...trial. will be discussed in detail below, the condemnor presented the corridor as an abandoned rail right-of-way, with little value for adaptive uses. The condemnee considered its property to be valuable regional transportation resource in a congested, urbanized hub of major development. The gatekeeper of valuation theories at a trial is the judge; the ultimate arbiter of proof is the jury.

CREs represent a treasure trove of experience to parties engaged in major condemnation disputes. In addition to a sophisticated land planner, the condemnee here engaged three CREs: one was the co-author of one of the methodologies for corridor valuation featured in the literature; another was experienced in the adaptive reuse of underutilized urban rail corridors; and the third, a veteran appraiser, was charged with synthesizing theory and practice to arrive at a coherent approach to the appraisal problem.

A jury trial is different from a bench trial in that the proof must persuade twelve jurors, representing a cross-section of the community. Each juror comes to the case with different histories, different viewpoints and different preconceptions. Lawyers and witnesses must be aware that nothing can be taken for granted. We are reminded of the motto of the Stoic philosophy: admirari nihil--be surprised at nothing.

BACKGROUND

As urban land becomes more and more developed and traffic more and more congested, public agencies have taken a second look at acquiring underutilized rail corridors to solve critical transportation problems. Adaptive reuse of these corridors presents opportunities for solutions to congestion in urban areas throughout the nation.

Fundamentally, however, the value of corridors is intrinsic to their attributes, and what is said of land in general, quoting Will Rogers, "they're not making any more of it," can be said of corridors. But the truth is that they (i.e., condemnors) are making more corridors, but the costs of assemblage and other obstacles are formidable. So that when a ready-made corridor is available, a transportation agency may jump at the chance to make the acquisition, using the power of Eminent Domain if necessary. Reported cases demonstrate, however, that condemnors continue to try to acquire corridors on the cheap. Fortunately, courts in the few reported cases have been willing to require just compensation and permit valuation methods designed to address intrinsic value. In the few cases reported, juries have returned impressive verdicts.

The valuation of corridors in Eminent Domain raises challenging questions of appraisal methodology. Two approaches seem to have taken hold in the literature: the across-the-fence plus enhancement factor method ("ATF Method") and the replacement cost method. The direct sales comparison approach has limited utility, primarily because corridors, properly viewed, are special purpose properties, meaning that comparable sales are difficult, if not impossible, to find.

A recent Pennsylvania case illustrates the challenge of valuing a corridor in an Eminent Domain trial in a state largely without caselaw guidance in valuation methodologies. The trial represented an opportunity to test the competing approaches in the real world in real time. (1)

THE CHESTER VALLEY BRANCH

The Chester Valley Branch (the "Corridor"), a railroad right-of-way assembled in the 1850s, served Pennsylvania's Lancaster, Chester and Montgomery Counties in moving farm products to Philadelphia. After World War II its use declined as the construction of major highways and suburban development stimulated motor freight and automobile traffic. The Corridor lying parallel to heavily traveled Route 202, remained an important but underutilized physical link between the edge city hub of King of Prussia and major office, commercial and residential development to the west in the area known as Great Valley.

In the 1980s, as part of a corporate restructuring, Conrail was getting rid of rail lines as fast as it could under federal legislation that expedited the abandonment process, the Northeast Railroad Services Act of 1981. Abandonment of the Corridor would come with a price: title would revert to underlying owners and Conrail would have to dismantle four bridges and bridge structures, and remove nine street and other grade crossings and restore the underlying properties. In PECO Energy, however, Conrail found a captive buyer. PECO, a public utility providing electricity to the region, needed to assure the continuity of occasional freight service to move huge transformers to its Upper Merion substation. Management had in mind not only this service, but also the possibility of owning a resource for fiber optic cable, power lines and other uses.

PECO and Conrail negotiated a deal. PECO would pay $600,000 for a quit-claim deed and accept the risk that title would dissolve upon conveyance from Conrail, a railroad company, to PECO a non-rail company. The consideration included not only the cash payment, but also a non-cash price, which included an indemnity against damages, costs and liabilities that might arise from the ultimate abandonment of the right-of-way, including the removal costs of the bridges and overpasses and restoration of streets and other lands. Had Conrail had not decided to get out of the freight business in the area as part of its business plan, it would never have sold the line to PECO. In any event, PECO's acquisition preserved the Corridor as a transportation resource for the region.

Following the 1986 quit-claim, an owner of an underlying fee interest challenged PECO's title, claiming (not surprisingly) that the transfer of the railroad right-of-way to a non-railroad company worked an abandonment of rail use and consequently revested title in underlying fee owners. The trial court sustained the challenge. On appeal, the Superior Court reversed the trial court and upheld PECO's position that there was no abandonment as a matter of law....

NOTE: All illustrations and photos have been removed from this article.



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