• About
    • Justin Hodge
    • Luke Ellis
  • Contact Us
  • Eminent Domain FAQs
  • Resources
    • Fair Market Value Considerations
    • Highest and Best Use
    • Highway Expansions
    • Pipelines
    • Power Lines
    • Water Rights
    • What is Eminent Domain?
  • Sitemap
  • Thank You

Texas Condemnation

~ Texas Eminent Domain Explained

Texas Condemnation

Tag Archives: mitigation credits

Mitigation Credits as “Highest and Best Use”

22 Friday Jul 2016

Posted by texascondemnation in Highest and Best Use, Landowner Rights, texas condemnation

≈ Leave a comment

Tags

California Tiger Salamander, condemnor, County of Santa Barbara, Double H Properties, Eminent Domain, entitlements, environmental impact, financially feasible, Highest and Best Use, King County WA, Landowner Compensation, legally permissible, maximally productive, mitigation bank, mitigation credit theory, mitigation credits, physically possible, rural farmland, sensitive or protected habitat

In Eminent Domain cases, the acquiring entity or condemnor, must compensate the landowner for the property they are taking. Fulfilling this requirement typically raises two questions:

             1) How much should the landowner receive for their land?

             2) How should we determine that amount?

Under Texas law, a landowner is entitled to compensation for an amount to be determined by an application of the “Highest and Best Use” (HBU) principle. The principle requires that the value of the land be established, not merely by evaluating the current use, but by analyzing four factors. Thus, a landowner may receive an amount derived from a potential highest and best use, rather than the current one. Therefore, an application of the HBU principle must operate within the boundaries established by these four limiting conditions. The purported HBU must be:

             1) Legally permissible

             2) Physically possible

             3) Financially feasible

             4) Maximally productive

In short, the HBU attempts to hold the condemnor responsible for the greatest compensation amount that can be sustained by an objective analysis of a respective property.

An interesting application of the principle was attempted recently in the California case of County of Santa Barbara (Plaintiff and Respondent) v. Double H Properties, LLC (Defendant and Appellant). This case was initiated by the County for the purposes of obtaining an easement to serve as a habitat for the endangered California Tiger Salamander. In valuing the land, the owner’s appraiser submitted two theories, one which analyzed the property as rural farmland, and one which calculated the value of the property when used for mitigation credits.

Mitigation credits are a way that a developer can obtain entitlements when a project is likely to impact an environmentally sensitive or protected habitat. To earn these entitlements, the developer can purchase mitigation credits with a mitigation bank. The bank then purchases and preserves another property to offset the environmental impact of the original construction.

The owner’s appraiser argued that, only when the land was valued as mitigation credits, did it fulfill its highest and best use, and obtain the greatest value. Their assessment also exceeded in value the one put forth by the County’s appraiser, who valued the property as farmland. The County moved to exclude the landowner’s valuation, a motion which the Trial Court granted.

The owner took the case on appeal. In reviewing the Trial Court’s dismissal of the owner’s mitigation credit theory, it became apparent to the Appeals Court that the appraiser had never provided any evidence that the land could be entitled for mitigation credits. In other words, the appraiser had failed to show that the use of the land for mitigation credits was affirmatively permissible in the law. The Appellate Court held that the Trial Court did not abuse its discretion in excluding the mitigation credit appraisal.

This will likely not be the last time we see this argument made in regards to a highest and best use analysis in California or elsewhere.

Share this:

  • Facebook
  • LinkedIn
  • Email
  • Twitter

Like this:

Like Loading...

Stay up to date with Justin and Luke

texascondemnation

texascondemnation

Luke Ellis and Justin Hodge are partners with Marrs Ellis & Hodge LLP. Justin heads the firm's eminent domain practice in the Houston office. Luke heads the firm's eminent domain practice in the Austin office. Luke Ellis is widely recognized as one of Texas’s top young lawyers—and one of the top lawyers of any age practicing in the area of eminent domain. Mr. Ellis has broad experience and has enjoyed success in many types of civil litigation. Justin Hodge is a trial lawyer who represents Texas landowners in condemnation, eminent-domain, and real-estate lawsuits. He represents landowners in condemnation proceedings, not the governmental authorities or private companies taking property. Mr. Hodge has handled complex condemnation and eminent-domain cases throughout the State of Texas. If you have questions about any of the issues raised in this blog, we invite you to discuss them with us at jhodge@mehlaw.com or lellis@mehlaw.com.

Personal Links

  • Marrs Ellis & Hodge LLP

View Full Profile →

RSS TexasCondemnation

  • Jacob Merkord on Fox 7 Austin News Regarding Matterhorn Pipeline in Williamson County, Texas August 3, 2022
    Jacob Merkord, Marrs Ellis & Hodge LLP partner, was interviewed on Fox 7 Austin news regarding the upcoming Matterhorn Pipeline …Continue reading →
    texascondemnation
  • Luke Ellis Interviewed on KXAN-NBC News Austin Regarding Matterhorn Pipeline Project July 13, 2022
    Luke Ellis, Marrs Ellis & Hodge LLP partner, was interviewed on KXAN-NBC news in Austin regarding the upcoming Matterhorn pipeline …Continue reading →
    texascondemnation
  • Watch Justin Hodge on Fox26 News – Texas Supreme Court Approves Eminent Domain for High Speed Train Between Houston and Dallas June 30, 2022
    Justin Hodge was interviewed on Fox26 news about the Texas Supreme Court’s recent approval of eminent domain for the high …Continue reading →
    texascondemnation
  • ALI CLE Eminent Domain Conference – Scottsdale, Arizona January 28, 2022
    Justin Hodge with Marrs Ellis and Hodge presented at the 2022 ALI CLE Eminent Domain Conference in Scottsdale, Arizona. You …Continue reading →
    texascondemnation
  • Brazoria County Bar Association – Eminent Domain Presentation January 20, 2022
    Justin Hodge, Kyle Baum, and Kyle Hlavinka presented on eminent domain at the January 2022 Brazoria County Bar Association luncheon. …Continue reading →
    texascondemnation
  • Oral Arguments Held in Tropical Storm Harvey Downstream Flooding Cases January 13, 2022
    On January 12, 2022, the United States Court of Appeals for the Federal Circuit heard Milton v. United States (The Tropical Storm …Continue reading →
    texascondemnation
  • Law360 – High Speed Rail Showdown In Texas January 4, 2022
    Emma Whitford, with Law360, wrote a terrific article entitled “3 Real Estate Cases to Watch in 2022.” As part of …Continue reading →
    texascondemnation
  • Groups File Complaint With FHWA Against TxDOT on I-45 Project in Houston, Texas. December 18, 2021
    Alliance Houston, Stop TxDOT I-45, LINK Houston, Texas Appleseed, and Texas Housers filed a complaint on Thursday, December 16, 2021 …Continue reading →
    texascondemnation
  • High Speed Train from San Antonio to Monterrey – TxDOT and Mexico Study Concept December 11, 2021
    TxDOT and Mexico both recently conducted studies connecting San Antonio, Texas to Monterrey, Mexico. Another high-speed train project is also …Continue reading →
    texascondemnation
  • TxDOT I-45 Project is Allowed to Proceed December 3, 2021
    Despite months of delay, the Federal Highway Administration announced that TxDOT is allowed to proceed with portions of the I-45 …Continue reading →
    texascondemnation

Follow Our Blog via Email

Enter your email address to follow this blog and receive notifications of new posts by email.

Twitter Updates

Tweets by JMEHCondemn

Twitter Updates

Tweets by TXCondemnation

Twitter Updates

Tweets by JMEHLaw

TexasCondemnation

  • RSS - Posts
  • RSS - Comments

Pages

  • About
    • Justin Hodge
    • Luke Ellis
  • Contact Us
  • Eminent Domain FAQs
  • Resources
    • Fair Market Value Considerations
    • Highest and Best Use
    • Highway Expansions
    • Pipelines
    • Power Lines
    • Water Rights
    • What is Eminent Domain?
  • Sitemap
  • Thank You

Powered by WordPress.com.

 

Loading Comments...
 

    %d bloggers like this: