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ST9302-CS 950509 NICHOLS, JACKSON, DILLARD, HAGER & SMITH, L.L.P. LAWRENCE W. JACKSON 2~"torJleys &Counselors at Law JOHN F. ROEHM III ROBERT L DILLARD III 1800 Lincoln Plaza ROBERT E, HAGER PETER G. SMITH 500 ~q'oz/J3, AJG3$d ROBERT L. DILLARD, JR. DAVID M. BERMAN Dallas, Texas 75201 H. LOUIS NICHOLS BRUCE A. STOCKARD (214) 965-9900 OF COU~S~k Fax (214) 965-0010 May 9, 1995 Mayor Tom Morton Members of the City Council City of Coppell P.O. Box 478 Coppell, Texas 75019 Re: Eminent Domain Procedure Dear Mayor and Council: Pursuant to your request, the undersigned provides the following summary regarding eminent domain procedure as it applies to the Texas Utility Electric Company transmission line and poles located adjacent to Sandy Lake Road. Previously, we advised that if the City exercises the power of eminent domain, that TU Electric is entitled to be compensated for the removal and relocation of the transmission line and poles adjacent to Sandy Lake Road located by easement in private property off of the public right-of-way. We aiso concluded that subject to the limitation contained in the Franchise Agreement, that TU Electric could relocate the transmission line and poles to the center median on Sandy Lake Road or to other available public rights-of-way. The amount of compensation should consider the expense incident to the construction of a similar transmission line and poles on private property affording comparable facilities. Although the exact measure of damages will be determined by an appraiser and is subject to judicial interpretation, it should roughly equate to the cost of removal and permanent relocation of the transmission line and poles less depreciation and salvage value. Chapter 21 of the Texas Property Code sets forth the statutory procedures for eminent domain proceedings. The district courts and county courts of Texas have concurrent jurisdiction in eminent domain cases. The first step in exercising the right of eminent domain is to have an accurate survey and field note description prepared for the property to be acqu/red. A title commitment should be obtained to make certain that all parties having an interest in the real property are named in the condemnation action. This AGG~C25 May 9, 1995 Page 2 includes fee owners, lienholders, and those having leasehold interest in the property. An update should be obtained just prior to filing the condemnation proceedings. Prior to filing a petition, the City must enter into good faith negotiations with the property owner in an attempt to agree on the amount of damages to be paid to the property owner for the acquisition of the property. This is jurisdictional. Ordinarily, an appraisal is obtained before negotiations are commenced. It is a good practice to offer the property owner the full amount of the appraised value prior to filing the condemnation petition. It is to the City's advantage to attempt to agree on damages as most Special Commissioners and Courts are predisposed to award damages in excess of the City's appraisal. Purchase by negotiation can be faster, easier and cheaper. The damages payable to the property owner are based upon an appraisal of the market value of the property taken. Market value is a matter of opinion and each side will have to bear the cost of a competent real estate appraiser who can testify at the hearing of the Special Commissioners and at trial if necessary. If the City elects not to use the City Engineer, it will be necessary to employ an engineer to determine the interest to be acquired to complete the project and also to be available for testimony as the necessity of the project. The cost of an eminent domain case will include fees for the Special Commissioners, probably ranging from $200.00 to $1,000.00 for each, depending on the amount of their services on the case, and which almost always will be assessed against the City. Both sides will have to pay attorneys' fees to be represented in the eminent proceedings. After the Commissioner's Award, either side may appeal the decision and have the Judge or jury of the County Court determine the damages. If that occurs, you can multiply all these costs. Regardless of the outcome, the City will be incurring considerable staff time, including that of highly paid professionals and management personnel. If the City decides to exercise the power of eminent power to acquire the property, the City Council will pass a resolution authorizing the action, declaring a need and necessity for the acquisition of the subject property. After the City Council passes a resolution declaring the need and necessity for the acquisition of the subject property, a condenmation petition is filed with the District Court or County Court if negotiations have failed. All parties who claim an interest in the property are served with the petition. In conjunction with the filing of the original petition, a lis pendens notice is filed in the County Land Records to put all bona fide subsequent purchasers on notice of the condemnation proceedings. The lis pendens notice is to cut off innocent purchasers. After filing the condemnation petition, the Judge of the assigned Court will appoint three (3) disinterested free holders (persons owning real property) who reside in the County in which the real property is located. When filing a petition, a proposed order appointing Special Commissioners is presented to the Judge. While the Property Code provides that AGG06C25 NICHOLS. JACKSON, DILLARD, HAGER,& SMITH, L.L.P. May 9, 1995 Page 3 a Judge should give preference to persons agreed to by the parties, in practice, the Judge will appoint individuals from the list the Judgme maintains for such purposes. As soon as the Commissioners are appointed, arrangements are then made to have the Commissioners sign an oath to be filed with the Court. The oath requires the Special Commissioners to swear to assess damages fairly, impartially and according to the law. After their appointment, the Commissioners promptly schedule a hearing for the parties at the earliest practical time and in a place that is as near as practical to the property being condemned or in the County seat. In practice, the City takes the initiative in setting up the hearing. This is done by contacting the three (3) Special Commissioners, the property owner or the property owner's attorney and any witnesses to find a convenient time and place for conducting the heating. Usually, the Special Commissioners view the property prior to the hearing. The attorney representing the City will meet with the City's appraiser before the Special Commissioners' hearing to discuss the testimony. There are three basic approaches to valuation of property, the sales comparison approach, cost approach, and the income approach. The direct sales comparison approach is considered to be the best and most reliable approach in most situations. The appraiser makes an attempt to find recent sales of properties similar to the subject property and compares those sales to the property making adjustments for dissimilarities. The cost approach is utilized when the subject property is improved. The cost approach is less reliable ff the buildings or structures are obsolete or substantially depreciated. Under the income approach the property is viewed as an investment. The Special Commissioners' hearing is an administrative hearing. Even though the Rules of Evidence apply as a practical matter, the Special Commissioners' hearing is very informal. The Property Code prescribes how damages are to be assessed. If all the property is being condemned, the damage to the property owner is the market value of the property at the time of the Special Commissioners' hearing. The market value is the price the property will bring when offered by sale by one who desires to sell but is not obligated to sell, and is bought by one who desires to buy, but is under no necessity of buying, taking into consideration all those uses to which it is originally adaptable and for which it either is or in all reasonable probability will become available within the reasonable future. If a portion of the property is being condemned, the Commissioners will determine the market value of the property being taken. In addition, the Commissioners determine the damages, if any, to the remainder of the property. Damage to the remainder property is the difference of fair market value of the remaining property immediately before and after the partial taking. All testimony is under oath and if a transcript of the heating is desired, arrangements must be made for a court reporter. The City proceeds first usually with two (2) witnesses, the City Engineer and an appraiser. Ordinarily, the engineer testifies regarding the project for which the property is being acquired and the appraiser testifies as to his opinion on the market value. The condemnee usually has the property owner testify AGG06C25 NICHOLS. JACKSON, DILLARD, HAGER & SMITH, L.L.P. May 9, 1995 Page 4 with an appraiser. Following the Special Commissioners' hearing, the Commissioners give a written statement of their decision known as the Commissioners' Award. This decision awards the damages and assesses the cost. The award is filed with the Judge of the Court on the day the decision is made or on the next working day after the decision is made. Ordinarily, the City's attorney makes arrangements to file the award with the Court along with any other papers that need to be filed with the Court such as the return of notices of hearing. The Judge of the Court will inform the Clerk of the Court as to the decision of the Special Commissioners on the date the decision is filed or on the next working day after the day the decision is filed. No later than the next working day after the decision is filed, the Clerk sends notice of the decision by certified or registered United States mail, return receipt requested to all parties in the proceeding or their attorneys of record. Usually the City facilitates this by preparing postage paid envelopes and green cards for the Court Clerk. In most instances, the City wants to take possession of the property pending the litigation. The Property Code provides that a City may take immediate possession of the property by paying to the property owner the mount of damages and costs awarded by the Special Commissioners or by depositing that amount with the Court subject to the order of the property owner. The Courts have held that in addition a writ of possession is required in order to take possession of the property. Therefore, either a writ of possession or a waiver of writ of possession is obtained from the property owner in order for the City to take possession. After the Commissioners' Award, the Property Code permits any party in the condemnation proceeding to object to the Award by filing written objections with the Court before the first Monday following twenty (20) days after the day the Commissioners filed their Award with the Court. It is the responsibility of the objecting party to have all of the parties served with citations. As a practical matter, since the City desires dear title, the City will make certain that all parties are cited to appear if there are objections to the Award. Once the objections are filed, the proceedings are transformed from an administrative proceeding into a civil court action that is tried in the conformance of the Rules of CM1 Procedure. In that event, the Judge or Jury then determines the damages and costs to be assessed. If either side is dissatisfied following the trial, the decision may be appealed to the Court of Appeals and like any other civil case. If no party files timely objections to the Commissioners' Award, the Court must adopt the Commissioners' findings as the Judgment of the Court. If the City wants to dismiss the condemnation case, there are specific rules which apply. After the Special Commissioners' Award, the City cannot dismiss the case and start over. The City is entitled to dismiss prior to taking possession. If a Motion to Dismiss by AGG06C25 NICHOLS. JACKSON, DILLARD, HAGER & SMITH, L.L.P. May 9, 1995 Page 5 the City is granted, the Court will make allowance for reasonable and necessary fees for attorneys, appraisers and for other expenses incurred by the property owner. The City takes actual possession when it invades or appropriates the property. The date of taldng is a date in which the condemnor or City lawfully takes actual possession or takes constmctively by deposit of the Special Commissioners' Award. The City takes constructive possession of the property when the City deposits the Award into the Registry of the Court. Finally, dismissal will be allowed if the owner is not prejudiced and the stares quo can be restored. The City is entitled to a jury trial on the issue of reasonable and necessary attorneys' fees and expenses in condemnation case that has been dismissed. The land owner is entitled to recover reasonable attorneys' fees even if his arrangement is for a contingent fee. The purpose is to compensate the land owner for expenses and to discourage the commencement and subsequent abandonment of condemnation proceedings. The above summarizes the step by step eminent domain procedure through the Special Commissioners' hearing. It is intended only as a practical guide to the condemnation process. If you have any questiota regarding eminent domain procedure or need further assistance, please don't hesitate to contact me. Very truly yours, NICHOLS, JACKSON, DILLARD, HAGER & SMITH, L.L.P. Peter G. Smith PGS/CT CC'. Mr. James Witt City Manager City of Coppell P. O. Box 478 Coppelt, Texas 75019 AGG06C25 NICHOLS. JACKSON, DILLARD, HAGER & SMITH, L.L.P.