86. Valuation
1. Evidence of profits from a business conducted on the property
is not admissible. Dep't. of Highways v. Campbell,
80 Nev. 23, 33, 388 P.2d 733 (1964) (#36)
2. Valuation/Actual Use: "A landowner is entitled
to compensation for the highest and best use to which his property may be put,
and is not limited by the use actually made of it." Andrews
v. Kingsbury Gen. Improvement, 84 Nev. 88, 90, 436 P.2d 813 (1968) (#41)
3. Valuation/Appeal: Valuation of land taken in eminent
domain, supported by substantial evidence, will not be disturbed on appeal.
Dep't of Hwys. v. Wells Cargo, Inc., 82 Nev. 82, 85,
411 P.2d 120 (1966) (#37)
4. Valuation/Benefits: When land is condemned for
a railroad after its original construction, the owner is entitled to the actual
market value of the property at the time of the taking, without deduction for
any appreciation in value caused by the previous location and construction of
the road. Virginia and Truckee Railroad Company v. Lovejoy,
8 Nev. 100 (1872) (#5)
5. Valuation/Capitalization: It is proper to capitalize
the property's net income (value of an asset capable of producing the known
income of the property). State v. Shaddock,
75 Nev. 392, 399, 344 P.2d 191 (1959) (#29)
6. Valuation/Capitalization: It is proper to use testimony
of capitalization of income. Dep't. of Highways
v. Campbell, 80 Nev. 23, 28, 388 P.2d 733 (1964) (#36)
7. Valuation/Capitalization: A certified public accountant
may give his opinion on the value of an asset producing the net income realized
from the subject property when capitalized at various rates, but may not express
his opinion on the market value of the property without foundation testimony
establishing such expertise. Eikelberger v.
State ex rel. Dep't Hwys., 83 Nev. 306, 308-310, 429 P.2d 555 (1967) (#39)
8. Valuation/Capitalization: Absent foundation information
about the relevant capitalization rate, a capitalization witness should not
be permitted to express an opinion on market value by use of the income approach
to value. Id. at 309 (#39)
9. Valuation/Capitalization: "Market value is ascertained
by the income approach by the mathematical process of dividing the estimated
annual income from the highest use of the property by a capitalization rate
appropriate to the type of investment risk involved. A slight variation in the
capitalization rate profoundly affects the value to be attributed to the property.
Accordingly, unless the components of the formula, the annual income and the
capitalization rate, are determined with reasonable certainty, the resulting
value is speculative, and of little use to the trier of the fact." Id.
at 309 (#39)
10. Valuation/Capitalization: "We have doubt about
the propriety of the testimony allowed in State v. Shaddock,
supra, (#29) since the appropriate capitalization rate to be used in
the income approach to market value depends upon the nature of the investment
risk. It seems to us that some evidence on that point may be necessary before
a witness may capitalize income. However, that question is not presented for
decision here." Id. at 308, n.1 (#39)
11. Valuation/Date: "In formal condemnation proceedings,
NRS 37.120(1)(b) places the burden on the government to move the case to trial
within two years after the action is commenced. If it does not, and the delay
is not primarily caused by the actions of the landowner, the government must
account for the increased value of the property." This rule applies equally
to claims for inverse condemnation! (391) County
of Clark v. Alper, 100 Nev. 382, 391, 685 P.2d 943 (1984) (#68)
12. Valuation/Date: "We hold that the county cannot
delay formal eminent domain proceedings on the expectation that the landowner
will file an action for inverse condemnation and thereby avoid its obligation
to bring the matter to trial within two years." Id. at 391 (#68)
13. Valuation/Discretion: The trial court has discretion
to allow testimony of comparable acreage, close and remote, conditions of demand,
financial conditions, availability of capital, slack purchase periods, bank
loans, etc. Clark Co. School Dist. v. Mueller,
76 Nev. 11, 17-18, 348 P.2d 164 (1960) (#30)
14. Valuation/Discretion: The court has discretion
to allow evidence of sales from 3 years earlier when the market was different.
Id. at 19 (#30)
15. Valuation/Factors: "Every factor which affects
the value of the property and which would influence a prudent purchaser should
be considered." (Tacchino, #50) County
of Clark v. Alper, 100 Nev. 382, 685 P.2d 943 (1984) (#68)
16. Valuation/General: Just compensation equals actual
value in money "to be ascertained by its location, the price at which similar
land may be or has been sold in its vicinity, or what it would itself sell at...."
The Virginia and Truckee Railroad Company v. Elliott,
5 Nev. 358, 367 (1870) (#4)
17. Valuation/General: "(G)enerally everything which
actually enhances its present worth should be taken into consideration; not,
however, the fact that it is necessary or indispensable for the purposes for
which it is claimed by the public." Id. at 367 (#4)
18. Valuation/General: "We have previously interpreted
'just compensation' to require that property be valued in light of its highest
and best use." quoting Sorenson, #54 Skyland
Water v. Tahoe Douglas Dist., 95 Nev. 289, 291, 593 P.2d 1066 (1979) (#60)
19. Valuation/General: "Generally, the value of property
taken in condemnation proceedings is its market value, defined as 'the highest
price estimated in terms of money which the land would bring if exposed for
sale in the open market, with reasonable time allowed in which to find a purchaser,
buying with knowledge of all the uses and purposes to which it was adopted (sic)
and for which it was capable.'" City of Elko v.
Zillich, 100 Nev. 366, 370, 683 P.2d 5 (1984) (#67)
20. Valuation/General: "The term 'just compensation'
requires that the market value of the property should be determined by reference
to the highest and best use for which the land is available and for which it
is plainly adaptable." (Skyland, #41; Sorenson,
#35) County of Clark v. Alper, 100 Nev. 382,
387, 685 P.2d 943 (1984) (#68)
21. Valuation/General: "It is often appropriate to
determine the fair market value of property which has no relevant market by
any method of valuation that is just and equitable." City
of Sparks v. Armstrong, 103 Nev. 619, 621-622, 748 P.2d 7 (1987) (#74)
22. Valuation/General: "We have clearly defined the
term 'fair market value' that is to be used in condemnation cases." "Generally
the value of property taken in condemnation proceedings is its market value,
defined as 'the highest price estimated in terms of money which the land
would bring if exposed for sale on the open market, with reasonable time allowed
in which to find a purchaser, buying with knowledge of all the uses and purposes
to which it was adopted (sic) and for which it was capable.'" [quoting Zillich,
#67] Wheeler v. State, Dep't Transportation,
105 Nev. 217, 218, 773 P.2d 728 (1989) (#77)
23. Valuation/General: An appraiser may testify as
to "most probable price" where he states that this is equivalent to "the highest
price". Id. at 218 (#77)
24. Valuation/Highest Price: Change in
definition of "value" in NRS 37.009(6), from "highest price"
to "most probable price" is constitutional. County
of Clark v. Buckwalter, 115 Nev.Adv.Op. 11 (1999).
"(T)o the extent that NRS 37.009(6) contradicts
Wheeler, we explicitly overrule Wheeler on this issue." Id.
at 3. "We conclude that these two terms have different meanings, and that
the district court committed reversible error by giving the "highest price"
instruction because it likely affected the jury's verdict. Id. at 4. The court
"will presume a substantial change in the law when a statute is amended
to change a definition previously used." Id. at 5. "In the case at
bar, the landowners misused and abused the "highest price" instruction
in their closing argument to justify the five million-dollar difference in value."
Id. at 6. "Ironically, the landowners' closing argument exemplifies the
exact type of misuse and abuse of the Wheeler instruction that the legislature
was trying to eradicate by changing the law." Id. at 6-7.
Maupin concurring: Statute is constitutional, but does
not repeal Wheeler, since the terms are synonomous. Id. at 7-8. "I
take this position because the industry, that is persons in the business of
appraising real estate, do not seem to regard the terms "highest price"
and "most probable price" as comprising anything other than a distinction
without a difference." Id. at 8. "The problem at trial was created
by the failure to instruct on the statute and, later, the forensic approach
taken during closing argument." Id. "Thus, it was the instruction
and the arguments made in connection with the instrtuction that form the need
for a second trial below." Id. at 9. "(T)he appraisal industry does
not draw such a distinction." Id. "If juries are instructed as I suggest,
and if jury arguments are kept consistent with the instructions, just compensation
to all parties will be realized. For example, on re-trial, the county will certainly
be free to argue that the most probable price for the subject property based
upon its highest and best use should not include speculative casino development."
Id
25. Valuation/Illusory: "(T)he valuation of property
is an illusory matter for which there exists no absolute mathematical formula."
"Since the jury awards fall within the range of the expert testimony received,
we shall not disturb them." State ex rel. Dep't
Hwys. v. Tacchino, 92 Nev. 286, 549 P.2d 755 (1976) (#52)
26. Valuation/Intent: The owners are not required
to offer evidence of their intention to subdivide for single family residence
use. Andrews v. Kingsbury Gen. Improvement,
84 Nev. 88, 90, 436 P.2d 813 (1968) (#41)
27. Valuation/Intent: "(O)ne may not be deprived of
his property without just compensation merely because he has chosen to let it
lie dormant or perhaps was unaware of the value or the existence of the minerals."
Milchem Inc. v. District Court, 84 Nev. 541, 548,
445 P.2d 148 (1968) (#43)
28. Valuation/Intent: "It has been held that, when
there is no evidence in the record that the land in question is suitable or
naturally adapted for use, or uses, other than that to which it was applied
at the time of the taking, an owner may not present evidence that he intended
to put property to some specific use which would have produced a certain amount
of income and that as a result of the condemnation, he has been damaged in the
amount of the prospective income he allegedly has been deprived; and, under
such circumstances, that a jury may not consider, as a basis for awarding damages,
the fact that the owner has been prohibited from putting his property to some
intended use by reason of its condemnation. See, e.g., Tibbles, 123 N.E.2d
170 (Ind. 1954)." State ex rel. Dep't Hwys. v.
Nev. Aggregates, 92 Nev. 370, 372-373, 551 P.2d 1095 (1976) (#53)
Quite understandably, in the absence of such evidence, such
damages are considered too speculative to provide a reasonable guide for the
ascertainment of present fair market value. Empire Dist. Electric Co. v.
Johnston, 268 S.W.2d 78 (Mo.App. 1954) Cf. Tacchino v. State ex rel.
Dep't of Hwys., 89 Nev. 150, 508 P.2d 1212 (1975) (#50)." Id. at
372-373 (#53)
29. Valuation/Intent: "Prior to the commencement of
these proceedings, Nevada Aggregates implemented this plan and by August of
1972 (when the complaint was filed) the company was fully engaged in the task
of extracting the minerals from the first designated area." Id. at 373
(#53)
30. "There is a significant distinction between the cases
referred to by appellant which condemn the practice of considering damages resulting
from frustration of intended use and the instant case. ...we are not here concerned
with a plan or intended use which had not yet been developed to fruition. Here,
the plan was in effect at the time of the condemnation and income was being
realized as a result of it...". Id. at 373-374 (#53)
31. "The plan was not a fantasy of the landowner which had
not been reduced to tangible returns but was a reality. There was no need to
speculate as to the amount of income the plan would produce. Under such circumstances,
the rationale behind the rule prohibiting consideration of intended use obviously
does not apply." cf. United States ex rel. Tennessee Valley Authority v.
Powelson, 138 F.2d 343 (4th Cir. 1943); State v. Goodwyn, 133 So.2d
375 (Ala. 1961); In Re Ford, 263 N.Y.S.2d 831 (Sup.Ct.App.Div. 1965).
Id. at 374. (#53)
32. Valuation/Intent (Dissent): "Evidence of what
the owner might plan to do with his property is not to be considered by the
jury as enhancing its market value." Tacchino
v. State ex rel. Dep't Hwys., 89 Nev. 150, 508 P.2d 1212 (1973) (#50)
33. Valuation/Later Comparable Sales: "Although...'the
best evidence...is found in sales of comparable property within a reasonable
time before the taking,'" the trial court may properly admit testimony of sales
subsequent to the service of summons where the figures are adjusted for differences
in the date of sale - affects the weight of the evidence, not its admissibility.
City of Elko v. Zillich, 100 Nev. 366, 369-370, 683
P.2d 5 (1984) (#67)
34. Valuation/Legal Restrictions: Legal restrictions
on use may be properly considered in determining value. Skyland
Water v. Tahoe Douglas Dist., 95 Nev. 289, 291, 593 P.2d 1066 (1979) (#60)
35. Valuation/Minerals: "In a condemnation action
the existence of mineral deposits in or on land is an element to be considered
in determining the land's value. Nevertheless, where the property is not taken
for the purpose of obtaining the minerals or as an ongoing business it is improper
to appraise the mineral deposits separately and add the mineral value to the
value of the land." Testimony should be restricted to the effect the presence
of the minerals would have on market value. State,
Dep't of Transp. v. Las Vegas Bldg., 104 Nev. 479, 482, 761 P.2d 843 (1988)
(#75)
36. Valuation/Precondemnation Activities: Depreciation
caused by the prospective taking once the government has announced its commitment
to the project is not admissible evidence. County
of Clark v. Alper, 100 Nev. 382, 389, 685 P.2d 943 (1984) (#68)
37. Valuation/Precondemnation Activities: "It would
be manifestly unjust to permit a public authority to depreciate property values
by a threat of a construction of a government project and then to take advantage
of this depression in price when the property is eventually condemned." Id.
at 389. Codified in NRS 342.230(3). "The property is to be valued as if the
government project that resulted in the taking was neither contemplated nor
carried out." Id. at 390 (#68)
38. Valuation/Prospective Use: Evidence that a prospective
buyer indicated interest in building specific enterprises, but became disenchanted
upon learning of contemplated condemnation, is admissible to show a change in
possible use of the property. Dep't of Hwys.
v. Haapanen, 84 Nev. 722, 734, 448 P.2d 703 (1968) (#45)
39. Valuation/Prudent Businessman: "'(E)lements that
can fairly enter into the question of value and which an ordinarily prudent
business man would consider before forming judgment in making a purchase'" are
to be considered. Clark Co. School Dist. v. Mueller,
76 Nev. 11, 19, 348 P.2d 164 (1960) (#30)
40. Valuation/Prudent Businessman: "In determining
this value, the finder of fact may consider such factors as would be considered
by a prudent businessperson before purchasing such property." [quoting Shaddock,
#29] Skyland Water v. Tahoe Douglas Dist.,
95 Nev. 289, 291, 593 P.2d 1066 (1979) (#60)
41. Valuation/Prudent Businessman: "The court and
jury may consider 'other elements that can fairly enter into the question of
value and which an ordinarily prudent businessman would consider before forming
judgment in making a purchase.'" [quoting Tacchino,
#50] City of Elko v. Zillich, 100 Nev. 366,
370, 683 P.2d 5 (1984) (#67)
42. Valuation/Rent: It is proper to consider the actual
rent the property produces. State v. Shaddock,
75 Nev. 392, 398, 344 P.2d 191 (1959) (#29)
43. Valuation/Subdivision: Valuation need not be based
on what a willing purchaser will pay for the whole at the time of the taking,
where the land is undeveloped and subdivision is imaginary or hypothetical,
despite cases to the contrary in other jurisdictions. Tacchino
v. State ex rel. Dep't Hwys., 89 Nev. 150, 153, 508 P.2d 1212 (1973) (#50)
44. Valuation/Subdivision: The possibility of subdivision
is a factor a well-informed buyer would use in arriving at a price he would
pay for the land. Id. at 153 (#50)
45. Valuation/Subdivision: "The potential income to
be derived from the sale of subdivided lots, properly discounted to show present
value, is a factor and relevant to a determination of market value, since sophisticated
investors make decisions on the basis of income capitalization." Id.
at 154 (#50)
46. Valuation/Subdivision (Dissent): Industrial property
is not conducive to being subdivided into equal lots because of the varying
requirements of prospective industrial purchasers, as admitted in the evidence.
(#50)
47. Valuation/Subdivision (Dissent): "[W]here the
entire parcel of land is taken as a unit... the proper measure of compensation
is what a willing purchaser would be willing to pay for the parcel at the time
of the taking, in its then condition and not what a number of purchasers might,
in the future, be induced to pay for the land as divided into lots." Id.
at 155 (#50)
[Editor's note: This is not inconsistent with the majority
holding. The possibility of subdivision is a proper element, but it would be
improper to suggest that the value of the land is the value of the accumulated
subdivisions, sold "retail". The dissenters noted there was no dispute below
as to adaptability of the land to industrial subdivision, and the evidence was
merely cumulative "and could create substantial danger of undue prejudice."]
48. Valuation/Unit Price: "Uniformly, the courts have
condemned the price-unit formula as a basis for determining fair market value
of condemned property." State ex rel. Dep't Hwys.
v. Nev. Aggregates, 92 Nev. 370, 374, 551 P.2d 1095 (1976) (#53)
49. Valuation/Unit Price: "It is recognized that a
fair estimation of value cannot be reached simply by multiplying the unit market
price of a given mineral by the estimated quantity thereof contained in the
condemned land. Many other factors need be considered before fair value can
be attached to the mineral bearing property. But, where the product of the price-unit
formula is considered only as one of such factors, no prejudicial error results."
Id. at 375 (#53)
50. Valuation/Utilities: Valuing a utility is difficult
since there is no established market, especially where it is losing money.
Stagecoach Util. v. Stagecoach Gen. Imp. Dist.,
102 Nev. 363, 364, 724 P.2d 205 (1986) (#72)
51. Valuation/Utilities: Although normally we determine
the value of the property to the condemnee, not the condemnor, where a utility
has been relieved of the burden of an unprofitable water system by condemnation,
the court should look to the value that the utility has to the condemnor to
arrive at a damage amount. Id. at 364. Accordingly, compensation "lies
between an amount equal to the salvage value of the water system and an amount
equivalent to the reproduction cost of the water system minus depreciation."
Id. at 365 Plus interest from date of taking. Id. 366 (#72)
52. Valuation/Zoning: Evidence that the appropriate
authority would probably grant a variance if application were made is relevant
to severance damage, if offered through a competent witness. Andrews
v. Kingsbury Gen. Improvement, 84 Nev. 88, 90, 436 P.2d 813 (1968) (#41)
53. Valuation/Zoning: The trial court erred in relying
on present zoning as multiple-residential in determining highest and best use,
when "(i)t is clear from the record that the highest and best use of the property
is industrial...", as noted in the Las Vegas Master Plan. Sorenson
v. State ex rel. Dep't Hwys., 92 Nev. 445, 446-447, 552 P.2d 487 (1976)
(#54)
[Gunderson disqualified himself; no reason apparent here
why the court did not defer to the findings of the trial judge. No issue of
law involved, only of fact, and substantial evidence in the record. Substantial
problem here as to effect of master plans, but no analysis. (c.g.)] (#54)
54. Valuation/Zoning: A transferable grandfathered
right to use a parcel in variance with zoning is an element which would be considered
by a prospective purchaser and is admissible. City
of Elko v. Zillich, 100 Nev. 366, 370-371, 683 P.2d 5 (1984) (#67)
55. Valuation/Zoning: "As a restriction on land use,
an existing zoning ordinance is generally regarded as a proper matter for the
jury's consideration." County of Clark v. Alper,
100 Nev. 382, 387, 685 P.2d 943 (1984) (#68)
56. Valuation/Zoning: "Ordinarily, zoning restrictions
permitting a viable economic use of the property may be considered for valuation
purposes." Id. at 389 (#68)
57. Valuation/Zoning: "(D)ue consideration should
be given to those zoning ordinances that would be taken into account by a prudent
and willing buyer," but a reasonable possibility of obtaining a zoning change
may also be considered. Id. at 390 n. 6 (#68)
58. "Fair market value is generally defined as the price which a purchaser, willing but not obliged to buy, would pay an owner willing but not obliged to sell, taking into consideration all the uses to which the property is adapted and might in reason be applied." Unruh v. Streight, 96 Nev. 684, 686, 615 P.2d 247 (1980). [creditor's deficiency judgment case, not eminent domain]
59. When billboards "cannot be relocated to comparable, income-generating sites" within the market area, the bonus value approach to value does not sufficiently compensate the advertising companies for their leasehold interests, and the income capitalization methodology should be used. Nat'l Adv. Co. v. State, Dep't of Transp., 116 Nev. 107, 113, 993 P.2d 62 (2000).
60. "As noted by the district court, the bonus value approach is based on the assumption that the Advertising Companies may keep the benefit of their bargain with the Damontes if they can relocate their billboards under a comparable lease at market value to another comparable site. The evidence in this case, however, clearly establishes that these billboards were in valuable, unique locations, and that the billboards could not be relocated to a comparable site within the market area." (Id. at 7)
61. "If the billboards cannot be relocated to a comparable site, as is the case here, then the state must compensate the billboard owners for the valuable interests taken, that is, the value of their leasehold interests, taking into account the irreplaceable, lost rental income." (Id. at 7, n. 8)
62. "In order to determine the value of the leasehold interests...the advertising rental income must be considered under the income capitalization approach, which adjusts the anticipated net income to present value through the capitalization process." (Id. at 7, n. 7)
63. "We hold that the eminent domain statutes codified the undivided-fee rule, which requires the court to first determine the value of the property as a whole, and in a subsequent hearing, to apportion the award among the various interests." County of Clark v. Sun State Properties, 119 Nev. 329, 337, 72 P.2d 954 (2003)
64. "The undivided-fee rule provides that condemned property is first valued as though it was unencumbered, and in a subsequent hearing, the total award is apportioned among the various interests. ... Under the undivided-fee rule, the condemnor has no interest in the apportionment hearing because it has met its obligation when it pays the court the total award. Furthermore, the undivided-fee fule provides that 'the division of a fee into separate interests cannot increase the amount of compensation that the condemnor has to pay for the taking of the fee.'" (Id. at pp. 9-10) "We decline to follow the Lynbar, Inc. decision and its reasoning." (Id. at 336)
65. "The landowner is entitled to just compensation
for the government's taking of private property [fn to Nev. Const. art. 1, sec.
8] and has the burden of establishing the value of land so taken. [fn to State
v. Pinson, 66 Nev. 227, 237-238, 207 P.2d 1105, 1110(1949)] Just compensation
is determined by the property's market value 'by reference to the highest and
best use for which the land is available and for which it is plainly adaptable.'
[fn. to County of Clark v. Alper, 100 Nev. 382,
386-87, 685 P.2d 943, 946 (1984)] However, such use must be reasonably probable.
[fn to County of Clark v. Buckwalter, 115 Nev. 58,
63, 974 P.2d 1162, 1165 (1999)] In general, the trier of fact may consider
zoning restrictions permitting a viable economic use of the property in determining
the property's value. [fn to Alper, 100 Nev. at 389, 685 P.2d at 948] In fact,
the district court should give 'due consideration...to those zoning ordinances
that would be taken into account by a prudent and willing buyer. [fn: Id. at
390, 685 P.2d at 948] City of Las Vegas v. Bustos, 119
Nev.360, 362, 75 P.3d 351 (2003)
[Ed: City argued that it was required to defer to the general or master plan
and that the district court could not reasonably conclude that the city would
grant a zoning change in noncompliance with its master plan. The city's own
planning supervisor testified that the zoning change would require an amendment
to the master plan, but that spot zoning is "fairly common" and that
the city council frequently proceeds contrarily. Court held that "the district
court's findings of fact will not be disturbed on appeal if they are supported
by substantial evidence" and that the district court "determined that
a reasonable and prudent buyer would conclude that he or she could likely obtain
a zoning change, given the character of the neighborhood, the high volume of
traffic on Alta Drive, and the surrounding properties." The district court
likely didn't appreciate hearing the city argue for rare adherence to its master
plan. This case doesn't say anything new, but does at least keep the condemnor
from hiding behind its master plan and is instructive for the practitioner.]
66. "The trier of fact may consider the effect of future rezoning or variances on the highest and best use of the condemned property when determining its value." City of Las Vegas v. Bustos, 119 Nev. 360, 362, 75 P.3d 351 (2003)