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<br />Exhibit C <br />Page 3 <br /> <br />Highest and Best Use: The property is valued according to its highest and best use. For <br />example, if good farmland is vacant and historically unplanted, the condemning authority <br />would still have to pay the price that good farmland will bring on the market. Suppose the <br />property contains a leased building which has a lease very favorable to the lessor. The <br />condemning authority is not bound by the terms of the lease--it pays what the market will <br />now bring for the property. If the landowner has paid way too much for the property, the <br />condemning authority doesn't reimburse landowner's cost, it pays fair market value. <br />Multiple Ownership. Suppose several owners have interests in the land. Each owner <br />receives the fair market value for that owner's interest. Note that the sum of each owner's <br />interest must equal exactly the total fair market value of the property. Let's use leased <br />property as an example of how the process works. Imagine that the authority seeks to take a <br />shopping center strip in which three tenants lease commercial space. In Minnesota, the fact <br />finder first determines the fair market value of the property as a unit. Of course, the income <br />produced by a comparable shopping center may help determine the fair selling price of the <br />commercial strip. But the starting point is to determine the total value of the shopping mall. <br />What do tenants receive? In the absence of a specific agreement between the landlord and <br />tenant, the tenant receives the value of his interest. If the tenant's lease is at a below market <br />rent, the tenant will receive something to reflect the "bonus value" of the lease. If the right of <br />leasehold renewal has a net value, the tenant will receive that as well. The amounts payable <br />to the tenant will be subtracted from the overall award to arrive at the landlord's share. In <br />addition, if the tenant owns fixtures which cannot be removed, the tenant may receive <br />compensation for those fixtures. <br />Leasehold Condemnation Clauses. It is quite common for commercial leases to contain a <br />clause which seeks to reserve the entire award exclusively to the landlord. These clauses <br />are enforceable in Minnesota, although the tenant will still receive Uniform Relocation <br />benefits. In Minnesota, a commercial lease which terminates upon condemnation effectively <br />deprives the tenant of compensation for the value of its leasehold interest. Other states <br />follow a somewhat different rule. <br />What about lost profits. When a business property is taken, the owner loses business <br />opportunity. It may surprise you to know that, at least in Minnesota, the owner does not <br />receive compensation for lost profits or business opportunity. (There are a few exceptional <br />cases in which this is not true). The theory behind this rule is that the owner receives enough <br />money to find a comparable location, so that the owner should be able to relocate and <br />continue receiving the same income and profits at the new location. Relocation benefits are <br />designed to assist the owner with some of the expenses associated with the move. <br />Severance Damages. Sometimes the condemning authority takes part, but not all, of the <br />property. The property remaining may suffer damage, because it is no longer connected to, <br />or part of, the land which has been taken. Generally, the owner of the property will be <br />entitled to "severance damages" defined as the loss in market value inflicted on the land not <br />taken. The right to severance damages arises only when some of the owner's land is being <br />taken. If neighboring land is taken, then the owner is entitled to damages only if he can <br />prove up the elements of an inverse condemnation. Severance damages may be awarded <br />for land which is contiguous, but not named in the condemnation proceeding. In addition, in