La. Admin. Code tit. 70 § XVII-103

Current through Register Vol. 50, No. 11, November 20, 2024

Section XVII-103 - Real Property Acquisition

A. Applicability of Acquisition Requirements

1. General. The requirements of this Section apply to any acquisition of real property for a department project, and to projects where there is department financial assistance in any part of project costs except for:

a. voluntary transactions when the department or the acquiring agency has the power of eminent domain, but it will not acquire the property in the event negotiations fail to result in an amicable agreement, and the owner is so informed in writing;

b. the acquisition of real property from a federal agency, state, or state agency, if the department or the acquiring agency does not have the authority to acquire the property through condemnation;

c. projects or programs undertaken by the department or an acquiring agency or person that receives federal financial assistance but does not have authority to acquire property by eminent domain, provided that the department or the acquiring agency shall:

i. prior to making an offer for the property, clearly advise the owner that it is unable to acquire the property in the event negotiations fail to result in an amicable agreement; and

ii. inform the owner of what it believes to be fair market value of the property, based on an appraisal.

2. Less-Than-Full-Fee Interest in Real Property. In addition to fee simple title, the requirements of this Section apply to the acquisition of fee title, subject to a life estate or a life use, to acquisition by leasing where the lease term, including option(s) for extension, is 50 years or more, and to the acquisition of permanent easements. (See §115. B 1)

3. Federally-Assisted Projects. For projects receiving federal financial assistance the provisions of §103 B-E apply to the extent practicable under state law. (See §101. D 1)

B. Basic Acquisition Policies

1. Expeditious Acquisition. The department shall make every reasonable effort to acquire the real property expeditiously by negotiation.

2. Notice to Owner. As soon as feasible, the owner shall be notified of the department's interest in acquiring the real property and the basic protections, including the agency's obligation to secure an appraisal, provided to the owner by law and this Part (see also §105 C)

3. Appraisal, Waiver Thereof, and Invitation to Owner

a. Before the initiation of negotiations the real property to be acquired shall be appraised, except as provided in §103. B.3 b, and the owner, or the owner's designated representative, shall be given an opportunity to accompany the appraiser during the appraiser's inspection of the property.

b. An appraisal is not required if the owner is donating the property and releases the department from this obligation, or the department determines that an appraisal is unnecessary because the valuation problem is uncomplicated and the fair market value is estimated at $2,500 or less, based on a review of available data.

4. Establishment and Offer of Just Compensation. Before the initiation of negotiations, the department shall establish an amount which it believes is just compensation for the real property. The amount shall not be less than the approved appraisal of the fair market value of the property, taking into account the value of allowable damages or benefits to any remaining property (see also §103. D) Promptly thereafter, the department shall make a written offer to the owner to acquire the property for the full amount believed to be just compensation.

5. Summary Statement. Along with the initial written purchase offer, the owner shall be given a written statement of the basis for the offer of just compensation, which shall include:

a. a statement of the amount offered as just compensation. In the case of a partial acquisition, the compensation for the real property to be acquired and the compensation for damages, if any, to the remaining real property shall be separately stated;

b. a description and location identification of the real property and the interest in the real property to be acquired;

c. an identification of the buildings, structures, and other improvements (including removable building equipment and trade fixtures) which are considered to be part of the real property for which the offer of just compensation is made. Where appropriate, the statement shall identify any separately held ownership interest in the property, e.g., a tenant-owned improvement, and indicate that such interest is not covered by the offer.

6. Basic Negotiation Procedures. The department shall make reasonable efforts to contact the owner or the owner's representative and discuss its offer to purchase the property, including the basis for the offer of just compensation; and, explain its acquisition policies and procedures, including its payment of incidental expenses in accordance with §103. F The owner shall be given reasonable opportunity to consider the offer and present material which the owner believes is relevant to determining the value of the property and to suggest modification in the proposed terms and conditions of the purchase. The department shall consider the owner's presentation.

7. Updating Offer of Just Compensation. If the information presented by the owner, or a material change in the character or condition of the property, indicates the need for new appraisal information, or if a significant delay has occurred since the time of the appraisal(s) of the property, the department shall have the appraisal(s) updated or obtain a new appraisal(s). If the latest appraisal information indicates that a change in the purchase offer is warranted, the department shall promptly reestablish just compensation and offer that amount to the owner in writing.

8. Coercive Action. The department shall not advance the time of condemnation, or defer negotiations or condemnation or the deposit of funds with the court, or take any other coercive action in order to induce an agreement on the price to be paid for the property.

9. Administrative Settlement. The purchase price for the property may exceed the amount offered as just compensation when reasonable efforts to negotiate an agreement at that amount have failed and an authorized department official approves such administrative settlement as being reasonable, prudent, and in the public interest. When an administrative settlement is approved, a written justification shall be prepared which indicates that available information (e.g., appraisals, recent court awards, estimated trial costs, or valuation problems) supports such a settlement.

10. Payment before Taking Possession. Before requiring the owner to surrender possession of the real property, the department shall pay the agreed purchase price to the owner, or in the case of a condemnation, deposit with the court, for the benefit of the owner, an amount not less than the department's approved appraisal of the fair market value of such property, or the court award of compensation in the condemnation proceeding for the property. In exceptional circumstances, with the prior approval of the owner, the department may obtain a right-of-entry for construction purposes before making payment available to an owner.

11. Uneconomic Remnant. If the acquisition of only a portion of a property would leave the owner with an uneconomic remnant, the department shall offer to acquire the uneconomic remnant along with the portion of the property needed for the project (see §101. B 21).

12. Inverse Condemnation. If the department intends to acquire any interest in real property by exercise of the power of eminent domain, it shall institute formal condemnation proceedings and not intentionally make it necessary for the owner to institute legal proceedings to prove the fact of the taking of the real property.

13. Fair Rental. If the department permits a former owner or tenant to occupy the real property after acquisition for a short term or a period subject to termination by the department on short notice, the rent shall not exceed the fair market rent for such occupancy.

C. Criteria for Appraisals

1. Standards of Appraisal. The format and level of documentation for an appraisal depend on the complexity of the appraisal problem. The department shall develop minimum standards for appraisals consistent with established and commonly accepted appraisal practice for those acquisitions which, by virtue of their low value or simplicity, do not require the in-depth analysis and presentation necessary in a detailed appraisal. A detailed appraisal shall be prepared for all other acquisitions. A detailed appraisal shall reflect nationally recognized appraisal standards, including, to the extent appropriate, the Uniform Appraisal Standards for Federal Land Acquisition. An appraisal must contain sufficient documentation, including valuation data and the appraiser's analysis of that data, to support his or her opinion of value. At a minimum, a detailed appraisal shall contain the following items:

a. the purpose and/or the function of the appraisal, a definition of the estate being appraised, and a statement of the assumptions and limiting conditions affecting the appraisal;

b. an adequate description of the physical characteristics of the property being appraised (and, in the case of a partial acquisition, an adequate description of the remaining property), a statement of the known and observed encumbrances, if any, title information, location, zoning, present use, an analysis of highest and best use, and at least a five-year sales history of the property;

c. all relevant and reliable approaches to value consistent with commonly accepted professional appraisal practices. When sufficient market sales data are available to reliably support the fair market value for the specific appraisal problem encountered, the department, at its discretion, may require only the market approach. If more than one approach is utilized, there shall be an analysis and reconciliation of approaches to value that are sufficient to support the appraiser's opinion of value;

d. a description of comparable sales, including a description of all relevant physical, legal, and economic factors such as parties to the transaction, source and method of financing, and verification by a party involved in the transaction;

e. a statement of the value of the real property to be acquired and, for a partial acquisition, a statement of the value of the damages and benefits, if any, to the remaining real property;

f. the effective date of valuation, date of appraisal, signature, and certification of the appraiser.

2. Influence of the Project on Just Compensation. To the extent permitted by applicable law, the appraiser shall disregard any decrease or increase in the fair market value of the real property caused by the project for which the property is to be acquired, or by the likelihood that the property would be acquired for the project, other than that due to physical deterioration within the reasonable control of the owner.

3. Owner Retention of Improvements. If the owner of a real property improvement is permitted to retain it for removal from the project site, the amount to be offered for the interest in the real property to be acquired shall be not less than the difference between the amount determined to be just compensation for the owner's entire interest in the real property and the salvage value (defined at §101. B 17) of the retained improvement.

4. Qualifications of Appraisers. The department shall establish criteria for determining the minimum qualifications of appraisers. Appraiser qualifications shall be consistent with the level of difficulty of the appraisal assignment. The department shall review the experience, education, training, and other qualifications of appraisers, including review appraisers, and utilize only those determined to be qualified.

5. Conflict of Interest. No appraiser or review appraiser shall have any interest, direct or indirect, in the real property being appraised for the department that would in any way conflict with the preparation or review of the appraisal. Compensation for making an appraisal shall not be based on the amount of the valuation. No appraiser shall act as a negotiator for real property which that person has appraised, except that the department may permit the same person to both appraise and negotiate an acquisition where the value of the acquisition is $2,500, or less.

D. Review of Appraisals. The department shall have an appraisal review process and, at a minimum:

1. a qualified reviewing appraiser shall examine all appraisals to assure that they meet applicable appraisal requirements and shall, prior to acceptance, seek necessary corrections or revisions;

2. if the reviewing appraiser is unable to approve or recommend approval of an appraisal as an adequate basis for the establishment of just compensation, and it is determined that it is not practical to obtain an additional appraisal, the reviewing appraiser may develop appraisal documentation in accordance with §103. C to support an approved or recommended value;

3. the review appraiser's certification of the recommended or approved value of the property shall be set forth in a signed statement which identifies the appraisal reports reviewed and explains the basis for such recommendation or approval. Any damages or benefits to any remaining property shall also be identified in the statement.

E. Acquisition of Tenant-Owned Improvements

1. Acquisition of Improvements. When acquiring any interest in real property, the department shall offer to acquire at least an equal interest in all buildings, structures, or other improvements located upon the real property to be acquired, which it requires to be removed or which it determines will be adversely affected by the use to which such real property will be put. This shall include any improvement of a tenant-owner who has the right or obligation to remove the improvement at the expiration of the lease term.

2. Improvements Considered to be Real Property. Any building, structure, or other improvement, which would be considered to be real property if owned by the owner of the real property on which it is located, shall be considered to be real property for purposes of this Section.

3. Appraisal and Establishment of Just Compensation for Tenant-Owned Improvements. Just compensation for a tenant-owned improvement is the amount which the improvement contributes to the fair market value of the whole property or its salvage value, whichever is greater. (Salvage value is defined at §101. B 17.)

4. Special Conditions. No payment shall be made to a tenant-owner for any real property improvement unless:

a. the tenant-owner, in consideration for the payment, assigns, transfers, and releases to the department all of the tenant-owner's right, title, and interest in the improvement; and

b. the owner of the real property on which the improvement is located disclaims all interest in the improvement; and

c. the payment does not result in the duplication of any compensation otherwise authorized by law.

5. Alternative Compensation. Nothing in this Section shall be construed to deprive the tenant-owner of any right to reject payment under this Section and to obtain payment for such property interests in accordance with other applicable law.

F. Expenses Incidental to Transfer of Title to the Department

1. The owner of the real property shall be reimbursed for all reasonable expenses the owner necessarily incurred for:

a. recording fees, transfer taxes, documentary stamps, evidence of title, boundary surveys, legal descriptions of the real property, and similar expenses incidental to conveying the real property to the department. However, the department is not required to pay costs solely required to perfect the owner's title to the real property;

b. penalty costs and other charges for prepayment of any preexisting recorded mortgage entered into in good faith encumbering the real property; and

c. the pro-rata portion of any prepaid real property taxes which are allocable to the period after the department obtains title to the property or effective possession of it, whichever is earlier.

2. Whenever feasible, the department shall pay these costs directly so that the owner will not have to pay such costs and then seek reimbursement from the department.

G. Certain Litigation Expenses. The owner of the real property shall be reimbursed for any reasonable expenses, including reasonable attorney, appraisal, and engineering fees, which the owner actually incurred because of a condemnation proceeding, if:

1. the final judgment of the court is that the department cannot acquire the real property by condemnation; or

2. the condemnation proceeding is abandoned by the department other than under an agreed-upon settlement; or

3. the court having jurisdiction renders a judgment in favor of the owner in an inverse condemnation proceeding or the department effects a settlement of such proceeding.

H. Donations. An owner whose real property is being acquired may, after being fully informed by the department of the right to receive just compensation for such property, donate such property or any part thereof, any interest therein, or any compensation paid therefor, to the department as such owner shall determine. The department is responsible for assuring that an appraisal of the real property is obtained unless the owner releases the department from such obligation, except as provided in §103. B.3 b

La. Admin. Code tit. 70, § XVII-103

Promulgated by the Department of Transportation and Development, Office of Real Estate, LR 19:507 (April 1993).

AUTHORITY NOTE: Promulgated in accordance with 42 USC 4601 - 4655, 52 FR 45667, 49 CFR 1.48(dd), and R.S. 38:3107.