For the original article with more explanation, an example and definition of terms used, click here.
This is a ruling concerning eminent domain and the distribution of funds to owners and lessees of property condemned by the State of Alabama.
In 1992, Alabama condemned property for a public easement. The
Fairhope Single Tax Colony and the lessee, SouthTrust Bank, had agreed the appraised value of the condemned property was $28,260, plus
accrued interest, for the condemned property. The value of the
leasehold interest over the duration of the lease was determined by a testifying witness to be
$29,809. Since in Alabama the lessee's losses are covered first, FSTC likely wouldn't have gotten much if any had they proceeded with the new trial. Instead, after the Court of Civil Appeals sent it back to the trial court,
FSTC and SouthTrust Bank settled out of court and had the settlement
sealed.
Presumably, the formula for distribution of State funds of eminent domain properties concerning owners and lessees is as follows: Take the purchase price plus economic rent less the contract rent subtracted from State funds with the remainder going to the FSTC.
For Example: The State has agreed to pay $10,000 for a piece of land to
expand the highway. The tax value on the land is $10,000, therefore the
contract rent is $20 per year. The economic rent is $100 per year.
Price of Land + Economic Rent = Total Value
10000 + 9900 = 19900
Economic Rent x Remainder of Lease = Total Economic Rent
100 x 99 = 9900
Contract Rent x Remainder of Lease = Total Contract Rent
20 x 99 = 1980
Economic Rent - Contract Rent = Leaseholder Value
9900 - 1980 = 7920
Leaseholder Value + Purchase Price = Total Leaseholder Value
10000 + 7920 = 17920
State Funds - Total Leaseholder Value = Remainder
10000 - 17920 = -7920
Remainder + Contract Rent = Colony Share
-7920 + 1980 = -5940
In
this simplified example (every case will be fact specific), the
Leaseholder Value and Colony Share exceeded what the State had agreed to
pay. In this instance, Alabama law states a lessee must be reimbursed
first. This means the leaseholder would get $10,000 and the Colony would
receive $0. The leaseholder loses $7,920 in property value and the
Colony loses $1,980 due to the state only paying $10,000 for a piece of
property worth $19,900.
Summaries of each section are in bold italics.
