Manchester Housing Authority v. Reingold

547 A.2d 219, 130 N.H. 598, 1988 N.H. LEXIS 66
CourtSupreme Court of New Hampshire
DecidedJuly 8, 1988
DocketNo. 87-149
StatusPublished
Cited by2 cases

This text of 547 A.2d 219 (Manchester Housing Authority v. Reingold) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Manchester Housing Authority v. Reingold, 547 A.2d 219, 130 N.H. 598, 1988 N.H. LEXIS 66 (N.H. 1988).

Opinion

Brock, C.J.

The plaintiff, the Manchester Housing Authority (hereinafter MHA or housing authority), appeals from a jury verdict awarding the defendants, the Reingolds, damages for property that the housing authority acquired through eminent domain. For the reasons that follow, we affirm.

The Reingolds owned property consisting of a parcel of land and attached buildings in downtown Manchester. On April 27, 1982, MHA filed a declaration of taking with respect to the property. Following an assessment of damages by the New Hampshire Board of Tax and Land Appeals, both MHA and the Reingolds appealed to the superior court, pursuant to RSA 498-A:27, for a trial de novo on damages. Prior to trial, each party moved to exclude the expert testimony that the other proposed to offer on the issue of fair market value as of the date of the taking. The Trial Court (M. Flynn, J.) ruled that the parties’ expert testimony was admissible, with limitations not pertinent here.

At trial, the housing authority offered the testimony of appraiser Robert LaPorte, who had inspected the property in April 1981, prior to the taking. LaPorte estimated the fair market value of the property to be $99,500. In LaPorte’s opinion, the highest and best use of the property, which had been damaged by fire in January 1981, was development of the land, following demolition of the buildings. Using the market data, or comparable sales, method, [600]*600which establishes value with reference to the selling prices of similar property, LaPorte estimated the fair market value of the land to be $138,000, and then subtracted $41,000, representing the estimated cost of demolition. An adjustment of the resulting $97,000 figure, to account for the property’s Manchester location, produced the $99,500 estimate of property value as of the date of the taking.

The Reingolds offered the testimony of appraiser Joseph Kenney, who had inspected the property in September 1982, after the taking. Kenney estimated the fair market value of the property to be $200,000. Unlike LaPorte, Kenney determined that the highest and best use of the property was for retail sales, once the buildings had been remodelled, and his method of appraisal was different.

Kenney used a combination of the comparable sales method, which LaPorte had used, and a modification of the reproduction cost method. He testified that he was unable to identify similar properties in Manchester that would permit his appraisal on the basis of the comparable sales method alone, and he acknowledged that the property’s fire-damaged condition contributed to his difficulty in that respect. He also chose not to use the income method of appraisal, which determines value on the basis of the property’s net operating income. Kenney therefore used the comparable sales method in appraising only the land, which he determined to have a value of $134,000. To this figure, he added the value that he attributed to the buildings.

Kenney testified that the value of the buildings was $67,000. He arrived at this figure by first determining that, at the time of the taking, the cost of reproducing the “shells” alone, without plumbing and other “mechanicals,” would be $332,860. He then subtracted $265,860 for depreciation, arriving at a value of $67,000, which, when added to the value attributed to the land, produced a total property value of $201,000, or approximately $200,000.

The court instructed the jury on its responsibility to determine the property’s fair market value on the basis of all evidence, and not, merely the opinions of the parties and their expert witnesses. The charge provided the following explanation of the reproduction cost method:

“The law of New Hampshire permits the use of reproduction costs of a structure less depreciation as evidence of its market value where the structure has special characteristics not found in comparable properties.
There was evidence that no [sales of] land and buildings could be found in the City of Manchester which possessed comparable age, style, and physical condition to that of the [601]*601defendant’s buildings as they existed on the date of taking on 4-27-82, the physical conditions of which there was evidence — was evidence of some fire damage, also evidence of the lack of heating, plumbing, or electrical in the buildings as they existed at the date of taking. Therefore, if you find that the buildings possessed special characteristics for which no comparable [sales of] properties could be found in the City of Manchester, you may use reproduction costs less depreciation as an element or a circumstance to be considered along with other circumstances in arriving at a proper award of just compensation.”

(Bracketed material added by trial court after, and as a consequence of, a bench conference.) The jury returned a verdict for the Reingolds in the amount of $175,000.

On appeal, the housing authority raises essentially two issues. First, MHA asserts that the trial court erred in admitting the Reingolds’ expert testimony, and in giving the attendant jury instruction with respect to buildings that did not possess the uniqueness or special characteristics that would make admission of reproduction cost evidence appropriate. Second, MHA asserts error in the trial court’s suggestion, during instructions to the jury, that the fire damage and physical deterioration gave the buildings special characteristics that made appropriate the jury’s consideration of reproduction cost evidence.

The owner of property subject to a taking is entitled to “just compensation,” see RSA 498-A:ll, which reflects the property’s fair market value at the time of the taking. See 4 P. Nichols, The Law of Eminent Domain § 12.1, at 12-12, § 12.2, at 12-60 (3d ed. rev. 1985) (hereinafter 4 P. Nichols). For purposes of valuation in eminent domain cases, this court has recognized that standard appraisal methods include the following: (1) the comparable sales method, which establishes value on the basis of comparison with sales, or sale offerings, of similar properties around the time of the taking; (2) the income method, which establishes value on the basis of capitalized net income; and (3) the reproduction cost method, where the appraiser determines the value of the land without buildings, and then adds the depreciated current cost of reconstructing the buildings, to determine the value of the property as a whole. See Bartage, Inc. v. Manchester Housing Auth., 114 N.H. 203, 204-05, 318 A.2d 152, 153-54 (1974). See generally 4 P. Nichols, supra §§ 12.311-.313, at 12-154 to 12-223.

[602]*602The reproduction cost method, to which appraisers resort when valuation by the other two methods is not feasible, 4 P. Nichols, supra § 12.313, at 12-222, 12-223, tends to inflate fair market value by setting a price that often exceeds the level of actual market price negotiations, Fusegni v. Portsmouth Housing Auth., 114 N.H. 207, 210, 317 A.2d 580, 582 (1974). Consequently, to curtail the excessive influence that reproduction cost evidence is likely to have on juries unsophisticated in the methods of real estate appraisal, this court, like courts in other jurisdictions, has recognized the need for limits on the admissibility of such evidence. Id.

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Bluebook (online)
547 A.2d 219, 130 N.H. 598, 1988 N.H. LEXIS 66, Counsel Stack Legal Research, https://law.counselstack.com/opinion/manchester-housing-authority-v-reingold-nh-1988.