City of Stamford v. G & M Energy Consulting Corp. et al. (2010)

MEMORANDUM OF DECISION

On June 28, 2005, the City of Stamford (“City”) filed with the Court and recorded on the Stamford Land Records a Certificate of Taking and a Taking Map (Exhibits A & B) for its acquisition by eminent domain of a portion of 345 Elm Street in Stamford (“Subject Premises”).   At the time of the City's filing, the Subject Premises was owned by G & M Energy Consultants, Corp (“G & M”).  The taking at the Subject Premises impacted the remaining property owned by G & M;  based on the configuration of G & M's building, the City's taking eliminated most of the on-site parking.   As compensation for its taking of this property, the City paid $60,000.00 into Court;  by order of the Court (Rogers, J.) the Court Clerk paid this money to G & M. G & M is entitled to full and fair compensation for the loss of its on-site parking at the Subject Premises.

In connection with City's Urban Transitway Project (“SUT Project”)-a $65 million road improvement project in the south end of Stamford-the City recorded a Certificate of Taking and acquired a portion of the Subject Premises which the City deemed necessary to implement the SUT Project (“the Taking”).   The Taking consisted of a 1,509-square-foot area of the Subject Premises which fronted Elm Street, used for and designated for on-site parking.

The Subject Premises is a commercial property located a quarter mile south of the Connecticut Thruway (1-95) at the corner of Cherry Street and Elm Street.   Before the Taking, the Subject Premises consisted of 8,291 square feet, with a building which covered 3,522 square feet and the remaining 4,769 square feet paved for access and on-site parking.   The Taking reduced the paved surface by 32%, from 4,763 square feet to 3,260 square feet.

The Subject Premises is located in the C-N Zone, and the applicable zoning regulations permitted a variety of neighborhood businesses including retail uses.   At the time of the Taking, G & M owned the Subject Premises for approximately 22 years during which time Cove Awning Company (“Cove”) was the only tenant on a month-to-month basis;  Cove manufactured and sold canvas awnings to commercial and retail customers.   Cove's “industrial” use was a legal non-conformity.

As for on-site parking before the Taking, although there were several designed parking layouts, at the time of her inspections, the City's appraiser, Christine Hume (“Hume”) observed 8 unlined parking spaces on site;  G & M's appraiser, Michael McGuire (“McGuire”) observed 7 spaces on the frontage on Elm Street, with sufficient area for approximately 2-4 spaces available on the paved surface to the south of the building.   Much of the paved area south of the building was used by Cove for “staging” to assemble awnings.

In 2005 there were retail uses operating in the immediate neighborhood of the Subject Premises;  from the larger supermarket (i.e., Grade A Market) to smaller store and restaurants.

Before the Taking, the Subject Premises could be used exclusively for retail with modification of the building;  demolition of the 874 square foot rear warehouse area would yield 2,648 square feet building to be devoted to retail.   The costs for the owner's modification of the building were $15,000.00 to demolish the rear warehouse and $27,500 to install a traditional retail storefront along the building's 50-foot frontage on Elm Street.   After the rear warehouse demolition, the paved area of the Subject Premises would increase from 4,769 square feet to 5,643 square feet.

In 2005, the applicable zoning regulations required a retail business to provide 4 parking spaces for every 1,000 square feet of retail building space.   Before the Taking, with the modifications to the building, the reduced building size of 2,648 square feet would need 10.6 parking spaces.   Based upon the configuration of the modified building on the Subject Premises, the 5,643 square feet of paved area would reasonably accommodate 10.6 on-site parking spaces to satisfy the zoning regulations.

After the Taking, the loss of 1,509 square feet was a 32% reduction of paved area, eliminated parking in front of the building along Elm Street.   With the substantial reduction of on-site parking, the applicable zoning regulations prevented the Subject Premises from being used for retail;  instead, the C-N Zone uses permitted a combination of office (with 1 parking space for 500 sf of office) and warehouse (with 1 parking space for 2000 sf);  such uses produce substantially lower rent than retail.

“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.’  ․ 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 therefor’ ․ [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 pecuniarily by just compensation as he would have been in had the property not been taken.”  (Citations omitted;  internal quotation marks omitted.)  Commissioner of Transportation v. Rocky Mountain, LLC, 277 Conn. 696, 728-29, 894 A.2d 259 (2006).

“[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 ․ Generally speaking, market value is the price that would in all probability-the probability being based upon the evidence in the case-result from fair negotiations, where the seller is willing to sell and the buyer desires to buy ․ 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.”  (Citations omitted;  internal quotation marks omitted.)  Branford v. Santa Barbara, 294 Conn. 785, 795, 988 A.2d 209 (2010).  “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 ․” (Internal quotation marks omitted.)  Commissioner of Transportation v. Rocky Mountain, LLC, supra, 277 Conn. 729.  “The general rule is that the loss to the owner from the taking, and not its value to the condemnor, is the measure of the damages to be awarded in eminent domain proceedings.”  (Internal quotation marks omitted.)  Norwich v. Styx Investors in Norwich, LLC, 92 Conn.App. 801, 806, 887 A.2d 910 (2006).

“In actions requiring ․ a valuation of property, the trial court is charged with the duty of making an independent valuation of the property involved.”   (Internal quotation marks omitted.)  Bristol v. Tilcon Minerals, Inc., 284 Conn. 55, 70, 931 A.2d 237 (2007).  “[T]he trial court [is] not, as a matter of law, bound by the valuations or valuation methods used by the appraisers ․” (Internal quotation marks omitted.)  Id., 74.  “[N]o one method of valuation is controlling and ․ the [court] may select the one most appropriate in the case before [it] ․ Moreover, a variety of factors may be considered by the trial court in assessing the value of such property ․” (Internal quotation marks omitted.)  Sheridan v. Killingly, 278 Conn. 252, 259, 897 A.2d 90 (2006).  “In determining the value of the property taken, the trier arrives at its own conclusions by weighing the opinions of the appraisers, the claims of the parties, and its own general knowledge of the elements going to establish value, and then employs the most appropriate method to determine the damages that result from the taking ․ [T]he trial court has the right to accept so much of the testimony of the experts and the recognized appraisal methods which they employed as he finds applicable ․” (Internal quotation marks omitted.)   Bristol v. Tilcon Minerals, Inc., supra, 284 Conn. 70.  “[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.  “When confronted with conflicting evidence as to valuation, the trier may properly conclude that under all the circumstances a compromise figure most accurately reflects fair market value.”   Commissioner of Transportation v. Torrington Arms Apartments, LLC, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 08 4009348 (November 9, 2009, Stodolink, J.T.R., Maiocco, J.T.R. and Moran, J.T.R.).

In preparing her appraisal for the City Ms. Hume acknowledged that the Taking eliminated 5 parking spaces from the Subject Premises but arrived at her damages for the Taking with a formula which essentially multiplied $40 per square foot by 1509 square feet tract which the City acquired.   In arriving at her opinion of highest and best use before the Taking, Ms. Hume disregarded the increased value of a retail use at the Subject Premise;  although her report (Ex 8) at page 53, mentioned a comparable property with an exclusively retail use (at 310 Elm Street) in her “before” discussion, this property was never considered in her valuation.   Instead, she relied solely on the less valuable industrial use existing in 2005.

G & M's expert witness, Michael McGuire, stated that loss of on-site parking had critical impact on available uses of the Subject Premises.   Mr. McGuire concluded that the Subject Premises had a highest and best use as retail before the Taking and, after accommodating for the costs to modify the building, it was valued at $900,000.00;  after the Taking, with a 32% loss of available area for parking, the highest and best use was as combined office/warehouse with its value was $510,000.00.   The Taking diminished value of the remainder (the property retained by G & M) by $390,000.00.

G & M is entitled to be paid just compensation equal to the diminution in value of the Subject Premises caused by the Taking.

The evidence presented at trial proved that the City of Stamford did not pay just compensation for its Taking of the Subject Premises.   The City's appraiser undervalued the compensation because she never considered retail as the property's highest and best use before the Taking, despite such retail use being legally permissible, physically possible, financially feasible, and maximally productive, and she disregarded the significance of the parking on-site to the value of the Subject Premises.   G & M is entitled to judgment for the difference between the amount paid by the City and fair and reasonable compensation for the Taking plus interest, its recoverable costs and fees, including the fees of its appraiser.

The City claims the damages suffered by the property owner is $60,000.00.   The defendant property owner claims its damages are $390,000.00.

The property owner claims the value before taking was $900,000.00, and that the after taking value was $510,000.00 for damages of $390,000.00.   The property owner claims the highest and best value of the property is for retail use.   The City claims the highest and best use is its current use as an awning fabrication factory.   The court finds the highest and best use was retail before the Taking, and office/warehouse after the Taking.

The parties, although they have used different routes to get to the after taking value do not substantially differ.   The City says the after value of the property is $465,000.00.   The property owner says the after taking value is $510,000.00.

The substantial difference is in the pre-taking value.   This court has reviewed all the evidence in the case, including the appraisal reports of the parties being Exhibits E and 8, along with the other exhibits and the testimony.   This court concludes that the value of the impact of the taking is $242,000.00.   This is determined by the court as a before taking value of $752,000.00, and an after taking value of $510,000.00 for a total compensation due the property owner of $242,000.00.   This is the impact in dollars, of the taking.

Direct Capitalization Before Taking

The court finds a net operating income could reasonably be calculated at $71,210.00.   This amount was based on a rental at $300.00 per square foot for a total of 2,648 square feet, less operating expenses and vacancy.  (See Pg. 47, Exhibit E.)

The court finds based on the evidence that a reasonable capitalization rate was 9%. $71,210.00 divided by this capitalization rate was $791,222.00 of value.   There were modifications and improvements necessary of $42,500.00, which need to be deducted from the value.   This leaves a net value of $748,722.00 (rounded to $749,000.00).

Sales Comparison Approach

The court based on the evidence finds there are 2,648 square feet of rental space.   That based on the evidence $300.00 per square foot is a reasonable value.   Therefore, $300.00 times 2,648 per square foot gives a value of $794,440.00.   There are modifications and improvements necessary in the sum of $42,500.00 for a net value of $751,900.00 (rounded to $752,000).

Accordingly, the court finds the value of the property before taking of $752,000.00.   The after taking value is found to be $510,000.00.   The difference is $242,000.00 being the total compensation due the property owner. $60,000.00 has already been paid.   This leaves a balance due of $182,000.00.

Interest and costs are taxed, from June 28, 2005 the total amounts are to be ruled on subsequently.

The parties are to submit calculations on interest, cost and fees for ruling by this court.   The parties are to confer in advance on their submissions to seek agreement as to the amount due in light of this decision.

SO ORDERED.

EDWARD R. KARAZIN, JR., J.T. R

Karazin, Edward R., J.T.R.