Power Lines, Landlords, Utilities, and the Power of Eminent Domain
In the old days, railroad agents had a responsibility to buy land from Native Americans for rights of way on which they could build their tracks. One story tells of a rather cunning boss who understood the situation well. This Chief was approached by a railway agent who offered to buy a particularly poor piece of land:
Buy my land? . . . Sure, sell me for $50,000, said the Chief.
$50,000! Why is that land not good for sowing or for grazing. It just doesn’t do any good! the agent exclaimed.
The Chief grunted, It’s good for the railway. [i]
While this anecdote may seem silly, Kimble County landowners can draw two important lessons: The first of these lessons is that, like the railroad, the LCRA power transmission lines are likely going through Kimble County, whether we like it or not. While we are only talking about easements and we need not fear the complete divestment of our property rights that Native Americans went through, a taking is a taking. Utilities like the LCRA have the immense power of eminent domain and eminent domain behind them.
Eminent Domain is a common law principle that is given statutory force at the level of the state legislature. Empowers government and quasi-government entities to take land from any US citizen for public use. The only real restrictions placed on this power are found in the Takings Clause of the 5th Amendment, which states that private property may not be taken for public use, without just compensation.[ii]
This article is not some kind of call to arms to support legislative reform. If that is a cause you intend to support, I suggest you take a look at the materials provided by the various land rights groups or other related organizations across the country.
Rather, what this article hopes to accomplish is to provide useful tips and basic information to Kimble County landowners so they can better prepare for what lies ahead and hopefully get the best possible outcome.
This brings me to the second lesson we can learn from the wise Chief.
Owners must be aware and prepared to defend the value of their land. As a property owner, or the “big boss” of your land, can you just accept what the LCRA/railroad agent thinks the easement on your land is worth? Sure and indeed your life will be easier that way. However, your offer may not be what you think you’re entitled to and may be much less than you could receive with a little extra preparation.
Understand that eminent domain/consuming proceedings are adversarial in nature. This means that even if you may or may not ultimately be able to prevent the installation of the transmission line on your property, you certainly have a say in determining what your fair 5th Amendment compensation will be. Preparation is key, you will be dealing with a team of LCRA-trained professionals to meet a budget and timeline. Your rights and compensation are NOT their priority.
It is clear that there is a lot of confusion among the public as to how eminent domain/consuming actions actually work and how they are going to occur. Familiarizing yourself with the progression will allow you to make better decisions when the time comes. The following five steps are a drastically abbreviated timeline of how a normal eminent domain/consuming matter is likely to proceed.
1: If it hasn’t already happened, the LCRA will contact you and ask for your permission to inspect, measure, and appraise your property.
2: An LCRA representative presents you with an appraisal of your property and makes you an offer.
3: This offer is time sensitive and must be accepted within a specific time frame. If you don’t respond or reject the offer outright, the LCRA will likely file a condemnation lawsuit against you.
4: Once this happens, the Court selects three special commissioners to conduct a hearing on the matter. The special commissioners will be disinterested property owners residing in Kimble County. At this hearing, you can present evidence to the panel in support of your valuation, question the LCRA appraisers, and generally explain to them why the LCRA valuation is too low. Once the presentation of evidence is concluded, the Commissioners make a determination of value and make that figure their “special award”.
5: This “special prize” is not the end of the game unless you are satisfied with it. If you are not satisfied with the commissioners’ award, you have a short period of time in which you can object and appeal. In this new trial, both sides start over and the case proceeds as if the commissioners’ hearing never happened. You will be able to choose whether a judge or a jury decides your case.
As you can see, it’s really all about money. The steps I have outlined are your chances to have a say in how much you will receive. Essentially, you have three main options: reach a negotiated settlement with the LCRA, accept the award from the special commissioners, or have a judge or jury decide how much you should receive.
Not make mistakes; Property valuation can be very complicated in the context of eminent domain. Perhaps you have sold a property in the past; perhaps you even contested the tax assessment of your own home. The appraisals and appraisals in these situations are very simple calculations compared to those made in the matter of expropriation. Property valuation evidence in condemnation proceedings must comply with and reflect a body of condemnation laws crafted over decades in the Texas appellate courts. It would be wise to seek professional help early in the game.
Fundamentally, when valuing easements in the context of the transmission line, we are actually talking about devaluation. How much less is my property worth now that there are power lines running through it, and that amount of depreciation is also how much money I could be compensated with and be happy? To set the tone, throw out some real numbers, and give you a general idea of what kind of devaluation I’m talking about, consider the following:
In 1997, the LCRA commissioned a study to find out how much its power transmission lines affected the property values they cross.[iii] The geographic area studied was around Georgetown, Texas. This study was completed by an appraiser that the LCRA had contracted to do all of the appraisal work on an easement acquisition project very similar to the one proposed for Kimble County. The only difference is that this study was done for a much smaller 138 Kv transmission line than the 345 Kv double circuit lattice tower we face today.
In this study, conducted by an appraiser paid by the LCRA, an undeniable depreciation was found. It concluded that a transmission line easement has less than a 10% price impact and, in most cases, less than a 5% price impact.[v] It is important to note that this is a possible 10% overall impact on the price of the entire property.[vi] Simply put, if you owned a specific piece of land around Georgetown around the millennium, the LCRA converted your $500,000.00 property to a $450,000.00 property. – Property of $475,000.00.
For the land directly below and near the line, the study concluded:
“It is concluded that the area located within an electric transmission line easement has a 90% decrease in value due to the presence of the easement. [and] [i]It is concluded that a 200 foot wide area adjoining the proposed easement has some diminished value. The extent of the diminished value may depend on several factors that would include the location of the easement in relation to the entire section and the physical characteristics of the remainder.[vii]
This is, of course, data from ten years ago from a single source that only considers strict real estate values. Also, this study was done for much smaller transmission lines; and should be considered only as a point of reference.
Much has changed since 1997, but my opinion is that it has changed in favor of the landowner rather than the LCRA. To arrive at a fairer devaluation figure, one