FAIRFAX COUNTY PARK AUTHORITY
v.
VIRGINIA DEPARTMENT OF
TRANSPORTATION
440 S.E.2d 610, 247 Va. 259
SUPREME COURT OF VIRGINIA
Record No. 930391
February 25, 1994
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY J. Howe
Brown, Judge.
William McCauley Arnold (Cowles, Rinaldi & Arnold, on brief), for appellant.
James F. Hayes, Senior Assistant
Attorney General (Stephen D. Rosenthal, Attorney General; Mary Yancey Spencer,
Deputy Attorney General; William B. Moore; Schwartz, Ellis & Moore, on
brief), for appellee.
Amicus Curiae: (James C. Kozlowski, on brief), in
support of appellant.
Present: All the Justices.
The opinion of the court was delivered by: Lacy
OPINION BY JUSTICE ELIZABETH B. LACY
In this appeal of a condemnation award, we consider
the appropriate basis for valuing land subject to a trust agreement providing
that ownership of the land vests in a church if it is used for purposes other
than a park.
In 1970, David Lawrence executed a trust agreement
dedicating a 639-acre parcel to be used as a park. The trust agreement names
Fairfax County Park Authority (FCPA) as the beneficiary in possession of the
trust so long as the property in the trust is used as a public park dedicated
to the memory of Ellanor C. Lawrence. If the property
is used for any other purpose, title to the land passes to the trustees of the
St. John's Episcopal Church, who then own the land free from any restrictions.
In the event of condemnation, the trust agreement requires the FCPA to contest
the condemnation proceedings in "every fashion reasonably possible,"
but condemnation of a portion of the park land does
not pass the remaining property to the Church.
In 1988, the Virginia Department of Transportation
(VDOT) filed a certificate of condemnation for approximately 13 acres of the
park property to expand and improve existing roadways. The certificate
subsequently was amended to reduce the taking to 2.6497 acres in fee simple,
1.0584 acres for a temporary easement, and .3685 acre for a drainage easement.
VDOT filed a motion in limine
seeking to establish the criteria for valuation of the condemned park property.
The trial court ruled that the measure of compensation was the property's fair
market value as restricted by the trust. The parties waived a hearing before
commissioners and presented evidence to the trial court of the value of the
condemned property restricted to use as a park.
VDOT's appraisal witness, Edward S. Williams, III,
testified that the value of the property used as a park or an open space was
$2,125 an acre based on four sales he considered comparable. Clyde A. Pinkston,
the appraisal witness presented by FCPA, testified that there was no market for
park land and, therefore, the property, if restricted
to use as a park, had no market value. If used for residential purposes,
Pinkston testified that the condemned property would have a market value of
$125,000 an acre.
The trial court, treating the land as park land,
held that there was a market for the property as park land and accepted
Williams's appraisal of $2,125 an acre. The court entered a final order setting
the condemnation award at $6,450. We awarded FCPA an appeal.
We first consider FCPA's contention that the trial
court erred in holding that the value of the condemned land must include
consideration of its restricted use. In reaching this conclusion, the trial
court acknowledged that cases in other jurisdictions have taken contrary positions.
Some jurisdictions value the land based on the restricted use while others
disregard such restrictions. See generally W.W. Allen, Annotation, Measure of
damages or compensation in eminent domain as affected by premises being
restricted to particular educational, religious, charitable, or non-commercial
use, 75 A.L.R.2d 1382 (1961). The trial court elected to follow those cases which required consideration of the restricted use
because of their factual similarities to this case. In each
instance, the land taken comprised only a small portion of the condemnee's parcel. In our opinion, this factor--the
amount of land taken relative to the amount left the owner--has little
relevance to determining just compensation due as measured by fair market
value, the standard mandated in condemnation proceedings in this Commonwealth. Va. Const. art. I, ¤ 11; Appalachian Power
Co. v. Anderson, 212 Va. 705, 708, 187 S.E.2d 148, 152 (1972).
Therefore, we must look to other grounds for determining the appropriate
treatment of the use restriction in valuing the land taken in this condemnation
proceeding.
In seeking support for their respective positions,
the parties noted that we have not previously determined whether use
restrictions such as those present in this case should be applied in
determining the amount of the condemnation award. We have held, however, that
similar restrictions should not be taken into account when valuing land for
taxation purposes.
In a series of cases the Richmond, Fredericksburg
and Potomac Railroad Company (RF&P) challenged the assessments of its
railroad yard in Alexandria, the Potomac Yard: Richmond, F. & P. R.R. v.
State Corp. Comm'n, 230 Va. 260, 336 S.E.2d 896
(1985); Richmond, F. & P. R.R. v. State Corp. Comm'n,
219 Va. 301, 247 S.E.2d 408 (1978); Richmond, F. & P. R.R. v. Commonwealth,
203 Va. 294, 124 S.E.2d 206 (1962). The assessments were attacked on various
grounds, but as pertinent here, RF&P sought reduction in the appraised
value because the land could only be used as a railroad yard. Furthermore, as
in the instant case, part of the land was subject to an indenture agreement
that provided that if the land was used for purposes other than maintenance or
construction of railroad tracks, ownership of the land would revert to the
United States government. We rejected on various grounds RF&P's argument
that restricted use as a railroad yard and the indenture agreement should be
considered in determining the market value of the property. Richmond, F. &
P. R.R. v. State Corp. Comm'n, 230 Va. at 261, 336
S.E.2d at 896-97; Richmond, F. & P. R.R. v. State Corp. Comm'n,
219 Va. at 318-20, 247 S.E.2d at 418-19; Richmond, F. & P. R.R. v.
Commonwealth, 203 Va. at 300-01, 124 S.E.2d at 210-11.
As relevant here, we held that it is the fair
market value of the land, not the value of the land to the owner, which is
subjected to taxation. Therefore, the market value of the
land is derived by considering the various uses to which the land is
susceptible, not just those uses to which a particular owner may be restricted.
If, however, the land is so committed to a particular use that it cannot be put
to another use economically, we held that, under those circumstances, it is
appropriate to take the committed use of the land into consideration when
determining the market value of the land. Lake Monticello
Serv. Co. v. Board of Supervisors, 237 Va. 434, 440-41, 377 S.E.2d 446, 450
(1989); Richmond, F. & P. R.R. v. Commonwealth, 203 Va. at 300, 124 S.E.2d
at 210.
While these principles establish the circumstances
under which use restrictions should be considered in calculating the fair
market valueof property in the context of real
property taxation, we see no reason why they should not be applied in the
context of the instant case. Fair market value of land is used not only for
taxation purposes, but, as we have said, it is the prescribed method for
determining the amount of "just compensation" due in condemnation
proceedings. Anderson, 212 Va. at 708, 187 S.E.2d at 152.
To adopt one set of principles for determining the fair market value of real
property in a condemnation proceeding and another set to make the same
determination for taxation purposes could result in a single parcel of land
having more than one fair market value. Such a result would be inconsistent and
inequitable and is unnecessary.
These principles are consistent with the
condemnation jurisprudence of this Commonwealth. Condemnation is an in rem
proceeding and, while the land is valued from the point of view of an owner
rather than the condemnor, the value established is
not the value to the owner personally. Highway Commissioner v. Reynolds, 206
Va. 785, 788, 146 S.E.2d 261, 263 (1966). A determination of a particular
owner's loss relative to that of others is only undertaken in the second step
of the condemnation proceeding in which the condemnation award is allocated
among those with interests in the property. Code ¤ 25-46.28; Williams v.
Fairfax County Redev. & Hous.
Auth., 227 Va. 309, 315, 315 S.E.2d 202, 205 (1984).
Finally, there is no evidence here that the
condemned land was so committed to use as a park that it was not economically
feasible to put the land to other uses. In fact, the trial court held that the
highest and best use of the property was for residential purposes. There were
no legal impediments to that use. Nor are future improvements required to adapt
it for residential use. Appalachian Power Co. v. Johnson, 137 Va. 12, 26, 119
S.E. 253, 257 (1923). Therefore, applying the principles stated above, we find
that the fair market value of the property condemned in this case should be
calculated without regard to the use restrictions placed on it by the trust
agreement. In light of our disposition of this issue, we need not address the
other errors assigned by FCPA.
Accordingly, we will reverse the order of the trial
court and remand the case for further proceedings consistent with this opinion.
Reversed and remanded.