HBA-EDN C.S.S.B. 438 77(R) BILL ANALYSIS Office of House Bill AnalysisC.S.S.B. 438 By: Madla Land & Resource Management 5/17/2001 Committee Report (Substituted) BACKGROUND AND PURPOSE Currently, while assessing damages to a property owner under condemnation proceedings, a court will accept evidence for the existence of certain natural resources that increase the rental value of the property. However, a property owner cannot be compensated for the fair market value of the natural resources separately from the real property even if the condemner's intended use of the property is to develop and use that natural resource. C.S.S.B. 438 allows property owners to submit evidence and be compensated for the fair market value of natural resources when certain conditions are met. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS C.S.S.B. 438 amends the Property Code to require the special commissioners or court in a condemnation proceeding regarding eminent domain to admit evidence relating to the market value of the natural resources as property apart from the land in addition to the local market value of the real property if the entity proposes to condemn the fee title of the real property and the special commissioners or court find that the real property may be used by the entity to develop or use the natural resources located on or under the real property. If evidence relating to the market value of natural resources is admitted, the bill authorizes the special commissioners or court to assess damage to the property owner based on the local market value of the real property, excluding the market value of the natural resources at the time of the special commissioners' hearing and the market value of the natural resources on or under the real property, determined separately from the real property, at the time of the special commissioners' hearing. The bill provides that evidence relating to the market value of the natural resources must be based on generally accepted appraisal methods and techniques. These provisions apply only to a political subdivision of the state, a corporation with eminent domain authority, and an irrigation, water improvement, or water power control district created by law and do not authorize natural resources for which a value is assessed in determining damage to the property owner to be appraised separately from the real property for property tax appraisal purposes or subject real property condemned in a condemnation proceeding to an additional tax. EFFECTIVE DATE September 1, 2001. COMPARISON OF ORIGINAL TO SUBSTITUTE C.S.S.B. 438 modifies the original by stipulating that for evidence to be admitted in a condemnation proceeding regarding eminent domain, the entity must propose to condemn the fee title of the real property and the special commissioners or court must find based on the evidence presented at the hearing that the real property may be used by the entity to develop or use the natural resources located on or under the real property. Whereas, the original required such evidence to be admitted if the political subdivision stated in its condemnation petition that the intended purpose for acquiring real property was to develop or use the natural resources located on or under the real property. The substitute modifies the criteria for the assessment of damages to a property owner under condemnation proceedings. The substitute provides that these provisions apply to a political subdivision of the state, a corporation with eminent domain authority, and an irrigation, water improvement, or water power control district created by law, whereas the original only applied to political subdivisions.