CONDEMNATION SYMPOSIUMCONDEMNATION SYMPOSIUMMay 26, 2010May 26, 2010

• Subsurface Utilities-Easements Subsurface Utilities-Easements (Deep tunnels to Aerial crossings)(Deep tunnels to Aerial crossings)

• Appraisal Issues – Dennis Stefanik Appraisal Issues – Dennis Stefanik (MMSD)(MMSD)

• Legal Issues – Ben SouthwickLegal Issues – Ben Southwick

Presentation Overview Presentation Overview

• Acquisition Process and the AppraiserAcquisition Process and the Appraiser• Types of Subsurface EasementsTypes of Subsurface Easements• Subsurface Construction MethodsSubsurface Construction Methods• Easement Valuation IssuesEasement Valuation Issues• Easement StigmaEasement Stigma• Easement Status after Street or Easement Status after Street or

Highway DiscontinuanceHighway Discontinuance• Easement vs Fee Easement vs Fee

But 1st - A Little Bit About Sewers (Sanitary Sewer & Combined)

MIS is the Freeway of SewersMIS is the Freeway of Sewers(Metropolitan Interceptor Sewers)(Metropolitan Interceptor Sewers)

– Limited Access and High CapacityLimited Access and High Capacity– Don’t Assume Property Can Hook UpDon’t Assume Property Can Hook Up

• Need local hook up (if feasible)Need local hook up (if feasible)

– Many sizes 36” to 120” (diameter)Many sizes 36” to 120” (diameter)• Deep Tunnels are 24-30 feet in diameter Deep Tunnels are 24-30 feet in diameter

250-300’ deep250-300’ deep• 10” local line can serve an entire 10” local line can serve an entire

subdivisionsubdivision

– Gravity (limited pump stations)Gravity (limited pump stations)– ?? How District manages wet weather ?? How District manages wet weather

flowsflows

EMINENT DOMAIN PROCESSEMINENT DOMAIN PROCESSBen and DennisBen and Dennis

– Wisconsin Statues Chapter 32Wisconsin Statues Chapter 32• 32.05 (Highways, Streets, Sewers, 32.05 (Highways, Streets, Sewers,

Watercourses, Alleys, Airports, and Mass Watercourses, Alleys, Airports, and Mass Transit)Transit)

• 32.06 (Condemnation in all matters except 32.06 (Condemnation in all matters except under s. 32.05 etc.)under s. 32.05 etc.)

• Public Necessity Declared-Relocation OrderPublic Necessity Declared-Relocation Order– Acquisition PlatAcquisition Plat– Need for Appraisal(s)Need for Appraisal(s)– Appraisal differences 32.05 vs 32.06Appraisal differences 32.05 vs 32.06

11stst Steps in Appraisal Steps in Appraisal ProcessProcess• Evaluate the appraisal issues & negotiate Evaluate the appraisal issues & negotiate

your fee (Gov. or Owner’s appraisal)your fee (Gov. or Owner’s appraisal)• Gather data: Const Plans, Esmt sample, Gather data: Const Plans, Esmt sample,

title and survey info from acquiring title and survey info from acquiring agency agency

• Envision easement (during construction Envision easement (during construction and after construction with Permanent and after construction with Permanent Easement Rights)…loss of usesEasement Rights)…loss of uses

• Is Highest and Best Use affected ??Is Highest and Best Use affected ??

Types of Subsurface Types of Subsurface EasementsEasements

(with/without surface rights) (with/without surface rights) • Deep Tunnel (250’-300’ deep)Deep Tunnel (250’-300’ deep)

– Work shafts, blasting, ground water, collector sewersWork shafts, blasting, ground water, collector sewers• Tunnel with access rightsTunnel with access rights

– Lutheran College (Underwood Creek)Lutheran College (Underwood Creek)– Hansen Golf CourseHansen Golf Course

• Subsurface and Surface (limited rights) (Open Cut)Subsurface and Surface (limited rights) (Open Cut)– Aqueducts near Milwaukee RiverAqueducts near Milwaukee River– Oak Creek InterceptorOak Creek Interceptor

• Temporary Construction Temporary Construction – Expires when project completeExpires when project complete

• Conservation EasementsConservation Easements

Life Cycle of a Sewer EasementLife Cycle of a Sewer Easement(For the Appraiser to Consider) (For the Appraiser to Consider)

• BirthBirth– Acquisition Plat (32.05 procedure)Acquisition Plat (32.05 procedure)– Appraisal (District)Appraisal (District)– (Owner’s appraisal) Negotiation(Owner’s appraisal) Negotiation– Acquisition (Easement or Award) (Appraiser consider-Acquisition (Easement or Award) (Appraiser consider-

terms)terms)

• ConstructionConstruction– Loss of Use (annual rate or monthly)Loss of Use (annual rate or monthly)– RestorationRestoration

• The Aftermath-Forever The Aftermath-Forever (or until ??)(or until ??)– Allowed UsesAllowed Uses– Maintenance, repair, reconstruction, accessMaintenance, repair, reconstruction, access

Other Potential Appraisal Other Potential Appraisal IssuesIssues• Soil Borings Soil Borings • Contamination (prior to const Contamination (prior to const

project)project)• Work in existing R/W Work in existing R/W • Street Vacations (esmt rights Street Vacations (esmt rights

reserved)reserved)• Water Table & Monitoring WellsWater Table & Monitoring Wells

Other Appraisal Considerations Other Appraisal Considerations

• Restoration – “In Kind”Restoration – “In Kind”– Maybe need expert special circumstancesMaybe need expert special circumstances

• Timing for Construction Phase Timing for Construction Phase – Annual amount can be appliedAnnual amount can be applied

• Temp from PermTemp from Perm• Hold Harmless (Ben)Hold Harmless (Ben)

VALUATION TECHNIQUESVALUATION TECHNIQUES

• Before and After ValuesBefore and After Values– Hunt for CompsHunt for Comps

• Part of the WholePart of the Whole– % of bundle of rights% of bundle of rights

• What can you not do After that you could What can you not do After that you could BeforeBefore

• Cost to CureCost to Cure

Status of Underground Status of Underground Utility Easement in Highway Utility Easement in Highway Right-of Way after Highway Right-of Way after Highway

Has Been Discounted or Has Been Discounted or VacatedVacated

• Wisconsin Statutes, section 66.1005Wisconsin Statutes, section 66.1005• Former Right of Way Reverts to AbuttersFormer Right of Way Reverts to Abutters• Easements for underground utilities in Easements for underground utilities in

discounted Hwy R/W shall continue unlessdiscounted Hwy R/W shall continue unless– No use or written consentNo use or written consent

Admissibility of Fear and Admissibility of Fear and Stigma EvidenceStigma Evidence

• 2 Fairly Recent Court of Appeals 2 Fairly Recent Court of Appeals DecisionsDecisions– Generalized EvidenceGeneralized Evidence

– Not by itselfNot by itself

– Must be related to fair Mkt Value of propertyMust be related to fair Mkt Value of property

• Wisconsin Statutes, Sec 907.03 Wisconsin Statutes, Sec 907.03 – Admission of EvidenceAdmission of Evidence

• Relied upon by AppraisersRelied upon by Appraisers• Considered by prospective buyersConsidered by prospective buyers

Top 10 Reasons to Purchase Top 10 Reasons to Purchase Fee Simple and Not an Fee Simple and Not an

EasementEasement• 10-You pay for it (restrictive esmt)10-You pay for it (restrictive esmt)• 9-Owners have no clue about uses9-Owners have no clue about uses• 8-Maintenance same cost (access issues)8-Maintenance same cost (access issues)• 7-Muni ownership common in most cases7-Muni ownership common in most cases• 6-Uses & Encroachments not an issue6-Uses & Encroachments not an issue• 5-Owner can grant other easements which 5-Owner can grant other easements which

might conflictmight conflict

Top 10 Reasons (cont’d)Top 10 Reasons (cont’d)

• 4-No Hold Harmless clause like esmt4-No Hold Harmless clause like esmt• 3-Liability exposure 3-Liability exposure

(environmental/general) same(environmental/general) same• 2-Ownership is clear, no terms and 2-Ownership is clear, no terms and

conditions to interpret conditions to interpret • 1-TOTAL CONTROL1-TOTAL CONTROL