The court decision upheld a landowner’s ability to use the selling price of nearby properties to determine how much WisDOT should pay for property.
The state in 2007 acquired Mark Spanbauer’s property, which was used for engine machining, at 3050 Algoma Blvd. in Oshkosh. But Spanbauer and WisDOT disagreed over how much the property was worth.
Spanbauer’s appraiser said the land was worth $275,000, according to court documents. WisDOT’s appraiser argued it was worth only $155,000.
The Winnebago County Circuit Court ruled in favor of Spanbauer in April 2008 and ordered WisDOT to pay him 194,570.72. WisDOT appealed the ruling but lost when the Wisconsin Court of Appeals on Wednesday upheld the circuit court’s decision.
Spanbauer’s appraisal of his machine shop was based partially on the selling price of a nearby Kwik Trip building. But WisDOT argued the Kwik Trip building should not be considered.
Wisconsin law prevents appraisers from considering the selling price of properties if they are influenced by an upcoming project, such as a new interchange. WisDOT said its plan to build a roundabout on Spanbauer’s property increased the value of the Kwik Trip.
WisDOT did not respond to calls for comment.
It’s difficult to determine the influence proposed projects have on land sale prices, said Tom Hartley, a partner in Guttormsen, Hartley, Wilk & Higgins, LLP, Kenosha. Hartley said he is appraising some properties slated for acquisition for the Interstate 94 reconstruction between Milwaukee’s Mitchell Interchange and the Illinois border, but the project’s effect on property values has not popped up as an issue, he said.
“It’s for the appraiser to try to adjust for that or take that influence out,” Hartley said.
In its court case, WisDOT argued appraisers should not consider any properties near a proposed project, regardless of any influence the project might have on land values. But the Court of Appeals rejected that argument.
Existing state law protects private landowners and the public by forcing appraisers to take a project’s influence on prices into account, said Larry Nicholson, owner of Nicholson Group LLC, a Hartland-based firm that appraises properties for WisDOT and private landowners. He said the best way to decide if a highway project is affecting sale prices is to ask the buyer. Another good test is to check if the sale price fits within average prices in the area, he said.
Appraisals for the I-94 reconstruction will be particularly difficult because the project got the go-ahead this year, but some land will not be appraised until four years from now. Finding land sales that aren’t influenced by the project in the immediate area of the highway will be difficult, Nicholson said.
“You can’t use them,” he said. “And then you have to go to sales that occurred before the project was announced.”