LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 2, 1997
TO: Honorable Fred M. Bosse, Chair IN RE: House Bill No. 1794
Committee on Land and Resource Management By: Krusee
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB1794 ( Relating
to assessment of damages in a condemnation proceeding.) this
office has detemined the following:
Biennial Net Impact to General Revenue Funds by HB1794-As Introduced
Implementing the provisions of the bill would result in a
net impact of $0 to General Revenue Related Funds through the
biennium ending August 31, 1999.
Fiscal Analysis
The bill would allow a property owner to establish the value
of an entire tract or parcel of real property that has been
condemned as of a date not earlier than the date of the first
offer made by the condemnor to acquire a tract or parcel of
real property for the same project. Currently, the damage to
the property is the local value of the property at the time
of the special commissioner's court hearing.
Methodolgy
In the City of Austin v. Westgate case, the Supreme Court of
Texas held that an owner may not receive compensation for damages
caused by the public intent of the condemnor to take the property
absent some direct restriction on use of the property. The Court
also found that the landowner was entitled to an additional
$633,000 based on a decrease in the landowner's property value
from the date of a newspaper article referencing the highway
project (public intent), until the date of the Special Commissioner's
hearing.
TxDot assumes that the expression of public intent
is equivalent to the first offer for the first parcel in the
project to be acquired. The $633,000 figure in the Westgate
case represents a 25% increase due to project influence and
other non-compensable factors. The cost of all right of way
purchased by the department for fiscal year 1995, as provided
by the department, was approximately $98.0 million. Of that,
the department estimates that approximately $38.0 million was
used for the purchase of property acquired through eminent domain.
The $38.0 million amount reflects only the cost of the property
and not the attorney fees, or associated right of way costs.
The department estimate also assumes that only one-half of owners
elect to establish an earlier date of valuation as provided
by the proposed legislation, and based on Westgate type percentage
increases, the department estimates increase in right of way
costs $4.75 million annually.
In addition, since the owner
could choose to change the date of the valuation to the date
of the first offer for the first parcel in the project, the
TxDOT estimates it would obtain appraisals on each parcel within
the project prior to the first offer being made. The department
stated that the average cost of an appraisal for fiscal year
1995 was $2,200 and estimated that approximately 1,000 parcels
were acquired in fiscal year 1995. The TxDOT estimates assume
at least one additional appraisal would be necessary on all
parcels, and possibly two additional updated appraisals for
the parcels being condemned. The cost for the additional appraisals
would be approximately $2,200,000 per year. TxDot estimates
that updated appraisals cost, on average, $600; assuming 20%
are condemned, the costs of updates would be increased by $240,000
per year. Therefore, TxDot estimates the additional costs of
appraisals is $2,440,000 per year.
TxDot estimates the total
increase in right-of-way expenditures for each fiscal year following
enactment to be $7.19 million.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable
Savings/(Cost)
from State
Highway Fund
0006
1998 ($7,190,000)
1998 (7,190,000)
2000 (7,190,000)
2001 (7,190,000)
2002 (7,190,000)
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $0
1999 0
2000 0
2001 0
2002 0
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
The implications of the bill would apply to local governments
and would have a similar direct fiscal impact on local governments.
Source: Agencies: 601 Department of Transportation
302 Office of the Attorney General
LBB Staff: JK ,BB ,ML