Hardy v. United States

In the United States Court of Federal Claims

No. 14-388L

(Filed: December 14, 2018)

*************************************

WILLIAM C. HARDY & BERTIE ANN *

HARDY et al., *

* Rails-to-Trails; Valuation Trial; Yellow

Plaintiffs, * Book; Value of Property Rights Remaining

* in the Servient Estate; Special Benefit;

v. * General Benefit; Severance Damages;

* Verification; Comparable Sales;

THE UNITED STATES, * Adjustments

*

Defendant. *

*************************************

Elizabeth A. Gepford McCulley and Thomas S. Stewart, Kansas City, MO, for plaintiffs.

Amarveer Brar, United States Department of Justice, Washington, DC, for defendant.

OPINION AND ORDER

SWEENEY, Chief Judge

In this Rails-to-Trails action, plaintiffs own real property adjacent to a rail corridor in

Newton County, Georgia. Until 2013, the Central of Georgia Railroad Company and its

predecessors held easements for railroad purposes that crossed their land. Defendant United

States then authorized the conversion of the railroad rights-of-way into recreational trails

pursuant to the National Trail Systems Act, conduct that resulted in a taking in violation of the

Just Compensation Clause of the Fifth Amendment to the United States Constitution. At issue is

the amount of compensation owed to plaintiffs for the taking. As explained below, the court

awards damages to plaintiffs in an amount to be determined in accordance with the court’s

findings and conclusions.

I. FACTS ....................................................................................................................................... 3

A. Status of the Trail........................................................................................................... 4

B. Plaintiffs’ Property Interests as of the Date of the Taking......................................... 5

C. Size of the Land Taken .................................................................................................. 5

D. Impact of the Trail on Landowners ............................................................................. 6

E. Highest and Best Use .................................................................................................... 10

II. STANDARDS FOR DECISION .......................................................................................... 11

A. Legal Standards ........................................................................................................... 11

B. Appraisal Standards .................................................................................................... 12

III. THE EXPERTS ................................................................................................................... 14

IV. PROPERTY RIGHTS REMAINING IN BURDENED LAND ...................................... 15

A. Defendant’s Position .................................................................................................... 15

B. Plaintiffs’ Position ........................................................................................................ 17

C. Analysis ......................................................................................................................... 18

V. BENEFITS AND DAMAGES TO THE REMAINDER ................................................... 21

A. Defendant’s Position .................................................................................................... 21

1. Sales Along Other Trails in Newton County ..................................................... 22

2. Sales Along the Subject Trail .............................................................................. 23

3. Impact of the Trail ............................................................................................... 24

4. Data From Trails Outside of Newton County ................................................... 25

5. Mr. Sheppard’s Conclusion Regarding Special Benefits ................................. 25

B. Plaintiffs’ Position ........................................................................................................ 26

1. Trail Proximity Damage Studies ........................................................................ 26

2. Cost to Cure .......................................................................................................... 31

C. Analysis ......................................................................................................................... 32

VI. COMPARABLE SALES AND ADJUSTMENTS ............................................................ 38

A. Points of Error.............................................................................................................. 39

1. Verification ........................................................................................................... 39

2. Report Format and Supporting Data ................................................................. 42

3. Math Errors .......................................................................................................... 45

B. Small Residential Parcels ............................................................................................ 47

C. Drapac’s Parcels........................................................................................................... 53

D. Large Residential Parcels ............................................................................................ 60

E. Agricultural/Timber Parcels ....................................................................................... 65

F. Commercial Parcels ..................................................................................................... 69

G. Industrial Parcels ......................................................................................................... 74

H. Temporarily Taken Parcels ........................................................................................ 77

VII. CONCLUSION .................................................................................................................. 81

-2-

I. FACTS

Detailed descriptions of the statutory and regulatory context of this case, initial

acquisition of the land in question, and proceedings before the Surface Transportation Board are

provided in the court’s summary judgment ruling on the issue of liability and need not be

repeated herein.1 See Hardy v. United States, 127 Fed. Cl. 1, 5-7 (2016). In that ruling, the court

determined that the Surface Transportation Board’s issuance of a Notice of Interim Trail Use or

Abandonment (“NITU”) on August 19, 2013, constituted a taking with respect to property

owners holding a cognizable Fifth Amendment property interest. Id. at 21-22. It further

determined which plaintiffs held such an interest. Id. at 10-21. The court later reconsidered its

ruling with respect to certain parcels, finding that additional plaintiffs held a cognizable Fifth

Amendment property interest as of the date of taking. Hardy v. United States, 129 Fed. Cl. 513,

518 (2016); see also Jt. Stip. 1 (discussing the parties’ stipulation regarding ownership).

On November 18, 2016, the Surface Transportation Board issued a public notice of

correction of the NITU, modifying the NITU’s description of the location of the eastern terminus

of the portion of the rail line covered by the NITU—a modification that affected eleven plaintiffs

owning twelve parcels. Hardy v. United States, 131 Fed. Cl. 534, 536-37 (2017); see also Cent.

of Ga. R.R. Co.—Abandonment Exemption—in Newton Cty., Ga., No. AB 290 (Sub-No. 343X),

2016 WL 6839539 (S.T.B. Nov. 18, 2016). The court determined that the NITU’s modification

impacted the duration of the taking, not whether a taking had occurred, and that the plaintiffs

affected by the NITU’s modification suffered a temporary taking from August 19, 2013, to

November 18, 2016. Hardy, 131 Fed. Cl. at 539-40.

The court then held an eight-day trial in Atlanta, Georgia from September 25 through

October 4, 2017, to ascertain the value of the property interests that were found to have been

taken. Six landowners, as well as experts for both sides, testified during the trial. During

posttrial briefing, the parties filed cross-motions for partial summary judgment as to the

appropriate interest rate necessary to provide just compensation. On June 21, 2018, the court

determined that “[p]laintiffs are entitled to delay damages between the date of taking and the

date of payment at an interest rate equivalent to the [Moody’s Composite Index of Yields on Aaa

Long Term Corporate Bonds (“Moody’s”)] rate, compounded quarterly.”2 Hardy v. United

States, 138 Fed. Cl. 344, 357 (2018). After posttrial briefing concluded, the court heard closing

arguments on August 16, 2018.

1

This section contains the court’s findings of fact as required by Rule 52(a)(1) of the

Rules of the United States Court of Federal Claims. The court derives these facts from the

parties’ Joint Stipulation of Facts (“Jt. Stip.”); the transcript of testimony elicited at trial (“Tr.”);

the exhibits admitted into evidence during trial (“PX” or “DX”); relevant statutes, regulations,

and prior decisions; and matters of which the court may take judicial notice pursuant to Rule 201

of the Federal Rules of Evidence. Citations to the trial transcript will be to the page number of

the transcript and the last name of the testifying witness.

2

The Moody’s rate for August 19, 2013, was 4.71%. Federal Reserve Economic Data,

Moody’s Seasoned Aaa Corporate Bond Yield, Federal Reserve Bank of St. Louis,

https://fred.stlouisfed.org/series/DAAA/ (last visited Dec. 14, 2018).

-3-

A. Status of the Trail

Newton County is a suburban/rural community in north central Georgia. PX 220 at 9;

DX 416 at 45. It comprises 279 square miles of land and had 105,473 residents in 2015. PX 220

at 9. The county seat, Covington, is a half-hour drive east from Atlanta, and thus serves as a

“convenient commuting bedroom community” for Covington’s 13,916 residents.3 Id. at 9-10.

The trail at issue extends approximately 14.9 miles from its eastern terminus near Newborn to its

western terminus in Covington. Id. at 9. On September 28, 2016, the Central and Georgia

Railway Company and the Newton County Trail-Path Foundation, Inc. (“Newton Trails”)

notified the Surface Transportation Board that they had executed a lease agreement for interim

trail use and railbanking. Cent. of Ga. R.R. Co., 2016 WL 6839539, at *1. At the time of trial,

the hiking and biking trail included three impassible trestle bridges, DX 416 at 41, and its

construction was not complete,4 Tr. 88, 113 (Greer); PX 138 at 1-2; PX 186 at 1.

First, access to the subject trail is constrained by the lack of

trailheads (save Beaver Park, located between Manchester and

Newborn), such that owners abutting the trail and subdivisions

where community-specific access points were added are generally

the only users that do not have to trespass to access the trail. . . .

Second, closed bridges effectively divide the subject trail

into relatively short segments that are less conducive for users

wanting longer stretches of trail . . . . Funding required to repair

the bridges and open up larger segments of the subject trail appears

to be a significant obstacle . . . . [I]t is highly unlikely that the trail

will be more than 1.5± miles to 2.5± miles in length during the

foreseeable future.

DX 416 at 170. Notwithstanding the lack of trailheads, “[t]he segment of trail between

downtown Covington and the Alcovy River bridge is accessible by several street crossings.” Id.

at 173.

3

Census figures indicate that the population of Covington was 13,116 in 2010. PX 220

at 10. The 13,916 figure reflects an extrapolation of the 6.1% growth in Covington’s population

from 2010 to 2015. See id.

4

The court recognizes that the current status of the trail is not relevant to valuation, see

infra Section II.B, but provides the information in this section for background purposes. See also

Tr. 1842 (Sheppard) (indicating that information regarding the status of the trail was included to

“bring the user of the appraisal to a point of understanding” the work performed).

-4-

B. Plaintiffs’ Property Interests as of the Date of the Taking

The parties stipulate that all but one of the plaintiffs held a cognizable Fifth Amendment

property interest in one or more parcels adjacent to the former rail corridor as of August 19,

2013. Jt. Stip. Ex. A. The parties disputed whether an additional plaintiff, James Jackson,

owned the parcel identified as claim 106 as of the date of the taking. Id. at 15; Tr. 684

(Matthews). Although no deed conveying the property to Mr. Jackson could be located, an

appraisal report reflects that he held “[t]itle to the subject property” as of August 19, 2013, and

for at least ten years prior. DX 410 at 8. The appraisal report further reflects that Mr. Jackson

purchased the relevant parcel from its prior owner in the 1970s and a lot survey was performed

for Mr. Jackson in 1990. Id. at 9-10. Thus, Mr. Jackson held a cognizable Fifth Amendment

property interest in a parcel adjacent to the former rail corridor as of August 19, 2013.

C. Size of the Land Taken

The parties stipulate to the portion of each parcel situated within the former rail

corridor—i.e., the size of the taking—for the majority of the plaintiffs. Jt. Stip. Ex. A (listing the

stipulated measurements, where applicable, for all parcels); see also PX 112 (maps of all parcels

and the former railroad corridor).

One of these stipulations—with respect to the area of the claims 21.A through 21.BB, all

owned by Drapac Group 28 LLC (“Drapac”)—contains an error. The parties’ joint stipulation

indicates that the aggregate land taken with respect to the Drapac parcels is 2,058 feet long and

25 feet wide, for a total area of 51,450 square feet, i.e., 1.181 acres. Jt. Stip. Ex. A at 4.

However, these figures conflict with the information for the individual Drapac parcels that is

contained within the joint stipulation. That information reflects that the width of the taking is 25

feet for all parcels and that the length of the taking varies from 33 feet to 130 feet, summing to

2,167 feet. See id. at 2-4. At 2,167 feet long and 25 feet wide, the total area taken is 54,175

square feet, i.e., 1.244 acres. Indeed, the experts for both parties used this latter figure in their

calculations, rather than 51,450 square feet. PX 220 at 21-24 (reflecting an area of “54,175 SF

or 1.244 acres”); DX 320 at 4 (noting that “[t]he subject has 54,174± SF of land area being

acquired”5), 18-44 (individual parcel maps reflecting lengths that match those listed in the joint

stipulation).

The parties dispute the size of the taking for the following claims: 17, 26.A, 26.B, 69.A,

69.B, 70, 86, and 95. Jt. Stip. Ex. A; Tr. 521 (Matthews). In support of its position, defendant

offers the areas supplied by its expert, who did not perform his own measurements but merely

relied on the numbers provided by defense counsel.6 DX 316 at 9 (claim 17); DX 325 at 10

5

The difference of one square foot has no significance in the instant case.

6

During trial, defendant’s expert stated that he reviewed, for accuracy, all of the

measurements that were provided to him. Tr. 1016 (Sheppard). Further, in his expert report, he

describes having made adjustments to maps that reflected area adjustments. DX 416 at 34.

However, these remarks were relevant to the trail as a whole—not for individual properties along

the trail. None of his individual reports regarding the parcels for which the area of taking was

-5-

(claims 26.A and 26.B); DX 369 at 10 (claims 69.A and 69.B); DX 370 at 9 (claim 70); DX 391

at 9-10 (claim 86); DX 402 at 11 (claim 95). In contrast, plaintiffs offer the areas supplied by

their expert, who performed his own measurements and calculations. Tr. 520-22 (Matthews); PX

220 at 546 (claim 17), 556 (claim 26.A), 557 (claim 26.B), 606 (claim 69.A), 607 (claim 69.B),

608 (claim 70), 583 (claim 86), 617 (claim 95). The actual measurements and calculations of

plaintiffs’ expert are more credible. Thus, the sizes of the land taken at issue are as follows:

Square

Claim Acres7

Footage

17 6,425 0.147

26.A 5,850 0.134

26.B 6,550 0.150

69.A 8,800 0.202

69.B8 161,100 3.698

70 14,350 0.329

86 16,275 0.374

95 35,850 0.823

D. Impact of the Trail on Landowners

Six plaintiffs testified credibly regarding their concerns pertaining to the trail. Written

comments from all plaintiffs regarding the trail were also admitted into evidence. Plaintiffs

generally expressed concerns related to privacy, safety, crime, law enforcement response times,

trespassers, trash, farm animals being disturbed by trail users, and the trail negatively impacting

the value of the their property.

Fred Greer owns a 250-acre farm near Mansfield that has been in his family for six

generations.9 Tr. 56 (Greer). His farm is bisected by the trail, and includes barns and other

not stipulated provides any indication that he made any adjustments to the measurements that

were provided by defense counsel.

7

One acre equals 43,560 square feet. Acre, Black’s Law Dictionary (10th ed. 2014); Tr.

397 (Matthews); see also U.S. Customary System of Weights and Measures: Commercial

Weights and Measures Units, 33 Fed. Reg. 10,755, 10,755 (July 27, 1968) (listing “common

weights and measures used in normal commerce throughout the United States”). The acreage

based on the square footage is rounded to the nearest thousandth (i.e., three decimal places).

8

The parties’ disagreement with respect to claim 69.B amounts to a rounding dispute.

Compare PX 69.D at 2 (reflecting an area equal to 161,100 square feet, i.e., 3,222 feet long and

50 feet wide), and PX 220 at 607 (same), with DX 369 at 10 (reflecting an area equal to 161,087

square feet, i.e., 3,221.73 feet long and 50 feet wide).

9

Mansfield is near Newborn, both of which are located in the southeastern portion of

Newton County. PX 220 at 9; DX 416 at 51.

-6-

structures near the trail itself.10 Id. at 61, 75; PX 77.B; PX 77.C at 2; DX 376 at 11-12; DX 377

at 11-12; DX 379 at 10; DX 380 at 13. He described having items stolen from his barn, Tr. 66

(Greer), trespassers on his property, id. at 88, cattle being disturbed by trail users, id. at 72, a

“substantial” increase in trash along the trail, id. at 76, and feeling that safety will be impacted

once trail construction is complete, id. at 88.

Jack Morgan owns a 32-acre residential property that is bisected by the trail on its

southern side. Id. at 118, 142, 148-49, 155 (Morgan); PX 68.E.1; DX 368 at 10. His home is

located approximately 600 feet from the trail, at the end of a half-mile private drive accessible

via a cul-de-sac. Tr. 119-20, 141 (Morgan); PX 68.E.1. His property includes a pond and other

structures. Tr. 120-21, 141 (Morgan); PX 68.E.1. Mr. Morgan also owns Morgan Plaza, which

is commercial property within the Covington city limits. Tr. 117-18 (Morgan). Along with other

neighbors, he formed a group opposed to recreational trails in Newton County. Id. at 130-32.

His primary concern with the trail is that it “opens up a right-of-way” through his property giving

users “blind access,” whereas people did not use the corridor when the railroad was running. Id.

at 121-22. He remarked that “interlopers” can determine whether he is home and then access his

barn. Id. at 128. Mr. Morgan explained that has to be “on guard more so now than ever before”

due to the ability of the public to use the trail, despite barriers that are in place surrounding a

trestle bridge just to the south of his property. Id. at 128, 150. In June 2017, for example, a cell

phone belonging to a registered sex offender was found near the pond. Id. at 123-26; PX 232. In

addition, although the trail “is not supposed to be used for vehicle traffic,” he occasionally hears

all-terrain vehicles on the trail. Tr. 122-23, 151 (Morgan).

Jeremiah Frazier lives in a small Covington subdivision on approximately one-third of an

acre at the end of a cul-de-sac. PX 37.C; PX 37.D; DX 337 at 10. The trail corridor is located at

the back of his property adjacent to a street that is not safe to walk along. Tr. 170-71 (Frazier);

PX 37.C; DX 337 at 10. He and his wife purchased their property in December 2006 to be closer

to family members, and two adult children still live at home. Tr. 158, 165 (Frazier); PX 37.B.

Mr. Frazier’s primary concerns are privacy and safety because he spends “quite a bit of [his]

time” in the backyard. Tr. 165-68 (Frazier). Although his backyard is enclosed by a fence that is

“somewhere between six and seven feet tall,” trail users can see into the backyard and in his

windows due to the elevation of the trail and lack of foliage immediately off the ground, and he

can hear whenever people are using the trail. Id. at 166-68, 172; accord PX 37.E.3, 37.E.4,

37.E.5. Mr. Frazier noted that, at night, someone on the trail can see into his home if the lights

are on, but he would not be able to see outside since the trail is not lit. Tr. 167 (Frazier); PX 155

at 1. Mr. Frazier also described increased trash and trespassing, and explained that he recently

installed a security system, because of the presence of the trail.11 Tr. 168-70 (Frazier). He stated

that the trail “absolutely” impacted his property values because a potential buyer “would have

the same concerns.” Id. at 171-72.

10

Mr. Greer’s farm comprises several contiguous parcels, not all of which are adjacent

to the trail corridor. See, e.g., PX 220 at 21.

11

Mr. Frazier also referenced a break-in, but acknowledged that the perpetrators did not

access his property via the trail. Tr. 170, 179 (Frazier).

-7-

Jim Anderson’s family owns approximately 170 acres of farmland that has been in his

family since the nineteenth century.12 Id. at 196, 208 (Anderson); PX 59.C; DX 358 at 8. The

property, which abuts a river, includes a small home, two barns, and a Native American

campground. Tr. 196-97 (Anderson); PX 59.B. Mr. Anderson raises cattle on the property,

which is approximately 80% open and 20% wooded. Tr. 195-96, 200 (Anderson). The property

is bisected by 5,087 feet of the trail on its western side, and another 467 feet of the trail abuts the

property’s southern edge. PX 59.C at 1; DX 358 at 9-10. There are two private crossings on the

property approximately 1,500 feet apart over the former rail corridor that were previously

maintained by the railroad, and a trestle bridge on the trail where it crosses the river just

northwest of the property. Tr. 199-200, 211 (Anderson). Mr. Anderson, like Mr. Morgan,

shared his concerns regarding the trail with his neighbors, and prefers to simply have his land

back instead of having a trail sever the property. Id. at 205. He described the loss of privacy due

to the public trail as “hurt[ing] the value of the property.” Id. at 206. Specifically, he listed

“gross trespassing,” “illegal hunting and poaching,” “unabated littering,” and “vandalism” as

concerns associated with “unauthorized persons . . . access[ing] a property.” Id. at 200. Mr.

Anderson recounted how people “began cruising the track” after the railroad ceased regular

service. Id. at 201. Since then, he has found trash along the trail and discovered campgrounds

where squatters “set up housekeeping” on multiple occasions. Id. at 201-02, 216. He has also

had tools stolen from the barns and fences along the former rail corridor cut, causing his cattle to

get loose and roam the trail. Id. at 202-03. Mr. Anderson noted that before the rail track was

removed, theft was higher during hunting season, but now thefts occur “year round.” Id. at

215-16. He remarked that law enforcement assistance has been unhelpful due to delayed

response times. Id. at 204.

Michael Solomon lives next door to Mr. Frazier. Id. at 219 (Solomon); DX 336 at 10,

with DX 337 at 10. Similar to Mr. Frazier, Dr. Solomon’s property also comprises

approximately one-third of an acre and is located at the end of the cul-de-sac. Id. The trail

corridor is located at the back of his property, separated by a fence, and is adjacent to the same

street described by Mr. Frazier as not safe to walk along. Tr. 170-71 (Frazier), 227 (Solomon);

DX 336 at 10; DX 337 at 10. Dr. Solomon explained that he and his wife moved to Covington

for “seclusion and quiet.” Tr. 226 (Solomon). He expressed concerns with needing to “enhance

security” surrounding his property, despite having had a security system in place since building

the home, because he travels abroad for business approximately 90% of the year. Id. at 226,

230-31. Dr. Solomon has, similar to Mr. Frazier, seen people on the trail, including one occasion

in 2017 when he was upstairs showering. Id. at 228-29. He has also seen “significant trash built

up on [his] property” due to the presence of the trail. PX 154 at 1.

Mark Sanders also lives in Covington. Tr. 238 (Sanders). His property is a ten-acre

single-family residential tract, with its east border abutting approximately 758 feet of the trail.

Id. at 244, 251; PX 16.B; PX 16.D; DX 315 at 8-10, 12. Mr. Sanders purchased the

five-bedroom home—a replica of an antebellum mansion—in a dilapidated state in 2012 at a

bankruptcy sale for $300,500 (the property having sold for $1.4 million in 2002) and has since

spent considerable funds on renovations. Tr. 240-41, 247 (Sanders); PX 16.B; DX 315 at 8. His

12

The record owner of the farmland is Jane Greer Anderson. PX 59.B; DX 358 at 8.

-8-

home is approximately 100 yards from the trail. Tr. 259 (Sanders). He also has a barn that is

approximately 25 yards from the trail. Id. at 248; PX 16.B; DX 315 at 11. Mr. Sanders

explained that he is concerned with people having “access to [his] property without [him] being

able to see them” since the trail is “very hidden,” although he has seen people walking the trail.

Tr. 249, 251-52 (Sanders). He remarked that he is worried about trespassing and vandalism

based on previous break-ins to his barn and the topography of his land, and averred that it would

be naïve to think that the trail would not provide a “platform” for nefarious activity. Id. at

249-54.

Other plaintiffs provided sworn declarations that were admitted into evidence in which

they shared concerns similar to those expressed by the plaintiffs who provided live testimony

during trial. For example, Luckie Jerry Ward explained:

The Trail above and well behind my home allows EXCESS water

to flow down[,] therefore[] trash left by trail users ends up in my

back yard. The trail is a huge nuisance because it is being used as

a “shooting alley” by ATVs, motorcycles, and trail bikes.

PX 172 at 1. Similarly, Michael Lassiter averred:

We have continually cleaned the area between the old

railroad track and our land ever since the [rail] line was abandoned.

We have used a swing blade since a lawn mower would certainly

be wrecked with rocks, branches jutting up from the ground[,] and

trash thrown by “trail” users. The stretch of the abandoned track

has not been prepared for a walking trail and yet we have

experienced noisy walkers, bicycles, golf carts, and speedsters in

Trailblazers, Explorers, three wheelers & motorcycles. The

abandoned track is at a level that anyone can peer into our private

backyard. The City of Covington has posted a sign stating

“Primitive Path” but people still come through.

PX 138 at 1. Mr. Lassiter noted that there has been vandalism, graffiti, and trash along the trail.

Id. at 2. He further stated that “multiple walkers and people on bicycles” cut through his

property to access the trail. Id. Several other plaintiffs have also seen people trespass on their

property to access or leave the trail. See, e.g., PX 130 at 4; PX 140 at 1; PX 163 at 1. Wayne

Blackwell, who owns a grocery store that is adjacent to the trail, has had people treat his store’s

parking lot as a trailhead, leaving fewer parking spots for his customers. PX 206 at 1. Some

plaintiffs, similar to Mr. Frazier and Dr. Solomon, observed that trail users can see into their

homes. PX 132 at 1; PX 153 at 1. For Patricia Alexander, the safety concerns due to the trail

caused her to move away, PX 173 at 4, and Maxine Romeo Smith remarked that she may, if it

becomes necessary, do so as well, PX 150 at 4. Anthony Sinyard is currently considering selling

his property because of safety concerns. PX 190 at 1.

-9-

In addition, several plaintiffs emphasized that Newton Trails does not actively maintain

the trail. See, e.g., PX 145 at 1; PX 159 at 1; PX 167 at 1; PX 193 at 1. Thomas Fulton

explained that the trail is not safe for users:

[T]here is a major concern with the trestle located on the west end

of my parcel. [Newton Trails] put up some barriers and signs

around the trestle, but they quickly were torn down. The trestle

poses a serious liability issue[] for the trail users. . . . The trestle

acts as an attractive nuisance for people.

PX 194 at 1. According to defendant’s expert, “most of the trail is inaccessible for trash

collection due to bridges that are out of service and impassible.” DX 416 at 173.

Some plaintiffs indicated that they had no concerns regarding the trail, but specified that

their lack of concern was due to the fact that the trail was not fully operational. E.g., PX 125

at 1; PX 168 at 1. Ultimately, the general sentiment was that the trail had an adverse impact on

property values. See, e.g., PX 129 at 1; PX 147 at 1; PX 165 at 2; PX 171 at 2; PX 178 at 1; PX

180 at 2; PX 187 at 1.

E. Highest and Best Use

As a final matter, each of the parcels at issue can be placed in a category that reflects its

highest and best use. The relevant categories include small residential, large residential,

agricultural/timber, commercial, and industrial. Jt. Stip. Ex. A. The parties generally do not

dispute the highest and best use of any of the land in question. Tr. 335 (Matthews), 1411

(Sheppard). There are two exceptions: claims 91.C and 91.D.

Mr. Matthews grouped claims 91.C and 91.D among the agricultural/timber parcels, and

averred that the highest and best use for each was residential. PX 220 at 634-35; PX 221.A at

10. He noted that both parcels are zoned for agricultural use, and specified that claim 91.C is

primarily wooded and that claim 91.D is used as a park for recreational purposes. Tr. 621

(Matthews); PX 220 at 634-35. Aerial maps support his assertions. See PX 112 at 24.

Meanwhile, Mr. Sheppard grouped claim 91.CD (combined) among the industrial

parcels. DX 397 at 15. He observed that although the current zoning was “for agricultural use as

of the effective date . . . , future land use maps indicate a probable change to commercial or

industrial use.” Id. He remarked that “the subject site is of sufficient size, per current and

retrospective zoning regulations, to support agricultural, commercial, or industrial use” and that

“[i]t is logical that the subject site would be developed in an industrial capacity,” and concluded

that the highest and best use for claim 91.CD was industrial. Id.

Mr. Matthews is correct. “To be a property’s highest and best use, the use must be

(1) physically possible; (2) legally permissible; [and] (3) financially feasible,” and “must result

in the highest value.” Interagency Land Acquisition Conference, Uniform Appraisal Standards

-10-

for Federal Land Acquisitions (“Yellow Book”) 23 (6th ed. 2016).13 Industrial use is not legally

permissible for claims 91.C and 91.D because those parcels are zoned for agricultural use. Of

course, rezoning can factor into the highest-and-best-use analysis. However, “[f]or any highest

and best use that will require a property to be rezoned, the probability of that rezoning must be

thoroughly investigated and analyzed.” Id. (emphasis added); accord Bd. of Cty. Supervisors of

Prince William Cty. v. United States, 276 F.3d 1359, 1365 (Fed. Cir. 2002) (“[A] proposed ‘use’

requires a showing of reasonable probability that, at the time of the taking, the land was both

physically adaptable for such use and that there was a need or demand for such use in the

reasonably near future.”). Mr. Sheppard failed to demonstrate that he thoroughly investigated

and analyzed the potential for claims 91.C and 91.D to be rezoned. He simply alluded to future

land use maps in stating that it was “logical” that the land would be developed for industrial use.

Although he indicated that it was “probable” that the land use would change, his report lacks any

analysis of the magnitude of such probability (including, for example, whether there was any

demand for industrial use). Further, claim 91.D is currently exempt from property taxes because

the land is developed as a park. DX 397 at 14. Its current use as a park is drastically different

from industrial use, thus further demonstrating the need for a thorough discussion of the

likelihood that such use would change.

In short, the highest and best use for claims 91.C and 91.D is residential, and they are

properly classified as agricultural/timber parcels.

II. STANDARDS FOR DECISION

A. Legal Standards

The Fifth Amendment to the United States Constitution prohibits the federal government

from taking private property for public use without paying just compensation. As relevant here,

the Surface Transportation Board’s issuance of a NITU effected a taking by preventing plaintiffs

from enjoying possession of their property unencumbered by a railroad easement. Hardy, 127

Fed. Cl. at 7, 21-22 (citing Ladd v. United States, 630 F.3d 1015, 1019, 1024 (Fed. Cir. 2010);

Barclay v. United States, 443 F.3d 1368, 1374, 1378 (Fed. Cir. 2006); Caldwell v. United States,

391 F.3d 1226, 1233-34 (Fed. Cir. 2004)). It is well settled that just compensation is measured

by the fair market value of the property taken. Bauman v. Ross, 167 U.S. 548, 574 (1897).

“Under this standard, the owner is entitled to receive what a willing buyer would pay in cash to a

willing seller at the time of the taking.” Kirby Forest Indus., Inc. v. United States, 467 U.S. 1, 10

(1984) (internal quotation marks omitted).

In Rails-to-Trails cases, the “measure of damages for just compensation must be the

difference between the value of plaintiffs’ land unencumbered by a railroad easement and the

value of plaintiffs’ land encumbered by a perpetual trail use easement subject to possible

reactivation as a railroad.” Raulerson v. United States, 99 Fed. Cl. 9, 12 (2011). However,

courts have consistently found that such possible reactivation (i.e., “railbanking”) is not a

“relevant consideration of analysis” in Rails-to-Trails cases because the possibility is so remote.

13

Plaintiffs’ exhibit 124 is a complete copy of the 2016 version of the Yellow Book.

-11-

Ingram v. United States, 105 Fed. Cl. 518, 540-41 (2012) (collecting cases describing

railbanking as “hypothetical,” a “vague notion,” “unlikely,” “speculative,” and “unrealistic”);

accord Howard v. United States, 106 Fed. Cl. 343, 367 (2012) (“[T]here is no real prospect that

the property owners will ever again have unencumbered use of their property.”).

B. Appraisal Standards

Having concluded that plaintiffs are owed just compensation, the court must determine

the value of the property interests taken from them. The approach that government appraisers

are to follow in opining on the value of land taken by the federal government is found in the

Yellow Book.14 Yellow Book 3. Specifically,

[a]ppraisers must exercise sound judgment based on known

pertinent facts and circumstances, and it is their responsibility to

obtain knowledge of all pertinent facts and circumstances that can

be acquired with diligent inquiry and search. They must then

weigh and consider the relevant facts, exercise sound judgment,

and develop an opinion that is completely unbiased by any

consideration favoring either the landowner or the government.

. . . [I]t is inappropriate for an appraiser to “give the benefit of the

doubt” to either a landowner or the United States.

Id. at 204.

Acquisitions in Rails-to-Trails cases are “partial acquisitions”—i.e., those in which the

federal government “acquires only part of a larger parcel.” Id. at 111. In partial acquisitions,

“compensation is measured by the difference between the market value of the larger parcel

before the government’s acquisition and the market value of the remainder after the

government’s acquisition.” Id. This approach is known as the “before and after method of

valuation,” id. at 151, and is the “conventional method of valuation” used in Rails-to-Trails

cases,15 Rasmuson v. United States, 807 F.3d 1343, 1345 (Fed. Cir. 2015) (internal quotation

marks omitted); accord Yellow Book 199. Appraisals utilizing the before-and-after method of

valuation “must analyze and reflect all compensable damages and direct (special) benefits to the

value of the remainder property due to the government’s acquisition and disregard all

non-compensable damages and indirect (general) benefits . . . in accordance with federal law.”

Yellow Book 151. In the “after” condition, appraisers are to assume that the hiking and biking

trail is in place and has been constructed. Tr. 324-25 (Matthews), 1404-05, 1409-10 (Sheppard).

All claimed damages must be “supported by actual market evidence.” Yellow Book 157. When

14

The standards set forth in the Yellow Book “have guided the appraisal process in the

valuation of real estate in federal acquisitions since their original publication by the Interagency

Land Acquisition Conference in 1971.” Yellow Book 1.

The “before and after method of valuation” is often referred to as the “federal rule.”

15

Yellow Book 152.

-12-

properly applied to partial acquisitions, the before-and-after method incorporates compensable

damages and benefits. Id. at 164. The amount of compensation due to each landowner is

“measured by the owner’s loss, not the government’s gain.” Id. at 154. The same rules apply to

both permanent and temporary takings. Id. at 160.

Under the Uniform Standards of Professional Appraisal Practice (“USPAP”), there are

two written reporting options for appraisers—an “appraisal report” and a “restricted appraisal

report”—as well as the option to provide an oral report. Id. at 56. Oral reports are not permitted

under the Yellow Book. Id. Similarly, restricted appraisal reports, i.e., appraisals in which “the

intended user of the report is restricted to the client only,” are not permitted under Yellow Book

guidelines for “litigation matters” (although they may be used internally). Id. For partial

acquisitions, written appraisal reports must include an introduction; factual data, data analysis,

and conclusions regarding the “before” condition; factual data, data analysis, and conclusions

regarding the “after” condition; acquisition analysis; and exhibits and addenda. See generally id.

at 57-72. When multiple properties are acquired simultaneously, a project appraisal report (a

type of appraisal report) may be used to satisfy USPAP requirements. Id. at 56, 72-73.

A project appraisal report “include[s] the appraisal of more than one parcel in a single

report.” Id. at 73. Such reports

are not appraisal shortcuts; they are clerical shortcuts. A separate

opinion of market value must still be developed for each

acquisition[,] but the results of each valuation can be reported in a

more efficient form.

Id. Project appraisal reports that “contain opinions of value of properties owned by persons not

parties to the lawsuit and introduce a myriad of collateral issues” are “rarely conducive to

litigation purposes.”16 Id. (emphasis added). Project appraisal reports must contain the same

information as appraisal reports, organized into three major parts: (1) “introduction, factual data,

and analysis relating to all properties included in the report”; (2) “individual parcel reports”; and

(3) “addenda and exhibits relating to all properties included in the report.” Id. at 73. See

generally id. at 73-79 (discussing the required contents of project appraisal reports).

Regardless of whether a project appraisal report is used, appraisers must “report the

opinion of value of the land for its highest and best use as if vacant and available for such use.”

Id. at 65. The “sales comparison approach is the preferred valuation approach for forming an

opinion of the market value of the land.” Id.

16

In the instant case, all of the properties on which the appraisers offered opinions of

value are owned by one or more plaintiffs.

-13-

III. THE EXPERTS

In addition to the six plaintiffs who testified as fact witnesses, each party presented the

testimony of an expert appraiser. David Matthews testified as an expert appraiser on behalf of

plaintiffs. Tr. 262-63, 294 (Matthews). Prior to trial, Mr. Matthews submitted appraisal reports

for each property at issue. See generally PX 220; PX 221. Mr. Matthews averred that his work

conformed to Yellow Book standards, Tr. 317 (Matthews); PX 220 at 6, although he was not

actually required to follow the Yellow Book since he was not a government appraiser, Tr. 1866

(Matthews). Mr. Matthews has been an appraiser since 1969, received his MAI designation in

1975 and his senior residential appraiser designation in 1991, and owned and actively managed

an appraisal business from 1980 through 2017. Id. at 264, 275-77, 280; PX 217 at 24. Mr.

Matthews is also a member of the Real Estate Counseling Group of America, an invitation-only

group of approximately thirty preeminent appraisers in the United States, and served as its

president and chair from 2008 through 2011. Tr. 281-83 (Matthews); PX 217 at 24. In addition

to his other qualifications, Mr. Matthews has appraised over 500 individual properties across

thirty Rails-to-Trails cases since 2000 as either a joint appraiser, consultant, reviewer, or

plaintiffs’ expert, and has experience appraising railroad corridors dating back to 1976. Tr.

286-89, 293 (Matthews).

Andrew Sheppard testified as an expert appraiser on behalf of defendant. Tr. 992-93,

1009-10 (Sheppard). Prior to trial, Mr. Sheppard submitted appraisal reports for each property at

issue. Id. at 1010-11. See generally DX 305-416.A. Mr. Sheppard has been an appraiser since

1998, and received his MAI designation in 2007. Tr. 993, 1392 (Sheppard); DX 416 at 10. At

the time of trial, Mr. Sheppard served as president of the Atlanta-area chapter of the Appraisal

Institute.17 Tr. 995 (Sheppard); DX 416 at 10. Mr. Sheppard’s practice focuses on “atypical”

properties. Tr. 997, 1392 (Sheppard). His experience includes easement corridors, appraisal

review work, and six Yellow Book appraisals. Id. at 998-1007. However, his work in the instant

case was his first Rails-to-Trails project. Id. at 1418.

The experts’ testimony revealed three major areas of dispute: (1) identifying the property

rights available to the landowners in the “after” scenario; (2) whether there were any

compensable benefits or damages to the remainder parcel in the “after” scenario; and (3) the

comparable sales analyses performed by the experts, including the adjustments made (or lack

thereof), verification, and reporting format. See, e.g., id. at 1900 (Matthews).

17

The Appraisal Institute is the “nation’s leading appraisal education organization.” Tr.

994 (Sheppard).

-14-

IV. PROPERTY RIGHTS REMAINING IN BURDENED LAND

The first major area of dispute between the parties involves the scope of property rights

each plaintiff now holds in the land burdened by the trail easement in the “after” scenario. The

trail easement itself is the dominant estate; the land burdened by the trail easement is the servient

estate. Yellow Book 168. With respect to easement valuation, the Yellow Book provides that

the owner of the servient estate may “make any use of the realty that does not interfere with the

easement holder’s reasonable use of the easement and is not specifically excluded by the terms

of the easement.” Id. Therefore, appraisers must “carefully and precisely state what interest(s),

if any, will remain with the landowner” in the “after” scenario. Id. at 169 (emphasis added). In

other words, “the appraiser must clearly understand the specific terms of the easement involved

to analyze the burden the easement imposes on the servient estate and the resulting impact on the

value of the affected land.” Id. Mr. Matthews opined that, as a result of the taking effected by

imposition of the perpetual trail use easement, plaintiffs retained no valuable rights in the

servient estate. Tr. 329-31 (Matthews). Mr. Sheppard opined that plaintiffs retained 15%—and

conversely, lost only 85%—of their fee simple property rights. Id. at 1416, 1422-23 (Sheppard);

DX 416 at 200.

A. Defendant’s Position

Mr. Sheppard based his opinion that 85% of plaintiffs’ property rights in the servient

estate were taken primarily on what he described as the “Sherwood Matrix,” which is an

“easement valuation matrix [serving] as a general guide for the impact or allocation from fee

simple value a host of typical easement types may have on the total bundle of rights.” DX 416 at

199. The Sherwood Matrix emerged in an article titled “Easement Valuation” that was written

by Donald Sherwood and appeared in the May/June 2006 issue of the Right of Way magazine.18

Id. The Sherwood Matrix is reproduced here from Mr. Sheppard’s report:

Percentage Potential Types of

Comments

of Fee Easements

Overhead electric

Flowage easements

90% – Severe impact on surface use

Railroad ROW

100% Conveyance of future uses

Irrigation canals

Access roads

Pipelines

Major impact on surface use

75% – 89% Drainage easements

Conveyance of future uses

Flowage easements

18

Mr. Sheppard incorrectly stated during trial that Mr. Sherwood’s “Easement

Valuation” article was published in 2016. Tr. 1168 (Sheppard). The correct year of publication

is 2006, as reflected in Mr. Sheppard’s expert report. DX 416 at 199; Donald Sherwood,

SR/WA, Easement Valuation, Right of Way, May/June 2006, at 30, 33, available at

https://www.irwaonline.org/members/publications/archives-2000-2009/.

-15-

Percentage Potential Types of

Comments

of Fee Easements

Some impact on surface use

Pipelines

51% – 74% Conveyance of

Scenic easements

ingress/egress rights

Water or sewer lines

Balanced use by both owner

50% Cable line

and easement holder

Telecommunications

Location along a property

Water or sewer line

26% – 49% line, location across non

Cable lines

usable land area

Subsurface or air rights that

have minimal effect on use Air rights

11% – 25%

and utility Water or sewer line

Location with a setback

Nominal effect on use and Small subsurface

0% – 10%

utility easement

Id. Mr. Sheppard stated that “a percentage of fee-simple value for the affected easement area

ranges between 75% and 89%, considering the severity of impact of the surface’s use.” Id. at

200. Specifically, he contended that that the trail use easement was a “major” impact rather than

a “severe” or “total” impact. Tr. 1424 (Sheppard). Mr. Sheppard explained that

[t]he trail easement was not considered to be as onerous as

overhead transmission lines, access roads, or railway right-of-way,

because there is no aesthetic quality lost as a result of the trail,

vehicles are precluded from using the trail, and there is no

expectation that rail cars will use the trail.

DX 416 at 200. He further contended that the “permanent easement includes only limited

ownership rights benefitting [plaintiffs], and there is a stipulation that the trail . . . may be

converted back into an active rail line if needed.” Id. Mr. Sheppard averred that “sales

evidence” utilizing “high-percentage floodplain sales where there is little utility in the purchased

site” supports his conclusion that only 85% of property rights were taken because such examples

“illustrate how fallow or significantly unusable land is worth more than $0.” Id. In describing

the utility of floodplain land, Mr. Sheppard indicated that building thereon was generally

impractical, but owners could exclude others and use the land for parking and setback purposes.

Tr. 1428-31, 1823-24 (Sheppard).

During trial, Mr. Sheppard acknowledged that “the right to use that land [underlying the

imposed trail easement] is restricted,” but posited that abutting property owners—i.e.,

plaintiffs—retained a “right to access” the trail that nonabutting property owners did not share.

Id. at 1170; accord id. at 1421. He also explained that, in the “before” scenario where plaintiffs

are assumed to have 100% of the fee simple rights, plaintiffs could have used the land underlying

-16-

the perpetual trail easement for “whatever” purpose they desired, and provided the following

examples:

• as a factor in “density calculations” if the land was “in a more

densely populated area,” such as during the permitting process

when building an apartment complex;

• landscaping, including planting;

• setback requirements under zoning laws;

• erecting improvements;

• parking; and

• exclusion of others.

Id. at 1419-21. Mr. Sheppard then explained that, in the “after” scenario where the perpetual

trail use easement had been imposed and the trail was constructed, plaintiffs could not control

what the land was used for, but retained access rights. Id. at 1421. Specifically, he observed that

plaintiffs could not use the land for any purpose not shared by the general public—including

building, parking, landscaping, and exclusion—other than convenient access. Id. at 1170-71,

1427-28. He also assumed that, because plaintiffs technically retained “reversionary” interests in

the land underlying the trail easement in the “after” scenario, plaintiffs could potentially use the

land to meet setback requirements.19 Id. at 1826.

B. Plaintiffs’ Position

Mr. Matthews similarly considered the “value of the remaining rights in the easement.”

Id. at 329 (Matthews); accord id. at 324-25. He explained that the “value of the rights,” rather

than the “name of the rights,” was the proper focus. Id. at 327-28. Unlike Mr. Sheppard,

however, Mr. Matthews determined that there was no “remaining or residu[al] value” in the land

burdened by the perpetual trail use easement, id. at 330, because plaintiffs “lost all the rights of

use” of the land taken, id. at 325. Therefore, Mr. Matthews suggested, there was no need to

include in his reports a separate section that discussed the market value of retained rights. Id. at

877. He remarked that plaintiffs have no more rights in the land in the “after” scenario than do

members of the general public—most importantly, plaintiffs cannot exclude others from the

trail—except for more convenient access, which did not impact the land’s value. Id. at 330-31.

He observed that, in having conducted hundreds of appraisals in Rails-to-Trails cases, he has

19

Both parties use the term “reversionary interest” as shorthand for the possibility of

plaintiffs or their successors enjoying unencumbered ownership of the land in the event that the

trail easement is completely extinguished, i.e., not converted to another use upon its termination

(by abandonment or otherwise).

-17-

consistently opined that the land underlying the easement “has no value” (beyond perhaps a de

minimis amount) because the land is simply not usable. Id. at 331-32. Mr. Matthews noted that

although plaintiffs maintain “reversionary” rights, such rights were too speculative to have any

value. Id. at 974. In short, he asserts, a buyer would not be willing to pay for land that is

burdened by a perpetual trail use easement since the buyer could “get no use out of it.” Id. at

975.

C. Analysis

The court agrees with Mr. Matthews that plaintiffs retained no valuable rights in the land

underlying the perpetual trail use easement.

As an initial matter, Mr. Matthews recognized that the possibility of the trail easement

being extinguished was too remote to have any value. Id. at 974. Meanwhile, Mr. Sheppard

acknowledged that he was unaware that such a possibility was “totally speculative.” Id. at 1823

(Sheppard). Since Mr. Sheppard relied on the possibility of easement extinguishment as a

valuable right plaintiffs retain in the servient estate, his conclusion that plaintiffs retained 15% of

the value of their rights in the land burdened by the trail easement is flawed. Further, the

potential ability of plaintiffs to use the servient estate in density calculations (due to the

possibility of easement extinguishment) is similarly speculative and thus has, at best, negligible

value. The other valuable right that Mr. Sheppard relied on was more convenient access to the

trail than nonadjacent property owners. As explained below, the court is not persuaded that

typical buyers would pay a premium for abutting the trail, and agrees with Mr. Matthews that

such increased access did not increase the value of the remainder parcel or the servient estate.20

In any event, Mr. Sheppard double-counts the purported value of increased access, thus

undermining his overall approach, since his valuation opinions rely on both (1) proximity to the

trail as a special benefit to the unburdened portion of the remainder parcel and (2) special access

as a retained property right in the servient estate.21

Second, even assuming, for the sake of argument, that the Sherwood Matrix constitutes

reliable authority, Mr. Sheppard’s reliance on it is inapposite. He testified that when a typical

drainage or flowage easement is present (a “major” impact on surface use in which 75% to 89%

of property rights are taken per the Sherwood Matrix), the owner of the servient estate is

typically able to use the surface land, subject to the parameters of the easement, and that it would

be unusual for a landowner to be completely prevented from using any portion of the surface. Id.

20

The land burdened by the trail easement—i.e., the servient estate—is actually part of

the remainder parcel, but in the “after” condition it has no value.

21

That Mr. Sheppard’s overall approach is internally inconsistent is also demonstrated

by his statements that, with respect to the temporarily taken parcels, “100% of the ownership

rights for land within the subject corridor were curtailed during the temporary easement.” DX

398 at 4 (claim 91.E); DX 405 at 4 (claims 101.A and 101.B); DX 406 at 4 (claim 102); DX 407

at 4 (claims 103.A and 103.B); DX 408 at 4 (claim 104); DX 409 at 4 (claim 105); DX 410 at 4

(claim 106); DX 411 at 4 (claim 107); DX 413 at 4 (claim 109).

-18-

at 1425. He also indicated that when a power easement is present (a “severe” impact on surface

use in which 90% to 100% of property rights are taken per the Sherwood Matrix), the owner of

the servient estate is restricted from building on the land, but can generally use the land for

parking and landscaping purposes.22 Id. at 1426. Here, however, both Mr. Sheppard and Mr.

Matthews recognize that plaintiffs cannot exclude others from the trail or make any use of the

trail (such as parking and landscaping), other than increased access and perhaps setback purposes

in density calculations, beyond that which members of the general public enjoy. See, e.g., Kaiser

Aetna v. United States, 444 U.S. 164, 176 (1979) (describing the “right to exclude others” as

“one of the most essential sticks in the bundle of [property] rights”). Accordingly, the

restrictions on plaintiffs’ use of the trail easement are greater than the restrictions on owners of a

servient estate underlying a power easement.

Mr. Sheppard characterized an easement in which the owner of the servient estate could

only use the land for “a setback calculation” as a “worst-case example,” Tr. 1167-68 (Sheppard),

yet nevertheless opined that only 85% of plaintiffs’ property rights in the land underlying the

trail easement were taken. In fact, an access road easement is listed as a “severe” impact in the

Sherwood Matrix, and Mr. Sheppard remarked that in his experience with road condemnations,

he typically treats a “perpetual county road easement” as a “100 percent fee simple take.” Id. at

1432. Treating a county road easement as a 100% taking is appropriate because owners of land

underlying an access road easement have no rights to use the underlying land other than as a

member of the general public. Since plaintiffs similarly have no right to use the land burdened

by the trail use easement other than as a member of the general public, Mr. Sheppard’s analysis

should similarly have led him to treating the imposed trail use easement as a “100 percent fee

simple take.” Such testimony undermined the credibility of Mr. Sheppard’s analysis.

Further, Mr. Sheppard’s comparison of the trail use easement to floodplain land misses

the mark. He is correct that “[t]here is some value associated with rights to unproductive land.”

Id. at 1760. Unlike plaintiffs’ inability to use the land burdened by the trail easement, however,

owners of floodplain land are able to use their land for significant, valuable purposes not

available to the general public. Morgan Plaza, for instance, is located on floodplain land—a fact

that Mr. Sheppard even noted in his claim 5 appraisal. DX 308 at 9.

Defendant relies on several authorities for the proposition that imposed easements do not

effect a taking of all property rights. In particular, defendant relies on Childers v. United States

to demonstrate that other judges of this court have “rejected the argument that land burdened by

a trail easement is worthless.” Def.’s Posttrial Br. 40.

Plaintiffs are asking the Court to find that the 35-foot buffered strip

is valueless. But that is not the case. Plaintiffs still own the land

under the 35-foot buffer, and they have not demonstrated how the

buffer adversely affected the value of either the land underneath it

or the valuation of the remainder.

22

A power easement is described in the Sherwood Matrix as an “[o]verhead electric”

easement. DX 416 at 199.

-19-

Childers v. United States, 116 Fed. Cl. 486, 533 (2013), quoted in Def.’s Posttrial Br. 40. This

excerpt from Childers correctly states the law—as relevant here, that (1) the proper focus must

be on the valuation of property rights and (2) a 100% taking is only appropriate when there is no

value remaining—but defendant’s application of the excerpt to the instant case is misguided. In

Childers, a recreational trail easement was imposed on thirteen subject properties following

issuance of a NITU. 116 Fed. Cl. at 495. The court determined that the “record as a whole

establishe[d] that the Legacy Trail had a negative impact on the value of the land adjacent to the

Legacy Trail.” Id. at 512. One of the properties was subject to restrictive covenants requiring, in

part, a fifty-foot buffer between the trail and the remainder of the property. Id. at 514-15. Since

there was already a fifteen-foot setback assumed in the “before” condition, an additional

thirty-five-foot buffer was designated to comply with the restrictive covenants. Id. at 532. In

addition to the value of the land encumbered by the trail easement itself, the Childers plaintiffs

sought damages for the value of the land underlying the thirty-five-foot buffer, arguing that “the

buffered land could not be used for other purposes.” Id. The court observed that the plaintiffs

were required to show that “the taking caused a diminution in the value of the remainder” to be

compensable. Id. at 533. The court went on to explain that the plaintiffs failed to meet that

burden:

While the Legacy Trail itself caused a diminution in value to the

remainder by exposing landowners to noise, trespass, and

nuisance, Plaintiffs have not established that mitigation of this

harm in the form an additional 35-foot buffer would equate to a

diminution in value of the remainder.

Id. The court then made the statement quoted by defendant above, and remarked that the

buffered areas had independent value. Id. Thus, with respect to the statement from Childers

quoted by defendant, the court was not discussing the value of the land underlying the trail

easement itself, but was discussing the effect of a buffer beyond the impact of the trail easement.

Indeed, with respect to the trail easement itself, the Childers court used 99% diminution (based

on the parties’ agreement) of the full market value of the land burdened to calculate damages.

Id. at 532, 551. In other words, the court effectively concluded that the NITU effected a taking

of 99% of the value of the property rights in the land burdened by the trail easement. This

conclusion stands in stark contrast to defendant’s position.

Defendant’s position is further undermined by other precedent in Rails-to-Trails cases.

In Howard, for example, another judge of this court considered, among other issues, the extent of

property rights remaining in the servient estate after a perpetual trail use easement was imposed.

106 Fed. Cl. at 366-68. Although Howard was decided under Indiana law, and the property

rights at issue in the instant case are governed by Georgia law, the salient issue with respect to

the remaining property rights in both cases is the same: neither interim trail use nor railbanking

is considered a “railroad purpose.” Id. at 367. Indeed, the Howard court emphasized that the

land burdened by the trail easement “would appear to be lost to [plaintiffs] for all intents and

purposes in perpetuity.” Id.

-20-

In the instant case, the court similarly concludes that plaintiffs have no remaining use of

the land burdened by the trail easement that is not available to the general public. While

defendant is correct that the determination of remaining property rights is a question of law,

defendant fails to recognize that determining the value of those rights is a question of fact.

Although plaintiffs may indeed have nominal property rights in the burdened land, those rights

have no pecuniary value and thus cannot impact the just compensation analysis.

V. BENEFITS AND DAMAGES TO THE REMAINDER

The next area in which the parties disagree concerns the benefits and damages to the

remainder parcels. As noted above, the Yellow Book provides that just compensation for each

plaintiff must be set off by any special benefits to the remainder parcel (i.e., the “after” condition

in which plaintiffs’ land is subject to a perpetual trail use agreement), whereas general benefits

do not offset the compensation due. See Yellow Book 162-63. A special benefit is present when

the “remainder property ‘is specially and directly increased in value by the public

improvement.’” Id. at 162 (quoting Bauman, 167 U.S. at 574). General benefits “are those

‘which result to the public as a whole.’” Id. at 163 (quoting Bauman, 167 U.S. at 581); accord

id. (describing a general benefit as a “general increase in the value of property in the

neighborhood” (quoting Bauman, 167 U.S. at 580)). Just compensation must also include, in

addition to the value of the property actually taken, severance damages, which “compensate for

the diminution in value in the owner’s remaining property resulting from the taking.” Boyer v.

United States, 135 Fed. Cl. 121, 127 (2017). As noted above, special benefits and severance

damages, if any, are taken into account by proper application of the before-and-after rule.

Yellow Book 155, 164.

Plaintiffs argue that small, single-family residential lots in Covington lose one-third of

their land value due to the presence of a hiking and biking trail abutting the rear property line.

Tr. 588 (Matthews); PX 220 at 15. Plaintiffs also argue that the severance damages for other

property types can be measured by the cost of erecting a fence. Tr. 588 (Matthews); PX 220 at

15-16. On the other hand, defendant suggests that

there is a premium of $5,000/lot coinciding with suburban

residential lots along the subject trail and $0 for rural residential

lots, but no discount. Further, there appears to be no premium or

discount accruing to any commercial, industrial, agricultural, rural

lot, or larger tracts of land along the subject corridor.

DX 416 at 169; accord Tr. 1115-17 (Sheppard).

A. Defendant’s Position

Specifically, defendant posits that even assuming that the trail provides a general benefit

to the surrounding community, such a general benefit “does not somehow negate direct and

special benefits experienced by properties directly adjoining the trail.” Def.’s Posttrial Br. 29;

accord Tr. 1451 (Sheppard). Defendant also emphasizes that special benefits can be the same “to

-21-

‘each and every lot of land upon the same street’ where the same advantages ‘are direct and

special to each lot.’” Def.’s Posttrial Br. 29 (quoting United States v. River Rouge Improvement

Co., 269 U.S. 411, 416 (1926)). Mr. Sheppard explained that he analyzed property sales to

determine whether there was any evidence of damages or premiums based on the presence of a

trail. Tr. 1093 (Sheppard). He separately examined “commercially oriented” sales, “industrial-

oriented sales,” and “suburban residential sales.” Id. at 1093-94.

1. Sales Along Other Trails in Newton County

Mr. Sheppard examined sales abutting trails in Newton County other than the subject

trail: the 0.5-mile Yellow River Trail, the 1.2-mile Oxford College Trail, and the 2.4-mile

Eastside Trail (which is located less than a mile east of the trail at issue). Id. at 1119; DX 416 at

159-60. The only available sales along these trails were “residential-oriented.” DX 416 at 160.

Mr. Sheppard noted three large-acre sales along the Eastside Trail to owners who planned to sell

off subdivided portions of their tracts. Id. He also noted that an access path was added to the

Highgrove subdivision, which is located along Fernhill Court and Westwood Drive, to connect

the subdivision to the Eastside Trail. Id. Mr. Sheppard discussed the following sales along the

Eastside Trail:

• 40 Fernhill Court, built in 2016 at 1,622 square feet with three

bedrooms and two bathrooms, is located approximately 25 feet

from the trail (separated by county-owned land), and sold on

December 16, 2016, for $146,600. Id.

• 30 Fernhill Court, built in 2016 at 1,690 square feet with three

bedrooms and two bathrooms, is located ten feet from the trail

(separated by privately-owned land), and sold on December 19,

2016, for $157,500. Id.

• 20 Fernhill Court, built in 2016 at 1,622 square feet with three

bedrooms and two bathrooms, is located “a similar distance

from the trail” as 40 Fernhill Court, and sold on December 30,

2016, for $146,900. Id. at 161.

• 10 Fernhill Court, built in 2016 at 1,690 square feet with three

bedrooms and two bathrooms, is located approximately 75 feet

from the trail but adjacent to the access path, and sold on

December 20, 2016, for $146,000. Id. In addition, this

property “includes a ‘corner’ lot along a curve.” Id.

Mr. Sheppard observed that a $10,900 premium was paid for 30 Fernhill Court relative to the

adjacent 40 Fernhill Court. Of that premium, he allocated $5,100 to the “bricks and sticks” by

assuming $75 per square foot in construction costs according to the Marshall & Swift index, a

“national costing service that every appraiser uses,” and the remaining $5,800 to the lot itself.

Tr. 1102-04 (Sheppard); accord DX 416 at 160-61. Mr. Sheppard made no references to the lot

-22-

sizes of any of the Fernhill Court properties in his expert report, but during trial he testified that

if the “only difference is location” of the land, assuming the same lot size, then the $5,800

difference could be attributed to being closer to the trail. Tr. 1102 (Sheppard). He averred that

30 Fernhill Court “effectively abutt[s] the trail” because, despite the ten-foot buffer owned by a

third party, it is “pragmatically three or four steps” away, and “[u]nless signage was posted or

surveys were examined in detail, most people would expect that they owned up to the corridor

when there was only an intervening 10′ strip of land owned by someone else.” DX 416 at 161.

Further, Mr. Sheppard asserted that because “the same sized house [10 Fernhill Court] sold

contemporaneously for $11,500 less than 30 Fernhill Court,” he “inferr[ed] a premium for

effectively abutting the trail.” Id. He concluded that “suburban residential lots along the paved

Eastside Trail command a $5000± premium.” Id.

2. Sales Along the Subject Trail

Mr. Sheppard also examined sales along the subject trail after the August 19, 2013

effective appraisal date to determine the effect of the trail on property values. He found “no

instance of a different (higher or lower) price being paid for unimproved land sales along the

subject corridor,” including commercial, industrial, suburban residential, rural residential, bulk

lot, and other types. Id. at 158-59. He also reviewed improved sales taking place after August

19, 2013, finding twenty-nine such sales (including three outliers).23 Id. at 162. In the Brookline

subdivision consisting primarily of homes along Baltusrol Way that were both “on and off the

subject corridor,” he calculated an “$18,563 premium for abutting the subject corridor . . . prior

to considering time aspects,” and a $15,000 time-adjusted premium, for sales between August 6,

2013, and December 7, 2016. Id. at 164. He allocated $10,000 of this difference to the

“woods-view aspect” of abutting homes and the remaining $5,000 being “attributable to the

underlying land . . . associated with owning a suburban residential develop[ed] lot along the

unpaved subject corridor.” Id. at 164-65.

So in the world of reasonableness, if you [have a] $15,000

spread that includes two variables and you’re trying to account for

one of the variables and you have data that says 5,000 is a

reasonable allocation of that $15,000, it makes sense to me that

within that 15,000 that 5,000 associated with the trail is reasonable.

Tr. 1115 (Sheppard). He also noted that the developer of the Brookline subdivision indicated

that the presence of the trail “had no impact” on the timing of either development or sales. DX

416 at 165. Mr. Sheppard concluded that “improved sales with the same age, type, and scale of

construction provide evidence of a $5,000 premium being applicable for suburban residential lots

along the subject corridor.” Id. at 166.

23

Mr. Sheppard provided a chart listing thirty sales, one of which was listed as having

taken place prior to the August 19, 2013 effective appraisal date. See DX 416 at 162.

-23-

Mr. Sheppard’s anecdotal evidence—consisting of conversations with purchasers of three

homes adjacent to the trail and nine homes that were not adjacent to the trail—suggested that

“[n]o premium or discount was paid by any of the respondents . . . from any of the unimproved

or improved sales along the subject corridor (or other trail corridors in Newton County)

occurring after the effective date of appraisal.” Id. at 168.

3. Impact of the Trail

Continuing further in his proximity study, Mr. Sheppard “analyzed the potential impact

of the subject trail,” id. at 171, and opined as follows:

• “The trail easement does not appear to create a less usable or

less marketable site between the Before and After scenarios

unless otherwise noted . . . .” Id.

• “[T]he corridor would not directly cause lesser-quality

development or preclude[] better-quality development . . . .”

Id.

• “I considered the potential loss in value due to increased noise

and/or decreased privacy resulting from the corridor’s trail use.

Pragmatically, the mere existence of a rear or side neighbor

invites the potential for noise and the lack of privacy on any

given property. Noise and privacy issues from adjoining

uses/properties all have legal remedies.” Id. at 172.

• There is a “general tendency toward homes ‘on’ trails having

security systems.” Id. The present value of the cost of

installing and maintaining a security system for fifteen years is

approximately $3,256. Id. In addition, “[s]ales and evidence

from ‘after’ sales along the subject and other Newton County

trails suggest[] that a small premium (up to $1,000/lot) is being

paid for suburban/downtown residential lots.” Id. Therefore,

in places “where the trail is paved and it is more obvious that

the trail exists, . . . there is the potential for a buyer and seller

to negotiate a price that is $2,250/lot lower than what would be

expected at lots not abutting the trail.” Id.

• Considering the cost of trash cleanup “in reflection of an

expected $1,000/lot premium noted from an analysis of after

sales of lots and homes abutting trails in Newton County, it

does not appear reasonable that the typical buyer or seller

would negotiate the purchase price of a home or suburban

residential lot abutting the subject corridor upward or

downward.” Id. at 173.

-24-

• There was “no evidence that an insurance company would

charge more for a site being on a corridor.” Id. at 174.

4. Data From Trails Outside of Newton County

Mr. Sheppard also reviewed data related to trails outside of Newton County. He

acknowledged that he could not obtain sufficient data from the Silver Comet Trail or the

Suwanee Greenway for meaningful analysis of “a comparison for being on or off the trail.” Id.

at 178-79. However, he determined that the Big Creek Greenway showed a $15,000 premium

for “suburban residential lots abutting an existing paved trail.” Id. at 178. He averred that the

$15,000 premium “should be adjusted downward to reflect the location and population

differences between the case study areas and the subject’s submarkets between Covington and

Manchester.” Id. at 184.

5. Mr. Sheppard’s Conclusion Regarding Special Benefits

After discussing his research with respect to the subject trail and its impact, other trails in

Newton County, and trails in areas outside of Newton County, Mr. Sheppard summarized his

findings:

My conclusion, from “after” sales data is that the trail

corridor likely commands a negligible/small premium in certain

instances, but not a discount. Sales along the paved Eastside Trail

suggest a $5,000/lot premium. Sales along the unpaved subject

corridor provide evidence of a $5,000± lot premium.

It is important to note that the subject’s trail will likely only

be paved over the first “segment” of area, between downtown

Covington and the Alcovy River bridge, for the foreseeable future.

. . . [I]t appears unreasonable to assume that most of the trail will

be paved or accessible to the public at large over [the next fifteen

years].

Considering the unpaved nature of the subject trail,

comments from buyers, and matched pair analysis from sales along

both the subject trail corridor and the nearby Eastside Trail in

Covington, there is a premium of $5,000/lot coinciding with

suburban residential lots along the subject trail and $0 for rural

residential lots, but no discount.24 Further, there appears to be no

24

Mr. Sheppard remarked that “[t]he distinction between suburban and rural,

pragmatically, reflects properties north of and south of the Alcovy River bridge, respectively.”

DX 416 at 169.

-25-

premium or discount accruing to any commercial, industrial,

agricultural, [or] rural lot, or larger tracts of land along the subject

corridor.

DX 416 at 169 (footnote added).

B. Plaintiffs’ Position

Plaintiffs argue that “the small residential urban properties sustained 33% damage to the

land due to the proximity of the hiking and biking trail.” Pls.’ Posttrial Br. 30. Plaintiffs also

argue that “the large residential parcels generally could be cured by building a fence that was

fairly inexpensive, for either privacy or security depending on the circumstance, and that the

commercial and industrial parcels would generally require a chain link fence for security

purposes.” Id. Finally, plaintiffs contend that there is no damage, “either diminution in value to

the land or cost to cure damages, for parcels across the road from the hiking and biking trail or

where a substantial buffer already existed.” Id.

1. Trail Proximity Damage Studies

To reach his conclusions, Mr. Matthews conducted seven studies to analyze the impact of

the trail on property values, and found that “the overwhelming results were that the properties

abutting the trail did tend to sell for less than the homes without a trail in their back yard.” PX

220 at 13. He noted that in four decades of appraising, he has completed “studies in multiple

states for the construction of local roads, highways, interstates, pipelines, power lines, local

utility lines[,] and trails,” and that such studies “also show loss in value to abutting single family

residential properties if the corridor is fairly close to the home and privacy is lost.” Id. at 14.

Mr. Matthews began by searching trails in the surrounding area to find a similar trail that

would provide “meaningful” results, and identified the Fall Line Trail in Columbus, Georgia as

such a trail. Tr. 361-62 (Matthews). He explained that the Fall Line Trail is an excellent

comparable because it is located approximately 50 to 100 feet away from houses, at grade, and at

the rear of residential parcels. Id. at 362.

His first study examined the “overall average difference in adjusted price per square foot

of the house, comparing homes with and without trails in the backyard.” Id. at 536-37. He

compared sixteen sales of properties located off the trail with eight sales in which the trail was

located at the back of the property with “light trees” as a buffer. PX 221 at 828. In each sale,

Mr. Matthews first applied a time adjustment utilizing the Case-Schiller Index applicable for the

date of sale. Id. Mr. Matthews explained that the Case-Schiller Index is used by appraisers “to

make market condition adjustments.” Tr. 355 (Matthews). He noted that there is a separate

index for each large metropolitan area in the United States, and that the Atlanta area index

includes Newton County. Id. at 354-55; see also PX 221 at 684 (providing a list of the Case-

-26-

Schiller Index values for each month from November 2006 through November 201425). To use

the Case-Schiller Index, Mr. Matthews indicated that he would “find the date of sale, find the

index for that date of sale, find the date of valuation, find the index for [the date of valuation],

and calculate a percentage change.” Tr. 356 (Matthews). After adjusting the sale price by the

appropriate percentage change in the Case-Schiller Index from the date of sale to the date of

valuation,26 Mr. Matthews applied additional adjustments to the sales to account for the age of

the house and whether the house had a garage, a basement, or a large lot. PX 221 at 828. Mr.

Matthews then divided the adjusted sale price for each transaction by the square footage of the

house to compute the price per square foot. Id. He then computed the average price per square

foot for all of the homes abutting the trail ($76.65) and for all of the homes not abutting the trail

($79.96) before comparing the two. Id. The difference between these two values ($3.31)

represents a 4.1% decrease from the “no trail” condition to the “abutting a trail” condition. See

id. Mr. Matthews opined that the land itself, and not the house, is what actually loses value

based on proximity to the trail, and thus he “had to convert the damage to the entire property to

damage to the land.” Tr. 369 (Matthews); accord id. at 371 (“[T]he land takes all the damage

and the house is not damaged at all.”). He explained that he used a 5:1 ratio of total value to land

value to perform his allocations—in other words, the land value was 20% of the total value—

based on the literature and his prior experience. Id. at 371; see also PX 221 at 826 (“Both local

data and national data indicate that a reasonable . . . ratio of total property value to land value is

5:1 which means land contributes 20% to the total property.”). Using this ratio, Mr. Matthews

determined that a 4.1% decrease in overall property value reflected a 20.5% decrease in land

value because the decrease in overall property value was entirely allocable to the land. PX 221

at 826.

In his second study, Mr. Matthews used the adjusted sale price per square foot values

from his first study to perform two linear regressions: one for sales of homes abutting the trail

25

As reflected in the addenda to Mr. Matthews’s expert report, the Case-Schiller Index

provides values to the nearest hundredth, i.e., two decimal places. See PX 221 at 684. Mr.

Matthews generally appears to have used these values to the nearest tenth, i.e., to one decimal

place. The distinction had no material impact on his conclusions since he rounded correctly.

26

For example, a December 2012 (Case-Schiller Index of 96.0) sale price of $139,000 is

adjusted to August 2013 (Case-Schiller Index of 113.5), the baseline valuation date, as follows:

(1) 113.5 – 96.0 = 17.5, the increase in the Case-Schiller Index from the sale date to the valuation

date; (2) 17.5 ÷ 96.0 = 0.182, reflecting an 18.2% increase; (3) $139,000 × 0.182 = $25,339, the

amount of the adjustment; and (4) $139,000 + $25,339 = $164,339 (without rounding at

intermediate steps). Thus, all else being equal, a $139,000 sale price in December 2012 is

equivalent to a $164,339 sale price in August 2013. See PX 221 at 684, 828. Alternatively, the

139,000 𝑥

adjusted sale price can be computed by solving for x in the following proportion: 96.0 = 113.5 .

(In each ratio, the numerator represents the price on a given date, and the denominator represents

the Case-Schiller Index for that date. The variable, 𝑥, represents the price for the second date

that would be equivalent to the given price for the first date.) Either approach yields the same

$164,339 result.

-27-

and one for sales of homes not abutting the trail. See id. at 829. He then used the linear

regressions to predict that an “average” home—1,500 square feet—would sell for $88.23 per

square foot if located “off” of the trail and $77.53 per square foot if located “on” the trail. Id.

The decrease from $88.23 to $77.53 reflects “12.1% of the house value.” Id. at 826. Using the

5:1 ratio, the decrease in land value was 60.5%. Id. Mr. Matthews noted that the average loss in

value per square foot between his first two studies was 8.1%, reflecting an average land value

loss of 40.5%. Id. at 829.

For his third study, Mr. Matthews performed a matched pair analysis of the “sale and

resale of the same property before and after the trail was built,” which he described as “an ideal

situation.” Tr. 538 (Matthews). Prior to the construction of the Fall Line Trail, 5360 McCaghren

Drive sold for $160,000 on March 1, 2006; after the construction of the trail, it sold for $124,500

on December 19, 2013. PX 221 at 838. Using Case-Schiller Index values of 130.0 and 113.4,

respectively,27 see id. at 684, 838, Mr. Matthews computed the time-adjusted sales prices to be

$139,692 and $125,051,28 id. at 830. After applying additional adjustments for age and other

property characteristics, and dividing by 1,576 square feet, Mr. Matthews computed that, as

adjusted, the property sold for $70.41 per square foot before the trail was built and $63.03 after

the trail was built. Id. Therefore, the “loss to the total property” was 10.5%, and land damage

was 52% using the 5:1 allocation ratio. Id. at 826; Tr. 538 (Matthews).

Studies four and five were also matched pair analyses following the same format as the

third study. Tr. 538-39 (Matthews). In study four, Mr. Matthews compared “a property on the

trail . . . to a similar home off the trail.” PX 221 at 826. The off-trail property was 5940 Fornof

Road, a 1,382-square-foot property built in 1972 that sold for $125,350 on March 8, 2012, when

the Case-Schiller Index was 82.5. Id. at 684, 830, 854. The on-trail property was 5356

McCaghren Drive, a 1,664-square foot property built in 1992 that sold for $160,000 on June 24,

2013, when the Case-Schiller Index was 109.2. Id. at 684, 830, 837. The time-adjusted sales

prices for March 2012 and June 2013 were $172,451 ($124.78 per square foot) off of the trail

and $166,606 ($100.12 per square foot) on the trail.29 Id. at 830. The time-adjusted difference in

price per square foot thus reflected a 19.8% decrease in total value, and 99% decrease in land

value, due to the presence of the trail. Id.; Tr. 538-39 (Matthews). After applying age and

characteristics adjustments, the adjusted sales prices were $140.93 per square foot off of the trail

and $84.54 per square foot on the trail, reflecting a 40.0% decrease in total value, and 200%

decrease in land value, due to the presence of the trail. PX 221 at 830.

27

As he did in his first study, Mr. Matthews appears to have used August 2013 (with a

Case-Schiller Index value of 113.5) as the baseline value.

28

In providing the backup computations for his third and fourth studies, Mr. Matthews

rounded to the nearest ten cents (i.e., one decimal place) for the time-adjusted sale price values.

The court refers to the values as rounded to the nearest whole dollar.

29

As in his other studies, Mr. Matthews appears to have used August 2013 as the

baseline valuation date.

-28-

In study five, Mr. Matthews utilized 5900 Fornof Road as the off-trail property and 5881

Fornof Road as the on-trail property. Id. The off-trail property was built in 1968, was 1,653

square feet, and sold for $104,586 on August 17, 2016, when the Case-Schiller Index was

approximately 133. Id. at 830, 855. The on-trail property was built in 1969, was 1,412 square

feet, and sold for $88,795 on September 30, 2016, when the Case-Schiller Index was

approximately 133. Id. at 830, 842. The time-adjusted sales prices were $89,252 ($53.99 per

square foot) on the trail and $75,776 ($53.67 per square foot) off of the trail, a loss of 0.6% in

total value, and 3.0% in land value, due to the presence of the trail. Id. at 830. After applying

age and characteristic adjustments—5900 Fornof Road contained a finished basement of 826

square feet—the adjusted sales prices were $62.06 off of the trail and $66.24 on the trail. Id.

The difference reflected a 6.3% increase in total value due to the presence of the trail. During

trial, Mr. Matthews testified that study five “indicated a loss of 15.1 percent” to the total property

value, or “75 percent loss” to the land value after utilizing the 5:1 ratio. Tr. 539 (Matthews).

For his sixth study, Mr. Matthews attempted to find pairs of sales of houses in Covington

that were both on and off a trail. Id. After finding no such pairs that were reliable, Mr.

Matthews used a pair of sales “with one house abutting the highway and the other identical house

three lots in from the highway.” PX 221 at 827. He explained that although a highway had a

somewhat “different impact” than a trail, it was “still a transportation corridor next to a house”

and was “the best [he] could find in Covington to show some local flavor to it.” Tr. 539-40

(Matthews). Mr. Matthews then compared 15 Magan Court and 35 Magan Court. Id. at 540; PX

221 at 827. There are a total of nine houses on Magan Court, which is accessible only via

Crowell Road. PX 221 at 865. The “on” property, 15 Magan Court, is located at the intersection

of these two streets. Id. It was built in 2007, is 1,656 square feet on 0.14 acres, and sold on

April 13, 2010, for $129,000. Id. at 866. The “off” property, 35 Magan Court, is the third house

on the left side of Magan Court after entering Magan Court from Crowell Road. Id. at 862. It

was also built in 2007, is 1,668 square feet on 0.13 acres, and sold on March 2, 2010, for

$134,900.30 Id. at 863. Mr. Matthews opined that “[t]hese are similar enough that no adjustment

is required,” id. at 827, because the two sales reflect that “same date, same size, [and] same lot

size,” Tr. 541 (Matthews). He attributed “[t]he difference in price of $5,900 . . . to the location”

of 15 Magan Court. PX 221 at 827; accord Tr. 541 (Matthews). Because the $5,900 drop in

price due to being adjacent to the highway represented 4.4% of the total property value, Mr.

Matthews used the 5:1 allocation ratio to determine that the land value declined by 21.9%. Tr.

541 (Matthews); PX 221 at 827.

The seventh study was similar to the sixth study, but examined pairs of sales of vacant

lots along Magan Court instead of improved properties. Tr. 541 (Matthews). The “on” property,

10 Magan Court, is located at the intersection of Crowell Road and Magan Court. PX 221 at

858. It comprises 0.21 acres, is wooded on the back half of the property, and was purchased by

Thomas Singleton from The People’s Bank on October 31, 2008, for $20,000. Id. at 858-59.

30

In the discussion section of his expert report and during trial, Mr. Matthews

inadvertently indicated that the sales price was $139,400. PX 220 at 15; PX 221 at 827; Tr. 540

(Matthews). However, his backup documentation clearly indicated that the sales price was

$134,900. PX 221 at 862-63.

-29-

The “off” property, 40 Magan Court, is the fourth house on the right side of Magan Court after

entering Magan Court from Crowell Road. Id. at 860. It comprises 0.14 acres, has some

wooding at the back of the property, and was also purchased by Thomas Singleton from The

People’s Bank on October 31, 2008, for $20,000. Id. at 860-61. Mr. Matthews explained that

“[t]hese are similar enough that no adjustment is required.” Id. at 827. He emphasized that the

lot abutting the highway sold for $95,238 per acre and that the lot not abutting the highway sold

for $142,857 per acre, demonstrating that the loss in land value due to being located adjacent to

the highway was 33.3%. Id.; Tr. 541 (Matthews). He remarked that no allocation was necessary

because the entire value was in the land (since there were no improvements at the time of sale).

Tr. 541 (Matthews). He also acknowledged that “a small size adjustment if made would bring

the damage down slightly.” Id. Even if such an adjustment were made, he explained, the paired

sales nevertheless suggested a loss in value for being next to the highway and therefore provided

“additional data to show that if you lose privacy, you’re going to suffer some loss in the value of

the property.” Id. at 541-42; accord PX 221 at 827.

After completing the seven studies, Mr. Matthews reconciled the results as follows:

Study #1: 20.5%

Study #2: 60.5%

Study #3: 52%

Study #4: 99%

Study #5: 75%

Study #6: 21.9%

Study #7: 33.3%

Range: Low 20.5% High 99%

Average: 51.8%

The Covington sales indicated a loss from 20% to 33%, and

are given heavy weight, but not total weight since they do not

measure the influence of a trail. Study #1 is a good indicator since

it measures the impact on a single property before and after the

trail was built. [Studies one, six, and seven] indicate an average

loss of 25.2%. The others which measure loss due to a rear trail

[studies two through five] average 71.6%. It is my opinion that the

probable loss to the land value lies within the range of 25% and

50% with my best estimate in the middle of that range at 33.3%

loss. This is supported by the lot sales in Covington impacted by

the abutting highway.

Estimated loss in residue lot value for small single family

lots due to rear trail is 33.3%.

PX 220 at 15.

-30-

Although Mr. Matthews opined that certain properties along the trail can expect to lose

“about a third of [their] land value,” he did not apply the one-third loss of value to all of the

parcels. Tr. 543 (Matthews). Rather, he only applied the one-third loss “[w]here it was

appropriate,” as in “a close setback and a shallow lot [and] the trail’s in the backyard” or if the

trail was “alongside the house.” Id. He noted that, in a few instances, the proximity damages

would be higher or lower depending on “proximity [to the trail] and . . . what is done to the lot.”

Id. at 588-89; accord id. at 1954. On the other hand, Mr. Matthews explained, if the trail was

“across the street” or “500 feet away from any kind of probable improvement,” then the

one-third diminution would be inapplicable. Id. at 543.

2. Cost to Cure

Mr. Matthews testified that in some of the instances where proximity damages would not

apply, “there might be a security or trespass concern” which could be ameliorated by erecting a

fence, id. at 372, but averred that privacy fences would be “inadequate” for the small residential

parcels in Covington, id. at 590. Thus, if fencing was appropriate, the type of fencing that was

needed varied:

[T]he cost to cure is a method of estimating damages to make the

land owner whole again. For example, if there is a loss of security

created by an unfenced trail along the property line of an industrial

property where materials or personal property are stored that might

attract trespassers, graffiti artists[,] or thieves[,] the safety and

security can be reinstated by paying to erect a 6 foot chain link

fence with top rail and barbed wire as is frequently seen in

industrial areas. A 6 foot solid board privacy fenc[e] is more

appropriate for single family residential property and woven wire

security fencing is more appropriate for agricultural and woodland

property.

PX 220 at 15-16.

Mr. Matthews calculated the cost to cure, where appropriate, by multiplying the length of

property taken by the cost per linear foot for the type of fence needed. Tr. 591 (Matthews). He

obtained the costs per linear foot by consulting the Marshall Valuation Service Cost Manual,

which he stressed is “widely used by appraisers throughout the [United States] as a reliable cost

resource.” PX 220 at 16. The costs for each type of fencing are as follows:

• $25 per linear foot for privacy fencing, Tr. 365 (Matthews);

e.g., id. at 600; PX 63.D;

• $5 per linear foot for woven-wire security fencing in

agricultural/timber areas, e.g., PX 220 at 629-30; PX 61.D; PX

72.D; and

-31-

• $20 per linear foot for chain-link security fencing in

commercial and industrial areas, e.g., PX 220 at 36; PX 1.D at

8.31

These costs are for installation only; they do not include expected future maintenance. Tr.

591-93 (Matthews). Finally, Mr. Matthews emphasized that in choosing between proximity

damages or cost to cure, he applied “whichever is less expensive.” Id. at 590.

C. Analysis

In resolving the dispute concerning the benefits and damages to the remainder parcels,

the court first addresses the issue of special (i.e., direct) and general (i.e., indirect) benefits.

Distinguishing between special and general benefits is not

always an easy task. [A]s a general matter, special benefits are

those which inure specifically to the landowner who suffered the

partial taking and are associated with the ownership of the

remaining land. In contrast, benefits that inure to the community

at large are considered general. [In other words,] special benefits

are those which arise directly and proximately to the remaining

land as a result of the public work on the part taken, due to the

peculiar relation of the land in question to the public work. In

contrast, resulting benefits that are more or less common to all

lands in the vicinity of the land taken are general.

Hendler v. United States, 175 F.3d 1374, 1380 (Fed. Cir. 1999) (citations omitted).

While the parties appear to agree on the definitions of special and general benefits, they

disagree on how they apply in the instant case. Defendant contends that “the recreational trail

presents the special benefit of access to abutting residential property owners.” Def.’s Posttrial

Br. 26. Plaintiffs argue that “the hiking and biking trail in the after condition is a general

benefit” and that “[b]etter access than the public as a whole is not a special benefit as a matter of

law and is also false in most instances as a matter of fact.” Pls.’ Posttrial Br. 22.

The court agrees with plaintiffs that the presence of the trail represents a general benefit

to residential landowners in the neighborhood surrounding the trail. The court also agrees with

defendant that the presence of a general benefit does not, in and of itself, mean that properties

directly adjoining the trail cannot also be specially impacted. Indeed, plaintiffs’ position that

residential properties in Covington that abut the trail lose a portion of their land value supports

such a conclusion. In other words, a particular parcel can experience special benefits or damages

even while a general benefit is also present. Because the landowners of parcels adjacent to the

trail are specially situated vis-à-vis nonadjacent landowners, it is legally possible for special

31

During trial, Mr. Matthews also alluded to a cost of $23 per linear foot for chain-link

fencing in one particular instance. See Tr. 649 (Matthews); see also PX 220 at 399.

-32-

access not enjoyed by others to be a benefit. It is also legally possible for direct proximity not

experienced by others to result in damages. Of course, whether there is such a benefit or damage

is a question of fact.

The court finds that in general, landowners place value on having trails nearby, but do not

want trails adjacent to (or running through) their properties. This value judgment, in turn,

impacts their property values. In other words, the presence of the trail is a general benefit to the

community, while the trail’s proximity is a special damage to adjacent landowners. Although

Mr. Sheppard identified one landowner (who is not a plaintiff because she purchased her home in

August 2015) who “thinks the trail will be good to have in her back yard,” “cannot wait until the

trail is paved,” and “plans to add a gate to [her] existing fence” to access the trail once it is

paved, DX 416 at 168, that perspective is an anomaly. Mr. Sheppard also noted that another

landowner “wants a buffer/barrier between her house and the trail.” Id. All three responses that

he received from trail-adjacent landowners—none of whom is a plaintiff because the respective

properties were purchased after the NITU was issued—indicated that they were not even aware

of the presence of the trail when they purchased their homes. Id. Meanwhile, at the time of trial,

one plaintiff had already moved away due to safety concerns related to the trail, and at least two

others were considering doing so. Further, plaintiffs testified credibly regarding their myriad

concerns pertaining to safety, security, privacy, trespassing, vandalism, trash, and noise due to

the creation of the hiking and biking trail. Mr. Sheppard candidly acknowledged that there are

multiple homes where people walking along the trail can see into backyards and windows, and

those people would not have the access to do so absent the trail. Tr. 1498 (Sheppard). Mr.

Sheppard also acknowledged that although he was not aware of any such occurrences, bringing

people into proximity with homes via the trail had the potential to increase vandalism and theft.

Id. at 1503-04. Even if plaintiffs’ concerns are unfounded or misplaced, as defendant attempted

to demonstrate through cross-examination, the salient issue with respect to valuation is whether

those concerns are genuinely held. That plaintiffs’ concerns are indeed authentic cannot

reasonably be disputed.

Of course, there is more to the inquiry. As Mr. Sheppard correctly observed with respect

to special benefits and damages, “even if it’s common sense, you have to have evidence.” Id. at

1094. In other words, whether being adjacent to the trail is a special benefit or damage must be

supported by market evidence.

The court cannot credit Mr. Sheppard’s benefit analysis, in which he relies primarily on

the Fernhill Court sales to arrive at $5,000 benefit. His analysis of those four sales is

fundamentally flawed for two main reasons. First, none of the Fernhill Court parcels is actually

adjacent to the Eastside Trail. Id. at 1476; PX 222.1 at 1. Mr. Sheppard treated 30 Fernhill

Court as “pragmatically” adjacent despite it being separated from the trail by a ten-foot strip of

land owned by a private individual and thus requiring a trespass in order to utilize the purported

special access. Tr. 1099 (Sheppard). Yet he treated 40 Fernhill Court as being nonadjacent to

the trail because it was separated by a 25-foot buffer and thus “is a little bit further removed,” id.

at 1101, and similarly viewed both 10 Fernhill Court and 20 Fernhill Court as nonadjacent

because of their distance from the trail. For each parcel, however, he only considered the

property lines—for example, he emphasized that “10 feet’s kind of two or three steps” away, id.

-33-

at 1099—rather than the distance between the house and the trail. From a “pragmatic”

standpoint, the distance between the house and the trail should have factored into Mr. Sheppard’s

analysis, but he admitted that he did not measure it. Id. at 1475. Since he stressed that 30

Fernhill Court was “visually” near the trail (according to its property line) in arguing that it was

effectively adjacent, id. at 1099, he should have used the same approach with respect to the other

properties and explained why they either met or failed to meet that same criteria. Therefore,

even under (for the sake of argument) the dubious assumption that the need to trespass in order

to directly access the trail is a nonissue, his basis for treating only 30 Fernhill Court as

“pragmatically” adjacent to the trail is unsupported.

Second, although Mr. Sheppard properly made no time adjustments in comparing the four

Fernhill Court sales and properly allocated total sale prices between improvements and land, he

failed to consider other land characteristics. For example, he noted that 10 Fernhill Court was a

corner lot along a curve, but apparently assumed that such status did not impact the land value in

either direction. Such an assumption should at least be clearly stated. He also failed to account

for the topography of the land, neglecting to consider that there were varying amounts of dense

wooding between the street and the trail on each of the four Fernhill Court properties before the

houses were built. Id. at 1932 (Matthews); PX 222.1. Most importantly, Mr. Sheppard simply

assumed that each parcel had “the same size lot and its only difference is location” with respect

to the trail, Tr. 1102 (Sheppard), but did not actually reference the individual lot sizes anywhere

in his expert report or during trial. Indeed, the properties all have different shapes and sizes,

although the extent of the size differences is unclear. Id. at 1931-32 (Matthews); PX 222.1 at 1.

It is entirely possible that 30 Fernhill Court commanded a premium because of the size and/or

shape of its lot. Given that both experts focused on per-acre values in their appraisals, it is

beyond peradventure that the lot size is a vital component of land value. Therefore, Mr.

Sheppard’s failure to consider lot sizes in comparing the Fernhill Court sales to one another

renders his conclusions regarding those sales unreliable.

In any event, it is entirely unclear how Mr. Sheppard reconciles the $5,800 difference in

sale price between 30 Fernhill Court and 40 Fernhill Court after accounting for the “bricks and

sticks,” Tr. 1102 (Sheppard), with the $11,500 difference in sale price between 10 Fernhill Court

and 30 Fernhill Court where no adjustments were appropriate, id. at 1105, to conclude that

“suburban residential lots along the paved Eastside Trail command a $5000± premium,” DX 416

at 161. The court simply cannot credit a conclusion where the path to that conclusion is opaque.

The remainder of Mr. Sheppard’s conclusions regarding the value of parcels being

directly proximate to the trail are unreliable because they incorporate this $5,000 premium.

After finding that there was a $15,000 time-adjusted premium for sales along Baltusrol Way in

the Brookline subdivision, he allocated $5,000 of that premium to being adjacent to the trail and

the remaining $10,000 to the view available to trail-abutting homes. Id. at 164-65. Mr.

Sheppard explained that, in deciding how to allocate the $15,000 total between trail proximity

and the “natural backyard versus not having a great backyard,” it was reasonable to allocate

$5,000 to the trail proximity where he had “other evidence” showing that “[$]5,000 associated

with the trail is reasonable.” Tr. 1115 (Sheppard). He similarly found a $15,000 premium with

-34-

respect to the Big Creek Greenway, but averred that it “should be adjusted downward.” DX 416

at 184.

Ultimately, Mr. Sheppard’s summary of his conclusions demonstrates that his analysis

lacked the appropriate foundation. Mr. Sheppard explained that in addition to anecdotal

evidence and his matched pair analyses from Fernhill Court and the Brookline subdivision, he

considered “the unpaved nature of the subject trail” in reaching his conclusions because it

“appear[ed] unreasonable to assume that most of the trail will be paved or accessible to the

public at large” for the “foreseeable future.” Id. at 169. As stated above, appraisers are to

assume that in the “after” condition, the hiking and biking trail is in place and has been

constructed. During trial, Mr. Sheppard repeatedly recognized this basic principle of

Rails-to-Trails valuation, e.g., Tr. 1404-05, 1410 (Sheppard), and asserted that he “assume[d] the

trail is there in existence,” id. at 1125, yet in his expert report he explained that his conclusion

regarding special benefits was based, in part, on his perception of the current condition of the

trail and its likely future development, DX 416 at 169. His attempt to reconcile having

considered the unpaved nature of the trail (in relying on the Brookline subdivision sales) with the

requirement to assume that trail construction is complete was wholly unavailing:

So, at the end of the day, yes, assume the trail is there in existence,

but have evidence that shows both ways. Have as much evidence

as possible because more is more.

Tr. 1125-26 (Sheppard). In short, Mr. Sheppard’s finding of a special benefit is unreliable and

the court gives it no weight.

Having rejected Mr. Sheppard’s analysis, the court must examine the reliability of the

conclusion reached by Mr. Matthews that the small residential parcels in Covington experienced

a decrease of one-third of their land value due to their adjacency to the trail. The court agrees

that these parcels experienced a decrease in value, but it remains plaintiffs’ burden to quantify

that decrease with market evidence.

The court finds that Mr. Matthews’s first study is reliable. First, Mr. Matthews used

twenty-four sales as data points. It is axiomatic that, all else being equal, using more data points

will produce more accurate results when searching for average values. Second, since both

experts used price per square foot as a measure of property values at various points in their work,

the parties do not dispute the propriety of such a measure. Third, the Case-Schiller Index is a

reasonable proxy for time and market conditions adjustments. Mr. Matthews used the correct

baseline date of August 2013 (the baseline date was apparent based on his computations even

though it was not explicitly stated), used the correct values for each date, and computed the

adjustments correctly. Fourth, Mr. Matthews applied adjustments for the age of each home, as

well as other property conditions. Those adjustments appear reasonable, and it would have been

improper not to account for those characteristics. Fifth, based on the inputs, Mr. Matthews

accurately computed the 4.1% decrease in price per square foot. Sixth, his use of a 5:1 ratio of

total property value to land value was supported. Finally, his determination that the decrease in

property value due to trail proximity should be entirely allocated to the land was reasonable.

-35-

The court cannot credit the findings of Mr. Matthews’s second study, which involved a

linear regression of the values obtained from the first study. The linear regressions themselves—

one each for trail-adjacent and nonadjacent homes—appear to have been performed correctly.

However, Mr. Matthews based his finding of a 12.1% decrease in total property value, and thus

60.5% decrease in land value, on a hypothetical 1,500-square-foot home by comparing the

predicted values in each of the two linear regressions. While his computations are correct, the

assumption of a 1,500-square-foot home appears to have been somewhat arbitrary. The average

size of the “on trail” homes was 1,514 square feet, but the average size of the “off trail” homes

was 1,622 square feet. PX 221 at 828. The composite average, based on the number of homes in

each category, is 1,586 square feet. The median size is 1,503 square feet for “on trail” homes,

1,615 square feet for “off trail” homes, and 1,576 square feet for all homes. Accordingly,

although there appears to be some factual support for using 1,500 square feet as the hypothetical

average sized home, there is also factual support for using other figures, and Mr. Matthews did

not explain his selection of the 1,500 figure either in his expert report or during trial.

Mr. Matthews’s third study compared the sale of the same property both before and after

the Fall Line Trail was constructed. As with the first study, Mr. Matthews did not explicitly state

that he used a baseline date of August 2013, but it is apparent from his computations.32 The

main problem with the third study is the age adjustment. Since 5360 McCaghren Court was built

in 1992, id. at 838, Mr. Matthews correctly observed that the home was twenty-one years old on

the hypothetical baseline valuation date, id. at 830. Based on its date of construction, the home

was only fourteen years old on the date it was sold in the “off trail” condition in March 2006

(before trail completion), and was twenty-one years old on the date it was sold in the “on trail”

condition in December 2013 (after trail completion). See id. at 830, 838. Despite this disparity,

Mr. Matthews applied the same age adjustment to both sales. Thus, the court cannot credit the

findings of his third study.

Studies four and five suffer from the same defect as one another. These two studies

appear to have been properly performed, but the reporting of the results is deficient.33 In stating

that studies four and five showed losses of 19.8% and 15.1% in total property value (and thus

32

Mr. Matthews computed a time-adjusted sales price of $125,051 for August 2013

vis-à-vis the unadjusted sales price of $124,500 from December 2013. PX 830. His calculation

of the $125,051 figure reflects a change in the Case-Schiller Index from 113.5 to 113.0 between

the two dates. The Case-Schiller Index, rounded to the nearest tenth (i.e., one decimal place)

was indeed 113.5 for August 2013, but was actually 113.4 for December 2013. Id. at 684. A

change in the Case-Schiller Index from 113.5 in August 2013 to 113.4 in December 2013 would

yield a time-adjusted sale price of $124,610 (rather than $125,051). The slight discrepancy

reflects a 0.3% difference from the “off trail” time-adjusted sale price, which is immaterial.

33

In study four, Mr. Matthews used a Case-Schiller Index value of 109 to compute the

time-adjusted sale price of $166,606 for the “on trail” sale. See PX 221 at 830. Using the

correct value of 109.2 for June 2013, see id. at 684, would have yielded a time-adjusted sale

price of $166,300. The discrepancy is immaterial, as it would have resulted in insignificant

changes to the results.

-36-

losses of 99% and 75% in land value), respectively, see id. at 828, Mr. Matthews was not making

a true apples-to-apples comparison. The 19.8% figure from study four represents the decrease in

the time-adjusted price per square foot, before any other adjustments (i.e., age and other property

characteristics) were made. Id. at 830. The 15.1% figure from study five represents the decrease

in time-adjusted price, before figuring in the square footage or making any other adjustments

such as age and other property characteristics. Id. If the same values were compared across

studies three, four, and five, the resulting change in total property values—before allocating any

or all of the decrease to the land—due to the presence of the hiking and biking trail would be as

follows:

• time-adjusted price per square foot, plus adjustments for

property characteristics

o study three: 10.5% decrease

o study four: 40.0% decrease

o study five: 6.7% increase

• time-adjusted price per square foot, without additional

adjustments for property characteristics

o study three: 10.5% decrease

o study four: 19.8% decrease

o study five: 0.6% decrease

• time-adjusted overall home price, without additional

adjustments for size or other property characteristics

o study three: 10.5% decrease

o study four: 3.4% decrease

o study five: 15.1% decrease

Id. Notably, Mr. Matthews’s 20.5% decrease in land value due to the presence of the trail from

study one (which was much more rigorous as that study involved twenty-four properties) was

based on a time-adjusted price per square foot, after adjusting for property characteristics, id. at

828, which seems to be the most authentic approach out of the three listed above. Thus, while

his approach in studies three, four, and five—analyzing the same house both before and after the

trail was constructed (study three); comparing two houses on different streets, one that was off

the trail and one that was on the trail (study four); and comparing two houses on the same street

sold almost contemporaneously with one another, one abutting the trail and one off the trail

(study five)—was sound, Mr. Matthews’s results from those three studies as reported are not

reliable.

The sixth study that Mr. Matthews performed correctly included no adjustments because

the two properties compared were built and sold at the same time, were approximately the same

size, and had essentially identical characteristics. Thus, it was appropriate to simply examine the

sale price of each. Although neither property on Magan Court abutted a trail, as Mr. Matthews

candidly acknowledged, one of the properties abutted a highway, so the sixth study appropriately

provides context for the impact of a transportation corridor on property values in Covington.

-37-

The court credits the findings of this study because the data was properly selected, properly

analyzed, and properly reported.

The seventh study also involved a matched pair analysis on Magan Court, but considered

vacant lots rather than improved properties. The approach of comparing vacant lots, one

abutting the highway and one not, for the purpose of providing context (like the sixth study) is

sound, but the court cannot credit the findings. Mr. Matthews did not make any adjustments to

either sale because both parcels were vacant lots at the time and sold on the same date. Although

Mr. Matthews compared the per-acre values, both lots were sold by the same seller to the same

buyer on the same date. Additionally, the record reflects that other vacant lots on Magan Court

were transferred from the same seller to the same buyer on that same date.34 See id. at 858-67.

Mr. Matthews did not consider whether the “bulk” aspect of the purchase impacted the price,

such that a per-acre comparison would be inappropriate, nor did Mr. Matthews consider the

amount of wooded land that was available on each lot and its impact on the sale price.

On balance, the court finds that plaintiffs have demonstrated that small residential parcels

in Covington lose 20.5% of their land value if they are adjacent to the trail. This result is based

on the credible data from the comparable Fall Line Trail (study one).35 The result from study six

is not directly applicable because that study analyzed the impact of properties abutting a highway

rather than a trail, but its 21.9% result provides context showing that the 20.5% decrease from

study one is a reasonable figure.

In addition, the court finds that Mr. Matthews’s findings regarding the cost to cure are

entirely reliable. He accurately analyzed whether the cost to cure was appropriate for each

property at issue, utilized the suitable type of fencing for each scenario and its associated cost,

based those costs on reputable data that is routinely relied upon by appraisers throughout the

nation, and meticulously applied such damages where proper.

VI. COMPARABLE SALES AND ADJUSTMENTS

Having addressed property rights remaining in the burdened land and the benefits and

damages to the remainder, the court now turns to the comparable sales selected, and adjustments

made, by each expert to opine on property values. The Yellow Book provides that appraisers

“may need to adjust each comparable sale through quantitative and/or qualitative analysis to

derive an indication of the market value of the subject property.” Yellow Book 121. Whether a

particular sale is sufficiently comparable to be helpful “is largely a function of three variables:

34

These other lots were later improved before the sales analyzed in the sixth study took

place. PX 221 at 858-67.

35

The court’s finding that trail-adjacent residential homes in Covington suffer a decrease

in property values is buttressed by an individual property appraisal for 9121 Dearing Street in

Covington with a June 16, 2016 effective date. See generally PX 156 at 6-24. That appraisal,

which utilized the sales comparison approach, contained an $8,000 adjustment to the value of

one of the comparable sales for “r-rd noise” due to its proximity to the trail. Id. at 8.

-38-

characteristics of the properties, their geographic proximity to one another, and the time

differential.” Id. at 120. The veracity of the comparable sales selected, and adjustments made,

by each expert is perhaps the most significant area of disagreement between the parties.

Both experts utilized the sales comparison approach. Plaintiffs argue that defendant’s

expert, Mr. Sheppard:

artificially limited the scope of his search for comparable sales,

intentionally chose comparable sales at the very low end of the

market or simply missed potential comparable sales within his

artificial time restriction, and then failed to make proper

adjustments based on size and other factors to make the

comparable sales he chose as comparable as possible to the actual

parcels at issue.

Pls.’ Posttrial Br. 32. Defendant asserts that plaintiffs’ expert, Mr. Matthews, failed to follow

Yellow Book standards by failing to verify comparable sales, making inappropriate adjustments

and failing to make property-specific adjustments, and “inappropriately complet[ing] a project

appraisal rather than individual appraisals of each subject property and [failing] to provide the

appropriate data to explain his results.” Def.’s Posttrial Br. 13. Defendant also contends that

Mr. Matthews’s “math is incorrect” in several instances and thus his value conclusions are

unsupported. Id. at 25-26.

The court will first address the disputes concerning verification, report format and

supporting data, and math errors, since those issues pertain to all parcels. The court will then

address the issue of comparable sales and adjustments with respect to each parcel type.

A. Points of Error

1. Verification

The court begins by examining the dispute pertaining to verification. As relevant here,

the Yellow Book includes a directive that all sales used by appraisers in forming their value

conclusions “must be confirmed by the buyer, seller, broker, or other person having knowledge

of the price, terms, and conditions of sale.” Yellow Book 25. The Appraisal of Real Estate

treatise provides that the Yellow Book standards “require an appraiser to talk directly to a party

to the transaction to verify data . . . , which is a higher level of verification than is usually

necessary . . . for mortgage lending purposes.” DX 60 at 34.

Mr. Sheppard explained that verification is “a cornerstone of the appraisal process”

because “there could be issues that are behind the scenes that you learn through the verification

process.” Tr. 1019-20 (Sheppard). He relied primarily upon speaking directly with someone

involved in the sale, and also used data available through the county tax assessor’s office,

LoopNet (which he described as a “broker provided data service” that is “helpful in rural

-39-

counties where there aren’t any subscription based data services”), and other commercial

sources. Id. at 1023-26.

Mr. Matthews agreed that the “verification process is important,” id. at 306 (Matthews),

and stated that “[a]ll sales” were verified with a “party with first-hand knowledge of the facts of

the sale,” PX 220 at 7; accord Tr. 825 (Matthews). He explained that although he did not verify

the data personally with buyers, sellers, brokers, or bankers, he utilized the data from LoopNet

and the local tax assessor. Tr. 824-26 (Matthews). He described such information as “good” and

“excellent,” respectively, and asserted that it was “verified data” because it was supplied by

attorneys on a PT-61 form under the threat of misdemeanor for providing false information. Id.

at 306.

The court agrees with Mr. Matthews that his underlying data was sufficiently reliable

such that further verification was unnecessary. The Appraisal of Real Estate treatise provides

that a “primary purpose of verifying a sale of real property is to make sure that the sale occurred

under conditions that meet the definition of value used in the appraisal.” DX 60 at 34.

According to the treatise, when verifying sales, appraisers should seek the following “essential”

information regarding each sale:

• Is the data correct?

• Is the data complete?

• Was the sale or rental an arm’s-length transaction?

• Were there any contingencies?

• Were any concessions involved?

• Does the data conform to relevant standards or regulatory

requirements?

• Did any special or unusual conditions affect the sale or rental?

Id. Although the “most common verification technique is interviewing market participants,” id.

at 35, there is no specific requirement that verification be accomplished through the interview

process. Indeed, “the reliability of the original data source” impacts “the scope of data

verification.” Id. at 34.

Mr. Matthews is correct that, for purposes of this case, tax assessor data is verified data.

In Georgia, a real estate transfer tax is “determined on the basis of written disclosure of the

actual consideration of the interest in the property.” Ga. Code Ann. § 48-6-4(c) (2015). This

disclosure “shall be made on a form or in electronic format prescribed by the [state revenue

commissioner].” Id. Accordingly, the Georgia Administrative Code provides that “any deed,

instrument[,] or other writing which conveys any lands, tenements, or other realty must be

-40-

accompanied by Form PT-61.” Ga. Comp. R. & Regs. 560-11-2-.16(1) (2016). A properly

completed Form PT-61 must contain the following information:

(a) Seller’s Information – The form shall contain the complete

name, street mailing address, city, state[,] and zip code of the

seller and month, day[,] and year the sale occurred.

(b) Buyer’s Information – The form shall contain [the] complete

name, street mailing address, city, state[, and] zip code of the

buyer for the purpose of receiving tax notices and billings.

The intended use of the property by the buyer at the time of

the transfer shall be listed and designated as being residential

(R), agricultural (A), commercial (C), or industrial (I).

(c) Property Information – The complete description of the

property being conveyed, the county name where the property

is located[,] and the city name (if the property lies within the

limits of a city) [shall be listed]. The number of acres of

property, map and parcel number, district, land lot and

sublot[,] and block shall be shown.

(d) Value and Tax Information – The actual value of the

consideration received by the seller for the real and personal

property conveyed to the buyer shall be shown separately on

the form[ ](PT-61) prescribed in subsection (c) of Code

section 48-6-4. This consideration total should reflect all

cash, other property or goods, and the assumption of

mortgages or other obligations. . . .

(e) Other Information – Any other information requested on the

most current version of form PT-61 shall be listed.

(f) Certification – The seller or seller’s authorized agent shall

certify that all items of information entered on the transfer

form PT-61 are true and correct (to the best of his knowledge

and belief) and that he is aware that the making of any willful

false statement of material facts will subject him to the

provision of the penal law relative to the making and filing of

false instruments. . . .

Id. A false statement on a Form PT-61 subjects the declarant to a misdemeanor. Ga. Code Ann.

§ 48-6-10. The declarant submitting the Form PT-61, which is typically the closing attorney

managing the transaction, Tr. 307 (Matthews), certainly qualifies as a “person having knowledge

of the price, terms, and conditions of sale” per Yellow Book standards, Yellow Book 25.

-41-

Because Georgia law requires accurate sales prices to be contemporaneously disclosed

under the threat of criminal penalty, the court finds that the data maintained by the tax assessors

is more reliable than data provided by parties to a transaction several years after the fact. See Tr.

956-60 (Matthews). The tax assessor data is inherently reliable since it was effectively verified

at the time of sale; further verification is unnecessary.36 This conclusion comports with the

Appraisal of Real Estate’s edict that the scope of verification needed is informed, at least in part,

by the reliability of the available data. Indeed, Mr. Sheppard acknowledged that (1) in all of his

conversations with parties to real estate transaction, he did not find a single discrepancy in the

sales price reported to the tax assessor via Form PT-61; and (2) in many instances, he was unable

to speak with either a buyer or seller, so he relied on the information available through the

county tax assessor. Id. at 1836-37 (Sheppard). Further, appraisers are generally able to

ascertain whether a transaction is “a good arm’s length sale, qualified or not qualified” based on

data from the tax assessor. Id. at 307 (Matthews).

In short, defendant’s argument that Mr. Matthews did not appropriately verify his data is

unavailing.

2. Report Format and Supporting Data

Next, the court addresses the dispute concerning the sufficiency of Mr. Matthews’s

reporting format and supporting documentation. Defendant avows that “Mr. Matthews

inappropriately completed a project appraisal rather than individual appraisals of each subject

property and did not provide the appropriate data to explain his results.” Def.’s Posttrial Br. 13.

Therefore, defendant proclaims, his data cannot be verified and thus the court “is left in the

dark.” Id. at 21. Plaintiffs, on the other hand, stress that even though Mr. Matthews was not

bound by the Yellow Book, he nevertheless comported with its requirements. Further, plaintiffs

argue, Mr. Matthews “developed complete and consistent conclusions of value for each and

every parcel.” Pls.’ Posttrial Resp. Br. 32.

As an initial matter, the parties are correct that, as a matter of law, Mr. Matthews was not

bound by the Yellow Book. The Yellow Book applies only to appraisers hired by the federal

government for condemnation purposes; it is not mandatory with respect to appraisers not hired

by the government. See Tr. 1865-66 (Miller). However, the Yellow Book standards are relevant

as pertaining to Mr. Matthews’s credibility since he testified that his work complied with those

standards. Id. at 880 (Matthews); see also PX 220 at 6.

36

The court observes that this conclusion would not be applicable if the underlying data

was not sufficiently reliable. For instance, Mr. Matthews remarked that—unlike in the instant

case—tax assessor and LoopNet data for some geographic areas is not always accurate or even

available. Tr. 306-06 (Matthews).

-42-

In discussing the application of the sales comparison approach, the Yellow Book

provides:

In reporting the results of the sales comparison approach

for land valuation, the appraiser shall provide detailed descriptions

of confirmed sales of lands that have the same or similar highest

and best use as the subject property. The description of each sale

transaction used as a comparable sale should at a minimum include

the date of the transaction, the price paid, the name of the seller,

the name of the buyer, the size of the property, the location of the

property, the zoning or other legal restraints on the property, and a

description of the physical characteristics of the property. The

person with whom the transaction was verified should also be

identified.

Differences between the comparable sales and the subject

property should be considered and adjustments made to the sales to

address these differences. Items of comparison shall include

property rights conveyed, financing terms, conditions of sale,

market conditions, location, physical characteristics, economic

characteristics, legal characteristics, and non-realty components of

value. The adjustments must be summarized in an adjustment grid

and each adjustment (whether qualitative or quantitative) should be

supported with market data. The data and analysis must provide

sufficient detail for the client and intended users to understand the

data, the analysis, and the logic of the appraiser’s opinion of

market value for the subject land as if vacant.

Yellow Book 65. The Yellow Book standards “address the content and level of information and

analysis required to communicate the results of an appraisal prepared for federal property

acquisitions,” and are “intended to establish requirements for appraisal report content and

documentation.” Id. at 56. In other words, the standards exist to ensure that appraisers include

sufficient information within their reports.

The court finds that project appraisal reports meet Yellow Book standards if

appropriately compiled. As explained above, USPAP standards allow for two types of written

reports—appraisal reports and restricted appraisal reports—and also for oral appraisal reports.

However, only unrestricted written appraisal reports are acceptable pursuant to the Yellow Book.

Project appraisal reports are a type of unrestricted written appraisal report that is allowable under

Yellow Book guidelines. While the Yellow Book contains a warning that project appraisal

reports are “rarely conducive to litigation purposes,” that warning is premised on the notion that

project appraisal reports “typically contain opinions of value of properties owned by persons not

parties to the lawsuit.” Id. at 73. Here, Mr. Matthews’s project appraisal report included

opinions of value for 156 parcels; each of these properties is owned by one or more plaintiffs,

i.e., a party to the instant suit. PX 220 at 2. Thus, not only does the Yellow Book not actually

-43-

foreclose project appraisal reports from being utilized in litigation, the stated reasons against

such use are not applicable here. Further, Mr. Matthews’s project appraisal report (including its

addenda) fully satisfied the Yellow Book requirements for such reports. Compare id. at 5

(containing the Table of Contents for Mr. Matthews’s project appraisal report), with Yellow

Book 72-79 (outlining the Yellow Book standards for project appraisal reports).

Finally, and most importantly here, the court agrees with plaintiffs that nobody is “‘in the

dark’ as to how Mr. Matthews made his adjustments.” Pls.’ Posttrial Resp. Br. 32. An

individual one-page report, standing alone, is certainly insufficient, but none of the reports stands

alone. The full report, including the addenda, contain all of the backup documentation

supporting the valuation opinions reached for “[e]ach and every one” of the 156 parcels at issue

in this case. Tr. 303 (Matthews); accord PX 220 at 16 (“The sales data upon which these values

and the damages are based are shown in the addenda by property type.”). Mr. Matthews’s

project appraisal report, including the addenda, is by no means a model of stellar organization,

but the data is all available. Mr. Matthews’s deficiencies with respect to organization do not

equate to any deficiencies with respect to the information itself. A holding to the contrary would

be improper because the Yellow Book standards address content and documentation, but “are

not, however, intended to establish an absolute requirement for appraisal formatting.” Yellow

Book 56. It is the content—not the organization—that matters. Even Mr. Sheppard, who issued

a separate written appraisal report for each property, observed that his addenda was “integral to

each individual appraisal report.” DX 416 at 37. Contrary to defendant’s averment that the court

was left in the dark regarding how Mr. Matthews arrived at his conclusions of value, the court is

able (with a few exceptions, each of which is discussed below) to follow Mr. Matthews’s

reasoning. See, e.g., infra Section VI.A.3 (addressing defendant’s suggestion that Mr.

Matthews’s approach with respect to certain parcels was mathematically unsound).

As specified in the Yellow Book, project appraisal reports “are not appraisal shortcuts;

they are clerical shortcuts.” Yellow Book 73 (emphasis added). The project appraisal approach

followed by Mr. Matthews was just that—a clerical shortcut. Mr. Sheppard emphasizes that he

completed “in excess of 100” individual appraisals, i.e., one for each parcel, Tr. 1012

(Sheppard), but he overstates the importance of having done so. Mr. Sheppard’s individual

reports, which are in the record as defendant’s exhibits 305 through 415, average just over thirty

pages each.37 However, the majority of the information within each of his reports is either

boilerplate, duplicative, or both. Most importantly, as discussed below, he used the same

comparable sales across groups of properties with the same highest and best use. See DX 416 at

190-97. Mr. Sheppard could easily have taken a “clerical shortcut” and issued one project

appraisal report utilizing the same data as is reflected in his 110 individual reports while still

37

Defendant did not offer an exhibit numbered 326. Compare Tr. 1245 (Sheppard)

(reflecting that claims 26.A and 26.B were both addressed in one appraisal report, i.e.,

defendant’s exhibit 325), with Def.’s Ex. List 18 (reflecting that claims 26.A and 26.B would be

addressed in two separate appraisal reports, i.e., defendant’s exhibits 325 and 326).

-44-

comporting with Yellow Book standards.38 There was no substantive difference between the

manners in which each expert presented his appraisals.

In short, Mr. Matthews did not err by completing a project appraisal report. Further,

although his report could have benefited from better organization and presentation, the report’s

overall content was not deficient or unclear. Mr. Matthews included sufficient documentation in

his report and the addenda referenced therein to support his opinions of value.

3. Math Errors

In addition to charging that Mr. Matthews erred by failing to properly verify comparable

sales, issuing a project appraisal report, and failing to provide backup documentation, defendant

suggests that Mr. Matthews’s math is incorrect in several places. Specifically, defendant

identifies a list of parcels for which Mr. Matthews’s “purported methodology for determining

damages did not add up.” Def.’s Posttrial Reply Br. 12.

Mr. Matthews succinctly described his methodology in his expert report. After

comparing the “before” and “after” values of the land based on per-acre value and size, he then

factored in residual damages where applicable to determine the net “after” value. PX 220 at 16.

The difference between the “before” and “after” values “is the compensation estimate owed the

land owner,” which he “allocated between the value of the part taken and the residu[al]

damages.” Id. He noted that, for some parcels, the per-acre value in the “after” condition (where

there is a smaller land size due to the taking) can be higher than the per-acre value in the

“before” condition. Id. The increased per-acre value in the “after” condition, if applicable,

“creates a benefit which offsets some or all of the damages created by the take.” Id.

Defendant identifies twenty-two specific parcels for which it asserts that Mr. Matthews’s

“formula does not add up to his remainder damages conclusions.” Def.’s Posttrial Reply Br. 13

(containing a list of twenty-one parcels); see also Def.’s Posttrial Br. 25-26 (discussing an

additional parcel). Each will be addressed below.39

With respect to claim 6, the land had a fair market value of $67,485 (0.409 acres at

$165,000 per acre) in the “before” condition. In the “after” condition, the land had a fair market

value of $38,533 (0.340 acres at $170,000 per acre, i.e., $57,800, less $19,267—one-third of

$57,800—for proximity damages), for a net per-acre value of $113,333 ($38,533 divided by

0.340 acres). The diminution in value was thus $28,952. Of that amount, $11,385 is allocable to

the value of the property taken (0.069 acres at $165,000 per acre), and the remaining $17,567 is

38

Pursuant to the Yellow Book, “the larger parcel is the tract or tracts of land that

possess a unity of ownership and have the same, or an integrated, highest and best use.” Yellow

Book 110 (emphasis added). For both experts, there are fewer appraisals than total parcels

because “some of those parcels were combined.” Tr. 303 (Matthews).

39

For the sake of simplicity, the court uses figures rounded to the nearest dollar;

however, there was no rounding at intermediate steps in the computations.

-45-

allocable to the damages to the remainder. As with many claims, Mr. Matthews shows slightly

different numbers due to differences in rounding. See PX 6.D; see also Tr. 387 (Matthews)

(discussing rounding). The discrepancy between the $19,267 in proximity damages and $17,567

in damages to the remainder equals $1,700—the increase in per-acre value of the land in the

“after” condition, i.e., 0.340 acres multiplied by the $5,000 per-acre increase in value. In other

words, the one-third proximity damages ($19,267) were partially offset by $1,700 to reflect the

increase in per-acre value. Although Mr. Matthews perhaps should have “left the light on” by

explicitly explaining each step in his computations within his one-page summary report, the

descriptions of his process and supporting documentation “flip the switch” (so that nobody is left

“in the dark”) by making it easy to recreate his work, thus demonstrating that his process is

reliable.

Of the remaining claims for which defendant posits that Mr. Matthews’s “formula does

not add up,” claims 20.B, 27, 28, 29, 30, 33, 34, 37, 46, 48, 49, 50, 51, and 55 follow the same

pattern as claim 6. In these fifteen claims (including claim 6), the difference between the

one-third proximity damages and the damages to the remainder is equal to the per-acre increase

in value multiplied by the acres remaining in the “after” condition. Simply put, Mr. Matthews’s

formula does, in fact, add up.

The math employed by Mr. Matthews in the remaining seven claims identified by

defendant, none of which experienced a per-acre increase in land value in the “after” condition,

also adds up. Mr. Matthews’s appraisals reflect damages that, while not immediately apparent

due to a lack of explanation on the one-page summary reports, become clear when considering

the entirety of his expert report (including the supporting data in the addendum). Whether such

damages are appropriate for each parcel is a separate issue from the mathematics, and is

addressed below in the discussions regarding comparable sales and adjustments with respect to

each parcel type. See infra Sections VI.B (small residential parcels), VI.D (large residential

parcels).

For claim 12, Mr. Matthews doubled the proximity damages. PX 12.D. As noted above,

he explained that proximity damages could be higher or lower than the typical one-third

depending on how close a home was in relation to the trail. Tr. 588-89 (Matthews); see also PX

12.E.1 (showing a photograph of the trail vis-à-vis the home); PX 12.E.5 (same); Tr. 428-30

(Matthews) (discussing the photographs). When the normal one-third proximity damages are

doubled, the math is correct.

For claim 22, Mr. Matthews opined that the damages to the remainder parcel were $8,600

(after rounding). PX 22.D; Tr. 446 (Matthews). This figure represents proximity damages of

20% (rather than one-third) plus the cost of privacy fencing. Before factoring in special

damages, the land value in the “after” condition was $36,900 (0.410 acres at $90,000 per acre).

Twenty percent of $36,900 is $7,380. The cost of privacy fencing is $1,260—50 feet, the length

of the property taken, multiplied by $25 per linear foot. See Jt. Stip. Ex. A at 5 (reflecting the

length of the property taken). The sum of the proximity damages ($7,380) and privacy fencing

($1,260) equals $8,640, which rounds to the $8,600 figure for total residual damages used by Mr.

Matthews.

-46-

For claim 24, Mr. Matthews opined that the damages to the remainder parcel were $7,300

(after rounding). PX 24.D; Tr. 449 (Matthews). This figure represents proximity damages of

20% (rather than one-third). Before factoring in special damages, the land value in the “after”

condition was $36,400 (0.280 acres at $130,000 per acre). Twenty percent of $36,400 is $7,280,

which rounds to the $7,300 figure used by Mr. Matthews.

For claim 86, Mr. Matthews opined that the damages to the remainder parcel were $2,200

(after rounding). PX 86.D; Tr. 519 (Matthews). This figure represents the cost of privacy

fencing ($25 per linear foot) for approximately 88 feet, subject to a slight rounding adjustment,

which is less than the length of the property taken.40 Mr. Matthews did not find that proximity

damages were applicable to any of the residential parcels, like this one, located in Mansfield.

For claim 87, Mr. Matthews opined that the damages to the remainder parcel were $4,500

(after rounding). PX 87.D; Tr. 523 (Matthews). This figure represents the cost of privacy

fencing ($25 per linear foot) for approximately 180 feet, subject to a slight rounding adjustment,

which is less than the length of the property taken. See Jt. Stip. Ex. A at 12 (reflecting that the

property taken was 278 feet long and 25 feet wide).

For claim 88, Mr. Matthews opined that the damages to the remainder parcel were $5,800

(after rounding). PX 88.D; Tr. 580 (Matthews). This figure represents the cost of privacy

fencing ($25 per linear foot) for 233 feet, the length of the property taken, for a total cost of

$5,825 before rounding. See Jt. Stip. Ex. A at 13 (reflecting that the property taken was 233 feet

long and 25 feet wide).

Finally, for claim 89, Mr. Matthews opined that the damages to the remainder parcel

were $3,100 (after rounding). PX 89.D; Tr. 525 (Matthews). This figure represents the cost of

privacy fencing ($25 per linear foot) for approximately 124 feet, subject to a slight rounding

adjustment, which is greater than the length of the property taken. See Jt. Stip. Ex. A at 13

(reflecting that the property taken was 117 feet long and 25 feet wide).

In sum, defendant’s argument that Mr. Matthews’s math does not add up, and therefore

leaves the court and the parties “in the dark,” is wholly meritless.

B. Small Residential Parcels

The majority of claims in this case concern small residential parcels, i.e., parcels that are

smaller than one acre. Each expert selected comparable sales and performed various analyses to

reach their conclusions regarding the value of such land.

40

The parties did not stipulate to the size of the property taken with respect to claim 86.

However, Mr. Sheppard suggested that the property taken—which is smaller than both the

court’s finding and the figure used by Mr. Matthews—was approximately 400 feet long and 25

feet wide. DX 391 at 9.

-47-

After discarding outliers and nonqualified sales, Mr. Matthews found over 100

comparable sales, identified each with a reference number, and organized them by highest and

best use.41 Tr. 338-39 (Matthews). He found forty-nine total comparable sales in Newton

County for small residential parcels that took place between January 1, 2008, and December 31,

2013. Id. at 340; PX 221 at 676. Mr. Matthews explained that he chose this time frame because

he did not want to go beyond the valuation date. Tr. 340 (Matthews). He then applied a time

adjustment for each sale using the Case-Schiller Index and divided by the number of acres to

compute the time-adjusted, per-acre value for each comparable sale before graphing the results.

Id. at 340-41; PX 221 at 676-77. Using the graph, Mr. Matthews divided the market into high

quality, average quality, and inferior quality locations. Tr. 342 (Matthews); PX 221 at 677. He

emphasized that his graphical analysis “show[ed] the entire universe of all the comparable sales

and how they fall into patterns,” which allowed him to “be consistent from beginning to end.”

Tr. 343 (Matthews). Mr. Matthews asserted that an important trend shown by his graph was that

buyers “pay less per acre for large properties.” Id.

From the graph, Mr. Matthews selected specific properties from among the forty-nine

small residential comparable sales to be used in the sales grids for each representative appraisal.

For example, he selected comparable sales 106, 116, and 121 for the Bouchillon representative

appraisal because those three comparable sales were all in Covington and of average quality,

similar to the Bouchillon property (claim 14). Id. at 384. He opined that Bouchillon property

had a fair market value of $90,000 per acre in the “before” condition and $90,000 per acre in the

“after” condition before considering proximity damages. PX 220 at 131 (sales grid for the

“before” condition), 137 (sales grid for the “after” condition). As another example, Mr.

Matthews selected comparable sales 124, 128, 176, and 216 for the Pierre representative

appraisal because those four comparable sales were located in “higher end residential

subdivisions,” similar to the Pierre property (claim 48). Tr. 394-95 (Matthews). He opined that

the Pierre property had a fair market value of $165,000 per acre in the “before” condition and

$170,000 per acre in the “after” condition before considering proximity damages. PX 220 at 265

(sales grid for the “before” condition), 271 (sales grid for the “after” condition).

After calculating the per-acre value in the “af

This text is long and has been trimmed here. Open the source document for the complete record.