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Home My WebLink AboutScanned on 07/20/2010 at 14:50:45 NO. CV 98 0492578S REX LUMBER COMPANY SUPERIOR COURT JUDICIAL DISTRICT OF V. NEW BRITAIN TOWN OF SOUTH WINDSOR OCTOBER 15, 1999 MEMORANDUM OF DECISION The plaintiff, Rex Lumber Company ("Rex"), brings this real estate tax appeal challenging the valuation placed upon its property by the assessor for the Town of South Windsor on the grand lists of October 1, 1997 and October 1, 1998. The defendant was defaulted for failure to plead on May 7, 1999. On May 24, 1999, Rex filed a claim for a hearing in damages. On July 28, 1999, the court scheduled the hearing in damages for September 8, 1999. Rex filed a notice of intention to call an expert witness on August 4, 1999. The court file reflects that Rex certified that its pleadings were all mailed to the defendant's counsel, and a copy of the court notice shows that the notice of the scheduled hearing was mailed to all counsel on July 28, 1999. The plaintiff appeared for the scheduled hearing in damages on September 8, 1999, but the defendant did not appear.' At the hearing, Rex 10n September 13, 1999, five days after the scheduled hearing in damages was held,the defendant filed a motion to open the default for failure to plead claiming that the matter was inadvertently not placed on the calendar of its counsel. The motion was denied. i8noo Hld3dns 661 80 1 I S 1130 r a� a 182,080 square feet of building by the market value of$18 per square foot of gross building area to include land to arrive at its rounded estimate of value of$3,275,000. Appraisal Resources also considered the income capitalization approach. However, the subject was 93%vacant in July of 1994. Cardinal Industries, Inc., the owner of the subject in July of 1994, was in bankruptcy. The trustee of the bankrupt estate leased 13,600 square feet of the subject to the former owner, Industrionics Service Company for 5 years commencing on August 1, 1992 for$3.17 per square foot per year. Using a discounted cash flow analysis over a period of 10 years, Appraisal Resources concluded that the value of the subject using the income approach, as of July 25, 1994, was $2,940,000. After valuing the property using both approaches, in its final reconciliation, Appraisal Resources placed exclusive reliance on the sales comparison approach. (Plaintiff s Exhibit B, P. 64.) Nitz, who testified at the hearing, basically reviewed and adopted the appraisal analysis and conclusions of Appraisal Resources. Nitz revised the value conclusion of Appraisal Resources to account for the change in the size of the parcel from 15.035 acres to 8.41 acres by subtracting $230,000, which was $35,000 per acre multiplied by 6.625 acres. Nitz raised the issue of environmental problems on the subject property and for this reason discounted his revised value by 5%to arrive at a final value of the subject as of October 1, 1994 of$2,620,000. An environmental survey made for Rex prior to Rex's purchase of the subject property did disclose some contamination by the prior owner, Industrionics Service Company, Inc. The survey reported relatively localized affected areas based on groundwater results. (Plaintiff s Exhibit D, p. 15.) Appraisal Resources did not value the subject property as affected by environmental problems since the Connecticut Department of Environmental Protection did not 3 list the subject on their"Dynamic Inventory"which includes the Comprehensive Environmental Response Compensation Liability Information System and Superfund sites. (Plaintiff's Exhibit B, covering letter.) Accordingly, we do not find that the value of the property should be reduced for environmental stigma. We consider the market sales approach used by Appraisal Resources to be the most credible approach to value the subject property. The Appraisal Resources report is based upon 15.035 acres of land. We must reduce the value of$3,275,000 by excluding the value of 6.625 acres of land that is not now part of the subject property. We find, based on the land sales in Nitz's report,that$30,000 per acre is a reasonable unit value for the land on October 1, 1994. Subtracting a total of$198,750 ($30,000 per acre multiplied by 6.625 acres) from$3,275,000 results in a total of$3,076,250. Based upon our analysis of the sales data used by Appraisal Resources and Nitz, we conclude that the fair market value of the subject property, as of October 1, 1994, was $3,076,250. Since Rex's property was overvalued by the South Windsor assessor on October 1, 1994, judgment may enter in favor of the plaintiff sustaining its appeal. The assessor shall correct the assessment of Rex's property in accordance with this decision beginning on the October 1, 1997 grand list until the next town-wide revaluation. Arnold W. Aronson Judge Trial Referee 4 i copy NO. CV98 0492578S (RTX) SUPERIOR COURT REX LUMBER COMPANY J. D. OF NEW BRITAIN VS. : TAX & ADMINISTRATIVE APPEALS TOWN OF SOUTH WINDSOR SEPTEMBER 10, 1999 a N n c0 zz MOTION FOR JUDGMENT The Plaintiff represents to the Court as follows: 1. At a hearing in damages to the Court (Aronson, Judge Referee) held a QMon September 8, 1999, the Plaintiff presented its evidence as to z� damages resulting from an unfair and inaccurate assessment of the value of its property by the Defendant. Q� • � 2. In the event that the Court finds in favor of the Plaintiff, the zW QW Plaintiff will have made an overpayment of taxes on the 10/97 List z and on the 10/98 List. xV om3 . Connecticut General Statute §12-117a gives the Court the power to z a: order reimbursement by the Defendant to the Plaintiff including 3 • interest and costs. W a° 0 m ORAL ARGUMENT NOT REQUESTED TESTIMONY NOT REQUIRED -2- WHEREFORE, The Plaintiff moves the Court to enter judgment in favor of the Plaintiff and against the Defendant for the whole amount of such overpayment as found together with interest and costs to be taxed pursuant to Plaintiff's Bill of Costs to be filed. REX LUMBER COMPANY ^N i0 0 Z N BY Gerard I. Adelman Its Attorney cc s� Q� Q o ORDER zw WThe foregoing Motion having been duly presented and heard, it is hereby ORDERED: GRANTED / DENIED z 00 BY THE COURT x do 0 �u o: 5 • W Clerk W a 0 m CERTIFICATION This is to certify that a copy of the foregoing was mailed, postage prepaid, on this loth day of September 1999 to Atty. Barry Guiliano, 773 Main St. , Manchester, CT 06040. Gerard I. Adelman Commissioner of Superior Court Misc2:rexlumbl EIGAND, MAHON & ADELMAN 636 BROAD STREET, P.O.BOX 2420 MERMEN,CONNECTICUT 06450-4336 ATTORNEYS AT LAW,P.C. JOSEPH F WEIGAND,JR. (203)238-1010 BRIAN T.MAHON FAX(203)630-1930 GERARn I.ADELMAN email: wma@snet.net JAMES B.STREETO• http://www.wmalawyer.com MICHAEL D.Gun,,TN JOHN F.STANTON DATE: September 10, 1999 OF COUNSEL -ALSO MEMBER OF NEW PORK BAR TO: Barry Guiliano, Esq. 773 Main Street Manchester, CT 06040 FROM: Gerard I. Adelman RE: Rex Lumber Co. vs. Town of South Windsor [ ] Please file the enclosed pleadings. ( ] Enclosed please find check # in the amount of $ for filing fee. [ ] Please sign the enclosed and return it to meat your earliest convenience. Enclosures for your approval. [ ] Please record the enclosed: [ ] Enclosures pursuant to your request. [ ] Please 'sign the document in the presence of a Notary Public and return to me at-your earliest convenience. [ ] Copy of my appearance [ ] Case Management Agreement. [ Iq other Copy of appraisal by John W. Nitz, mi erard I. Adelman1 REAL ESTATE APPRAISAL REVIEW Real Estate Located at. 489 Sullivan Avenue South Windsor, Connecticut Owner: Rex Lumber Company Date of Review: September 3, 1999 Prepared For: Gerard L Adelman, Esq. Weigand, Mahan & Adelman 636 Broad Street P. O. Box 2420 Meriden, CT 06450-4336 Date of Appraisal: July 25, 1994 Date of value: October 1, 1994 Appraiser: Appraisal Resources of Connecticut, Inc. Review Prepared by: John W. Nitz, MAI John W. Nitz&Associates 155 Greystone Drive Plantsville, CT 06479-1856 (860) 276-0298 John W. Nitz & Associates 155 Greystone Drive Plantsville, CT 06479-1856 John W. Nitz,MAI (860) 276-0298 telephone Real Estate Appraisers (860)276-8464 fax and Consultants September 3, 1999 Gerard I. Adelman, Esq. Weigand, Mahan & Adelman 636 Broad Street P. O. Box 2420 Meriden, CT 06450-4336 Re: Real Estate Located at: 489 Sullivan Avenue South Windsor, Connecticut Dear Attorney Adelman: A review of the above referenced appraisal has been conducted in accordance with USPAP (Uniform Standards of Professional Appraisal Practice), as required by FIRREA Title XI and adopted by the FDIC Final Rule 12 CFR Part 323. On the basis of my review, the appraisal of the above referenced property generally conforms to USPAP standards. The following review serves three purposes: 1) to establish credibility, reliability, and conformity of the appraisal prepared by Appraisal Resources of Connecticut, Inc.; 2) to update the appraisal from July 25, 1994, to October 1, 1994, the date of revaluation in the town of South Windsor; and 3) to exclude the adjacent parcel, comprised of approximately 6.625 acres, as well as reflect the stigma resulting from prior environmental factors affecting the property. Gerard 1. Adelman, Esq. -2- September 3, 1999 Conclusion Based on the information contained in the report, an inspection of the property, and a review of market data not included in this appraisal, your review appraiser has revised the market value from $3,275,000 to $2,620,000, as of October 1, 1994. Market Value as of October 1, 1994: $296209000 This review has been completed subject to the attached Review Appraiser's Certification. Respectfully submitted, �-1 ✓. J hn W Nitz MAI ertifi G nera_1 Appraiser T Lic se No. 00000449 REVIEW OF MINIMUM STANDARDS (Y)es, (N)o, (N/A) Not Applicable, (P)artial DOES THE APPRAISAL: Y 1. Conform to the Uniform Standards of Professional Appraisal Practice (USPAP, revised 12/90) adopted by the Appraisal Standards Board of the Appraisal Foundation, with the exception that the Departure Provision of USPAP does not apply for an appraisal completed for a "Federally Related Transaction." Y 2. Identify the real property interest appraised and the effective date of value. Y 3. Discuss the scope of the appraisal, the purpose of the appraisal, the function of the appraisal. Y 4. Disclose any steps taken that were necessary to comply with the Competency Provision of USPAP. Y 5. Document a conclusion of market value based upon the definition set forth in Section 34.42(f) of Title XI (FIRREA) and USPAP. Y 6. Provide sufficient detail and depth of analysis that reflects the complexity of the real estate appraised, enabling the reader to ascertain the estimated market value and the rationale for the estimate. Y 7. Analyze and report in reasonable detail prior sales or current listing of the property being appraised. Y 8. Analyze and report on current revenues, expenses, and vacancies if the real estate is currently, and is estimated to continue to be, an income producing property. Y 9. Analyze and report a reasonable exposure time given the property's characteristics and market conditions, disclosing any assumptions used. Y 10. Analyze and report on current market conditions and trends, including the reporting of marketing activity on the subject property, to the extent that they affect the value of the subject. 1 REVIEW OF MINIMUM STANDARDS (Continued) (Y)es, (N)o, (N/A) Not Applicable, (P)artial DOES THE APPRAISAL: N/A 11. (i) Analyze and report appropriate deductions and discounts for incomplete/proposed construction or unabsorbed rental or sale units. Y (ii) Include the value of the property in its "as is" condition. Y 12. Include in the certification an additional statement required by USPAP that: ". . . the appraisal assignment was not based upon a requested minimum valuation, a specific valuation, or the approval of a loan." Y 13. Provide all information necessary to enable a reader to understand the appraiser's logic, reasoning, judgment and analysis (i.e., is the report self-contained). Y 14. Include a legal description of the real estate being appraised. N/A 15. Identify and separately value any personal property, fixtures, tangible or intangible items that are not real property, but are included in the appraisal, and discuss the impact of their inclusion or exclusion on the estimate of market value. Y 16. Follow a reasonable valuation method that addresses the cost approach, income capitalization approach, and sales comparison approach and supports the elimination of an appraisal approach not used. Y 17. Reflect that it was completed without regard to the racial, ethnic, religious, or national origin/characteristics of the applicant, buyer, seller, tenants, or neighborhood where the subject is located. Y 18. Contain a signed copy of the engagement letter in the Addenda. 2 COST APPROACH The appraisal excludes a cost approach to value; therefore, your review appraiser has included the cost approach to support the indicated values established via the sales comparison approach and the income capitalization approach. The cost approach represents the sum of the unimproved land value and the depreciated cost of the improvements. In estimating the subject land value, five comparable land sales located within the subject market area have been considered in this analysis. Units of comparison analyzed include sale price per square foot of land and the sale price per acre of land. Each land sale has been adjusted based upon financing terms, market conditions, location, and various physical characteristics. After establishing the subject land value, the replacement cost of the improvements is estimated utilizing the Marshall Valuation Service. Accrued depreciation in the form of physical deterioration, functional obsolescence, and external obsolescence is then deducted from the replacement cost estimate. The sum total of the land value and depreciated cost of the improvements represents the market value of the property via the cost approach in this analysis. The following comparable land sales have been analyzed and adjusted in this analysis. Summary of Land Sales Land Area Date Sale Price Location Acres Zone of Sale Sale Price Per Acre Lots 1 and 48A Woodlawn Road 6.81 PI & 02/04/94 $280,000 $41,116 Berlin, CT HI 135 Great Pond Road 20.11 I-1 07/21/93 $800,000 $39,781 Windsor, CT Cedar Street 32.20 I 07/30/93_ $700,000 $21,739 Newington, CT Lot 1 Helmsford Way 17.00 I-1 09/15/93 $900,000 $52,941 Windsor, CT 1046R Tolland Tnpk. 29.93 IND 07/07/94 $1,282,650 $42855 Manchester, CT 3 COSTAPPROACH(Continued) Analysis of Land Sales The foregoing land sales indicate an unadjusted sale price per acre range of $21,739 to $52,941 per acre, or an average of$39,686 per acre. Adjustments to the land sales in comparison to the subject have been considered for various factors, including property rights conveyed, favorable financing, unique conditions of the sale, market conditions, location, and various physical characteristics. In general, the subject falls in the lower end of the value range due to the presence of inland wetlands affecting the site. Land Value Estimate The foregoing land sales have been analyzed and adjusted for various factors including 1) real property rights conveyed; 2) financing; 3) conditions of sale; 4) market conditions; 5) location; and 6) various physical characteristics, including land area, topography, soil type, inland wetlands, etc. Based upon an analysis of the land sales and the subject site, an appropriate market value for the subject land is approximately $30,000 per acre. Therefore, the land value is calculated as follows: Land Area Unit Value Land Value 15.035 acres @ $30,000/acre = $451,050 Indicated Land Value $4509000 4 COST APPROACH(Continued) Replacement Cost Estimate The actual construction costs were not available; therefore, the Marshall Valuation Service has been consulted in establishing the replacement costs of the improvements. Source: Marshall Valuation Service Reference: Section 14, Page 17 Type: Class S, Average Quality, Distribution Warehouses Building Data Gross Building Area: 182,080 square feet Age: Built 1974 and 1978 (majority) Percentage of Office Finish: 11.4% Perimeter: 1,838 feet Story Height: 18 feet- clearspan Base Cost: $21.58 HVAC Adjustment: + .49 Adjusted Base Cost: $22.07 Sprinkler Adjustment: + 1.06 Adjusted Base Cost: $23.13 Perimeter Multiplier: x .86 Adjusted Base Cost: $19.89 Story Height Multiplier: x1.086 Adjusted Base Cost: $21.60 Current Cost Multiplier: x 1.07 (October 1994) Adjusted Base Cost: $23.11 Local Cost Multiplier: x 1.12 (Windsor Locks) Adjusted Base Cost: $25.89 Entrepreneurial Profit(5%) x 1.05 Adjusted Base Cost: $27.18 Then: Gross Replacement Building Area Unit Cost Cost 182,080 sq.ft. @ $27.18/sq.ft. _ $4,948,934 5 COSTAPPROACH(Continued) Entrepreneurial Profit Entrepreneurial profit (5%) has been included due to the fact that someone requiring a similar building would purchase the site and allow a general contractor (developer) to handle a majority of the general contracting duties. Accrued Depreciation Physical Deterioration The physical age-life method has been developed in estimating the total physical deterioration applicable to the property. In order to estimate physical deterioration by the economic age-life method, the ratio between the effective age and the total economic life of the building is applied to the total replacement costs. The estimated effective age is 17 years, which is close to its actual age due to the fact that minimal renovations or replacements have occurred since its construction. The total economic life is estimated to be 40 years, based on a national survey of similar distribution facilities. Therefore, physical deterioration for the subject property can be calculated as follows: Effective Age _ 17 vears Total Economic Life = 40 years = 43% Then: Percentage of Physical Replacement Costs Physical Deterioration Deterioration $4,948,934 x 43% _ $2,128,042 Replacement Costs: $4,948,934 Less Physical Deterioration: (2,128,042 Depreciated Cost of Improvements: $2,820,892 6 COST APPROACH(Continued) Accrued Depreciation (Continued) Functional Obsolescence A deduction of 10% of the depreciated cost of the improvements has been made for functional obsolescence to account for functional inadequacies, including the lack of handicap accessibility to lavatories and other areas; the insufficient loading dock and truck height overhead doors; as well as superadequacies in the form of office areas. Then: Percentage of Depreciated Functional Total Functional Cost Obsolescence Obsolescence $2,820,892 x 10% _ $ 282,089 Total Depreciated Cost of the Improvements: $2,538,803 External Obsolescence A deduction of 5% has been reflected to account for soft market conditions and the fact that buyers are avoiding new construction in lieu of purchasing existing facilities priced well-below construction costs. Then: Percentage of Depreciated External Total External Cost Obsolescence Obsolescence $2,538,803 x 5% _ $ 126,940 Total Depreciated Cost of the Improvements: $2,411,863 7 COST APPROACH(Continued) Site Improvements Macadam paved parking, driveways, and curbing (102,740 sgft. @ S1.50/sgft): $154,110 Landscaping: 15,000 Miscellaneous (includes walkways, signage, and other items): 15.000 Total Site Improvements: $184,110 Depreciated Cost of the Site Improvements The site improvements typically depreciate at a greater rate than structural improvements; therefore, 48% has been deducted for site improvements, based on an effective age of 12 years and a total economic life of 25 years. Therefore, the depreciated cost of the site improvements is calculated as follows: Replacement Cost of the Site Improvements: $184,110 Less 48%Accrued Depreciation: ($ 88.373) Depreciated Cost of the Site Improvements: $ 95,737 Soft Costs Brokerage fees and real estate taxes during construction have not been included because an owner-occupant would likely purchase the land and construct the facility for its own operations. Therefore, no lag time during construction or brokerage fees would be necessary. Soft costs, such as engineering and survey fees, insurance, construction interest, and other miscellaneous costs, have already been included in the Marshall Valuation Service estimate. Summary Depreciated Cost of Improvements: $2,507,600 Land Value: 450,000 Indicated Value: $2,957,600 Rounded to: $2,960,000 Indicated Value Via the Cost Approach $2,960,000 8