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Lehigh-Northampton Airport Authority v. Fuller,
862 A.2d 159 (Pa. Cmwlth. 2004)
Shortly after a developer submitted a subdivision and land development plan to develop a residential neighborhood, a nearby Airport Authority filed a declaration of taking to condemn the property. The Board of Viewers estimated the value of the condemned property at two million dollars. Both parties appealed. After hearing the matter anew, a jury returned a verdict valuing the property at three and a half million dollars.
The Airport Authority appealed, challenging the methods used by the developer's expert witnesses to determine the value of the condemned property for just compensation purposes (as required by the Eminent Domain Code). Specifically, the Authority argued that the trial court erred by letting the developer's expert use the "Development Approach" to determining the value of the property. The Development Approach is essentially a present value calculation of the net income that should be realized upon the subdivision and development of a tract of land.
On appeal, the Commonwealth Court affirmed the verdict and expressly validated, for the first time, the use of the Development Approach in a condemnation proceeding. So long as a developer lays a proper foundation a developer may present evidence of the land's development value. To lay a proper foundation, the court concluded, the developer must show 1) that the land is "ripe for development," 2) that there is a reasonable expectation of securing all necessary permits, and 3) that development of the property is "within the reasonably foreseeable future." The court also reiterated and set forth its understanding of the eight procedural steps used in the Development Approach (the court had previously outlined and validated the method in the context of a tax assessment case, Penn's Grant Associates v. Northampton County Board of Assessment Appeals, 733 A.2d 23, 28, n.10 (Pa. Cmwlth. 1999).
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