LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 2, 1997
TO: Honorable Fred M. Bosse, Chair IN RE: House Bill No. 2740
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 the preservation of the rights of property owners through
a uniform assessment of market value in condemnation proceedings.)
this office has detemined the following:
Biennial Net Impact to General Revenue Funds by HB2740-As Introduced
The bill would make no appropriation but could provide the
legal basis for an appropriation of funds to implement the provisions
of the bill.
The bill would amend Section 21.042 of the Property Tax Code,
relating to the determination of the value of property in condemnation
proceedings.
Note: The bill refers to Section 21.042 of
Property Tax Code. This fiscal note assumes the bill would
amend Section 21.042 of the Property Code.
FISCAL IMPACT:
Based
on information provided by the Texas Department of Transportation
(TxDOT), the major impact of the bill is to make certain elements
of damage compensable--elements which have by prior court decisions
been ruled to be non-compensable. The bill attempts to make
compensable three of the factors determined by the Texas Supreme
Court in State v. Schmidt to be non-compensable. Those factors
included in this bill are circuity of travel, diversion of traffic
and visibility. The proposed changes to the Property Code as
set forth in this bill would allow an owner to receive damages
based on the Schmidt factors.
In fiscal year 1996, approximately
$45,000,000 was spent by TxDOT to acquire parcels through condemnation.
Of that figure, approximately $31,500,000 was attributable
to condemnation cases for property in the Fort Worth, Houston,
Austin and Dallas Districts. Damages based on the Schmidt factors
arise most often in urban areas. While the Schmidt case was
pending a ruling from the Supreme Court of the State of Texas,
appraisals were prepared which included Schmidt and non-Schmidt
factors. The Schmidt factors increased the appraisals by approximately
75%. Therefore, assuming conservatively that one-half of those
cases in the urban districts named above included Schmidt factor
damages, the proposed legislation would result in a $11,812,500
annual increase in the cost of acquisition as a result of condemnation.
The bill also includes new compensable factors other than Schmidt
factors. One of these will likely cause a major fiscal impact.
The "productivity and convenience" factor relates to the compensability
of lost profits which has never been a compensable factor under
Texas law. In several Texas cases owners have alleged damages
based on loss of business profit. In those cases, as well as
the recent case of City of Austin v. Westgate, compensation
for lost profits would have increased the award by approximately
25%. In fiscal year 1996, approximately $45,000,000 was used
for the purchase of property acquired through eminent domain.
This amount only reflects the cost of the property. Of that
figure, $31,500,000 was attributable to cases in urban areas
as noted above. It is assume that the majority of lost profits
claims would arise in urban districts. Therefore, if one-half
of the cases in the urban areas included claims for lost profits,
then the fiscal impact would be $3,937,500.
Source: Agencies: 601 Department of Transportation
302 Office of the Attorney General
304 Comptroller of Public Accounts
LBB Staff: JK ,BB ,BR