Bartage, Inc. v. Manchester Housing Authority, 6648

• Decision Date: 29 March 1974
• Docket Number: No. 6648,6648
• Citation: 114 N.H. 203,318 A.2d 152
• Parties: BARTAGE, INC. v. MANCHESTER HOUSING AUTHORITY.
• Court: New Hampshire Supreme Court

Page 152

318 A.2d 152

114 N.H. 203

BARTAGE, INC. v. MANCHESTER HOUSING AUTHORITY.

No. 6648.

Supreme Court of New Hampshire.

March 29, 1974.

McLane, Carleton, Graf, Greene & Brown, Manchester (Stanley M. Brown, Manchester, orally), for plaintiff.

Craig & Wenners and Joseph F. McDowell, III, Manchester (McDowell, orally), for defendant.

GRIMES, Justice.

The main issue the court is asked to decide is whether evidence of reproduction cost is admissible as an element or circumstance to be considered in arriving at the fair market value of condemned property. This issue as well as defendant's exceptions to a failure to grant a requested instruction and to the exclusion of evidence of repairs after condemnation were reserved and transferred by Dunfey, J., after a jury trial with a view resulted in a $145,000 verdict for the plaintiff.

Plaintiff owned the Bartage Hotel which was situated on 10,350 square feet of land located on Pine Street in downtown Manchester. The Bartage, built in 1892, boasted a restaurant, lounge, and office space on the first floor and 52 rentable rooms for permanent and transient guests on the upper three floors, but had a high vacancy rate. It was located in a depressed area where other property had been taken over by the Manchester Housing Authority. On October 6, 1969, the Bartage was condemned by the authority in a petition for condemnation brought pursuant to RSA ch. 203, ch. 205 and 4:30-4:36.

At trial, one expert called by plaintiff valued the property at $130,000 and another expert valued it at $150,000. These estimates were arrived at by considering three standard approaches to valuation. The comparable sales method produces an estimate of value based on comparisons with and adjustments to sales and offerings for sale of similar properties in the area. The income approach is a determination of what value the property's net income will support based on a capitalization of net income. The cost approach, at issue on appeal, is figured by adding to the value of the land without buildings the cost of reconstructing the buildings as adjusted by subtracting an allowance for physical, economic and functional depreciation of the buildings. As applied to a valuation of the Bartage, these three factors depreciated the cost of reproduction an estimated 80% (T. 130). See American Institute of Real Estate Appraisers, The Appraisal of Real Estate 63-70 (4th ed. 1964).

Using these three methods, plaintiff's two appraisers arrived at six estimations of value ranging between $126,500 and $168,000. In choosing their best estimates, they arrived at the $130,000 and $150,000 figures respectively. Both experts considered the market data approach most accurate in valuing this property and one expert testified that the cost approach established merely the 'upper limit' of what a buyer would pay for the property. All of the testimony on the methods and the values was introduced as a foundation to support the experts' final opinions.

In this State, the 'rule of value permits all...