LEGISLATIVE BUDGET BOARD
                                   Austin, Texas
         
                                   FISCAL NOTE
                               75th Regular Session
         
                                  April 29, 1997
         
         
      TO: Honorable Fred M. Bosse, Chair            IN RE:  House Bill No. 2740, Committee Report 1st House, Substituted
          Committee on Land and Resource Management                              By: Uher
          House
          Austin, Texas
         
         
         
         
         FROM:  John Keel, Director    
         
In response to your request for a Fiscal Note on HB2740 ( Relating 
to assessment of damages in a condemnation proceeding.) this 
office has detemined the following:
         
         Biennial Net Impact to General Revenue Funds by HB2740-Committee Report 1st House, Substituted
         

The bill would make no appropriation but could provide the 
legal basis for an appropriation of funds to implement the provisions 
of the bill.
         
FISCAL ANALYSIS  

The bill would amend the Property Code 
relating to determination of property values and compensable 
factors in condemnation proceedings.  Three factors previously 
ruled non-compensable (in State v. Schmidt), circuity of travel, 
diversion of traffic, and visibility, would become compensable, 
allowing property owners to receive damages.  

The bill would 
also allow compensation based on "productivity and convenience" 
factors relating to lost profits.  Previous court decisions, 
including the City of Austin v. Westgate, have ruled such factors 
non-compensable.  

METHODOLOGY and FISCAL IMPACT

The Office 
of the Attorney General estimates that the bill would not significantly 
impact the agency.  The Texas Department of Transportation (TxDOT) 
estimates significant increases in costs of condemnations.  


The TxDOT spent an average of $135 million annually between 
fiscal years 1992-96 to acquire parcels, with slightly over 
$129 million attributable to urban areas (where Schmidt factors 
arise most often).  Based upon appraisals prepared using Schmidt 
and non-Schmidt factors, the department estimates that the dollar 
value of appraisals in urban areas would increase by approximately 
75 percent in about one-half of acquisitions.   This would result 
in increased expenditures of approximately $48.5 million per 
year in acquisition costs.  

The bill would also increase 
costs based on compensability of lost profits.  The TxDOT based 
calculations on the same $129 million annual average to acquire 
properties in urban areas.  The department states that in similar 
cases, including the City of Austin v. Westgate, compensation 
for lost profits would have increased costs by approximately 
25 percent.  If one-half of the cases in urban areas included 
compensation for lost profits, the additional cost to the State 
would be approximately $16.2 million annually.  

Taking into 
account the factors affecting compensation in condemnation cases 
under the provisions of the bill, the TxDOT estimates total 
additional costs of $64.7 million each year from the State Highway 
Fund.  

         
 
          
Inclusion of additional compensable factors in condemnation 
cases could result in similar increased expenditures for local 
units of government.  

          
   Source:            Agencies:   302   Office of the Attorney General
                                         601   Department of Transportation
                                         
                      LBB Staff:   JK ,BB