Ruling Confirming Property Owners’ Right to Establish Condemned Property’s Value by Showing Future Development Potential.
Duggan Shadwick Doerr & Kurlbaum LLC secured a victory for property owners facing condemnation when the Supreme Court of Kansas in Kansas City Power & Light Company v. Strong, et al. affirmed a $1,922,559 jury award. John Duggan represented the Strongs at trial and on appeal, urging the Court for the first time to clear the way for landowners to show how hypothetical buyers evaluate partial land takings by showing detrimental effects on future development potential.
The Strongs owned two South Johnson County undeveloped farms totaling approximately 460 acres, and Kansas City Power & Light Company (“KCPL”) condemned a 70-feet wide power line easement to build 110-feet tall poles bisecting the farms. The easement occupied roughly 12 acres, and the court-appointed appraisers awarded the Strongs only $96,465 for the taking.
At trial, KCPL presented two experts claiming the damages were only $94,678 and $128,400, respectively. Both experts admitted on cross-examination that the land’s value exceeded pure farm ground prices based on the land’s proximity to future development. But both KCPL experts insisted that the power line easement bisecting the tracts failed to impact the remaining property’s value because the easement left farming operations unaffected. Both experts calculated damages by simply multiplying the 12 acres condemned by the per-acre land value. KCPL experts dismissed the importance of considering how a developer perceives the easement’s impact on the remaining property.
Mr. Duggan called two experts on behalf of the Strongs contradicting the conclusions urged by KCPL that the remaining property’s value is unaffected by the easement. The Strongs’ experts urged that developer-purchasers evaluate the easement’s negative impact on development. The experts demonstrated how typical development plans must factor in the easement’s detrimental impact, including the number of lots lost due to set backs from the easement as well as lot price discounts that must be applied to those lots closest to the power lines. The jury found Mr. Duggan’s argument persuasive and determined that the easement reduced the value of the remaining property by $1,922,559.
On appeal, KCPL argued that K.S.A. 26-513(e)—which provides that “fair market value” be determined by comparable sales, costs, or income capitalization methods—precludes a landowner from introducing evidence of future development potential. The Strongs maintained that K.S.A. 26-513(d)’s nonexclusive list of adjustments permits juries to consider anything a hypothetical buyer might consider, including the easement’s negative impact on potential development.
The Supreme Court noted that the three methods promoted by KCPL are appropriate for determining the pre-taking value, and all the experts, including KCPL’s experts, used the comparable sales method for determining pre-taking value. But the Court ruled that determining the remaining property’s value is not similarly restricted; the statute permits consideration of nonexclusive factors including matters a hypothetical buyer and seller consider in purchasing investment property. Thus, the Strongs’ evidence regarding the easement’s detrimental effect on a typical development—a factor developer-purchasers consider—was properly admitted.
The Strongs’ case now affords property owners flexibility to prove the remaining property’s value when condemning authorities only take part of the property. Partial takings account for the vast majority of condemnation cases, and DSDK’s efforts representing the Strongs have cleared the way to show how condemnation impacts future development in partial takings cases. Allowing property owners to show how developers’ price land after a partial taking oftentimes provides the most probative evidence of what a hypothetical buyer will pay post-taking. By all measures, the Strongs’ victory is a victory for Kansas property owners.