4.3.4.7. Special Considerations in Land Exchanges.Different considerations may be required in determining the larger parcel in appraisals for federal land exchanges (see Section 1.12). In such situations, legal instructions for the appraiser to assume a specific larger parcel determination may be necessary to comply with statutes or other federal requirements, as discussed in Section 4.10.
4.3.4.6. Special Considerations in Riparian Land Acquisitions.When developing an opinion of the highest and best use of land riparian to navigable water, there are special considerations that must be taken into account, as discussed in Section 4.11.1.
4.3.4.5. Special Considerations in Partial Acquisitions.In partial acquisitions, the appraiser must make two separate determinations of highest and best use: once for the larger parcel before acquisition, and once for the remainder after acquisition. As J.D. Eaton cautioned: “If the appraiser does not estimate the property’s highest and best use correctly in both the before and after situations, it will be impossible to estimate the property’s value correctly.”415 The existence and extent of any change in highest and best use due to the government’s acquisition requires careful analysis.416 The highest and best use of the remainder may reflect a complete change, a change in intensity, or no change from the highest and best use of the larger parcel before acquisition.417…
4.3.4.4. Legal Instructions.While the larger parcel must ultimately be determined by the appraiser, legal instructions are often required to address questions of law that arise within the appraiser’s analysis. For example, whether unity of ownership exists based on the quality of the property interests held in different tracts raises not only factual but legal questions.412 Thus, an appraiser must obtain legal instructions if the ownership interests in all parts of the whole are not identical in a potential larger parcel. Similarly, whether there is sufficient evidence to support a finding of an integrated use involves legal as well as factual analysis.413 In addition, in federal condemnation litigation, the appraiser’s larger parcel analysis and conclusions will be evaluated by the court…
4.3.4.3. Physical Unity (Contiguity or Proximity).Under federal law, physical unity is considered within the context of integrated use rather than as a stand-alone test. As the First Circuit emphasized: Physical contiguity is important, however, in that it frequently has great bearing on the question of unity of use. Tracts physically separated from one another frequently, but we cannot say always, are not and cannot be operated as a unit, and the greater the distance between them the less is the possibility of unitary operation . . . .402 Accordingly, the physical unity (proximity) or separation of a tract is an important consideration, but not necessarily determinative of the ultimate question of what constitutes a single tract.403 The availability of replacement…
4.3.4.2. Unity of Ownership (Title).The larger parcel must also have unity of ownership—that is, there must be uniform control over the ownership and future of all property making up the larger parcel.382 Principles of fairness underlie the unity of ownership concept and form the basis of the Supreme Court’s reasoning in Campbell v. United States: [I]f the land taken from plaintiff had belonged to another, or if it had not been deemed part and parcel of this estate, he would not have been entitled to anything on account of the diminution in value of his estate. It is only because of the taking of a part of his land that he became entitled to any damages resulting to the rest.383 …
4.3.4.1. Unity of Use.The key question in determining the larger parcel is whether parcels have an integrated use.364 To meet the unity of use test in federal acquisitions, the lands in question must have the same or an integrated highest and best use.365 Lands with dissimilar uses are not part of the same larger parcel, and must be considered as separate and distinct tracts for compensation and valuation purposes.366 As with any other aspect of the highest and best use analysis, actual use is compelling evidence of highest and best use.367 An integrated use that is merely planned or hoped for is not sufficient to meet the unity of use test.368 In determining the larger parcel, a potential use “may…
4.3.4. Criteria for Analysis.In determining the larger parcel, federal courts consider unity of use, unity of ownership (title), and physical unity (proximity or contiguity) as it relates to highest and best use—factors historically called the three unities.362 Because this analysis typically involves questions of law as well as fact, appropriate legal instructions are often required.363
4.3.3. Larger Parcel.In adopting “working rules in order to do substantial justice[,]” the Supreme Court established that “a parcel of land which has been used and treated as an entity shall be so considered in assessing compensation for the taking of part or all of it.”353 That “parcel of land,” reflecting the whole property to be considered for compensation purposes, is called the larger parcel. It is the economic unit to be valued.354 Under federal law, the larger parcel is the tract or tracts of land that possess a unity of ownership and have the same, or an integrated, highest and best use.355 Definition of Larger Parcel The tract or tracts of land that possess a unity of ownership and…
4.3.2.4.1. Exceptions.A narrow exception to the general rule that zoning and other land use regulations must be considered in determining a property’s highest and best use may arise under the scope of the project rule.347 As discussed in Section 4.5, the scope of the project rule ensures that compensation does not reflect changes in market value due to the influence of the government project prompting the acquisition. In most valuation assignments, zoning and other land use restrictions are not a form of project influence—they are simply “the legal framework of land use restrictions to which virtually all private real estate is subject,” and so they must be considered regardless of whether the scope of the project rule applies.348 However, in…
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