California Eminent Domain Report

We recently wrapped up assisting with the acquisition of several part-takes of commercial and residential properties for a public transit project.  One of the big issues involved with each of the acquisitions centered on whether the project provided the impacted properties with benefits that would offset the potential severance damages.

By way of background, when only a portion of property is acquired through the use of eminent domain, the acquiring entity is required to pay not only for the portion of the property acquired, but also for any decline in value the remainder property suffers as a result of the property's severance (i.e., "severance damages"), along with any damage caused by the construction and use of the project.  (Code Civ. Proc., secs. 1263.410 - 1263.430.)  However, these severance damages are to be offset against any benefits the remainder property receives as a result of the project.

For example, while properties located next to a public transit project arguably could suffer some decline in value as a result of the project's impacts (such as impacts from noise and vibrations), do those properties also receive some benefit from being located near a public transit project? 

According to at least one new study published in Realtor Magazine, the demand for homes near public transit continues to increase as more and more people want properties that boast easy access to public transportation.  Another report by NPR suggests that public transit projects, such as light rail, are taking off; and property owners -- both residential and commercial -- are selecting sites based on locational proximity to public transit. 

While every case will be different, as public transportation becomes more and more popular in California, real estate appraisers are likely going to find increased project benefits when public transit projects require the acquisition of only portions of properties.