Highest Court in North Carolina Resolves Valuation Issues in Notorious Map Act Case

On May 1, 2020 the N.C. Supreme Court unanimously affirmed the just compensation judgement in Chappell v. N.C. Dep’t of Transportation, No. 51PA19-1 (May 1, 2020). Chappell is the follow up to the N.C. Supreme Court’s landmark decision in Kirby v. North Carolina Dep’t of Transportation, No 56PA14-2 (June 10, 2016), in which the court held that the “Map Act,” a statute by which NCDOT designated vast swaths of property for future highway acquisition, was a taking because it prohibited development and use of designated properties over an extended period of time. In Kirby, the court concluded “[t]hese restraints, coupled with their indefinite nature, constitute a taking of plaintiffs’ elemental property rights by eminent domain.” The court remanded the case for a parcel-by-parcel determination of just compensation.

Shortly after the decision in Kirby, the North Carolina Legislature repealed the Map Act, thereby changing an indefinite taking into a finite one. This set the stage for a valuation of the countless properties that had been encumbered by the Map Act for years in order to assess the just compensation due. Further complicating the matter were the actions of NCDOT in filing condemnation actions against some, but not all, of the impacted properties.

In the end, the N.C. Supreme Court issued a decision upholding the damages awarded in the first of the property owner cases to go to trial, but doing so in a way that leaves open the valuation methodology to be employed for future Map Act cases. In Chappelle, the Court ruled that the applicable statute for determining fair market value in North Carolina “does not restrict real estate appraisers with regard to the method they” may use. Slip op. at 16. In other words, appraisers can use any method (comp sales, income cap, and replacement cost), and “[w]hile the comparable sales method is the preferred approach, the next best method is capitalization of income when no comparable sales data is available.” Slip op.at 16.

OCA filed an Amicus Brief in this case in support of the more flexible rental income approach in determining fair market value and just compensation in the Map Act cases, an approach consistent with the temporary nature of the takings.  For more information about the Map Act, the Kirby decision, and court’s valuation rulings in Chappelle, read OCA Member Robert Thomas’ blog posting at Inverse condemnation.com.

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