An interesting decision from the Fourth Department presents the issue of can an appraisal be limited to the study of specific economic measurements. Most appraisals of property taken in condemnation consider the three basic methods of valuation, Viz.: comparable sales or market data approach; capitalization of income; or, the cost or specialty approach.
In Matter of Rochester Genesee Regional Trans. Auth. v Stensrud, ___ AD3d ____ (June 7, 2019), the condemnor’s motion to strike that part of claimant’s appraisal report with respect to “investment value” and to preclude the proposed expert from testifying at trial was granted by the trial court.
The Appellate Division first held that the order was appealable inasmuch as it limited “the scope of the issues at trial” by precluding the introduction of evidence regarding claimant’s primary method of property valuation.
The court stated that the measure of damages in condemnation is the fair market value of the condemned property in its highest and best use on the date of the taking. The Fourth Department then went on to say that there is “no fixed method for determining (fair market) value.” Citing Matter of Allied Corp. v Town of Camillus, 80 NY2d 351, 356 (1983).
It was noted that the property was at its highest and best use and that use was income-producing, therefore, the capitalization of income is a proper method of valuation. The court continued its analysis by finding that although the appraiser titled “investment valuation,” he actually applied an income capitalization approach using the standard income capitalization formula, i.e., value equals net income derived by a capitalization rate.
To the extent that the appraiser utilized the phrase “investment value” as he believed it would apply factors making the property more appealing to prospective purchasers and may be subject to question, goes to the weight to be accorded the appraisal, not its admissibility.
My advice, tell your appraiser not to get too fancy.