Eminent Domain Report

One interesting valuation issue eminent domain attorneys and appraisers run into in California is when a "special use" property -- such as a church or school -- faces condemnation.  How does one value such a property when there is no relevant market or comparable sales to rely on? 

The Legislature enacted Evidence Code section 824 to deal with such situations, specifically providing that such special use properties can be valued based on a reproduction or replacement cost analysis (i.e., the cost of purchasing replacement land, making the land suitable for the same use, and the cost of construction), and as an added benefit, "any depreciation or obsolescense of the improvements" is not to be considered in the valuation.  For example, if an 80-year-old church is acquired by eminent domain, the condemning authority is required to essentially pay for the church to purchase new land and build a new church (without considering depreciation).  But there are some exceptions.

First Assembly Church in Victorville may be an example of one of the exceptions.  According to a Daily Press article, "First Assembly Church fights for its future," the City of Victorville has approved moving forward with eminent domain to acquire approximately 25,000 square feet (plus 14,000 square feet for a temporary construction easement) from the First Assembly Church's 19-acre property.  The land acquisition is apparently necessary for the I-15/Nisqualli Interchange project, and negotiations stalled after the Church declined to accept the City's offer of $590,000. 

So why would this acquisition potentially qualify as an exception to the "special use" property valuation rules I mentioned above?  Because the eminent domain action does not involve the acquisition of the actual church, but instead appears to only potentially impact parking and access.  Such a condemnation may require traditional valuation methodologies, as the Evidence Code provides that the special use property valuation rules do not apply to eminent domain actions involving utilities, flood control facilities, or rights-of-way "where those acquisitions neither require removal or destruction of existing improvements, nor render the property unfit for the owner's present or proposed use."