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by Ron Davis
Having a shopping center as a new neighbor has been a windfall for the owners of a Cincinnati-area property. But elation over the appreciation enjoyed by the owners was certainly not shared by local government officials when they eventually appropriated the property and had to pay an inflated price.
The owners, a couple who bought the property in 2000, paid $129,000, then converted the house located there for business use. Within a short time after their purchase, however, Rookwood Commons, a shopping center with 48 shops and restaurants, was completed just across the street. And the values of properties surrounding the shopping center skyrocketed.
But when the city of Norwood, the location of Rookwood Commons, decided to appropriate the couple’s property, city officials were apparently unaware of just how much they might have to pay. In fact, the couple who owned the property expected compensation of at least $500,000.
City officials responded by retaining the services a Cincinnati real-estate appraiser, and he concluded that based on the market value of the couple’s property, it was worth $200,000. The couple had their own experts, however. The first stated that the property was worth “at least $600,000,” although he added that an accurate appraisal was impossible because of a lack of comparable-property sales. The second expert said that based on the “visibility component” of the property, it was conservatively valued at $500,000.
A jury awarded the couple $500,000 for the property. Norwood officials appealed that award, questioning the basis of the second expert’s analysis and his lack of familiarity with the local area.
An Ohio appellate court upheld the jury’s award, explaining, “The value of a visibility component to commercial property, especially one located directly opposite a lifestyle mall, was relevant. Given his opinion that other local properties could not be used as market comparisons, his general unfamiliarity with local land values did not take away from his expertise and opinion.... We conclude that he based his opinion on the limited data that were available because of the unique set of facts, just as the other two expert witnesses did.” (City of Norwood v. Burton, 2005 WL 2807211 [Ohio App. 1 Dist.])
Decision: October 2005
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