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calculating value by estimating rental price
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CIVIL ACTION NO. 02-11054-GAO.
August 27, 2007
ORDER
This is an eminent domain action in which the plaintiff, pursuant to statutory authority, condemned permanent and temporary easements over property owned by the defendant, JA Ventura, LLC ("Ventura"), in order to complete construction of an underground gas pipeline. The issue of just compensation was tried before Judge William G. Young of this Court. After trial, Judge Young entered an Order for Judgment awarding $105,550 to the property owner, but the order did not contain any specific findings as required by Federal Rule of Civil Procedure 52(a). It was apparently Judge Young's intention to give the parties prompt notice of the outcome and to provide the Rule 52 findings later. Before he could issue the findings, however, it came to his attention for the first time that his recusal was required under 28 U.S.C. § 455(b)(4). He promptly recused himself, and the case was randomly reassigned to me.
The plaintiff has moved pursuant to Federal Rule of Civil Procedure 63 for me, as the substitute judge, to complete the proceedings in the case. I GRANT that motion (dkt. no. 50). In accordance with Rule 63, I certify that I have familiarized myself with the trial record. Specifically, I certify that I have read the transcript of the testimony before Judge Young, as well as the exhibits admitted in evidence and the parties' legal memoranda. While Rule 63 permits me to reopen the evidence or recall witnesses who previously testified, I conclude that, given the nature of the case and the evidence produced in the trial, neither course is necessary nor appropriate.
The Order for Judgment entered by Judge Young awarded damages in the sum of $105,550, but since the order was not accompanied or followed by findings comporting with the requirements of Rule 52, the reasons for the assessment of damages in that amount do not appear. I conclude that it is my obligation in making findings under Rule 63 and Rule 52 to make an independent assessment of the evidence, which may result in the award of damages in a different sum. As will appear below, that is the case here.
I make the following findings of fact and conclusions of law:
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiff Maritimes Northeast Pipeline, L.L.C. ("Maritimes") is a limited liability company organized and existing under the laws of the State of Delaware with its principal place of business in Boston, Massachusetts. Maritimes is a natural gas company as defined by § 2(6) of the Natural Gas Act, 15 U.S.C. § 717a(6). Ventura is the record owner of property located at 128-130 Water Street in Danvers, Massachusetts, which consists of approximately 0.714 acres of land ("Ventura Property").
On December 21, 2001, the Federal Energy Regulatory Commission ("FERC") issued a Certificate of Public Convenience and Necessity that authorized Maritimes, among other things, to construct, operate, and maintain a nature gas pipeline and related facilities that will be used to transport natural gas in interstate commerce along a route that extends from Methuen, Massachusetts to Salem, Massachusetts. In order to construct the pipeline, Maritimes needed to acquire both a permanent and a temporary easement on the Ventura Property. Unable to purchase the easements from Ventura, Maritimes instituted this condemnation action to take the easements by the power of eminent domain. Pursuant to an Order entered in this case by Judge Young dated July 25, 2002, Maritimes installed the pipeline on the Property.
Ventura as the landowner, although nominally the defendant, has the burden of proving what compensation it is justly entitled to for the diminution in the value of its property caused by Maritimes' takings. See, e.g., United States v. 33.5 Acres of Land, 789 F.2d 1396, 1400 (9th Cir. 1986); United States v. 125.07 Acres of Land, 753 F. Supp. 1034, 1037 (D. Mass. 1991). Massachusetts law of eminent domain governs the substantive determination of just compensation in a condemnation action commenced under the Natural Gas Act. See, e.g., Portland Natural Gas Transmission Sys. v. 19.2 Acres of Land, 195 F. Supp. 2d 314, 319-320 (D. Mass. 2002); Algonquin Gas Transmission Company v. 60 Acres of Land, 855 F. Supp. 449, 453 (D. Mass. 1994). Just compensation is the amount of money required to put a landowner in the same, but not better, position as if the property had not been taken. San Diego Gas Elec. Co. v. City of San Diego, 450 U.S. 621, 657 (1981) ("The payment of just compensation serves to place the landowner in the same position monetarily as he would have occupied if his property had not been taken.").
The Ventura Property
The Ventura Property is located in the Danversport neighborhood of Danvers just east of Route 35 and at the confluence of the Waters and Danvers Rivers. The Ventura Property has frontage on Water Street as well as along the Waters River and is located immediately north of the Route 35 bridge that crosses the Waters River. Abutting properties include a vacant parcel from which the Ventura Property was divided and Liberty Marina, a recreational marina with modern boat slips, an old storage building, and a yard used for boat storage in winter. The Ventura Property was the front portion of a 3.26 acre parcel acquired by Waters River Corporation and Danvers Real Estate Investment Corporation in 1999 for $425,010. Waters River Corporation thereafter subdivided that property and sold 31,100 square feet to Ventura on March 22, 2002 for the recorded consideration of $425,000. The sale included Site Plan Approval of a 4560 square foot retail strip building with a drive-through lane to be used by a bank. In addition to the payment of $425,000, Ventura also paid a sales commission, plus the seller's legal expenses for the Site Plan Approval process, which totaled approximately $75,000. Hence, the total consideration paid by Ventura to acquire the parcel was $500,000.
As of July 25, 2002, the Ventura Property was improved by a short stone wall, an 82-year-old, 5226 square foot, one-story wood frame building at the end of its useful life, 92 feet of granite seawall followed by 47 feet of deteriorated wooden seawall, and a public storm drain. In order to develop the Ventura Property, the existing building would have to be demolished and the wooden portion of the seawall replaced. Depending upon the type of wall selected, replacement costs for the seawall would vary from about $500 to $1250 per linear foot.
The Ventura Property is listed on the Massachusetts Department of Environmental Protection's List of Confirmed Disposal Sites and Locations to be Investigated because it, and the abutting land to the east, were once used by a petroleum company as a petroleum tank farm and distribution facility. The land east of the Ventura Property was found to contain significant contamination consisting of petroleum and lead while the Ventura Property contained mostly petroleum. Richard E. Warren, a Licensed Site Professional ("LSP") and principal of REW Environmental Consultants, Inc., filed a Class C Response Action Outcome ("RAO") with the Massachusetts Department of Environmental Protection that included the Ventura Property on February 21, 2002. Thus, any prospective buyer would consider the cost, time, and overall effect of a permanent remediation program on the Ventura Property's value. Neil Carey, a Licensed Site Professional employed by TRC Environmental Corporation ("TRC"), prepared a report regarding the hazardous soil conditions at the Ventura Property and estimated the remediation and related expenses to cost $48,000.
As of July 25, 2002, the Ventura Property was both encumbered by, and benefitted from, other easements. It was encumbered by a recorded 24-feet wide surface easement occupying approximately 3264 square feet ("Easement A") and running in favor of the abutting landowner, Waters River Corporation. That easement expires March 21, 2009, unless it is used before then. Easement A divides a strip of land along the seawall from the rest of the Ventura Property and makes construction of a building unlikely, if not impossible, from the northern boundary of Easement A southward. Easement A does not adversely affect the Ventura Property's development potential, however, as the area covered by Easement A is best suited for parking.
The Ventura Property also benefitted from an easement 20-feet wide that crosses abutting land but adds little, if any, utility to the Ventura Property ("Easement B"). Waters River Corporation, the owner of the abutting land, retains the right to cross Easement B only where it intersects with Easement A if and when Easement A is used.
Typically, new construction projects must first be approved by the Danvers Planning Board. To obtain such approval, an applicant must submit a Site Plan containing the extensive list of information noted in Section 4.4 of the Danvers Zoning Bylaw. On December 11, 2001, prior to Ventura's purchase of the Property, the Ventura Property received Site Plan Approval for a one-story, three-unit, 4560 square foot building for a bank with a drive-through lane, a restaurant, and retail store. In 2003, Ventura requested a modification of the Site Plan to allow a Dunkin Donuts with a drive-through as part of a proposed development of a 4,603 square foot two-story building (the "Modified Site Plan"). The Town notified Ventura of its decision not to grant approval of the proposed modification in May 2003.
The permanent underground easement taken by Maritimes on the Ventura Property is approximately 0.18 acres (7841 square feet) and the temporary workspace easement was approximately 0.21 acres (9148 square feet).
Determining Just Compensation
"Generally, there are two elements involved in calculating the condemnee's award for the taking of an easement by eminent domain. First, the value of the servitude must be assessed. Second, it must be determined if there are severance damages to the remainder." 4 Nichols on Eminent Domain § 12D.01[2][d], at 12D-17. Massachusetts courts have described this calculation in two different ways. The most common expression is the "before and after" rule, in which the landowner is entitled to the difference "between that value of the . . . land immediately before the taking and its value immediately after." Kane v. Town of Hudson, 389 N.E.2d 737, 740 (Mass.App.Ct. 1979). The other approach, the "value of the take plus damages" rule, provides that the landowner should be awarded the fair market value of the land taken and "any damage accruing to the remainder of the land not taken caused by the taking. . . ."Nichols v. Commonwealth, 121 N.E.2d 56, 58 (Mass. 1954). Fair market value is defined as the highest price that a hypothetical willing buyer, under no compulsion to buy, would pay to a hypothetical willing seller, under no compulsion to sell, in an assumed free and open market, with both parties being informed of all the attributes of the property and the circumstances that might affect its value and with the property having been exposed to the market for a reasonable period of time. Epstein v. Boston Hous. Auth., 58 N.E.2d 135, 137-38 (Mass. 1944); see also Newton Girl Scouts Council, Inc. v. Mass. Tpk. Auth., 138 N.E.2d 769, 773 (Mass. 1956). Fair market value is a function of a property's highest and best use. Douglas Envtl. Assoc. v. Dep't of Envtl. Prot., 706 N.E.2d 620, 623 (Mass. 1999) (citing Mass. Gen. Laws ch. 79, § 12; Skyline Homes, Inc. v. Commonwealth, 290 N.E.2d 160 (Mass. 1972)). The highest and best use of the Ventura Property before and after the taking was for retail/commercial use.
The market data or comparable sales approach is an appropriate method for determination of the fair market value of Ventura's property and any reduction in value caused by the taking of the permanent easement. The validity of the comparable sales approach for valuation depends upon the degree of comparability between the subject property and the properties used for comparison.United States v. 103.38 Acres of Land, More or Less, 660 F.2d 208, 211 (6th Cir. 1981). It is axiomatic that no two parcels of property are truly identical, and, as a result, the term "comparable" merely means similar in as many respects as possible. Id. Generally, comparable sales evidence has probative value only if the subject and comparison properties have similar characteristics and if the comparison sales are not too remote in time or place from the applicable date of valuation and the site of the subject property. See New Boston Garden Corp. v. Bd. of Assessors of Boston, 420 N.E.2d 298, 306 (Mass. 1981) (stating "comparability depends on 'fundamental similarities'").
William A. LaChance, a real estate appraiser who testified as an expert witness on behalf of Maritimes, used the comparable sales method to value the Ventura Property before Maritimes' taking. In applying the comparable sales method, LaChance relied on similarly zoned land sales located at high traffic locations on the North Shore that were acquired for the same uses allowed by zoning for the Ventura Property and whose intended use is comparable or would compete with, the highest and best use of the Ventura Property. LaChance considered six land sales to be most appropriate for his comparative analysis. Using the price per square foot of land as the unit of comparison for analysis of the comparable sales, LaChance performed both quantitative and qualitative analyses to estimate the value of the Ventura Property.
To determine whether a sale is comparable to the subject property, the factors that are generally considered are size, shape, location, zoning, and other such circumstances surrounding each parcel of land proffered to be comparable. Each difference or similarity is to be considered in determining the weight, if any, to be given to opinions of value. Boyd v. Lawrence Redevelopment Auth., 202 N.E.2d 297, 299 (Mass. 1964). The more comparable the factors are, the more probative they are of the fair market value of the subject. United States v. 320.0 Acres of Land, 605 F.2d 762, 798 (5th Cir. 1979).
An appraiser must also make adjustments to the "comparable" properties. See New Boston Garden Corp., 420 N.E.2d at 306 ("Once basic comparability is established, it is then necessary to make adjustments for the differences, looking primarily to the relative quality of the properties, to develop a market indicator of value."). It is for the fact-finder to determine whether the claimed factors are in fact comparable, and if found to be so, then to determine the weight to be accorded to such sales. United States v. 84.4 Acres of Land, 348 F.2d 117, 119 (3d Cir. 1965); E F Realty Company, Trustee v. Comm'r of Transp., 377 A.2d 302, 305 (Conn. 1977). Hence, in order for an appraiser's testimony which is based upon the comparative sales approach to have any probative value, the appraiser must carefully explain any adjustments made to each comparison sale. Adjustments should be made in either percentages or dollars for each factor of comparison involved and should reflect, as reasonably as possible, each difference between each comparable advanced and the subject property. When a comparable sale is considered superior to the subject property, the comparable is adjusted downward to more closely resemble that property. Conversely, when the comparable is inferior to the subject property, the comparable is adjusted upward to reflect its inferior characteristic. Typically, sales are often adjusted in the following convention or sequence:
• Property rights conveyed
• Financing
• Conditions of sale
• Expenditures made immediately after purchase
• Market conditions
• Location
• Physical characteristics
• Economic characteristics
• Use/Zoning
• Non-realty components of value
LaChance used properties that were comparable to Ventura's property and he adequately explained his reasons for considering each property as comparable based on the degree of comparability, physically, economically, and functionally. LaChance also explained any adjustments made to account for the differences with the Ventura Property. He considered all of the comparative elements and determined that there were differences between the comparable sales and the Ventura Property with respect to four elements: expenditures made immediately after purchase, changes in market conditions (between the sale date and the valuation date), location, and physical characteristics (including environmental status).
As to the first element, expenditures made immediately after purchase, LaChance concluded that the expenses a buyer would incur for demolition and removal of the existing building were similar to minor demolition expenses at most of the sales, and that, at most, the difference in this expenditure equated to $0.39 per square foot, and therefore did not warrant an adjustment. With respect to the second element, measuring changes in market conditions, LaChance included the broker's fee that Ventura paid as part of its purchase of the Property because such a fee is included in the prices of comparable sales. The amount for legal expenses associated with approval of the Site Plan that Ventura paid when it purchased the Property is an expense that would ultimately be borne by buyers of all comparable sale properties. But this expense for the Ventura Property was nearly complete as reflected by its Site Plan approval received prior to sale and adds value similar to its reported cost of $35,000. Hence, a $75,000 adjustment for Ventura's payment of the real estate commission, plus the legal expenses incurred in obtaining Site Plan Approval was appropriate. LaChance determined that prices of commercial properties trended upward from 1999 through 2001 and held flat in early 2002, therefore requiring a 10% annual adjustment or 0.83% per month from the month of sale through December of 2001. In considering the third element of location quality, LaChance considered traffic count, quality and density of nearby commercial construction by examining the published traffic counts. However, LaChance reasoned that because the property was located on a divided highway, only roughly one-half the total traffic passes by the property. In relation to the final element, the physical characteristics, LaChance focused on three particular physical characteristics: (1) size (smaller sites tend to sell at higher prices per square foot and larger ones tend to sell at lower prices per square foot), for which the adjustments did not exceed 30%; (2) the unique expense associated with replacing the wooden seawall on the Ventura Property which was estimated at $45,000; and (3) the effect of the contamination of the Ventura Property.
The sales comparison approach produced a range of unit values from approximately $16 to $22 per square foot. Considering the sales that were most similar in size to the Ventura Property, namely Sales Nos. 1, 2 and 5, a value near the middle of the range, equivalent to $17.50 per square foot, is appropriate. This unit value equates to $544,250 for the Ventura Property which rounds to $550,000 or approximately $17.69 per square foot. Hence, a quantitative sales comparison analysis indicates a value of $550,000 for the Ventura Property before the taking.
LaChance also performed a qualitative analysis of the comparable sales that consisted of placing the Ventura Property within an array of the comparables sales ranging from best to worst after adjustments only for changes in market conditions and contamination status. The array supports the conclusion that the overall value of the Ventura Property should fall in the range of $500,000 to $555,000 established by Sales Nos. 1, 2, and 7, supporting the valuation arrived at by the quantitative analysis. Thus, the sales comparison approach establishes that the fair market value of the Ventura Property as of July 25, 2002 was $550,000.
In determining the value of the Ventura Property after the taking, LaChance considered the rights taken by Maritimes. In general, a landowner can use Maritimes' permanent easement as long as such use does not unreasonably interfere with Maritimes' rights. An easement is a non-possessory property right to use the land of another for a definite purpose. Brown v. Sneider, 400 N.E.2d 1322, 1324 (Mass.App.Ct. 1980). Under Massachusetts law, "the scope of the condemnor's use of the easement [is] limited to the extent reasonably necessary for the purpose served by the taking, so that the landowner's right to use the easement area is as great as possible while remaining reasonably consistent with the purpose of the taking." Gen. Hosp. Corp. v. Mass. Bay Transp. Auth., 672 N.E.2d 521, 525 (Mass. 1996); see also W. Mass. Elec. Co. v. Sambo's of Mass., Inc., 398 N.E.2d 729, 731 (Mass.App.Ct. 1979) (reciting the rule as "an owner [of property encumbered by an easement] may use the land for all purposes which are not inconsistent with the easement . . . or which do not materially interfere with its use") (citations omitted). Where "the condemnor takes an easement, the owner retains title to the land and fee and has the right to make any use of it that does not interfere with the public use." Gen. Hosp. Corp., 672 N.E.2d at 525. "When an easement is taken that does not require the exclusive occupation of the surface, such as the right to lay and maintain . . . subterranean pipes over or through private land, the owner is not entitled to recover the entire market value of the land subjected to the easement." 4 Nichols on Eminent Domain § 12D.01[2][c], at 12D-16. Thus, Ventura is not entitled to recover the entire market value of the area encumbered by Maritimes' permanent easement. In determining just compensation in a case involving an easement, the issue is the value of the property rights that the owner has lost, not the value of what the taker has gained. See Boston Chamber of Commerce v. City of Boston, 217 U.S. 189, 195 (1910).
Maritimes' "Information for Landowners" letter sets forth Maritimes' policies with respect to a landowner's use of land subject to Maritimes' permanent easement. The landowner may not place a building or permanent structure within the easement, but may utilize the easement area for the requirements of zoning, for vehicular access, a driveway, parking, a lawn, and certain types of plantings. The landowner may also install underground utilities provided they are designed to adequately clear the gas pipeline.
At the Ventura Property, prior to installation of the pipeline, the surface of the permanent easement area consisted of gravel and crushed stone. Approximately 2320 square feet of Maritimes' permanent easement is also within Easement A — the 3200 square foot, 24 foot wide pre-existing easement in favor of the abutter. The Ventura Property, after the taking of the permanent easement, has the same square footage (31,100 square feet) that it had before the taking. The differences are that 7841 square feet are encumbered by a permanent easement, and 9148 square feet were encumbered by a temporary easement from July 25, 2002 to July 25, 2003.
Diminution in Value Caused by the Permanent Easement
Approximately 2320 square feet or about 30% of Maritimes' permanent easement is within the pre-existing Easement A, which already precludes buildings and other obstructions and also removes some of the area's subsurface rights. In addition, 2500 square feet of Maritimes' permanent easement lies within the 50 foot front yard setback area under the Danvers By-Law and 1250 square feet is within the 25 foot rear yard setback area, both of which preclude buildings on those areas. Consequently, only approximately 2265 square feet of the Ventura Property (7.3%) loses its potential building rights. The remaining 5576 square feet could not have been improved with a building due to the combination of limitations presented by Easement A and zoning regulations.
LaChance opined that 25% of the rights were taken from the 5576 square feet of Maritimes' permanent easement where no building could have been constructed before the taking and 50% of the rights were taken from the 2265 square feet where a building might, but probably would not, be constructed due to the need for parking and other constraints. The weighted rate or percentage of rights lost equates to 32.25% which LaChance rounded to 35%. The fee value of the area encumbered by Maritimes' permanent and temporary easement before the taking was $17.69 per square foot which equates to $138,707. Therefore, the diminution in value caused by the permanent easement is 35% of $138,707 or $48,548, which LaChance rounded to $50,000.
The Temporary Easement
The temporary easement area was used as additional workspace during installation of the pipeline and was to be restored to a condition as near as practicable to that which existed before the taking. Maritimes and Ventura agreed that the temporary easement area would last for only one (1) year or until July 25, 2003. Although Maritimes controlled the temporary easement area for 12 months, access to the temporary easement area was accommodated during installation of the pipeline. No structures were built within the temporary easement during its term, and the temporary easement had no impact on the use of the Ventura Property during its one-year life span.
LaChance valued the temporary easement taken on Ventura's property by estimating the fair rental value of the property taken, which is the general measure of compensation for the taking of a temporary easement. See Kimball Laundry Co. v. United States, 338 U.S. 1, 6-7 (1949); Heydt v. United States, 38 Fed. Cl. 286, 305 (Fed.Cl. 1997); Fowler Irrevocable Trust 1992-1 v. City of Boulder, 992 P.2d 1188, 1196 (Col. App. 1999); see also Mich. Wis. Pipeline Co. v. Herbert, 488 So. 2d 754, 757 (La.Ct.App. 1986) (applying this methodology to value temporary construction easements); State v. Sun Oil Co., 390 A.2d 661, 668 (N.J.Super.Ct. Law Div. 1978).
Ventura did not offer any evidence of the fair market rent owed for the taking of the temporary easements on the property. LaChance calculated the temporary easement's rental value as the fee value of the area encumbered, multiplied by the percentage of the area rented, multiplied by a rate of return for each year of the easement's term. No discounting was necessary as the temporary easement was only taken for a one-year term and the rent was assumed to be paid in advance. The fee value of the 9148 square foot temporary easement area was $161,828. LaChance concluded that fair market rent for a ground lease was 10%, thereby arriving at $16,183 which he rounded to $16,200.
Severance Damages
Maritimes has no authority to restrict the owner's use of the land outside the dimensions of the permanent easement unless such use would materially interfere with Maritimes' ability to operate and maintain Maritimes' pipeline. W. Mass. Elec., 398 N.E.2d at 731 ("[A]n owner may use the land for all purposes which are not inconsistent with the easement, or which do not materially interfere with its use." (citations omitted)). In Massachusetts, if only part of a parcel of land is taken, "there shall be included damages for all injury to the part not taken caused by the taking or by the public improvement for which the taking is made. . . ." Mass. Gen. Laws ch. 79, § 12. However, this statute does not relieve claimants in condemnation proceedings from the burden of proving that the taking actually has caused "injury" to the "part not taken." The damage to the remainder, or part not taken, is often referred to as severance damage. United States v. 91.90 Acres of Land, 586 F.2d 79, 86 (8th Cir. 1978). "'Severance damages' are compensable only if the landowner incurs a direct loss reflected in the marketplace that results from the taking. . . . the landowner must demonstrate that the taking caused the severance damages." United States v. 760.807 Acres of Land, 731 F.2d 1443, 1448 (9th Cir. 1984); see also Moore v. United States, 54 Fed. Cl. 747, 753 (Fed.Cl. 2002) ("[T]he court can only award severance damages if there is some reliable proof that the physical intrusions, concerns, and annoyances have actually translated into loss in market value."); United States v. 122.63 Acres of Land, 526 F. Supp. 539, 542 (D. Mass. 1981) (declining to award any severance damages for the taking of an easement when there was no proof of such damages); Miller v. United States, 620 F.2d 812, 828 (Ct.Cl. 1980) (requiring the owner to show a loss in the market value of the remainder to receive severance damages). There was no evidence that Maritimes' permanent easement affected the use of, or reduced the value of, the area outside the permanent easement area on the Ventura Property. Specifically, the evidence showed that Maritimes' easement would not interfere with the development of the property in accordance with the Site Plan Approval received from the Danvers Planning Board or even the Modified Site Plan that had not been approved by the Planning Board.
Furthermore, the development potential of the Ventura Property is not changed after the takings because:
• The Ventura Property had an approved Site Plan for a new development prior to July 25, 2002 and Maritimes reviewed and accepted the Site Plan without any changes;
• Maritimes also reviewed the Modified Site Plan in the event that that Plan was ever approved by the Town and carved out a notch in the permanent easement to accommodate the proposed building shown on that Plan;
• Maritimes' permanent easement does not impair the proposed building's layout or construction or extend the remediation process;
• The Ventura Property does not lose any development potential as any suburban retail site requires parking and access/egress lanes because Maritimes' permanent easement area can accommodate such uses; and
• The proposed layout depicted on the Site Plan and Modified Site Plan utilized Maritimes' permanent easement area for parking spaces, a drive-through lane, and to comply with the landscaping requirements of section 4 of the Danvers Zoning By-Laws.
Moreover Maritimes does not place any restrictions on a landowner's right to use the area outside of Maritimes' permanent easement. The Ventura Property's highest and best use after the takings is the same as it was before the takings since the proposed building size, site, construction costs, and timing are not measurably changed.
Michael Bovio, an engineer, who was the only witness who testified on behalf of Ventura, had prepared a plan dated September 4, 2003, showing a hypothetical development of the Ventura Property. A landowner who seeks damages on the basis of a hypothetical plan of development must show that it was reasonably probable that the relevant municipal authorities would approve the owner's proposed development plan. See, e.g., McLaughlin v. Bd. of Selectmen of Amherst, 664 N.E.2d 786, 790 (Mass. 1996) (stating that the landowner must show that there was a "reasonable probability" that the landowner could obtain from the town's zoning board's approval for his intended use); Colonial Acres, Inc. v. Inhabitants of North Reading, 331 N.E.2d 549, 551 (Mass.App.Ct. 1975) (requiring landowner to present evidence that a potential use of its property is reasonably probable). The plan, introduced in evidence as Exhibit 20 by Ventura, was not approved by the Danvers Planning Board and there was no evidence from which it could be concluded that it would be reasonably probable that the Planning Board would approve that plan. See Portland Natural Gas Transmission Sys. v. 19.2 Acres of Land, 195 F. Supp. 2d at 325 (denying damages sought by the landowner on the theory that the natural gas pipeline easement reduced the size of imaginary buildings that could have been constructed on vacant industrial lot because such an approach was "too conjectural and hypothetical"); Clifford v. Algonquin Gas Transmission Company, 604 N.E.2d 697, 701-02 (Mass. 1992) (finding it appropriate to admit a plan after concluding that the plan "did not portray a use that was unduly speculative or conjectural"); Aselbekian v. Mass. Tpk. Auth., 169 N.E.2d 863, 865 (Mass. 1960) (stating that a plan showing development of the property into housing lots "had no proper place in th[e] case except to illustrate the physical possibility" that the land could have been subdivided); see also Tigar v. Mystic River Bridge Auth., 109 N.E.2d 148, 151 (Mass. 1952) ("A speculative future development cannot be shown.").
Without any other evidence, severance damages are not appropriate and are therefore not awarded.
Summary
Interest
A landowner who claims that the interest rate set by § 37 is not constitutionally adequate has the burden of proving at trial what higher rate of interest should be used. See Claff, Inc. v. Mass. Bay Transp. Auth., 808 N.E.2d 238, 241 (Mass. 2004). Ventura did not introduce any such evidence.
Where the period for which prejudgment interest is owed is not more than one year, such interest shall be calculated at an annual rate equal to the weekly average one-year constant maturity treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date on which the right to damages under this chapter vested. Where the period for which prejudgment interest is owed is more than one year, such interest for the first year shall be calculated in accordance with the preceding sentence, and such interest for each additional year shall be calculated on the principal amount due at an annual rate equal to the weekly average one-year constant maturity treasury yield, as published by the board of governors of the Federal Reserve System, for the calendar week preceding the beginning of each additional year.
In this case, the date on which the right to damages vested is July 25, 2002, the date the Order entered granting Maritimes permission to go upon the Ventura Property to install the pipeline. The $66,200 award of just compensation owed to Ventura is the principal upon which pre-judgment interest will be calculated. The following chart summarizes the pre-judgment interest calculation. Year Interest Rate Interest Amount Total Amount TOTAL
7/25/2002 — 1.97% $1,304.14 $67,504.14 (published 07/19/2002) 7/24/2003 7/25/2003 — 1.10% $728.20 $68,232.34 (published 07/18/2003) 7/24/2004 7/25/2004 — 2.12% $1,403.44 $69,635.78 (published 07/23/2004) 7/24/2005 7/25/2005 — 3.68% $2,436.16 $72,071.94 (published 07/22/2005) 7/24/2006 7/25/2006 — 5.22% $3,455.64 $75,527.58 (published 07/21/2006) 7/24/2007 7/25/2007 — 4.99% $307.71 $75,835.29 (published 07/20/2007) 8/27/2007 $9,635.29 $75,835.29 Thus, pre-judgment interest is $9635.29 and the total award of just compensation and pre-judgment interest totals $75,835.29.It is SO ORDERED.