State and local government agencies often acquire temporary easements on private property to facilitate roadwork and other construction projects. Landowners are entitled to compensation.

In a recent case from Charlotte, the state’s second highest court ruled that the compensation for a temporary easement can be significant when an easement affecting a small section of the land reduces the value of the entire parcel, and that government authorities must account for the loss of value of the entire property when they offer compensation for a partial taking.

Anthony and Karen Combs own the Biberstein House in Charlotte. The historic property, a 4,167-square-foot structure which has been converted into an office building, sits on 0.3 acres off of Elizabeth Avenue not far from Presbyterian Hospital. In 2007, the city of Charlotte began work on its Elizabeth Avenue Business Corridor Project. To facilitate the work, the city acquired a “temporary construction easement” over a 330-square-foot (5-foot-by-66-foot) strip of the Combses’ land adjacent to Elizabeth Avenue. The city originally planned to acquire the easement for one year but work dragged on. It would take more than two years for all work on the project to be completed.

A trial was held to determine how much compensation the Combses were due for the temporary taking of their land. An appraiser the Combses had hired calculated their loss at about $103,000. The jury awarded the Combses just $5, 073 — not much more than the $4,789 the city’s expert had suggested was fair.

The Combses challenged the compensation award, arguing that the city’s expert calculation was not reliable and should have been excluded at trial.

The N.C. Supreme Court has defined a taking as “entering upon private property for more than a momentary period, and under warrant or color of legal authority, devoting it to a public use, or otherwise informally appropriating or injuriously affecting it in such a way as substantially to oust the owner and deprive him [or her] of all beneficial enjoyment thereof.” A taking does not have to be permanent for a property owner to be entitled to compensation.

Ordinarily, compensation for a temporary taking is based on the fair market rental value of the property that is affected directly by the taking. The N.C. Supreme Court has, however, recognized that payment is appropriate in when the work conducted by the public agency doing the taking reduces the value of the rest of the property as well.

Damon Bidencope, the appraiser the Combses hired, believed that the TCE reduced the rental value of the Biberstein House as a whole. His analysis showed that the monthly fair-market rent for the building had fallen from around $20 per square foot to only $8 per square foot while the road project was underway. When multiplied by the number of square feet in the building and the length of time, the loss came to $102,803.

Fitzhugh Stout, the appraiser the city used, testified that he did not believe that the TCE affected the rest of the property, and did not conduct any analysis to back up his contention.

Relying on the N.C. Supreme Court’s holding in N.C. Department of Transportation v. Haywood County, the Combses argued that Stout’s testimony should not have been admitted at trial. That lawsuit concerned how much compensation the state had to pay Haywood County after widening a highway next to a county-owned building. Three appraisers testified that they believed the widened road decreased the value of the building from between 30 percent and 35 percent. The Supreme Court held that the appraisers’ opinions should have been admitted.

The Court of Appeals agreed.

“Here, as in Haywood County, because Mr. Stout based his valuation of the TCE on his experience that such temporary takings do not affect the remainder of the condemnee’s property, rather than an actual assessment that the Combs’ property outside of the TCE was not affected, his method of proof lacked sufficient reliability,” wrote Judge Robert C. Hunter for the appeals court. The appeals court ordered a new trial.

The case is City of Charlotte v Combs, (11-107).

Michael Lowrey is an associate editor of Carolina Journal.