwater rights in the United States are generally allocated based on ownership of overlying

land, prior appropriation, or state management.

1014

Special rules regarding riparian lands adjacent to navigable waters and the federal navigational

servitude are discussed in Section 4.11.1.

4.9. Inverse Takings. Most valuation assignments under these Standards involve intentional

acquisitions, in which the United States purposely seeks to acquire property (by negotiated

purchase, exchange, or eminent domain). But actions of the United States may also result in its

taking property without intending to do so. In such a situation, called an inverse taking (or inverse

condemnation), a landowner can sue the United States for compensation.

1015

Inverse takings claims

involve important legal and practical dierences from other types of federal acquisitions.

1016

The most signicant dierence between an inverse taking claim and a direct condemnation or

other armative acquisition is the threshold question of liability: In ling a direct condemnation,

the United States expressly acknowledges the actual or proposed property acquisition and its

obligation to pay compensation. In an inverse taking claim, on the other hand, the United States

may contest the landowner’s claim that a taking occurred for which just compensation must be

paid under the Fifth Amendment.

1017

Accordingly, in an inverse taking claim, the court must

1014 See generally United States v. Gerlach Live Stock Co., 339 U.S. 725, 742-55 (1950) (exploring development of water law systems in the United States

generally and California in particular); cf. dAVid h. geTches eT Al., wATer lAw in A nuTshell (5th ed. 2015).

1015 The U.S. Court of Federal Claims has exclusive jurisdiction over inverse takings claims exceeding $10,000 under the Tucker Act. 28 U.S.C.

§ 1491. Federal district courts have concurrent jurisdiction for claims for $10,000 or less. 28 U.S.C. § 1346(a)(2) (the “Little Tucker Act”).

These statutes waive sovereign immunity, allowing the United States to be sued, in recognition of the fact that unintended takings may occur

despite federal agencies’ eorts to avoid them. Cf. Uniform Act, 42 U.S.C. § 4651(8) (“No Federal agency head shall intentionally make

it necessary for an owner to institute legal proceedings to prove the fact of the taking of his real property.”); 49 C.F.R. § 24.102(l) (“If the

Agency intends to acquire any interest in real property by exercise of the power of eminent domain, it shall institute formal condemnation

proceedings and not intentionally make it necessary for the owner to institute legal proceedings to prove the fact of the taking of the real

property.”); see also Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 6 (1984) (noting Uniform Act “enjoins federal agencies . . . to attempt to

acquire property by negotiation rather than condemnation, and whenever possible not to take land by physical appropriation”).

1016 See United States v. Clarke, 445 U.S. 253, 255 (1980).

1017 The United States can also concede liability as appropriate. E.g., Otay Mesa Property, L.P. v. United States (Otay Mesa III), 779 F.3d 1315 (Fed.

Cir. 2015).

riparian

appropriation

hybrid

other

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 185

rst determine whether a taking occurred for which just compensation must be paid. If so, the

case can then proceed to the compensation phase to determine what amount of compensation

is due. Appraisers may be retained to develop opinions in connection with the liability phase, the

compensation phase, or both.

The liability inquiry will vary depending on the nature of the inverse taking claim. The issue

is rather straightforward if the government’s action resulted in the government’s permanent

physical occupation of the land in question.

1018

But “[i]n view of the nearly innite variety of

ways in which government actions or regulations can aect property interests, the Court has

recognized few invariable rules in this area.”

1019

In regulatory takings claims, the federal courts

have developed various tests to determine whether a taking has occurred: the character of the

government action; the extent to which the regulation interferes with distinct, investment-backed

expectations; and the economic impact of the regulation.

1020

These distinct inquiries may alter

the appropriate considerations (as well as the terminology) for determining the larger parcel for

liability purposes in inverse takings claims, as discussed in Section 4.3.4.8.

If the court nds that a compensable taking occurred, litigation will proceed to the compensation

phase, in which the standard valuation rules apply. Generally, the appraiser will be asked to

develop opinions of the market value of the aected property before and after the taking. As

discussed in Section 4.2.1.1, the date of value is typically the date of taking, which should be

provided by legal counsel.

4.10. Land Exchanges. Federal land exchanges are voluntary real estate transactions between the

United States and a nonfederal landowner. The parties must agree on the market value of

the properties being exchanged, and neither the United States nor a nonfederal landowner is

required to participate in an exchange.

1021

Nevertheless, federal land exchanges may still result in

litigation relating to the valuation of the property involved and/or the adequacy of the appraisal

supporting the transaction.

1022

Most federal land exchanges are authorized under the Federal

Land Policy and Management Act of 1976 (FLPMA).

1023

Exchanges can be initiated by any

party. By law, for an exchange to occur the public interest must be well served, and the estimated

value of the nonfederal land must be within 25 percent of the estimated value of the federal

land, among other requirements.

1024

Some land exchanges are specically legislated by Congress,

sometimes with special provisions that dier from the usual federal exchange process.

1025

1018 Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 432 (1982) (“[A] permanent physical occupation is a government action of such a

unique character that it is a taking without regard to other factors that a court might ordinarily examine.”).

1019 Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511, 518 (2012).

1020 Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 124 (1978).

1021 In contrast, direct acquisitions, while often voluntary, may involve at least a possibility that the government can exercise the power of

eminent domain to take property for a public purpose with payment of just compensation.

1022 E.g., Greer Coal., Inc. v. U.S. Forest Serv., 470 F. App’x 630 (9th Cir. 2012) (unpubl.); Nat’l Parks & Conservation Ass’n v. Bureau of Land Mgmt. (NPCA

v. BLM), 606 F.3d 1058 (9th Cir. 2010); Desert Citizens Against Pollution v. Bisson, 231 F.3d 1172 (9th Cir. 2000). Litigation also arises over the

determination that an exchange is in the public interest, and agency environmental compliance. E.g., Ctr. for Biological Diversity v. U.S. Dep’t of Interior,

623 F.3d 633 (9th Cir. 2010); Lodge Tower Condo. Ass’n v. Lodge Props., Inc., 85 F.3d 476 (10th Cir. 1996), a’g 880 F. Supp. 1370 (D. Colo. 1995).

1023 43 U.S.C. §§ 1701-1785 (2012).

1024 43 U.S.C. § 1716.

1025 See, e.g., Mt. St. Helens National Volcanic Monument Act, Pub. L. No. 97-243, 96 Stat. 301 (1982), 16 U.S.C. § 431 note (1982) (repealed 2014).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards186

Federal land exchanges are subject to the same valuation requirements as other types of federal

acquisitions. In fact, federal regulations specically require appraisals in many federal land

exchanges to comply with these Standards.

1026

But special legal instructions may be necessary

due to statutory or regulatory requirements for land exchanges. Special rules commonly dictate the

larger parcel determination, reecting federal statutes and agency regulations.

1027

The appraiser

must also obtain instructions regarding the appropriate date of valuation,

1028

which may be

negotiated by the parties involved in the exchange in accordance with agency regulations

1029

dictated by statute.

1030

For example, following the volcanic eruption at Mount St. Helens in 1980,

Congress authorized the acquisition of lands by donation or exchange in what is now the Mount

St. Helens National Volcanic Monument.

1031

Most of these acquisitions required appraisal of the

properties’ current market value, but the statute expressly provided for timber acquisitions to be

valued as of July 1, 1982, in recognition of rapid deterioration of timber in the area.

1032

As in other types of acquisitions, analysis of a property’s highest and best use is critical in

appraising property for federal land exchanges.

1033

As discussed in Section 4.3.2, a property’s

existing use is normally its highest and best use on the date of value because “economic demands

normally result in an owner’s putting his land to the most advantageous use.”

1034

But federal

lands typically involve other considerations: as the Supreme Court observed over a century

ago, “property may have to the public a greater value than its fair market value . . . .”

1035

As a

practical matter, then, the federal lands to be exchanged likely are not being put to their highest

and best use on the date of value,

1036

while the nonfederal party’s proposed use may well be a

feasible highest and best use that must be considered.

1037

For this reason, a nonfederal party’s

proposed use, if reasonably probable, must be analyzed as a part of the highest and best use

determination.

1038

As with any possible highest and best use, neither an existing federal use nor

a nonfederal party’s proposed use can be considered unless there is competitive demand for

that use in the private market.

1039

And of course, any proposed use, no matter how probable or

1026 See, e.g., NPCA v. BLM, 606 F.3d at 1066 (citing 43 C.F.R. § 2201.3).

1027 See Section 4.3.3.

1028 See Greer Coal., Inc. v. U.S. Forest Serv., 470 F. App’x 630, 636 (9th Cir. 2012) (unpubl.) (“an exchange is concerned with the relative value of two

sets of property rather than the absolute value of either”); see generally Section 4.2 (discussing date of valuation).

1029 See, e.g., Desert Citizens Against Pollution v. Bisson, 231 F.3d 1172, 1185 (9th Cir. 2000); cf. 43 U.S.C. § 1716(d).

1030 See Mt. St. Helens Mining & Recovery Ltd. P’ship v. United States, 384 F.3d 721, 729 (9th Cir. 2004) (noting date of valuation for specic

acquisitions set by statute).

1031 Mt. St. Helens National Volcanic Monument Act, Pub. L. No. 97-243, 96 Stat. 301 (1982), 16 U.S.C. § 431 note (1982) (repealed 2014).

1032 Mt. St. Helens Mining, 384 F.3d at 729; Pub. L. No. 97-243, § 3(b); 36 C.F.R. § 254.9(b) (2015).

1033 See Section 4.3.

1034 United States v. Buhler, 305 F.2d 319, 328 (5th Cir. 1962); see Section 4.3.2.1.

1035 United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 80 (1913).

1036 See United States v. Weyerhaeuser Co., 538 F.2d 1363, 1366-67 (9th Cir. 1976) (“[G]overnment projects may render property valuable for a

unique purpose.”); see, e.g., United States v. 46,672.96 Acres of Land in Doña Ana Ctys., 521 F.2d 13, 15-16 (10th Cir. 1975) (“absolutely no

evidence that anyone other than the government could or would use the land for a missile range”); cf. United States v. 320 Acres of Land, 605

F.2d 762, 783 n.26 (5th Cir. 1979) (“[T]he use which the Government proposes to devote the property to should not be considered unless

private owners could also reasonably devote the property to that use.”).

1037 See, e.g., Nat’l Parks & Conservation Ass’n v. Bureau of Land Mgmt. (NPCA v. BLM), 606 F.3d 1058, 1066-69 (9th Cir. 2010); Desert Citizens Against

Pollution v. Bisson, 231 F.3d 1172, 1181-85 (9th Cir. 2000).

1038 Desert Citizens, 231 F.3d at 1181; accord NPCA v. BLM, 606 F.3d at 1067-68; see Section 4.3.

1039 Chandler-Dunbar, 229 U.S. at 80-81; compare NPCA v. BLM, 606 F.3d at 1067-68 (noting “obvious and well-known presence of competing

. . . proposals” for nonfederal party’s proposed use), and Desert Citizens, 231 F.3d at 1185 (noting “regional market and the presence of

competitors” pursuing similar projects to nonfederal party’s proposed use), with Doña Ana, 521 F.2d at 16 (“no basis whatsoever for

considering that the highest and best use was for a missile range” without “evidence that anyone other than the government could or would

use the land for [that purpose]”), and J.A. Tobin Constr. Co. v. United States, 343 F.2d 422, 425 (10th Cir. 1965) (“‘there was no market for an

ordinary commercial quarry in the area involved’”); see 320 Acres, 605 F.2d at 811 n.107 (“[T]he use must be one which a private owner might

reasonably develop or enjoy.” (emphasis added)).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 187

protable, is to be considered only “to the full extent that the prospect of demand for the use

aects market value.”

1040

4.11. Special Rules. Federal acquisitions of certain types of property involve special valuation

rules to comply with constitutional or specic statutory provisions. The special valuation

rules discussed in Section 4.11.1 (Riparian Lands [Navigation Servitude]) and Section 4.11.2

(Federal Grazing Permits) arise from the general principle that the United States is not

compelled to compensate “for elements of value that the Government has created, or that it

might have destroyed under the exercise of governmental authority other than the power of

eminent domain.”

1041

In the words of Justice Jackson: “Such losses may be compensated by

legislative authority, not by force of the Constitution alone.”

1042

Specically, Section 4.11.1

addresses the valuation of property involving the federal navigation servitude over waters of

the United States. This section also explains special valuation requirements for partial and

total acquisitions under 33 U.S.C. § 595a, which authorizes compensation for certain elements

beyond what the Fifth Amendment requires.

1043

Section 4.11.2 discusses the valuation of

property involving federal grazing permits, which are administered primarily by the U.S.

Forest Service and the Bureau of Land Management.

1044

Section 4.11.3, on the other hand,

discusses the application of the standard valuation rules to special types of property, guided by

the principles of fairness and indemnity underlying the Fifth Amendment.

1045

Valuation issues

arising in inverse taking claims under the National Trails System Act and Amendments

1046

are

also addressed, as well as the substitute-facility form of compensation.

4.11.1. Riparian Lands and the Federal Navigational Servitude. Special valuation rules

apply in acquisitions aected by the navigational servitude, a dominant federal easement over

the nation’s navigable waters.

1047

Arising under the U.S. Constitution, the federal navigation

servitude is a preexisting limitation on the ownership of the ow of navigable waters and

underlying streambeds.

1048

This has important ramications for the compensation due not only

for navigable waters, which encompass the entire streambed up to the high-water mark, but

also for riparian fast lands (upland) lying above the high-water mark.

1049

In addition, by federal

1040 Olson v. United States, 292 U.S. 246, 255 (1934).

1041 United States v. Fuller, 409 U.S. 488, 492 (1973) (citing United States v. Rands, 389 U.S. 121 (1967), United States v. Twin City Power Co., 350 U.S.

222 (1956), and United States v. Commodore Park, Inc., 324 U.S. 386 (1945)).

1042 United States v. Willow River Power Co., 324 U.S. 499, 510 (1945); accord Fuller, 409 U.S. at 494 (“Congress may, of course, provide in connection

with condemnation proceedings that particular elements of value or particular rights be paid for even though in the absence of such

provision the Constitution would not require payment.”); cf. United States v. Bodcaw Co., 440 U.S. 202, 204 (1979) (“such compensation is a

matter of legislative grace rather than constitutional command”).

1043 Rivers and Harbors Act of 1970 § 111, 33 U.S.C. § 595a (2012); see United States v. 30.54 Acres of Land in Greene Cty. (Filiaggi), 90 F.3d 790, 793-

94, 794 n.3 (3d Cir. 1996).

1044 Taylor Grazing Act of 1934, 43 U.S.C. § 315(b) (2012); Granger-Thye Act of 1950, 16 U.S.C. § 580l (2012).

1045 See United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 30 (1984); United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 517

(1979); see also United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 281 (1943) (“it is the owner’s loss, not the taker’s gain, which is the

measure of just compensation”).

1046 National Trails System Act, 16 U.S.C. §§ 1241-51 (2012); see 1983 Amendments, Pub. L. No. 98-11, 97 Stat. 48 (railbanking provisions).

1047 See United States v. Rands, 389 U.S. 121, 122-23 (1967); Gilman v. City of Philadelphia, 70 U.S. 713, 724-25 (1865); Gibbons v. Ogden, 22 U.S. 1, 189-

93 (1824); United States v. 30.54 Acres of Land in Greene Cty. (Filiaggi), 90 F.3d 790, 795 (3d Cir. 1996). A servitude is an easement or other legal

right to limited use of property without possession of it. See Section 4.6.5 (Easement Valuation Issues).

1048 United States v. Twin City Power Co., 350 U.S. 222, 227 (1956); see Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1028-29 (1992); United States v.

Cherokee Nation, 480 U.S. 700, 707 (1987); Rands, 389 U.S. at 123; United States v. Commodore Park Inc., 324 U.S. 386, 391 (1945); United States v.

Chi., M., St. P. & P. R. Co., 312 U.S. 592, 597 (1941); Scranton v. Wheeler, 179 U.S. 141, 163 (1900).

1049 Rands, 389 U.S. at 122-26; see United States v. Willow River Power Co., 324 U.S. 499, 509 (1945); see also United States v. Va. Elec. & Power Co., 365

U.S. 624, 628-29 (1961); cf. Cherokee Nation, 480 U.S. at 704; Kaiser Aetna v. United States, 444 U.S. 164, 176 (1979) (“fast lands”); Scranton, 179

U.S. at 163 (“upland”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards188

statute, Congress has increased compensation above what the Constitution requires in certain

acquisitions of fast lands.

1050

These constitutional and statutory requirements establish when

market value due to a property’s access to or use of navigable waters can be considered, and

when it must be disregarded, in appraisals for federal acquisitions relating to navigation.

Origins of the Navigational Servitude. Although the federal navigation servitude aects

compensation under the Fifth Amendment, it arises from Congress’ power to regulate commerce

under Article I of the U.S. Constitution.

1051

“Commerce includes navigation”

1052

—and so

the Commerce Clause “confers a unique position upon the Government in connection with

navigable waters.”

1053

As a result, the great inland waterways have long been deemed national

assets rather than the private property of riparian owners: they are “the public property of the

nation.”

1054

And while lands adjacent to or beneath navigable waters may be owned by states or

individuals, their ownership “is always subject to the servitude in respect of navigation created in

favor of the federal government by the constitution.”

1055

The Commerce Clause “speaks in terms of power, not of property.”

1056

The navigational

servitude “encompasses the exercise of this federal power with respect to the stream itself and

the lands beneath and within its high-water mark.”

1057

Accordingly, when the United States

properly exercises its navigational servitude, no property is taken within the meaning of the Fifth

Amendment, and no compensation is due.

1058

Navigable Waters. While the term navigable waters is signicant in dierent areas of the

law, only its meaning in the context of the navigational servitude is relevant here.

1059

The basic

1050 See 33 U.S.C. § 595a (codifying Section 111 of the Rivers and Harbors Act of 1970); see also United States v. Gerlach Live Stock Co., 339 U.S. 725,

739-42 (1950); cf. United States v. Fuller, 409 U.S. 488, 494 (1973) (“Congress may, of course, provide . . . that particular elements of value or

particular rights be paid for even though in the absence of such provision the Constitution would not require payment.”).

1051 U.S. Const. art. 1, § 8, cl. 3 (“Congress shall have power . . . [t]o regulate commerce with foreign Nations, and among the several States, and

with the Indian Tribes”); see Twin City Power, 350 U.S. at 224-25.

1052 Gilman, 70 U.S. at 724; accord Gibbons, 22 U.S. at 190 (“All America understands, and has uniformly understood, the word ‘commerce,’ to

comprehend navigation. It was so understood, and must have been so understood, when the constitution was framed. The power over

commerce, including navigation, was one of the primary objects for which the people of America adopted their government, and must have

been contemplated in forming it.”); see United States v. Appalachian Elec. Power Co., 311 U.S. 377, 426-27 (1940).

1053 Rands, 389 U.S. at 123; accord Cherokee Nation, 480 U.S. at 704.

1054 Gilman, 70 U.S. at 725 (“For [navigation] purposes, Congress possesses all the powers which existed in the States before the adoption of the

national Constitution, and which have always existed in the Parliament in England.”); see United States v. Chandler-Dunbar Water Power Co., 229

U.S. 53, 69 (1913) (“that the running water in a great navigable stream is capable of private ownership is inconceivable”).

1055 Gibson v. United States, 166 U.S. 269, 272 (1897); see Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1028-29 (1992) (“a pre-existing limitation upon the

land owner’s title”); Rands, 389 U.S. at 123 (“a power to which the interests of riparian owners have always been subject”); Scranton v. Wheeler, 179

U.S. 141, 163 (1900); see also Lambert Gravel Co. v. J.A. Jones Constr. Co., 835 F.2d 1105, 1112 (5th Cir. 1988); cf. Ronald C. Allen, Federal Evaluation of

Riparian Property: Section 111 of the Rivers and Harbors Act of 1970, 24 me. l. reV. 175, 197-98 (1972) (“[The] servitude exemplies the only clear

cut instance when we as a nation have maintained a common property right exclusively for common benet when needed.”).

1056 Twin City Power, 350 U.S. 222, 225 (1956); accord United States v. Certain Parcels in Valdez, 666 F.2d 1236, 1238 (9th Cir. 1982).

1057 United States v. Va. Elec. & Power Co., 365 U.S. 624, 628 (1961). Federal courts have used the terms high-water mark and ordinary high-water

mark interchangeably in describing the boundary of the federal navigational servitude. Banks v. United States, 71 Fed. Cl. 501, 506 (2006)

(noting both terms “refer to the same boundary” despite “any distinction in nomenclature” and citing cases).

1058 Cherokee Nation, 480 U.S. at 704; Rands, 389 U.S. at 123; United States v. Kan. City Life Ins. Co., 339 U.S. 799, 804 (1950); see Lucas, 505 U.S. at

1028-29; United States v. 30.54 Acres of Land in Greene Cty. (Filiaggi), 90 F.3d 790, 795 (3d Cir. 1996) (“Exercise of the servitude did nothing

more than realize a limitation always inherent in the landowners’ title. It was not a taking.”); Pub. Util. Dist. No. 1 v. City of Seattle, 382 F.2d

666, 669 (9th Cir. 1967) (“[T]he navigational servitude, by its nature, does not destroy or exclude all property rights in the beds and banks of

navigable streams. Such rights continue to exist but are held subject to the governmental power in the nature of an easement.”).

1059 See Kaiser Aetna v. United States, 444 U.S. 164, 170-79 (1979); see also PPL Montana, LLC v. Montana 132 S. Ct. 1215, 1228-29 (2012); The Propeller

Genesee Chief v. Fitzhugh, 12 How. 443, 454-57 (1851) (exploring inadequacy of English common-law concept of navigable waters, based on

ebb and ow of tide, for American geography); Kaiser Aetna, 444 U.S. at 182-83 (Blackmun, J., dissenting) (discussing same); cf. Rapanos v.

United States, 547 U.S. 715 (2006) (construing “navigable waters” and “waters of the United States” as used in Clean Water Act); Tundidor v.

Miami-Dade Cty., 831 F.3d 1328, 1333 (11th Cir. 2016) (citing cases).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 189

standard is navigability in fact.

1060

Waterways are “navigable in fact when they are used, or are

susceptible of being used, in their ordinary condition, as highways for commerce.”

1061

But this

threshold question is not the end of the inquiry: for purposes of compensation under the Fifth

Amendment, “the Supreme Court has rejected a mechanical test imposing the [navigational]

servitude on all waters navigable in fact.”

1062

Thus, whether the navigational servitude applies

under federal law to a specic body of water that is navigable in fact must be determined on a

case-by-case basis.

1063

Arising mainly (but not only) in inverse takings claims, this determination

cannot be made by the appraiser; legal instructions are required.

1064

Scope of the Navigational Servitude. The navigational servitude extends “to the entire

bed of a stream, which includes the lands below ordinary high-water mark.”

1065

It “applies to

all holders of riparian and riverbed interests.”

1066

Accordingly, property within the bed of a

navigable stream is always subject to the potential exercise of the navigational servitude.

1067

And

while the navigational servitude does not extend beyond the high-water mark, it does aect the

compensation for fast lands acquired by the United States in connection with navigation.

1068

Whether the federal project prompting an acquisition is related to navigation is determined

by Congress or the agency ocials to whom Congress has delegated this authority—

primarily the U.S. Army Corps of Engineers.

1069

“If the interests of navigation are served, it

is constitutionally irrelevant that other purposes may also be advanced.”

1070

Accordingly, “[o]

nce Congress determines that an action will improve or protect navigation, the Government

may rely on the navigation servitude to accomplish that action.”

1071

And federal courts have

repeatedly held that proper exercise of the navigation servitude stems from the purposes of the

federal project as a whole rather than the immediate facts of a specic acquisition.

1072

Indeed,

the United States may “block navigation at one place to foster it at another.”

1073

Congress may also decide not to assert the navigational servitude in a specic acquisition or

project—in other words, Congress may authorize payment of compensation above what the

1060 E.g., United States v. Appalachian Elec. Power Co., 311 U.S. 377, 406 & n.21 (1940); see Kaiser Aetna, 444 U.S. at 175.

1061 The Daniel Ball, 77 U.S. 557, 563 (1870); see Arizona v. California, 283 U.S. 423, 452 n.2 (1931) (citing cases).

1062 Boone v. United States, 944 F.2d 1489, 1495 n.12 (9th Cir. 1991) (citing Kaiser Aetna, 444 U.S. at 175).

1063 See, e.g., United States v. 102.871 Acres of Land in Cameron Par. (La. Jetty), No. 2:13 CV 2508, 2015 WL 5794073 (W.D. La. Oct. 2, 2015); see

also Banks v. United States, 71 Fed. Cl. 501 (2006). In practice, “this important public interest has generally led to the conclusion that the

navigational servitude will preclude the payment of compensation in cases involving waters navigable in interstate commerce . . . .” Boone,

944 F.2d at 1501.

1064 See, e.g., Owen v. United States, 851 F.2d 1404 (Fed. Cir. 1988); Banks, 71 Fed. Cl. 501; Alameda Gateway, Ltd. v. United States, 45 Fed. Cl. 757

(1999). The issue arises less frequently in other types of federal acquisitions. See, e.g., La. Jetty, 2015 WL 5794073; see also United States v. 30.54

Acres of Land in Greene Cty. (Filiaggi), 90 F.3d 790 (3d Cir. 1996).

1065 United States v. Chi., M., St. P. & P. R. Co., 312 U.S. 592, 596-97 (1941); accord United States v. Cherokee Nation, 480 U.S. 700, 704 (1987); United

States v. Rands, 389 U.S. 121, 123 (1967); United States v. Va. Elec. & Power Co., 365 U.S. 624, 625 (1961).

1066 Cherokee Nation, 480 U.S. at 706; see id. at 706-07 (citing cases).

1067 Rands, 389 U.S. at 123; Lewis Blue Point Oyster Cultivation Co. v. Briggs, 229 U.S. 82, 88 (1913); Alameda Gateway, 45 Fed. Cl. at 763.

1068 Va. Elec., 365 U.S. at 629; accord Rands, 389 U.S. at 123-24; United States v. Twin City Power Co., 350 U.S. 222, 225 (1956); see also Kaiser Aetna v.

United States, 444 U.S. 164, 175-77 (1979).

1069 Twin City Power, 350 U.S. at 224; United States v. Commodore Park, Inc., 324 U.S. 386, 392 (1945); see, e.g., United States v. Certain Parcels of Land in

Valdez, 666 F.2d 1236, 1239 (9th Cir. 1982) (discussing Ports and Waterways Safety Act of 1972, codied at 33 U.S.C. § 1221).

1070 Twin City Power, 350 U.S. at 224.

1071 Valdez, 666 F.2d at 1239 (citing Chi., M., St. P. & P. R. Co., 312 U.S. at 597); cf. United States v. Gerlach Live Stock Co., 339 U.S. 725 (1950) (nding

Congress had not intended to exercise navigation servitude in acquisitions for specic dam project).

1072 Commodore Park, 324 U.S. at 392-93; see, e.g., Weatherford v. United States, 606 F.2d 851, 853 (9th Cir. 1979) (holding navigational servitude

applied to acquisition for purpose of relocating highway that would be submerged by construction of dam in navigable stream).

1073 Commodore Park, 324 U.S. at 393.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards190

Constitution requires.

1074

But “[s]uch a waiver of sovereign authority will not be implied . . . . [I]t

must be ‘surrendered in unmistakable terms.’”

1075

Elements of Value Under the Navigational Servitude.

Market value that is “attributable in the end to the ow of the

stream—over which the Government has exclusive dominion”—

is not compensable under the Fifth Amendment.

1076

Similarly,

any market value that arises from access to or use of navigable

waters is allocable to the public, not to private owners.

1077

Paying

compensation for such values would permit private owners to

receive windfalls to which they are not entitled under the Fifth

Amendment.

1078

Accordingly, while access to navigable waters

may enhance the market value of fast land, any such value must

be disregarded in federal acquisitions pursuant to the navigational

servitude, except as provided below.

1079

Under this established

principle of law, “all value attributable to the riparian location

of the land” is excluded from consideration under the Fifth

Amendment.

1080

As a result, when the United States acquires

riparian fast lands in an exercise of its power to control commerce,

elements of value that are not compensable under the Fifth

Amendment include: port site value;

1081

power site or power

development value;

1082

value due to riparian rights of access to

navigable waters;

1083

irrigation value;

1084

and recreational value for

boating, shing, and hunting.

1085

Any value arising from a property’s access to or use of navigable

1074 Gerlach Live Stock, 339 U.S. at 739; Lambert Gravel Co. v. J.A. Jones Constr. Co., 835 F.2d 1105, 1110 (5th Cir. 1988); cf. Turner v. Kings River

Conservation Dist., 360 F.2d 184, 192-93 (9th Cir. 1966) (analyzing Flood Control Act of 1944 § 8, codied at 33 U.S.C. § 701-1(b) (1996).

1075 United States v. Cherokee Nation, 480 U.S. 700, 707 (1987) (quoting Bowen v. Pub. Agencies Opposed to Soc. Security Entrapment, 477 U.S. 41, 52 (1986));

accord Lambert Gravel, 835 F.2d at 1109-10.

1076 United States v. Va. Elec. & Power Co., 365 U.S. 624, 629 (1961); accord United States v. Twin City Power Co., 350 U.S. 222, 225-27 (1956) (“a value

in the ow of the stream [is] a value that inheres in the Government’s servitude and one that under our decisions the Government can grant

or withhold as it chooses”).

1077 United States v. Rands, 389 U.S. 121, 124-25 (1967); accord United States v. Appalachian Elec. Power Co., 311 U.S. 377, 427 (1940) (“[T]here is no

private property in the ow of the stream. This has no assessable value to the riparian owner.”).

1078 Rands, 389 U.S. at 126; see also United States v. 30.54 Acres of Land in Greene Cty. (Filiaggi), 90 F.3d 790, 795 (3d Cir. 1996).

1079 Rands, 389 U.S. at 126 (“[T]hese rights and values are not assertable against the superior rights of the United States, are not property within

the meaning of the Fifth Amendment, and need not be paid for when appropriated by the United States.”); see Twin City Power, 350 U.S. at

227 (“it is the water power that creates the special value, whether the lands are above or below ordinary high water”).

1080 Va. Elec., 365 U.S. at 631; accord Twin City Power, 350 U.S. at 225-26 (“It is no answer to say that payment is sought only for the location value

of the fast lands. That special location value is due to the ow of the stream . . . .”).

1081 Rands, 389 U.S. at 126; see also Filiaggi, 90 F.3d at 796; United States v. 87.30 Acres of Land, 430 F.2d 1130, 1133 (9th Cir. 1970).

1082 E.g., Va. Elec., 365 U.S. at 629; Twin City Power, 350 U.S. at 228; United States v. Willow River Power Co., 324 U.S. 499, 511 (1945); see Appalachian

Elec., 311 U.S. at 424 (describing federal “dominion over owage and its product, energy”).

1083 United States v. Commodore Park, Inc., 324 U.S. 386, 390-91 (1945); Scranton v. Wheeler, 179 U.S. 141, 152-53 (1900); Gibson v. United States, 166

U.S. 269, 275-76 (1897); see South Carolina v. Georgia, 93 U.S. 4, 10-11 (1876) (no compensation for diverting channel).

1084 Weatherford v. United States, 606 F.2d 851, 853 (9th Cir. 1979) (Kennedy, Circuit J.); United States v. Birnbach, 400 F.2d 378, 381-82 (8th Cir. 1968)

(before Blackmun, Circuit J.).

1085 Commodore Park, 324 U.S. at 391 (“no private riparian rights of access to the waters to do such things as ‘shing and boating and the like’”);

Birnbach, 400 F.2d at 382 (“boating, shing and hunting”); see also Lewis Blue Point Oyster Cultivation Co. v. Briggs, 229 U.S. 82, 88 (1913) (no

compensation for right to use bed for oyster cultivation); but see 28 U.S.C. § 1497 (permitting oyster growers to seek damages for destruction

of oyster beds cultivated on private lands).

Federal law limits the navigational use of waters in the western United States so as not to “conict with any benecial consumptive use, present

or future, . . . of such waters for domestic, municipal, stock water, irrigation, mining, or industrial purposes.” 33 U.S.C. § 701-1(b) (2012)

(applicable to “waters arising in States lying wholly or partly west of the ninety-eighth meridian”); see In re Operation of the Mo. River Sys. Litig., 363

F. Supp. 2d 1145, 1153-54 (D. Minn. 2004), a’d in part and vacated in part, 421 F.3d 618 (8th Cir. 2005) (discussing statute); Turner v. Kings River

Conservation Dist., 360 F.2d 184, 190-98 (9th Cir. 1966) (same). Appraisers should obtain legal guidance on the applicability of this Act.

Values Due to Access to or

Use of Navigable Water

In federal acquisitions related to

navigation, the following elements

are not compensable under the

Fifth Amendment:

• Port site value

• Power site value

• Riparian rights of access to

navigable waters

• Irrigation value

• Recreational value for boating,

shing, and hunting

These values must be disregarded

in federal acquisitions of fast land,

except as required by federal

statute. See 33 U.S.C. § 595a.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 191

waters must therefore be disregarded in valuations for federal acquisitions relating to navigation—

except as required by 33 U.S.C. § 595a, the federal statute discussed below.

1086

Statutory Modication. Congress modied the compensation rule disregarding value due to

water access or use from consideration in 1970, with the enactment of 33 U.S.C. § 595a.

1087

This

statute specically authorizes compensation for market value due to water uses—that is, for more

than what the constitution requires—for lands above the high-water mark that are actually acquired by

the United States.

1088

But the statute does not allow compensation for loss of water access from

property not acquired by the United States (remainder property),

1089

nor for any property below

the high-water mark.

1090

The statute also made “no change in existing law with respect to the

osetting of special [direct] benets to remaining real property against the just compensation” to

be paid.

1091

As a result, § 595a has dierent implications for total and partial acquisitions.

1092

Total Acquisitions Under 33 U.S.C. § 595a. In total acquisitions, in which the United

States acquires an entire larger parcel, 33 U.S.C. § 595a creates an exception to the rule to

disregard market value due to water access or use for property above the high-water mark.

1093

The statute provides that in connection with any improvement of rivers, harbors, canals, or

waterways of the United States:

[T]he compensation to be paid for real property taken by the United States above the normal

high water mark of navigable waters of the United States shall be the fair market value of

such real property based upon all uses to which such real property may reasonably be put,

including its highest and best use, any of which uses may be dependent upon access to or

utilization of such navigable waters.

1094

As a result, valuations of total acquisitions under § 595a are fairly straightforward: the appraiser

must consider water-dependent uses in determining the highest and best use, and the market

value of fast land actually acquired should include any value due to its riparian location.

1095

1086 As the Supreme Court observed, since its decision in Rands (1967), Va. Electric (1961), and Twin City Power (1956), “the elements of

compensation for which the Government must pay when it condemned fast lands riparian to a navigable stream have remained largely

settled.” Kaiser Aetna v. United States, 444 U.S. 164, 176-77 (1979) (citing Rands, 389 U.S. at 123; Va. Elec., 365 U.S. at 628; and Twin City Power,

350 U.S. at 226).

1087 Rivers and Harbors Act of 1970, Pub. L. No. 91-611, § 111, 84 Stat. 1818, 1821 (codied at 33 U.S.C. § 595a (2012)). These Standards refer

to this statute as § 595a, using the ocial U.S. Code citation. The same statute has been referred to as Section 111 (an abbreviation of the

session laws citation) in prior editions of these Standards and a few early federal cases.

1088 33 U.S.C. § 595a; United States v. 967,905 Acres of Land in Cook Cty. (Pete), 447 F.2d 764, 770-72 (8th Cir. 1971); United States v. 71.29 Acres of

Land in Catahoula Par., 376 F. Supp. 1221, 1225-26 (W.D. La. 1974); United States v. 8,968.06 Acres of Land in Chambers & Liberty Ctys. (Wallisville),

326 F. Supp. 546, 547-48 (S.D. Tex. 1971).

1089 33 U.S.C. § 595a; United States v. 13.20 Acres of Land in Lincoln Cty., 629 F. Supp. 242, 247 (E.D. Wash. 1986); see United States v. 30.54 Acres of

Land in Greene Cty. (Filiaggi), 90 F.3d 790, 795-96 (3d Cir. 1996); see also Weatherford, 606 F.2d 851 (no compensation for loss of irrigation rights

for remainder property).

1090 See, e.g., United States v. Certain Parcels of Land in Valdez, 666 F.2d 1236 (9th Cir. 1982) (no compensation for alteration of improvements located

in navigable waters); United States v. 422,978 Square Feet of Land in S.F., 445 F.2d 1180 (9th Cir. 1971) (no compensation for use of submerged

land beneath navigable waters); see also United States v. Cherokee Nation, 480 U.S. 700, 701-05 (1987) (no compensable taking arises from

“interference with in-stream interests result[ing] from an exercise of the Government’s power to regulate navigational uses of ‘the deep

streams which penetrate our country in every direction’” (quoting Gibbons v. Ogden, 9 Wheat. 1, 195 (1824))).

1091 H.R. rep. no. 91-1665, at 31 (1970) (quoted in Filiaggi, 90 F.3d at 794 n.3).

1092 Filiaggi, 90 F.3d at 794 & n.3; 13.20 Acres in Lincoln, 629 F. Supp. at 247; see Pete, 447 F.2d at 771. As discussed in Section 4.3.3, the appraiser

must determine the larger parcel to distinguish whether a total or partial acquisition is involved.

1093 See Filiaggi, 90 F.3d at 795-96 & nn.4-5 (noting § 595a’s limited nature).

1094 33 U.S.C. § 595a.

1095 Pete, 447 F.2d at 771; United States v. 8,968.06 Acres of Land in Chambers & Liberty Ctys. (Wallisville), 326 F. Supp. 546, 547-48 (S.D. Tex. 1971); see

United States v. 71.29 Acres of Land in Catahoula Par., 376 F. Supp. 1221, 1225-26 (W.D. La. 1974).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards192

Section 595a does not alter the rule that no compensation is due for lands below the high-water

mark.

1096

Such lands include property located in the bed of a navigable stream

1097

or “spoil islands”

and other inlled land created by the United States’ dredging activity.

1098

And this rule does not

change simply because the legal description of property being acquired may include or contain

some land below the high-water mark—for example, if a deed is the source of a legal description,

reecting “a measure of convenience [rather] than a waiver of the navigational servitude.”

1099

Note

also that § 595a does not alter or replace the scope of the project rule, which bars consideration

of changes in market value due to government project inuence (see Section 4.5). As a result,

application of the scope of the project rule and application of § 595a are separate inquiries.

1100

Partial Acquisitions Under 33 U.S.C. § 595a. Partial acquisitions under 33 U.S.C. § 595a

require a special valuation method because Congress expressly did not authorize compensation

for diminution in value of landowners’ remaining property because of lost or reduced access to

navigable waters. The statute provides:

In cases of partial takings of real property, no depreciation in the value of any remaining

real property shall be recognized and no compensation shall be paid for any damages to such

remaining real property which result from loss of or reduction of access from such remaining

real property to such navigable waters because of the taking of real property or the purposes

for which such real property is taken.

1101

As a result, in partial acquisitions of riparian land under § 595a, access to or use of navigable

waters must be considered in valuing the part acquired, but cannot be considered in evaluating any

damage to the remainder property.

1102

Moreover, because § 595a does not alter “existing law with

respect to the osetting of special benets to remaining real property,”

1103

any direct and special

benet to the remainder property—including benets resulting from new or enhanced access to

navigable waters due to the government’s acquisition—must be considered.

1104

1096 33 U.S.C. § 595a; Filiaggi, 90 F.3d at 795-96; see United States v. 101.88 Acres of Land in St. Mary Par. (Avoca Island), 616 F.2d 762, 768 (5th

Cir. 1980) (noting government may use submerged lands subject to navigational servitude “for any purpose in aid of navigation without

compensating the owner”).

1097 Greenleaf-Johnson Lumber Co. v. Garrison, 237 U.S. 251 (1915) (wharf); Lewis Blue Point Oyster Cultivation Co. v. Briggs, 229 U.S. 82 (1913) (oyster

cultivation); W. Chi. St. R.R. v. Ill. ex rel. Chi., 201 U.S. 506 (1906) (tunnel); Alameda Gateway, Ltd. v. United States, 45 Fed. Cl. 757, 764 (1999) (pier).

1098 E.g., United States v. 49.79 Acres of Land in New Castle Cty. (Cherry Island), 582 F. Supp. 368, 374 (D. Del. 1983); United States v. 102.871 Acres of

Land in Cameron Par. (La. Jetty), No. 2:13 CV 2508, 2015 WL 5794073, *7-*8 (W.D. La. Oct. 2, 2015) (holding servitude applied to spoil island

created by dredge cast into navigable waters). Lands created by private dredging activity may require compensation, however. See Kaiser

Aetna v. United States, 444 U.S. 164, 178-80 (1979).

1099 See, e.g., Lambert Gravel Co. v. J.A. Jones Constr. Co., 835 F.2d 1105, 1111 (5th Cir. 1988); see also Avoca Island, 616 F.2d at 764-69 (noting

government’s original legal description of property relied on disputed ordinary high-water mark, but after amendment to “describe the

above water ridges in courses and distances, there was little question about the accuracy of the description”).

1100 E.g., United States v. 13.20 Acres of Land in Lincoln Cty., 629 F. Supp. 242, 243-47 (E.D. Wash. 1986). Similarly, application of the scope of the

project rule is also distinct from application of the navigational servitude, regardless of whether § 595a applies. See United States v. Birnbach,

400 F.2d 378 (8th Cir. 1968).

1101 33 U.S.C. § 595a; see Section 4.6 (Partial Acquisitions); see also Palm Beach Isles Assocs. v. United States, 42 Fed. Cl. 340, 352 (Fed. Cl. 1998)

(noting provision “does not abrogate the navigational servitude generally, . . . nor provide compensation for loss or reduction of access to

navigable waters”), vacated on other grounds, 208 F.3d 1374 (Fed. Cir. 2000).

1102 United States v. 13.20 Acres in Lincoln Cty., 629 F. Supp. 242, 247 (E.D. Wash. 1986); see also Good v. United States, 39 Fed. Cl. 81, 97 (1997), a’d,

189 F.3d 1355 (Fed. Cir. 1999).

1103 United States v. 30.54 Acres of Land in Greene Cty. (Filiaggi), 90 F.3d 790, 794 n.3 (3d Cir. 1996) (quoting h.r. rep. no. 91-1665, at 31 (1970)); see

Section 4.6.3 (Benets).

1104 See United States v. Rands, 389 U.S. 121, 125-26 (1967); Filiaggi, 90 F.3d at 794 & nn.2-3; Miller v. United States, 550 F. Supp. 669, 674 n.3 (Cl.

Ct. 1982), a’d, 714 F.2d 160 (Fed. Cir. 1983) (mem.); see also 33 U.S.C. § 595 (2012) (codifying oset of “special and direct benets to the

remainder” for partial takings “in connection with any improvement of rivers, harbors, canals, or waterways of the United States”); cf. Horne

v. Dep’t of Agric., 135 S.Ct. 2419, 2432 (2015) (noting regulatory taking ruling does not aect provisions for oset of “special benets—such as

new access to a waterway” in partial takings).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 193

The portion of § 595a prohibiting consideration of damage for remainder property’s loss of

riparian access has been upheld as constitutional.

1105

But federal courts have not specically

addressed the appropriate valuation method to measure compensation in partial acquisitions

under the statute.

1106

The usual before and after valuation method for partial acquisitions

1107

does

not readily allow the dierent treatment of the part acquired and the remainder property that

§ 595a requires.

1108

As a result, valuing partial acquisitions under § 595a may require use of a

taking plus damages method—but only with appropriate legal instructions.

1109

As explained in Section 4.6.4.1, the taking plus damages method is subject to error and apt to

result in improper duplication (double damage), and is therefore generally improper in valuations

for federal acquisitions. Its use is recommended here solely to address the unique challenges of

valuing partial acquisitions under 33 U.S.C. § 595a. As discussed above, valuations of partial

acquisitions under this statute must incorporate the following:

Each of the steps in this rare application of the taking plus damages method requires great care

to ensure its results can be used for purposes of just compensation. Note also that the portion

being valued at each step must be valued as part of the appropriate larger parcel (Section

4.6.1.1).

• Estimate the market value of the part acquired, including value due to water access. The

market value of the part acquired must be estimated as a part of the larger parcel. As a

result, the appraiser must estimate the market value of the larger parcel based on its highest

and best use, including uses that depend on access to or utilization of navigable waters, before

acquisition; then allocate that value to determine the contributory value of the part

being acquired.

1110

1105 13.20 Acres of Land in Lincoln, 629 F. Supp. at 247 (citing Rands, 389 U.S. 121).

1106 E.g., 13.20 Acres in Lincoln, 629 F. Supp. at 247 (“[Section] 595a will apply to the valuation of the remaining parcels, and severance damages

regarding those parcels will not include loss of access to Lake Roosevelt.”). Indeed, the only other cases to directly address valuation issues

under § 595a involved total, not partial, acquisitions. Filiaggi, 90 F.3d 790; United States v. 967, 905 Acres of Land in Cook Cty. (Pete), 447 F.2d

764, 771 (8th Cir. 1971); United States v. 71.29 Acres of Land in Catahoula Par., 376 F. Supp. 1221, 1225-26 (W.D. La. 1974); United States v.

8,968.06 Acres of Land in Chambers & Liberty Ctys. (Wallisville), 326 F. Supp. 546, 547-50 (S.D. Tex. 1971), vacating 318 F. Supp. 698 (S.D. Tex.

1970) in view of statute. The legislative history of § 595a is similarly sparse. See Ronald C. Allen, Federal Evaluation of Riparian Property: Section

111 of the Rivers and Harbors Act of 1970, 24 me. l. reV. 175 (1972); Kerry R. Brittain, Comment, Navigation Servitude—The Shifting Rule of

No Compensation, 7 lAnd & wATer l. reV. 501 (1972); Charles E. Corker, Federal-State Relations in Water Rights Adjudication and Administration,

17 rocky mTn. min. l. insT. 21 (1972); see also Alan T. Ackerman & Noah Eliezer Yanich, Just and Unjust Compensation: The Future of the

Navigational Servitude in Condemnation Cases, 34 u. mich. J.l. reForm 573 (2001).

1107 In partial acquisitions (Section 4.6), the measure of compensation is normally the dierence between the market value of the landowner’s

property before and after the government’s acquisition. E.g., United States v. Birnbach, 400 F.2d 378, 382 (8th Cir. 1968). Appraisers therefore apply

the before and after valuation method (the Federal Rule), estimating the market value of the larger parcel before the acquisition, and subtracting

the market value of the remainder property after acquisition, to determine the dierence (diminution) in market value. See Section 4.6.1.

1108 Cf. Birnbach, 400 F.2d at 382-83 (holding that in determining damage to remainder property in partial taking aected by navigational

servitude, an “important distinction must be made so that the enhancement in value ‘owing’ from a riparian location may not be

recognized when the riparian character of the [remainder] land is destroyed”). While Birnbach predated § 595a, the statute did not change

the compensation for damage to remainder property. See Pete, 447 F.2d at 770-71 (discussing Birnbach and § 595a).

1109 As discussed in Section 4.6.4.1, the taking plus damages valuation method (the State Rule) is generally improper in valuations for federal

acquisition purposes. It cannot be used in federal acquisitions (under § 595a or otherwise) without appropriate legal instructions. See

eATon, supra note 16, at 30-40 (discussing taking plus damages valuation methods); see also United States v. 97.19 Acres of Land, 582 F.2d 878,

880-81 (4th Cir. 1978); United States v. 344.85 Acres of Land, 384 F.2d 789, 792 (7th Cir. 1967).

1110 See Section 4.3.3; cf. Olson v. United States, 292 U.S. 246, 256 (1934) (addressing uses made in combination with other lands); United States v.

429.59 Acres of Land (Imperial Beach), 612 F.2d 459, 463-64 (9th Cir. 1980) (approving instruction to “value the property as a unit” because “it

was ‘reasonably probable that the properties would be used in combination’”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards194

• Estimate damage (diminution in value) to the remainder property resulting from the

government’s acquisition, disregarding any damage due to lost or impaired water access. That

is, what is the dierence in value of the remainder property before and after the acquisition,

based on its highest and best use excluding uses that depend on access to or utilization of

navigable waters? There may or may not be any diminution in value of the remainder

resulting from the government’s acquisition that is unrelated to water use or access.

1111

• Estimate special and direct benets to the remainder resulting from the government’s project,

including those due to new or enhanced riparian access.

1112

For example, such benets include

direct river access from the remainder property from which a landowner can build docks or

piers (subject to applicable laws)

1113

or improved bank stabilization and ood control due to a

revetment project that allows remainder property to be converted to a more valuable use.

1114

Any direct and special benets resulting from the project must be oset against the total

compensation to be paid.

1115

Following these steps, the ultimate calculation will reect the market value of the part acquired

(including water access) plus damage to the remainder (disregarding lost water access), oset by

direct and special benets to the remainder (including new or improved water access).

The Navigational Servitude and Inverse Taking Claims. As the Supreme Court has

observed, the navigational servitude does not create a blanket exception to the Takings Clause

whenever Congress exercises its authority to promote navigation under the Commerce Clause.

1116

In inverse takings claims, courts must consider the factual circumstances of each case regarding the

scope of the navigational servitude to determine whether a public action has eected a taking.

1117

1111 See United States v. Va. Elec. & Power Co., 365 U.S. 624, 629-30 (1961) (remanding for determination of “depreciative impact of the

[acquisition] upon the nonriparian uses of the property”).

1112 United States v. Rands, 389 U.S. 121, 125-26 (1967); United States v. River Rouge Improvement Co., 269 U.S. 411, 417-18 (1926); see 33 U.S.C. §

595 (2012) (mandating that in partial takings in connection with improvement of rivers, harbors, canals or waterways of the United States,

award of just compensation “shall take into consideration by way of reducing the amount of compensation or damages any special and

direct benets to the remainder arising from the improvement”); see also United States v. Eastman (Eastman I), 528 F. Supp. 1177, 1179 n.2 (D.

Or. 1981), adopted 714 F.2d 76, 77 (9th Cir. 1983) (per curiam) (“Where only part of a tract of land is taken, the government is entitled to

deduct from the condemnation award benets which accrue to the landowner’s remaining land in the same tract.” (citing § 595)).

1113 River Rouge, 269 U.S. at 417-18. While the remainder property may be subject to the navigational servitude, it is “fundamental error” to

“over-emphasi[ze] the contingent character of the rights of the riparian owners.” Id. at 420-21.

1114 E.g., United States v. Fort Smith River Dev. Corp., 349 F.2d 522, 525-26 (8th Cir. 1965) (reversing award that failed to consider special benets due

to United States’ revetment project that “manifestly” protected remainder land “from further reliction or erosion. That fact alone apparently

places [the remainder] in a ‘better position’ because of the taking” and must be considered).

1115 H.R. rep. no. 91-1665, at 31 (1970) (noting § 595a does not change federal law on osetting special benet to remainder “against the

just compensation that would otherwise be paid for the real property taken and for damages to remaining real property”); United States v.

30.54 Acres of Land in Greene Cty.,(Filiaggi), 90 F.3d 790, 794 n.3 (3d Cir. 1996) (quoting H.R. rep. no. 91-1665); see Rands, 389 U.S. at 125-26

(“compensation award for the part of the property taken by the Government was reduced by the value of the special and direct benets to

the remainder of the land” (describing River Rouge)); see also Bauman v. Ross, 167 U.S. 548 (1897); Hendler v. United States, 175 F.3d 1374, 1379-

80 (Fed. Cir. 1999) (noting dierences in federal and state laws regarding oset of benets).

1116 Kaiser-Aetna, 444 U.S. 164, 172 (1979).

1117 E.g., Owen v. United States, 851 F.2d 1404 (Fed. Cir. 1988); Banks v. United States, 71 Fed. Cl. 501 (2006); Alameda Gateway, Ltd. v. United States, 45

Fed. Cl. 757 (1999).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 195

4.11.2. Federal Grazing Permits. In federal acquisitions involving ranch lands, appraisers

must disregard any value added to those lands as a result of their actual or potential use in

combination with adjacent federal lands under revocable grazing permits.

1118

Federal grazing

permits are chiey administered by the Bureau of Land Management (U.S. Department

of Interior) under the Taylor Grazing Act

1119

and the Forest Service (U.S. Department of

Agriculture) under the Granger-Thye Act.

1120

By law, these federal permits to use the public

domain for grazing are revocable and create no property rights in the holder.

1121

Thus, while

grazing permits typically remain with a privately owned base property for many years, permits

revert to the federal agency when the base property is sold and may or may not be granted to the

new owner.

1122

As a result, in federal acquisitions, privately owned lands cannot be aggregated

with permitted public lands for valuation purposes, as “[t]o require the United States to pay

for this . . . value would be to create private claims in the public domain.”

1123

Appraisers must

therefore disregard the use or potential use of the subject property in conjunction with federal

grazing permit lands—even if “this element of value would be considered by a potential buyer

in the open market”—because the government “need not compensate for value which it could

remove by revocation of a permit for the use of lands that it owned outright.”

1124

Because Congress elected not to create compensable rights out of

what are now licensees, landowners “have no compensable right

in the land covered by their grazing permits or in the permits

themselves.”

1125

As a result, federal grazing permits cannot be

considered in estimating market value.

1126

4.11.3. Streets, Rail Corridors, Infrastructure, and Public

Facilities. Federal acquisitions may involve property already

being used to benet the public—such as a street, landll,

or other public facility—owned by public or private entities

that may be obligated to replace the facility acquired by

the United States. But the Supreme Court has unanimously held that none of these facts

1118 United States v. Fuller, 409 U.S. 488, 492-93 (1973); see Bischo v. Glickman, 54 F. Supp. 2d 1226, 1230-31 (D. Wyo. 1999); see also Estate of Hage v.

United States, 687 F.3d 1281, 1291-92 (Fed. Cir. 2012).

1119 Taylor Grazing Act of 1934, 43 U.S.C. § 315(b) (2012) (grazing permits on rangelands in the public domain administered by the Bureau of

Land Management, U.S. Department of the Interior); see generally Public Lands Council v. Babbitt, 529 U.S. 728, 731-39 (2000) (purpose, history,

and administration of Taylor Grazing Act).

1120 Granger-Thye Act of 1950, 16 U.S.C. § 580l (2012) (grazing permits on National Forest System lands, administered by the U.S. Forest Service).

1121 43 U.S.C. § 315b (“issuance of a permit pursuant to [this provision] shall not create any right, title, interest or estate in or to the lands”);

Fuller, 409 U.S. at 492-93.

1122 ApprAisAl insTiTuTe & Am. soc’y oF FArm mAnAgers, The ApprAisAl oF rurAl properTy 325 (2d ed. 2000); see generally id. 324-27; Public

Lands Council, 529 U.S. at 743 (noting “well-established [agency] powers to cancel, modify, or decline to renew individual permits” under

Taylor Grazing Act).

1123 Fuller, 409 U.S. at 493 (citation omitted).

1124 Id. at 491-92; see, e.g., Estate of Hage, 687 F.3d at 1291-92.

1125 Hage v. United States, 51 Fed. Cl. 570, 587-88 (Fed. Cl. 2002); see Estate of Hage, 687 F.3d at 1291-92; see also Monongahela Nav. Co. v. United States,

148 U.S. 312, 327 (1893) (“The legislature may determine what . . . property is needed for public purposes[,]” but determining the measure

of compensation “is a judicial, and not a legislative, question.”); Hage v. United States, 35 Fed. Cl. 147, 170 (Fed. Cl. 1996) (“[B]ased upon the

language and history of the Granger-Thye Act and the Taylor Grazing Act, . . . Congress had no legislative intention of creating a property

interest in the permit just as Congress had no legislative intention of creating a property interest in the underlying federal lands.”).

1126 Fuller, 409 U.S. at 491-92. Congress has provided for administrative payments for losses due to cancellation of Taylor grazing permits for war

purposes. See 43 U.S.C. § 315q (2012); United States v. Cox, 190 F.2d 293, 296 (10th Cir. 1951). But these administrative benets created by

statute are separate from compensation under the Fifth Amendment, and beyond the scope of the appraiser’s assignment to estimate market

value. See United States v. Westinghouse Elec. & Mfg. Co., 339 U.S. 261, 263-64, 264 n.2 (1950); United States v. Gen. Motors Corp., 323 U.S. 373, 379-

80 (1945); United States v. Willow River Power Co., 324 U.S. 499, 510 (1945).

Whether departure from

the market value measure

of just compensation is

required, and if so, what

alternative measure

of compensation is

appropriate, are legal

determinations that cannot

be made by the appraiser.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards196

“require suspension of the normal rules for determining just compensation.”

1127

Accordingly,

compensation for streets, highways, roads, alleys, other infrastructure, or public facilities is

measured by the same market value standard applied to other types of property, whether

publicly or privately owned. “Deviation from this measure of just compensation [is] required

only ‘when market value [is] too dicult to nd, or when its application would result in

manifest injustice to owner or public.’”

1128

Appraisals for federal acquisitions of streets,

infrastructure, or public facilities must therefore follow the same valuation standards as for any

other property, whether privately or publicly owned.

1129

4.11.3.1. Streets, Highways, Roads, and Alleys. Under federal law, streets, roads, highways, and

alleys typically have only nominal market value, and therefore only nominal compensation

is due for their acquisition.

1130

This is because streets and similar property are normally

long narrow strips of land that have been legally dedicated to use as streets or highways,

depriving them of value except as thoroughfares.

1131

As discussed in more detail in Section

4.6.5 (Easement Valuation Issues), it is critical for the appraiser to understand the precise

property interest(s) being acquired and the impact of any existing encumbrances.

1132

Legal

instructions are typically required. The Ninth Circuit explained the process for determining

just compensation for the taking of state-owned lands dedicated as public thoroughfares in

California v. United States (Naval Shipyard):

“Just compensation” is to be measured by what the State lost by the taking, and, [here], this is

the value of the lands in question burdened as they were. The legal eect of the dedication under

the law of the State must rst be determined. That question of law resolved, the monetary

value, if any, of the loss to the State of the lands so burdened must then be ascertained . . . .

1133

Federal courts have repeatedly upheld the payment of only nominal compensation for streets

and similar property with only nominal market value.

1134

If the owner of a street acquired by

the United States is not required to replace it, the owner—typically a city or other municipal

1127 United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 516 (1979) (rejecting demand of owner, a private nonprot organization, for

compensation measured by cost of substitute facility rather than market value); United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 33-

34 (1984) (rejecting municipal owner’s demand for same).

1128 Duncanville, 469 U.S. at 29 (quoting United States v. Commodities Trading Corp., 339 U.S. 121, 123 (1950)); accord Lutheran Synod, 441 U.S. at 512-

13; Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 10 n.14 (1984); see United States v. Toronto, Hamilton & Bualo Nav. Co., 338 U.S. 396, 402

(1949) (“[When there are insucient comparable sales to determine market value, w]e then say that there is ‘no market’ for the property in

question. . . . And it is here that other means of measuring [market] value may have relevance—but only, of course, as bearing on what a

prospective purchaser would have paid.”).

1129 See Duncanville, 469 U.S. at 26 (holding public condemnees are not entitled to substitute-facilities compensation if market value can be

ascertained); Lutheran Synod, 441 U.S. at 516-17 (holding private condemnees are not entitled to substitute-facilities compensation).

1130 United States v. Streets, Alleys & Pub. Ways in Vill. of Stoutsville, 531 F.2d 882, 887 (8th Cir. 1976).

1131 E.g., Mayor & City Council of Baltimore v. United States, 147 F.2d 786, 788-89 (4th Cir. 1945) (“The fact is that the value of the land in the bed

of the highway as land has been diminished by its devotion to a limited purpose.”); see United States v. 3,727.91 Acres of Land (Elsberry Drainage

District), 563 F.2d 357, 359-60 (8th Cir. 1977) (“[When] the public condemnee has held only a right of way easement in a public street or

alley, and, upon condemnation, they retained no interest in the property[, . . .] only nominal compensation is held to be proper.”); California v.

United States (Naval Shipyard), 395 F.2d 261, 266-68 (9th Cir. 1968) (discussing possible impacts of dedication on lands’ use and market value).

1132 Encumbrances aecting streets could include dedication to highway use, prohibitions on non-road use, or reversionary rights, for example.

Such legal encumbrances are a type of easement, that is, a limited right to use or control land owned by another for specied purposes.

Federal acquisitions of streets, roads, highways, and alleys may involve dominant easement interests (Section 4.6.5.1), lands encumbered

by easements (Section 4.6.5.2), and/or appurtenant easements to the servient estate (Section 4.6.5.3). Section 4.6.5 addresses the valuation

issues that commonly arise in acquisitions involving each type of easement.

1133 Naval Shipyard, 395 F.2d at 266-67 (emphases added).

1134 See Caporal v. United States, 577 F.2d 113, 117-18 (10th Cir. 1978); Elsberry Drainage District, 563 F.2d at 359-60; Vill. of Stoutsville, 531 F.2d at

887; United States v. City of New York, 168 F.2d 387, 389-90 (2d Cir. 1948); Woodville v. United States, 152 F.2d 735, 736-37 (10th Cir. 1946), cert.

denied, 328 U.S. 842 (1946); United States v. Des Moines Cty., 148 F.2d 448, 449 (8th Cir. 1945).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 197

entity—suers no loss, and therefore no compensation is due.

1135

Such federal acquisitions may

even benet the owner economically by relieving the owner of the cost of maintaining the land

as a highway.

1136

Nominal compensation in such circumstances is therefore consistent with the

basic Fifth Amendment principles of indemnity and fairness.

1137

Alternatively, as discussed below,

it is constitutionally permissible for the United States to provide compensation in the form of a

substitute facility instead of cash.

1138

Even strips of land that may have been intended for use as a street, but are not legally

encumbered (or “dedicated”) to prohibit non-street use, typically have limited market value.

Indeed, it is legally improper to simply assume such strips have the same market value as

surrounding lands.

1139

As the Federal Circuit explained:

The point is that the property at issue here consists of strips of land, rather than one large,

easily developable tract. The question . . . is, what is the fair market value of such odd pieces

of land, taking into account their potential uses, current condition and the improvements

thereon, and considering the most protable uses to which the pieces of land can probably be

put in the reasonably near future.

1140

Again, legal instructions are typically required regarding the precise property interest(s) to be

appraised and the eects of any encumbrances. Existing legal encumbrances must be considered

when developing opinions of market value.

1141

Acquisitions of existing roads or rights of way may also involve land with physical impediments

or conditions—such as embankments, underground utility lines, rail ties, or poor soil

conditions.

1142

Preexisting physical conditions, like legal encumbrances, must be considered when

developing opinions of market value.

1143

For example, in an inverse taking of a railway corridor

with physical remnants of the abandoned railway that would require removal to put the property

1135 Vill. of Stoutsville, 531 F.2d at 886; Naval Shipyard, 395 F.2d at 266-67; Washington v. United States (Hanford), 214 F.2d 33, 39 (9th Cir. 1954); see

United States ex rel. Tenn. Valley Auth. v. Powelson, 319 U.S. 266, 281 (1943) (“it is the owner’s loss, not the taker’s gain, which is the measure of

compensation for the property taken”).

1136 Jeerson Cty. v. Tenn. Valley Auth., 146 F.2d 564, 566 (6th Cir. 1945); see Naval Shipyard, 395 F.2d at 268 (“The State has lost the prot potential,

if any, which these lands may have had as part of the ‘channel.’ On the other hand, the untaken lands have been relieved of the burdens of

the dedication. These and other relevant factors must be considered . . . to determine whether the taking resulted in a decrease in the value

of the untaken portion of the channel . . . .”).

1137 See United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 30 (1984) (“basic principles of indemnity embodied in the Just Compensation

Clause”); United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 517 (1979) (“‘basic equitable principles of fairness’ underlying

the Just Compensation Clause” (quoting United States v. Fuller, 409 U.S. 488, 490 (1973))); cf. United States v. 46,672.96 Acres of Land in Doña Ana

Ctys., 521 F.2d 13, 17 (10th Cir. 1975) (“The fact that [property] has very little value cannot justify . . . using an inapplicable measure . . . .”).

1138 See Duncanville, 469 U.S. at 33 (discussing Brown v. United States, 263 U.S. 78 (1923)).

1139 Bd. of Cty. Supervisors v. United States (Prince William Cty. II), 116 F.3d 454, 458 (Fed. Cir. 1997) (holding lower court “erred as a matter of law in

reading our decision as foreclosing an inquiry into whether the value of the [strips of land] was dierent from the value of the surrounding land”).

1140 Id.; see Naval Shipyard, 395 F.2d at 266-68.

1141 Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910); see United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 76 (1913)

(“[T]here would be no justice in paying for a loss suered by no one in fact.”); cf. Nebraska v. United States, 164 F.2d 866, 869 (8th Cir. 1947),

cert. denied, 334 U.S. 815 (1948) (no compensation for “a diminution in the market value of the [landowner’s] rights through the creation of a

leasehold, easement, or other interest in the land by the [landowner’s] own acts” preceding United States’ acquisition).

1142 See, e.g., Rasmuson v. United States, 807 F.3d 1343, 1346 (Fed. Cir. 2015) (inverse taking of railway corridor converted to trail use). See Section

4.11.3.2 for discussion of inverse takings claims regarding rails-to-trails conversions under the 1983 Amendments to the National Trails System Act.

1143 Rasmuson, 807 F.3d at 1346; United States v. 0.59 Acres of Land, 109 F.3d 1493, 1497 (9th Cir. 1997) (holding “the condition of condemned

land is relevant” and it would be improper to “ignor[e] a condition that the Government did not create” – namely, a preexisting power

transmission line within abutting right of way); United States v. 320 Acres of Land, 605 F.2d 762, 818 (5th Cir. 1979) (noting “inherent physical

characteristics of a property” may “decisively” preclude an otherwise possible use); see Olson v. United States, 292 U.S. 246, 256 (1934) (“highest

and most protable use for which the property is adaptable”); Section 4.3 (Highest and Best Use).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards198

to its highest and best use, the Federal Circuit recently held that failing to consider the removal

costs “will result in an articially inated value and yield a windfall to the landowner.”

1144

Physical

remnants of improvements made by the United States may require special treatment, and the appraiser

must request appropriate legal instruction. This issue is discussed in Section 4.2.2.2.1 and the

accompanying case study.

At times, streets or similar facilities may be “so infrequently traded” that their market value may

be too dicult to ascertain, at least from comparable sales.

1145

But a market need not be “an

extremely active one” to allow market value to be ascertained.

1146

And market value can generally

be determined even when no comparable sales are available.

1147

Accordingly, it is legally improper

to assume that market value cannot be ascertained, even if no comparable sales are available.

1148

Whatever valuation method is used, “the equitable principles underlying just compensation

require that any protable uses of the lands which are left open by the dedication must be

considered in determining the fact of loss and in calculating its monetary equivalent.”

1149

4.11.3.2. Corridors and Rights of Way. Acquisitions of strips, corridors, or rights of way via negotiated

purchase or armative condemnation involve many similar valuation problems to those found

in acquisitions of streets. Such acquisitions often involve preexisting encumbrances, such as

easements for rail or transmission line use, that may deprive them of value for other uses.

1150

The

appraiser must understand the precise property interest(s) being acquired and the impact of any

existing encumbrances.

1151

Typically, legal instructions are required.

1152

Rails-to-Trails Claims. These issues frequently arise in so-called rails-to-trails cases. The

1144 Rasmuson, 807 F.3d at 1346.

1145 See United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 513 (1979) (“This might be the case, for example, with respect to . . .

roads or sewers.”); United States v. Toronto, Hamilton & Bualo Nav. Co., 338 U.S. 396, 402 (1949) (“At times, however, peculiar circumstances

may make it impossible to determine a ‘market value.’ There may have been, for example, so few sales of similar property that we cannot

predict with any assurance that the prices paid would have been repeated in the sale we postulate of the property taken. We then say that

there is ‘no market’ for the property in question. But that does not put out of hand the bearing which the scattered sales may have on what

an ordinary purchaser would have paid for the claimant’s property. We simply must be wary that we give these sparse sales less weight

than we accord ‘market’ price, and take into consideration those special circumstances in other sales which would not have aected our

hypothetical buyer. And it is here that other means of measuring value may have relevance—but only, of course, as bearing on what a

prospective purchaser would have paid.”).

1146 See Lutheran Synod, 441 U.S. at 513.

1147 Toronto, Hamilton, 338 U.S. at 402; see, e.g., United States v. 3,727.91 Acres of Land (Elsberry Drainage District), 563 F.2d 357, 361-62 (8th Cir. 1977)

(error to assume market value of levees and ditches could not be determined without comparable sales evidence and to disregard other

evidence of market value).

1148 Elsberry Drainage District, 563 F.2d at 361-62; California v. United States (Naval Shipyard), 395 F.2d 261, 264-67 (9th Cir. 1968); see Toronto, Hamilton,

338 U.S. at 402.

1149 Naval Shipyard, 395 F.2d at 267 (reversing lower court’s failure to consider evidence of market value of lands dedicated as streets); accord Elsberry

Drainage District, 563 F.2d at 362 (quoting Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470, 473 (1973)) (“The district court

ruled that without the comparable sale as evidence of value the appraisers did not have an adequate basis for their valuation . . . . [But i]n

light of the underlying policy in condemnation proceedings of providing the ‘full monetary equivalent of the property taken,’ we think [the

appraiser’s] testimony [based on other evidence of market value] deserved to be given greater weight.”).

1150 See, e.g., Interstate Commerce Act, 49 U.S.C. § 10903 (2012) (generally requiring rail carrier to continue to oer service over its lines to

shippers unless it rst obtains authority to abandon or discontinue lines from Interstate Commerce Commission); United States v. Chi., B. & Q.

R. Co., 82 F.2d 131, 140 (8th Cir. 1936) (discussing similarities between public highways and railways).

1151 See Section 4.6.5; cf. Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910).

1152 Whether or not a rail right of way had been legally abandoned or discontinued as of the date of value is often key. See Preseault v. Interstate

Commerce Comm’n (Preseault I), 494 U.S. 1, 5 n.3 (1990) (discussing important distinction between legal “abandonment” of a rail line and

“discontinuance” of service under Interstate Commerce Act, 49 U.S.C. § 10903 (1982)); see, e.g., Terminal Coal Co. v. United States, 172 F.2d 113,

114-16 (3d Cir. 1949) (nding railroad had not abandoned right of way that was actively used for railroad purposes until taking, therefore owner

of reversionary interest in underlying land in event of abandonment was entitled to only nominal compensation); Woodville v. United States, 152

F.2d 735, 737-39 (10th Cir. 1946), cert. denied, 328 U.S. 842 (1946) (same result where owner of reversionary interest was municipality).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 199

National Trails System Act Amendments of 1983

1153

has prompted numerous inverse takings

claims regarding adjacent landowners’ potential reversionary interests in rail corridor lands.

1154

As in any inverse taking claim, the court must rst determine liability (i.e., whether a taking

occurred for which just compensation must be paid) before the case can proceed to the

compensation phase (i.e., what amount of compensation is due) in which appraisers are retained

to develop opinions of market value.

1155

If a taking occurred and the United States is liable for

compensation, the standard federal valuation rules apply in the compensation phase of a rails-to-

trails case, as in other inverse takings.

1156

Rails-to-trails takings may be permanent or temporary

in nature.

1157

Rail corridors frequently include preexisting improvements or physical remnants

of rail use—such as embankments, rail ties, or poor soil conditions—which must be considered

in developing an opinion of market value.

1158

As the Federal Circuit held, in a rails-to-trails case

“the fair market value of the land includes the physical remnants of the railway that would have

remained on the landowners’ property” but for the conversion of the corridor to trail use.

1159

Accordingly, failing to consider the removal costs is an improper appraisal methodology that “will

result in an articially inated value and yield a windfall to the landowner.”

1160

4.11.3.3. Substitute-Facility Compensation. As noted above, it is constitutionally permissible

for the United States to provide compensation in the form of a substitute facility instead

of cash.

1161

This form of compensation may be the most practical and equitable means of

compensating landowners in certain “peculiar” acquisitions.

1162

In such circumstances—

typically acquisitions of properties that are owned by a public entity, dedicated to public use,

and for which a functional substitute is required and payment of market value would deviate

signicantly from making the owner whole—“compensation by substitution would seem to be

the best means of making the parties whole.”

1163

But while a substitute facility is a constitutionally acceptable form of just compensation instead

of cash, the Supreme Court has repeatedly rejected attempts to measure just compensation by

1153 16 U.S.C. § 1241-51 (2012) (1983 Amendments, Pub. L. No. 98-11, 97 Stat. 42, 48, amended the National Trails System Act, Pub. L.

No. 90-543, 82 Stat. 919 (1968)); see generally Preseault I, 494 U.S. at 5-8 (discussing Act and Amendments), 15-16 (distinguishing types of

acquisitions).

1154 See, e.g., Ladd v. United States, 630 F.3d 1015 (Fed. Cir. 2010); Ellamae Phillips Co. v. United States, 564 F.3d 1367 (Fed. Cir. 2009); Preseault v. United

States (Preseault II), 100 F.3d 1525, 1533 (Fed. Cir. 1996).

1155 See Preseault I, 494 U.S. at 16 (“only some rail-to-trail conversions will amount to takings”); cf. United States v. Clarke, 445 U.S. 253, 255-58

(1980) (discussing “important legal and practical dierences” between armative condemnation proceedings and inverse takings). See

generally Section 4.9.

1156 See, e.g., Rasmuson v. United States, 807 F.3d 1343, 1345-46 (2015) (citing these Standards).

1157 Ladd, 630 F.3d at 1025; Caldwell v. United States, 391 F.3d 1226, 1234 (Fed. Cir. 2004).

1158 See, e.g., Rasmuson, 807 F.3d at 1345-46.

1159 Id. (noting railway companies were not obligated to remove physical railroad construction features and landowners would have regained

possession of corridor land with physical structures still on it).

1160 Id. at 1346.

1161 United States v. 50 Acres of Land (Duncanville), 469 U.S. 24, 33 (1984) (discussing Brown v. United States, 263 U.S. 78 (1923)).

1162 E.g., Brown, 263 U.S. at 81 (United States provided new town site and relocated buildings as compensation for ooding of three-quarters of

town due to reservoir project); United States v. Streets, Alleys & Pub. Ways in Vill. of Stoutsville, 531 F.2d 882 (8th Cir. 1976) (arming United States’

plan to construct substitute road facilities to compensate Village in kind, rather than monetarily, for taking of gravel streets, public alleys and

sidewalks); United States v. 10.56 Acres of Land in Whatcom Cty. (Peace Arch II), No. C07-1261RAJ, 2010 WL 415244, at *2 (W.D. Wash. Jan. 27,

2010) (United States’ condemnation of interstate highway conduit to construct elevated roadway and then convey new roadway to state).

1163 Brown, 263 U.S. at 81-83; see Duncanville, 469 U.S. at 30-34, 30 n.12; United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506, 513

(1979); see also Duncanville, 469 U.S. at 37 (O’Connor, J., concurring) (“When a local governmental entity can prove that the market value of its

property deviates signicantly from the make-whole remedy intended by the Just Compensation Clause and that a substitute facility must be

acquired to continue to provide an essential service, limiting compensation to the fair market value in my view would be manifestly unjust.”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards200

the cost of a substitute facility instead of the market value standard.

1164

The Court unanimously

criticized the “substitute facility doctrine” as an unfair measure of compensation: among

other aws, it increases the risk of error, prejudice, and windfall awards; adds uncertainty and

complexity to the valuation process without any necessary improvement; and departs from the

established “principle that just compensation must be measured by an objective standard that

disregards subjective values which are only of signicance to an individual landowner.”

1165

If the United States provides compensation in the form of a substitute facility, “the market

value of the . . . property is no longer relevant.”

1166

As a result, appraisals of market value

are generally inapplicable in such situations,

1167

although appraisers or other experts may be

retained to estimate costs, perform trac studies, or conduct other analyses in connection with

compensation by substitution.

1168

But determining whether substitute-facility compensation would

be appropriate for a given acquisition is beyond the scope of the appraiser’s task of developing an

opinion of market value.

1169

Congress can specically authorize substitute-facility compensation, regardless of whether

the standard market value measure of just compensation would be adequate.

1170

Absent a

congressional mandate to provide substitute-facility compensation, agencies are to be guided

in this determination by the basic principles of just compensation: fairness to both landowners

and the public, and making the landowner whole.

1171

With substitute-facilities compensation, as

with monetary compensation, “the question is, What has the owner lost? not, What has the taker

gained?”

1172

Accordingly, appropriate compensation will turn on the impact of the government’s

1164 Duncanville, 469 U.S. at 32-33; Lutheran Synod, 441 U.S. at 513-17; see Peace Arch II, 2010 WL 415244, at *2 (noting “mistaken[ ] belie

[

]

that

the substitute facilities doctrine deems the cost of a substitute facility to be ‘the equivalent’ of a property’s market value[,]” as “the cost of a

substitute facility is an alternate measure of just compensation, it is not the equivalent of fair market value”).

1165 Duncanville, 469 U.S. at 33-35; Lutheran Synod, 441 U.S. at 511, 514-16; see id. at 517-19 (White, J., concurring) (“The substitute-facilities

doctrine is unrelated to fair market value and . . . unabashedly demands additional compensation over and above market value in order to

allow the replacement of the condemned facility . . . . It seems to me that the argument for enhanced compensation . . . is nothing more

than a particularized submission that the award should exceed fair market value because of the unique uses to which the property has been

put by the condemnee or because of the unique value the property has for it.”).

1166 Peace Arch II, 2010 WL 415244, at *2; accord Vill. of Stoutsville, 531 F.2d at 885 (discussing substitute-facilities compensation “in place of the

conventional fair market value concept of determining compensation”); see also United States v. 10.56 Acres in Whatcom Cty. (Peace Arch I), No.

C07-1261RAJ, 2008 WL 3977614, at *2 (W.D. Wash. Aug. 22, 2008) (discussing substitute-facility compensation).

1167 See eATon, supra note 16, at 19-22 (“[A]ppraisers are experts in estimating value, not just compensation.”); Section 4.1.2 (Market Value: The

Measure of Just Compensation); Section 4.2.6 (Exceptions to Market Value Standard).

1168 See, e.g., Peace Arch II, 2010 WL 415244, at *2 (dispute over maintenance and operating costs of substitute highway provided as compensation).

1169 See Duncanville, 469 U.S. at 32-33 (quoting Brown v. United States, 263 U.S. 78, 81 (1923)), 37 (O’Connor, J., concurring); Lutheran Synod, 441

U.S. at 513-17 (“we nd no circumstances here that require suspension of the normal rules for determining just compensation”); see also

eATon, supra note 16, at 234 (“The doctrine of substitute facilities is not a valuation or appraisal technique, but a concept that has evolved

from court decisions.”).

1170 See, e.g., Tenn. Valley Auth. Act, 16 U.S.C. § 831q (2012) (authorizing condemnation of property for purpose of relocating railroad

tracks, highways, and other properties, enterprises and projects whose removal may be necessary to carry out purposes of Act); Berberich

v. United States, 5 Cl. Ct. 652, 655 (1984) (discussing statutory authorization for relocation of North Bonneville, Wash., in connection with

construction of new powerhouse at Bonneville Dam); Brown, 263 U.S. at 80 (quoting statute authorizing and appropriating funds for

condemnation of replacement town site as compensation for ooding of American Falls, Idaho); see also Lutheran Synod, 441 U.S. at 519 n.6

(White, J., concurring); cf. Duncanville, 469 U.S. at 33 (holding that while substitute-facility compensation may be constitutionally permissible,

the United States has no duty to provide anything more than market value (discussing Brown, 263 U.S. 78)).

1171 See Duncanville, 469 U.S. at 30 (“basic principles of indemnity embodied in the Just Compensation Clause”); Lutheran Synod, 441 U.S. at 517

(“‘basic equitable principles of fairness’ underlying the Just Compensation Clause” (quoting United States v. Fuller, 409 U.S. 488, 490)); see

also Town of Clarksville v. United States, 198 F.2d 238, 242-43 (4th Cir. 1952) (“Of course, the interests of the public, upon which the payment

burden rests, are at stake, too, and the award must not be in excess of strict equivalence.”).

1172 Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910); see Brown, 263 U.S. at 83 (“A method of compensation by substitution

would seem to be the best means of making the parties whole” in “peculiar” circumstances presented.); see also Duncanville, 469 U.S. at

37 (O’Connor, J., concurring) (“the make-whole remedy intended by the Just Compensation Clause”); Lutheran Synod, 441 U.S. at 511

(“compensation required to make the owner whole”), 516 (“The guiding principle of just compensation . . . is that the owner of the

condemned property ‘must be made whole but is not entitled to more.’” (quoting Olson v. United States, 292 U.S. 246, 255)).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 201

acquisition, not the nature of the acquisition itself. Regardless of the

form of compensation, the Fifth Amendment does not require any

award for non-compensable (or “consequential”) damages, further

discussed in Section 4.6.

1173

In practice, substitute-facility compensation is often extremely

complex and arises only in “peculiar” situations.

1174

As for the specics

of this form of compensation for a given acquisition, the Fourth Circuit’s discussion in Town of

Clarksville v. United States is instructive:

Of course, the interests of the public, upon which the payment burden rests, are at stake, too,

and the award must not be in excess of strict equivalence. Yet we are not here dealing with

a rigid, blind measure, that grants compensation only on a pound of esh basis, but rather

with an equitable concept of justice and fairness that accords with the Fifth Amendment’s

mandate. Accordingly, the equivalence requirement which must be met with respect to the

substitute facility is more that of utility than of mere dollar and cents value.

1175

As the Supreme Court held in rejecting a substitute-facilities measure of compensation for the

taking of a municipal landll in Duncanville, “[i]n this case, as in most, the market measure of

compensation achieves a fair ‘balance between the public’s need and the claimant’s loss.’”

1176

To be just, compensation—whether in the form of cash or substitute facility—must achieve

that “fair balance.”

1177

4.12. Appraisers’ Use of Supporting Experts’ Opinions. Some appraisal assignments may

require the appraiser to rely on other experts’ opinions on technical or other specialized

issues.

1178

“An expert cannot be an expert in all elds, and it is reasonable to expect that experts

will rely on the opinion of experts in other elds as background material for arriving at an

1173 See Duncanville, 469 U.S. at 33. Congress can authorize compensation for otherwise non-compensable damage in connection with substitute-

facility compensation. For example, in the relocation of the Town of Bonneville, Washington (population 650), in connection with the

construction of a new powerhouse at Bonneville Dam, special legislation authorized the U.S. Army Corps of Engineers to provide not

only substitute streets and utilities, but also city planning assistance, cooperation with nonfederal entities, and other elements above and

beyond the constitutional requirements of just compensation. See Act of Mar. 7, 1974, Pub. L. No. 93-251, § 83, 88 Stat. 12, 35 (authorizing

legislation); cf. Berberich v. United States, 5 Cl. Ct. 652, 655 (1984) (discussing specic statutory authorization for relocation of town). This

endeavor generated years of litigation. See Town of N. Bonneville v. Callaway, 10 F.3d 1505 (9th Cir. 1993); Town of N. Bonneville v. U.S. Dist. Court,

732 F.2d 747 (9th Cir. 1984); Town of N. Bonneville v. United States, 833 F.2d 1024, 1987 WL 38842 (Fed. Cir. Oct. 28, 1987) (unpubl.); Town of

N. Bonneville v. United States, 5 Cl. Ct. 312 (1984).

1174 See, e.g., Brown, 263 U.S. at 81-83 (providing new town site as compensation for ooding of three-quarters of existing town); Washington v.

United States (Hanford), 214 F.2d 33, 38-39, 41-43 (9th Cir. 1954) (providing nominal compensation for taking of part of state highway where

existing highways were adequate substitute, as rerouted trac would “impose no appreciable burden” and state “has suered no money

loss and has been relieved of the burden of maintaining the road taken”); see also United States v. 10.56 Acres in Whatcom Cty. (Peace Arch II), No.

C07-1261RAJ, 2010 WL 415244, at *2-*3 (W.D. Wash. Jan. 27, 2010) (providing new highway as compensation with consideration of costs

saved by and imposed on state due to substitute; see also California v. United States (Naval Shipyard), 395 F.2d 261 (9th Cir. 1968) (compensation

for state road measured by market value).

1175 Clarksville, 198 F.2d at 242-43.

1176 Duncanville, 469 U.S. at 33 (quoting United States v. Toronto, Hamilton & Bualo Navigation Co., 338 U.S. 396, 402 (1949)).

1177 See id.; Bauman v. Ross, 167 U.S. 548 (1897) (Compensation must be “just, not merely to the individual whose property is taken, but to the

public which is to pay for it.” (quoting Searl v. Sch. Dist. in Lake Cty., 133 U.S. 553, 562 (1890)).

1178 See USPAP, Competency Rule: Acquiring Competency, comment (“Competency can be acquired in various ways, including, but not limited

to, personal study by the appraiser . . . or retention of others who possess the necessary knowledge and/or experience.”). For topics that

often require additional expertise in appraisals for federal acquisitions, see Section 1.13.

Reliance on unsupported

subsidiary expert opinions

can undermine or even

invalidate the appraiser’s

valuation analysis and

conclusions.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards202

opinion.”

1179

But the appraiser cannot merely assume such supporting experts’ reports are

accurate and reliable. Rather, the appraiser must review all supporting opinions and can rely

on or adopt them only if the appraiser determines, after review, that all supporting opinions

are credible, reliable, and factually supported.

1180

As the Tenth Circuit succinctly stated: “[Any

expert] opinion . . . must be founded upon substantial data, not mere conjecture, speculation

or unwarranted assumption. It must have a rational foundation.”

1181

An appraiser who fails to

ensure the rational foundation of all supporting opinions and other underlying assumptions

will be left with an “ultimate opinion of value [that] is virtually devoid of factual moorings,

depriving it of virtually any evidentiary value.”

1182

The appraiser must carefully analyze subsidiary experts’ reports to ensure a full understanding of

the bases for their ndings and the impact on the appraisal. The precise steps necessary to ensure

the reliability of a particular subsidiary expert’s opinion will of course depend on the subject

matter. Broadly, however, important considerations for the appraiser include:

• Are subsidiary experts’ opinions conrmed by market studies or other appropriate analyses?

• Did subsidiary experts credibly reconcile data or other facts that may contradict their conclusions?

• Did subsidiary experts gather relevant data in a methodical manner?

• Are the assumptions underlying subsidiary experts’ opinions reasonable and appropriate?

• Are subsidiary experts’ conclusions substantiated by other evidence?

Appraisers’ reliance on subsidiary expert opinions that failed to adequately address these

concerns has resulted in the rejection of all valuation evidence based on such unsupported

opinions—including appraisers’ conclusions of highest and best use, methodology, and ultimate

opinions of value.

1183

However, with appropriate verication of reliability and support (as

recognized in a case armed by the Eleventh Circuit), “relying on a sub-consultant’s report is

a common, respected, and approved occurrence in appraisal practice and[ ] ‘to hold otherwise

would eectively demand an inconceivably broad area of expertise from any appraiser.’”

1184

Unit Rule Considerations. The results of subsidiary valuation reports, such as mineral,

xture, or timber valuations, cannot simply be added to the value of the land to arrive at a

value of the property as a whole without proper analysis by the appraiser. To do so would

1179 United States v. 1,014.16 Acres of Land in Vernon Cty., 558 F. Supp. 1238, 1242 (W.D. Mo. 1983), a’d, 739 F.2d 1371, 1373 (8th Cir. 1984) (“The

district court properly noted that in condemnation cases, federal procedural and evidentiary rules apply.”); see Fed. r. eVid. 703 (bases of an

expert opinion).

1180 See, e.g., United States v. 1.604 Acres of Land (Granby I), 844 F. Supp. 2d 668, 678 (E.D. Va. 2011); United States v. 381.76 Acres of Land (Montego

Group), No. 96-1813-CV, 2010 WL 3734003, *7 (S.D. Fla. Aug. 3, 2010), adopted sub nom. United States v. 10.00 Acres of Land, No. 99-0672-CIV,

2010 WL 3733994 (S.D. Fla. Sept. 22, 2010), a’d sub nom. United States v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (per curiam) (unpubl.);

1,014.16 Acres in Vernon, 558 F. Supp. at 1242.

1181 United States v. Sowards, 370 F.2d 87, 92 (10th Cir. 1966).

1182 Brace v. United States, 72 Fed. Cl. 337, 352-53 (2006) (“the ipse dixit of that reliance does not make those facts, data or opinions true”), a’d,

250 F. App’x 359 (Fed. Cir. 2007) (per curiam) (unpubl.) (“armed based upon the well-reasoned opinion of the trial court”); see, e.g., Granby

I, 844 F. Supp. 2d at 676-81 (excluding all valuation and other evidence based on highest and best use that was premised on unreliable,

unsupported opinions of subsidiary experts).

1183 Granby I, 844 F. Supp. 2d at 676-81 (detailing failures of subsidiary experts’ opinions, holding such opinions were “without support” and

excluding from consideration all valuation and other evidence based on unsupported subsidiary opinions); see also United States v. 1.604 Acres of

Land (Granby III), 844 F. Supp. 2d 685, 689 (E.D. Va. 2011) (excluding opinions of ve experts based on Granby I ruling).

1184 Montego Group, 2010 WL 3734003, at *5; accord 1,014.16 Acres in Vernon, 558 F. Supp. at 1242.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 203

violate the unit rule (discussed in Section 4.2.2) and professional appraisal standards.

1185

These

components are to be considered, but only in light of how they contribute to the market value

of the property as a whole.

1186

4.13. Common Purpose (Roles and Responsibilities). The importance of sound appraisals in

federal acquisitions cannot be overstated. It is the United States’ obligation to serve the general

public and protect the common welfare by paying just compensation whenever property is

needed for public purposes, and reliable, objective valuations are critical to achieving this

end.

1187

Appraisers, landowners, attorneys, and government agency sta all play important

roles in the federal acquisition process, whether or not litigation is anticipated.

4.13.1. Appraisers and Other Experts. Appraisers assist in the determination of just compensation

by developing an opinion of market value,

1188

often in consultation with experts in other elds.

1189

In fact, there is a long history in the United States of objective evaluators appraising property

value to assist and inform the determination of just compensation—since well before a distinct

real estate appraisal profession began to emerge in the early twentieth century.

1190

Serving this important function requires expertise, diligence, sound judgment, and objectivity,

whether appraisers or other experts are retained by the United States, landowners, or other

parties.

1191

The appraiser must be diligent in data collection and competently apply the accepted

methods and techniques of the appraisal profession as well as the special rules and requirements

set forth in these Standards (e.g., larger parcel, unit rule, before and after method). The following

describes an appraiser’s job well done:

A comprehensive investigation of [the] parcels was made . . . . [The appraiser] thoroughly

surveyed each of the parcels and completely catalogued and examined all of the

improvements on each parcel; in addition [the appraiser] investigated and checked all sales

made in the immediate vicinity for several years prior to the [date of value] and interviewed

a number of persons of long experience and familiarity with the property and its uses. Both

[t]his investigation and appraisal appear to me to have been thoroughly and conscientiously

conducted with a view to a just evaluation. [The appraiser’s] conclusions were wholly

impersonal and not actuated by any adversary concept.

1192

1185 USPAP Standards Rule 1-4(e) (“An appraiser must refrain from valuing the whole solely by adding together the individual values of the

various estates or component parts.”).

1186 See Sections 4.8 and 4.8.1; see also Sections 4.8.3 and 4.8.4.

1187 See, e.g., Hoover v. U.S. Dep’t of Interior, 611 F.2d 1132, 1138 (5th Cir. 1980).

1188 See eATon, supra note 16, at 19-22; Section 4.1.2.

1189 See Sections 1.11 and 4.12.

1190 For example, in 1878, the Supreme Court described a condemnation involving the “appointment of commissioners to . . . secure a fair

appraisement of [a property’s] value” followed by a court determination “as to the amount of compensation the owner of the land was entitled

to receive[.]” Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403, 404-405 (1878). Similarly, in 1893 the Court noted that “[v]iewers were

appointed, who reported the value . . . . [and then] the matter was tried before the court . . . as to the question of amount of compensation.”

Monongahela Nav. Co. v. United States, 148 U.S. 312, 314 (1893); cf. James H. Boykin, Real Property Appraisal in the American Colonial Era, The ApprAisAl

J. 361, 366-367 (July 1976) (describing property valuation in legal disputes); Norman G. Miller, Jr. & Sergey Markosyan, The Academic Roots and

Evolution of Real Estate Appraisal, The ApprAisAl J. 172, 172 (April 2003) (appraisal as a distinct professional eld began in about 1902).

1191 See USPAP Ethics Rule (“An appraiser must promote and preserve the public trust inherent in appraisal practice by observing the highest

standards of professional ethics.”).

1192 United States v. 711.57 Acres in Alameda Cty., 51 F. Supp. 30, 32 (N.D. Cal. 1943); see also USPAP Ethics Rule – Conduct (“[Appraisers] must not

advocate the cause or interest of any party or issue . . . .”).

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards204

While this description arose from an appraiser’s work as an

expert witness in condemnation litigation, the same qualities

are necessary for any appraisal for federal acquisition purposes.

Appraisers must exercise sound judgment based on known

pertinent facts and circumstances, and it is their responsibility

to obtain knowledge of all pertinent facts and circumstances

that can be acquired with diligent inquiry and search. They must then weigh and consider the

relevant facts, exercise sound judgment, and develop an opinion that is completely unbiased by any

consideration favoring either the landowner or the government. For this reason, it is inappropriate

for an appraiser to “give the benet of the doubt” to either a landowner or the United States.

While the vast majority of federal acquisitions do not involve litigation, every appraisal and report

should be prepared with recognition of the possibility that the question of value may be litigated,

since it is not possible to predetermine which tracts will be acquired by voluntary means.

1193

The

fact that a new appraisal and report may be required prior to trial (to bring the eective date

of valuation into conformance with the legally required date of valuation

1194

) does not excuse

an ill-prepared initial appraisal. All appraisal reports are often subject to discovery, and a poorly

prepared initial appraisal may not only embarrass an appraiser, but also weaken a client’s case.

Appraisers Retained as Expert Witnesses by the U.S. Department of Justice. Expert

witnesses for litigation have additional obligations. It is the responsibility of the appraiser to

spend adequate time and eort to thoroughly prepare to testify in depositions and at trial. Prior

to undertaking this preparation and any necessary updating of the appraisal report, the appraiser

will confer with the trial attorney.

Appraisers must conform their appraisal reports with Rule 26(a)(2)(B) of the Federal Rules of

Civil Procedure, as discussed in Section 2.2.3. In addition, the particular court in which a case

will be tried may have local rules regarding expert reports. The United States’ legal counsel

should advise the appraiser of any such local rules. In preparing the initial appraisal report,

the appraiser may have had comparable sales veried by personnel from his or her oce. In

litigation, however, the appraiser must personally verify all comparable sales prior to testifying in

deposition or at trial.

The trial attorney will often provide the appraiser with observations and suggestions for

strengthening the appraisal report. Both appraisers and attorneys should distinguish between

a rigorous exploration of the appraiser’s methodologies, analysis, and factual support—and

improper pressure that undermines the objectivity and reliability of the appraiser’s conclusions.

Embracing the former with a clear eye on the appraiser’s independence will strengthen the

appraisal and reinforce the appraiser’s credibility at trial. Any suggestion of the latter, on the

other hand, should be immediately addressed and claried to ensure appraisers’ objectivity and

the integrity of their opinions.

1193 Moreover, even voluntary acquisitions may generate litigation over valuation matters or the suciency of appraisals. See, e.g., Desert Citizens

Against Pollution v. Bisson, 231 F.3d 1172 (9th Cir. 2000).

1194 E.g., United States v. 8.34 Acres of Land in Ascension Par., No. 04-50D-MI, 2006 WL 6860387, at *4 (M.D. La. June 12, 2006); see Kirby Forest

Indus., Inc. v. United States, 467 U.S. 1, 10 (1984).

It is inappropriate to “give

the benet of the doubt” to

either a landowner or the

United States.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards 205

In conferring with the attorney, the appraiser should advise the attorney of any information

that would be helpful in strengthening the report that was not available to the appraiser.

1195

The

attorney may be able to procure this information from the landowner’s legal counsel or through

the discovery process, if necessary. The appraiser and the attorney should also discuss the logistics

of a site inspection and appropriate communication with the landowner (if the landowner is

represented by an attorney, all communications must go through legal counsel).

In condemnation proceedings, appraisers’ only function is to testify to their impartial opinion of

market value. While it is important that appraisers testify with the conviction that their valuations

are correct, appraisers are not advocates for their clients: that role is exclusively reserved to

attorneys. Nor do appraisers determine what is fair or just: that is the responsibility of the fact-

nder—a jury, land commission, or judge. The appraiser is employed to develop and express

an objective opinion of market value, following federal law, that is supported by factual data to

warrant being accorded weight.

1196

4.13.2. Government Agency Sta. Federal realty acquisitions require the contributions of a variety

of government agency sta, including realty specialists, surveyors, engineers, title researchers,

negotiators, project managers, contract procurement specialists, executives, appraisers, review

appraisers, and attorneys. Critical to the valuation process, agency sta identify property for

federal acquisition; work with government and outside appraisers to develop an appropriate

scope of work for each valuation assignment; provide necessary information to appraisers,

such as property descriptions, title information, maps, surveys and other data; and issue

legal instructions. Agency sta are also tasked with explaining the United States’ oer of

just compensation and its basis, which often involves explaining the appraisal process, the

data considered by the appraiser, and the reasons improper considerations are disregarded.

Agency sta also rely on appraisals to determine just compensation for the purpose of making

oers under the Uniform Act, estimate project acquisition costs, and make judicious use of

public funds. Finally, while only a small fraction of federal acquisitions involve litigation, it

is impossible to predict with certainty which acquisitions—even voluntary acquisitions—will

result in litigation.

1197

Even if a new appraisal may be obtained for litigation (often required

in condemnation to reect the appropriate date of value),

1198

every appraisal should be well

prepared, reecting sound instructions and a scope of work appropriate for its purpose.

1195 Examples might include the property’s historical income and expense information that a landowner had not previously provided to the

appraiser, or verication of the price, terms, and conditions of a prior sale of the property being appraised.

1196 See, e.g., Washington v. United States (Hanford), 214 F.2d 33, 43 (9th Cir. 1954) (“Opinion evidence is only as good as the facts upon which it is

based. . . . Opinion evidence without any support in the demonstrated facts . . . can have no weight . . . .”).

1197 See, e.g., Desert Citizens Against Pollution v. Bisson, 231 F.3d 1172 (9th Cir. 2000).

1198 See 8.34 Acres in Ascension, 2006 WL 6860387, at *4; cf. Kirby Forest Indus., Inc., 467 U.S. at 10.

Uniform Appraisal Standards for Federal Land Acquisitions / Legal Foundations For Appraisal Standards206

4.13.3. Landowners. Each and every federal acquisition involves a landowner—usually, but not

always, as a willing participant. Landowners are entitled to just compensation if their property

is acquired for public purposes, and to receive fair and equitable treatment no matter which

agency is acquiring their land. During the appraisal process, landowners must be given an

opportunity to accompany the United States’ appraiser on the inspection of their property

under the Uniform Act.

1199

The site visit is a chance for landowners to share information about

their property that they believe should be considered in the valuation process (Section 1.2.6.4).

4.13.4. Attorneys. Attorneys play a critical role in appraisals for federal acquisitions, whether or

not litigation is involved. Legal instructions are necessary on a variety of valuation issues

addressed throughout these Standards, such as ownership and title questions aecting the

larger parcel determination (Section 4.3.3) or the proper application of the scope of the

project rule to exclude government project inuence on market value (Section 4.5). To do

so, attorneys—whether agency counsel, Department of Justice attorneys, or landowners’

counsel—must often engage in nuanced discussions with appraisers to determine what

legal instructions are necessary and appropriate. Agency counsel should consult the U.S.

Department of Justice for assistance on novel or complex issues.

1199 42 U.S.C. § 4651(2); see Section 1.2.6.4. Landowners can also designate a representative to attend the property inspection on their behalf.

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix 207

APPENDIX

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix208

APPENDIX A

Appraisal Report Documentation Checklist

INTRODUCTION

Title Page

Agency name

Appraiser’s name(s)

Agency tract no. Appraiser’s address

Property address Eective date of value

Transmittal Letter

Date of letter Client and legal instructions

Property identication Opinion of value before acquisition

Property rights appraised Opinion of value after acquisition

Eective date of value Dierence

Extraordinary assumptions Appraiser signature

Table of Contents

Appraiser’s Certication

Conforms to USPAP Opinion of value after acquisition

Conforms to Federal Standards Dierence

Property inspection Eective date of value

Oered owner accompaniment Appraiser signature

Opinion of value before acquisition

Executive Summary

Property identication Highest and best use – after acquisition

Eective date of value Description before

Highest and best use – before acquisition Description after

Value before Value after

Cost approach Cost approach

Sales comparison approach Sales comparison approach

Income capitalization approach Income capitalization approach

Final opinion of value Final opinion of value

Photos of subject Assumptions and limiting conditions

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix 209

Scope of Work Description

Client Property characteristics

Intended users Assignment conditions

Intended use Geographic area and timespan of market data research

Denition of market value Type of market data researched

Denition of market rental value Extent of market data conrmation

Eective date Data sources

FACTUAL DATA AND ANALYSIS – BEFORE ACQUISITION

Legal description Area data

Site Data

Existing use Land Shape

Access Utilities

Topography Minerals

Soils Easements

Vegetation Hazards

Land Area

Improvement Data

Type Condition

Size Quality

Actual age Occupancy

Eective age On-site improvements

Fixtures Sales history

Use history Rental history

Tax/Assessments

Assessed value Tax load

Zoning and land use regulations

Highest and Best Use

As vacant Financial feasibility

As improved Degree of protability

Physical possibility Larger parcel

Legal permissibility

Land Valuation

Describe comparables Analysis of comparables

Photos of comparables Final value analysis/opinion of value

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix210

Cost Approach

Included or [ ] omission explained Market support

Reproduction/replacement cost Final value analysis/opinion of value

Depreciation

Sales Comparison Approach

Included Analysis of comparables

Describe comparables Final value analysis/opinion of value

Photos of comparables

Income Capitalization Approach

Included or [ ] omission explained Operating expenses

Market rental comparables Market support for capitalization rate

Gross income estimate Explain selection of capitalization rate

Vacancy Final value analysis/opinion of value

Fixed expenses

Reconciliation and Final Opinion of Value

Provided Avoid summation appraisal

FACTUAL DATA AND ANALYSIS – AFTER ACQUISITION

Legal Description/Description of Acquisition

Legal description of remainder or [ ] description of acquisition

Area Data

Describe government project Address project impact

Site Data

Shape Utilities

Size Access

Easements Relationship to project

Improvement Data

Describe improvements

Fixtures Rental history after acquisition

Use after acquisition

Tax/Assessments

Est. assessed value Est. tax load

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix 211

Zoning and Land Use Regulations

Re-zone considered

Highest and Best Use

Change considered Eects of TCEs or [ ] n/a

Intensity considered Zoning non-conformance addressed

Restoration considered

Land Valuation

Same or dierent comparables Analysis of comparables

Describe comparables Final value analysis/opinion of value

Photos of comparables

Cost Approach

Included or [ ] omission explained Market support

Reproduction cost Final value analysis/opinion of value

Depreciation

Sales Comparison Approach

Included Photos of comparables

Same or [ ] dierent comparables Analysis of comparables

Describe comparables Final value analysis/opinion of value

Income Capitalization Approach

Included or [ ] omission explained Operating expenses

Gross income estimate Market support for capitalization rate

Vacancy Explain selection of capitalization rate

Fixed expenses Final value analysis/opinion of value

Reconciliation and Final Opinion of Value

Provided Avoided summation appraisal

Acquisition Analysis

Recapitulation Proper format

Damage (if applicable)

Allocate part acquired vs. damage to

remainder or [ ] n/a Estimate cost to cure damage

Note allocation is accounting exercise

Benets (if applicable)

Consider direct (special) benets Explain benets analysis

Disregard indirect (general) benets

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix212

ADDENDA AND EXHIBITS

Location map Comparable sales data maps

Comparable Sales Data Sheets

Sales conrmed Existing use

Terms reported Highest and best use

Buyer and seller Zoning

Date of sale Legal

Recording information Physical description

Location

Subject Property Plot Plan

Property boundaries shown Street frontage after acquisition

Dimensions before acquisition Photo locations

Dimensions after acquisition Improvement locations

Street frontage before acquisition

Subject property oor plan Other exhibits

Title report Appraiser qualications

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix 213

APPENDIX B

Recommended Appraisal Report Format for Total Acquisitions

2.3.1 Introduction

(2.3.1.1) Title Page

(2.3.1.2) Transmittal Letter

(2.3.1.3) Table of Contents

(2.3.1.4) Appraiser’s Certication

(2.3.1.5) Executive Summary

(2.3.1.6) Photographs

(2.3.1.7) Statement of Assumptions and Limiting Conditions

(2.3.1.8) Description of Scope of Work

2.3.2 Factual Data

(2.3.2.1) Legal Description

(2.3.2.2) Area, City, and Neighborhood Data

(2.3.2.3) Property Data

(2.3.2.3.1) Site

(2.3.2.3.2) Improvements

(2.3.2.3.3) Fixtures

(2.3.2.3.4) Use History

(2.3.2.3.5) Sales History

(2.3.2.3.6) Rental History

(2.3.2.3.7) Assessed Value and Annual Tax Load

(2.3.2.3.8) Zoning and Other Land Use Regulations

2.3.3 Data Analysis and Conclusions

(2.3.3.1) Highest and Best Use

(2.3.3.1.1) Four Tests

(2.3.3.1.2) Larger Parcel

(2.3.3.2) Land Valuation

(2.3.3.2.1) Sales Comparison Approach

(2.3.3.2.2) Subdivision Development Method

(2.3.3.3) Cost Approach

(2.3.3.4) Sales Comparison Approach

(2.3.3.5) Income Capitalization Approach

(2.3.3.6) Reconciliation and Final Opinion of Market Value

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix214

2.3.7 Exhibits and Addenda

Location Map

Comparable Data Maps

Detail of Comparable Sales and Rental Data

Plot Plan

Floor Plan

Title Evidence Report

Other Pertinent Exhibits

Qualications of the Appraiser

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix 215

APPENDIX C

Recommended Appraisal Report Format for Partial Acquisitions

2.3.1 Introduction

(2.3.1.1) Title Page

(2.3.1.2) Transmittal Letter

(2.3.1.3) Table of Contents

(2.3.1.4) Appraiser’s Certication

(2.3.1.5) Executive Summary

(2.3.1.6) Photographs

(2.3.1.7) Statement of Assumptions and Limiting Conditions

(2.3.1.8) Description of Scope of Work

2.3.2 Factual Data – Before Acquisition

(2.3.2.1) Legal Description

(2.3.2.2) Area, City, and Neighborhood Data

(2.3.2.3) Property Data

(2.3.2.3.1) Site

(2.3.2.3.2) Improvements

(2.3.2.3.3) Fixtures

(2.3.2.3.4) Use History

(2.3.2.3.5) Sales History

(2.3.2.3.6) Rental History

(2.3.2.3.7) Assessed Value and Annual Tax Load

(2.3.2.3.8) Zoning and Other Land Use Regulations

2.3.3 Data Analysis and Conclusions – Before Acquisition

(2.3.3.1) Highest and Best Use

(2.3.3.1.1) Four Tests

(2.3.3.1.2) Larger Parcel

(2.3.3.2) Land Valuation

(2.3.3.2.1) Sales Comparison Approach

(2.3.3.2.2) Subdivision Development Method

(2.3.3.3) Cost Approach

(2.3.3.4) Sales Comparison Approach

(2.3.3.5) Income Capitalization Approach

(2.3.3.6) Reconciliation and Final Opinion of Market Value – Before Acquisition

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix216

2.3.4 Factual Data – After Acquisition

(2.3.4.1) Legal Description

(2.3.4.2) Neighborhood Factors

(2.3.4.3) Property Data

(2.3.4.3.1) Site

(2.3.4.3.2) Improvements

(2.3.4.3.3) Fixtures

(2.3.4.3.4) History

(2.3.4.3.5) Assessed Value and Tax Load

(2.3.4.3.6) Zoning and Other Land Use Regulations

2.3.5 Data Analysis and Conclusions – After Acquisition

(2.3.5.1) Analysis of Highest and Best Use

(2.3.5.2) Land Valuation

(2.3.5.3) Cost Approach

(2.3.5.4) Sales Comparison Approach

(2.3.5.5) Income Capitalization Approach

(2.3.5.6) Reconciliation and Final Opinion of Value – After Acquisition

2.3.6 Acquisition Analysis

(2.3.6.1) Recapitulation

(2.3.6.2) Allocation and Damages

(2.3.6.3) Special Benets

2.3.7 Exhibits and Addenda

Location Map

Comparable Data Maps

Details of Comparable Sales and Rental Data

Plot Plan

Floor Plan

Title Evidence Report

Other Pertinent Exhibits

Qualications of the Appraiser

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix 217

APPENDIX D

(2.5) Recommended Project Appraisal Report Format

Part I – Introduction, General Factual Data and Analysis

Introduction

(1) Title Page

(2) Transmittal Letter

(3) Table of Contents

(4) Executive Summary

(5) Statement of Assumptions and Limiting Conditions

(6) Description of Scope of Work

General Factual Data

(7) Area, City, and Neighborhood Data

(8) Zoning and Other Land Use Regulations

Analysis

(9) Analysis of Highest and Best Use

(10) Discussion of Approaches to Value

(11) Land Valuation

(12) Cost Approach

(13) Sales Comparison Approach

(14) Income Capitalization Approach

(15) Special Studies

Part II – Individual Parcel Report

Introduction

(16) Title Page

(17) Table of Contents

(18) Appraiser’s Certication

(19) Summary of Salient Facts and Conclusions

(20) Photographs of Subject Property

(21) Statement of Assumptions and Limiting Conditions

(22) Description of Scope of Work

(23) Executive Summary

Factual Data [total acquisitions] or Factual Data – Before Acquisition [partial acquisitions]

(24) Legal Description

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix218

(25) Area, City, and Neighborhood Data

(26) Property Data

a. Site

b. Improvements

c. Fixtures

d. Use History

e. Sales History

f. Rental History

g. Assessed Value and Annual Tax Load

h. Zoning and Other Land Use Regulations

Data Analysis and Conclusions [total acquisitions] or Data Analysis and Conclusions – After Acquisition [partial

acquisitions]

(27) Analysis of Highest and Best Use

(28) Land Valuation

(29) Value Estimate by Cost Approach

(30) Value Estimate by Sales Comparison Approach

(31) Value Estimate by Income Capitalization Approach

(32) Reconciliation and Final Opinion of Value

Factual Data – After Acquisition [partial acquisitions only]

Items (24) to (26) in after situation

Data Analysis and Conclusions – After Acquisition [partial acquisitions only]

Items (27) to (32) in after situation

Acquisition Analysis [partial acquisitions only]

(33) Acquisition Analysis

Exhibits and Addenda

(34) Exhibits and Addenda

a. Neighborhood Map

b. Comparable Data Map

c. Detail of Comparative Data

d. Plot Plan

e. Floor Plan

f. Title Evidence Report

g. Other Pertinent Exhibits

Part III – General Exhibits and Addenda

(35) Location Map

(36) Comparable Data Maps

(37) Details of Comparative Data

(38) Other Pertinent Exhibits

(39) Qualications of Appraiser

Uniform Appraisal Standards for Federal Land Acquisitions / Appendix 219

Extraordinary Verication of Sales - Section 1.5.2.4

1. Examine Authorizing Legislation

• Does the legislation require purchase based on market value?

• Does the legislation mandate purchase at other than market value?

• Does the legislation provide for acquisition based on non- market considerations (e.g., unaected by

Endangered Species Act even though an endangered species is found on the property)?

2. Contact Acquiring Agency

• Examine the Appraisal

- Was the appraisal based on a partial or total acquisition?

- What property interest was valued?

- Was the highest and best use an economic use?

- Was the highest and best use the same or similar to the subject property?

- Were the sales used in the appraisal inuenced by non-market factors?

- Was there an allocation of value in the appraisal addressing the contributions of dierent land

types or improvements?

• Examine the Appraisal Review

- Did the appraisal review identify any factual or technical errors in the appraisal report?

• Examine the Negotiators Report

- Was there threat of condemnation if agreement could not be reached?

- Was the price paid based on agency support for a tax write-o for the seller?

- Did the owner threaten to damage property if the asking price was not paid?

- Was the sale part of a land exchange?

- Did the owner submit an appraisal or other market data to the agency during the negotiation?

• Examine the Correspondence File

- Was there correspondence between the agency and the owner’s political representatives?

- Was there public pressure on the agency about the purchase?

- Was there media coverage about the purchase?

• Examine the Conveyance and Closing Documents

- Was the estate conveyed the same as the estate valued in the appraisal?

- Was the estate conveyed an easement?

- Was the price paid for the property equivalent to the appraiser’s nal opinion of value?

- Was the price paid within the appraisal’s range of value?

- Did the conveyance allow the seller to remain on the property or continue to use the property for

a period of time (e.g., life estate)?

3. Verify Sale with Buyer and Seller

APPENDIX E

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities220

TABLE OF AUTHORITIES

Cases

6,816.5 Acres of Land v. United States, 411 F.2d 834 (10th Cir. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . 163

767 Third Ave. Assocs. v. United States, 30 Fed. Cl. 216 (1993), a’d, 48 F.3d 1575 (Fed. Cir. 1995) . . . . . . . . . . .43

767 Third Ave. Assocs. v. United States, 48 F.3d 1575 (Fed. Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . 177

A.G. Davis Ice Co. v. United States, 362 F.2d 934 (1st Cir. 1966) . . . . . . . . . . . . . . . . . . . . . . . . 140-41, 175

Ackerley Commc’ns of Fla., Inc. v. Henderson, 881 F.2d 990 (11th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . .99

Acton v. United States, 401 F.2d 896 (9th Cir. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159

Adaman Mut. Water Co. v. United States, 278 F.2d 842 (9th Cir. 1960) . . . . . . . . . . . . . . . . . . . . . . . . . 159

Alameda Gateway, Ltd. v. United States, 45 Fed. Cl. 757 (1999). . . . . . . . . . . . . . . . 115, 154, 189, 192, 194, 203

Albert Hanson Lumber Co. v. United States, 261 U.S. 581 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130

Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470 (1973) . . . . . . . . . . . . . . . . . . . 93, 198

Am. Savings & Loan Ass’n v. County of Marin, 653 F.2d 364 (9th Cir. 1981) . . . . . . . . . . . . . . . . . . . . . . .117

Arizona v. California, 283 U.S. 423 (1931). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189

Ark. Game & Fish Comm’n v. United States, 133 S. Ct. 511 (2012) . . . . . . . . . . . . 161, 168, 170, 175, 177, 183, 185

ASARCO, Inc. v. Kadish, 490 U.S. 605 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .178

Atlantic Coast Line R. Co. v. United States, 132 F.2d 959 (5th Cir. 1943) . . . . . . . . . . . . . . . . . . . . . . . . . 129

Autozone Dev. Corp. v. Dist. of Columbia, 484 F. Supp. 2d 24 (D.D.C. 2007) . . . . . . . . . . . . . . . . . . . . . . 175

Baetjer v. United States, 143 F.2d 391 (1st Cir. 1944). . . . . . . . . . . . . . . . . . .111, 113, 115-16, 123-25, 153-56

Bank of Edenton v. United States, 152 F.2d 251 (4th Cir. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . 110, 129

Banks v. United States, 71 Fed. Cl. 501 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188-89, 194

Barnes v. S.C. Pub. Serv. Auth., 120 F.2d 439 (4th Cir. 1941) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Barnhart v. Brinegar, 362 F. Supp. 464 (W.D. Mo. 1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

Basset, New Mexico LLC v. United States, 55 Fed. Cl. 63 (2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Batten v. United States, 306 F.2d 580 (10th Cir. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

Bauman v. Ross, 167 U.S. 548 (1897) . . . . . . . .4, 6, 90, 93, 99, 101, 113, 119, 151, 154-55, 162-63, 167, 194, 201

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 221

Bd. of Cty. Supervisors v. United States (Prince William Cty. II), 116 F.3d 454 (Fed. Cir. 1997). . . . . . . . . . . . . . .197

Benecke v. United States, 356 F.2d 439 (5th Cir. 1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92

Berberich v. United States, 5 Cl. Ct. 652 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200-01

Berman v. Parker, 348 U.S. 26 (1954) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 157

BFP v. Resolution Tr. Corp., 511 U.S. 531 (1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120, 124-25

Bibb Cty. v. United States, 249 F.2d 228 (5th Cir. 1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98

Bischo v. Glickman, 54 F. Supp. 2d 1226 (D. Wyo. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

Bogart v. United States, 169 F.2d 210 (10th Cir. 1948) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97

Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

Boone v. United States, 944 F.2d 1489 (9th Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .189

Borman v. Raymark Indus., Inc., 960 F.2d 327 (3d Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

Bos. Chamber of Commerce v. City of Boston, 217 U.S. 189 (1910) . . . . . . . . . . . . . . 99, 162, 172-73, 197-98, 200

Bowen v. Pub. Agencies Opposed to Soc. Security Entrapment, 477 U.S. 41 (1986) . . . . . . . . . . . . . . . . . . . . . . 190

Boyd v. United States, 222 F.2d 493 (8th Cir. 1955) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Brace v. United States, 72 Fed. Cl. 337 (2006), a’d, 250 F. App’x 359 (Fed. Cir. 2007) (per curiam) (unpubl.) . . . . 202

Brooks-Scanlon Corp. v. United States, 265 U.S. 106 (1924) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

Brown v. Legal Found. of Wash., 538 U.S. 216 (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162

Brown v. United States, 263 U.S. 78 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197, 199, 200-01

Buena Vista Homes, Inc. v. United States, 281 F.2d 476 (10th Cir. 1960) . . . . . . . . . . . . . . . . . . . . . . . . . 133

Caldwell v. United States, 391 F.3d 1226 (Fed. Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

California v. United States (Naval Shipyard), 395 F.2d 261 (9th Cir. 1968) . . . . . . . . . . . . . . . . . . .196, 198, 201

Calvo v. United States, 303 F.2d 902 (9th Cir. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170

Cameron Dev. Co. v. United States, 145 F.2d 209 (5th Cir. 1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

Campbell v. United States, 266 U.S. 368 (1924) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113, 157-58

Caporal v. United States, 577 F.2d 113 (10th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

Carlock v. United States, 60 App. D.C. 314 (D.C. Cir. 1931) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174-75

Carlstrom v. United States, 275 F.2d 802 (9th Cir. 1960) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

Cementerio Buxeda, Inc. v. Puerto Rico, 196 F.2d 177 (1st Cir. 1952) . . . . . . . . . . . . . . . . . 137-38, 140, 142, 182

Certain Land in City of Washington v. United States, 355 F.2d 825 (D.C. Cir. 1965) . . . . . . . . . . . . . . . . . . . 159

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities222

Chapman v. United States, 169 F.2d 641 (10th Cir. 1948) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

Childers v. United States, 116 Fed. Cl. 486 (Fed. Cl. 2013). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121-22

City of New York v. Sage, 239 U.S. 57 (1915) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99, 106, 150

City of Van Buren v. United States, 697 F.2d 1058 (Fed. Cir. 1983). . . . . . . . . . . . . . . . . . . . . . . . . . . .153

Clear Sky Car Wash., LLC v. City of Chesapeake, 910 F. Supp. 2d 861 (E.D. Va. 2012) . . . . . . . . . . . . . . . . . .99

Cloverport Sand & Gravel Co. v. United Sates, 6 Cl. Ct. 178 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . 180-82

Cole Inv. Co. v. United States, 258 F.2d 203 (9th Cir. 1958) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

County of Ontonagon v. Land in Dickinson Cty., 902 F.2d 1568, 1990 WL 66813 (6th Cir. 1990) (unpubl.) . . . . . . . 159

CSX Transp., Inc. v. Ga. State Bd. of Equalization, 552 U.S. 9 (2007) . . . . . . . . . . . . . . . . . . . . . . . . . . .119

Ctr. for Biological Diversity v. U.S. Dep’t of Interior, 623 F.3d 633 (9th Cir. 2010) . . . . . . . . . . . . . . . . . . . . . 185

D.C. Redev. Land Agency v. 61 Parcels of Land, 235 F.2d 864 (D.C. Cir. 1956) . . . . . . . . . . . . . . . . . . . . . .124

Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Denver v. Quick, 108 Colo. 111 (1941) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

Desert Citizens Against Pollution v. Bisson, 231 F.3d 1172 (9th Cir. 2000) . . . . . . . . . . 50, 94, 105-06, 185-86, 204-05

Devou v. City of Cincinnati, 162 F. 633 (6th Cir. 1908) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

Dickinson v. United States, 154 F.2d 642 (4th Cir. 1946) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124

Dugan v. Rank, 372 U.S. 609 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94, 169

Duk Hea Oh v. Nat’l Capital Revitalization Corp., 7 A.3d 997 (D.C. 2010) . . . . . . . . . . . . . . . . . . . . . . . .126

E. Tenn. Nat. Gas Co. v. 2.93 Acres of Land, No. 4:02CV00179, 2007 WL 2688414 (W.D. Va. Sept. 13, 2007) . . . .158

E. Tenn. Nat. Gas Co. v. 7.74 Acres of Land, 228 F. App’x 323 (4th Cir. 2007) (unpubl.) . . . . . . . . . . . . . . . . 117

Eagle Lake Improvement Co. v. United States (Eagle Lake I), 141 F.2d 562 (5th Cir. 1944) . . . . . . . . . . . . . . . 178-80

Eagle Lake Improvement Co. v. United States (Eagle Lake II), 160 F.2d 182 (5th Cir. 1947) . . . . . . . . . . . . . . 141, 180

El Paso Nat. Gas Co. v. Fed. Energy Regulatory Comm’n, 96 F.3d 1460 (D.C. Cir. 1996) . . . . . . . . . . . . . . . . . 120

Ellamae Phillips Co. v. United States, 564 F.3d 1367 (Fed. Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . .199

Erceg v. Fairbanks Expl. Co., 95 F.2d 850 (9th Cir. 1938) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

Estate of Hage v. United States, 687 F.3d 1281 (Fed. Cir. 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

Etalook v. Exxon Pipeline Co., 831 F.2d 1440 (9th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

Evans v. Tenn. Valley Auth., 922 F.2d 841, 1991 WL 1113 (6th Cir. 1991) (unpubl.) . . . . . . . . . . . . . . . . 169-70

Evans v. United States, 326 F.2d 827 (8th Cir. 1964). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125-27

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 223

Faireld Gardens, Inc. v. United States, 306 F.2d 167 (9th Cir. 1962) . . . . . . . . . . . . . . . . . . . . . . . . 109, 132

First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987) . . . . . . . . . . . . . 43, 174, 177

Five Tracts of Land in Cumberland v. United States, 101 F. 661 (3d Cir. 1900) . . . . . . . . . . . . . . . . . . . . . . 106

Fla. Rock Indus., Inc. v. United States (Florida Rock II), 791 F.2d 893 (Fed. Cir. 1986). . . . . . . . . . . . . . . . . .95, 96

Fla. Rock Indus., Inc. v. United States (Florida Rock III), 18 F.3d 1560 (Fed. Cir. 1994) . . . . . . . . . . . . . . . . .95, 96

Foster v. United States, 2 Cl. Ct. 426 (1983), a’d, 746 F.2d 1491 (Fed. Cir. 1984) . . . . . . . 129, 136, 138-39, 181-82

Ga. Kaolin Co. v. United States, 214 F.2d 284 (5th Cir. 1954) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178

Ga.-Pac. Corp. v. United States, 640 F.2d 328 (Ct. Cl. 1980) (per curiam) . . . . . . . 94, 115, 151, 154-59, 165-67, 183

Gen. Elec. Co. v. Joiner, 522 U.S. 136 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90, 119

Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-88, 191

Gibson v. United States, 166 U.S. 269 (1897) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188, 190

Gilman v. City of Philadelphia, 70 U.S. 713 (1865) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-88

Good v. United States, 39 Fed. Cl. 81 (1997), a’d, 189 F.3d 1355 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . 192

Greenleaf Johnson Lumber Co. v. Garrison, 237 U.S. 251 (1915) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

Greer Coal., Inc. v. U.S. Forest Serv., 470 F. App’x 630 (9th Cir. 2012) (unpubl.) . . . . . . . . . . . . . . . . . 94, 185-86

H & R Corp. v. District of Columbia, 351 F.2d 740 (D.C. Cir. 1965). . . . . . . . . . . . . . . . . . . . . . . . . . .108

Hage v. United States, 35 Fed. Cl. 147 (Fed. Cl. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

Hage v. United States, 51 Fed. Cl. 570 (Fed. Cl. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .195

Hannan v. United States, 131 F.2d 441 (D.C. Cir. 1942) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126

Harris v. United States, 205 F.2d 765 (10th Cir. 1953) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

Hembree v. United States, 347 F.2d 109 (8th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Hendler v. United States, 175 F.3d 1374 (Fed. Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . 156, 159, 163, 194

Hickey v. United States, 208 F.2d 269 (3d Cir. 1953). . . . . . . . . . . . . . . . . . . . . . . . . . . . 94, 120, 123-25

Hicks v. United States ex rel. Tenn. Valley Auth., 266 F.2d 515 (6th Cir. 1959) . . . . . . . . . . . . . . . . . . . . . . .142

Home Ins. Co. v. Balt. Warehouse Co., 93 U.S. 527 (1876) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Hooten v. United States, 405 F.2d 1167 (5th Cir. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Hoover v. U.S. Dep’t of Interior, 611 F.2d 1132, 1138 (5th Cir. 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . 203

Horne v. Dep’t of Agric., 135 S. Ct. 2419 (2015). . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 90, 93, 162-64, 192

In re Cool, 81 B.R. 614 (D. Mont. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140, 142

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities224

In re Dyevoich, No. 11-2551 (MLC), 2012 WL 194677 (D.N.J. Jan. 23, 2012) (unpubl.) . . . . . . . . . . . . . . . .95

In re Furman Street, 17 Wend. 649 (N.Y. Sup. Ct. 1836) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

In re Gulf Oil/Cities Serv. Tender Oer Litig., 142 F.R.D. 588 (S.D.N.Y. 1992) . . . . . . . . . . . . . . . . . . . . . . 121

In re Operation of the Mo. River Sys. Litig., 363 F. Supp. 2d 1145 (D. Minn. 2004),

a’d in part and vacated in part, 421 F.3d 618 (8th Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

In re U.S. Comm’n to Appraise Wash. Mkt. Co. Prop., 295 F. 950 (D.C. Cir. 1924) . . . . . . . . . . . . . . . . . . . . 134

Int’l Paper Co. v. United States, 227 F.2d 201 (5th Cir. 1955) . . . . . . . . . . . . . . . . . . 115-16, 124, 132, 153-54

Intertype Corp. v. Clark-Congress Corp., 240 F.2d 375 (7th Cir. 1957) . . . . . . . . . . . . . . . . . . . . 157, 159-61, 177

J.A. Tobin Constr. Co. v. United States, 343 F.2d 422 (10th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . 104, 186

Jeerson Cty. v. Tenn. Valley Auth., 146 F.2d 564 (6th Cir. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197

Joslin Co. v. Providence, 262 U.S. 668 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142

Justice v. United States, 145 F.2d 110 (9th Cir. 1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Kaiser Aetna v. United States, 444 U.S. 164 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . .187-89, 191-92, 194

Kaiser Dev. Co. v. Honolulu, 649 F. Supp. 926 (D. Haw. 1986), a’d, 898 F.2d 112 (9th Cir. 1990) (mem.) . . . . . . . 160

Kelo v. City of New London, 545 U.S. 469 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90

Kerr v. S. Park Comm’rs, 117 U.S. 379 (1886) . . . . . . . . . . . . . . . . . . . . . . . . .93, 94, 95, 101-02, 146, 149

Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . 49, 118

Kimball Laundry Co. v. United States, 338 U.S. 1 (1949) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . .90, 93, 95-96, 98, 100-01, 104-05, 107, 118, 136-38, 140, 161, 171, 174-75, 177

Kinter v. United States, 156 F.2d 5 (3d Cir. 1946) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .131, 133, 136

Kirby Forest Indus., Inc. v. United States, 467 U.S. 1 (1984) . . . . . . . . . . . . . . . . 91-94, 101, 183-84, 196, 204-05

Klein v. United States, 375 F.2d 825 (Ct. Cl. 1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Knollman v. United States, 214 F.2d 106 (6th Cir. 1954) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120-21

Kohl v. United States, 91 U.S. 367 (1875) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .89

L. Vogelstein & Co. v. United States, 262 U.S. 337 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106-07

Ladd v. United States, 630 F.3d 1015 (Fed. Cir. 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

Lambert Gravel Co. v. J.A. Jones Constr. Co., 835 F.2d 1105 (5th Cir. 1988). . . . . . . . . . . . . . . . . . .188, 190, 192

Lewis Blue Point Oyster Cultivation Co. v. Briggs, 229 U.S. 82 (1913) . . . . . . . . . . . . . . . . . . . . . . 189-90, 192

Likins-Foster Monterey Corp. v. United States, 308 F.2d 595 (9th Cir. 1962) . . . . . . . . . . . . . . . . . . .137, 141, 182

Lodge Tower Condo. Ass’n v. Lodge Props., Inc., 85 F.3d 476 (10th Cir.1996) . . . . . . . . . . . . . . . . . . . . . . . 185

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 225

Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) . . . . . . . . . . . . . . . . . . . . . . 49, 177, 185

Lost Tree Village Corp. v. United States, 787 F.3d 1111 (Fed. Cir. 2015),

petition for cert. docketed, No. 15-1192 (U.S. March 23, 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-88

Marbury v. Madison, 5 U.S. 137 (1803) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 89, 93

Mayor & City Council of Baltimore v. United States, 147 F.2d 786 (4th Cir. 1945) . . . . . . . . . . . . . . . . . 174, 196

McCann Holdings, Ltd. v. United States, 111 Fed. Cl. 608 (Fed. Cl. 2013) . . . . . . . . . . . . . . . . . . . . . . . . 121

McCoy v. Union Elevated R.R. Co., 247 U.S. 354, 365 (1918) . . . . . . . . . . . . . . . . . . . . . . . 93, 95, 162, 167

Meadows v. United States, 144 F.2d 751 (4th Cir. 1944) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .97

Miller v. United States, 550 F. Supp. 669 (Cl. Ct. 1982), a’d, 714 F.2d 160 (Fed. Cir. 1983) (mem.). . . . . . . . . .192

Miller v. United States, 620 F.2d 812 (Ct. Cl. 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

Mills v. United States, 363 F.2d 78 (8th Cir. 1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .139-140, 179

Minnesota Rate Cases, 230 U.S. 352 (1913) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

Miss. & Rum River Boom Co. v. Patterson, 98 U.S. 403 (1878) . . . . . . . . . 90, 92-93, 96, 105, 107, 127-28, 171, 203

Mitchell v. United States, 267 U.S. 341 (1925) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142, 151, 155, 159

Monongahela Nav. Co. v. United States, 148 U.S. 312 (1893) . . . . . . . . . . . 96, 101, 105, 140, 155, 169-70, 195, 203

Mont. Ry. Co. v. Warren, 137 U.S. 348 (1890) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178-79

Morgan v. Commercial Union Assurance Cos., 606 F.2d 554 (5th Cir. 1979) . . . . . . . . . . . . . . . . . . . . . . . . .82

Morris v. Comm’r, 761 F.2d 1195 (6th Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134

Morton Butler Timber Co. v. United States, 91 F.2d 884 (6th Cir. 1937) . . . . . . . . . . . . . . . . . . . . . . . . . . .98

Mt. St. Helens Mining & Recovery Ltd. P’ship v. United States, 384 F.3d 721 (9th Cir. 2004) . . . . . . . . . . . . . . . 186

Murr v. Wisconsin, 359 Wis. 2d 675 (Wis. Ct. App. 2014), review denied, 366 Wis. 2d 59 (2015),

cert. granted, 136 S. Ct. 890 (2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118

Nash v. D.C. Redev. Land Agency, 395 F.2d 571 (D.C. Cir. 1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

Nat’l Parks & Conservation Ass’n v. Bureau of Land Mgmt. (NPCA v. BLM), 606 F.3d 1058 (9th Cir. 2010). . . . . . 185-86

Nebraska v. United States, 164 F.2d 866 (8th Cir. 1947) . . . . . . . . . . . . . . . . . . . . . . . . 91, 97, 99, 172, 197

Norfolk Redev. & Hous. Auth. v. Chesapeake & Potomac Tel. Co., 464 U.S. 30 (1983). . . . . . . . . . . . . . . . . . . . .89

Norman v. United States, 429 F.3d 1081 (Fed. Cir. 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Norman v. United States, 63 Fed. Cl. 231 (Ct. Cl. 2004), a’d, 429 F.3d 1081 (Fed. Cir. 2005) . . . . . . . . . . . . . 145

Old Dominion Land Co. v. United States, 269 U.S. 55 (1925) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities226

Olson v. United States, 292 U.S. 246 (1934) . . . 5, 90, 93, 96, 100-05, 107-08, 117, 119, 123-24, 126-29, 132, 134-36,

. . . . . . . . . . . . . . . . . .139, 143-45, 151, 156-57, 162, 170-71, 173, 174, 176, 179, 183, 187, 193, 197, 200

Olson v. United States, 67 F.2d 24 (8th Cir. 1933), a’d, 292 U.S. 246 (1934) . . . . . . . . . . . . . . . . . . . . . . 107

Omnia Commercial Co. v. United States, 261 U.S. 502 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Oncor Elec. Delivery Co. v. Brown, 451 S.W.3d 128 (Tex. Ct. App. 2014) . . . . . . . . . . . . . . . . . . . . . . . . 114

Otay Mesa Prop., L.P. v. United States (Otay Mesa I), 670 F.3d 1358 (Fed. Cir. 2012) . . . . . . . . . . . . . . . . . 177-78

Otay Mesa Prop., L.P. v. United States (Otay Mesa II), 110 Fed. Cl. 732 (Fed. Cl. 2013) . . . . . . . . . . . . . . 107, 178

Otay Mesa Prop., L.P. v. United States (Otay Mesa III), 779 F.3d 1315 (Fed. Cir. 2015) . . . . . . . . . . . . .107, 178, 184

Owen v. United States, 851 F.2d 1404 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189, 194

Palazzolo v. Rhode Island, 533 U.S. 606 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117-18

Palm Beach Isles Assocs. v. United States, 42 Fed. Cl. 340 (Fed. Cl. 1998). . . . . . . . . . . . . . . . . . . . . . . . .192

Penn Central Transp. Co. v. City of New York, 438 U.S. 104 (1978) . . . . . . . . . . . . . . . . . . . . . 49, 117-18, 185

Pa. Ave. Dev. Corp. v. One Parcel of Land in D.C., 670 F.2d 289 (D.C. Cir. 1981). . . . . . . . . . . . . . . . . . . . .175

Phillips v. United States, 148 F.2d 714 (2d Cir. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Phillips v. United States, 243 F.2d 1 (9th Cir. 1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179-80

Porrata v. United States, 158 F.2d 788 (1st Cir. 1947) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

Portland Nat. Gas Transmission Sys. v. 19.2 Acres of Land, 318 F.3d 279 (1st Cir. 2003) . . . . . . . . . . . . . . . . . .91

Pottawatomie Cty. Comm’rs v. O’Sullivan, 17 Kan. 58 (1876) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162, 164

PPL Montana, LLC v Montana, 132 S. Ct. 1215 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

Preseault v. Interstate Commerce Comm’n (Preseault I), 494 U.S. 1 (1990) . . . . . . . . . . . . . . . . . . . . . . . . 198-99

Preseault v. United States (Preseault II), 100 F.3d 1525 (Fed. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . .199

Public Lands Council v. Babbitt, 529 U.S. 728 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

Pub. Util. Dist. No. 1 v. City of Seattle, 382 F.2d 666, 669 (9th Cir. 1967) . . . . . . . . . . . . . . . . . . . . . . . .188

PVM Redwood Co. v. United States, 686 F.2d 1327 (9th Cir. 1982). . . . . . . . . . . . . . . . . . . . . . . . . . . .159

R.J. Widen Co. v. United States, 357 F.2d 988 (Ct. Cl. 1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Rapanos v. United States, 547 U.S. 715 (2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

Rapid Transit Co. v. United States, 295 F.2d 465 (10th Cir. 1961) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Rasmuson v. United States, 807 F.3d 1343 (Fed. Cir. 2015) . . . 89-90, 94-95, 100-02, 132, 134, 150, 152, 169, 197-99

Rhodes v. City of Chi. for Use of Sch., 516 F.2d 1373 (7th Cir. 1975). . . . . . . . . . . . . . . . . . . . . . . . . . . .99

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 227

Richards v. Wash. Terminal Co., 233 U.S. 546 (1914) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

Robinson v. United States, 305 F.3d 1330 (Fed. Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95

Rockies Exp. Pipeline LLC v. 4.895 Acres of Land, 734 F.3d 424 (6th Cir. 2013) . . . . . . . . . . . . . . . . . . . . . .91

Rockies Exp. Pipeline LLC v. Hopkins, 131.495 Acres, No. 1:08-cv-00751-RLY-DML,

2012 WL 1622532 (S.D. Ind. May 9, 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

Rogers v. United States, 184 So.3d 1087 (Fla. 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

Rogers v. United States, 814 F.3d 1299 (Fed. Cir. 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

Roth v. U.S. Dep’t of Transp., 572 F.2d 183 (8th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

Rousseaux v. United States, 394 F.2d 123 (5th Cir. 1968) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . .117

S. Ctys. Gas Co. of Cal. v. United States, 157 F. Supp. 934 (Ct. Cl. 1958), cert. denied, 358 U.S. 815 (1958) . . . . . . . 159

S. Nat. Gas Co. v. Land, Cullman Cty., 197 F.3d 1368 (11th Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . .91

San Nicolas v. United States, 617 F.2d 246 (Ct. Cl. 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98

Scott Lumber Co. v. United States, 390 F.2d 388 (9th Cir. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

Scranton v. Wheeler, 179 U.S. 141 (1900) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-88, 190

Se. Supply Header, LLC v. 110 Acres in Covington Cty. (SESH),

No. 2:07-CV-291 KS-MTP, 2008 WL 127490 (S.D. Miss. Jan. 10, 2008) . . . . . . . . . . . . . . . . . . . 114, 116

Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299 (1923) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .151

Searl v. School Dist., 133 U.S. 553 (1890) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90, 94, 98, 119, 201

Seravalli v. United States, 845 F.2d 1571 (Fed. Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119-20

Sharp v. United States, 191 U.S. 341 (1903) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110-14, 130, 153, 156

Sharpe v. United States, 112 F. 893 (3d Cir. 1902),

a’d sub nom. Sharp v. United States, 191 U.S. 341 (1903) . . . . . . . . . . . . . . . . . . . . . . 110-11, 115, 153, 156

Shoemaker v. United States, 147 U.S. 282 (1893) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 101, 145

Sill Corp. v. United States, 343 F.2d 411 (10th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Simmonds v. United States, 199 F.2d 305 (9th Cir. 1952) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123

Slattery Co. v. United States, 231 F.2d 37 (5th Cir. 1956) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125-27

South Carolina v. Georgia, 93 U.S. 4 (1876) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

St. Joe Paper Co. v. United States, 155 F.2d 93 (5th Cir. 1946) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

St. Regis Paper Co. v. United States, 313 F.2d 45 (9th Cir. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Standard Oil Co. of N.J. v. S. Pac. Co., 268 U.S. 146 (1925) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities228

Stephenson Brick Co. v. United States ex rel. Tenn. Valley Auth., 110 F.2d 360 (5th Cir. 1940) . . . . . . . . . . . . . . . .128

Stipe v. United States, 337 F.2d 818 (10th Cir. 1964). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140, 159

Surfside of Brevard, Inc. v. United States, 414 F.2d 915 (5th Cir. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . 123

Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302 (2002) . . . . . . . . . . . . . 89-90, 117-18

Terminal Coal Co. v. United States, 172 F.2d 113 (3d Cir. 1949) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .198

The Daniel Ball, 77 U.S. 557 (1870) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

The Propeller Genesee Chief v. Fitzhugh, 12 How. 443 (1852) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .188

Town of Clarksville v. United States, 198 F.2d 238 (4th Cir. 1952) . . . . . . . . . . . . . . . . . . . . . . . . . . 200-01

Town of N. Bonneville v. Callaway, 10 F.3d 1505 (9th Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

Town of N. Bonneville v. U.S. Dist. Court, 732 F.2d 747 (9th Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . 201

Town of N. Bonneville v. United States, 5 Cl. Ct. 312 (1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

Town of N. Bonneville v. United States, 833 F.2d 1024 (Fed. Cir. Oct. 28, 1987) (unpubl.) . . . . . . . . . . . . . . . .201

Transwestern Pipeline Co. v. O’Brien, 418 F.2d 15 (5th Cir. 1969) . . . . . . . . . . . . . . . . . 92, 126-27, 152, 169-71

Tundidor v. Miami-Dade Cty., 831 F.3d 1328 (11th Cir. 2016) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

Turner v. Kings River Conservation Dist., 360 F.2d 184 (9th Cir. 1966) . . . . . . . . . . . . . . . . . . . . . . . . . .190

United States ex rel. Tenn. Valley Auth. v. 1.72 Acres of Land, 821 F.3d 742 (6th Cir. 2016) . . . . . . . . . 101-05, 107-08

United States ex rel. Tenn. Valley Auth. v. An Easement & Right-of-Way, 182 F. Supp. 899 (M.D. Tenn. 1960). . . . . . .169

United States ex rel. Tenn. Valley Auth. v. An Easement & Right-of-Way (Hadley), 447 F.2d 1317 (6th Cir. 1971) . . . . . . 104

United States ex rel. Tenn. Valley Auth. v. An Easement & Right-of-Way over 6.09 Acres of Land (TVA v. 6.09 Acres),

140 F. Supp. 3d 1218 (N.D. Ala. 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143-45

United States ex rel. Tenn. Valley Auth. v. Bailey, 115 F.2d 433 (5th Cir. 1940) . . . . . . . . . . . . . . . . . . . . . . 126

United States ex rel. Tenn. Valley Auth. v. Harralson, 43 F.R.D. 318 (W.D. Ky. 1966) (mem.) . . . . . . . . . . . . . 98, 123

United States ex rel. Tenn. Valley Auth. v. Indian Creek Marble Co.,

40 F. Supp. 811 (E.D. Tenn. 1941) . . . . . . . . . . . . . . . . . . . . . 137, 153, 162, 165-66, 167, 170, 178, 182

United States ex rel. Tenn. Valley Auth. v. Powelson,

319 U.S. 266 (1943) . . . . . . . . . . . . . . . . 90, 91, 99-102, 112, 133, 135-36, 140, 154-56, 159, 176, 187, 197

United States ex rel. Tenn. Valley Auth. v. Robertson, 354 F.2d 877 (5th Cir. 1966) . . . . . . . . . . . . . . . . . . . . . 166

United States ex rel. Tenn. Valley Auth. v. Russell, 87 F. Supp. 386 (E.D. Tenn. 1948) . . . . . . . . . . . . . . . . 91, 170

United States ex rel. Tenn. Valley Auth. v. Stewart, 429 F. Supp. 658 (E.D. Tenn. 1976) . . . . . . . . . . . . . . . . 113-14

United States ex rel. Tenn. Valley Auth. v. Welch, 327 U.S. 546, 554 (1946) . . . . . . . . . . . . . . . . . . . . . . . . .91

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 229

United States v. 0.073 Acres of Land (Mariner’s Cove), 705 F.3d 540 (5th Cir. 2013) . . . . . . . . . . . . . . . . . 90, 159

United States v. 0.161 Acres of Land in Birmingham, 837 F.2d 1036 (11th Cir. 1988) . . . . . . . . . . . . . . . . . . 130

United States v. 0.21 Acres of Land, 803 F.2d 620 (11th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

United States v. 0.39 Acres of Land, No. 2:11-0259, 2013 WL 3874472 (S.D.W. Va. July 25, 2013) . . . . . . . . . . 166

United States v. 0.59 Acres of Land in Pima Cty., 109 F.3d 1493 (9th Cir. 1997) . . . . . . . . . . . 126-27, 129, 132, 197

United States v. 1,014.16 Acres of Land in Vernon Cty., 558 F. Supp. 1238 (W.D. Mo. 1983),

a’d, 739 F.2d 1371 (8th Cir. 1984) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202

United States v. 1,291.83 Acres of Land in Adair & Taylor Ctys., 411 F.2d 1081 (6th Cir. 1969) . . . . . . . . . . 139, 145

United States v. 1,629.6 Acres of Land in Sussex Cty. (Island Farm II),

360 F. Supp. 147 (D. Del. 1973), a’d, 503 F.2d 764 (3d Cir. 1974) . . . . . . . . . . . . . . . . . . . . . . . 179-80

United States v. 1,629.6 Acres of Land in Sussex Cty. (Island Farm III), 503 F.2d 764 (3d Cir. 1974) . . . . . . . . . . . .90

United States v. 1.377 Acres of Land (Hotel San Diego), 352 F.3d 1259 (9th Cir. 2003) . . . . . . . . . . . . . . . . .97, 99

United States v. 1.57 Acres of Land in San Diego Cty., No. 12cv3055,

2015 WL 5254558 (S.D. Cal. Sept. 9, 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105, 107

United States v. 1.604 Acres of Land (Granby I),

844 F. Supp. 2d 668 (E.D. Va. 2011) . . . . . . . . . 103, 105, 131-32, 134-36, 146-47, 149-51, 156, 159, 160, 202

United States v. 1.604 Acres of Land (Granby II), No. 2:10-cv-00320, 2011 WL 1810594 (E.D. Va. May 11, 2011) . . 135

United States v. 1.604 Acres of Land (Granby III), 844 F. Supp. 2d 685 (E.D. Va. 2011) . . . . . . . . . .124, 135-36, 202

United States v. 10,031.98 Acres of Land in Las Animas Cty., 850 F.2d 634 (10th Cir. 1988) . . . . . . . . . . . . . . . 129

United States v. 10.0 Acres of Land, 533 F.2d 1092 (9th Cir. 1976) . . . . . . . . . . . . . . . . . . . . . . . . . 112-13

United States v. 10.00 Acres of Land, No. 99-0672-CIV, 2010 WL 3733994 (S.D. Fla. Sept. 22, 2010),

a’d sub nom. United States v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (per curiam) . . . . . . . . 96, 109, 121, 202

United States v. 10.48 Acres of Land, 621 F.2d 338 (9th Cir. 1980) . . . . . . . . . . . . . . . . . . . . . . 125-26, 171

United States v. 10.56 Acres in Whatcom Cty. (Peace Arch I), No. C07-1261RAJ,

2008 WL 3977614 (W.D. Wash. Aug. 22, 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

United States v. 10.56 Acres in Whatcom Cty. (Peace Arch II), No. C07-1261RAJ,

2010 WL 415244 (W.D. Wash. Jan. 27, 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199, 201

United States v. 100 Acres of Land, 468 F.2d 1261 (9th Cir. 1972) . . . . . . . . . . . . . . . . . . . . .120, 131, 144-45

United States v. 100.00 Acres of Land in Livingston Cty., 369 F. Supp. 195 (W.D. Ky. 1973). . . . . . . . . . . . . . . .103

United States v. 100.01 Acres of Land in Buchanan Cty., 102 F. App’x 295 (4th Cir. 2004) (unpubl.) . . . . . . . . . . . 123

United States v. 100.80 Acres of Land (Parrish), 657 F. Supp. 269 (M.D.N.C. 1987) . . . . . . . . 137, 140, 142, 178, 181

United States v. 101.88 Acres of Land in St. Mary Par. (Avoca Island), 616 F.2d 762 (5th Cir. 1980) . . . . . .155, 157, 192

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities230

United States v. 102.871 Acres of Land in Cameron Par. (La. Jetty), No. 2:13 CV 2508,

2015 WL 5794073 (W.D. La. Oct. 2, 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189, 192

United States v. 103.38 Acres of Land in Morgan Cty. (Oldeld), 660 F.2d 208 (6th Cir. 1981) . . . 120, 137-38, 178-80, 182

United States v. 105.40 Acres of Land in Porter Cty., 471 F.2d 207 (7th Cir. 1972) . . . . . . . . . 111, 113, 116, 152, 156

United States v. 1129.75 Acres of Land in Cross & Pointsett Ctys., 473 F.2d 996 (8th Cir. 1973). . . . . . . . . . . . . .131

United States v. 114.64 Acres of Land, 504 F.2d 1098 (9th Cir. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . 129

United States v. 117,763 Acres of Land in Imperial Cty., 410 F. Supp. 628 (S.D. Cal. 1976),

a’d sub nom. United States v. Shewfelt Inv. Co., 570 F.2d 290 (9th Cir. 1977). . . . . . . . . . . . . . . . . . . . .43, 176

United States v. 12.94 Acres of Land in Solano Cty., No. S-07-2172,

2009 WL 4828749, 2009 U.S. Dist. LEXIS 114581 (E.D. Cal. Dec. 9, 2009) . . . . . . . . . . . . . . . . 57, 166-67

United States v. 122.63 Acres of Land in Norfolk Cty., 526 F. Supp. 539 (D. Mass. 1981) . . . . . . . . . . . . . . . . .157

United States v. 124.84 Acres of Land in Warrick Cty., 387 F.2d 912 (7th Cir. 1968) . . . . . . . . . . . . . . . . . . . 120

United States v. 125.07 Acres of Land (Pond Road I), 667 F.2d 243 (1st Cir. 1981) . . . . . . . . . . . . . . . . . 145, 151

United States v. 125.2 Acres of Land in Nantucket, 732 F.2d 239 (1st Cir. 1984). . . . . . . . . . . . . . . . . . . . . . .94

United States v. 13.20 Acres of Land in Lincoln Cty., 629 F. Supp. 242 (E.D. Wash. 1986) . . . . . . . . . . . . . . 191-93

United States v. 131,675 Rentable Square Feet of Space (GSA-VA St. Louis I),

No. 4:14-cv-1077, 2015 WL 4430134 (E.D. Mo. July 20, 2015) . . . . . . . . . . . . . . . . . 159, 161, 174, 176-77

United States v. 14.36 Acres of Land in McMullen Cty., 252 F. Supp. 2d 361 (S.D. Tex. 2002) . . . . . . . . . . . . 113-14

United States v. 14.38 Acres of Land, 80 F.3d 1074 (5th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

United States v. 147.47 Acres of Land (Delagap), 352 F. Supp. 1055 (M.D. Pa. 1972) . . . . . . . . . . . . . . . 143, 145

United States v. 15,478 Square Feet of Land (Balaji Sai), No. 2:10-cv-00322,

2011 WL 2471586 (E.D. Va. June 20, 2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100, 131, 133, 135

United States v. 15.00 Acres of Land in Miss. Cty., 468 F. Supp. 310 (E.D. Ark. 1979) . . . . . . 106-07, 138-39, 180, 183

United States v. 15.65 Acres of Land in Marin Cty. (Marin Ridgeland Co.), 689 F.2d 1329 (9th Cir. 1982) . . . . . . . 157-58

United States v. 158.00 Acres of Land in Clay Cty., 562 F.2d 11 (8th Cir. 1977). . . . . . . . . . . . . . . . . . . .99, 136

United States v. 158.24 Acres of Land in Bee Cty., 515 F.2d 230 (5th Cir. 1975) . . . . . . . . . . . . . . . . . . 103, 111

United States v. 158.24 Acres of Land, 696 F.2d 559 (8th Cir. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . 129

United States v. 158.76 Acres of Land in Townshend, 298 F.2d 559 (2d Cir. 1962) . . . . . 98, 104, 137, 140-41, 178, 182

United States v. 161.99 Acres of Land in Collins Cty., 512 F.2d 65 (5th Cir. 1975) . . . . . . . . . . . . . . . . . . . 94-95

United States v. 17.69 Acres of Land in San Diego (Nat’l Enterprises),

No. 99cv1248 DMS (JMA) (S.D. Cal. Aug. 30, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113, 116

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 231

United States v. 172.80 Acres of Land in Mercer Cty., 350 F.2d 957 (3d Cir. 1965) . . . . . . . . . . . . . . . . . . . . 147

United States v. 1735 N. Lynn St., 676 F. Supp. 693 (E.D. Va. 1987) . . . . . . . . . . . . . . . . . . . 159, 161, 174-77

United States v. 174.12 Acres of Land in Pierce Cty., 671 F.2d 313 (9th Cir. 1982) . . . . . . . . . . . . . . . . . . . . 108

United States v. 179.26 Acres of Land in Douglas Cty., 644 F.2d 367 (10th Cir. 1981) . . . . . . . . . . . . . . . . . . 180

United States v. 18.46 Acres of Land in Swanton, 312 F.2d 287 (2d Cir. 1963) . . . . . . . . . . . . . . . . . . . . . . 128

United States v. 2,175.86 Acres of Land in Hardin & Jeerson Ctys., 687 F. Supp. 1079 (E.D. Tex. 1988) . . . . . . . . 183

United States v. 2,477.79 Acres of Land in Bell Cty., 259 F.2d 23 (5th Cir. 1958) . . . . . . . . . . . . . . . . . . . . .163

United States v. 2,560.00 Acres of Land in Wash. Cty., 836 F.2d 498 (10th Cir. 1988) . . . . . . . . . . . . . . . . . . 155

United States v. 2,847.58 Acres of Land in Bath Ctys., 529 F.2d 682 (6th Cir. 1976) . . . . . . . . . . . . . .153, 165, 170

United States v. 2.33 Acres of Land in Wake Cty., 704 F.2d 728 (4th Cir. 1983) . . . . . . . . . . . . . . . . .112, 166, 167

United States v. 2.739 Acres of Land in Santa Cruz Cty., 609 F. App’x 436 (9th Cir. 2015) (unpubl.) . . . . . . . . . . .126

United States v. 21.54 Acres of Land in Marshall Cty., 491 F.2d 301 (4th Cir. 1973) . . . . . . . . . . . . . . . . . 91, 157

United States v. 22.80 Acres of Land in San Benito Cty., 839 F.2d 1362 (9th Cir. 1988) . . . . . . . . . . . . . . . . . 178

United States v. 237,500 Acres of Land, 236 F. Supp. 44 (S.D. Cal. 1964),

a’d sub nom. United States v. Am. Pumice Co., 404 F.2d 336 (9th Cir. 1968) . . . . . . . . . . . . . . 97, 107, 139, 181

United States v. 24.48 Acres of Land, 812 F.2d 216 (5th Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . 120, 180-81

United States v. 25.02 Acres of Land, 495 F.2d 1398 (10th Cir. 1974) . . . . . . . . . . . . . . . . . . . . . . . 126-127

United States v. 25.202 Acres of Land (Amexx I), 860 F. Supp. 2d 165 (N.D.N.Y. 2009),

adopted 860 F. Supp. 2d 165 (N.D.N.Y. 2010),

a’d, 502 F. App’x 43 (2d Cir. 2012) . . . . . . . . . 103, 110-11, 116, 118-20, 132-33, 136-38, 142, 155, 182, 189

United States v. 25.202 Acres of Land (Amexx II), No. 5:06-CV-428,

2011 WL 4595009 (N.D.N.Y. Sept. 30, 2011), a’d, 502 F. App’x 43 (2d Cir. 2012) . . . . . . . . . . . . . . . . .136

United States v. 25.936 Acres of Land in Edgewater, 153 F.2d 277 (3d Cir. 1946) . . . . . . . . . . . . . . . . . . . . . .97

United States v. 26.07 Acres of Land in Nassau Cty., 126 F. Supp. 374 (E.D.N.Y. 1954). . . . . . . . . . . . . . . . 156-57

United States v. 264.80 Acres of Land in Ramsey Cty., 360 F. Supp. 1381 (D.N.D. 1973) . . . . . . . . . . . . . . . . .126

United States v. 27.93 Acres of Land in Cumberland Cty., 924 F.2d 506 (3d Cir. 1991) . . . . . . . . . . . . .103, 108, 110

United States v. 275.81 Acres of Land (Flight 93 Memorial),

No. 09-233, 2014 WL 1248205 (W.D. Pa. Mar. 26, 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104-05

United States v. 3,218.9 Acres of Land in Warren Cty., 619 F.2d 288 (3d Cir. 1980). . . . . . . . . . . . . . . 91, 157, 169

United States v. 3,317.39 Acres of Land in Jeerson Cty., 443 F.2d 104 (8th Cir. 1971) . . . . . . . . . . . . . . . . . . 157

United States v. 3,727.91 Acres of Land (Elsberry Drainage District), 563 F.2d 357 (8th Cir. 1977). . . . . . . .135, 196, 198

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities232

United States v. 3.544 Acres of Land, 147 F.2d 596 (3d Cir. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

United States v. 3.6 Acres of Land in Spokane Cty., 395 F. Supp. 2d 982 (E.D. Wash. 2004) . . . . . . . . . . . . . . . 172

United States v. 3.66 Acres of Land in S.F., 426 F. Supp. 533 (N.D. Cal. 1977). . . . . . . . . . . . . . . . . . . . . .152

United States v. 30.54 Acres of Land in Greene Cty. (Filiaggi), 90 F.3d 790 (3d Cir. 1996) . . . . . . . . . . . . 187-92, 194

United States v. 312.50 Acres of Land in Prince William Cty., 812 F.2d 156 (4th Cir. 1987) . . . . . . . . . . . . . . 129-30

United States v. 32.42 Acres of Land (Fleet ASW), No. 05cv1137 DMS,

2009 WL 2424303 (S.D. Cal. Aug. 6, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98, 172

United States v. 32.42 Acres of Land in San Diego Cty., 683 F.3d 1030 (9th Cir. 2012) . . . . . . . . . . . . . . . . . . .91

United States v. 320 Acres of Land, 605 F.2d 762

(5th Cir. 1979) . . . . 99, 102, 104-06, 107-10, 119-120, 123-24, 129-30, 145-50, 165, 171, 175, 180, 183, 186, 197

United States v. 33.5 Acres of Land, 789 F.2d 1396 (9th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

United States v. 33.92356 Acres of Land (Piza-Blondet),

585 F.3d 1 (1st Cir. 2009) . . . . . . . . . 102-03, 107-08, 110-12, 116, 119, 129, 152, 154-55, 165-67, 170, 180-81

United States v. 33.92356 Acres of Land (Piza-Blondet Trial Op.),

Nos. 98-1664 & 98-2344, 2008 WL 2550586 (D.P.R. June 13, 2008),

a’d, 585 F.3d 1 (1st Cir. 2009). . . . . . . . . . . . . . . . . . . . . . . . .98, 101, 112, 137-38, 140, 142, 178, 180

United States v. 341.45 Acres of Land in St. Louis Cty., 633 F.2d 108 (8th Cir. 1980) . . . . . . . . . . . . . . 104, 143-45

United States v. 344.85 Acres of Land, 384 F.2d 789 (7th Cir. 1967) . . . . . . . . . . . . . . . . . . . . . . . . 120, 193

United States v. 38,994 Net Usable Square Feet at 910 S. Mich. Ave., No. 87 C 8569,

1989 WL 51395 (N.D. Ill. May 11, 1989). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .161

United States v. 38.60 Acres of Land in Henry Cty., 625 F.2d 196 (8th Cir. 1980) . . . . . . . . . . . . . . . . . . 157, 169

United States v. 381.76 Acres of Land (Montego Group), No. 96-1813, 2010 WL 3734003

(S.D. Fla. Aug. 3, 2010), adopted sub nom. United States v. 10.00 Acres of Land, No. 99-0672-CIV,

2010 WL 3733994 (S.D. Fla. Sept. 22, 2010), a’d sub nom. United States v. Gonzalez,

466 F. App’x 858 (11th Cir. 2012) (per curiam) . . . . . . . . . . . . . . . . . . . . . . . . . .96, 109, 121, 178, 202

United States v. 4.0 Acres of Land, 175 F.3d 1133 (9th Cir. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

United States v. 4.105 Acres of Land in Pleasanton, 68 F. Supp. 279 (N.D. Cal. 1946) . . . . . . . . . . . . . . . . . . 101

United States v. 4.27 Acres of Land, 271 F. App’x 424, 2008 WL 830711 (5th Cir. 2008) (per curiam) (unpubl.) . 152, 165

United States v. 4.85 Acres of Land in Lincoln Cty., 546 F.3d 613 (9th Cir. 2008) . . . . . . . . . . . . . . .123-24, 130-31

United States v. 40.60 Acres of Land in Contra Costa Cty., 483 F.2d 927 (9th Cir. 1973). . . . . . . . . . . . . . . . . .157

United States v. 403.14 Acres of Land in St. Clair Cty., 553 F.2d 565 (8th Cir. 1977) . . . . . . . . . . . . . . . . . 112-13

United States v. 421.89 Acres of Land, 465 F.2d 336 (8th Cir. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . . .120

United States v. 422,978 Square Feet of Land in S.F., 445 F.2d 1180 (9th Cir. 1971) . . . . . . . . . . . . . . . . . . . 191

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 233

United States v. 428.02 Acres of Land in Newton & Searcy Ctys., 687 F.2d 266 (8th Cir. 1982) . . 123-25, 129-30, 146, 151

United States v. 429.59 Acres of Land (Imperial Beach), 612 F.2d 459 (9th Cir. 1980) . 103, 107, 110-14, 116, 122, 129, 193

United States v. 46,672.96 Acres of Land in Doña Ctys.,

521 F.2d 13 (10th Cir. 1975) . . . . . . . . . . . . . . . . . .104-06, 123, 125, 126-28, 174, 175, 177, 183, 186, 197

United States v. 47.14 Acres of Land in Polk Cty., 674 F.2d 722 (8th Cir. 1982). . . . . . 46, 120, 125, 136, 137, 138, 182

United States v. 47.3096 Acres of Land, 583 F.2d 270 (6th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . 143-45

United States v. 478.34 Acres of Land, 578 F.2d 156 (6th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . .143

United States v. 48.10 Acres of Land in New Windsor, 144 F. Supp. 258 (S.D.N.Y. 1956) . . . . . . . . . . . . . . . . .150

United States v. 480.00 Acres of Land (Fornatora),

557 F.3d 1297 (11th Cir. 2009) . . . . . . . . . . . . . . . . . . . . . . . 107, 109, 120, 125, 127, 146, 148, 150-51

United States v. 49,375 Square Feet of Land in Manhattan (252 Seventh Ave.),

92 F. Supp. 384 (S.D.N.Y. 1950), a’d sub nom. United States v.

Tishman Realty & Constr. Co., 193 F.2d 180 (2d Cir. 1952) (per curiam) . . . . . . . . . . . . . . . . . . . . . 131, 133

United States v. 49.01 Acres of Land in Osage Cty., 669 F.2d 1364 (10th Cir. 1982). . . . . . . . . . . . . . .147, 149, 151

United States v. 49.79 Acres of Land in New Castle Cty. (Cherry Island), 582 F. Supp. 368 (D. Del. 1983) . . . . . . . . . 192

United States v. 494.10 Acres of Land in Cowley Cty., 592 F.2d 1130 (10th Cir. 1979) . . . . . . . . . . . . . . . . . . 180

United States v. 499.472 Acres of Land in Brazoria Cty., 701 F.2d 545 (5th Cir. 1983) . . . . . . . . . . . 97, 99, 173, 178

United States v. 5,139.5 Acres of Land, 200 F.2d 659 (4th Cir. 1952) . . . . . . . . . . . . . . . . . . . . . . . . . . 122

United States v. 50 Acres of Land (Duncanville),

469 U.S. 24 (1984) . . . . . . . . . . . . . . . . .5, 90, 92-93, 100-01, 105, 107, 145, 155, 187, 196-97, 199, 200-01

United States v. 50.50 Acres of Land, 931 F.2d 1349 (9th Cir. 1991) . . . . . . . . . . . . . . . . . . . . . .112, 114, 155

United States v. 55.22 Acres of Land in Yakima Cty., 411 F.2d 432 (9th Cir. 1969) . . . . . . . . . . . . . . . . . . 131-34

United States v. 564.54 Acres of Land (Lutheran Synod), 441 U.S. 506 (1979) . . . . . . 93, 96, 99-120, 173, 187, 196-200

United States v. 57.09 Acres of Land in Skamania Cty. (Peterson I), 706 F.2d 280 (9th Cir. 1983) . . . . . . . . . . . . . .173

United States v. 57.09 Acres of Land in Skamania Cty. (Peterson II), 757 F.2d 1025 (9th Cir. 1985). . . . . . . . . . . . .159

United States v. 58.1 Acres of Land in Hempstead, 151 F. Supp. 631 (E.D.N.Y. 1957) . . . . . . . . . . . . . . . . . . .150

United States v. 599.86 Acres in Johnson & Logan Ctys., 240 F. Supp. 563 (W.D. Ark. 1965),

a’d sub nom. Mills v. United States, 363 F.2d 78 (8th Cir. 1966). . . . . . . . . . . . . . . . . . . . . . . . . . . . .179

United States v. 6.24 Acres of Land (Weber), 99 F.3d 1140,

1996 WL 607162 (6th Cir. 1996) (per curiam) (unpubl.) . . . . . . . . . . . . . . . 96, 98, 111-12, 150, 152, 155-57

United States v. 6.45 Acres of Land (Gettysburg Tower), 409 F.3d 139 (3d Cir. 2005). 97, 99, 110-11, 136, 138, 141-42, 173

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities234

United States v. 6.45 Acres of Land, No. 1:CV-99-2128, 2006 WL 839375

(M.D. Pa. Mar. 27, 2006), on remand from 409 F.3d 139 (3d Cir. 2005) . . . . . . . . . . . . . . . . . . . . . 138, 142

United States v. 60.14 Acres of Land, 362 F.2d 660 (3d Cir. 1966) . . . . . . . . . . . . . . . . . . . . . . .119, 120, 122

United States v. 62.17 acres of Land in Jasper Cty., 538 F.2d 670 (5th Cir. 1976) . . . . . . . . . . . . . . . . . . . 91, 147

United States v. 62.50 Acres of Land in Jeerson Par., 953 F.2d 886 (5th Cir. 1992) . . . . . . . . . . . . . . . 103, 108-09

United States v. 63.04 Acres of Land at Lido Beach, 245 F.2d 140 (2d Cir. 1957) . . . . . . . . . . . . . . . . . . . . . 130

United States v. 633.07 Acres of Land, 362 F. Supp. 451 (M.D. Pa. 1973) . . . . . . . . . . . . . . . . . . . . . . . . 123

United States v. 677.50 Acres of Land, 420 F.2d 1136 (10th Cir. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . 159

United States v. 68.94 Acres of Land in Kent Cty., 918 F.2d 389 (3d Cir. 1990) . . . . . . 120, 123-24, 130-31, 151-52, 169

United States v. 69.1 Acres of Land (Sand Mountain), 942 F.2d 290 (4th Cir. 1991) . . . . 95-96, 103, 137-39, 179-80, 182

United States v. 691.81 Acres of Land in Clark Cty., 443 F.2d 461 (6th Cir. 1971) . . . . . . . . . . . . . . . . . . . . 130

United States v. 71.29 Acres in Catahoula Par., 376 F. Supp. 1221 (W.D. La. 1974) . . . . . . . . . . . . . . . . . 191, 193

United States v. 711.57 Acres of Land in Alameda Cty., 51 F. Supp. 30 (N.D. Cal. 1943) . . . . . . . . . . . .115, 154, 203

United States v. 75.13 Acres in Polk Cty., 693 F.2d 813 (8th Cir. 1982) . . . . . . . . . . . . . . . . . . . . . . . . 138-39

United States v. 760.807 Acres of Land in Honolulu, 731 F.2d 1443 (9th Cir. 1984) . . . . . .96, 150, 152-54, 156-59,166

United States v. 765.56 Acres of Land in Southampton (765.56 Acres I), 164 F. Supp. 942 (E.D.N.Y. 1958),

a’d sub nom. United States v. Glanat Realty Corp., 276 F.2d 264 (2d Cir. 1960). . . . . . . . . . . . . . 94, 108, 152, 172

United States v. 765.56 Acres of Land in Southampton (765.56 Acres II), 174 F. Supp. 1 (E.D.N.Y. 1959),

a’d sub nom. United States v. Glanat Realty Corp., 276 F.2d 264 (2d Cir. 1960). . . . . . . . . . . . . . . . .113, 152, 172

United States v. 79.20 Acres of Land in Stoddard Cty., 710 F.2d 1352 (8th Cir. 1983) . . . . . . . . . . . . . . . . . 172-73

United States v. 79.31 Acres of Land, 717 F.2d 646 (1st Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90

United States v. 79.95 Acres of Land, 459 F.2d 185 (10th Cir. 1972) . . . . . . . . . . . . . . . . . . . . . . . . . 124-25

United States v. 790.71 Acres of Land in Cotton, Comanche & Stephens Ctys., 550 F. Supp. 690 (W.D. Okla. 1981) . . . . .94

United States v. 7,936.6 Acres of Land, 69 F. Supp. 328 (D.P.R. 1947) . . . . . . . . . . . . . . . . . . . . . . . . . 116

United States v. 8,968.06 Acres in Chambers & Liberty Ctys. (Wallisville), 326 F. Supp. 546 (S.D. Tex. 1971) . .108, 191, 193

United States v. 8,968.06 Acres of Land in Chambers & Liberty Ctys.,318 F. Supp. 698 (S.D. Tex. 1970),

vacated 326 F. Supp. 546 (S.D. Tex. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

United States v. 8.34 Acres of Land in Ascension Par., No. 04-5-D-MI,

2006 WL 6860387 (M.D. La. June 12, 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135, 204-05

United States v. 8.41 Acres of Land in Orange Cty.,

680 F.2d 388 (5th Cir. 1982) . . . . . . . . . . . . . . . . . . . . .103, 110-13, 116-17, 152-53, 155, 165, 169, 171

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 235

United States v. 819.98 Acres of Land, 78 F.3d 1468 (10th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . 120

United States v. 87.30 Acres of Land in Whitman & Gareld Ctys., 430 F.2d 1130 (9th Cir. 1970) . . . . . . . . . 113, 190

United States v. 87.98 Acres of Land in Merced Cty., 530 F.3d 899 (9th Cir. 2008) . . . . . . . . . . . . . . . . . . . . 158

United States v. 881.39 Acres of Land, 254 F. Supp. 294 (E.D. Okla. 1966) . . . . . . . . . . . . . . . . . . . . . . .150

United States v. 883.89 Acres of Land in Sebastian Cty., 314 F. Supp. 238 (W.D. Ark. 1970),

a’d, 442 F.2d 262 (8th Cir. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 171, 175

United States v. 883.89 Acres of Land in Sebastian Cty., 442 F.2d 262 (8th Cir. 1971) . . . . . . . . . . . . 43, 171, 175-76

United States v. 9.20 Acres of Land in Polk Cty., 638 F.2d 1123 (8th Cir. 1981) . . . . . . . . . . . . . . . . . 112, 154-55,

United States v. 901.89 Acres of Land in Davidson & Rutherford Ctys. (Davenport),

436 F.2d 395 (6th Cir. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152, 162-63, 166

United States v. 91.90 Acres of Land in Monroe Cty. (Cannon Dam),

586 F.2d 79 (8th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . 97-99, 112-13, 136, 151-52, 154-55, 159, 178-79

United States v. 93.970 Acres of Land (Illinois Aircraft), 360 U.S. 328 (1959) . . . . . . . . . . . . . . . . . . . . . . . .91

United States v. 967,905 Acres of Land in Cook Cty. (Pete), 447 F.2d 764 (8th Cir. 1971) . . . . . . . . . . . . . . 191, 193

United States v. 97.19 Acres of Land, 582 F.2d 878 (4th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . 166, 193

United States v. 99.66 Acres of Land (Sunburst Invs.), 970 F.2d 651 (9th Cir. 1992) . . . . . . . . . . . . . . . 118, 143-44

United States v. Am. Pumice Co., 404 F.2d 336 (9th Cir. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . 140, 181

United States v. An Easement & Right-of-Way Over Two Strips of Land, 284 F. Supp. 71 (W.D. Ky. 1968) . . . . . . . . .170

United States v. Appalachian Elec. Power Co., 311 U.S. 377 (1940) . . . . . . . . . . . . . . . . . . . . . . . . . . 188-90

United States v. Banisadr Bldg. Joint Venture, 65 F.3d 374 (4th Cir. 1995) . . . . . . . . . . . . . 151-52, 166, 169, 174-75

United States v. Becktold Co., 129 F.2d 473 (8th Cir. 1942) . . . . . . . . . . . . . . . . . . . . . . 124, 131-32, 135-36

United States v. Bedford Assocs., 548 F. Supp. 732 (S.D.N.Y. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

United States v. Benning Hous. Corp., 276 F.2d 248 (5th Cir. 1960) . . . . . . . . . . . . . . . . . . . . . . .119, 131, 133

United States v. Birnbach, 400 F.2d 378 (8th Cir. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190, 192-93

United States v. Bodcaw Co., 440 U.S. 202 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

United States v. Brondum, 272 F.2d 642 (5th Cir. 1959) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

United States v. Buhler (Buhler I), 254 F.2d 876 (5th Cir. 1958) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

United States v. Buhler (Buhler II), 305 F.2d 319 (5th Cir. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . 103, 186

United States v. Carroll, 304 F.2d 300 (4th Cir. 1962) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

United States v. Causby, 328 U.S. 256 (1946) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90-92, 169, 177-78

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities236

United States v. Certain Interests in Prop. in Brooklyn, 326 F.2d 109 (2d Cir. 1964) . . . . . . . . . . . . . . . . . . . . .132

United States v. Certain Interests in Prop. in Champaign Cty., 271 F.2d 379 (7th Cir. 1959) . . . . . . . . . . . . . . . 91, 131

United States v. Certain Interests in Prop. in Cumberland Cty., 296 F.2d 264 (4th Cir. 1961) . . . . . . . . . . . .132, 133, 135

United States v. Certain Interests in Prop. in Monterey Cty., 186 F. Supp. 167 (N.D. Cal. 1960),

a’d sub nom. Likins-Foster Monterey Corp. v. United States, 308 F.2d 595 (9th Cir. 1962) . . . . . . . . . . . .137, 141, 182

United States v. Certain Land in Fort Worth, 414 F.2d 1029 (5th Cir. 1969) . . . . . . . . . . . . . . . . . . . 124-25, 129

United States v. Certain Land in Lincoln, 343 F. Supp. 155 (D. Neb. 1972) . . . . . . . . . . . . . . . . . . . . . . . . .94

United States v. Certain Lands in Wappinger, 67 F. Supp. 905 (S.D.N.Y. 1946) . . . . . . . . . . . . . . . . . . . . . . .94

United States v. Certain Land Situated in Detroit (DIBCO I), 188 F. Supp. 2d 747 (E.D. Mich. 2002),

a’d, 450 F.3d 205 (6th Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112, 116

United States v. Certain Land Situated in Detroit (DIBCO III), 600 F. Supp. 2d 880 (E.D. Mich. 2009),

a’d, 633 F.3d 418 (6th Cir. 2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

United States v. Certain Parcel of Land in Jackson Cty., 322 F. Supp. 841 (W.D. Mo. 1971) . . . . . . . . . . . . . 112, 114

United States v. Certain Parcels of Land in Phila., 144 F.2d 626 (3d Cir. 1944) . . . . . . . . . . . . . . . . . . . . . . 130

United States v. Certain Parcels of Land in Rapides Par., 149 F.2d 81 (5th Cir. 1945). . . . . . . . . . . . . . . . . . . . .98

United States v. Certain Parcels of Land in Valdez, 666 F.2d 1236 (9th Cir. 1982) . . . . . . . . . . . . . . . . 188-89, 191

United States v. Certain Space in Rand McNally Bldg., 295 F.2d 381 (7th Cir. 1961) . . . . . . . . . . . . . . . . . . . . .98

United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53 (1913) . . . . . . .94, 96, 104-07, 155, 172, 186, 188, 197

United States v. Cherokee Nation, 480 U.S. 700 (1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-91

United States v. Chi., B. & Q.R. Co., 82 F.2d 131 (8th Cir. 1936) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

United States v. Chi., M., St. P. & P. R. Co., 312 U.S. 592 (1941). . . . . . . . . . . . . . . . . . . . . . . . . . . 187-89

United States v. City of Columbus, 180 F. Supp. 775 (S.D. Ohio 1959). . . . . . . . . . . . . . . . . . . . . . . . . . .98

United States v. City of New York, 168 F.2d 387 (2d Cir. 1948). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196

United States v. City of Tacoma, 330 F.2d 153 (9th Cir. 1964) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91, 169

United States v. Clarke, 445 U.S. 253 (1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94, 184, 199

United States v. Commodities Trading Corp., 339 U.S. 121 (1950) . . . . . . . . . . . . . . . . . . . . 93, 101, 108-09, 196

United States v. Commodore Park, Inc., 324 U.S. 386 (1945). . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 189-90

United States v. Consol. Mayower Mines, Inc., 60 F.3d 1470 (10th Cir. 1995) . . . . . . . . . . . . . . . . . . . . 178-79

United States v. Corbin, 423 F.2d 821 (10th Cir. 1970). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

United States v. Cors, 337 U.S. 325 (1949) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104, 146

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 237

United States v. Cox, 190 F.2d 293 (10th Cir. 1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159-160, 195

United States v. Crance, 341 F.2d 161 (8th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145, 147

United States v. Cress, 243 U.S. 316 (1917) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170

United States v. Deist, 442 F.2d 1325 (9th Cir. 1971) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

United States v. Delano Park Homes, Inc., 146 F.2d 473 (2d Cir. 1944) . . . . . . . . . . . . . . . . . . . . . . . . . . 109

United States v. Del., Lackawana & W.R.R. Co., 264 F.2d 112 (3d Cir. 1959) . . . . . . . . . . . . . . . . . . . . . . .98

United States v. Des Moines Cty., 148 F.2d 448 (8th Cir. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196

United States v. Dickinson, 331 U.S. 745 (1947) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91-92

United States v. Dillman, 146 F.2d 572 (5th Cir. 1944). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129

United States v. Dow, 357 U.S. 17 (1958) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93-94

United States v. Dunnington, 146 U.S. 338 (1892) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92, 97, 99

United States v. Eastman (Eastman I), 528 F. Supp. 1177 (D. Or. 1981),

adopted 714 F.2d 76 (9th Cir. 1983) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . . .90, 146-47, 150, 194

United States v. Eastman (Eastman II), 528 F. Supp. 1184 (D. Or. 1981),

a’d, 714 F.2d 76 (9th Cir. 1983) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90, 120-21

United States v. Eastman (Eastman III), 714 F.2d 76 (9th Cir. 1983) . . . . . . . . . . . . . . . . . . . . . . 90, 147, 194

United States v. Eden Mem’l Park Ass’n, 350 F.2d 933 (9th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . 108-09, 120

United States v. Evans, 380 F.2d 761 (10th Cir. 1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . 111, 115-16, 152

United States v. Finis P. Ernest, Inc., 509 F.2d 1256 (7th Cir. 1975), cert. denied, 423 U.S. 893 (1975) . . . . . . . . . . .82

United States v. Flood Bldg., 157 F. Supp. 438 (N.D. Cal. 1957) . . . . . . . . . . . . . . . . . . . . . . . . . . . 175-76

United States v. Fort Smith River Dev. Corp., 349 F.2d 522 (8th Cir. 1965). . . . . . . . . . . . . . . . . . . . . . . . .194

United States v. Foster, 131 F.2d 3 (8th Cir. 1942) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101, 125

United States v. Freeman, 113 F. 370 (D. Wash. 1902) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

United States v. Fuller, 409 U.S. 488 (1973) . . . . . . . . . . . . . . . . . . . . . . . .100, 150, 165, 187-88, 195, 197

United States v. Gen. Motors Corp., 323 U.S. 373 (1945) . . . . . . . . . . . 99, 136, 152, 154, 159, 160-61, 174-77, 195

United States v. Gerlach Live Stock Co., 339 U.S. 725 (1950) . . . . . . . . . . . . . . . . . . . . . . . . . . 184, 188-190

United States v. Gettysburg Elec. Ry. Co., 160 U.S. 668 (1896) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

United States v. Glanat Realty Corp., 276 F.2d 264 (2d Cir. 1960) . . . . . . . . . . . . . . . . . . . . . . . . . 152, 170

United States v. Gonzalez, 466 F. App’x 858 (11th Cir. 2012) (per curiam) . . . . . . . . . . . . . . . . . . . . . . . .97

United States v. Gossler, 60 F. Supp. 971 (D. Or. 1945) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities238

United States v. Grand River Dam Auth., 363 U.S. 229 (1960). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .159

United States v. Grizzard, 219 U.S. 180 (1911) . . . . . . . . . . . . . . . . . . . . 110, 113, 151, 165, 167-68, 170, 173

United States v. Hart, 312 F.2d 127, 130 (6th Cir. 1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

United States v. Hickey, 360 F.2d 127 (7th Cir. 1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

United States v. Honolulu Plantation Co., 182 F.2d 172 (9th Cir. 1950) . . . . . . . . . . . . . . . . 112-13, 154, 157, 166

United States v. Kan. City Life Ins. Co., 339 U.S. 799 (1950) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

United States v. Katz, 213 F.2d 799 (1st Cir. 1954) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122

United States v. Kooperman, 263 F.2d 331 (2d Cir. 1959) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

United States v. L.E. Cooke Co., 991 F.2d 336 (6th Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

United States v. Land & Cris Realms, Inc., 213 F.3d 830 (5th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . 110, 146

United States v. Land in Dry Bed of Rosamond Lake, 143 F. Supp. 314 (S.D. Cal. 1956) . . . . . . . . . . . . . . . . . 179

United States v. Leavell & Ponder, Inc., 286 F.2d 398 (5th Cir. 1961) . . . . . . . . . . . .123, 125, 128, 137, 140-41, 182

United States v. Lewis, 308 F.2d 453 (9th Cir. 1962). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98

United States v. Little Lake Misere Land Co., 412 U.S. 580 (1973) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91

United States v. Mattox, 375 F.2d 461 (4th Cir. 1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112, 156

United States v. Meadow Brook Club, 259 F.2d 41 (2d Cir. 1958) . . . . . . . . . . . . . . . . . . . . .108, 110, 129, 139

United States v. Meyer, 113 F.2d 387 (7th Cir. 1940). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91, 98, 178

United States v. Michoud Indus. Facilities, 322 F.2d 698 (5th Cir. 1963). . . . . . . . . . . . . . . . . . . . . 43, 171, 176

United States v. Miller,

317 U.S. 369 (1943) . . 4, 89, 90-91, 93-94, 99, 100, 110, 112, 114, 119, 128, 145-47, 150-52, 154, 156, 165-68, 177

United States v. New River Collieries Co., 262 U.S. 341 (1923) . . . . . . . . . . . . . . . . . . 89, 93, 101, 106, 120, 151

United States v. Pa.-Dixie Cement Corp., 178 F.2d 195 (6th Cir. 1949) . . . . . . . . . . . . . . . . . . . . . . . . . . 139

United States v. Petty Motor Co., 327 U.S. 372 (1946). . . . . . . . . . . . . . . . . . . . . . . 155, 159-61, 174-75, 177

United States v. Pewee Coal Co., 341 U.S. 114 (1951) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

United States v. Playa De Flor Land & Improvement Co., 160 F.2d 131 (5th Cir. 1947) . . . . . . . . . . . . . . . . . . 125

United States v. Pope & Talbot, Inc., 293 F.2d 822 (9th Cir. 1961) . . . . . . . . . . . . . . . . . . . . . . . . . . 157-58

United States v. Rands, 389 U.S. 121 (1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-94

United States v. Reynolds, 397 U.S. 14 (1970) . . . . . . . . . .90, 93-94, 100, 116, 128, 131, 145-47, 149, 150-51, 165

United States v. Right to Use & Occupy 3.38 Acres in Alexandria, 484 F.2d 1140 (4th Cir. 1973) . . . . . . . . . . . . . 176

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 239

United States v. River Rouge Improvement Co., 269 U.S. 411 (1926) . . . . . . . . . . . . . . . . . . . . . . . 163-64, 194

United States v. Rodgers, 461 U.S. 677 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

United States v. S.D. Game, Fish & Parks Dep’t, 329 F.2d 665 (8th Cir. 1964) . . . . . . . . . . . . . . . . . . . . . . 107

United States v. Smith, 355 F.2d 807 (5th Cir. 1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129-30

United States v. Sowards, 370 F.2d 87 (10th Cir. 1966) . . . . . . . . . . . . . . . . 98, 105, 137-38, 177-80, 182, 202

United States v. Sponenbarger, 308 U.S. 256 (1939) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162

United States v. Streets, Alleys & Pub. Ways in Vill. of Stoutsville, 531 F.2d 882 (8th Cir. 1976) . . . . . . . 196-97, 199-200

United States v. Tishman Realty & Constr. Co., 193 F.2d 180 (2d Cir. 1952) (per curiam) . . . . . . . . . . . . . . . . 131

United States v. Toronto, Hamilton & Bualo Nav. Co.,

338 U.S. 396 (1949) . . . . . . . . . . . . . . . . . . . . . . . . 119, 131-33, 137, 140, 142, 177, 182, 196, 198, 201

United States v. Trout, 386 F.2d 216 (5th Cir. 1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117, 163

United States v. Twin City Power Co., 350 U.S. 222 (1956) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-91

United States v. Upper Potomac Props. Corp., 448 F.2d 913 (4th Cir. 1971) . . . . . . . . . . . . . . . . . . . 120, 179-81

United States v. Va. Elec. & Power Co., 365 U.S. 624 (1961) . . . . . . . . . . . 145, 151-52, 165, 169-172, 187-91, 194

United States v. Wateree Power Co., 220 F.2d 226 (4th Cir. 1955) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

United States v. Waymire, 202 F.2d 550 (10th Cir. 1953). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110

United States v. Welch, 217 U.S. 333 (1910) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99, 173

United States v. Werner, 36 F.3d 1095 (4th Cir. 1994) (unpubl.) . . . . . . . . . . . . . . . . . . . . . . . .117, 155, 166

United States v. Westinghouse Elec. & Mfg., 339 U.S. 261 (1950) . . . . . . . . . . . . . . . . 154, 159-61, 175, 177, 195

United States v. Weyerhaeuser Co., 538 F.2d 1363 (9th Cir. 1976) . . . . . . . . . . . . . . . . . . . . . . . 104-05, 186

United States v. Whitehurst, 337 F.2d 765 (4th Cir. 1964) . . . . . . . . . . . . . . . . . . 104-05, 107, 137-40, 178-82

United States v. Willow River Power Co., 324 U.S. 499 (1945) . . . . . . . . . . . . . . . 99, 152, 160-61, 187, 190, 195

United States v. Wise, 131 F.2d 851 (4th Cir. 1942) . . . . . . . . . . . . . . . . . . . . . . . . . 98, 119, 131, 134, 136

Vector Pipeline, L.P. v. 68.55 Acres of Land, 157 F. Supp. 2d 949 (N.D. Ill. 2001) . . . . . . . . . . . . . . . . . . . . .92

Virgin Islands v. 2.7420 Acres of Land, 411 F.2d 785 (3d Cir. 1969) . . . . . . . . . . . . . . . . . . . . . . . . . . .108

W. Chi. St. R.R. v. Ill. ex rel. Chi., 201 U.S. 506 (1906) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

Walther v. Secretary of Health & Human Servs., 485 F.3d 1146 (Fed. Cir. 2007) . . . . . . . . . . . . . . . . . . . . . .90

Wardy v. United States, 402 F.2d 762 (5th Cir. 1968) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146

Wash. Metro. Area Transit Auth. v. One Parcel of Land (Old Georgetown), 691 F.2d 702 (4th Cir. 1982). . .108, 111, 117, 163

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities240

Wash. Metro. Area Transit Auth. v. One Parcel of Land, 780 F.2d 467 (4th Cir. 1986) . . . . . . . . . . . . . . . . . . . .98

Washington v. United States (Hanford), 214 F.2d 33 (9th Cir. 1954) . . . . . . . . . . . . . . . . . . . . . . .197, 201, 205

Weatherford v. United States, 606 F.2d 851 (9th Cir. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . 168, 189-91

Welch v. Tenn. Valley Auth., 108 F.2d 95 (6th Cir. 1939) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .125

Whitney Benets v. United States, 18 Cl. Ct. 394 (1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

Wilson v. United States, 350 F.2d 901 (10th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183

Winn v. United States, 272 F.2d 282 (9th Cir. 1959) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110-11, 157

Winston v. United States, 342 F.2d 715 (9th Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

Wol v. Puerto Rico, 341 F.2d 945 (1st Cir. 1965) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Woodville v. United States, 152 F.2d 735 (10th Cir. 1946), cert. denied, 328 U.S. 842 (1946) . . . . . . . . . . . . 196, 198

Wyatt v. United States, 271 F.3d 1090 (Fed. Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

Yuba Nat. Res., Inc. v. United States, 904 F.2d 1577 (Fed. Cir. 1990) . . . . . . . . . . . . . . . . . . . 159, 171, 174, 177

United States Constitution

U.S. Const. amend. v . . . . . . . . . . . . . . . . . .1, 4, 49, 89-90, 95, 99-101, 105-112, 132-33, 135-36, 154-55,

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159-61, 166, 170, 174, 176, 184, 187-190, 195, 197, 201

U.S. Const. art. 1, § 8, cl. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188

Statutes

100 Stat. 4274 § 8(o) (Pub. L. No. 99-663) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

102 Stat. 1086 § 3(a) (Pub. L. No. 100-409), amending 43 U.S.C. § 1716 . . . . . . . . . . . . . . . . . . . . . 4, 14

105 Stat. 1150 § 8126(a) (Pub. L. No. 102-172). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

106 Stat. 2112 § 7(b) (Pub. L. No. 102-415). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

106 Stat. 2258 § 2(d)(2)(A) (Pub. L. No. 102-453) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

110 Stat. 4093 § 304(c)(4)(A) (Pub. L. No. 104-333) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

112 Stat. 879 § 1(c) (Pub. L. No. 105-208) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

112 Stat. 2681 §357(1), § 605(a)(3) (Pub. L. No. 105-277) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

113 Stat. 1693 § 4(b) (Pub. L. No. 106-138) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Act of Mar. 7, 1974, Pub. L. No. 93-251, § 83, 88 Stat. 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 241

Alaska National Interest Lands Conservation Act, 16 U.S.C. § 3192 . . . . . . . . . . . . . . . . . . . . . . . . .51

Alaska Native Claims Setlement Act, as amended, 43 U.S.C. § 1621 . . . . . . . . . . . . . . . . . . . . . . . . .51

Clean Water Act, 33 U.S.C. § 1251 et seq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Declaration of Taking Act, 40 U.S.C. § 3114 (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10, 94

Everglades National Park Protection and Expansion Act of 1989, 16 U.S.C. § 410r-5 et seq. . . . . . . . . . 127, 148

Federal Land Policy and Management Act of 1976 (FLPMA), 43 U.S.C. §§ 1701-1785 . . . . . . . . 4, 14, 51, 185

Fifth Circuit Court of Appeals Reorganization Act of 1980, Pub. L. No. 96-452,

94 Stat. 1994 (1980) (codied as amended in scattered sections of 28 U.S.C.). . . . . . . . . . . . . . . . . . . .148

Flood Control Act of 1944 § 8, 33 U.S.C. § 701-1(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .190

General Condemnation Act, 40 U.S.C. § 3113 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94

Granger-Thye Act of 1950, 16 U.S.C. § 580l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 195

Interstate Commerce Act, 49 U.S.C. § 10903 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198

Little Tucker Act, 28 U.S.C. § 1346 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184

Mount St. Helens National Volcanic Monument Act, Pub. L. No. 97-243,

96 Stat. 301 (1982), 16 U.S.C. § 431 note (1982) (repealed 2014) . . . . . . . . . . . . . . . . . . . . . . . . 185-86

National Trails System Act, as amended, 16 U.S.C. §§ 1241-51 (2012) . . . . . . . . . . . . . . . . . . . . 187, 199

Natural Gas Act, 15 U.S.C. § 717f(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Ports and Waterways Safety Act of 1972, 33 U.S.C. § 1221 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

Rivers and Harbors Act of 1970, § 111, 33 U.S.C. § 595a . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187-93

Taylor Grazing Act of 1934, 43 U.S.C. § 315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187, 195

Tennessee Valley Authority Act, 16 U.S.C. § 831q . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200

Tucker Act, 28 U.S.C. § 1491 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

Uniform Relocation Assistance & Real Property Acquisition Policies Act of 1970

(Uniform Act), 42 U.S.C. §§ 4601-4655. . . . .3, 6, 9, 12, 14-15, 17, 21, 29, 38, 70, 73, 80, 84, 86-87, 89, 92, 94-95,

. . . . . . . . . . . . . . . . . . . . . . . . . . . 98-99, 123, 136, 150, 152, 160-61, 163, 165-66, 175, 184, 205-06

16 U.S.C. § 410r-9(2)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

43 U.S.C. § 315q. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160, 195

Code of Miami-Dade Cty., Fla., Municipal Code §1-4.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities242

Legislative Materials

H.R. Rep. No. 91-1656, 91st Cong., 2d Sess. (1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .99

H.R. Rep. No. 91-1665, 91st Cong., 2d Sess. (1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191-92, 194

Rules

Federal Rules of Civil Procedure, Rule 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56-57, 72, 82

Federal Rules of Civil Procedure, Rule 71.1 (formerly Rule 71A) . . . . . . . . . . . . . . . . . . . . . . 91-92, 116

Federal Rules of Evidence, Rule 102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90, 119

Federal Rules of Evidence, Rule 408 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

Federal Rules of Evidence, Rule 703 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202

Regulations and Administrative Materials

33 C.F.R. § 323.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

36 C.F.R. § 254 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

36 C.F.R. § 254.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51, 53

36 C.F.R. § 254.3(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

36 C.F.R. § 254.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

36 C.F.R. § 254.4(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

36 C.F.R. § 254.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

36 C.F.R. § 254.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14, 51

36 C.F.R. § 254.9(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

36 C.F.R. § 254.9(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

36 C.F.R. § 254.9(b)(ii) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

36 C.F.R. § 254.9(b)(v) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

36 C.F.R. § 254.9(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

43 C.F.R. § 2200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

43 C.F.R. § 2200.0-5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

43 C.F.R. § 2200.0-5(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

43 C.F.R. § 2200.0-6(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities 243

43 C.F.R. § 2201.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

43 C.F.R. § 2201.1(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

43 C.F.R. § 2201.1-1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

43 C.F.R. § 2201.3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14, 51, 186

43 C.F.R. § 2201.3-1(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

43 C.F.R. § 2201.3-2(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53

43 C.F.R. § 2201.3-2(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

43 C.F.R. § 2201.3-4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52

49 C.F.R. pt. 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

49 C.F.R. § 24.102(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94

49 C.F.R. § 24.102(l) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .184

49 C.F.R. § 24.103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 14, 86

49 C.F.R. § 24.103(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

49 C.F.R. § 24.103(a)(2)(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123

49 C.F.R. § 24.103(d)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

49 C.F.R. § 24.103(d)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51

49 C.F.R. § 24.104 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .83, 86

49 C.F.R. § 24.104(a)-(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81, 86

Regulations of the Attorney General Governing the Review and Approval of Title

for Federal Land Acquisitions (Attorney General’s Title Regulations) (2016) . . . . . . . . . . . . . . . . . . . . .91

u.s. Army corps oF eng’rs, reAl esTATe engineer regulATions, EC 405-1-04 (2016) . . . . . . . . . . . . . .81

u.s. dep’T oF Agric., ForesT serVice mAnuAl Fsm § 5400 (2005) . . . . . . . . . . . . . . . . . . . . . . . . .81

u.s. dep’T oF Agric., ForesT serVice hAndbook Fsh 5409.12 (2006) . . . . . . . . . . . . . . . . . . . . . . .81

Professional Standards

The ApprAisAl FoundATion, uniForm sTAndArds oF proFessionAl ApprAisAl prAcTice (USPAP) (2016-17) . . . . .

. . . . . . . . . . 6, 8, 9-16, 19, 21, 22, 25, 43, 51, 52, 54-56, 58, 61, 63, 80-88, 94-95, 129, 132, 134, 178, 201, 203

Uniform Appraisal Standards for Federal Land Acquisitions / Table of Authorities244

Books and Treatises

ApprAisAl insT., The dicTionAry oF reAl esTATe ApprAisAl (6th

ed. 2015) . . . . . . . . . . 11, 135-36, 138, 150

(5th ed. 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

ApprAisAl insT., The ApprAisAl oF reAl esTATe (14th ed. 2013) . . . . . . . . . . . . . . . . . . . . . 27, 106, 120

(8th ed. 1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

(7th ed. 2d prtg. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

ApprAisAl insT. & Am. soc’y oF FArm mAnAgers, The ApprAisAl oF rurAl properTy

(2d ed. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116, 128, 136, 195

blAck’s lAw dicTionAry (10th ed. 2014) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .92, 168

byrl n. boyce, reAl esTATe ApprAisAl Terminology (1st ed. 1975) . . . . . . . . . . . . . . . . . . . . . . . . 120

J.d. eATon, reAl esTATe VAluATion in liTigATion (2d. ed. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . 12, 36, 90, 95, 110, 117, 127-28, 131, 134-38, 142-43, 145, 152, 155, 160, 166-67, 173, 193, 200, 203

dAVid h. geTches eT Al., wATer lAw in A nuTshell (5th ed. 2015) . . . . . . . . . . . . . . . . . . . . . . . . 184

lewis orgel, VAluATion under The lAw oF eminenT domAin (2d ed. 1953) . . . . . . . . . . . . . . 89, 133, 135

Julius l. sAckmAn, eT Al., nichols on eminenT domAin (rev. 3d ed. 2001) . . . . . . . . . . . . . . .114, 152, 156

Articles and Presentations

Alan T. Ackerman & Noah Eliezer Yanich, Just and Unjust Compensation: The Future of the Navigational Servitude in

Condemnation Cases, 34 u. mich. J.l. reForm 573 (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193

Ronald C. Allen, Federal Evaluation of Riparian Property: Section 111 of the Rivers and Harbors Act of 1970,

24 me. l. reV. 175 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188, 193

Am. Soc’y of Farm Managers & Rural Appraisers, 2012 course, Appraising Natural Resources (2012) . . . . . . .48

James H. Boykin, Real Property Appraisal in the American Colonial Era, The ApprAisAl J. (July 1976) . . . . . . . . . . 203

Kerry R. Brittain, Comment, Navigation Servitude—The Shifting Rule of No Compensation,

7 lAnd & wATer l. reV. 501 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

Charles E. Corker, Federal-State Relations in Water Rights Adjudication and Administration,

17 rocky mTn. min. l. insT. 21 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193

Trevor R. Ellis, Sales Comparison Valuation of Development and Operating Stage Mineral Properties,

mining engineering 89 (April 2011) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181

Nicole Stelle Garnett, The Neglected Political Economy of Eminent Domain, 105 mich. l. reV. 101 (2006) . . . . . . . 152

Norman G. Miller, Jr. & Sergey Markosyan, The Academic Roots and Evolution of Real Estate Appraisal,

The ApprAisAl J. (April 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .203

Alan K. Stagg, P.G., Federal Condemnation and Takings–A Journey Down the Yellow Book Road,

to Soc’y of Mining, Metallurgy, & Exploration, Inc. (Denver, Colo., March 1, 2011) . . . . . . . . . . . . . . . .181

Uniform Appraisal Standards for Federal Land Acquisitions / Index 245

INDEX

acquisition analysis, 70, 78

admissibility, 27, 125-26, 130

adjustment

sales adjustment grid, 65

quantitative adjustment, 27-28, 36, 37, 67, 121-22

qualitative adjustment, 27-28, 36, 67, 121-22

in sales comparison approach, 121-22

administrative review, 83

administrative benets, 98-99, 152, 160; see also

Uniform Act

after acquisition, 20, 23, 27, 31, 60-61, 68-70

alleys, 196-98

allocations, 38, 71, 98-99, 166; see also Uniform Act

appraisal

appraisal development, 5-6, 8-55

appraisal report, 56-79

appraisal review, 80-88

appraiser’s certication, 58, 81, 83, 85, 88

appraiser’s responsibility, 85-86

approaches to value

generally, 25-26

reconciliation, 25, 37, 68, 70, 78

see also sales comparison approach, cost approach,

income capitalization approach

assessed value, 21, 63, 69

assumptions and limiting conditions, 12-14, 59-60; see

also extraordinary assumptions

avigation easements, 157n765, 168

before acquisition, 61-63

before and after method (before and after rule)

(Federal Rule), 17-18, 31, 37-39, 73, 152

larger parcel, 71, 110, 152-54

parent tract, 111, 152

remainder, 17-19, 130-31, 150-52

benets

direct (special) benets, 20, 39, 71, 161-65, 194

indirect (general) benets, 39, 151, 162-65

oset, 18, 20, 39, 117, 153, 163, 165, 167, 191-92, 194

and navigational servitude, 187-94