United States of America v. 75.746 Acres of Land et al, No. 2:2008cv01829 - Document 81 (D. Ariz. 2010)
Court Description: ORDER - We tried this eminent domain action under Rule 71.1, Fed. R. Civ. P., on May 11 and 12, 2010. These are our findings and conclusions under Rule 52(a), Fed. R. Civ. P. The United States acquired an aviation easement over 75.746 acres of land, part of a larger parcel of 211.58 acres, owned by Ashby Land LLC, located at the end of the southwest runway at Luke Air Force Base in Glendale. The only issue in dispute is the amount of just compensation due, measured by the fair market value of th e land on the day of taking, here, October 6, 2008. I find and conclude that there were no comparables to the subject property, and that Nagy's use of sales outside the Luke area for properties that were not used for rose bush farming failed to give a true measure of value. Thus, Brophy was right to not use the comparable sales method, because there were no legitimate comparables. I find that the income approach for this land, which is uniquely suited to rose bush farming, is a reasonable a pproach where there simply are no comparables. The clerk is directed to enter final judgment in favor of the defendants and against the United States in the amount of $3.1 million. Signed by Judge Frederick J Martone on 6/8/10. (NOTE: See Order for full details)(KMG)
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United States of America v. 75.746 Acres of Land et al 1 Doc. 81 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 United States of America, 9 Plaintiff, 10 vs. 11 12 13 75.746 Acres of Land et al., Defendants. 14 ) ) ) ) ) ) ) ) ) ) ) ) No. CV-08-1829-PHX-FJM ORDER 15 We tried this eminent domain action under Rule 71.1, Fed. R. Civ. P., on May 11 and 16 12, 2010. These are our findings and conclusions under Rule 52(a), Fed. R. Civ. P. 17 The United States acquired an aviation easement over 75.746 acres of land, part of a 18 larger parcel of 211.58 acres, owned by Ashby Land LLC, located at the end of the southwest 19 runway at Luke Air Force Base in Glendale. The only issue in dispute is the amount of just 20 compensation due, measured by the fair market value of the land on the day of taking, here, 21 October 6, 2008. 22 Unfortunately, the parties’ disagreement over the evaluation method to be used causes 23 them to be deeply divided over value. The United States contends that the comparable sales 24 method should be used. Ashby contends that there are no comparable sales, and thus the 25 income approach to value should be used. That approach does not encompass lost future 26 profits (which are not allowed), but instead focuses on value from the perspective of a 27 potential buyer in the relevant market. See our Order of April 7, 2010 (doc. 58). The parties 28 agreed that the burden of proof rested with the landowner. Dockets.Justia.com 1 Stanley Ashby testified that the 2008 easement would prevent him from leasing his 2 land to rose bush farmers because the easement vests total discretion in the Commander of 3 Luke AFB to exercise rights under the easement. The easement goes beyond allowing 4 flights. It prohibits birds (which farming attracts), allows for the construction of lighting 5 fixtures, navigational aids, signs, and most importantly, allows the Base Commander to go 6 in and tear out crops at any time. Since rose bush farming is on a two-year cycle, no one 7 would invest in farming the land in the face of these risks. He testified that his property was 8 appraised for Federal Estate Tax purposes at $40,000.00 per acre in 2007. 9 Ashby’s expert, Stephen Brophy, testified that Arizona now exceeds Texas and 10 California in the rose bush farming industry. Because of its unique soil and location, the 11 highest and best use for the subject property is rose bush farming. He estimates it takes an 12 investment of about $13,000.00 per acre to farm rose bushes. He also asserts, without 13 contradiction (the United States’ expert did not even read Brophy’s report and did not testify 14 in rebuttal to it), that there are no comparable sales in the area. He asserted that the 15 “comparables” cited by the United States’ expert were not comparable at all. None involved 16 rose bush farming. Most were sales to speculators and developers in a down market. In light 17 of the extensive authority to remove crops vested in the Base Commander by the easement, 18 he concluded that much of the property lost value at the rate of $34,500.00 per acre. He 19 ultimately concluded that the total diminution in value was $3.1 million. 20 Steven Nagy testified as the United States’ expert. He appraised the value of the 21 easement taken at $418,000.00. He concluded that various local governmental restrictions 22 already limit the use of the subject property. He disputed the use of the income approach to 23 value for agricultural uses. Instead, he looked at land around Luke AFB for comparables, 24 but found no sales. So, he went all over the west valley looking for sales. He acknowledged 25 that the land before all the restrictions were imposed was valued at $40,000.00 per acre, but 26 concluded that the pre-2008 easement restrictions already reduced the value to $6,000.00 per 27 acre. He thought that the 2008 easement was slightly more restrictive than those already 28 imposed (the allowance of clear cutting and the potential loss of crop) and valued this loss -2- 1 at $4,000.00 per acre. As noted, he had not seen the Brophy report and was not prepared to 2 rebut it. 3 I find and conclude that there were no comparables to the subject property, and that 4 Nagy’s use of sales outside the Luke area for properties that were not used for rose bush 5 farming failed to give a true measure of value. Thus, Brophy was right to not use the 6 comparable sales method, because there were no legitimate comparables. I find that the 7 income approach for this land, which is uniquely suited to rose bush farming, is a reasonable 8 approach where there simply are no comparables. I find it remarkable that the United States’ 9 expert failed to even read the Brophy report and failed to rebut it. Thus, while it might have 10 been possible to produce different numbers (e.g., the capitalization rate) using the income 11 approach, there is no evidence before me to construct a damages model different from that 12 employed by Brophy. 13 Brophy was a highly credible witness. His opinions were tempered by realism and 14 did not overreach. I therefore find it more probable than not that the sum of $3.1 million 15 represents the difference between the value of the whole 211-acre parcel (including the 16 75.746 subject to the easement) before the taking and after the taking, and is fair, adequate 17 and just compensation. This figure is driven largely by the authority the easement gives to 18 the Base Commander to “cut to ground level”, Ex. 2 at 8, crops grown on the land. Although 19 the United States suggested that was unlikely, it would not commit to not doing it when given 20 the opportunity at trial. The United States believed that would be an alteration of the 21 easement, thereby admitting not only the authority to clear the property of crops but also the 22 possibility that it might happen. It simply would not represent that it would not clear the 23 ground of crops. 24 25 26 At all events, the clerk is directed to enter final judgment in favor of the defendants and against the United States in the amount of $3.1 million. DATED this 8th day of June, 2010. 27 28 -3-
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