Should highest and best use as a pipeline corridor be considered in valuing land for condemnation? Landowner Condemnation Rights Attorney Philip Hundl talks about a recent Texas Court of Appeals case that recognizes that concept. Call or text 800-266-4870 for an appointment with Mr. Hundl.
Summary of the Highest and Best Use as a Pipeline Corridor Video
– Hi, I’m Philip Hundl. I’m an attorney and my practice focuses on land litigation. I primarily represent landowners facing eminent domain and condemnation cases. When I refer to land litigation, I also represent landowners in land partition cases.
If you’re facing condemnation as a landowner, or you need to partition some property amongst you and some co-owners, probably family members, it’s always important to take the highest and best use of the land into consideration. Obviously, you shouldn’t value land that’s along a busy highway as agricultural land. If your land is in line for future development, perhaps future retail commercial, it should not be valued as strictly agricultural use land or recreational land. That’s a pretty easy concept, and I think everybody agrees with that.
I want to talk to you all today about the highest and best use of land as a pipeline corridor. Land is valued by its highest and best use, and a pipeline corridor might be the highest and best use of your property. If you have some property that has multiple pipelines on it, the highest and best use of that strip of land might be as a pipeline corridor.
This concept has been around for a long time. There’s a recent decision about this by the First District Court of Appeals out of Houston. I’m not going to go into all the legal procedural parts of this case, but the decision came out June 18, 2020.
Recent Texas Court of Appeals Decision
It is a topic of the Hlavinka versus HSC Pipeline Partnership LLC case that I just mentioned. The Hlavinka is Terry Hlavinka, Kenneth Hlavinka and Tres Bayou Farms LP, and Terrance Hlavinka Cattle Company. I know, Terrance Hlavinka referred to as Terry Hlavinka, from East Bernard. He’s big Aggie, and he was a yell leader at A&M. I’m an Aggie, and we know each other through some of the Wharton County A&M club stuff. It’s interesting to read a case when it involves someone that you personally know.
So in this case, the Hlavinkas, have a large tract of land in Brazoria County. When I say a large tract it’s 15 to 16,000 acres. This tract has lots of pipeline easements on it. The way the property is geographically located puts it in the path of current and future pipelines. These pipelines always end up at the coast in the Freeport area in Brazoria County or through Brazoria County going to Jefferson County or Harris County.
It is strategically located and very useful to contain pipelines. So the highest and best use of the land is as a pipeline corridor. A pipeline corridor or land for a pipeline corridor has a much higher value than land that’s just recreational or agricultural. In this case, one of the valuation opinions for this land was that its highest and best use is a pipeline corridor.
Mr. Hlavinka testified through deposition about why his opinion was that the land should be valued according to its highest and best use as a pipeline corridor. Landowners can have an opinion on the value of their property. There’s case law that says that, and so he was doing that.
Of course, the pipeline company wanted to convince the court that his testimony should not be admissible as to value the land. The pipeline company objected to his idea of valuing the land as a pipeline corridor, and not just agricultural land. The Court of Appeals said the lower court should consider his testimony, and this valuation testimony of a pipeline corridor.
So if your property is being affected by pipeline or a power line, its highest and best use as a pipeline corridor or a power line corridor should be considered. It’s a valuation methodology that you should think about if you have a strip of land with other pipelines or power lines.
I’ve got several cases right now that that are like this. I have landowners who believe the highest and best use of their land is as a pipeline or power line corridor. That’s my opinion too from doing this work. This land should not be valued as agricultural pasture.
Consider the Valuation of Each Different Part of Your Land
So this is something to keep in mind when you’re dealing with condemnation or a partition case. Take into consideration all the unique characteristics of the property, because part of the property may be considered to have a much higher value than other parts.
As an illustration, think about a pizza. For my family we get on online, and we order Domino’s Pizza by phone. You can make that pizza however you want. So in my family, everybody’s got different tastes. I love Supreme and so I’ll have a quarter of that pizza being a Supreme, and then a quarter of it just pepperoni. Another quarter of it will be pepperoni, hamburger and sausage and then another quarter of it is just cheese.
Now that pizza has unique characteristics. The cheese quarter of the pizza shouldn’t have the same value as the Supreme quarter. Domino’s doesn’t charge you, as if that whole pizza is cheese. I’ve seen that illustration used by certified land appraisers on valuation of land.
So always remember that Supreme piece of pizza could be retail commercial or a pipeline corridor as the highest and best use for that land. The cheese quarter of the pizza might be recreational or agricultural pasture for valuation.
So anyway, hopefully that’s helpful. Please keep that in mind. If you’re facing a condemnation case, in which you have a pipeline corridor or power line corridor, the land should be valued higher. If you’re dealing with a land partition the same highest and best use reasoning applies. Good luck and thanks.
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