75(R) HB 2740 House committee report

CPC C.S.H.B. 2740 75(R)BILL ANALYSIS


LAND & RESOURCE MANAGEMENT
C.S.H.B. 2740
By: Uher
5-1-97
Committee Report (Substituted)



BACKGROUND 

Article I, Sec. 17 of the Texas Constitution guarantees that "No person's
property shall be taken, damaged or destroyed for or applied to public use
without adequate compensation being made. . ."  This constitutional
provision is supported by Sec. 21.042 of the Texas Property Code which
also requires adequate compensation for the property condemned as well as
severance damages to the property owner's remaining property ("If a
portion of a tract or parcel of real property is condemned, the special
commissioners shall determine the damage to the property owner after
estimating the extent of the injury and benefit to the property owner,
including the effect of the condemnation on the value of the property
owner's remaining property.")  In 1936, in State v. Carpenter, the Texas
Supreme Court stated the proper procedure for determining severance
damages in a condemnation case: 

"We are of the opinion that the proper rule for ascertaining the measure
of damage to the remainder of a tract of land where a part only has been
taken for public use is . . . the difference between the market value of
the remainder of the tract immediately before the taking and the market
value of the remainder of the tract immediately after the appropriation,
taking into consideration the nature of the improvement, and the use to
which the land taken is to be put . . ." 

[I]t is proper as touching the matter of the value and depreciation in
value to admit evidence upon all such matters as suitability and
adaptability, surroundings, conditions before and after, and all
circumstances which tend to increase or diminish the present market value.
Evidence should be excluded relating to remote, speculative, and
conjectural uses, as well as injuries, which are not reflected in the
present market value of the property." 
 
 This language clearly establishes market value  as the focal point of
adequate compensation to property owners.  This approach allows evidence
on damages in a condemnation case as long as that evidence does not relate
to remote or speculative damages, and as long as the property owner does
not seek compensation for damages suffered by the community in general. 

 This decision stood for almost sixty years - until 1993, when the Supreme
Court held in State v. Schmidt that diversion of traffic flow, increased
circuity of travel to the property, lessened visibility to passersby and
the inconvenience of construction activities could not be used in
determining the market value of the property remaining after the taking.
As a result, property owners who have had part of their property taken
since the Schmidt decision are receiving reduced compensation for their
remainder property based on a valuation which excludes these factors.   

PURPOSE

CSHB 2740 is to ensure that property owners receive fair compensation for
property involved in takings and that the compensation is based on a
definition of "market value" that includes those components commonly
assumed to be a part of the definition. 

RULEMAKING AUTHORITY

 It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Sec. 21.042, Property Tax Code , by amending subsections
(c)-(e) and adding subsections (f) and (g) as follows: 

 Sec. 21.042.  ASSESSMENT OF DAMAGES. 
 
 (c) Provides that if a portion of a tract or parcel of real property is
condemned and the property owner seeks an award for damage caused by the
condemnation to the property owner's 
remaining property, the total amount of the award for damage to the
property condemned and to the remaining property is based on the
difference in the local market value of the entire property immediately
before the condemnation and the local market value of the remaining
property immediately after the condemnation, considering any benefit or
injury that the construction or operation of the condemnor's project has
on the market value of the remaining property. 

 (d) Provides that any increase or decrease in the market value of an
entire tract or parcel of real property caused by the condemnor's proposed
project before the condemnation may not be considered in estimating the
market value of that property before condemnation.  Any increase or
decrease in the market value of any remaining real property caused by the
condemnor's proposed project after the condemnation shall be considered in
estimating the market value of that property after the condemnation. 

 (e) Requires that in the case of a condemnation by or for the Texas
Department of Transportation of real property for a state or federal
highway, in estimating the market value of the property condemned and of
any remaining property if a portion of a tract or parcel of real property
is condemned, the special commissioners shall consider all factors
considered in the marketplace that may affect the property's market value,
including:  vehicular and pedestrian access to and from and on and off the
property; traffic circulation and count in and around the property;
visibility and appearance of and from the property; productivity and
convenience of use of the property, including its highest and best use;
and the property's access to utilities and drainage.   

 (f) Requires that the effect that the condemnation has on any of the
market value characteristics required to be considered under Subsection
(e) shall be considered in estimating the market value of any remaining
portion of a tract or parcel of real property that is condemned regardless
of whether any other property in the area is similarly affected by the
condemnation.   

 (g) Requires that notwithstanding any other provision of this section, if
the property condemned is owned by a public entity or by a person
organized and operated on a non-profit basis and the property is devoted
to and needed by the property owner in good faith to perform a public
function or to provide a non-profit educational, charitable, or
eleemosynary service, the damage award may not be less than the financial
cost of replacing the property. 

SECTION 2. This section state the applicability of the effective date of
this Act. 

SECTION 3.  Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

CSHB 2740 states that if a portion of a tract or parcel of real property
is condemned and the property owner seeks an award for damage caused by
the condemnation to the property owner's 
remaining property, the total amount of the award for damage to the
property condemned and to the remaining property is based on the
difference in the local market value of the entire property immediately
before the condemnation and the local market value of the remaining
property immediately after the condemnation, considering any benefit or
injury that the construction or operation of the condemnor's project has
on the market value of the remaining property.  The  original legislation
did not contain these provisions 

CSHB 2740 state the applicability of the effective date of this Act.  The
original legislation did not contain this provision.