Zoning laws and zoning maps are not caste in stone. They are subject to change for any number of reasons including recognition by a legislative body of a change in the character of an adjacent area. In Middle Tennessee these days, it is not at all fantastical for a land owner to expect a change in the current zoning of his or her property, which rezoning would allow new uses and development parameters.
In many cases, land owners’ real estate increases in value when a zoning change is enacted. For example, the value of a piece of property might dramatically increase when its zoning is changed from some form of residential to some form of commercial or industrial use. Can a possible change in zoning that would increase the value of a piece of property that is the subject of a condemnation case be considered by a jury? In Tennessee, the answer is “yes.”
A couple of Tennessee eminent domain cases are excellent authority for the position that a potential change in zoning may be considered by a jury. In Shelby County v. Mid-South Title Company, Inc. (Tenn. Ct. App. 1980), the property owner’s property was zoned R-1 (single family residential). The condemning authority, Shelby County, appealed a jury verdict on the grounds that the trial judge should not have permitted the property owner’s experts to testify as to the value of the land being taken based on appraisals wherein they considered comparable sales of commercially zoned properties.
At trial in the Shelby County case, the proof was that the county was taking 1.842 acres of the property owned by the defendant land owner. All three of the land owner’s expert witnesses testified that the property at issue had immediate and imminent commercial value that would be taken into account by any potential buyer. These opinions were based on their opinions that the property would be rezoned for commercial use in the near future. Consistent with the aforementioned opinions, each expert based his opinion of the value of the land being taken on appraisals based on comparable commercial sales. The three experts for the county based their appraisals strictly on comparable residential sales because they believed that any commercial potential for the subject property was far-off.