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Home My Public Portal About05/08/20474 Land Acquisition Opinion letterWm. F. GIGRAY, III MATTHEW A. JOHNSON WILLIAM F. WHOLs * BRIAN T. O'BANNON • PHILIP A. PETERSON WHITE PETERSON ATTORNEYS AT LAW WHITE, PETERSON, GIGRAY, ROSSMAN & NICHOLS, P.A. CANYON PARK AT THE IDAHO CENTER 5700 E. FRANKLIN RD., SurrE 200 NAMPA, IDAHO 83687-7901 TEL (208)466-9272 FAX(208)466-4405 EMAIL: wfg@whitepetecson.com May 8, 2014 Nathan Coyle, Airport Manager City of McCall 216 E. Park Street McCall, Idaho 83638 Re: Appraisal Review Services, City of McCall Airport Improvement Project Legal Opinion Application of Scope of the Project Rule Dear Mr. Coyle: WILLIAM L. PUNKONEY TODD A. ROSSMAN DAVIS F. VANDERVELDE ** TERRENCE R. WHITE *** * Also admitted in OR ** Also admitted in NV *** Also admitted in WA You have requested that we provide you with a legal opinion regarding the application of the "scope of the project" rule to the City's Airport Improvement Project for the use of Ed Morse of Morse & Company in reviewing two prior appraisals of the subject properties of this project. Question: Does the "scope of the project rule" apply to the McCall Airport Improvement Project? Analysis: The "scope of the project" rule derives from the U.S. Supreme Court case United States v. Miller, 317 U.S. 369 (1943). The rule provides that just compensation for the taking of private property for a government project does not include changes in market value due to the activities of government relating to the project for which the property is condemned. The rule applies where the lands were "probably within the scope of the project from the time the government committed to it." Miller, 317 U.S. at 377. If the lands were probably within the scope of the project from the beginning, "the Government ought not to pay any increase in value arising from the known fact that the lands probably would be condemned." Id. If the land is not within the scope of the project from the time the government commits to it, but is later condemned for an extension of the original project or for some other purpose, "the general rule of just compensation requires that such enhancement in value be wholly taken into account, since fair market value is generally to be determined with due consideration of all available economic uses of the property at the time of the taking." United States v. Reynolds, City of McCall — Legal Opinion Airport Improvement Project May 8, 2014 Page 2 397 U.S. 14, 17 (1970). However, the rule applies where the property is "probably" within the scope of the project; the rule "does not require a showing that the land ultimately taken was actually specified in the original plans for the project. It need only be shown that during the planning or original construction it became evident that land so situated would probably be needed for the public use." Id. at 21. The scope of the project rule applies to both enhancement and to diminution in the value of the property due to the influence of the government project. Where the rule applies, the property owner is not entitled to compensation for any increment of market value that is added to the property due to the influence of the project, but also cannot be punished for any loss in market value resulting from this influence. Id. at 16; United States v. 480.00 Acres of Land, 557 F.3d 1297, 1307 (11 th Cir. 2009). The scope of the project rule has been codified at 42 U.S.C. § 4651(3), which provides: Before the initiation of negotiations for real property, the head of the Federal agency concerned shall establish an amount which he believes to be just compensation therefor and shall made a prompt offer to acquire the property for the full amount so established. In no event shall such amount be less than the agency's approved appraisal of the fair market value of such property. Any decrease or increase in the fair market value of real property prior to the date of valuation caused by the public improvement for which such property was acquired, or by the likelihood that the property would be acquired for such improvement, other than that due to physical deterioration within the reasonable control of the owner, will be disregarded in determining the compensation for the property.... (emphasis added). The rule is also discussed in Section B-10 of the Uniform Appraisal Standards for Federal Land Acquisitions, and in Section 2-8 of the Federal Aviation Administration's Advisory Circular No. 150/5100-17, which provides standards for land acquisition for Airport Improvement Program (AIP) Assisted Projects. In order for the scope of the project rule to apply, there must be a government project for purposes of the rule. This is evaluated based on three factors: (1) whether there is a public purpose for the acquisition of the land; (2) whether the particular lands to be acquired for the public purpose have been identified; and (3) whether the imminent acquisition of the lands was evident to the public. See United States v. 49.01 Acres of Land, 669 F.2d 1364, 1367-69 (10th Cir. 1982); INTERAGENCY LAND ACQUISITION CONFERENCE, UNIFORM APPRAISAL STANDARDS FOR FEDERAL LAND ACQUISITIONS, 46 (2000). The scope of the project rule does not apply if "the landowner reasonably believed that the government's subsequent action removed the property from the project's scope." United States v. 49.01 Acres of Land, 669 F.2d at 1367. The following is our analysis of the application of these factors to the McCall Airport Improvement Project in light of the information the City has provided to us regarding the planning process it followed for this project. City of McCall — Legal Opinion Airport Improvement Project May 8, 2014 Page 3 Public Purpose for Acquisition of Land The land is to be acquired for an airport improvement project for the McCall Municipal Airport. The City of McCall identified factors creating a necessity for airport improvements in its purpose and need statement provided to the FAA: • The centerline separation of the runway and taxiway is insufficient to comply with current FAA standards. The McCall Municipal Airport receives federal funding and must comply with FAA design standards. Land must be acquired to increase the centerline separation of the runway and taxiway to bring the airport into compliance with these standards. The existing centerline separation is 200 feet. The current FAA standard for centerline separation at an airport with an ARC B-II classification is 240 feet. The airport is forecasted to have an ARC C-II classification in the future, and potentially a classification of ARC C-III. A C-II classification requires a centerline separation of 300 feet, and a C-III classification requires a separation of 400 feet. In January 2010 the McCall City Council voted to approve a plan for a centerline separation of 300 feet, consistent with a C-II classification, and to acquire sufficient land for a separation of 400 feet in the event the airport attains C-III classification in the future. • The City determined in the Airport Master Plan Update of 2007 that additional hangars would be required. Acquisition of land is necessary for construction of additional hangars. The acquisition of the land is therefore necessary for a public project, viz. the expansion of the McCall Municipal Airport and construction of airport facilities. Identification of Lands to be Acquired The subject parcels were first identified for acquisition for airport purposes in the 1990 Airport Layout Plan, although no development was indicated on the property at that time. The subject parcels were identified in the 1996 Airport Master Plan as a hangar development site. In the 2007 Master Plan Update, when the plans for the present project were developed, the subject parcels were designated for hangar development, aircraft aprons and airport -related support facilities. Imminence of Acquisition of the Land was Evident to the Public For the scope of the project rule to apply, the probable acquisition of the property as part of a government project must be evident to the public. However, the threshold for satisfying this requirement is low. It is not necessary that the lands to be acquired are specifically identified in the original plans, or that property owners be notified that their lands may be taken. The public need only be informed of the government's plans in such a way that a member of the public so informed can deduce that the lands will likely be acquired. As a federal appeals court stated: City of McCall — Legal Opinion Airport Improvement Project May 8, 2014 Page 4 Courts have also imposed a heavy burden on private owners of land adjoining a project to show that the government failed to give notice or that they reasonably believed their land lay outside the scope of the project. The government, for instance, need not notify individually the landowners that it intends to take their property; the public receives sufficient notice if the government specifies in its publicly disclosed plans the land that the project will require, or otherwise publicly indicates its plans. Consequently, if the government gave public notice of its plans, landowners must show that those plans did not include their property or that subsequent government action clearly expressed an alteration from the original plan. U.S. v. 49.01 Acres of Land, Situate in Osage County, State of Okl., 669 F.2d 1364 (10th Cir. 1982) (internal citations omitted). It is clear that the imminent acquisition of the subject property was evident to the public at least since 2006. During the period of the 2007 Master Plan Update, the City held public meetings at which the planned development of the subject property was discussed. These meetings included the following: • June 22, 2006 McCall City Council Meeting • September 7, 2006: two meetings (12:00 pm and 6:00 pm) at McCall Fire Station • October 2, 2006 at McCall Aviation Hangar • January 29, 2007 at McCall Fire Station • March 21, 2007 at McCall Fire Station The development of the subject property was also discussed at five open meetings of the City's Planning Advisory Committee, whose purpose was to integrate the Airport Master Plan into the City's Comprehensive Plan. In the course of the planning process the public had the opportunity to view exhibits depicting the planned development of the subject parcels. In the final stages of preparation of the 2007 Master Plan Update the Airport Layout Plan (ALP), a set of drawings depicting final plans for development of the subject property, was publicly displayed. The ALP remains the guiding document for the City's development of the subject property. These public meetings easily satisfy the requirement that the planned acquisition of the property must be evident to the public. The public has had notice that the City's development plans would include the subject property since the first public announcement regarding the 2007 Master Plan Update in June 2006. Whether the lands identified were subsequently excluded from the project The scope of the planned development of the subject property has not changed significantly since the 2007 Master Plan Update was completed. The ALP produced as part of the 2007 Master Plan Update continues to guide the plans for development of the property. There is no basis for a landowner to believe that any portion of the subject property was subsequently excluded from the City's acquisition plans. City of McCall — Legal Opinion Airport Improvement Project May 8, 2014 Page 5 Conclusion: The scope of the project rule applies to the McCall Airport Improvement Project. Any enhancement or diminution in the value of the subject property that has occurred as a result of the plans for acquisition of the property revealed during the 2007 Master Plan Update should be excluded from the appraised value of the property. Very truly yours, WHITE PETERSON WFG/cjb cc: City of McCall cjbW:\Work\M\McCall, City of 21684\Airport\Airport Expansion Matter\Opinion Letter re Scope of Project 5.8.14.doc