Owner’s Verdict Potpourri of Condemnation Valuation Principles

by: Joseph Grather
4 Mar 2020

Last month, the a New Jersey appellate court affirmed a $3,000,000.00 verdict rendered by a Camden County jury for the taking of an eight story 80,000 s.f. building in Camden City Center.  The full text of the opinion is here:   Estate of Rubin v. Camden Parking Authority.  The Parking Authority appealed arguing the owner’s valuation case was speculative and that the trial judge erred in setting the date of value as of the date of taking instead of the earlier date of complaint.  The latter point of law was established in the reported opinion of Township of Piscataway v. South Washington Ave, LLC, 400 N.J. Super 358 (App. Div. 2008), which holds that if the value of the property increased substantially in the period of time between filing of the complaint and the condemnor taking title, the owner is constitutionally entitled to the higher value as of the date of taking.

Plaintiff filed its complaint September 18, 2014, but did not file its Declaration of Taking until December 5, 2014.  In the interim, the owner apparently met with representatives of the State Grow New Jersey Assistance Program (Grow NJ).  That program would potential allow the property to be renovated and rented using tax incentives.  Relying in large measure on the Grow NJ incentives, the owner’s appraiser opined that the Property was worth $9,000,000 as of the date of taking.

Plaintiff’s counsel initiated three rounds of motions to bar the owner’s appraisal/case-in-chief.  None prevailed.  The consequence of the first was to permit the owner to obtain a planner’s report to opine on the probability of permitting the necessary renovations to the building to make it rent-able.  The second sought to bar the planner’s opinion that the permits would issue, and the third at trial merely repeated the prior two.

Therefore, the case proceeded to trial with the owner presenting evidence of a ‘to be renovated-tax incentive-rent producing building’ worth $9,000,0000 versus the condemnor’s $180,000 valuation based on a dilapidated non-productive building.

The owner testified to the property’s ownership history, including sales for $2,700,000 and $2,900,000 and a subsequent agreement to sell the property for $4,500,000 in 2007. He also testified that he had been planning to renovate the property as early as 2004, and that he had continued to maintain it and pay the property taxes, based on an assessed value of $1,662,000 from 2011 through 2014.  Again, the jury largely agreed with the owner’s case, awarding $3,000,000.

On appeal, the Appellate Division rejected the date of value point simply because “during oral argument, defendant argued that the property had increased in value between September 2014 and December 2014, due to Grow NJ’s impact on the Camden real estate market. Requiring the parties to appraise the property as of September 18, 2014 would have resulted in unjust compensation to defendant.” (Slip op. at 20).

In rejecting the argument that the appraisal methodology was speculative, “We conclude that neither judge abused his discretion in finding that the evidence was sufficient to allow the jury to find that defendant would have benefitted from Grow NJ had it renovated the property and subsequently rented it to a Grow NJ recipient. Wolf’s valuation is unlike those we rejected in Hilton, 334 N.J. Super. 582, and 200 Route 17, 421 N.J. Super. 168, because his valuation was not based on the assumption that defendant’s property had already been renovated and rented to a Grow NJ recipient.”

What may be most promising for trial lawyers looking ahead, the appellate court affirmed the trial judge’s decision not to hold a Rule 104 in response to the most to bar.  “The judge hearing the motion “fulfilled his gatekeeping function by finding that there was sufficient credible evidence that a willing buyer would have considered the probability that defendant’s property, as renovated, could have been rented to a Grow NJ recipient. The judge decided that an N.J.R.E. 104 hearing was unnecessary, as the Wolf Report contained adequate evidence to reach a determination as to the admissibility of its contents.” (slip op at 25).

There are many more intricacies to an opinion worthy of a good read.