Utility & Energy

Utility Line & Pipeline Easements Damages to the Remainder (Part 3)

By May 4, 2016 December 2nd, 2019 No Comments

Previous discussions (this is the third and final part of a series of blog posts on damages to the remainder) of the damage to the remainder have addressed Illinois courts’ recognition of such and the impact of utility facilities on property that remains after a partial taking for the purpose of constructing utility facilities.  This part will briefly consider how Illinois courts will assess the value of the damage to the remainder; it is not meant to be all encompassing.  The Illinois Supreme Court may have described just compensation for damage to the remainder most simply when it stated that the diminution in value is the difference between the fair market value of the remainder prior to the taking and its fair market value after the taking and improvement.  While this may sound simple, for many landowners this has proven difficult. 

In practice, a landowner should consider his or her parcel as two separate parcels: the easement parcel and the remainder parcel.  The fair cash market value of the remainder parcel will then need to be determined under two different scenarios: (1) the remainder parcel sits next to the easement parcel as it currently exists (before anything has been done with the easement parcel), and (2) the remainder parcel sits next to the easement parcel with the project for which it was taken having been completed.  The difference between the values under the two scenarios represents the damages to the remainder parcel.  To help ascertain the value of the remainder parcel under the two scenarios, a landowner should consider employing more than one professional appraiser in order to establish a range of values.

To determine the competency of a witness to testify to value in a condemnation proceeding, a witness must have some means of forming an intelligent and valid judgment as to value beyond what is presumed to be possessed by members of the general public.  Individuals the Court has found competent to testify about the impact of a pipeline on their land, for example, include lifelong farmers, one of whom had been a drainage commissioner and a president of the local Farm Bureau.  In another example, the Court permitted testimony about the inconvenience to farming caused by transmission line poles and the corresponding expense increases.  The Court noted that the testimony appropriately pertained to what a willing buyer would pay for an operating grain farm that happened to be located next to a transmission line.

The main lesson from past court decisions is that landowners should focus on market valuation of the land and not lost farming income.  Lost income may affect the land’s value, and so is relevant, but lost income must be translated into impacts on the value of the subject property. Attempts to recover damages based on lost income have failed.  To the extent that rental property may be at issue, the Court has consistently found that in eminent domain proceedings involving premises which are owner occupied, evidence of projected or future rental income is too speculative and dependent upon too many contingencies to be safely accepted as evidence of the fair cash market value.  Furthermore, not every factor that brings about a reduction in value represents a recoverable item of damage.  Diminution suffered in common by all lands in the vicinity of an improvement is not compensable.  A landowner must show a direct disturbance peculiar to his or her property.  In addition, in some situations, the public use for which a portion of private property was taken may actually result in a benefit to the remainder of the private property.  Under such circumstances, any benefit accruing to the remainder property may not be set off against the land taken; but it may be taken into consideration as reducing or completely offsetting any damages to the remainder.

Clearly, knowing the proper elements of damage and how to present them makes a significant difference in whether a landowner receives the compensation he or she believes is merited for damages to the remainder of land in a partial taking.