Opinion
No. UWY X01 CV 04 4010333
August 3, 2007
New England Estates, L.L.C. (New England Estates) and Thomas Santa Barbara, Jr. and Frank Perrotti, Jr. appeal from the statement of compensation in the amount of $1,167,800 filed upon the taking of the property known as 48-86 Tabor Drive in Branford, Connecticut.
In this memorandum of decision, New England Estates and Perrotti and Santa Barbara will be collectively referred to as the plaintiffs.
BACKSTORY OF THE CASE
On December 18, 2003, the town of Branford, filed its statement of compensation in the amount of $1,167,800 with the clerk of the Superior Court in the judicial district of New Haven in connection with the taking of the property known as 48-86 Tabor Drive in Branford (subject property or site). On January 5, 2004, the clerk of the court issued a certificate for the taking of the subject property, which was recorded in volume 855, page 428 of the Branford land records. In that same action, Santa Barbara and Frank Perrotti filed an appeal and application for review of the statement of compensation filed by the town of Branford, dated May 25, 2004. On October 12, 2004, Branford filed its answer and special defenses to the appeal and application for review. On April 22, 2005, Santa Barbara and Perrotti filed a reply to Branford's special defense.
In this memorandum of decision, the town of Branford will either be referred to as Branford or as the defendant.
This action was originally captioned Branford v. Santa Barbara, Superior Court, judicial district of New Haven, Docket No. CV 03 048991.
Meanwhile, in a separate action, New England Estates filed its appeal and application for review of the statement of compensation filed by the town of Branford, on June 9, 2004. On August 12, 2004, Branford filed its answer and special defenses to the appeal and application for review. On August 26, 2004, New England Estates filed its reply to Branford's special defenses.
This action was originally captioned New England Estates, L.L.C. v. Branford, Superior Court, judicial district of New Haven, Docket No. CV 04 0490722.
On December 27, 2004, Branford filed a motion on consent for an order consolidating the two separate actions, and the court granted the motion in January of 2005. On May 4, 2006, the two consolidated actions were transferred to the complex litigation docket in Waterbury. On June 13, 2007, the plaintiffs filed a pretrial brief in support of valuation claim. Also on June 13, 2007, Santa Barbara and Perrotti filed a separate pretrial brief in support of valuation claim. On June 13, 2007, Branford filed its pre-hearing memorandum. On June 20, 2007, both the plaintiffs and Branford filed reply briefs. The court conducted a hearing on June 25, 26 and 27, and July 2 and 5, 2007. This court viewed the subject property on July 3, 2007. The plaintiffs filed their post-trial brief on July 5, 2007, and Branford filed its post-trial memorandum on July 6, 2007.
The captions of the consolidated cases are now New England Estates, L.L.C. v. Branford, Superior Court, complex litigation docket at Waterbury, Docket No. X01 CV 04 4010333 and Santa Barbara v. Branford, Superior Court complex litigation docket at Waterbury, Docket No. X01 CV 03 4010334.
The taking is contested on constitutional grounds as well as on the amount of damages paid. The payment of $1,167,800 for the property appears to be based upon the town's October 2002 assessed value of the subject property for tax purposes being $817,500. This assessment was based on the value of vacant industrial land.
BACKSTORY OF THE PROPERTY
The subject property is irregularly shaped, consists of 76.91 acres and is located in the south central area of Branford. It is identified on Assessor's Map F-8, Block 8, Lot 5. The site has approximately 1,233 feet of frontage along the east side of Tabor Drive, which borders the property to the west. It is bordered to the north by an active railroad line, with an additional 175.69 feet of frontage on the southwest side of Pine Orchard Road. The railroad line, buffered by trees and a pond, separates the subject property from residential neighborhoods to the north. A landfill borders the subject property to the southwest, and to the south and southeast of the subject property is land owned by the Branford land trust. A dog kennel, veterinary clinic and residences are located to the east of the site. Along Tabor Drive a church, a cemetery, residential homes, salt marshes and small industrial sites can be found, Residential development is the predominant use of land west of Tabor Drive, south of the landfill, east of the site, and north of the railroad tracks. Access to the site can be gained from local two-lane roads.
The site was formerly mined as a sand and gravel site, and much of the subject property's topsoil has been removed. The periphery of the site has mature trees, but the majority of the area was stripped of its natural soils and is now covered by a nonnative invasive species of shrub-like vegetation. A 4.7-acre pond can be found on the northeast portion of the site. Wetlands encompass 7.35 acres of the site. The northwest portion of the site is within a flood plain. According to flood insurance rate map 090073-0003-D 090073-0006-C, dated June 16, 1992 and November 18, 1983, a majority of the site is located in zone C, an area of minimal flooding. A small portion of the site is located in zone A6, which is within the 100-year flood boundary and zone B, which is between the 100-year to 500-year flood boundary. Dirt and gravel roads extend throughout the site, and a municipal sewer line runs through the northern and western portion of the site. Sewer, water, electricity, and telephone service are available to the subject property.
The subject property is located about one mile southeast of the town center and is southeast of the Branford River and north of Long Island Sound. While the site is located near railroad tracks, there is no direct access from the site to trains; the train station is closer to the town center. The subject property is located approximately one and a half to one and three fifths miles southwest of Route 1 and Interstate 95.
The subject property is a desirable property for residential development. It is located in an ideal setting for residential use. It has considerable frontage on Talbot Drive and additional frontage on Pine Orchard Road and is approximately three quarters of a mile away from Long Island Sound. The entire tract is favored by immediately accessible utilities, including a sanitary sewer line and a municipal water line.
As of the time of the taking, 70 acres of the site were zoned as IG-2 industrial. A small portion of the site was zoned as R-3. There was also a Special Development Area (SDA) overlay zone over the entire site, which defines areas in which other zoning districts may be established, including a planned development district (PDD). A PDD is an area that is to be located only within an SDA and may have unique provisions. The Branford planning and zoning commission eliminated the PDD from the zoning map in January 2002.
In 1988, Branford approved a proposal for the construction of 298 residential condominiums, a community building and a nine hole golf course under the PDD. That development was never built. In the early 1990s, Santa Barbara and Perrotti purchased the property at a foreclosure auction for $2,110,000. Santa Barbara and Perrotti contemplated both using the subject property for a landfill for bulky waste and for a housing development. In the early 2000s, Santa Barbara and Perrotti decided to put the subject property on the market. In May of 2001, Santa Barbara and Perrotti entered into an option agreement with New England Estates, establishing a purchase price of $4,750,000. New England Estates agreed to pay $10,000 per month for the option, as well as the costs of testing, engineering, site designs, and town approvals for the proposed residential development, including legal fees associated with the approval process. The option was for six months, with three six-month renewals and a price increase to $15,000 per month for the last two renewal periods. One-half of all option payments were to be applied to the purchase price. The option agreement was amended in both May 2002, and December 2002. The first amendment granted a fourth renewal period. The renewal payment was $15,000 per month, for a total of $90,000. The fourth renewal term option payment was not to be applied to the purchase price. The second amendment gave New England Estates the right to extend the term of the option agreement for four six-month consecutive option periods, starting December 1, 2002, and ending November 30, 2004. The renewal payment was reduced to $45,000, to be paid in monthly installments of $7,500. If the parties to the option agreement reached a closing, then New England Estates would make an additional payment of $45,000 per revised renewal term. In addition, New England Estates would make an additional payment of $100,000 at the closing.
In 2001, New England Estates was formed for the purpose of purchasing and developing the subject property. Its principals are Don Stanziale, Jr., Andrew Forte and Alan Pizzolorusso. New England Estates hired the same engineering, planning and landscaping firm, Codespoti Associates that had prepared the 1988 plan. New England Estates initially attempted to resurrect the 1988 plan. Eventually, New England Estates reduced the number of units to 268. The project received a permit from the Branford inland wetlands commission in May of 2002, and New England Estates requested a new PDD designation for the subject property. The Branford planning and zoning commission denied the application in November 2002, and that denial was appealed to the Superior Court. New England Estates received a permit from the U.S. Army Corps. of Engineers in March 2003.
In May 2003, New England Estates filed a new plan with the Branford planning and zoning commission under Connecticut's affordable housing statute, General Statutes § 8-30g. The plan called for 354-units, but eliminated the golf course that was in the previous plans. In June 2003, New England Estates submitted a plan to the Branford inland wetlands commission and the Branford planning and zoning commission under § 8-30g for 354 residential units, but restored the golf course that had been eliminated from the May 2003 plans. The plan proposed the creation of a new "Housing Opportunity District" (HOD) zone. In 2003, the Branford board of selectman announced their intent to take the subject property by eminent domain. New England Estates appealed the denial of the wetlands permit to the Superior Court. Public hearings were conducted regarding the June 2003 plan on September 4, 2003, October 2, 2003, and November 6, 2003. On December 18, 2003, Branford filed a notice of condemnation. Branford acquired the site through eminent domain on January 5, 2004, and the Branford planning and zoning commission denied New England Estate's § 8-30g application on January 8, 2004. Subsequent to Branford taking title to the subject property, New England Estates withdrew its appeals to the Superior Court.
DISCUSSION OF LAW (a) General Rules with Respect to Condemnation
"`We begin our analysis of this [case] by setting forth the general, well established principles that govern the taking of real property by eminent domain. The fifth amendment to the United States constitution, as applied to the states through the due process clause of the fourteenth amendment . . . provides that "private property [shall not] be taken for public use, without just compensation." U.S. Const., amend. V. Article first, § 11, of the Connecticut constitution similarly provides that "[t]he property of no person shall be taken for public use, without just compensation therefore.`" (Citation omitted.) Northeast CT. Economic Alliance, Inc. v. ATC Partnership, 256 Conn. 813, 827-28, 776 A.2d 1068 (2001), on appeal after remand, 272 Conn. 14, 861 A.2d 473 (2004). `[T]he question of what is just compensation is an equitable one rather than a strictly legal or technical one. The paramount law intends that the condemnee shall be put in as good condition pecunarily by just compensation as he would have been had the property not been taken . . . We have stated repeatedly that [t]he amount that constitutes just compensation is the market value of the condemned property when put to its highest and best use at the time of the taking . . . In determining market value, it is proper to consider all those elements which an owner or a prospective purchaser could reasonably urge as affecting the fair price of the land . . . The fair market value is 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.' (Internal quotation marks omitted.) Northeast CT. Economic Alliance, Inc. v. ATC Partnership, supra, 272 Conn. 25." Commissioner of Transportation v. Rocky Mountain, LLC, 277 Conn. 696, 728-29, 894 A.2d 259 (2006).
"The highest and best use concept, chiefly employed as a starting point in estimating the value of real estate by appraisers, has to do with the use which 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 . . . In determining its highest and best use, the trial [court] must 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 may have had on the property's market value at the time of the taking . . ." (Internal quotation marks omitted.) Northeast CT Economic Alliance, Inc. v. ATC Partnership, supra, 272 Conn. 25-26.
"[B]ecause each parcel of real property is in some ways unique, trial courts must be afforded substantial discretion in choosing the most appropriate method of determining the value of a taken property." (Internal quotation marks omitted.) Commissioner of Transportation v. Rocky Mountain, LLC, supra 277 Conn. 729. "In condemnation hearings, the [trial court] sitting as a court [of] appeals . . . is more than just a trier of fact or an arbitrator of differing opinions of witnesses. [It] is charged by the General Statutes and the decisions of this court with the duty of making an independent determination of value and fair compensation in the light of all the circumstances, the evidence, [its] general knowledge and [its] viewing of the premises." (Internal quotation marks omitted.) Northeast CT Economic Alliance, Inc. v. ATC Partnership, supra, 272 Conn. 26. "`It is well established that [i]n an eminent domain proceeding, a trial court may seek aid in the testimony of experts, but must it ultimately make its own independent determination of fair compensation . . . on the basis of all the circumstances bearing upon value.' (Emphasis added; internal quotation marks omitted.) West Haven v. Norback, 263 Conn. 155, 173, 819 A.2d 235 (2003). Fair market value . . . involves a question of fact . . ." Commissioner of Transportation v. Rocky Mountain, LLC, supra, 729.
(b) Environmental Contamination
General Statutes § 48-17d provides: "In all condemnation proceedings, environmental remediation costs shall be considered in assessing fair market value." General Statues § 8-132(c) provides in relevant part: "The findings of the court shall take into account any evidence relevant to the fair market value of the property, including evidence of environmental condition and required environmental remediation." Furthermore, the court in Northeast CT. Economic Alliance v. ATC Partnership, supra, 256 Conn. 826 stated that "under traditional constitutional principles of just compensation, evidence of environmental contamination and remediation costs may not be excluded, as a matter of law, from a condemnation proceeding . . ."
General Statutes § 48-12 provides: "The procedure for condemning land or other property for any of the purposes specified in sections 48-3, 48-6, 48-8 and 48-9, if those desiring to take such property cannot agree with the owner upon the amount to be paid him for any property thus taken, shall be as follows: The Comptroller in the name of the state, any town, municipal corporation or school district, or the trustees or directors of any state institution in the name of the state, shall proceed in the same manner specified for redevelopment agencies in accordance with sections 8-128, 8-129, 8-129a, 8-130, 8-131, 8-132, 8-132a and 8-133."
(c) Appropriate Methods of Valuation
"[T]he income capitalization approach, the replacement cost approach, and the comparable sales approach are the three common methodologies for valuing real property interests." Commissioner of Transportation v. Rocky Mountain, LLC, supra, 277 Conn. 727 n. 26.
The Connecticut Supreme Court has also stated that there are four methods of real estate appraisal. In Carol Management Corp. v. Board of Tax Review, 228 Conn. 23, 36 n. 15, 633 A.2d [368 (1993), the court stated: "[A]t least four methods exist for determining the fair market value of property for taxation purposes: (1) analysis of comparable sales; (2) capitalization of gross income; (3) capitalization of net income; and (4) reproduction cost less depreciation and obsolescence." (Internal quotation marks omitted.)
(1) Comparable Sales Method CT Page 13728
"The comparable sales approach has long been an approved method for ascertaining the fair market value of property." Melillo v. New Haven, 249 Conn. 138, 150 n. 22, 732 A.2d 133 (1999). "Fair market value is generally best ascertained by reference to market sales . . . Where this method is unavailable, however, other means are to be found by which to determine value . . . A variety of such alternative methods for calculation of true and actual value have been approved by this court . . . As a rule, however, [n]o one method is controlling; consideration should be given to them all, if they have been utilized, in arriving at the value of the property." (Citations omitted; internal quotation marks omitted.) Uniroyal, Inc. v. Board of Tax Review, 174 Conn. 380, 385-86, 389 A.2d 734 (1978). "The comparable sales approach is also known as the `market data approach' or `sales comparison approach.' J. Eaton, [Real Estate Valuation in Litigation (2d Ed. 1995)] pp. 197-98. `It is a process of analyzing sales of similar recently sold properties in order to derive an indication of the most probable sales price of the property being appraised. The reliability of this technique is dependent upon (a) the availability of comparable sales data, (b) the verification of the sales data, (c) the degree of comparability or extent of adjustment necessary for time differences, and (d) the absence of non-typical conditions affecting the sales price.' American Institute of Real Estate Appraisers and the Society of Real Estate Appraisers, Real Estate Appraisal Terminology (Rev. Ed. 1981) p. 160. After identifying comparable sales, the appraiser makes adjustments to the sales prices `based on elements of comparison.' The Dictionary of Real Estate Appraisal (3d Ed. 1993) p. 318." Sun Valley Camping Cooperative, Inc. v. Stafford, 94 Conn.App. 696, 702, n. 8, 894 A.2d 349 (2006).(i) Appraisers for the Plaintiffs
On behalf of the plaintiffs, R. Bruce Hunter, an appraiser with Hunter Associates, LLC, testified as to the value of the subject property. Hunter considered the option agreement that existed between Santa Barbara and Perrotti and New England Estates. In conducting his appraisal, Hunter assumed that the 268-unit market rate development "would reasonably have been approved." (Plaintiffs' Exhibit 7A, A Summary Report of a Complete Real Estate Appraisal of Retrospective Market Value [Hunter Report], p. 2.) Hunter also estimated the market value of the subject property on the assumption that "approvals should have been granted for the 354-unit HOD [§ 8-30g] application." (Plaintiffs' Exhibit 7A, Hunter Report, p. 2.)
In Hunter's report, he determined that the highest and best use of the subject property was not industrial use and stated that "[t]he subject property is zoned for industrial use, but the market is not strong for large scale industrial developments, and the traffic issues and access of this site are not ideally suited for industrial development." (Plaintiffs' Exhibit 7A, Hunter Report, p. 16.) Hunter determined that the highest and best use of the subject property was the 268-unit market rate development with a recreational amenity. Hunter also concluded that the 354-unit affordable housing development was financially feasible.
Hunter utilized the sales comparison approach to determine value. Hunter rejected the cost approach due to its inapplicability to the valuation of vacant land and rejected the income capitalization approach due to "insufficient information to develop a Discounted Cash Flow analysis using the Income Capitalization Approach." (Plaintiffs' Exhibit 7A, Hunter Report, p. 16.)
In utilizing the sales comparison approach to the 268-unit scenario, Hunter found eight sales in Connecticut within a fifty mile radius of Branford that he selected for comparison. Hunter found no comparable sales in Branford itself. Land sale number one was for Newbury Village in Brookfield. This 43.75-acre parcel was sold for $3,200,000 on December 4, 2003. Approvals were in place for an active adult community with a total of 119 residential units, including a 2-story building with 44 units and 13 buildings with 75 townhouse units. There was also to be a clubhouse on the property. The price per acre was $73,143.
In section D of the addenda to his report, Hunter discussed land sales in Branford that he did not select in utilizing the sales comparison approach to value.
Land sale number two was for Granite Ridge located in Monroe. The 135.29-acre site was a former quarry. 55.48 acres of the site were to be used for an active adult community consisting of 100 free standing homes, and 29.79 acres of the site were to be used for a 14-lot subdivision. This parcel was sold for $2,200,000 on May 23, 2003. Approvals were granted on September 18, 2003, about four months after the purchase date. The price per acre was $16,261.
Land sale number three was for Montgomery Village in North Branford. Montgomery Village consisted of 50.515 acres and following a legal settlement, but prior to the sale, approval was granted for 50 units of clustered, detached, active adult housing. Initially, approval was sought for eighty-two clustered units of affordable housing, which was denied. This parcel was sold for $2,000,000 on March 25, 2003. The price per acre was $39,592. Immediately prior to this sale, the seller/owner exercised its option to buy the property as raw and unapproved land from the previous owner for $700,000.
Land sale number four was for Buckingham Estates in Avon. The land was a sand and gravel site formerly owned by the Connecticut Sand Stone Corporation. A third party purchased the property from the Connecticut Sand Stone Corporation and obtained subdivision approvals from the town of Avon before the land was sold to the developer/buyer. The parcel consisted of 160.53 acres. The master plan approved was for a large community of 199 units, including 147 traditional single-family homes on individual lots, and 52 detached units for active adults on two large common interest ownership parcels. About 20 acres were allocated for the 52 clustered, detached, active adult units and 159.2 acres were allocated for the 147 traditional single-family homes. Prior to the sale date, phase I was approved for twenty-four single-family lots and for one large parcel with twenty-eight clustered, active adult units. After the sale date, phase II, calling for thirty-nine additional single-family lots was approved. According to Hunter, two additional phases will be approved in the future, subsequent to the date of his report. This land was sold for $5,800,000 in 2001. The price per acre was $36,130.
On page 18 of his report, Hunter stated that the sale date for this property was July 31, 2001. On pages 63 and 64 of his report, Hunter reported that the sale date was June 8, 2001.
Land sale number five was for the Liberty at Newtown in Newtown. This property consisted of 40.7 acres and was approved prior to sale for 92 elderly condos. This land was sold for $2,820,000 on October 7, 2002. The price per acre was $69,287.
Land sale number six was for the Bradford Walk in Farmington and New Britain. This site consisted of 71.3 acres in Farmington and 9.02 acres in New Britain, for a total of 80.32 acres. When the property was sold, approvals were in place for 10 single-family homes and 120 condominium units. The developer incurred litigation costs related to an affordable housing plan in order to get a zone change for a higher density. The matter was settled out of court, with a zone change being granted for higher density housing, but without affordable units. This property was sold for $2,050,000 in March 2003. The price per acre was $25,529.
On page 18 of his report, Hunter stated that the sale date for this property was March 5, 2003. On page 67, Hunter stated that the sale date was March 4, 2003.
Land sale number seven was for Oxford Greens in Oxford. This land consisted of 677.75 acres. The land was assembled and purchased for a 400-unit active adult community planned around a golf course. This land was sold for $6,799,000 on February 13, 2003, with approvals in place. Prior to the sale, this property consisted of 8 separate parcels, one of which was a 127.45-acre parcel that was sold to an individual for $400,000 and then immediately re-sold to the developer/buyer for $1,450,000 with approvals in place. The price per acre was $10,032.
Land sale number eight was for the Avalon Milford in Milford. This parcel consisted of 22.64 acres and was sold with approvals for a 240 unit apartment complex, with a higher than normal density. A court order approved the higher than normal density and 25% of the units were set aside as affordable. This property was sold for $8,600,000 on December 27, 2002. The price per acre was $379,859. On April 29, 2002, this property was sold for $3,000,000, prior to approvals being obtained.
At the hearing, Hunter testified that much less weight was placed on land sale number eight as the property was to be developed into an apartment complex. Hunter's net sums of direct adjustments are as follows: Comparable one was adjusted downward 17%, comparable two was adjusted downward 1%, comparable three was adjusted downward 33%, comparable four was adjusted downward 24%, comparable five was adjusted downward 38%, comparable six was adjusted upward 31%, comparable seven was adjusted upward 39%, and comparable eight was adjusted downward 14%. Hunter determined the following adjusted price per unit for the eight comparables: comparable one was $22,361, comparable two was $22,732, comparable three was $28,111, comparable four was $25,623, comparable five was $19,927, comparable six was $21,774, comparable seven was $23,063, and comparable eight was $32,820. Taking into account all of the sales, Hunter arrived at a mean adjusted price per unit of $24,551 and taking into account every sale but sale 8, Hunter arrived at a mean adjusted price per unit of $23,370. Utilizing the comparable sales approach with respect to the 268-unit scenario, and taking into consideration all land sales except number eight, Hunter determined that the total land value was $6,263,160, which he rounded to $6,200,000. Utilizing comparables numbers one, two, three, five, six, and seven, the comparables that Hunter considered most similar to the subject property, Hunter determined the land value per unit to be $23,000, with a total land value of $6,164,000, which when rounded, came out to $6,200,000. Therefore, Hunter determined that the market land value per unit was about $23,000, and the most likely selling price of the land was $6,200,000. As a result, Hunter concluded that when utilizing the sales comparison approach with regard to the 268-unit development plan, the market value of the subject property was $6,200,000.
In utilizing the comparable sales approach in appraising the subject property with respect to the 354-unit development scenario, Hunter determined the average unit retail price was significantly lower than the average unit retail price for the 268-unit development scenario. Hunter found that the higher density (354-units versus 268-units) made the development more congested, thereby decreasing the size and price of the units. According to Hunter, while the per unit site development cost was lower on a per unit basis, that was insufficient to offset the overall lower profitability of the 354-unit development. Also, Hunter determined that because by statute 30% of the units were deed restricted for 40 years, that "place[d] a significant encumbrance on the land, making it less valuable per unit on the open market." (Exhibit 7A, Hunter Report, p. 24.) Furthermore, Hunter testified at the hearing that under the affordable housing development plan, the developers are basically subsidizing 106 of the 354-units.
Hunter concluded that when utilizing every comparable except number eight, the land value per unit was $17,581, with the total land value being $6,223,674. Hunter rounded that number down to $6,200,000. Hunter concluded that the land value per unit when utilizing the average of comparables one, two, three, five, six, and seven, the comparables considered to be most similar to the subject property, was $17,220. He determined that the total land value was $6,0995,880 and rounded that number to $6,100,000. Hunter concluded that that market value per unit was about $17,200, and that the selling piece of the land was most likely $6,100,000. Therefore, Hunter determined that the market value of the subject property with regard to the 354-unit scenario was $6,100,000.
Richard A. Michaud, a real estate appraiser with the Michaud Company, also testified as to the value of the subject property on behalf of the plaintiffs. Michaud considered the option agreement that existed between Santa Barbara and Perrotti and New England Estates and determined the market value of the subject property as though it would obtain all approvals needed for the 354-unit condominium development by January 5, 2005 which was within one year of the valuation date. Michaud utilized the sales comparison approach and the development approach when performing his appraisal. According to Michaud, the development approach "is a procedure for valuing land where subdivision represents a logical development pattern. This approach involves discounting the cost of development from the projected proceeds of the sale of the finished units. The Development Approach is a form of the Income Approach that measures and converts future cash flow from unit sales, after subtracting development expenses, into a present value." (Plaintiffs' Exhibit 8A, Appraisal of: 48-86 Tabor Drive Branford, Connecticut [Michaud Report], p. 2.) Michaud utilized the development approach in conjunction with the sales comparison approach. Michaud did not use the cost approach in his appraisal as he found that it was not relevant to the value of vacant land.
Michaud coauthored an appraisal report with Mark B. DiMarco. As Michaud was the sole person who testified regarding this report, this memorandum of decision will refer to Michaud exclusively.
In conducting the appraisal utilizing the sales comparison approach, Michaud searched for transactions of multi-family sites within Branford and surrounding communities. As there was insufficient current data in Branford, Michaud broadened his search to include other areas within Connecticut. Michaud selected and analyzed six sales.
Comparable land sale number one was for Ridgewood at Middlebury, in Middlebury. This parcel contained 308.8 acres, and at the time of purchase, approvals were in place for a 326-unit community of attached townhouses and duplexes. Amenities included a nine hole golf course and a clubhouse. This property was sold on January 26, 2004, for $10,010,000. The price per acre was $32,416.
Comparable land sale number two was for Newbury Village in Brookfield. This land sale was previously discussed in this memorandum of decision as Hunter also utilized this land sale in conducting his appraisal. Comparable land sale number three was for Montgomery Village in North Branford. This land sale was also previously discussed in this memorandum of decision as Hunter also utilized this land sale in conducting his appraisal. Comparable land sale number four was for Oxford Greens in Oxford. This land sale was also previously discussed in this memorandum of decision as Hunter also utilized this land sale in conducting his appraisal. Comparable land sale number five was for the Avalon of Milford in Milford. This land sale was also previously discussed in this memorandum of decision as Hunter also utilized this land sale in conducting his appraisal. Comparable land sale number six was for the Liberty at Newtown in Newtown. This land sale was also previously discussed in this memorandum of decision as Hunter also utilized this land sale in conducting his appraisal. Michaud did state that four additional units were approved in November 2003.
Michaud made the following total adjustments for the comparables: comparable one was adjusted downward 6.5%, comparable two was adjusted upward 10.5%, comparable three was adjusted downward 30%, comparable four was adjusted upward 35.9%, comparable five was adjusted upward 5%, and comparable six was adjusted downward 3.5%.
Michaud determined the following adjusted price per unit amounts for the six comparable land sales: comparable one was $34,805, comparable two was $29,714, comparable three was $28,000, comparable four was $30,566, comparable five was $37,625, and comparable six was $29,567.
Michaud found that both before and after adjustment, the subject property was most similar with comparables one, two, three and four, with comparables one and four being large developments requiring several years for build-out, similar to the subject property. Michaud found a value of $30,000 per unit, adding up to $7,440,000 for the 248 market rate units. Michaud based the value of the site on the 248 market rate units only as he believed that the 106 affordable housing units provided little opportunity for profit. He then discounted $7,440,000 by 8% to reflect the delay in obtaining the necessary approvals, and arrived at a value of $6,900,000.
Utilizing the development approach, Michaud valued the subject property to be $6,372,592, which he rounded to $6,400,000. When Michaud made his final analysis, he gave the greatest weight to the development approach. Reconciling both appraisal methods, Michaud valued the subject property at $6,500,000.
ii) Appraiser for Branford
Albert W. Franke, III, a real estate appraiser with Albert W. Franke Associates, Inc., testified as to the value of the subject property on behalf of Branford. The effective date of the appraisal was June 24, 2003. Franke did testify that there was no measurable change between the value of the land between June 24, 2003, and January 5, 2004, the date of the taking. Franke did not consider the option agreement when preparing the appraisal report and in his report, stated that to the best of his knowledge, the subject property was not under option. Franke testified that even after reading the option agreement, his opinion as to the value of the subject property remained unchanged.
Franke determined that the highest and best of the subject property was for it to remain vacant and undeveloped. Franke did not determine that using the subject property for industrial development was its highest and best use as there was "a weak market for industrial parcels of this size and poor accessibility to the site for truck traffic." (Defendant's Exhibit SS, Complete Real Property Appraisal Summary Appraisal Report [Franke Report], p. 6.) Franke stated in his report and testified at the hearing that trucks serving industrial purposes would have difficulty accessing the site via Montewese Street owing to a nine feet, six inch high train trestle located just south of the intersection of Pine Orchard Road. Franke rejected finding the highest and best of the land to be residential because residential use was "not permitted as of right on the majority of the site and is actually discouraged in the zoning regulations within the IG-2 district." (Defendant's Exhibit SS, Franke Report, p. 7.) In addition, Franke determined that the subject property's proximity to the landfill was not conducive to residential development. Franke also found that the then current proposal to create a new HOD was "highly speculative at best." (Defendant's Exhibit SS, Franke Report, p. 7.) Franke based this on the fact that the Branford planning and zoning commission revoked the site's PDD status in 2002 and that in November 2002, that same commission rejected a proposal for a 268-unit development on the subject property. Franke concluded in his report that "based upon recent actions of the commission and discussion with town officials, it is highly unlikely that the current proposal for a 354-unit community would be approved." (Defendant's Exhibit SS, Franke Report, p. 7.)
Utilizing the sales comparison approach, Franke searched "for sales of open space, large tracts with limited utility, and/or recreational land (Defendant's Exhibit SS, Franke Report, p. 7.) Franke stated in his report that he considered transactions throughout the greater New Haven and shoreline areas. Comparable sale number one was for a parcel Franke called Durham Road in Guilford. This 49.05-acre parcel was sold on September 27, 2002, for $200,000. The price per acre was $4,077.
Comparable land sale number two was for several parcels with the addresses of 169, 173, 177, 181, and 185 Ivy Street (a.k.a North Ivy Street) and 7 and 27 Brushy Plain Road in Branford. This property, consisting of 25.34 acres, was sold on July 9, 2002, for $250,000. The price per acre was $9,866.
Hunter also reviewed this land sale but did not select it as one of his eight comparable sales.
Comparable land sale number three was for 523 Totoket Road in North Branford. This 65.7-acre parcel was sold on December 19, 2001, for $1,200,000. The price per acre was $18,265.
Comparable land sale number four was for a parcel Franke called Durham Road ( Old Crooked Hill Road) in Guilford and Madison. This 54.4-acre parcel was sold on May 1, 2001, for $220,000. The price per acre was $4,044.
Comparable land sale number five was for a parcel Franke called Old Crooked Hill Road in Guilford and Madison. The 68.23-acre parcel was sold on April 27, 2001, for $205,500. The price per acre was $3,005.
Comparable land sale number six was for a parcel Franke called Leete's Island Road in Branford. This 47.19-acre parcel was sold on March 24, 2000, for $500,000. The price per acre was $10,595.
Franke also examined additional sales of open space and/or land purchased for recreational uses and found 15.43-acres on Long Hill Road in Guilford was sold for $7,453 per acre in May 2001, a 21.45-acre tract of land in Durham Road in Guilford was sold in November 2000, for $5,478 per acre, and 39.6 acres of Hart Road in Guilford was sold in March 1999, for $5,000 per acre. Franke also studied the sale of the former Bittersweet Farm complex in Branford, which consisted of 84.87 acres and was sold in January 2002, for $2,457,500. According to Franke, although this tract was zoned IG-2 and BR, it was not comparable to the subject property because it had a different utility with regard to location, access and development potential.
Franke determined that the subject property had some potential for active and passive recreational use, which included use for hiking, ball fields, and a nine hole golf course. After adjusting the comparables for differences in location, access, and overall utility, he found that the appropriate value for the subject property was $10,000 per acre, which came out to $769,100. Franke rounded that amount to $770,000, and therefore, determined that as of June 24, 2003, the subject property had a market value of $770,000.
(d) Determining Just Compensation
"Evidence of the special adaptability of land for a particular purpose is properly admitted if there is a reasonable probability that the land could be so used within a reasonable time and with economic feasibility." (Internal quotation marks omitted.) Commissioner of Transportation v. Towpath Associates, Commissioner of Transportation v. Wilusz, 255 Conn. 529, 544, 767 A.2d 1169 (2001). "The fair market value of realty is determined in light of the use to which it is being put at the time of the taking or to which it could be put most advantageously." (Emphasis in original.) Transportation Plaza Associates v. Powers, 203 Conn. 364, 375-76, 525 A.2d 68 (1987). "Proof of the reasonable probability that land could be put to a particular use need not be established by the testimony of the particular administrative officials involved." Id., 377.
"`In determining the market value of a piece of real property for the purposes of a taking by eminent domain, it is not merely the value of the property as it is used by the owner that should be taken into consideration. The possibility of its use for all purposes, present and prospective, for which it is adapted and to which it might in reason be applied, must be considered. Its value for the use to which men of prudence and wisdom and having adequate means would devote the property if owned by them must be taken as the ultimate test.' 4 P. Nichols, Eminent Domain (3d Ed. Rev. 1999) § 12B.12, p. 12B-89.
"`Any potential use of the land . . . will also be considered in the evaluation of the [property] . . . [A]lthough condemned property is not to be valued as part of the proposed improvement, when the condemnee's proposed use is one of the highest and best uses of the property but, due to zoning restrictions, the property is not presently available for that use, the condemnee is entitled to show the probability of a zoning change and its affect on market value . . . The potential use value must be reasonable, and within the realm of possibility in the not too distant future. The property must be available for the potential use asserted, and adaptable for the particular purpose.' 4 P. Nichols, CT Page 13737 supra, § 12B.14, pp. 12B-137-43." (Internal quotation marks omitted.) Newington v. Estate of Young, 47 Conn.Sup. 65, 75, 777 A.2d 219 (2001).
The court finds that the highest and best use of the subject property is for residential development. Since the court has found that the highest and best use of the subject property is not to keep the land vacant, Franke's opinion with respect to fair market value, which is premised on keeping the land vacant, is rejected by the court.
Taking into consideration all of the testimony before the court and the comparable sales properties utilized by Hunter and Michaud, as well as a visual inspection of the subject property, the court finds that based on these comparable sales, the fair market value of the subject property, as of the date of the taking, January 5, 2004, was $4,600,000.
With regard to environmental contamination, the court finds no credible evidence of environmental contamination of the subject property. "The court's authority before trial to restrict expert testimony derives from Practice Book § 13-4." Freer v. Morowitz, Superior Court, judicial district of New Britain, Docket No. CV 99 0497170 (November 25 2002, Kocay, J.) (33 Conn. L. Rptr. 666)." "Practice Book § 13-4 . . . provides in relevant part: (4) . . . [A]ny plaintiff expecting to call an expert witness at trial shall disclose the name of that expert, the subject matter on which the expert is expected to testify, the substance of the facts and opinions to which the expert is expected to testify, and a summary of the grounds for each opinion, to all other parties within a reasonable time prior to trial. Each defendant shall disclose the names of his or her experts in like manner within a reasonable time from the date the plaintiff discloses experts, or, if the plaintiff fails to disclose experts, within a reasonable time prior to trial. If disclosure of the name of any expert expected to testify at trial is not made in accordance with this subsection, or if an expert witness who is expected to testify is retained or specially employed after a reasonable time prior to trial, such expert shall not testify if, upon motion to preclude such testimony, the judicial authority determines that the late disclosure (A) will cause undue prejudice to the moving party; or (B) will cause undue interference with the orderly progress of trial in the case; or (C) involved bad faith delay of disclosure by the disclosing party . . ." (Internal quotation marks omitted.) Wagner v. Clark Equipment Co., 259 Conn. 114, 122-23 n. 10, 788 A.2d 83 (2002). While the defendant did disclose an expert who was to testify regarding the environmental condition of the subject property, that disclosure did not occur until May of 2007; therefore, pursuant to Practice Book § 13-4, the court precluded the expert's testimony.
"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. As such, it is determined as to rate solely by the Judicial Branch and the rate may not necessarily be dictated by statute. Leverty Hurley, Co. v. Commissioner of Transportation, 192 Conn. 377, 380-81 [ 471 A.2d 958] (1984). A statutory rate of interest can, however, be applied to a claim for just compensation if that rate is deemed reasonable by the court. Miller v. United States, 620 F.2d 812, 837 (CT. Cl. 1980)." Commissioner of Transportation v. BRW Management, LLC, Superior Court, judicial district of Danbury, Docket No. CV 01 0344082 (June 25, 2003, Moraghan, J.T.R.). Bearing these principles in mind, the court awards interest from January 5, 2004, until the actual date of payment. It finds that interest at the rate of 4 percent to be fair and reasonable and so awards.
CONCLUSION
Judgment may enter for the plaintiffs in the amount of $4,600,000, an excess of $3,432,200 over the amount of $1,167,800, with interest on such excess at 4% per annum from the date of taking on January 5, 2004, to the date of payment.