FAA Reauthorization Act Changes Rules for Valuation of Residential Properties

Exemption of NextGen procedures from environmental review is not the only issue raised by the FAA Reauthorization legislation set to be approved by the United States Senate on Monday, February 6 at 5:30 p.m. EST.  Section 505 of the Conference Version of the Bill allows a public entity taking private residential properties by eminent domain for airport purposes to pay the value of the property after its value has been diminished by the pendency of the project itself, and by any delay by the public entity in purchasing the property.  In other words, the Congress is overriding the long held judicial precept that “temporary takings are as protected by the Constitution as are permanent ones.”  See, e.g., First Evangelical Lutheran Church of Glendale v. Los Angeles County, California, 482 U.S. 304, 318 (1987).

Specifically, § 505 amends 49 U.S.C. § 47504 to allow the Federal Aviation Administration to “disregard any decrease or increase in the fair market value of the real property caused by the project for which the property is to be acquired, or by the likelihood that the property would be acquired for the project. . .”  Thus, hypothetically, once government announces a program of eminent domain, it may wait an unlimited time to appraise the property in the hope that the value will diminish by virtue of the threat itself, or of the deterioration of the surrounding areas caused by voluntary relocation in the face of the threat of condemnation.

This is precisely the inequity the weight of Supreme Court jurisprudence has sought to eliminate.  It is true that this case differs nominally from the typical case of “inverse condemnation,” i.e., a taking by government of all economically viable use of a property by regulation without just compensation, Tahoe Sierra Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U.S. 302, 350 (2002).  However, the absence of compensation for the indeterminate period before the actual purchase of the property, during which time the property arguably has no economically viable use, is paramount to the “temporary” taking at issue in, among other seminal cases, Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). 

In summary, the FAA Reauthorization Act adds the insult of potential undisclosed impacts of new NextGen procedures on previously non- or marginally impacted communities, to the injury of reduced compensation for residential properties eventually impacted, even if the reduction in value of those properties is caused by the airport’s intentional delay in purchasing the property.

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Brad Kuhn - February 7, 2012 5:12 AM

I have not read the entire legislation, but the portion you quote is typical language and is generally already the law in every state. What it says is that any decrease or increase in a property's value caused by the project is not to be taken into consideration. For example, if there were plans to acquire your neighborhood to build a dump, the value of your home would decrease; this should not be considered in valuing the property. Similarly, if there were plans to build a freeway on a part of your commercial property, your property may increase in value due to the freeway proximity; this likewise should not be considered.

The language should not impact a party's ability to make a temporary takings claim; they are extremely hard to prove (either through a "Klopping" precondemnation damages claim or through a de facto takings claim), but neither are impacted by the proposed language.

California Overtime Laws - February 15, 2012 1:39 AM

Good Information... Thanks for posting...

Lulaine - March 8, 2012 11:17 AM

I see a lot of litigant action against this exemption. Property owners are very protective and defensive of their property values and what should they be compensated. If the exemption goes through many people may feel like they are losing a lot of money and they will sue to get that changed. There are many cases where eminent domain has been challenged for a variety of reasons and this adds to those reasons.

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