Free Response in Opposition to Motion - District Court of Arizona - Arizona

EXHIBIT A
Case 2:03-cv-02006-SBB Document 142-2 Filed 07/19/2006 Page1 013

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I: I Sgctiens Bd? th reugh E-1B tirtiterrrt Appraisal Standards ter Federal L1I'l‘t'Jl Aeqtaisitierrs H-
The prehihitien against the admissibility ef effers te cempremise and cempleted cempre— it-
mises is new embedied in Rule 4{lti ei the Federal Rules ef Evidence.
There is ene netable citceptien te the abeve rule. Scctien dtifil et` the Uniftirm Releca- I-
tien Assistance and Real Preperty Acquisitien Pelicies Act ef 197fl, R L. 91-645, as ___
amended, 42 U.S.C. §4el}l. et seq. prevides that:
Befere the initiatieri ef negetiatierts fer real prepertjt the head ef the Federal agency cencerned ' _
shall establish an arrteunt which he believes te be just eempensatien therefer and shall make a
prempt effer te acquire the preperty fer the full araeunt se established. In ne event shall such it-
ameunt he less than the agency‘s appreved appraisal ef the fair market value ef such prcperty ....
The head ef the Federal agency cencetned shall previde tlie ewuer ef real preperty te be acquired i-
with a written statement ef. and surnmary ef the basis Ier. thc ameunt hc established as just
cempensauen.
The Fifth Circuit feund that §4t'i5l statements et` just cernpensatieri sent te land evvners
de net fall under Rule 4ElB ef the Federal Rules ef Evidence because "ftlecitnically, at the ·-
time the statements are previded, there is ne disputed claim, and hence he settlement
negetiatiens ef a disputed claim, te serve as the predicate ef Rule 4tlB.””" In light ef that a-
and ether findings, the ccurt ruted that §4tif`:·'l statements el just eempensatien sent te land l
ewners "are admissible at a subsequent cempensatien trial as an admissien . . ."’l" ef the it-
gevernment’s prier determinatien efjust cnmpensatien. This ceuld he ennsidered a cerel-
lary te the rule allewing effers te sell by landewners admitted as admissiens, as discussed in W-
Sectien 13-16. -
As with effers te purchase er sell, the admissibility ef a settlement effer dees net Ii-
centrel whether an appraiser censtrters a settlement effer in develeping an epinien ef value. M-
lt sheuld be neted that the Fifth Circuit’s ruling dees net admit §4e51 statements as ·
evidence ef market value, but rather as admissiens against interest in these cases in which L-_
the gevemmenfs valuatien testimeny at trial is less than the §4e5l effer.An efler te
purchase made under Seetien 4651 ef the Uniferm Relecatien Act generally represents
enly the epinien ef market value estimated hy anether appraiser and, as such, weuld rl-
generally net be given serieus censideratien by appraisers. _'_
It is generally reeegnized that effcrs cf settlement are net reliable indieatiens ef
market value because such effers are eften in the nature ef eempremise te aveid die ·¤-
expense and uncertainty ef litigatien and,therefere,sheuld net be censidererl hy appraisers
in develnping their epiniens et market value. ir-
B-18. Price Patel by a Gevernrnental Entity ter Similar Preperty. Based ··-
upen a variety efreasens, e.g.. that such payments are in the nature ef cempremise tc aveid
the expense and uncertainty cf litigatien and se are net fair indicatiens ef market value, ¤··-
that such evidence cemplicates the recerd, cenfuses the issue, is misleading, and, especially
in cendemnatien cases, raises ecllatcral issues as tc the eenditiens under which such sales ·¤-
ivere made, the histerical view ef the varieus federal ceurts has been that the sum paid fer
similar land by an agency having cendemnalien autherity, even if cendernnatien preeeed— t--
ings have net begun,was inadmissible? Hewever. an exeeptien te this rule is recegnizetl in
cases ef veluntary sales, cr where the fact that the parties were cenclemner and cendemnee *·¤·
2l'.?. UnitedStates v. 32fl.t5¤Acres at Lana'. BUS EEG td?. E24-B25 ·[5th Cir. 19TH}. '
21*3. tt:1·itI..325. mu
ET9. Urtftett States tt. 1tS'.4BAcres at lane', B21 l’.2t;l 39E, 339 [9th tilt. 19ED]; Ltrttieet States v. t1.5,E| Acres eii.ansf, 1UEl F.3d I
1493. l*lE|E· [9th Cir. 1991*1. Lt'ttitee' States v.- ·tE.E.?2.95 Acres eitanef. 521 1*.2d 13, tt t1Dth Cir. 1El·?5]; Ttanstvesierrt In-
Fipetrne Ce. it Cl'Brrert. 419 {Ed 15. 1F-13 [Enh [Int 1959]; Slattery Ce tt tlrtrtett States. 231 F.2d B?. -19-41 ·[5tl1 Ctr.
1955]; Evans v tthitert States. 32E F.2d E2?. Sat ttith [ltr 1954}; Htcliett v. UnitedStates. ?tZt8 F.2t1 259. 2?5 t3tt1 Gif.
1953]. cert. denied fit? L15. sts t‘t954]: Lttt·tte¤' States it t3.255.5.i'Acres ct Land, 155 F.2d atit. at? (3rd Cir. 1945}. ""
Inn
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Casa 2:03-cv-02006-SRB Document 142-2 Filed 07/19/2006 Page 2 of 3

Uniform llpuralsat Standards torfederai Land lteoursitions Sections B-t El through 9-19 E
either was not known or had no influence because the sale was not in connection with or in
anticipation of condemnation proceedingstm
‘*{T]lie recent trend has been in favor of granting the trial court broad discretion in _
determining the adrnissibility of sales . . .".*l" "The theory of admissibility is that although `
evidence of a purchase by the condetnnor of property similar to that involved in a condem-
nation proceedings is less persuasive on the issue of market value than evidence of a `
purchase by a stranger, there is no reuon in principle why such evidence should not be
admitted provided the purchase by the condemnor was made without compulsion; in short,
it is held that objection to this type of evidence goes to its weight, not to its competencyz"“
As explained by the Sixth Circuit: "'Il‘te possibility that the condemnation itself may have ·
influenced the price the Government paid for the [comparable] property may well disclose ,
the presence of artificially inflated values in the sale price of that property, Nevertheless,
this is merely a possibility which cannot be determirred through use of a general exclusion- `
ary rule prior to trial.“”“ l
W`I1i1e. sales to government entities should he viewed as .vtrs·pect from the outset, they i
cannot. and should not, be rejected by appraisers as invalid comparable sales out of hand, °
especially in those situations wherein a paucity of private sales are available for use in the
sales comparison approach to value. However, because "the person who offers evidence of
other transactions must establish preliminarily that the purchase was made ‘without
compulsion, coercion, or compromise,""·°*‘ appraisers must use extreme care in their verifi-
eations of sales to government entities if they are going to rely upon them as comparable
sales. Since there can be a multitude of motivations for a government entity to acquire
lands at a price other than market value, Section D-9 of these Standards sets out the j
verification procedures appraisers must employ in verifying the circumstances surrounding : ]
a sale to a government entity to ensure that it meets the criteria of market value,. or can be
accurately be adjusted to reflect market value. ]_
B-'I 9. Lsasaihulds. When the government acquires a leasehold estate, whether by _
voluntary lease or condemnation, the proper measure of value is the market or economic `
rent of the occupied premises for the term specified.*“" [See Section D-12, for detailed if
discussion ot` this point]. The market rcntal rate is to be determined as though the property '_
were an unencumbered whole and without regard to any subsidiary interests into wluch it ,l
may have been divided."”‘ `_
Just as the preferred way of appraising a fee estate is to use comparable sales transac- ·'
tions, the preferred way of appraising a leasehold estate is to use comparable lease transac- E
tions Elements of comparability in leasehold valuations include, in addition to the usual
Eatli./United States in tests Acres ot land. S21 Fee asa. ass-and [stri Cir. read]. '_
aa;/hired States it 2r5~t.li‘rZh·¤l:res errand. SED F. Supp. 13Bl, t3B2 [D. t·l.[l. rata]. Q
2lEl . Hash rr. tl. E. Redevelopment Land .4;;·er1c*,t 395 EEG 5i’t. 5i’·E tIIl.l3. Dir. 19E?]. ,
293. t.lnitedStates rr. d9i.i5"i Acres ettand, 443 F.2d 4Et, 492-4E3 [Eth Cir. 1Eli’1].
2E4. tltasll rr. D. Et Flederreiopment landngency 395 li2d Si'!. 5T5 [Ill]. [Sir. 19E?]. _
2E5. lu'rttnatl laundtjrr Co. rr. United States. 339 L|.S. 1. F [1949]: United States ri: General Motors Corp., 323 L|.S. 3T3, 392-393
[19-45}; United States is Petty Meter tSo.. 32i U.S. 3i2, 3i’E-3i’9 [1949]; United States rc EBt'l.|-5Er'i']it' Building Joint ttenture.
E5 Rid Sid. EITB [4th Cir *:995]-: Yuba l'ttatr.rrai.ilesnu.rees, ine. rr UnitedStates. 994 Eta l5i’?. 1-53Il-15B1 [Fed. Gtr. ‘·l99Ilt·. ‘ ·_
aaa. this is an asrisct ut the unit rule, discussed more tuity in Section El-13. See also tfiartoetr v. Uttlletll States, sa tart sas. ; ’
H2? [till:. Cir. 1931 tz ltd. Davis toe Co a United States, 392 F.2d 934, 93i [1 st Cir 1956]. Should the arooerty in tact ]
oe enc um bered by an existing leasehold estate in a third party that will be interrupted or extinguished as a consequence '
ot the Qo‘·iel'nl1‘rartt's acquisition. the lessee may or may not be entitled to com pensatton. but that is a question ot l
allocation ot the value. Thus. there is no nasa lor the go·,·sli1ment's appraiser to value that third pany leasehold estate. I
unless requested to do so bythe client agency. l
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