Opinion
Nos. CV 03 0827148 S, CV 97 0572219 S
November 30, 2009
MEMORANDUM OF DECISION
In these consolidated cases, the court is charged with the difficult task of determining the 1997 fair market value of a portion of a large tract of land that abuts and has been polluted by two separate landfills, owned by two different municipalities, for purposes of assigning condemnation and trespass damages against one of the municipalities. Further complicating the court's work is the fact that the valuation evidence offered by the owner of the property does not fit easily within the general rule that, if the taking is partial, the usual measure of damages is the difference between the market value of the whole tract with improvements before the taking and the market value of what remained of it thereafter.
This court conducted a lengthy hearing in damages after the cases were remanded by the Connecticut Supreme Court, which reversed a prior decision of the trial court (Satter, J.), awarding just compensation and trespass damages to Tilcon in the amount of $526,545. For the reasons set forth below, this court now awards just compensation and trespass damages in the total amount of $404,938.50.
These cases involve two corporations, namely, Tilcon, Inc., and Tilcon Minerals, Inc. The parties, however, appear to treat these corporations as synonymous. Accordingly, all future references in this opinion to Tilcon are to both corporations.
I. FACTUAL AND PROCEDURAL HISTORY
Tilcon owns approximately 184 acres of land in the town of Southington. The parcel is irregularly shaped, and contains wooded areas, several small ponds, wetlands, and is traversed by the Eight Mile River. The northern portion of the parcel abuts the city of Bristol (Bristol) and, more specifically, a landfill owned by Bristol. To the west, the property abuts a large parking lot that services the Lake Compounce Amusement Park. To the south, the property abuts Welch Road in Southington. To the east, the property abuts private property as well as a second landfill owned by the town of Southington.
For some time prior to 1996, Tilcon used the property to mine sand and gravel. Beginning in 1996, Tilcon stopped mining the property and instead used it as a place to store some of its gravel and sand mined from other properties in the area. This was done in order to retain their mining permit and to continue mining sand and gravel on adjacent properties owned by third parties (hereinafter referred to as the "Norton" and "Reynolds" properties). Although the Tilcon land is currently used for storage of sand and gravel, the area is zoned residential. Tilcon had a business plan in place in which, after completing the mining of sand and gravel on a given piece of land, Tilcon would cover it with fill and subdivide it for the sale of residential lots.
The Norton property is also sometimes referred to as the "Albahary" property. This property has also been polluted by leachate emanating from the Bristol landfill. The Norton property is the subject of a Connecticut Supreme decision; Albahary v. City Of Bristol, 276 Conn. 426, 886 A.2d 802 (2005); and a federal district court opinion; Albahary v. Bristol, 96 F.Sup.2d 121 (D.Conn. 2000).
Bristol is a municipality in Connecticut that controls the Bristol landfill. In 1984, the landfill became a municipal solid waste landfill operating under state permit to discharge water. During the time of the landfill's operation, Bristol discovered that contaminates, or leachate, had infiltrated the state's groundwater. In 1995, the Department of Environmental Protection ("DEP") initiated a proceeding against Bristol to prohibit the discharge of water, substance or materials, including, but not limited to, leachate, from the landfill into the waters of the state. This proceeding resulted in a consent order between Bristol and the DEP, in which Bristol agreed to identify any properties that may have been affected by the Bristol landfill, and to assume responsibility for any such contamination that may have resulted. Through the consent order, Bristol agreed to investigate the current impact and potential impact of the leachate on the properties, to develop a plan for remediation, and to perform such remedial actions in accordance with an approved schedule.
Bristol determined that portions of the Tilcon property that are south and east of the landfill had been polluted by contamination from its landfill. As a result, on July 18, 1997, the Bristol "filed a statement of compensation with [the trial] court and deposited $50,000 for the taking of easements and other rights on 24.84 acres of Tilcon's property for a period of thirty-one years. On August 15, 1997, [the city] recorded the certificate for taking in the Southington land records, condemning the following areas: (1) two `zones of influence easement areas' containing approximately 14.3 acres; (2) two `monitoring well easement areas' containing approximately 36,800 [square feet]; (3) three `access easement areas' containing approximately 10.7 acres on the Tilcon property; together with (4) the exclusive right to `withdraw ground water from the zone of influence areas'; (5) the right to release and deposit contaminants and pollutants directly and indirectly on or in the groundwaters and subsurface rocks and formation within the zone of influence areas; (6) the right to enter on, over and across and under the access easement areas and the monitoring well easement areas and to transport such machinery and materials as may be required for the purpose of collecting environmental data, extracting water from monitoring wells and conducting such investigations and tests which [the city] deems necessary in order to monitor and treat the groundwater within the zone of influence area; (7) the right to pump and treat water from the access easement areas for the purpose of remediating contamination from [the city's] landfill of the groundwater within the zone of influence area; (8) the right to enter on, over, across, under and upon the access easement areas and the monitoring well areas on foot or by vehicle and transport such machinery and materials as may be required for the purpose of maintaining, repairing and replacing any and all facilities located within such easement areas; and (9) the right to enter on, over, across and upon the access easement areas and monitoring well easement areas on foot or by vehicle and transport such machinery and material as may be necessary or convenient for the purpose of exercise in the easement taking.
"In addition, [the city] condemned a two year right to enter upon the access easement areas and monitoring well easement areas to construct and install four monitoring wells within the monitoring well easement area together with associate pumps, piping, hardware and equipment." (Internal quotation marks omitted.) City of Bristol v. Tilcon Minerals, Inc., 284 Conn. 55, 60-61, 931 A.2d 237 (2007).
The portion of the property that Bristol condemned, however, was not the only portion of Tilcon's property that was impacted by leachate from Bristol's landfill. An engineering consulting finn hired by Bristol, Fuss O'Neill, also determined that volatile organic compounds and heavy metals had migrated to groundwater on Tilcon's property south of the condemned portion of the property. This additional area amounted to 19.85 acres. These acres were not condemned Bristol nor were they considered by it in the $50,000 given to Tilcon as just compensation.
A portion of the Tilcon property has also been contaminated by a landfill owned and operated by the town of Southington. ("DePaolo landfill.") Leachate from the DePaolo landfill has damaged the southeastern portion of the Tilcon property and that portion of the property was itself the subject of a condemnation in 1988 and litigation that concluded in 1993. Tilcon was ultimately compensated $372,000 for the Southington taking.
A. Initial trial court proceedings
"On October 15, 1997, Tilcon filed an application for review of the statement of compensation (application for review) with the trial court, claiming inadequate damages for the statutory taking, for the reduction in value caused to Tilcon's adjoining land and for the additional costs required to develop or to use its remaining property. Tilcon also alleged claims of inverse condemnation and trespass on the ground that leachate from the landfill had contaminated an additional 19.85 acres of its property. After the city sought to dismiss the inverse condemnation and trespass claims on the ground that the trial court lacked jurisdiction to hear them because they fell outside the scope of the proceeding on the application for review, Tilcon filed a separate complaint, dated April 22, 2003, alleging trespass and inverse condemnation. On that date, Tilcon and the city also filed a joint motion to sever the trespass and inverse condemnation claims from the compensation claim in the application for review and to consolidate the cases for trial. On May 9, 2003, the trial court granted the parties' joint motion." City of Bristol v. Tilcon Minerals, Inc., 284 Conn. 55, 61, 931 A.2d 237 (2007).
The consolidated actions were tried to the court, Satter, J. In his memorandum of decision dated June 9, 2004, Judge Satter concluded that the highest and best use for the Tilcon property was for residential use. City of Bristol v. Tilcon Minerals, Inc., Superior Court, judicial district of Hartford, Docket No. CV97 0572219 (June 9, 2004, Satter, J.) [ 37 Conn. L. Rptr. 239]. Judge Satter determined the $50,000 initially paid to Tilcon for the taking was too low, and instead assessed condemnation damages of $324,785. Id. The court also found in favor of Tilcon on the claims of inverse condemnation and permanent trespass, and as a result, awarded $201,760 in damages for the city's de facto taking of the additional 19.85 acres of land contaminated by the Bristol landfill. Id. Judge Satter denied Tilcon's request for attorneys, appraisal and engineering fees.
B. Supreme Court decision
On appeal the Supreme Court of Connecticut affirmed the decision in part and reversed in part. City of Bristol v. Tilcon Minerals, Inc., 285 Conn. 55, 65-66, 943 A.2d 237 (2007). The court affirmed the trial court's determination that the highest and best use of the Tilcon property was as a residential subdivision. Id. The court further concluded, however, that the trial court improperly used a modified version of the lot method of valuation in determining the value of the property taken by Bristol, and in calculating trespass damages. Id., 68. The court held that the method used by the court was flawed because there was no evidence in the record regarding, inter alia, the costs to Tilcon of subdividing the property, or the expenses Tilcon would incur when preparing, marketing, and holding the property for its future sale. Id., 69. Ultimately, the Supreme Court concluded that the trial court's damages calculation was too speculative and uncertain, and lacked support in the evidence. Id., 77.
In addition, the Supreme Court reversed the trial court's decision that the contaminated groundwater constituted a taking by inverse condemnation. Id., 82. The Supreme Court reasoned that the contamination did not affect Tilcon's access to the Norton and Reynolds properties, or its storage of sand and gravel, and therefore Tilcon was not deprived of all reasonable and proper use of the property. Id., 84. The Supreme Court, however, affirmed the trial court's determination that the contaminated groundwater constituted a permanent trespass. Id., 86.
Finally, the Supreme Court reversed Judge Satter's award of trespass damages because the trial court used the same flawed methodology for determining trespass damages as it had used for valuating the just compensation damages for the portion of the property condemned by the city. Id., 91. The consolidated cases were remanded to this court for a hearing on damages on both the takings and the permanent trespass claims.
C. Proceedings on remand
On remand, this court conducted a hearing in damages on March 25, 2009, March 26, 2009, March 27, 2009, April 2, 2009, April 7, 2009, April 8, 2009, and May 22, 2009. After the close of the hearing, the court has received post-trial briefs, the last of which was filed on August 7, 2009. The court also heard post-trial oral argument on July 20, 2009.
Finally, the court conducted a site visit of the property. The court's site visit of the property and the surrounding area has significantly affected its view of the other evidence in the case and, ultimately, the court's determination of just compensation and trespass damages.
Further additional facts found by this court will be set forth below.
II. ANALYSIS
At the outset, it is important to indicate what is not at issue in this remand proceeding by virtue of the earlier proceedings in the trial court and the Supreme Court's decision on appeal. First, as Bristol concedes, it must be taken as established that the highest and best use of the property for both the takings and the trespass claims is a residential, single-family home subdivision. Second, it also established for purposes of this remand that there was a reasonable probability that the property could or would be used for residential development in the reasonably near future. Third, it must be taken as established the city's taking precludes any development of the condemned portion of the property as a residential subdivision.
In addition, it must be taken as established that the city permanently trespassed on 19.85 acres of Tilcon's property by contaminating the groundwater under the property. Finally, for purposes of this remand, it must be taken as true that even though the city has polluted these 19.85 acres, the pollution does not, at least theoretically, prevent Tilcon from developing that portion of the property. With these established facts in mind, the court turns to the specific task of awarding Tilcon condemnation and trespass damages for the relevant portions of the property impacted by the Bristol's actions.
A. Measure of condemnation and trespass damages.
The court first turns to the proper measure of Tilcon's claim for condemnation and trespass damages. The claim for condemnation damages specifically relates to the 24.84 acres of Tilcon's property that was taken by Bristol when it condemned easements and took other rights with respect to that portion of the property. The claim for trespass damages specifically relates to 19.85 acres of land that Bristol permanently damaged by causing the groundwater under the property to become contaminated.
1. Applicability of the "before and after rule" with respect to condemnation damages CT Page 19308
"Connecticut courts have recognized the well established constitutional principle that [t]he owner of land taken by condemnation is entitled to be paid just compensation. Conn. Const. art. I, § 11. If the taking is partial, the usual measure of damages is the difference between the market value of the whole tract with its improvements before the taking and the market value of what remained of it thereafter . . ." (Internal quotation marks omitted.) City of Bristol v. Tilcon Minerals, Inc., 284 Conn. 55, 71, 931 A.2d 237 (2007).In this case, Tilcon asks the court to depart from this "usual" measure of damages, and through expert testimony has offered evidence only as to the value of the portion of the property taken by the city. Tilcon has not offered evidence as to the market value of the whole 184-acre tract of land and/or the market value of the Tilcon's remaining land after the taking. Instead, Tilcon argues that the court is free to value the condemned portion of the property without the need to assign the remaining portion of its land a specific monetary value. Tilcon urges this court to accept a substituted valuation measure that simply assigns the remaining portion of its land a constant value of "X" both before and after Bristol's taking of the condemned portion of the property.
Bristol argues that the court should disregard all of Tilcon's valuation evidence because it does not conform to the "usual" measure of damages in cases involving partial takings. Bristol contends that the court must attempt to assign a specific monetary value to all 184 acres of Tilcon's property and then assign a value to the remaining portion of the property that has not been taken through condemnation by the city. Bristol asserts that the usual measure of damages will yield less condemnation damages because the remaining portion of the property is significantly polluted by contaminants emanating from the DePaolo landfill, for which Bristol has no responsibility, and therefore has very little value both before and after the taking.
This issue first arose during the initial proceedings before Judge Satter. Judge Satter concluded that the Tilcon's appraiser properly took "into account the entire tract owned by Tilcon, but since the lots outside of the taking were not directly impacted by the Bristol landfill as of the date of the taking, they were assigned a constant value of X in the before and after value." Bristol v. Tilcon Materials, Inc., supra, Superior Court Docket No. CV 97 0572219. Although Judge Satter did not explicitly say so, he appeared to conclude that this methodology is permissible. On appeal, our Supreme Court did not explicitly address whether this methodology was appropriate but also did not appear to find any fault with this part of the analysis.
This court concludes that in light of the unique and complex factual circumstances of this case, Tilcon's departure from the "usual" measure of damages is appropriate. In some cases involving a partial taking of land, such as this one, it simply is not practicable to apply the usual measure of condemnation damages. "[T]he question of what is just compensation is an equitable one rather than a strictly legal or technical one." (Internal quotation marks omitted.) Commissioner of Transportation v. Rocky Mountain, LLC, 277 Conn. 696, 728, 894 A.2d 259 (2006). Second, our Supreme Court's use of the phase "usual" measure is a recognition that this particular measure should not, in some instances, be applied because it is either unworkable or would result in some injustice to the parties.
Indeed, the overriding purpose of the "before and after rule is to ensure that the condemnee is fully compensated for severance damages when the taking results in diminution of the value of the property remaining postcondemnation." Commissioner of Transportation v. Larobina, 92 Conn.App. 15, 31, 882 A.2d 1265, cert. denied, 276 Conn. 931, 889 A.2d 816 (2005). In other words, the justification for the rule is to principally benefit the landowner by compensating him not just for the taken property itself but also for consequential or so-called severance damages to the remaining land. Id., citing 8A P. Nichols, Eminent Domain (3d Ed. Rev. 2005) § 16.01[2], p. 16-6. Here, Tilcon is not seeking severance damages for any harm to the portions of the 186-acre tract that are not subject to Bristol's taking. Indeed, Tilcon concedes that it has already received "damages" for diminution of value of at least some of the other areas of the 186-acre tract when its was compensated $372,000, after litigation, by the town of Southington for the DePaolo landfill.
Instead, the Connecticut Supreme Court has explicitly recognized that, in a partial takings case, an alternative to the "before and after rule" formula may be utilized. Meriden v. Highway Commissioner, 169 Conn. 655, 659, 363 A.2d 1094 (1975). In this alternative approach, "[d]amages may be computed by adding the market value of the land taken to the difference between the market value of the remainder before the taking and its market value after the taking." Id. In this case, Tilcon is willing to forgo any claim under the second half of the formula (which, again, attempts to quantify severance damages) by assigning the remaining portion of the land a constant value of "X" and to seek compensation only for the portion of the property that was actually taken by the city of Bristol.
Other courts have accepted a methodology in which a portion of land is assigned the value of "X." See, e.g., Wong v. Commissioner of Transportation, Superior Court, judicial district of New Haven, Docket No. CV 99 0431801 (December 4, 2001, Downey, J.T.R.) (appraiser assigned value of "x" to parcel with de minimus value); Hatzilambros v. Commissioner of Transportation, Superior Court, judicial district of New Britain, Docket No. 531361 (September 2, 1994, Bieluch, S.T.R.) (appraiser assigned value of "x" to building not impacted by land condemnation).
Additionally, although not obvious at first blush, the approach urged by Tilcon makes the valuation process less complicated here for several reasons arising out of the unique history and location of this property. First, as noted above, contamination from the DePaolo landfill on portions of the property that were not taken by Bristol significantly complicates the valuation of the remaining land by interjecting a number of additional factual issues and computation variables such as accounting for the stigma associated with that contamination both before and after the time of Bristol's taking and trespass. See Northeast CT. Economic Alliance, Inc. v. ATC Partnership, 256 Conn. 813, 832, 776 A.2d 1068 (2001). Second, further complicating the analysis, there are areas of the remaining property that have been polluted by both Bristol's landfill and the DePaolo landfill.
Third, allowing Tilcon to avoid appraising the entire 186-acre parcel will not, as the city contends, improperly fail to account for the "negative impact" of the contaminated southern portion of the property for which Bristol has no responsibility. As discussed below, this court specifically accounts for Bristol's concern regarding the Southington-caused contamination in its award of condemnation and trespass damages by recognizing that the condemned and trespassed portions of the property have less market value because of their close proximity to land, including other portions of the Tilcon property, that are contaminated by leachate emanating from the DePaolo landfill. The court can accomplish this adjustment without the need to value the entire 186-acre parcel of land.
Finally, the court finds as a factual matter, for reasons set forth at greater length below, that there is a reasonable probability that Tilcon would have received approval from the town of Southington to develop the portions of the property taken by and trespassed upon by Bristol without the existence of the remaining acreage. Consequently, the court's valuation approach is both simplified and made more reliable by limiting its inquiry to the fair market value of the portions taken by or trespassed upon by Bristol.
2. Measure of trespass damages
As the Supreme Court has held in this case, "[w]hen injury to property resulting from a trespass is remedial by restoration or repair, it is to be considered temporary, and the measure of damages is the cost of restoration and repair. Where a trespass is of a permanent nature, all damages, past and prospective, are recoverable in one action and the measure of damages is the decrease in the fair market value of the property . . ." (Internal quotation marks omitted.) City of Bristol v. Tilcon Minerals, Inc., 284 Conn. 55, 90, 931 A.2d 237 (2007).
Because it has already been determined in this proceeding that the Bristol's trespass upon the 19.85 acres is permanent, the measure of damages — the decrease in the fair market value of the land — is essentially the same measure of damage that the court uses to assess condemnation damages. Accordingly, with one significant exception, the court will treat the portions of the property taken by and trespassed upon as one 45.86-acre unit for assessing damages for both Bristol's condemnation and trespass.
There is one important difference in the manner in which the trespassed potion of the property must be valued from the manner in which the condemned portion of the property must be valued. With respect to the condemned portion of the property, Bristol's taking of that land through easement and other rights deprived Tilcon of all reasonable use of that land as a residential development. However, as Judge Satter found in the first trial, and as the Supreme Court noted in reversing the inverse condemnation award, Bristol's trespass upon the 19.85 acres by polluting the groundwater has not deprived Tilcon of all use of that acreage as a residential subdivision. Accordingly, the award of trespass damages, as discussed below, must account for the fact that Bristol's trespass did not totally destroy the fair market value of this acreage.
3. Highest and Best Use
In ascertaining the property's market value, it is well established that "[a] property's highest and best use is commonly accepted by real estate appraisers as the starting point for the analysis of its true and actual value . . . [U]nder the general rule of property valuation, fair [market] value, of necessity, regardless of the method of valuation, takes into account the highest and best value of the land . . . A property's highest and best use is commonly defined as the use that will most likely produce the highest market value, greatest financial return, or the most profit from the use of a particular piece of real estate . . . The highest and best use determination is inextricably intertwined with the marketplace because fair market value is defined as the price that a willing buyer would pay a willing seller based on the highest and best possible use of the land assuming, of course, that a market exists for such optimum use . . . The highest and best use conclusion necessarily affects the rest of the valuation process because, as the major factor in determining the scope of the market for the property, it dictates which methods of valuation are applicable . . . United Technologies Corp. v. East Windsor, 262 Conn. 11, 25-26, 807 A.2d 955 (2002). In determining its highest and best use, the [court may also] consider whether there was a reasonable probability that the subject property would be put to that use in the reasonably near future, and what effect such a prospective use [might] have had on the property's market value at the time of the taking . . . Northeast CT. Economic Alliance, Inc. v. ATC Partnership, 256 Conn. 813, 829, 776 A.2d 1068 (2001)." (Citations and internal quotation marks omitted.) City of Bristol v. Tilcon Minerals, Inc., 284 Conn. 55, 64-65, 931 A.2d 237 (2007).
The court is obligated to award just compensation based upon the fair market value of the land at the time of the taking and trespass, which, for purposes of this case, was July 18, 1997. See Textron, Inc. v. Commissioner of Transportation, 176 Conn. 264, 267, 407 A.2d 946 (1978).
In this case, the Supreme Court has affirmed Judge Satter's conclusions that the highest and best use of the property for both the takings and the trespass claims is a residential, single-family home subdivision and that there was a reasonable probability that the property could or would be used for residential development in the reasonably near future.
4. Valuation method for raw land
The court next turns to the appropriate valuation method to be utilized to assess the 1997 fair market value of the condemned and trespassed property. As noted by the Supreme Court in this case, "[R]aw land as such, with little or no improvements or preparation for subdivision may not be valued as if the land were in fact a subdivision . . . The accepted rule for the valuation of such land, therefore, is that the land will be considered in its present condition as a whole, with consideration given to any increment or enhancement in value due to the property's present adaptability to subdivision development . . . 4 P. Nichols, Eminent Domain (3d Ed.) § 12.3142[1][a], pp. 12-335 [through 12-356]; Minicucci v. Commissioner of Transportation, 211 Conn. 382, 384-85, 559 A.2d 216 (1989).
"In determining the adaptability of a property to residential use, the landowner need not establish the development potential of the property for the proposed use by a preponderance of the evidence, but only that it is reasonably so. The court is to value the tract of land only, and not to determine how it could best be divided into building lots, nor to conjecture how fast they could be sold, nor at what price per lot. Once the question as to the adaptability of a condemned tract of land for subdivision purposes has been answered, the real problem as to valuation must be faced. Does it enhance the market value and, if so, by how much. [4 P. Nichols, supra] §§ 12B.14 and 12B.14[1], pp. 12B-151 through 12B-158. Newington v. Estate of Young, 47 Conn.Sup. 65, 81, 777 A.2d 219 [ 28 Conn. L. Rptr. 341] (2000).
"Fair market value for the partial taking of land suitable for subdivision also may be determined by the lot method of valuation, in which the land is valued according to the number of buildable lots that the property can support. The lot method is most reliable in estimating value when substantial steps have been taken toward subdivision, as when portions of the tract already have been subdivided or partially developed, because tangible evidence of this nature clearly demonstrates the land's potential use as a subdivision. See 4 P. Nichols, supra, § 12B.14[1][c], pp. 12B-178 through 12B-179. In such cases, the costs to the developer are no longer speculative, the value of the individual lots in the market may be ascertained with as much certainty as in any other condemnation proceeding, and the possibility of such a use is no longer remote.
"A modified version of the lot method of valuation also may be used when few, if any, tangible steps have been taken toward subdivision of a property. Sometimes called the `residual approach,' an appraiser using this method `estimates a sale price for each individual, developed lot, multiplies that price by the number of lots in the tract, then deducts the estimated costs of development and marketing' to arrive at a final estimation of the property's value. United States v. 99.66 Acres of Land, 970 F.2d 651, 655 (9th Cir. 1992); see also Robinson v. Westport, supra, 222 Conn. 404-05 (describing lot method as approach in which land is appraised by establishing value of finished lots and then subtracting capital costs of improvements necessary to put them in that condition). Sufficient evidence of the costs associated with subdividing, preparing and marketing the land, however, must be provided to ensure the integrity and accuracy of the valuation process." (Citations and internal quotation marks omitted). Bristol v. Tilcon Minerals, Inc., 284 Conn. 71-73.
5. Tilcon's subdivision plan
Because few if any tangible steps have been taken by Tilcon to develop the property, Tilcon has urged the court to utilize the "modified version of the lot method of valuation." On remand, Tilcon has attempted to remedy the evidentiary flaws identified by the Supreme Court by submitting an appraisal containing evidence of the specific costs that it or a developer would incur to subdivide the property from start to finish.
Specifically, Tilcon hired an engineering firm to prepare a residential subdivision plan for the entire Tilcon property that likely would have been approved by the Southington's planning and zoning commission and inland wetlands agency in 1997. This plan, which was admitted into evidence at the hearing in damages, contains far more detail than the original 96-lot concept plan submitted in the first trial for Judge Satter to consider.
The detailed plan "proposes" a 103-lot open-space subdivision that would cover the entire 186 acres of Tilcon's property. Bristol objected to the detailed plan at the hearing in damages for principally two reasons. First, Bristol argues that, in light of Tilcon's decision not to appraise the entire 186-acre parcel, it should not be permitted to offer a subdivision plan that covers the entire parcel. Second, the city contends that on remand Tilcon is bound to its original concept plan of 96 lots and should not be permitted to inflate its damages by increasing the number of lots from 96 to 103 for which Tilcon, in effect, seeks compensation under the modified version of the lot valuation method. The court disagrees with Bristol.
An open-space subdivision differs from a conventional subdivision under the Town of Southington's 1997 regulations in several practical ways. Most importantly, an open space subdivision requires a special permit, thereby giving the town greater discretion in deciding whether to grant such an application and/or to impose reasonable conditions on any approval. An open-space subdivision under the applicable regulations allows for smaller lot sizes than a conventional subdivision but typically requires a developer of the property to dedicate larger areas for open-space and to take other steps to preserve natural and beneficial environmental features of a property. An open-space subdivision, therefore, is designed to encourage environmentally "smart" development and, at the same time, is beneficial to developers since it increases the number of lots that can be developed within a subdivision and reduces development and infrastructure costs by, inter alia, reducing the length of necessary roads.
Tilcon adequately explained through expert testimony, which the court credits, that in order to obtain subdivision approval from the town of Southington for the portions of the property taken by or trespassed upon by Bristol, Tilcon would have been required to show Tilcon's ultimate plan of development for the entire 186 acres. Municipal zoning agencies often require applicants seeking to subdivide some portion of larger piece of property to indicate what the expected future uses of the remaining land might be so that the zoning agency can insure that the proposed subdivision is consistent with all future uses of that property and surrounding properties. This practice, among other things, allows zoning officials to prevent adjacent properties from becoming "landlocked" and to ensure that the overall plan for the entire property will not unduly hamper owners of adjoining properties from suitably developing their own properties.
Consequently, even though Tilcon's detailed subdivision plan extends over the entire 186 acres, the detailed plan was admitted only to establish, pursuant to the modified version of the lot method of valuation, the specific subdivision plan for the portions of the land taken by or trespassed upon by Bristol. Tilcon simply is not seeking compensation for 103 lots under the modified version of the lot method of valuation but only for the reasonable market value of the land taken by or trespassed upon by Bristol.
Bristol's concerns about Tilcon using the 103-lot detailed plan over the conceptual plan offered at the first trial to inflate its damages are also unfounded. First, it is important to note that the Supreme Court's remand to this court did not explicitly or implicit limit Tilcon to one particular manner of valuation of the property. Instead, the Supreme Court found error because of the speculative nature of the evidence offered by Tilcon and simply remanded the cases with an order to conduct a hearing in damages. Nothing in the Supreme Court's rescript confines either party to using on remand the exact same evidence or appraisals it submitted at the first trial.
Finally, it is true that the Tilcon's detailed subdivision plan proposed nine more lots in the areas taken by or trespassed upon by Bristol than did the 96-lot concept plan. As a factual matter, however, this court is not obligated to find that Tilcon could actually obtain subdivision approval for the precise number of lots in this area of the property proposed by Tilcon in the detailed plan. Indeed, as set forth below, the court finds that the Tilcon's detailed plan overstates the number of lots for which Tilcon likely could have approval. Consequently, for all of these reasons, Bristol is not harmed by Tilcon's submission of the 103-lot detailed plan.
6. Tilcon's subdivision proposal would have been approved with modifications CT Page 19316
The court finds that it is reasonably likely that Tilcon could have obtained approval for a residential subdivision of the condenmed and trespassed portion of the property from the Southington Planning and Zoning Commission in 1997. The court does not credit the testimony of Bristol's expert that Tilcon's application for subdivision approval, as set forth in its detailed 103-lot subdivision plan, would have been rejected by the Southington planning and zoning commission and Southington Inland Wetlands Commission for lack of compliance with the applicable zoning and wetland regulations. Although both the Planning and Zoning Commission and the Inland Wetlands Commission would undoubtedly have required Tilcon to make reasonable modifications to its plan as a condition of regulatory approval, the court finds that there were no impediments to obtaining an approval that could not have been overcome by reasonable modifications to the plan.
The court also finds that Tilcon could have received regulatory approval for a "stand-alone" subdivision on the northern portion of the property, which includes the acreage taken by or trespassed upon, without necessarily applying for and receiving approval to subdivide lots on other portions of the property.
The court does conclude, however, that these modifications would have required Tilcon to reduce the number of proposed lots. Specifically, the court concludes that, with respect to the condemned and trespassed portions of the property, Tilcon would have received approval only for approximately 31 lots. It is reasonably likely that Tilcon would have been required to reduce the number of lots so as to avoid encroaching upon wetlands, including any buffer zones. The planning and zoning commission also would likely have required Tilcon to make some changes to its road system within the residential development for traffic and safety concerns, thereby reducing the number of lots that could be squeezed into this portion of Tilcon's property. Finally, because Tilcon indicated that it would have sought approval for an open-space subdivision, the number of lots into which the property may be subdivided is dependent upon a formula contained in section 3-07.4C of the Southington zoning regulations (Rev. to 1997). Due to unique features of this property (including but not limited to the presence of contamination from the DePaolo landfill), it is reasonably likely that the planning and zoning commission, in an exercise of its discretion, would have reduced the overall number of lots.
The court does not credit the testimony offered by Bristol that regulatory concerns about the layout of streets within the development would have resulted in the disapproval of the application altogether.
7. Application of the modified lot version method of valuation
At the hearing in damages, both parties presented retrospective appraisals in order to determine the fair market value of both the 24.84 acres of land that were taken by Bristol and the 19.85 acres of land permanently trespassed upon by Bristol. For example, as discussed above, Bristol's appraisal measured the fair market value of the entire property before the alleged taking and trespass and the value of the remaining property after the taking and trespass. Tilcon's appraisal focuses only on the before and after values of the acreage taken by or trespassed upon by Bristol. However, although these appraisals employed significantly different approaches at times, both appraisals ultimately and principally attempted to assess fair market value using the modified lot version method of valuation (also referred to as the subdivision development analysis method) within the specific context of Tilcon's 103-lot subdivision plan. Within this rubric, both appraisals utilized an income capitalization approach and a sales comparison approach.
The court makes the following findings of fact and conclusions relating to the appraisals and the question of fair market value. Under Tilcon's 103-lot subdivision plan, 18 lots would have been affected by Bristol's taking and 21 lots would have been impacted by Bristol's trespass. However, in light of the evidence, the court concludes that Tilcon (or another developer of the property) would have obtained approval only for approximately 14 lots in the 24.84 acres of land taken by Bristol and 17 lots in the 19.85 acres of land trespassed upon by Bristol.
These 31 lots would likely have had a average gross retail value (pre-taking and trespass) of $60,000 per lot, for a total gross retail value of $1,860,000. This figure is lower than the per lot value assigned by Tilcon's appraiser. The court finds that Tilcon's appraiser overstates the average value of the lots by failing to adequately account for a number of factors, including the lots' close proximity to (1) two landfills, (2) a plume of contamination emanating from the DePaolo landfill for which Bristol is not responsible, and (3) a large parking lot used by patrons of Lake Compounce Amusement Park. This factual finding regarding the average value of the lots has also been greatly influenced by the court's site visit to the property and surrounding area.
The court now turns to a factual assessment of the developmental, marketing, and carrying costs that would necessarily be incurred to turn this raw land into subdivided lots until they are all sold on the open real estate market. Specifically, the costs include, among other things: (1) initial development costs such a engineering, legal, application, and financing fees to subdivide the property; (2) road construction costs, including, but not limited to paving, curbing, drainage, and utilities (city water and sewer); (3) marketing and promotion costs; (4) overhead, insurance and other administrative costs; (5) real estate taxes imposed while the lots are held prior to sale; (6) real estate commissions; (7) closing costs; and (8) state and municipal conveyance taxes.
An important factor in assessing these costs is the so-called "absorption" rate, that is the rate at which a developer is likely to be able to sell the lots. The court rejects Tilcon's assertion that it likely could sell the lots at a rate of 2.16 lots per month. At the same time, the court recognizes that, based upon its prior finding that the acreage could only support 31 total lots. This absorption rate is significant because it affects the amount of taxes and other costs that would be incurred until each lot is sold. The court concludes that, given Southington's market conditions in 1997, it would have taken two years for a developer to obtain the necessary approvals and sell the 31 lots.
Based upon a review of all of the evidence regarding these development costs, the court finds the average development cost per lot would have been $39,000, thereby resulting in total development costs of approximately $1,215,000. Consequently, the net profit, after applying a 10 percent discount rate, would have been approximately $516,000, or $16,650 per lot.
As noted above, the lots subject to the trespass must be treated somewhat separately from the condemned lots. Because 14 of the 31 lots are subject to the taking, the court concludes that the value of these 14 lots prior to the taking is $233,100. The value of these lots after the taking discounted for 31 years at 10 percent is $12,144. Thus, the total net damages for the statutory taking is $220,956.
The court finds that the taking does not affect the value of the sand and gravel stored on the property and thus the sand and gravel is not considered in the court's taking analysis because it does not change the before or after values.
With respect to the 17 lots subject to the trespass, additional analysis is required because, as noted above, the pollution that constitutes the trespass does not completely destroy the lots' marketability. The court does find, however, that the pollution of the groundwater underneath these lots, even though the lots would be serviced by city water, heavily stigmatizes these lots. The court concludes that purchasers of residential homes on these lots would only pay approximately 35 percent of the price for which these lots would ordinarily sell.
The court agrees with and adopts Judge Satter's prior analysis in this case that the Connecticut Supreme Court's decision in Northeast Ct. Economic Alliance, Inc. v. ATC Partnership, 256 Conn. 813, 776 A.2d 1068 (2001) is inapplicable. Fundamental fairness dictates that Bristol, as the condemnor and the trespasser, should not be permitted to pay less condemnation or trespass damages when it itself caused the reduction of the market value of the property by polluting it.
Accordingly, the value of these 17 lots prior to the trespass is $283,050. The value of these lots after the trespass is $99,067.50.
Accordingly, the court awards trespass damages in the amount of $183,982.50.
B. Post-taking interest
General Statutes § 37-3c provides that "a judgment of compensation for the taking of property by eminent domain shall include interest at a rate that is reasonable and just on the amount of the compensation awarded." "Interest in an eminent domain proceeding is not interest, qua interest, but is an integral element of constitutional just compensation, being damages for delay in payment." Leverty Hurley Co. v. Commissioner of Transportation, 192 Conn. 377, 380-81, 471 A.2d 958 (1984). Under all of the facts and circumstances of this case, the court finds that a reasonable rate of interest in this case is 7 percent.
C. Post-judgment interest on trespass claim
Tilcon also seeks post-judgment interest on the permanent trespass damages and that the accrual of the interest should be calculated from the date of Judge Satter's decision. In its discretion the court declines to award such interest; see, e.g., Carrano v. Yale-New Haven Hospital, 112 Conn.App. 767, 963 A.2d 1117 (2009); particularly in light of the fact that Bristol not only appealed Judge Satter's decision in good-faith but actually prevailed in some significant ways in that appeal.
III. CONCLUSION
Based upon the analysis set forth above, Tilcon is entitled to judgment as follows:
1. On the application for the reassessment of condemnation damages, an increase of the award from $50,000 to $220,956, plus interest at 7 percent per annum from the date of the taking until the date of payment.
2. On the trespass claim, damages in the amount of $183,982.50.
3. A reasonable appraisal fee of $12,500.
4. Such cost as to be taxed by the clerk pursuant to P.B. § 18-5.
Judgment shall enter accordingly.