Terrene Investments, Ltd., Deerbrook Construction, Inc., Tax Matters Partner - Page 16




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                 i.  Setbacks                                                         
               The first of these is setbacks.  Setbacks are strips of                
          unmined land between pit walls and property lines, and they can             
          vary in size.  Legal restrictions in Texas require a 25-foot                
          setback for pit walls adjoining a public road,7 but the setbacks            
          for pit walls not adjacent to a public road are up to the                   
          operator and property owner.  The evidence showed setbacks in the           
          Houston area range from 5 to 50 feet.  Some of this variance                
          depends on what type of soil is present on the property--the more           
          compact the soil in a pit wall, the less likely it is to collapse           
          and the narrower the setback can be.  And some of the variance              
          simply lies in an operator’s risk preference.  (The risk being              
          that the walls collapse and damage adjoining land.)                         
               We begin by finding that Hamblen Road, a public road, runs             
          along the southern edge of the property for 1,022 feet.  On the             
          other sides, there is a private road on the east (1,600 feet), a            
          railroad easement on the west (1,550 feet), and the remaining 24-           
          acre parcel on the north that Terrene decided to keep (695                  
          feet).8  Other than along Hamblen Road, then, the precise size of           
          the setback is entirely discretionary.  We do think that prudence           


               7 See Tex. Nat. Res. Code Ann. sec. 133.044 (2005).                    
               8 The parties introduced good maps of the property, which              
          show it to be quadrilateral--but it’s not a rectangle, and                  
          there’s nothing in the record describing the angles involved,               
          making areal calculations of parts of the property necessarily              
          imprecise.  We also round to the nearest whole number here and              
          throughout our calculations.                                                




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