Board of County Com'rs of Eagle County v. Vail Associates, Limited

• Decision Date: 06 April 1970
• Docket Number: No. 23846,23846
• Citation: 468 P.2d 842,171 Colo. 381
• Parties: BOARD OF COUNTY COMMISSIONERS OF EAGLE COUNTY, and the Department of Highways, State of Colorado, Plaintiffs in Error, v. VAIL ASSOCIATES, LTD., Western Federal Savings and Loan Association, Denver U.S. National Bank, H. A. D. Enterprises, Inc., Virgil H. Williams as Treasurer and Public Trustee of Eagle County, Defendants in Error.
• Court: Colorado Supreme Court

Page 842

468 P.2d 842

171 Colo. 381

BOARD OF COUNTY COMMISSIONERS OF EAGLE COUNTY, and the Department of Highways, State of Colorado Plaintiffs in Error, v. VAIL ASSOCIATES, LTD., Western Federal Savings and Loan Association, Denver U.S. National Bank, H. A. D Enterprises, Inc., Virgil H. Williams as Treasurer and Public Trustee of Eagle County, Defendants in Error.

No. 23846.

Supreme Court of Colorado, En Banc.

April 6, 1970.

As Modified on Denial of Rehearing June 1, 1970.

Gene K. Luby, Eagle, for plaintiff in error, Board of County Commissioners of Eagle County.

Duke W. Dunbar, Atty. Gen., John P. Moore, Deputy Atty. Gen., Joseph M. Montano, Asst. Atty. Gen., and Chief Highway Counsel, George D. Dikeou, Leonard Ripps, Asst. Attys. Gen., Denver, for plaintiff in error, the Dept. of Highways, State of Colorado.

Winner, Berge, Martin & Clark, Fred M. Winner, Denver, for defendant in error, Vail Associates, Ltd.

Clanahan, Tanner, Downing & Knowlton, Denver, for defendant in error, Western Federal Savings and Loan Association.

Davis, Graham and Stubbs, L. Richard Freese, Jr., Denver, for defendant in error, Denver U.S. National Bank.

LEE, Justice.

This writ of error is directed to an eminent domain proceeding in the District Court of Eagle County, Colorado. The Board of County Commissioners of Eagle County and the Department of Highways, State of Colorado, petitioned to acquire by the exercise of the power of eminent domain a strip of land containing approximately 129 acres owned by respondent Vail Associates, Ltd. We herein refer to petitioners as the 'State' and to the respondent as 'Vail.'

The right-of-way being acquired was for the purpose of constructing a portion of U.S. Interstate 70 in the Gore Creek Valley which runs westerly from the west side of Vail Pass to Dowd Junction at the intersection of U.S. Highways Nos. 6 and 24. I--70 was to replace U.S. No. 6. Vail's lands in Gore Valley, which consisted of approximately 1,125 acres, were bisected by U.S. 6. The portion lying south of U.S. 6 had been developed into a ski resort known as Vail Village. The core of the Village development consisted of approximately eighty acres from which the ski lifts ascended southward into the Mill Creek area of the White River National Forest. The initial development of Vail Village and the adjoining ski area commenced during the early part of 1962. By the time of the trial in November of 1967, the development was a thriving ski resort. A variety of ski slopes had been created and were serviced by 9 ski lifts installed at a cost of approximately two million dollars. It was anticipated that when the ski area was fully developed a total of 20 ski lifts would have been installed.

Vail Village is a municipal corporation. It consists of numerous commercial enterprises, including shops, restaurants, hotels, motels, lodges, condominiums and individual residences, the construction cost of which was estimated to be from $27,000,000 to $29,000,000. Utility services for water, sewer, electricity and gas were available, as were fire and police protection. To the end that the area would develop into a year-round recreation resort, the Vail Metropolitan Recreation District was formed and had commenced construction of an 18-hole golf course, tennis courts and other summer recreation facilities. In sum total, the evidence showed a vital, thriving and growing community with great promise of significant additional expansion in the future. The State expert appraiser, in describing the successful manner in which the Vail ski area had been developed, characterized the management and general procedures followed by Vail Associates in the operation of the ski area and in planning for the future as outstanding. It is in this setting that the State, in the interest of constructing another segment of I--70 across the State of Colorado, exercised its power of eminent domain.

The property of Vail lying north of U.S. 6 was undeveloped, raw land; and it was through this area that I--70 was to be constructed. An arrangement had been worked out between the State and Vail that the portion of U.S. 6 lying outside of the I--70 right-of-way no longer needed for highway purposes would revert to Vail upon completion of I--70 through the Gore Valley area. This reversion consisted of approximately sixteen acres.

Although the condemnation proceedings were conducted before a commission of three freeholders, the court presided throughout the entire trial, ruling upon all issues and reducing the role of the commissioners to that of a jury.

Witnesses for both Vail and the State agreed that the highest and best use of the property being condemned was for an extension of the Vail ski area resort. Vail's evidence showed plans for the future development of a new ski area to be known as Lion's Head, which lay to the west of the existing Mill Creek area. Included in the development plans were the installation of additional ski lifts from the base of the Lion's Head area upward to new ski trails which eventually would be interconnected with the older development lying to the south and east. The plan envisioned a new commercial development radiating from the base of the new ski lifts, which would include uses similar to those existing in the Vail Village area. These plans were preliminary projections of the thinking of Vail as to the best utilization of the Lion's Head area; but in no sense of the word could they be considered finalized. No platting of this area had been accomplished, nor had streets been laid out or dedicated, nor had final engineering been undertaken or completed. Vail contended that there was an agreement with the State that Vail would deliberately postpone final planning, subdividing, and engineering until such time as the State definitely determined the route of I--70. The State disputed any such agreement. In any event the land over which I--70 was to cross was undeveloped and unplatted land.

The expert appraisers for both the State and Vail used the comparable sales approach, or market data approach. The appraisers disagreed sharply in their valuations. Vail's most generous appraiser placed the fair market value of the land taken at $1,508,000, or approximately $11,600 per acre, and the value of the U.S. 6 reversion at $363,600, or approximately $22,700 per acre; whereas the State expert was of the opinion that the taking was worth only $332,000, or approximately $2,570 per acre, and the reversion was worth $35,195, or approximately $2,000 per acre. The award of the commission was $1,378,096 for the taking, at the rate of about $10,930 per acre, and $335,694 for the reversion, at the rate of approximately $20,970 per acre.

The State contends prejudicial error was committed in several respects relating to the admission of evidence and, therefore, the commission's certificate of ascertainment and assessment should be set aside and the cause remanded for a new hearing. We agree, and discuss the specifications which we deem significant.

I.

The first contention relates to evidence consisting of two exhibits. The first, exhibit 17, depicted a hypothetical division of Vail's raw, undeveloped land into small areas or plots divided by hypothetical roads or streets. This exhibit was designated as 'Vail Village Lion's Head Land Use Plan.' It has been prepared by Vail's land planning consultant and represented the contemplated Lion's Head development heretofore discussed. It graphically depicted the highest and best use of this area, according to the testimony of Vail's witnesses. To each hypothetical plot was ascribed a certain land use, including such uses as for a shopping center, motels, lodges and apartments, highway services, condominiums, parking, medium-high density residential and hillside residential, etc.

The second exhibit, No. 18, captioned 'Vail Village Land Take and Reversion--Summary by Land Use and Location,' showed the right-of-way being condemned. On it were the hypothetical land uses as depicted on exhibit 17, traversed by the right-of-way. The amount of acreage being taken from each hypothetical use plot was set forth. For example, of the proposed shopping center use, exhibit 18 indicated the right-of-way took 3.186 acres; of the motel and highway services use, the right-of-way took 9.681 acres; etc. In addition, exhibit 18 showed land uses and acreages taken from each use in the eastern part of Gore Creek Valley, which were not shown on the Lion's Head Land Use Plan.

Vail's appraiser, Bresnahan, testified that in his opinion, considering the highest and best use as shown by exhibits 17 and 18, the total taking was worth $1,508,000. On cross-examination he indicated that he arrived at this figure by assigning a present market value per acre to each type of hypothetical use. He then determined how many acres of the particular use were being taken and multiplied the acreage by the hypothetical value assigned to that use. This figure was added together with those determined by this method for all other hypothetical use acreages taken, in order to arrive at the total market value of the right-of-way being condemned.

We here note that neither the court nor counsel had the benefit of our decision in Department of Highways v. Schulhoff, Colo., 445 P.2d 402, the announcement of which was made after this case was tried. The State contends that the use of exhibits 17 and 18 and the testimony of Vail's appraiser, which assigned hypothetical use values to the use areas designated on the exhibits in order to arrive at the total value, is prohibited by the rule announced in Schulhoff. It is fundamental that evidence of the highest and best use to which the property may reasonably be applied in the future by men of ordinary prudence and judgment is admissible to assist the commission or jury in arriving at the present cash market value of the property being taken. Wassenich v. City of Denver, 67 Colo. 456, 186 P. 533....