In that case our clients owned commercial property that the municipality wanted to acquire as part of a redevelopment project. When the municipality made its initial offer to our clients to acquire their property it based its offer upon a fair market value appraisal and did not perform any sort of minimum compensation study to determine how much it was going to cost our clients to acquire a comparable property within their community. The municipality's fair market value appraisal determined the value of the property to be $444,000 and its initial offer to purchase the property was $484,000.
After receiving the municipality's offer, our clients had their own fair market value appraisal done on the property and a minimum compensation study to determine how much it was going to cost them to purchase a comparable replacement property for their business. The appraisal determined the fair market value of the property to be $555,000, but the minimum compensation study determined it was going to cost our clients $779,000 to buy a comparable replacement property for their business.
Prior to the adoption of Minnesota Statute 117.187, our clients would have received compensation for their property based solely upon the two fair market value appraisals for their property. This would have meant they most likely would have received somewhere between $444,000 and $555,000 for their property. However, as a result of Minnesota Statute 117.187, our clients ended up selling their property to the municipality for $620,000, which is $65,000 more than their own fair market value appraisal said their property was worth. Clearly, this case demonstrates the value of 117.187 for property owners.
In order to take advantage of this new law a property owner and/or their attorneys have to be able to spot the critical issues involved in making a minimum compensation claim.
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