for Public Sector
January/February 2020 Issue
Also in this issue:
Wisconsin Court of Appeals Upholds Termination of Probationary Police Officers
Lease, License or Easement?
In a recent decision, the Wisconsin Court of Appeals invalidated a jurisdictional offer that the Department of Transportation (“DOT”) made to acquire property for a highway project. Christus Lutheran Church of Appleton v. Wisconsin Dep’t of Transportation, 2019 WI App 67. In doing so, the court clarified the interaction between the appraisal and jurisdictional offer requirements contained within Wis. Stat. § 32.05.
The DOT wished to acquire property from Christus Lutheran to expand and reconstruct a state highway. The DOT sent Christus Lutheran an initial offer letter, offering to purchase the property for $133,400. This initial offer did not include a line item for compensation for severance damages, which is the loss in value to the portion of the parcel remaining after the taking and construction of the public improvement. With the initial offer letter, the DOT sent an appraisal of the property prepared by an outside appraiser. The appraisal did not include severance damages. Instead, it explicitly stated that it considered whether severance damages would occur as a result of the highway project and concluded that they would not. A few months after receiving the initial offer, Christus Lutheran advised the DOT that the congregation would not authorize the sale of the property and that the DOT should acquire the property by eminent domain.
After Christus Lutheran rejected the DOT’s initial offer, the DOT internally reviewed its initial offer through an administrative review process. The DOT concluded that the property acquisition warranted a higher offer than its initial offer because the acquisition was more complicated than it originally believed. Thus, the DOT sent Christus Lutheran a revised offer of $403,200. Notably, due to the church’s proximity to the new right of way, this revised offer awarded the church severance damages in the amount of $159,574. Again, Christus Lutheran informed the DOT that it should proceed with the acquisition by eminent domain. The DOT responded with a jurisdictional offer of $403,200. When the DOT did not receive a response to its jurisdictional offer, it notified the County Register of Deeds of the award of damages and sent Christus Lutheran a check, closing letter, closing statement, and a copy of the award of damages. Subsequently, the property transferred to the DOT.
Christus Lutheran sued the DOT, arguing that because the DOT’s jurisdictional offer was more than three times the amount provided for in its appraisal, the DOT’s jurisdictional offer was not based on its appraisal in violation of the requirements in Wis. Stat. §§ 32.05(2)(b) and (e).
The court held that the jurisdictional offer was invalid because it included severance damages that were not supported by the appraisal in violation of Wis. Stat. § 32.05(2)(a). The court explained that Wis. Stat.
§ 32.05(2)(a) requires a condemnor to obtain at least one appraisal that values all of the property the condemnor wishes to acquire. However, the court found that the DOT’s inclusion of severance damages in its jurisdiction offer was not proper because the appraisal determined that such damages would not occur. Accordingly, the court concluded that the DOT’s jurisdictional offer was not sufficiently based on the appraisal, as required by Wis. Stat. § 32.05(2)(b).
This decision is an important one for municipalities looking to acquire property by condemnation. Municipalities should ensure their appraisals of the property include values for all of the property they wish to acquire and that every line item in a jurisdictional offer is sufficiently based on the appraisal.
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