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Helmick Family Farm, LLC v. Commissioner of Highways

Supreme Court of Virginia

August 29, 2019

HELMICK FAMILY FARM, LLC
v.
COMMISSIONER OF HIGHWAYS

          FROM THE CIRCUIT COURT OF CULPEPER COUNTY Susan L. Whitlock, Judge.

          OPINION

          STEPHEN R. McCULLOUGH, JUSTICE.

         Condemnation commissioners awarded $22, 592 in compensation to the Helmick Family Farm, LLC ("Helmick") for a taking of slightly more than two acres of land, along with some easements. Helmick appeals, contending that it was erroneously prevented from presenting evidence of the reasonable probability of a rezoning and, moreover, that the jury received incorrect instructions. Helmick also argues that the testimony of its representative was improperly restricted. Exclusion of this evidence, Helmick contends, prevented the commissioners from considering probative evidence concerning the land's fair market value. For the reasons noted below, we reverse the decision of the trial court.

         BACKGROUND

         Prior to the take, Helmick Family Farm consisted of approximately 168 acres. It is located in Culpeper County. The land is zoned A1 or Agricultural. The land is essentially vacant. As of the date of the take, it was being used for cattle grazing, and for growing hay. There are some businesses nearby, such as auto repair facilities and a mulch processing plant, as well as more vacant land. The farm has some road frontage, about 2, 000 linear feet on Poor Farm Road, as well as a "pipestem" that leads to Greens Corner Road.

         In order to build a diamond interchange at the intersection of Route 29 and Greens Corner Road, the Commissioner of Highways ("Commissioner") filed a Certificate of Take on August 20, 2014, for a portion of the farm. The Commissioner took 2.155 acres in fee simple with a .198-acre permanent drainage easement, a .318-acre temporary construction easement, and a .078-acre utility easement. Helmick refused the Commissioner's offer of $20, 281, so the Commissioner filed a petition in condemnation in the Circuit Court of Culpeper County.

         Helmick planned to introduce testimony from Charles F. Carter, who was previously employed by Culpeper County as the County Planner, a position later renamed Planning Director, to manage the activities of the Office of Planning and Zoning. He currently is the owner of Carter Planning Group, a consulting firm that provides land planning services to public and private clients. In his written report, Carter opined that the parcels taken by the Commissioner had been for many years "planned for commercial/industrial development." He acknowledged the current zoning of the property was Agricultural. No application for rezoning was pending at the time of the take. Carter's report indicated that "the subject property would be rezoned from A-1 (Agricultural) to LI (Light Industry) if application was made by the landowners." He also would have testified that "[b]ased on the intended commercial/industrial use of the subject property and its association with the adjacent LI and CS parcels, the appropriate zoning designation of the . . . parcel is LI (Light Industry)." Carter would have testified that the Board of Supervisors had approved nearly every application for such rezonings between 2006 and 2015.

         Helmick obtained an appraisal from Charles T. Dennis. Dennis reviewed the characteristics of the property. He noted its designation as Commercial property in the County's Comprehensive Plan. The property is also within the Urban Services boundary. Dennis' report details his conversations with the County's planning staff, the fact that nearby properties are devoted to commercial services, its proximity to U.S. Routes 15 and 29 and State Route 666, and its proximity to water and sewer services. Dennis concluded that "the highest and best use of the land would be to rezone the 31.5 acres planned for commercial to LI or another commercial zoning district, and hold the remaining 136.9457 acres for investment purposes." He acknowledged that the Helmick property "will need to be rezoned prior to being used for commercial purposes" and that the rezoning process "can be time consuming." Although Dennis used land zoned Light Industrial, Heavy Industrial, or Commercial Service as comparable sales, rather than land zoned Agricultural, he acknowledged in his report that the need to rezone the Helmick land renders it "inferior to the comparable sales that are all zoned industrial or commercial." Therefore, he applied a discount factor to adjust the price of those sales downward. The price of land per acre for comparable sales ranged from $65, 000 to $176, 906 per acre. Dennis concluded that the Helmick Farm land was worth $130, 000 per acre, a value of $280, 150, and that the easements and other improvements make the take worth a total of $321, 000.

         Prior to trial, the Commissioner filed a motion in limine to exclude all evidence concerning "a hypothetical rezoning of the subject property from Agricultural (A-1) to Light Industrial or Commercial before the take on August 20, 2014." The court agreed, reasoning that such evidence is too speculative and remote. The court ruled that "all testimony and evidence regarding hypothetical rezoning of the subject property is excluded from trial." Accordingly, the court held that Carter "is prohibited and excluded from testifying as to various facts about the area surrounding the property or about the reasonable probability of rezoning the subject property at the time of the take." The trial court further held that Dennis could not testify regarding the comparable sales he used in his appraisal. The trial court also excluded Dennis' "opinion of the highest and best use of the property, regarding the comparable sales he used to come up with his value of the take, and the methodology" he employed.

         At the trial, Walter Robinson, the appraiser who testified on behalf of the Commissioner, estimated the value of the land to be $22, 464. He opined that the highest and best use of the land is for it to continue as farmland. In reaching his opinion, he relied on sales of property zoned for agricultural use. He acknowledged that none of the comparable sales he used to value the property were designated as Commercial on the County's Land Use Map of its Comprehensive Plan and that none of these sales were within the County's Urban Services Area.

         The Culpeper Comprehensive Plan is a document that is prepared every three to five years that serves as a general guide for what possible future development might be for a property or for the County. According to its introduction, "[i]t identifies those areas planned for future growth and the anticipated land use associated with such growth." It is not binding. As Robinson put it, the Comprehensive Plan represents "the best available information that the county wants to give about how they want to see parts of the county develop." Robinson acknowledged that the Comprehensive Plan designation for a property can influence its value. The Comprehensive Plan does not cover the entirety of the Helmick farm, but designates a portion of the Helmick farm as "Commercial," including the portion taken by the Commissioner. The County also produced a future land use map, itself part of the Comprehensive Plan, that designates the Helmick property as commercial.

         The court permitted Melvin Helmick, the general manager of Helmick Family Farm, to testify. Mr. Helmick testified that the land taken by the Commissioner was worth $6 per square foot, which, when combined with the value of the easements, had a total value of $640, 435.51. He, among others, testified that the land taken is near sewer and water utilities. Helmick testified how much he initially paid for the property, and that he donated 20 acres of land to the County for the purpose of building a sewage treatment plant. In exchange, the County agreed to allow him 16 sewer taps. His testimony was extensive, and it covered his experience as a developer of residential property for more than two decades. He addressed the Comprehensive Plan and nearby commercial development. He also testified that the zoning of nearby properties has a bearing on the value of Helmick's land. His estimate of the value of the property was based on the value of commercial properties nearby. He pointed out that some of those commercial properties, which he described as "within a stone's throw" of Helmick's land, sold for $9 per square foot. He noted that medical buildings were built in close proximity to Helmick's property. He explained that "there's a huge amount of commercial development . . . surrounding" the farm.

         The court excluded certain documentary evidence offered by Helmick. Specifically, the court sustained the Commissioner's objections to Helmick's proffered exhibits 27 and 44-47. Exhibit 27 was a letter from the County informing Mr. Helmick that the property had been added to the sewer and water district, and exhibits 44-47 were deeds reflecting land sales that Mr. Helmick relied upon in forming an opinion about the value of the land.

         The trial court provided the commissioners with two instructions that are at issue in this appeal. Instruction 7, to which Helmick objected, App. 1094, provided:

In determining the fair market value of the subject land, you shall only consider the uses that may be made of the land under its existing zoning category of A-1 Agricultural. You may not consider a hypothetical rezoning of the subject land from A-1 Agricultural to a different zoning category before, on, or after the date of take on August 20, 2014 or an envisioned future change from the existing zoning category of A-1 Agricultural to a different zoning category. A hypothetical rezoning and an envisioned future change in zoning are speculative and remote.

App. 1113, 1167.

         Instruction 8 provided

You have heard evidence about Culpeper County's Zoning Ordinance. The Zoning Ordinance permits certain uses to be made of land, and also contains other requirements concerning how land may be used.
You have also heard evidence about Culpeper County's Future Land Use Map. The Future Land Use Map does not stand-alone and is not itself the future plan. It and many companion documents are part of Culpeper County's Comprehensive Plan.
The Comprehensive Plan is general in nature and is merely a guide for possible future development in the County. The Comprehensive Plan does not restrict or permit any uses of the land by the owner.
You have also heard evidence about Culpeper County's Future Land Use Plan. The Future Land Use Plan is not an assurance of community acceptance or a commitment to future development by the County.

App. 1113-14, 1168.

         Helmick objected to this instruction as well. Helmick argued that the instruction cast "the county's comprehensive plan" in "the most negative light possible instead of actually reflecting that the county's comprehensive plan does reflect what the county envisions as happening in the county." The commissioners awarded compensation to Helmick in the amount of $22, 592 and this appeal followed.

         ANALYSIS

         "The measure of compensation for the property taken is the fair market value of the property at the time of the taking." Lynch v. Commonwealth Transp. Comm'r, 247 Va. 388, 391 (1994). We have long defined fair market value as "the price which it will bring when it is offered for sale by one who desires, but is not obliged, to sell it, and is bought by one who is under no necessity of having it." Tuckahoe Woman's Club v. City of Richmond, 199 Va. 734, 737 (1958).

         A. Ample authority supports the admissibility of evidence that the property taken has a reasonable probability of rezoning.

         Helmick argues that he should have been permitted to introduce evidence concerning the reasonable probability of a rezoning of the land taken. We agree. While we have not directly addressed whether evidence concerning the reasonable probability of a rezoning is admissible in a condemnation proceeding, our previous decisions foreshadow the answer to this question. We have noted that "[e]verything which affects the market value is to be taken into consideration." Appalachian Elec. Power Co. v. Gorman, 191 Va. 344, 354 (1950). Furthermore, "[i]n determining fair market value, consideration is given to the property's adaptability and suitability for any legitimate purpose in light of conditions and circumstances that exist at the time of the take or that reasonably may be expected in the near future." Lynch, 247 Va. at 391. In addition, as Helmick notes, licensed appraisers in Virginia are required by regulation to craft their appraisals in conformity "with the Uniform Standards of Professional Appraisal Practice (USPAP)." 18 VAC § 130-20-180(D). The USPAP provide in Standards Rule 1-3 that

When necessary for credible assignment results in developing a market value opinion, an appraiser must:
(a) identify and analyze the effect on use and value of existing land use regulations, reasonably probable modifications of such land use regulations, economic supply and demand, the physical adaptability of the real estate, and market area trends[.]

(Emphasis supplied).

         Similarly, a leading manual instructs appraisers as follows: "When vacant land is being valued, the appraiser may explore the possibility of a zoning change." Am. Inst. of Real Estate Appraisers, The Appraisal of Real Estate 587 (9th ed. 1987).

         An avalanche of authority from other jurisdictions makes clear that such evidence is widely permitted.[1] The leading treatise on eminent domain also concludes such evidence is admissible. 4 Julius L. Sackman, Nichols on Eminent Domain § 13.04 (2019). The reason for allowing the factfinder to hear such evidence is obvious: a willing buyer will pay more for property that presents a fair prospect for more favorable zoning than a property that offers no such prospect. In an arms-length transaction, "the parties can be expected to bargain toward a price that can be viewed as the value of the property with the more valuable zoning classification, discounted by some amount." William B. Knipe, Valuing the Probability ...


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