Opinion ID: 1348704
Heading Depth: 2
Heading Rank: 2

Heading: The Overage Area

Text: Steiner presented expert testimony from Jack Lipman, a licensed architect with over thirty years of experience, regarding the topography and usability of the land. Lipman testified that a little less than 11,000 sq. ft. of the Steiner parcel is buildable, except at extremely excessive costs. He mentioned very rough and rugged and heavy rocks, inaccessibility for getting construction equipment in to do foundation work (pilings would be needed), the heavy winds and whip-lashing of water, and the Hawaiian trail across the property that cannot be built over. The Tax Appeal Court found that 14,000 sq. ft. of the parcel were economically usable. The only (evidentiary) source of this information was the testimony of John Hulten, Sr., an appraiser called by Steiner. Mr. Hulten testified that he obtained the 14,000 sq. ft. figure, from an architect (Reese) who was not called as a witness in this case, to illustrate two appraisal approaches which he was advocating. Steiner's attorney stated that as far as the report to Mr. Reese's report [sic] [on the buildable area], your honor, we're offering only to show what Mr. Hulten relied on but not to the truth of Mr. Reese's report. As we have previously stated, an expert witness may not serve as a mere conduit for the hearsay opinion, the factual basis of which is not established through evidence, of another expert who does not testify when the expert who does testify lacks the requisite qualifications to render the opinion in his own right. State v. Davis, 53 Haw. 582, 589-90, 499 P.2d 663, 669 (1972) (citations omitted). In this case, no attempt was made to establish Hulten's qualifications to determine the usable area of the Steiner property and the factual basis for the 14,000 sq. ft. figure was not otherwise established through evidence presented by either party. We therefore conclude that the Tax Appeal Court erred in finding 14,000 sq. ft. of the Steiner property usable for improvements. The City attacks the 14,000 sq. ft. figure from another perspective. It argues, correctly, that a benchmark value is calculated for a typical or benchmark lot size and, when a property is smaller than the typical lot, the benchmark value must be adjusted upward to reflect greater value per square foot. Steiner does not disagree with this analysis. In fact, Steiner's expert diagramed a hyperbolic curve of the formula for calculating the adjustment ratios to be applied to lots smaller than 20,000 sq. ft. [10] We agree that this analysis would be applicable to lots smaller than the benchmark lot. However, Steiner's property is actually much larger than the benchmark or typical lot. We will not create an anomaly whereby a single parcel is viewed as being both larger and smaller than the benchmark lot. [11] Steiner presented evidence that the usable area of the property was significantly less than 20,000 sq. ft. Nevertheless, the City's study showed that a typical lot size along the ocean-front in both the Black Point and Kahala Beach neighborhoods was 20,000 sq. ft. The City assessor testified that the non-utility of a portion of the benchmark area was factored into the calculation of the benchmark value. We find that application of the Black Point benchmark value to 20,000 sq. ft. is an appropriate systematic method for valuation of this portion of the Steiner property. See ROH § 8-7.1(a). We hold that the tax court erroneously rejected the City's valuation of the parcel using a formula which applied 100% of the Black Point benchmark value to 20,000 sq. ft. and a reduced benchmark to the overage area of 26,707 sq. ft.