When land is expropriated by the government, there are many questions concerning how much money the government will owe you. Courts consider factors such as the appraised value of the property, relocation costs, inconvenience, and other possible damages. See La. Const. art. I, §4(B)(5). The best lawyers are familiar with the different approaches the court could use to determine the amount of damages and are prepared to get the best results for their client. A recent case from the Louisiana First Circuit Court of Appeal highlights several different approaches than can be taken by a court in deciding land expropriation damages.
In 2008, the City of Baton Rouge and the Parish of East Baton Rouge expropriated a portion of land on which Baton Rouge Rentals & Sales was located. In this property taking, the city took 0.101 acre of land (4,380.9 square feet) and the business was forced to close their doors and vacate the building. Fifty-one percent of the property was owned by two sisters, Charlene McDonald Nelson and Kathleen McDonald, and forty-nine percent was owned by an employee of Baton Rouge Rentals & Sales, Connie Hyde. The original owner, Charles Hyde, transferred the forty-nine percent to Hyde shortly before he died. Hyde paid rent to the sisters and continued to operate the business until 2008.
The government contended that the total expropriation value of the property was $143,205, a value determined by a court-approved appraiser, Sharon Pruitt. There are three ways to determine the expropriation value of the property before the taking: cost approach, sales approach, and income approach. The cost approach values the taken property based off similar properties. The income approach determines the value by future potential income from the property. And the sales approach, the approach accepted by the trial and appellate courts, is the estimated cost of replacement after the improvements plus the value of the land. The sales approach generated a “before expropriation value” of $329,000 for the property, the income approach was $322,000, and the cost approach was $335,000. In Ms. Pruitt’s expert opinion, the sales approach was the best value determination for this property.