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25 One cost factor specifically mentioned in Nevada's had not affected the timely delivery of projects, whereas and Oregon's survey responses was attorney's fees. In the departments in three states (California, Missouri, Oregon the most significant impact was the amendment and Wyoming) reported that there had been an effect. of the attorney's fee provisions in Oregon Revised Stat- utes (ORS) Section 35.346(7)(a). The amendment re- Table 4. Post-Kelo Reforms' Effect on the quired Timely Delivery of Transportation Projects that attorney's fees were due if the final judgment at trial was greater than the "initial" written offer provided by Transportation depart- 23 (90 percent) the condemnor. The result of this change was to greatly ments reporting no effect on reduce the incentive for property owners to settle with timely delivery of transporta- ODOT or any other condemnor in the state. If the verdict tion projects at a condemnation trial exceeded the amount of the initial Transportation depart- 3 (10 percent) written offer, a condemnor was required to pay the prop- ments reporting some effect erty owner's attorneys fees. Thus a written offer made on timely delivery of trans- one to two years before the verdict was the amount the property owner had to "beat" at trial to have all attorney's portation projects fees paid. This was true even if the condemnor received new information and increased its offer of just compensa- When summarizing the effects of post-Kelo laws in tion.300 California, Caltrans explained that since the Kelo deci- According to the Oregon DOT, the amendment resulted sion California has enacted three laws affecting the use in public bodies having to pay larger settlement of eminent domain that have affected highway pro- amounts solely because of the likelihood of having to jects,304 all of which are discussed in Section VII.A. As pay a significant sum of attorney's fees at trial. The noted, one new requirement is for an Order of Posses- DOT reported that in one case a settlement was sion (OP) hearing that is attended by both parties reached with a property owner prior to trial. After the where the property owner may identify a hardship that settlement, the department received an attorney's fee may "delay possession indefinitely depending on what bill in the amount of $60,000. Although the department the judge determines from the testimony."305 contested the bill, the court ruled that the settlement In addition to the comments of the MHTC that were amount had been higher than the initial written of- noted previously, the MHTC stated that additional time fer.301 is now required prior to filing a condemnation peti- However, the attorney's fee issue was addressed in tion.306 Moreover, "the new post-Kelo laws allow prop- the Oregon 2009 legislative session. The legislature erty owners additional time to vacate residential prop- erty," as well as "provide landowner's attorneys new modified...ORS 35.300 to add the ability of a condemnor to make an "Offer of Compromise" up to 10 days prior to statutory means to delay condemnation cases."307 trial. If this offer was rejected, and the property owner Wyoming stated that there have been occasions did not achieve a higher result at trial, a condemnor only when the department chose not to acquire property if had to pay attorney's fees up to the day of the offer.302 the owner did not want to sell because of the time con- The legislature straints in using eminent domain.308 The reforms' addi- tional steps "have caused projects to be late."309 also modified...ORS 35.346(7)(a) to require attorney's fees [to] be paid only if a property owner received a jury ver- B. Post-Kelo Reforms' Effects on Appraisals, Land dict higher than `the highest written offer' made by a con- demnor prior to filing for condemnation. This highest Acquisition, and Project Planning written offer prior to filing is now incorporated into the Department's negotiation process and is routinely used in 1. Appraisals situations where it is likely that we will be forced to file Some states require that a condemnor must have the for condemnation.303 property being acquired appraised before initiating ne- As discussed in Section V.D.6, even if post-Kelo reforms gotiations with the property owner;310 that a condemnor result in payments exceeding fair market value, make reasonable efforts to acquire the subject property FHWA's policy, as long as the costs are "appropriately documented," is to reimburse for the increased costs. 2. Timely Delivery 304 Caltrans' Survey Response, dated Mar. 18, 2011 (citing Twenty-three departments reported that the post- SB 1210, SB 1650, AB 1322). Kelo constitutional or legislative changes in their state 305 Id. (citing SB 1210). 306 MHTC's Survey Response, dated Mar. 10, 2011. 300 Oregon DOT's Survey Response, dated Mar. 10, 2011. 307 Id. 301 Id. 308 Wyoming DOT's Survey Response, dated Mar. 22, 2011. 302 Id. 309 Id. 303 Id. 310 GA. CODE ANN. 22-1-9(2); MINN. STAT. 117.036, subd. 2.

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26 by negotiation;311 or that a condemnor's offer be no less was the appraisal that was made a part of an offer prior than the condemnor's independent appraisal.312 to an eventual taking by eminent domain.319 In reject- Nevertheless, in response to the survey, 22 state ing the condemning authority's argument, the court DOTs reported that there had been no effect on ap- held that that the post-Kelo 2006 amendments to the praisals. Although the DOTs in four states, California, applicable statute did affect a condemning authority's Iowa, Missouri, and Nevada, said that the laws have requirement to negotiate in good faith.320 In affirming affected appraisals, the Iowa DOT commented that any the circuit court's judgment and its award of attorney's impact has been minimal.313 fees,321 the court held that "[b]lind acceptance of an ap- praiser's testimony...would permit the condemning au- Table 5. Post-Kelo Reforms' Effect thority to provide landowners with `slipshod or incom- on Appraisals petent appraisals,' the precise evil the legislature sought to avoid" by the amendments."322 Transportation depart- 22 (85 percent) In a Minnesota case, a condemning authority failed ments reporting no effect on to comply strictly with the state's appraisal and nego- appraisals tiation requirements in Minnesota Statute Section Transportation depart- 4 (15 percent) 117.036.323 The statutory provision was amended post- ments reporting some effect Kelo in 2006 "to govern all condemnation petitions filed on appraisals under chapter 117."324 The court held that the state's failure did not deprive the district court of subject mat- California's response to the survey noted that, prior ter jurisdiction because substantial compliance was to the post-Kelo reforms, "appraisal efficiencies" existed sufficient.325 Moreover, notwithstanding the intended in that the department could combine a number of ap- transfer after the taking, the taking was held to serve a praisals on comparable or similar properties in one re- public purpose, the latter determination being a judicial port. Now, because of the need to craft one appraisal for issue in Minnesota.326 each property, "the combined reports are no longer as expeditious."314 Moreover, California law now requires a 2. Land Acquisition "condemning agency [to] pay the reasonable cost of an Twenty-two departments reported that their state's appraisal (up to $5,000) if the owner so chooses."315 An post-Kelo reforms have had no effect on land acquisi- owner is entitled to receive a full copy of the depart- tion, but the DOTs in four states, California, Missouri, ment's appraisal; prior to the change in the law an ap- Nevada, and Wyoming, said that there has been an ef- praisal summary statement was all that was re- fect with one state reporting that one of the state's post- quired.316 Kelo reforms actually benefited the department. In Iowa, although the reforms "included the payment of the cost of one appraisal in addition to reasonable Table 6. Post-Kelo Reforms' Effect on attorney fees if the compensation award exceeds 110 Land Acquisition percent of the final offer," as noted, the Iowa DOT re- ported that the reforms had had little impact.317 Transportation depart- 22 (85 percent) According to the MHTC, there has been an effect in ments reporting no effect on Missouri because a "condemnor's appraisal reports now land acquisition must be co-signed by a state-certified appraiser" and Transportation depart- 4 (15 percent) because the statutory redefinition of fair market value ments reporting some effect "will require additional appraisal resources to address on land acquisition previously restricted appraisal techniques."318 A recent Missouri case was located for the digest According to Caltrans, some property owners will de- concerning the post-Kelo reforms and appraisals with lay making a settlement while waiting for their ap- respect to a redevelopment plan. One issue in the case 311 319 GA. CODE ANN. 22-1-9(1); MINN. STAT. 117.036, subd. Planned Indus. Expansion Auth. of Kan. City v. Ivanhoe 3; R.I. GEN. LAWS 42-64.12-7(b) (property being acquired for Neighborhood Council, 316 S.W.3d 418 (W.D. Mo. App. 2010). redevelopment purposes). 320 At trial the court found that the appraisers demon- 312 GA. CODE ANN. 22-1-9(3); but see MINN. STAT. strated "an inability to explain...drastic adjustments" resulting 117.036, subd. 3 (requiring only that the appraisals be con- in a devaluated appraisal of the subject property. 316 S.W.3d sidered). at 422. 313 321 Iowa DOT's Survey Response, dated Mar. 11, 2011. Id. at 423. 314 322 Caltrans' Survey Response, dated Mar. 18, 2011 (citing Id. at 427 (citation omitted). AB 1322). 323 City of Granite Falls v. Soo Line R.R., 742 N.W.2d 690 315 Id. (citing SB 1210). (Minn. Ct. App. 2007). 316 324 Id. (citing AB 1322). Id. at 695 n.2 (emphasis in original). 317 325 Iowa DOT's Survey Response, dated Mar. 11, 2011. Id. at 697. 318 326 MHTC's Survey Response, dated Mar. 10, 2011. Id. at 697, 698.