Under Michigan law, when an airport decides to acquire property by condemnation, the municipal subdivision that owns the airport must make a Good Faith Offer to the property owner. In most all circumstances, the Good Faith Offer is supported by an appraisal. Appraising property near airports often involves unique issues which may have a substantial effect on valuation.
This artic.le examines the effect that Michigan 's Zoning Enabling Act, airport zoning ordinances and existing avigation easements might have on the value of the property.
The Effect of Michigan's Zoning Enabling Act on Property Acquisition For Michigan Airports
Section 4 of Michigan 's Zoning Enabling Act (MCL 125.3203(4) provides that:
If a zoning ordinance was adopted before March 28, 2001, the zoning ordinance is not required to be consistent with any airport zoning regulations, airport layout plan, or airport approach plan. A zoning ordinance amendment adopted or variance granted after March 28, 2001 shall not increase any inconsistency that may exist between the zoning ordinance or structures or uses and any airport zoning regulations, airport layout plan, or airport approach plan.
Airport zoning ordinances, airport layout plans, and airport approach plans contain specific restrictions regarding properties near an airport. Most public airports in Michigan have approved airport approach plans. The airport approach plans depict 5 A Safety Zones. @ Each Zone has certain recommendations regarding the uses of the property.
For example, Zone 2 provides that the property owner should A avoid land uses which concentrate people indoors or outdoors. @ Land uses should limit concentrations of people to 0-5 people per acre. Examples of recommended uses include mini-storage and small parking lots.
What this means in practical terms is that if a parcel in Zone 2 was zoned agricultural prior to March 28, 2001, the local zoning authority cannot rezone the property to multi-family residential, because such a use would increase the inconsistency between the potential rezoning and the airport approach plan.
In condemnation law, a property owner is permitted to value the property at a higher zoning classification if “a reasonable possibility existed that the rezoning would have occurred if the property had not been condemned.” As Michigan Civil Jury Instruction 90.10 explains:
One of the things that must be considered in deciding what the highest and best use of the property was at the time of taking is the zoning classification of the property at that time. However, if there was a reasonable possibility, absent the threat of this condemnation case, that the zoning classification would have been changed, you should consider this possibility in arriving at the value of the property on the date of taking. In order to affect the value of the property, the possibility of rezoning must be real enough to have caused a prudent prospective buyer to pay more for the property than he or she would otherwise pay.
Under the scenario provided above, that the owner's appraiser should be precluded from assuming that the property has a highest and best use for multi-family residential, because the potential rezoning is a fantasy that can never be realized in the real world. Of course, the likelihood exists that an owner's attorney will argue that the Zoning Enabling Act does not preclude the residential use.
In the end, regardless of the appraiser's opinion regarding the effect of the Michigan Zoning Enabling Act, the legal principles must be correctly applied. On a more fundamental level, this issue should not be ignored. Uniform Standards of Appraisal Practice (USPAP) Standards Rule 1-2(e) requires that:
In developing a real property appraisal, an appraiser must:
(e) identify the characteristics of the property that are relevant to the type and definition of value and intended use of the appraisal, including:
(iv) any known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, or other items of a similar nature.
USPAP Standards Rule 1-3(a) requires that:
When necessary for credible assignment results in developing a market value opinion, an appraiser must:
(a) identify and analyze the effect on use and value of existing land use regulations, reasonably probable modifications of such land use regulations , economic supply and demand, the physical adaptability of the real estate, and market area trends; and develop an opinion of the highest and best use of the real estate.
The existence of airport approach plans should not come as a surprise, as the Michigan Bureau of Aeronautic's website cautions that:
APPRAISERS SHOULD CONSIDER APPROACH PROTECTION PLANS TO DETERMINE CURRENT AND FUTURE IMPACTS ON ZONING (and any corresponding impacts on value) FOR PROPERTIES SURROUNDING LICENSED PUBLIC USE AIRPORTS
In Frenchtown Charter Township v City of Monroe , 275 Mich App 1 (2007), the Michigan Court of Appeals issued its first and only opinion dealing with the application of the Zoning Enabling Act to an airport approach plan. The Court considered whether Frenchtown Township = s refusal to rezone property from Agricultural zoning to permit single-family residential constituted a taking of their property. The refusal to rezone the property was based upon the belief that rezoning the property A might be precluded by an airport approach plan approved by the Michigan Aeronautics Commission in 2002.@
The Court of Appeals noted that at the time the property owners sought rezoning, the controlling statute, MCL 125.273a provided, in part, that:
MCL 125.273a, the Township Zoning Act, contained essentially the same language as the Zoning Enabling Act, which combined several different statutes.
a zoning ordinance amendment adopted or variance granted after the effective date of the amendatory act that added this section shall not increase any inconsistency that may exist between the zoning ordinance or structures or uses and any airport zoning regulations, airport layout plan, or airport approach plan.
The Court ruled that the Township's refusal to rezone could not constitute a taking because MCL 125.273a precluded residential development as a matter of law. In other words, neither the City of Monroe nor the Township could be liable for taking away a property right that did not exist in the first place. In reaching its decision, the Court of Appeals stated that:
The insurmountable legal problem with the [owners'] position, is that pursuant to state law, Frenchtown Township , City of Monroe and Monroe County cannot rezone their property.
1 MCL 125.273a, the Township Zoning Act, contained essentially the same language as the Zoning Enabling Act, which combined several different statutes.
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It is undisputed that the airport approach plan issued by the Michigan Aeronautics Commission designates that the … property is in A accident safety zone 5" and that residential land use is prohibited in that zone. The Michigan Legislature required the issuance of the airport approach plan, it was drafted by the Aeronautics Commission, and the local government units are obligated to comply with the plan under state law and are bound not to alter zoning classifications designated by the airport approach plan. . . . [I]if defendants granted the [landowners = ] rezoning request, it would run contrary to state law (emphasis added).
While every matter must be evaluated on a case by case basis, it is important thatissues involving the Zoning Enabling Act are properly understood and applied before the Good Faith Offer is made.
The Effect Of Existing Avigation Easements on Valuation
It is not uncommon to find that properties near an airport already were subject to existing avigation easements. It is important to consider whether the language of any existing easement has an effect on the value of the property. Because the language in avigation easements has changed throughout the years, it is important to analyze the height and use restrictions imposed by the easement.
I represented the Lenawee County Airport in a matter where the property owner's appraiser concluded that the highest and best use of the property involved excavating sand and gravel, creating a lake and then selling off residential lake front lots.
In addition to other problems with that approach, a portion of the “proposed” lake was subject to an existing avigation easement that the County had purchased many years before. The existing easement contained height and use restrictions that prohibited the owner from creating electrical interference with radio communications, creating conditions that produce glare or otherwise make it difficult for fliers to distinguish between airport lights, or any other use which endangers the landing, taking-off or maneuvering of aircraft.
The County successfully argued that creation of a lake at the foot of a runway was a major bird attractant which undoubtedly would endanger the safety of pilots.
If the title work reveals any avigation easements, they should be analyzed prior to making the Good Faith Offer and any effect on valuation should be considered in the appraisal.
Airport Zoning Ordinances
The Airport Zoning Act , (MCL 259.431 et seq ) empowers political subdivisions to a dopt, establish, administer, and enforce airport zoning regulations which limit the height of structures and objects of natural growth, and otherwise regulate the use of property in the vicinity of publicly owned airports.
The Act authorizes the adoption of zoning regulations for the purpose of preventing the creation or establishment of airport hazards, and places of public assembly in the area surrounding an airport. The Act defines the term "airport hazard" as “any structure or tree or use of land . . . which obstructs the air space required for the safe flight of aircraft in landing or taking off at an airport or is otherwise hazardous or creates hazards to such safe landing or taking off of aircraft.”
Airport zoning ordinances often contain various zones, similar to the airport approach plans discussed above. Ordinances also may restrict uses with language similar to that used in avigation easements. Moreover, a zoning ordinance may also provide that a person who builds a structure in violation of the ordinance has waived the right to later claim damages for the violative use. For example, the Lenawee County Airport Zoning Ordinance provides that:
A person or persons who elect to establish any land use within an Airport Protection Zone which is not recommended by this Section shall have no claim or cause of action against the Airport, nor any municipality or governmental agency operating said airport or responsible for the administration of this Ordinance. Any person or persons electing to establish such non-recommended uses following the effective date of this Ordinance shall do so at their individual risk.
As is true with the other issues presented in this article, prior to making the Good Faith Offer, the appraiser should find out whether the property around the airport is subject to an airport zoning ordinance. Because it is often the case that little development has occurred close to a rural airport, the existence of such a zoning ordinance might not be well known. However, fundamental legal principles dictate that individuals are "charged with knowledge of the restrictive provisions of the ordinance." Fass v Highland Park , 326 Mich 19 (1949). In Pittsfield Twp v Malcolm , 375 Mich 135 (1965), the Michigan Supreme Court affirmed the general rule that, except in exceptional circumstances, municipalities may not be prevented from enforcing their zoning ordinances.
Valuation of property for airport improvement projects often involves unique and potentially complex issues that do not arise in acquisition of property for roads and highways. Prior to making the Good Faith Offer, it is important to have an understanding of the legal import of Michigan 's Zoning Enabling Act, existing avigation easements and airport zoning ordinances.