Facts

Plaintiff San Diego Association of Governments ("SANDAG") filed an eminent domain action involving a partial take of property owned by defendant Costa Verde Hotel LLC, ("CVH") for the widening of Genesee Avenue in order to create room to construct an elevated trolley line in the street median. CVH's larger parcel was approximately 4.78 acres located at the southwest corner of Genesee and La Jolla Village Drive in the University Town Center area of the City of San Diego. SANDAG took 6,369 sf along Genesee Avenue for a permanent street/sidewalk easement and an additional 5,469 sf. for a temporary construction easement. As of the date of value, CVH had entitlements to construct 4 high-rise luxury apartment towers on the larger property and CVH was in the process of constructing the first tower. SANDAG's initial appraisal of just compensation, including severance damages, was $754,000.
SANDAG deposited its appraised just compensation of $754,000 in July 2018 as probable just compensation in order for SANDAG to obtain an order for prejudgment possession. Trial was scheduled for March 25, 2022 and the parties obtained each other's final appraisals and deposed each other's appraisers in early February, 2022. The appraisers were not far apart on the value of the property taken (their respective appraisals were within $650,000 of each other on the value of the property taken), but they were far apart on severance damages and offsetting benefits.

PLAINTIFF'S CONTENTIONS: SANDAG's appraiser, Robert Caringella, MAI, appraised just compensation at $2,699,300 (which included severance damages of $4,500,000 which he offset by benefits of $3,250,000, for a net damage of $1,250,000). Mr. Caringella's opinion was that the elevated trolley line and nearby trolley stations would be a substantial amenity for the apartment towers being built, thus justifying the offsetting benefits.

DEFENDANT'S CONTENTIONS: CVH's appraiser, Michael F. Waldron, MAI, appraised just compensation at $21,071,125 (which included severance damages of $18,993,901 with no offsetting benefits). Mr. Waldron's opinion was that the elevated trolley line and nearby trolley stations dramatically impaired the utility of the larger property for the planned high rise luxury apartments, including view and privacy impairment, noise, mitigation expenses, delay of construction, loss of a pre-existing pedestrian bridge that crossed Genesee, loss of setback from Genesee (thereby reducing parkway space), increased security expenses, and increased risk in the ability to complete the project, among other impairment factors.

Result

Mediation before Hon. John W. Kennedy, Jr. (Ret.) resulted in the payment of total just compensation of $9.9 million to defendant property owner.