Here’s one where you have to stop and pause and ask “why?” Because most of the time, you’d think that an offer to the property owner made by DOT that included more compensation than DOT’s own appraisal recognized would be a good thing.

Apparently not here: DOT’s appraiser opined that the owner incurred no severance damages from the partial take, and therefore did not include any in the appraisal. His letter appraised compensation for the property taken at $79k. But DOT offered the owner more, a total of $133k. Its initial offer identified $79k for the land, about $1k for “easement rights,” and the balance for “loss of various site improvements” (as the court phrased it. But “[n]otably, the initial offer letter did not identify severance damages as a line item for compensation.” 

When the parties could not agree on a voluntary acquisition, and in anticipation of condemnation, DOT went back and took a second look at valuation. “DOT officials reviewed the initial offer internally through the Department’s administrative review process. The DOT determined the acquisition was more complex than initially believed and involved additional impacts to the church’s pond, parking lot, signs and landscaping, as well as severance issue regarding the church building. Accordingly, the DOT determined that a higher offer was warranted.” 

Eventually, DOT revised its offer to $403k, more than three times its initial offer. It increased the per-acre value of the land, added $75k to remedy impacts to a parking lot, and specificed $159k in severance damages. Things were looking up! When the owner again declined to voluntarily sell, DOT made what is called in Wisconsin a “jurisidictional offer,” in the amount of its most recent offer, $403k. Based on the jurisdictional offer, DOT instituted a quick take and took ownership.

In Christus Lutheran Church of Appleton v. Wisconsin DOT, No. 2018AP11124 (Nov. 26, 2019), the Wisconsin Court of Appeals upheld the owner’s objection that DOT “failed to provide any appraisal that forms the basis for, or supports, the $403,200 compensation amount contained in the Jurisidictional Offer.” Slip op. at 6. Wisconsin statutes require a jurisdictional offer to “be based” on an appraisal, and the owner contended that the offer of $403k (which included severance damages) obviously wasn’t “based on” the only actual appraisal that DOT commissioned, the letter appraisal of $79k that expressly excluded severance damages.

The court agreed that the jurisdictional offer was not valid:

To explain, the appraisal in this case omitted a significant item of damages that was subsequently included in the jurisdictional offer. The appraisal stated that no severance damages to the remainder of Christus Lutheran’s property were to occur as a result of the highway project.

Slip op. at 14 (footnote omitted). DOT “took the initiative” to look deeper at the situation, and eventually substantially increased its offer after a second look. But the fact remained that the statute requires what it requires (and eminent domain statutes are strictly construed in favor of the property owner and against the condemnor), and it that means the offer must “be based” on the appraisal, even if it looks like DOT is doing what a condemnor should be doing (not locking down and looking for ways to keep compensation at a minimum). The court held that the point of the requirement for the offer being based on an appraisal is that this allows the owner to make its own evaluation:

The DOT was questioned at oral argument as to how a property owner would know a jurisdictional offer was “fair” if one of the most significant items of compensation had never been appraised and it was unclear to the property owner how the value of that interest was calculated.12 No satisfactory answer was forthcoming.

Instead, the DOT proposed at oral argument that an appraisal satisfies the Otterstatter standards when it values all of the real property interests to be taken. In other words, the DOT’s position is that the appraisal here was sufficient because it valued the fee and lesser property interests that the government was actually acquiring; the DOT views severance damages as a type of “ancillary” damage to the remainder property that occurs only as a result of the taking of the other property. The DOT argues that such ancillary damages have a logical nexus to the real property interests taken in the sense that, but for the taking of other property, there would be no ancillary damage to the remainder property. Thus, the DOT asserts it was good enough that the appraisal valued the real property interests to be taken and did not include severance damages, which the DOT could later add on its own initiative.

We cannot accept the DOT’s construction of the statutory appraisal requirement, as it ignores a critical goal of the condemnation process and important statutory provisions aimed at protecting property owners. When the government takes private property for public use, it must pay the property owner just compensation.

Slip op. at 15-16. 

The court noted the appraisal was the problem, not DOT’s second look and increase. Because DOT’s review showed that there were severance damages, the court concluded “the appraisal failed to forum a ‘supporting part’ or ‘fundamental ingredient’ of the jurisdictional offer because it did not value a statutorily enumerated item of ‘just compensation’ to which Christus Lutheran was entitled. Accordingly, the appraisal failed to value ‘all property proposed to be acquired.'” Slip op. at 18.  

Christus Lutheran Church of Appleton v. Wisconsin Dep’t of Trans., No. 2018AP1114 (Wis. App. Nov. 26, 2019)