Opinion ID: 2342905
Heading Depth: 1
Heading Rank: 4

Heading: Admission of Unified Government's Experts' Appraisal Reports and Testimony

Text: At trial, KC Mall objected to Marx's testimony, arguing that the subject property was zoned as a business park rather than as a mall at the time of the taking and that Marx should have used data from business parks rather than malls in transition to other uses. Judge Sieve permitted KC Mall to voir dire Marx outside the jury's presence on the issue but overruled the objection, reasoning that KC Mall's argument went to the weight rather than admissibility of Marx's opinions. KC Mall also lodged the same objection to Nunnick's testimony, but Judge Sieve again overruled it, stating that Nunnick's methods were within accepted limits for valuation experts. KC Mall renews its argument on appeal that the Unified Government's experts' appraisal reports and testimony were inadmissible because the witnesses compared the subject property to retail malls, even though it was zoned at the time of the taking as a business park. The Unified Government responds that the property had not been altered physically since its days as a shopping mall, with the exception of updated signage, which made its experts' methods appropriate. In ruling on KC Mall's objections at trial, Judge Sieve reviewed our decision in Board of Johnson County Comm'rs v. Smith, 280 Kan. 588, 123 P.3d 1271 (2005). On this appeal, KC Mall argues that Smith stands for the proposition that any appraisal presuming a use inconsistent with zoning leads to an erroneous determination of highest and best use and that employment of comparable data based on an incorrect highest and best use is legally flawed. We disagree with KC Mall's interpretation of our Smith opinion. In Smith, the parties asked this court to determine the subject property's zoning classification because that would largely determine the just compensation. 280 Kan. at 596, 123 P.3d 1271. We first observed that the zoning classification of the subject property was not dispositive of the issue of value: `[I]n determining, for condemnation purposes, the most profitable use to which land can reasonably be put in the reasonably near future, the existing zoning restrictions or other restrictions should be considered, but they are not determinative. ' (Emphasis added.) 29A C.J.S., Eminent Domain § 148(d). 280 Kan. at 597, 123 P.3d 1271. We noted the consistency between this language and K.S.A. 26-513(d)(1), which sets out 15 nonexclusive factors to be used to ascertain the proper amount of compensation in an eminent domain proceeding. See Smith, 280 Kan. at 596, 123 P.3d 1271. Those factors include: (1) The most advantageous use to which the property is reasonably adaptable. . . . . (4) Productivity, convenience, use to be made of the property taken, or use of the property remaining. . . . . (9) Destruction of a legal nonconforming use. . . . . (13) That the property could be or had been adapted to a use which was profitably carried on. K.S.A. 26-513(d). Smith recognized that PIK Civ.3d 131.05 addressed the first of these factors (the most advantageous use to which the property is reasonably adaptable) and stated: `In determining fair market value, you should consider all of the possible uses to which the property could have been put, including the best and most advantageous use to which the property was reasonably adaptable, but your consideration must not be speculative, conjectural, or remote. The uses which may be considered must have been so reasonably probable as to have had an effect on the fair market value of the property at the time of the taking. ' (Emphasis added.) 280 Kan. at 597, 123 P.3d 1271 (quoting PIK Civ.3d 131.05). We then went on to recognize that a determination of the uses to which a property was reasonably adaptable included consideration of a reasonable probability of zoning changes. 280 Kan. at 597, 123 P.3d 1271. This court looked to 5 Nichols on Eminent Domain § 18.05[3] (3d ed. 2003): `Admissibility of a proposed use requires a showing that the property is both physically adaptable for that use and that there is a demand for such use in the reasonably near future. Even if the asserted use is prohibited by zoning or other land use designations or requires the issuance of governmental permits, evidence of such use is admissible upon a showing that it is reasonably probable that the zoning or other designations would be changed or that permits would be issued. ' (Emphasis added.) 280 Kan. at 597, 123 P.3d 1271. Finally, we observed that the issue of rezoning probability was a jury question, as evidenced by PIK Civ.3d 131.06: `If you find that the best use to which the land could have been put at the time of the taking was a use other than that for which it was zoned at the time, and that there was a reasonable probability of its being later rezoned to permit such use, then you may consider such use in determining the market value.' (Emphasis added.) 280 Kan. at 597, 123 P.3d 1271 (quoting PIK Civ.3d 131.06). The concept of best and most advantageous use or highest and best use is a factor for the jury to consider when awarding just compensation. See K.S.A. 26-513(d); PIK Civ. 4th 131.05. The essential inquiry must be: what is the property worth in the market, viewed not merely with reference to the uses to which it is at the time applied, but with reference to the uses to which it is plainly adapted. 4 Nichols on Eminent Domain § 12B.12, p. 12B-96 (3d. ed. 2011). The crucial question arising from our interpretation of Smith is whether there was any evidence presented to the jury about the probability of rezoning. We see some evidence in the record before us to support an inference that rezoning was reasonably probable, given the state of the property and its current use. At the time of the taking, none of the buildings on the subject property had been altered to conform to business park use. Although architects had been hired to draw plans for an office park, the plans had not yet been pursued. The tenants occupying the buildings after rezoning as a business park were the same tenants that occupied the buildings before that rezoning. Nunnick also testified that he believed the Unified Government would play ball with a retail redevelopment plan. Finally, Marx testified that a change in zoning would not alter demand. Given this evidence and Smith 's holding that zoning is but one factor to consider in determining highest and best use, the district court did not err by admitting the testimony and reports of the Unified Government's expert appraisers.