ANALYSIS OF AUGUST 29, 2019 SUPREME COURT OPINION
(Posted August 29, 2019) Another day, another decision from the Supreme Court of Virginia. Today we get an important ruling in the field of eminent domain, including an expansive discussion of the framework for proving a reasonable probability of rezoning. Today’s appeal is Helmick Family Farm, LLC v. Commissioner of Highways.
The subject property is in a beautiful part of the Commonwealth, just east of downtown Culpeper. The farm comprised 168 acres and was zoned Agricultural. The Commissioner took two acres in fee, plus a little over half an acre in easements, in connection with a road project.
Despite its zoning, the farm was near other property zoned for commercial or industrial use. The landowner sought at trial to adduce evidence of the property’s value, considering the probability that part of it – including the area that the Commissioner condemned – would be rezoned to permit a similar, more intensive use. The landowner hired a land planner to testify about the zoning probability, and an appraiser to opine about the value given the likelihood of that rezoning.
The Commissioner objected to this testimony on the basis that it was speculative. The trial court agreed and excluded it, leading to a one-sided trial: The Commissioner called an expert who estimated just compensation based on a low per-acre figure, reflecting the Agricultural zoning, and the condemnation commissioners returned a report that tracked almost exactly the condemnor’s number.
Today, the Supreme Court takes up an issue that Justice McCullough’s majority opinion describes as unaddressed in the court’s previous jurisprudence: “whether evidence concerning the reasonable probability of a rezoning is admissible in a condemnation proceeding.” Previous decisions have talked all around this precise question, and today the court rules squarely that it is indeed admissible. Land that is likely to be upzoned will understandably be more valuable to a prospective buyer than is land that has no reasonable prospect of changing from a lower zoning classification.
I found the most important part of today’s majority opinion to be part C, on pages 13-15 of the slip opinion. This discussion sets out key “parameters” of admission of such evidence, including the burden of proof (it’s on the landowner), the initial decisionmaker (the trial judge has a gatekeeper function here to determine if the rezoning probability is reasonable), the factors to consider, and the duty to discount the value because any prospective rezoning is not yet complete.
Three justices file a partial dissent. Justice Goodwyn writes on behalf of Justices McClanahan and Powell. The dissent takes no issue with the holding that this evidence is generally admissible, and agrees with the guidelines in part C of the majority. That means that those holdings enjoy unanimous judicial approval, and you should regard them as firmly established going forward.
The dissent parts company with the admissibility of the landowner’s specific expert testimony here, finding that there was no proof that rezoning was truly “reasonably likely” for this site. The landowner pointed to, for example, no evidence of demand for commercial or industrial property near this farm. Justice Goodwyn cites earlier SCV decisions holding that future developments are remote and inadmissible if they depend on contingencies outside the landowner’s control. The dissent feels that a rezoning is an act outside the landowner’s control here, so the evidence should be inadmissible.
Who’s right? In one sense, the side that gets four votes is, because the Supreme Court is the court of last resort in cases like this. But I agree with the majority here. Here are two sentences from the dissent that I find impossible to reconcile:
“I agree with the majority opinion that the reasonable probability of rezoning of property taken through condemnation may be relevant to the property’s fair market value ….”
“The future approval of rezoning by the County is a contingency outside the control of the landowner.”
I don’t think you can have this both ways. If the probability of rezoning is relevant, and if (as the dissent specifically states) there is a proper framework for admitting evidence of it, how can you bar such evidence by saying that it’s out of the landowner’s hands? The ultimate decision on rezoning will always be out of any landowner’s hands, and if you hold that that makes it remote and speculative, then such evidence will always be inadmissible.
The dissent suggests that one key factor is whether rezoning proceedings are already underway. Here, they weren’t; the Commissioner filed a certificate of take before the landowner did anything to try to rezone any portion of this farm. In future cases, this may be a key factor, but given today’s majority ruling, it isn’t essential to secure the admission of the evidence.
The justices reverse the judgment today and remand for a new trial.