Eminent Domain Law in Colorado—Part II: Just Compensation Domain II.pdf · just compensation.Part...

The Colorado Lawyer / November 2006 / Vol. 35, No. 11 / 47

This two-part article provides ageneral overview of the procedur-al and substantive law of eminent

domain—the process by which one partycondemns, or “takes” the real or personalproperty of another, on the payment ofjust compensation. Part I was publishedin the September issue of The ColoradoLawyer,1 and addressed the right of emi-nent domain, the issues of public useand necessity, and the means by which“immediate possession” of the propertycan be acquired pending a valuation tri-al. Part II addresses the process andrules by which “just compensation” is tobe assessed.

The question of whether the right ofeminent domain is being properly exer-cised—that is, whether there is properauthority, a public purpose and necessi-ty,and a failure of negotiations—is deter-mined in advance of the valuation pro-ceedings. When these questions are notcontested or previously have been deter-mined by the court, the parties must re-solve the issue of the amount of compen-sation to be paid for the taking. If not byagreement, the amount of compensationis determined in a valuation trial.

Valuation Trial Proceedings:Jury or Commission ofFreeholders

The property owner (also referred toas the condemnee or respondent) hasthe right to have the valuation portion ofthe case tried to a commission of three

landowners or to a jury of six landown-ers who reside in the county in whichthe petition is filed.2 Only the propertyowner may demand a jury.3 Unless morethan six jurors are requested, alandowner need not advance any juryfee to preserve the right to a trial by ju-ry.4 The respondent may demand morejurors (not to exceed twelve) when thefees for such additional jurors are ad-vanced to the district court.5 A jury mustbe demanded before the appointment ofcommissioners and before the time for adefendant to appear and answer has ex-pired.6

The jurors must be “freeholders.”Thismeans they must own real property andreside in the county in which the actionhas been filed.7 As in any other jury tri-al, the jurors are subject to voir dire, anda challenge for cause will be sustained ifa juror does not qualify as a freeholder.8In fact, a valuation determination by ajury not consisting entirely of freehold-ers may be grounds for a mistrial.9 If ajury is requested by the respondent, thecase will proceed similarly to a typicalcivil action,with the court presiding overthe proceedings from start to finish.

If the landowner does not request ajury, the case is tried to a panel of threecommissioners who also must be “disin-terested and impartial freeholders”;however, they do not necessarily have toreside in the same county where the ac-tion is filed.10 The three commissionersusually are appointed by the court, butsome courts allow the parties to nomi-

GOVERNMENT AND ADMINISTRATIVE LAW

Eminent Domain Law in Colorado—Part II:Just Compensation

Article Editors:Carolynne C.White, of BrownsteinHyatt & Farber, P.C., (303) 223-1197,[email protected]; Brad Bailey,Assistant City Attorney, City of Littleton—(303) 795-3725, [email protected];Tiffanie Bleau,Denver, of Light, Harrington &Dawes, P.C.—(303) 298-1601, [email protected]

About The Author:M. Patrick Wilson,Denver, representslocal governmentsand private prop-erty owners in em-inent domain andreal property dis-putes. He serves asspecial counsel atMurray, Dahl, Kuechenmeister &Renaud LLP and is a certified medi-ator with Landispute, LLC—(303)493-6670, [email protected].

by M. Patrick Wilson

Part II of this article addresses some of the key proceduraland substantive rules governing the assessment of justcompensation in a taking of private property, includingimportant concepts in evaluating compensation claims forproperty actually taken, as well as remainder damages andspecific benefits.

Government and AdministrativeLaw articles provide information toattorneys dealing with various stateand federal administrative agencies,as well as attorneys representingpublic or private clients in the areasof municipal, county, and school orspecial district law.

Reproduced by permission. ©2006 Colorado Bar Association, 35 The Colorado Lawyer 47 (November 2006). All rights reserved.

nate suggested commissioners. Some ju-risdictions select commissioners from apool of retired judges, and others main-tain a list of qualified commissioners fromwhich a judge may choose.

The chair of the commission often is apracticing attorney and the other twocommissioners usually have some real es-tate experience—such as having workedas a real estate broker, appraiser, orlender—although there is no occupation-al requirement in the statutes.As with ju-rors, the commissioners are subject to voirdire, which must take place at least thir-ty days before trial, and any commissioneris subject to disqualification for cause.11

The commissioners typically are paid areasonable professional fee that is set bythe court and assessed as a cost to thecondemnor.12

The commissioners may serve as bothfinder of fact and, to a limited extent,finder of law.13 In addition to being au-thorized to administer oaths and requestthe issuance of subpoenas to compel testi-mony, during the valuation proceedingsthe commissioners may make rulings onthe admissibility of evidence.14 The com-missioners may request a ruling from thecourt during the trial on any legal issue,but the district court judge usually doesnot preside over the day-to-day trial pro-ceedings.15 In a valuation trial to a com-mission, the court’s involvement at thebeginning generally is limited to appoint-ing the commissioners, administeringtheir oath, issuing preliminary instruc-tions to the commissioners, and ruling onany pre-trial in limine issues raised bythe parties.16

Because the judge does not preside overa valuation trial to a commission, thecourt generally is free to continue with itsregular docket. In fact, the valuation por-tion of the case may not even be tried in acourtroom, but may be held in an unusedjury deliberation or conference room inthe courthouse. By stipulation of the par-ties and with the court’s approval, the val-uation trial can even be held outside thecourthouse, in counsel’s conference roomor at another location. By not requiring ajury, a courtroom, or a significant amountof the judge’s time, the parties to an emi-nent domain action potentially can avoidthe delays and continuances that afflictmany civil trials. This, combined withbudget cuts in the court system, maymean that the parties have to providetheir own court reporter in commissiontrials, a cost that also is taxed to the con-demning authority.

Valuation Trial Proceedings:Conduct of Trial

The respondent-landowner has theburden of proof in the valuation trial.17

Thus, the respondent puts on its case first,then the petitioner puts on its valuationand rebuttal evidence,and the respondentis afforded an opportunity for rebuttal ev-idence.At the close of evidence, the partiessubmit instructions to either the jury orthe commission.18 As in any other civil tri-al, these instructions must be approved bythe court before being tendered. If thecase is tried to a commission, the commis-sioners must view the property prior toascertaining the compensation to be paidfor the taking.19 If tried to a jury, on therequest of any party, the court, in its dis-cretion, may order the jurors to view theproperty prior to making an award ofcompensation.20

After hearing the evidence, viewing theproperty, and being instructed on the law,the jury or commission ascertains theamount of compensation owing for thetaking and states the same in a report (iftried to a commission) or a verdict (if triedto a jury).21 The commission’s report or thejury’s verdict must contain an accuratedescription of the land to be taken, thecompensation awarded for the land actu-ally taken, and, in the case of a partialtaking, any damages or special benefits tothe remainder.22 Any objection to a com-mission’s report or a jury’s verdict must beraised when the award is returned, beforethe commission or jury is discharged.23

On receiving the verdict or report, thecourt offsets any damages by any specificbenefits that have been shown to exist.24

The court then enters the verdict or reportin the court records and calculates inter-est that may be owing.25 The court alsomay entertain a request for costs and at-torney fees.26 On payment of all compen-sation owing either to the party entitledthereto or to the court registry, the courtwill enter a “rule and order” conveying theproperty to the condemnor.27 This ruleand order is recorded with the clerk andrecorder, and is deemed to have the sameeffect “as if it were a deed of conveyancefrom the owner. . . .”28

Apportionment HearingIf more than one party has a claim to a

compensable interest in the property, thevarious respondents either must agree ontheir respective shares of the award orproceed to an apportionment hearing.29

Pursuant to the undivided basis rule (dis-

cussed below) the condemnor pays intothe court registry one aggregate amountof compensation for all interests in theproperty to be acquired. A final rule andorder is entered on payment of theamount owing, and title to the estate be-ing acquired passes to the condemnor. Arule and order conveys to the condemnorall interests that the owner and any oth-er named parties may have in the proper-ty described therein.30 At that point, thecondemnor no longer is involved in theproceedings and the owners of the variousinterests that were acquired must appor-tion the proceeds among themselves byagreement or litigate their competingclaims in a subsequent proceeding beforethe court.31

AppealsAlthough an award of immediate pos-

session under CRS § 38-1-105(6)(a) is aninterlocutory order that cannot be imme-diately appealed (except pursuant to Colo-rado Appellate Rule 21),32 a final judgmentfor an award of compensation in an emi-nent domain valuation trial may be ap-pealed to the Colorado Court of Appeals,aswith any other final judgment.33 On mak-ing the deposit into the court registry, thepetitioner may take possession of the prop-erty pending an appeal. If the propertyowner prosecutes the appeal and later de-cides to withdraw the funds on deposit be-fore the appeal is decided, the appeal isdismissed.34 If the condemnor appeals, theproperty owner may withdraw the fundsdeposited pending the determination ofthe appeal if a surety or bond in double theamount withdrawn is provided.35

How Compensation Is Ascertained

The sole issue for the valuation trial isthe amount of compensation owing. Thisincludes the value of the property actuallybeing taken, as well as any damages orspecific benefits to any remainder proper-ty that is not being acquired. Issues thatare not relevant to determining compen-sation should be excluded from trial,36 butevidence that is in any way relevant to theissue of compensation should be admit-ted.37 Evidence that may be admissible in-cludes not only opinions of value but alsoevidence relating to the property’s highestand best use; the possibility of future,non-speculative uses; costs to cure negativeimpacts from the condemning authority’sproject; and damages and special benefitsto the remainder property.

48 / The Colorado Lawyer / November 2006 / Vol. 35, No. 11

48 Government and Administrative Law November

Evidence in the valuation trial consistslargely of appraiser testimony, althoughcompetent valuation testimony may bereceived from any qualified witness.38 Theowner of the property to be condemned,even if not otherwise qualified, usuallymay testify as to the property’s value.39

Valuation testimony often is supported byother expert witnesses, such as land useplanners; traffic, geotechnical, or othertypes of engineers; cost estimators; andothers, depending on the issues presentedin the case.

Property rights taken in condemnationproceedings usually are valued pursuantto standard appraisal methodologies—comparable sales, capitalization of in-come, and cost of reproduction less depre-ciation40—although in certain instancesother types of valuation analysis may beadmissible.41 The comparable sales ap-proach has been recognized to provide thebest evidence of value, although all threeapproaches commonly are accepted.42 Anywitness who relies on the sale of otherproperty to estimate value of the subjectproperty (under a comparable sales analy-sis) must personally confirm each salewith either the buyer or seller and exam-ine the recorded instrument.43 Typically,only completed sales (and not offers orcontracts) may be used as evidence toshow value under the comparable salesapproach in eminent domain proceed-ings.44

All compensation is determined as of aspecific date of value. If the condemnortakes immediate possession of the proper-ty prior to a valuation trial, the date ofvalue is the date the condemnor takespossession of the property.45 If immediatepossession is not sought, the date of valueis the date of the valuation hearing.46 Inan appreciating or depreciating market,or where other pertinent factors are influx, the date of value can have a materialeffect on the compensation that ultimate-ly may be owing. If strict adherence to thestatutory definition of the date of valuewould be fundamentally unfair in a givensituation, there is precedent for a court toestablish an alternative date of value.47

Highest and Best UseIn a valuation trial, the present market

value of the property is assessed in lightof the most advantageous use to whichthe property reasonably may be applied.48

Although evidence of speculative orprospective values is not permitted, theproperty is to be valued in its current con-dition, but with proper consideration of

the most advantageous use to which itreasonably might be applied.49 If such fu-ture use rises to the level of being proba-ble, any reasonable future use to whichthe property may be adapted or appliedby people of ordinary prudence and judg-ment may be considered, but only insofaras it may assist the jury in arriving at thepresent market value.50 The commissionor jury is to determine the present val-ue—not a future value—giving appropri-ate consideration to reasonably probablefuture uses.

Compensation: ValueFor the Land Taken

The compensation to be paid for theproperty actually taken in an eminent do-main action is determined by its reason-able market value.“Market value” for em-inent domain purposes is the actual cashprice at which the owner would be willingto sell and the purchaser would be willingto buy on the open market, where neitheris under an obligation to do so.51 The ulti-mate question of compensation often isviewed as “what has the owner lost, not,what has the taker gained.”52 However,the owner must be put in as good a posi-tion pecuniarily as if the property had notbeen taken.53

Taking All or Part of a ParcelWhen an entire parcel is being taken,

the valuation issues are relativelystraightforward, although appraisers candiffer significantly on the property’s high-est and best use and its ultimate value. Incontrast, when only a portion of a largerparcel is taken, the valuation issues canbe more complicated. Not only is there thepossibility for remainder damages andbenefits, but there also can be disagree-ment on how the part taken should bevalued. In a partial taking, the value ofthe interest taken normally is assessed asa part of the larger parcel. Under this sce-nario, the entire larger parcel typically isvalued, and a per-unit rate (often ex-pressed in terms of dollars per acre or persquare foot) is applied to the interest be-ing taken. After this determination ismade, any effect on the value of the re-mainder property is ascertained.54

Valuing the part taken as a part of thewhole may seem straightforward,but con-sider the hypothetical situation where thesubject property has land both within andoutside the floodplain. Assume also thatfloodplain-encumbered land has a signifi-cantly lower market value. The value of

the whole parcel typically would reflect ablended value of higher-value develop-ment land and lower-value floodplainland. If, however, the part to be taken iswholly within the floodplain, that interestarguably should not be valued on the per-unit value of the whole parcel, but ratheras purely floodplain land. Conversely, ifthe part to be taken is entirely outside thefloodplain, it arguably would be unfair tothe landowner to value it based on the en-tire parcel’s per acre “blended” value,which reflects that a significant portion ofthe larger parcel is undevelopable flood-plain. Case law suggests that a partialtaking should be valued as part of thewhole “so long as the parcel is sufficientlyuniform and that method of valuation isnot detrimental to the owner because itdoes not accurately value the propertytaken at its highest and best use.”55

Fee Simple, Easement, or Temporary Takings

Although a fee simple taking will bevalued at 100 percent of the unit rate, thetaking of an easement (or some other less-er interest) may be valued at a loweramount, often expressed as a percentageof the full fee value.A condemnor may ac-quire an easement and leave the fee withthe owner, or conversely may take the fee,subject to a easement or other interest re-served in the owner or other respondent.In either case, something less than the“full bundle of sticks” is being acquired,and the taking must be valued according-ly.

Similarly, a condemnor may need onlya temporary easement as part of a publicworks project.Temporary takings requirethe payment of just compensation, whichusually is measured by the fair rental val-ue of the property during the period of thetemporary easement, assuming the prop-erty is returned to its pre-existing condi-tion at the end of the term.56

Project InfluenceIn valuing the property actually taken,

the fact of the condemnation and the proj-ect are not to be considered.57 Under the“project influence rule,” any enhancementof or depreciation in the value of propertyto be acquired that occurs on account ofthe project may not be considered.58 Theprinciple behind the rule is to prevent ei-ther a windfall to the landowner based onproject enhancements or, conversely, adiminution in value caused by the sameproject for which the property is beingtaken.59



The project influence rule applies onlyto the assessment of compensation for theproperty actually being taken, and not toremainder damages or specific benefits.Damages and benefits necessarily musttake into consideration the taking and theproject improvements.Thus, for example,that portion of a landowner’s property ac-tually being taken for a new highway in-terchange may not be valued as if it al-ready had the enhanced access the projectwill bring. However, any remainder dam-ages or specific benefits accruing to therest of the larger parcel—that is, the re-mainder parcel—may be based on theproject and its improvements.

Compensation: DamagesTo the Remainder

In addition to compensation for the val-ue of the land taken, the Colorado Consti-tution provides that landowners be com-pensated for any damage resulting totheir remaining property.60 For example,if a condemnation is a partial taking thatwill leave the landowner with a remain-der parcel, and if that remainder’s valueis diminished as a result of the taking of

the land or the project improvements tobe built thereon, any diminution in valueto the remainder parcel is considereddamages that must be compensated.There are, of course, no severance dam-ages (or benefits) when the entire parcelis acquired.

Generally, all damages that are the“natural,necessary and reasonable” resultof the taking may be compensable.61

There are, however, a number of limita-tions on what is considered a compensa-ble damage in condemnation proceedings.For example, personal annoyance or in-convenience to the owner resulting fromthe use of the property taken may notform the basis for an award of damages.62

Similarly, impairment of access and busi-ness profits, discussed infra, may be com-pensable damages only under particularcircumstances.

In addition, damages to the remainderusually must be established by showingthat the reasonable market value of theremainder parcel has been diminished.63

This typically involves appraising the val-ue of the remainder parcel before the tak-ing and then after the taking, so as to ar-rive at a net decrease in value.64 Although

the existence of remainder damages maybe shown by a wide array of competentevidence, the extent of damages usuallymay be shown only in terms of a diminu-tion in market value.65 Elements of dam-ages, such as the cost of restoration ofproperty and the estimate of replacementvalue, are admissible only if they have abearing on and influence the value of theremainder parcel.66 However, at least inthe context of temporary takings in an in-verse condemnation case, damages havebeen permitted based on evidence ofrestoration costs.67

The property owner has the burden ofproof and must establish the existenceand amount of damages,68 including: (1)the existence of damages to the remain-der property; (2) that the taking or theproject caused these damages; and (3) theamount of compensation owed.69 Sever-ance damages can be measured by the ef-fects of: (1) the acquisition of the propertyactually taken; and (2) the expected usesof the property actually taken, on the rea-sonable market value of the remainingproperty.70 Thus, if the acquisition of aportion of property leaves the remaindertoo small for a particular high-value use,


2006 Government and Administrative Law 51

the claim for damages would be the differ-ence between that high-value use and thevalue of the use to which the remainderproperty still may be applied. Also, if thepublic improvement to be constructed onthe part taken results in a diminution invalue of the remainder, that too can serveas the basis for a claim for damages.

Examples of the types of severancedamages a condemnee may experience in-clude impaired access or site utility,change in the highest and best use, aes-thetic impairment, loss of view and loss ofvisibility, and inability to use appurtenantwater or mineral rights. The loss of viewand aesthetic impairment is a compensa-ble element of damages under Coloradolaw,71 but it currently is unclear if loss ofvisibility (being able to be seen) is a com-pensable item of damages.72

If there is no taking of a landowner’sproperty, any claimed damages resultingfrom uses of adjacent property generallyare not compensable in an eminent do-main action.73 Rather, such claims may bebrought in an inverse condemnation caseand recovered only to the extent they aredifferent in kind, not merely in degree,

from that suffered by the public in gener-al.74

Impairment of AccessOne issue of damages that must be con-

sidered by the court prior to a valuationtrial is a claim of impaired access. If alandowner claims that the taking resultsin an impairment of access to the proper-ty, the court must determine, in advanceof trial—that is, in limine—whether it ris-es to the level of a “substantial impair-ment” of access. Only on a finding of sub-stantial impairment of access may a re-spondent present evidence on thatelement of damages.75 However, unlikeother damages, whether property actuallyis taken is immaterial to the issue of dam-ages to the remainder of the property forloss or limitation of access.76

Business ProfitsA loss of business profits or goodwill re-

sulting from a condemnation generallyare not considered compensable in an em-inent domain action.77 Because a condem-nation of real property does not usually“take” the business being operated on the

land, and because a business usually maybe relocated, courts generally have disal-lowed compensation for purely businesslosses.78 However, where the business in-come is derived directly from the land it-self, such as with farming, ranching, ortimber operations, business losses may beconsidered in assessing compensation.79

This rule does not prohibit evidence ofbusiness income, but such evidence maybe admissible only for establishing the vi-ability of a particular use of that proper-ty.80

Compensation: Specific Benefits

Specific benefits are positive effectsfrom the taking or public project that re-sult in a measurable increase to the re-mainder property’s market value.81 Re-mainder damages, under certain circum-stances, may be offset by special benefitsto the remainder property that resultfrom the taking or the project.82 To beused as an offset, benefits must be specificto the parcel being damaged and may notconsist of general benefits available to the



public at large.83 For benefits used to re-duce severance damages, they must, at aminimum: (1) result from the public im-provement that justified the taking; (2)not be speculative or uncertain;and (3) re-late “directly and peculiarly” to the land inquestion. Further, special benefits maynot be used to offset compensable dam-ages if the remaining property is subjectto a special assessment for those samebenefits.84

Evidence of specific benefits may offsetremainder damages in any condemnationaction. However, in acquisitions for high-ways or transportation projects, such asRTD’s upcoming “Fastracks” projects, spe-cial benefits may be used to offset up to 50percent of the compensation owed for theproperty actually taken, in addition to anydamages.85 The Colorado Supreme Courtrecently upheld this statutory offset ofjust compensation against a challengethat it allowed a taking without the pay-ment of cash compensation.86 In essence,the Court ruled that an enhancement ofvalue to the landowner’s remaining parcelserved as adequate compensation not onlyfor remainder damages, but also for as

much as one-half of the compensation ow-ing for the land actually taken.

Many of the evidentiary rules applica-ble to severance damages are equally ap-plicable to special benefits. However, thecondemnor has the burden of proof to es-tablish the existence and amount of anyspecial benefits.87

Other Rules of Compensation

There are a number of other legal con-cepts that apply in condemnation valua-tion trials. The proper consideration ofthose concepts, as well as the resolution ofany disputes over their application, canhave a profound effect on the outcome attrial.

In general, valuation theories and evi-dence that do not comport with applicablestatutes or case law may be excluded onthe filing of an in limine motion to thecourt, or by objection and argument dur-ing trial—either to the court or the com-mission. Courts generally should strive toresolve evidentiary issues prior to a valu-ation trial when presented with a timelymotion in limine or other pleading.88 The

resolution of legal issues prior to trial of-ten help narrow and focus the issues fortrial, and can lead to a settlement. How-ever, if the court does not rule on the evi-dentiary issue prior to trial, the judge like-ly will have to rule on the issue during ajury trial; or, if tried to a commission, thecommissioners are authorized to decidethe issue during trial. The evidentiaryrules pertaining to eminent domain ac-tions should be adhered to but need not beapplied in a manner that will lead to afundamentally unfair result.89

Larger ParcelTo properly assess compensation, re-

mainder damages, and specific benefits, itis important to determine the nature andextent of the “larger parcel.” The largerparcel includes both the land to be takenand all remainder property. In essence,the larger parcel defines what may becompensable in an eminent domain ac-tion—either compensation for land actu-ally taken or damages to the remainder.In addition, the larger parcel determina-tion can affect the highest and best usedetermination.



For purposes of compensation in an em-inent domain action, what propertyshould be included in the larger parceltraditionally has been defined under arule known as the “three unities”: unity oftitle (common ownership); physical unity(contiguous or proximate); and unity ofuse (capable of being used as one econom-ic unit).90 The third element, “unity ofuse,”has become the most critical factor indetermining the larger parcel question,even in the face of diverse ownership ornon-contiguity.91 If property is not proper-ly included in the “larger parcel,” any re-duction in that property’s value, even if itis shown to result directly from the tak-ing, is not compensable as severance dam-ages in an eminent domain action.

Undivided BasisUnder the undivided basis rule, the

condemnor is required to pay compensa-tion for the undivided (unencumbered) in-terest in whatever property right or estatethe condemnor has deemed necessary forits intended use. Separate awards to eachrespondent, such as the fee owner, ease-ment holder, and lien holder, are not per-mitted on account of the undivided basisrule.92 Rather, the condemnor is requiredonly to offer and pay one amount, repre-senting the value of the undivided basis inthe property being acquired.93 The variousinterest holders in the property mustagree or litigate as to their proportionalshare of the compensation paid.94

Just as a separate award is not made toeach party with an interest in the proper-ty, separate awards are not made for theland and any improvements or appurte-nances.95 Thus, a commission or jury maynot return separate awards for land andimprovements, for land and water rights,or for land and any costs to repair or re-store property.Similarly, litigants may notpresent such evidence of separate values.However, if such improvements, appurte-nances, or costs to repair either enhanceor diminish the value of the property, evi-dence of this enhancement or diminutionmay be admitted, but only to show theireffect on the overall property’s reasonablemarket value.96

As with improvements and other ap-purtenances, the effect of encumbranceson the property are not ignored for pur-poses of valuation under the undividedbasis approach.97 The undivided basisrule also does not preclude a condemnorfrom taking “subject to” certain propertyinterests that may be compatible with itsintended use. For example, a city couldcondemn the fee interest in a parcel for amunicipal park but take that propertysubject to an existing underground pipe-line easement.

The undivided basis rule simply allowsthe condemnor to offer (and ultimately topay) one amount based on the undividedand unencumbered estate it seeks to ac-quire. If more than one party has an in-terest in the compensation paid for that

interest in the property, the apportion-ment of the compensation does not in-volve the condemnor.

Interest, Costs, and Attorney Fees

A property owner is entitled to pre-judgment interest on the amount of theaward from the date the condemnor takespossession of the property to the date ofthe final award.98 This applies only wherethe condemnor obtained immediate pos-session of the property prior to the valua-tion trial. No interest accrues on anyamount of a deposit made in connectionwith obtaining immediate possession thatthe landowner could have withdrawn.99

Interest is owed only on the portion of thefinal award that exceeds the immediatepossession deposit. If a final judgmentamount is less than what previously hasbeen deposited by the condemnor andwithdrawn by landowner, the landownermust repay the excess and may owe inter-est on the excess amount that was with-drawn.100

By statute, if an acquisition is valued atmore than $5,000, the condemnor mustreimburse the landowner for the reason-able cost of one appraisal.101 However,even if payment of appraisal costs is notinitially made under this statute, thelandowner usually may recover its ap-praisal and other costs pursuant toC.R.C.P. 54(d).102 In condemnation pro-ceedings, the landowner is entitled tocompensation for all reasonable costs in-curred, regardless of whether he or sheprevails.103 To require a landowner whoseproperty is being condemned to incur thecosts of litigation without reimbursementhas been deemed to unfairly reduce thejust compensation required to be paid, inviolation of Article II, § 15, of the ColoradoConstitution.104 Similarly, when alandowner recovers a final award of com-pensation that is less than a previouslymade statutory offer under CRS § 13-17-202, the condemnor is not entitled to re-cover its actual costs.105

The rationale of not requiring alandowner to spend any portion of his orher just compensation on litigation costshas not been fully extended to cover thelandowner’s attorney fees.106 A landownermay recover attorney fees in a condemna-tion action only under certain circum-stances. For example, a landowner mayrecover reasonable attorney fees if thecourt determines that the petitioner is notauthorized to acquire the real property



sought.107 Thus, if a landowner is success-ful in challenging any of prerequisites atthe immediate possession hearing (au-thority,public purpose,necessity, or failureto agree) and the case is dismissed, he orshe may recover reasonable attorney feesin challenging the action.

Further, if a final award of just compen-sation (where the final award is greaterthan $10,000) equals or exceeds 130 per-cent of the last written offer made by thecondemnor prior to filing the condemna-tion action, the condemnor shall reim-burse the owner’s reasonable attorneyfees.108 Thus, a condemnor could be liablefor a landowner’s attorney fees if it madea final written offer of $100,000 for a par-cel of land, and a final award was re-turned in an amount of $130,000 or more.This provision is intended to provide thecondemnor with an incentive to not “low-ball” its offer of just compensation.

Occasionally, a condemnor will increaseits last written offer to an amount exceed-ing its own appraised value, so as to mini-mize the risk of exposure for attorney fees.Although the condemnor must honor thathigher offer if accepted, if the offer is notaccepted, the condemnor is not bound byit and may present evidence of a lowervaluation at trial. Should the condemnorsubsequently move to amend the extentor nature of the property interests to beacquired, a court may prorate the lastwritten offer for purposes of assessing at-torney fees.109

In addition to compensation, interest,costs, and fees, counsel should determineif the project is subject to the federal Uni-form Relocation Assistance and RealProperty Acquisition Policies Act and de-termine if additional relocation benefitsare available.110 Although limited prima-rily to projects receiving federal funding,the Colorado General Assembly has maderelocation benefits available to landown-ers whose property is condemned by ur-ban renewal authorities for subsequenttransfer to private redevelopers.111

ConclusionThe assessment of just compensation

owing to a landowner whose property hasbeen taken is the critical phase of a con-demnation proceeding. The valuationphase must balance two competing inter-ests: the right of private property ownersto be fairly compensated for what hasbeen taken or damaged for public use,andthe right of the public to acquire propertyfor public purposes at its reasonable mar-

ket value. Colorado law provides for anequitable process by which this balancemay be struck and just compensation as-sessed, whether by jury or commission.

In addition to certain statutory guide-lines, there are many substantive rulesthat have developed over the years in thecase law. The practitioner must be awareof these rules and work proactively withvaluation witnesses to properly develop asound case.

NOTES

1. Wilson, “Eminent Domain Law in Colo-rado—Part I: The Right to Take Private Prop-erty,” 35 The Colorado Lawyer 65 (Sept. 2006).

2. See CRS §§ 38-1-105(1) and -106.3. CRS § 38-1-106.4. Town of Red Cliff v. Reider, 851 P.2d 282

(Colo.App. 1993).5. CRS § 38-1-106.6. Id.7. Id.8. State Dept. of Highways v. Ogden, 638

P.2d 832 (Colo.App. 1981).9. Id.

10. Compare CRS § 38-1-105(1) (commissionof freeholders) with CRS § 38-1-106 (jury offreeholders residing in the county in which thepetition is filed).

11. CRS § 38-1-105(1).12. Id.13. CRS § 38-1-105(2); State Dept. of High-

ways v. Mahaffey, 697 P.2d 773 (Colo.App.1984).

14. Mahaffey, supra note 13; State Dept. ofHighways v. Pigg, 656 P.2d 46 (Colo.App.1982);City of Aurora v.Webb, 585 P.2d 288 (Colo.App.1978).

15.CRS § 38-1-105(2);Bd.of County Comm’rsv.Vail Assocs., 468 P.2d 842 (Colo.1970).

16. Id.17.Jagow v.E-470 Public Highway Auth., 49

P.3d 1151 (Colo. 2002) (landowner has burdenof proof as to compensation, except for any off-setting special benefits);Bd.of County Comm’rsv. Noble, 184 P.2d 142 (Colo. 1947).

18. CRS §§ 38-1-105(1) (commission) and -107(1) (jury). Instructions for eminent domainactions are found in Chapter 36 of the Coloradocivil jury instructions. These same basic in-structions are used whether the case is tried toa jury or a commission.

19. CRS § 38-1-105(2).20. CRS § 38-1-107(1).The party requesting

the jury to view the subject property must ad-vance that expense; however, the condemnorultimately may have to reimburse thelandowner for this cost of litigation, regardlessof which party requested the jury view.

21. See Colorado Jury Instruction 36:8 (Civ.4th Ed.).

22. CRS § 38-1-115. Each of these three ele-ments (value for the property actually taken,damages to the remainder,and specific benefitsto the remainder) must be separately stated.

23. Evergreen Fire Protection Dist. v. Hucke-by, 626 P.2d 744 (Colo.App. 1981) (commissionreport); Ft. Lyon Canal Co. v. Farnan, 109 P.861 (Colo. 1910) (jury verdict).

24. CRS § 38-1-114; Colorado Jury Instruc-tion 36:4 (Civ. 4th Ed.) (“[a]ny adjustment orbalancing [of damages and benefits] must bedone by the court”).

25. CRS § 38-1-116. Where immediate pos-session previously was taken and deposit madepursuant to CRS § 38-1-105(6)(a), interest runsfrom the date of taking possession to the dateof the award and accrues only on the amount, ifany, that the final award exceeds the amountdeposited. Interest is paid at the statutory rateset at CRS § 5-12-106(2). As in any other civilaction, post-judgment interest also may be ow-ing if there is any meaningful delay betweenthe date of the award and the date of the con-demnor’s final deposit to the court registry sat-isfying the judgment.On deposit of the amountfully satisfying the award of compensation, in-terest, and any other amounts owing, the con-demnor is relieved of its responsibility for post-judgment interest for the period of time pend-ing an appeal or an apportionment hearing.See E-470 Public Highway Auth. v. 455 Co., 997P.2d 1273, 1277 (Colo.App. 1999).

26. Interest, costs of litigation, and attorneyfees are discussed below.

27. CRS § 38-1-105(3).



28. Id.29. Id.30. Id.31. See Total Petroleum, Inc. v. Farrar, 787

P.2d 164 (Colo. 1990); Montgomery Ward & Co.v. City of Sterling, 523 P.2d 465 (Colo. 1974);Vivian v. Bd. of Trustees, 383 P.2d 801 (Colo.1963); City of Englewood v. Denver WasteTransfer, L.L.C., 55 P.3d 191 (Colo.App. 2002);State Dept. of Highways, Div. of Highways v.Town of Silverthorne, 707 P.2d 1017 (Colo.App.1985).

32. Swift v. Smith, 201 P.2d 609 (Colo. 1948)(because an order for temporary possessionclearly is interlocutory, any review must be byan original proceeding).

33. CRS § 38-1-110.34. CRS § 38-1-111. But see Colorado Moun-

tain Properties, Inc. v. Heineman, 860 P.2d1388, 1391 (Colo.App. 1993) (accidental with-drawal of minor amount of deposit, which waspromptly repaid, does not warrant dismissal ofappeal).

35. CRS § 38-1-111.36. Dept. of Transp. v. Auslaender, 94 P.3d

1239, 1241 (Colo.App. 2004) (collateral or ex-traneous issues that change the scope of emi-nent domain proceedings are not permitted insuch proceedings); Denver Power & Irr. Co. v.Denver & Rio Grande R.R. Co., 69 P. 568 (Colo.1902).

37. City of Westminster v. Jefferson Ctr.Assocs., 958 P.2d 495 (Colo.App. 1997) (the ad-missibility of evidence regarding property val-ue is governed by an expansive, rather than re-strictive, rule). See also Waste Transfer, L.L.C.,supra note 31 (“any competent evidence . . .which would be considered by a prospectiveseller or buyer as tending to affect the presentmarket value of the land”); E-470 Public High-

way Auth. v. Jagow, 30 P.3d 798 (Colo.App.2001) (“any relevant evidence concerningdiminution of market value”).

38. City & County of Denver v. Hinsey, 493P.2d 348 (Colo. 1972); Bd. of Directors v. Cal-varesi, 397 P.2d 877 (Colo. 1964) (witness whoowns, buys, sells, values, or manages real prop-erty in the vicinity of the property to be con-demned was qualified to state an opinion ofvalue). See also Mack v. Bd. of County Comm’rsof Adams County, 381 P.2d 987 (Colo.1963)(whether a witness is qualified to give an opin-ion in a particular field rests in sound discre-tion of trial court, and the court’s rulings there-on will not be disturbed in absence of a grossabuse of discretion).

39. Denver Urban Renewal Auth. v.Berglund-Cherne Co., 568 P.2d 478 (Colo.1977); Baker Metro.Water & Sanitation Dist. v.Baca, 331 P.2d 511 (Colo. 1958).

40. Mahaffey, supra note 13 at 775 states:Real estate appraisers commonly utilizethree methods of property valuation: (1)Market data or comparable sales; (2) cost ofconstruction or reproduction costs less de-preciation; and (3) capitalization of income.Depending on the location and type of prop-erty involved, the appraiser may use anyone, two, or all three methods to evaluate thefair market value of the property.41. See Waste Transfer, L.L.C., supra note 31

(allowing alternative valuation approachwhere there was a lack of comparable sales andthe income and cost approaches could not pro-vide an accurate estimate of value).

42. Berglund-Cherne Co., supra note 39 at480.

43. CRS § 38-1-118. In effect, these are con-ditions to what is, in effect, a statutory excep-tion to the hearsay rule.

44. Ruth v. Dept. of Highways, 359 P.2d 1033(Colo. 1961); Loloff v. Sterling, 71 P. 1113, 1115(Colo. 1903).

45. CRS § 38-1-114(1). Possession usuallypasses when the condemnor makes the depositinto the registry of the court pursuant to CRS§ 38-1-105(6)(a). See also City of Glendale v.Rose, 679 P.2d 1096 (Colo.App 1983).

46. CRS § 38-1-114(1); Fowler IrrevocableTrust 1992-1 v. City of Boulder, 992 P.2d 1188(Colo.App. 1999), aff’d in part, rev’d in part onother grounds, 17 P.3d 797 (Colo. 2001).

47. Bd. of County Comm’rs v. Delaney, 592P.2d 1338 (Colo.App. 1978) (court allows evi-dence of cost of repairs necessitated by publicproject to include costs incurred after the dateof value where the need for repairs only subse-quently was discovered).

48. Goldstein v. Denver Urban RenewalAuth., 560 P.2d 80 (Colo. 1977).

49. Wassenich v. City and County of Denver,186 P. 533, 537 (Colo. 1920); Dept. of Highwaysv. Schuloff, 445 P.2d 402 (Colo. 1968).

50. Stark v. Poudre School Dist. R-1, 560 P.2d77, 79 (Colo. 1977) (“totally speculative or con-jectural estimate of future use of property” isinadmissible). See also Colorado Jury Instruc-tion 36:6 (Civ. 4th Ed.).

51. Bd. of Comm’rs v. Noble, 184 P.2d 142(Colo. 1947); Denver Urban Renewal Auth. v.Pogzeba, 558 P.2d 442 (Colo.App. 1976). Seealso Colorado Jury Instruction 36:3 (Civ. 4thEd.).

52. Williams v. City and County of Denver,363 P.2d 171, 173 (Colo. 1961), quoting BostonChamber of Commerce v. Boston, 217 U.S. 189,195 (1910).

53. Fowler Irrevocable Trust 1992-1 v. City ofBoulder, 17 P.3d 797, 802 (Colo. 2001).

54. Colorado’s valuation approach for partialtakings is referred to as the “state rule.” It dif-fers from the approach of other jurisdictionswherein the “before and after rule” is followed.In this latter approach, the entire property isvalued before the partial taking, and then theremainder is valued after the taking. The dif-ference in value is the total compensation ow-ing and includes both compensation for theland actually taken and for any damages andbenefits.

55. Jefferson Ctr.Assocs., supra note 37.56. Fowler Irrevocable Trust, supra note 53

(in the temporary taking context, the just com-pensation inquiry asks this question: consider-ing the property’s highest and best use duringthe period of the temporary taking,what rentalwould the property have produced? Proof mustsimulate a willing lessor/willing lessee trans-action,not a simulated sale of the property,andproduce a fair rental value for the temporarytaking period).

57. Williams, supra note 52; Bd. of CountyComm’rs of Eagle County v. HAD Enters., Inc.,533 P.2d 45,46 (Colo.App.1974);Colorado JuryInstruction 36:3 (Civ. 4th Ed.).

58. Williams, supra note 52; City of Boulderv. Fowler Irrevocable Trust 1992-1, 53 P.3d 725,728 (Colo.App. 2002).



59. Fowler Irrevocable Trust, supra note 58at 728 states:

This principle promotes fairness in valuingproperty by preventing a windfall to theproperty owner based on speculative poten-tial enhancements in value while, at thesame time, protecting the property ownerfrom the injustice of assessing against it adiminution in the property’s value caused bythe same project for which it is being taken.60. Colo. Const., Art. II, § 15. See also La

Plata Elec.Ass’n, Inc. v. Cummins, 728 P.2d 696(Colo. 1986); E-470 Pub. Highway Auth. v. 455Co., 983 P.2d 149 (Colo.App. 1999), aff’d, 3 P.3d18 (Colo. 2000).

61. La Plata Elec.Ass’n, Inc., supra note 60.62. Harrison v. Denver City Tramway Co.,

131 P. 409 (Colo. 1913).63. Mack, supra note 38.64. Colorado Jury Instruction 36:4 (Civ. 4th

Ed.).65. Western Slope Gas Co. v. Lake Eldora

Corp., 512 P.2d 641 (Colo.App. 1973); ColoradoJury Instruction 36:5 (Civ. 4th Ed.).

66. Mack, supra note 38 at 990; Ruth v. Dept.of Highways, 359 P.2d 1033 (Colo. 1961).

67. Fowler Irrevocable Trust, supra note 53at 806 (temporary takings jurisprudence rec-ognizes that just compensation can encompassthe cost of restoring the property to its pre-tak-ing condition).Restoration costs otherwise maybe admissible to show the existence of dam-ages, or if they can form the basis for a diminu-tion in value of the remainder property. Often,appraisers will rely on the amount of restora-tion costs as the basis for an opinion of thediminution of the remainder’s market value.

68. Colorado Jury Instruction 36:2 (Civ. 4thEd.).

69. Jagow, supra note 17 at 1158.70. Colorado Jury Instruction 36:4 (Civ. 4th

Ed.).A final award of damages (or specific ben-efits) is subject to adjustment for one year toprovide for additional damages or benefits thatwere not reasonably foreseeable at the time oftrial. CRS § 38-1-114(1) and (2)(a).

71. La Plata Elec.Ass’n, Inc., supra note 60.72. See Dept. of Transp. v. Marilyn Hickey

Ministries, 129 P.3d 1068 (Colo.App. 2005) (al-lowing loss of visibility damages resulting fromproject improvements located on the land tak-en from the respondents). However, certiorariwas granted by the Colorado Supreme Courtin this case on March 20,2006.No decision wasavailable as of this writing.

73. Keller v. Miller, 165 P. 774 (Colo. 1917);Marilyn Hickey Ministries, supra note 72.

74.State Dept. of Highways v.Davis, 626 P.2d661 (Colo. 1981); Troiano v. Colorado Dept. ofHighways, 463 P.2d 448 (Colo. 1969); Claassenv.City and County of Denver, 30 P.3d 710 (Colo.App. 2000); Thompson v. City and County ofDenver, 958 P.2d 525 (Colo.App.1998).

75. See State Dept. of Highways v. Interstate-Denver West, 791 P.2d 1119, 1121 (Colo. 1990);Davis, supra note 74 at 665.

76. Davis, supra note 74.77. Auraria Businessmen Against Confisca-

tion v. Denver Urban Renewal Auth., 517 P.2d845 (Colo. 1974).

78. Hinsey, supra note 38 at 351 (“injury to abusiness conducted upon lands taken underthe right of eminent domain . . . does not con-stitute an element of just compensation”).

79. Id.80. Id.81. E-470 Public Highway Auth. v. 455 Co., 3

P.3d 18, 23 (Colo. 2000); Denver Joint StockLand Bank v. Bd. of Comm’rs of Elbert County,98 P.2d 283, 286 (Colo. 1940).

82. CRS § 38-1-114.83. CRS § 38-1-114(2); Colorado Jury In-

struction 36:4 (Civ. 4th Ed.); Mack, supra note38; Denver Joint Stock Land Bank, supra note81; San Luis Valley Irr. Dist. v. Noffsinger, 274P. 827 (Colo. 1929); Western Slope Gas Co. v.Lake Eldora Corp., 512 P.2d 641 (Colo.App.1973) (availability of natural gas resultingfrom construction of gas pipeline project was abenefit to all landowners in the area andshould not, therefore, be used to offset dam-ages).

84. E-470 Public Highway Auth., supra note60, rev’d on other grounds 3 P.3d 18 (Colo.2000).

85. CRS § 38-1-114(2)(a).86. E-470 Public Highway Auth. v. Revenig,

91 P.3d 1038 (Colo. 2004).87. Colorado Jury Instruction 36:2 (Civ. 4th

Ed.).88.CRS § 38-1-101 provides that when prop-

erty is condemned, “all questions and issues,except the amount of compensation, shall bedetermined by the court. . . .”See also Troiano v.Colorado Dept. of Highways, 468 P.2d 448(Colo. 1969); Fishel v. Denver, 108 P.2d 236(Colo. 1940).

89. Upper Eagle Valley Sanitation Dist. v.Carnie, 634 P.2d 1008 (Colo.App. 1981).

90. See Noble, supra note 17 at 143 (the larg-er parcel includes the land taken, along with“the property not taken but which belongs tothe respondent which is contiguous or adja-cent, and which respondent uses as a part ofthe unit operation of her property”); ColoradoJury Instruction 36:4 (Civ. 4th Ed.).

91. See Bear Creek Dev. Corp. v. GeneseeFound., 919 P.2d 948 (Colo.App.1996);Delaney,supra note 47.

92. See Gifford v. City of Colorado Springs,815 P.2d 1008 (Colo.App. 1991).

93. See Montgomery Ward & Co., Inc. v. Cityof Sterling, 523 P.2d 465, 467 (Colo. 1974).

94. CRS § 38-1-105(3).95. Dandrea v. Bd. of County Comm’rs, 356

P.2d 893 (Colo. 1960); City of Gunnison v. Mc-

Cabe Hereford Ranch, Inc., 702 P.2d 768 (Colo.App. 1985):

As a general rule, the existence of naturalland assets such as mineral or water rightscan be considered in determining how theyenhance the fair market value of a con-demned piece of property, but it is not properto evaluate such appurtenant rights sepa-rately.96. McCabe Hereford Ranch, Inc., supra note

95 at 770. See also City of Boulder v. OrchardCourt Dev. Co., 527 P.2d 931, 933 (Colo.App.1974) (“evidence of elements of damages, suchas cost of restoration and estimates of replace-ment value, are admissible if they would havea bearing on and influence opinion as to val-ue”).

97. Gifford, supra note 92 at 1011 (underColorado’s undivided basis rule of fair marketvaluation, the condemnor must value the prop-erty as a whole by assuming ownership by oneperson, while taking into consideration the val-ue of encumbrances on the fair market valua-tion of property).

98. CRS § 38-1-116.99. Id.; E-470 Public Highway Auth., supra

note 25.100. See E-470 Public Highway Authority v.

Wagner, 77 P.3d 902, 905 (Colo.App. 2003)(where landowner had agreed by stipulation torepay any excess withdrawal with interest).101. CRS § 38-1-121(2).102. Dept. of Highways v. Kelley, 379 P.2d 386

(Colo. 1963); City of Colorado Springs v. Berl,658 P.2d 280, 281 (Colo.App. 1982).103.The reasonableness of the costs incurred,

including an award for expert witness fees, is amatter left to the discretion of the court. SeeCity of Lakewood v. DeRoos, 631 P.2d 1140(Colo.App. 1981).104. Denver Joint Stock Land Bank v. Bd. of

Comm’rs of Elbert County, 98 P.2d 283, 287(Colo. 1940); Denver Urban Renewal Auth. v.Hayutin, 583 P.2d 296 (Colo.App. 1978).105. City of Westminster v. Hart, 928 P.2d 758

(Colo.App. 1996) (statutory offers of settlementare inapplicable to condemnation proceedings).106. Dept. of Highways v. Intermountain Ter-

minal Co., 435 P.2d 391, 395 (Colo. 1967) (at-torney fees are not included within the mean-ing of “costs” as applied to Article II, § 15 of theColorado Constitution and are not recoverablein eminent domain proceedings).107. CRS § 38-1-122(1).108. CRS § 38-1-122(1.5) (as amended in

2003).An earlier version of this rule applied toacquisitions by a public highway authority. SeeCRS § 43-4-506(1)(h)(II)(B).109. Wagner, supra note 100 at 905.110. 42 U.S.C.A. §§ 4601 et seq.; CRS §§ 24-56-

101 et seq.111. CRS § 31-25-105.5(4). ■



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