New Haven Independent

Stanziale’s testimony unfolded in courtroom 3C in the Waterbury Superior Court. This part of the case —-the value of the land at the time it was seized by the town under eminent domain in January, 2004—
is being tried to a judge, William T. Cremins, Jr., who is assigned to complex litigation cases. Cremins will decide the value of the land and so far has heard nearly four days of testimony. Today he and the attorneys will visit the site.

The courtroom was filled with a dozen lawyers and their teams. They represented the Town of Branford, NEE and Thomas Santa Barbara, Jr., and Frank Perrotti, Jr. who purchased the property at a bank auction for $2.5 million and later put it up for sale for $4.7 million. The lawyers brought with them several dozen legal-sized boxes containing cross-referenced files, various exhibits and maps and easels they placed in the well of the courtroom.

A separate case based on the eminent domain seizure is scheduled for trial by jury on August 7. This trial will center on what NEE claims is its lost profits. But it could be postponed if either side in the current trial appeals.

For Stanziale, a small residential developer from Shelton who seemed naïve and a little awe-struck, Tabor seemed too good to be true. He explained he was looking for a new, large tract of land. From a local realtor he and his partners learned that the Tabor tract had been approved for condominium development in the 1980’s.

James Bergenn, his attorney from Shipman & Goodwin, took him through his early experience. He first walked the property on February 15, 2001. He said that he loved the land and the par-3 course scheduled for part of the site. Even the name conjured up sunset golf after work: “Fairways Village Estates.”

Stanziale had never undertaken a condo project before, let alone one as vast as this one. But the fact that the town once approved housing for the site didn’t mean it would happen again. The prior developer went bankrupt in 1988, and the approvals and permits had expired. The design, planning and engineering firm, Codespoti & Associates, had been left holding a bill for $200,000 for its site and engineering plans. As fate would have it Stanziale knew Jeffrey Gordon, the president of the firm, and he trusted his judgment. Gordon told him about the 1988 plans.

Stanziale was the developer while his two partners ran a mortgage company. His reality centered on a project whose plans were already done. At a meeting with Codespoti officials, he received confirmation that the tract was “already approved in 1988 for 288 units.” It looked like a win-win. All he had to do was recreate the 1988 plans already in hand, update them and use the Codespoti team. He was on his way. He admitted as much when later in the day David A. Reif, the town’s attorney, cross-examined him.

Now he was telling Bergenn: “We saw a whole set of plans. I liked them. I loved the idea of the golf course. It had a beautiful pond and the site was fully engineered. Just to have a set of plans. It had a lot of depth. Usually you don’t have that. And you had all the landscaping designs. This was a fully developed set of approved plans,” he said, explaining his enthusiasm.

But the reality was that Stanziale faced major legal impediments. It had been 13 years
since the land had permits for any housing. There were reports of contamination from the adjacent landfill. And while Stanziale reported that the Planning and Zoning Commission in an informal session seemed to love the idea, in fact they did not. In December, 2002, the Commission turned him down.

And then there was the need for a zoning change because the site is zoned industrial. And as far as the town is concerned, that fact means no housing regardless of the type a developer proposes.

The environmental problems so concerned the town’s Selectmen, the Board of Finance and the RTM that they unanimously voted to take it by eminent domain in 2003 in order to keep it vacant or perhaps use it for passive recreation. The town’s engineers had learned that a plume of contaminated ground water flowing from the nearby landfill could be a hazard to the Tabor tract. Bergenn maintains the town’s own engineers also say the parcel is safe is residential use.

Despite these efforts, the current town attorney, The Marcus Law Firm, supported a settlement that would have allowed Stanziale’s group to put 275 condos on the land. A settlement judge agreed to send it to the RTM, which oversees land transfers. If the deal were to work the RTM had to return the land to the owners.

But the Representative Town Meeting (RTM) rejected the proposed settlement and the case went back to court. Moreover, after much internal and external discussion, First Selectwoman Cheryl Morris finally agreed to appoint specialized lawyers to the case. David A. Reif, who had the valuation case and should have been allowed to try it in February 2006, got it back. Attorney David Monz, an environmental litigation expert at Updike, Kelly and Spellacy, has the eminent domain part of the case.
Doyle was in court but did not take the second seat as Morris said he would. He sat in the spectator session, but did meet with the team during breaks. Mrs. Morris was in court for all three days, sitting in the spectator section.

When it was Reif’s turn at cross -examination, Reif asked Stanziale if he had been aware “that there were no approvals in place and you would have to start over?” “Yes,” Stanziale replied.

Reif also elicited that when it looked as if the P& Z was going to turn NEE down, Stanizale, contacted Gordon at Codespoti and Gordon recommended he call Attorney Tim Hollister, an expert in affordable housing statutes. Affordable housing projects typically serve as a hammer to overcome town constraints and therefore are widely used by developers to gain approval for otherwise contested or difficult projects.

Hollister, who gave the firm’s opening statement on affordable housing, a field in which he is considered an expert, pointed out how dismal Branford had been in having “deed restricted affordable housing” units. What that means is that a buyer cannot sell the unit for anymore than he paid for it. But what Hollister did not discuss was that Branford, unlike other shoreline towns, has large numbers of condos subject to market values that might be more attractive to buyers. It also has many trailer parks.

Stanziale admitted under Reif’s cross- examination he knew nothing about affordable housing. Nor did his partners. “You didn’t make any effort to talk to people in Branford about affordable housing did you,” Reif asked. “No,” came the reply.

Reif next sought to show that Stanziale could easily have backed out of his option if he didn’t get his approvals, but that he chose not to.

Stanziale paid the option payments to the owners even after he could not obtain approvals. He even paid after the taking. “We paid it, “he said.

His reason: “We believed in the project.”

“When did you first learn of the taking?” Reif asked. “In about June, 2003”

“And yet you renewed in November, 2003?”

“Of course,” came the reply.

“No further questions,” Reif said, making his point that the development depended upon NEE winning future court appeals to overturn the town’s P& Z decision.

As for the potential environmental hazards, Stanziale said town officials told him the landfill would soon close forever. As far as he was concerned that would end the problem. But of course that is not how landfills work. Their dangers often do not appear until years later.

“I didn’t see any problem,” he said. His partners, Andrew Forte and Alan Pizzolorusso, were “running the numbers” and they concluded “there was money to be made here.”

Santa Barbara and Perrotti originally indicated the land would be used as an extension of the town’s landfill. They attended the court sessions and Santa Barbara was called as a witness. Their attorneys sat at the same table as Bergenn and Hollister.

The appraisers for the owners and NEE formulated their projections of the land’s value based on the assumption that the condo development would be approved in the future.

Richard Michaud, NEE’s appraiser, testified over a two-day period, explaining that affordable housing units of the plan are a “wash”. What has value were the 248 units sold at market rate.

As Bergenn led him through questions, Michaud sought to show that Tabor was a special project, in part because of its “newness—there hasn’t been any large scale development in Branford for some time,” he said.

Michaud said market values had risen substantially since 1997 and that the available comparables of other developments showed Tabor “was superior to others.”

There were no adjustments made for environmental concerns, he said. He did his calculations and came to the conclusion that the land was worth $6.5million.

Under cross-examination by Reif, Michaud conceded that he assumed the highest and best use for the land was based on town approvals. He said he was told to assume that by Jan 2005 all permits would be in place. “We presumed the approvals.” He agreed with Reif’s assertion that the purchaser would pay less for the land without approvals.

Reif had Michaud explain the “comparables” Michaud used to help arrive at a monetary figure. The ideal situation is to find a comparable as close to the subject property as possible.

It turned out that the comparables were hardly comparable. Reif observed that two were age-restricted units, which Tabor was not. One was a detached development which Tabor was not. One was an adult community only, which Tabor was not. One had an 18-hole golf course that was state of the art, Tabor’s was a par-3 nine hole course, hardly in the same league. One was a rental, Tabor was not.

One by one Reif took apart the figures leading to the $6.5 million figure. He noted that Michaud assumed increases in sales price of the Tabor units by the year 2007.

Judge Cremins interrupted “What is the relevance? There were assumptions.”

Reif declared: “I am testing assumptions. If the prices don’t go up, they don’t. I am testing their assumptions and I am entitled to do that under cross-examination.”

The judge let him continue.

By the time he was finished, Reif established that the comparables were not comparable, that that condo prices in 2007 in Branford had not gone up at all, that the number of sales Michaud predicted per month was probably too high, that he depended only on his client’s view and an appraiser’s evaluation book to arrive at his conclusions and that his math was wrong on figuring out the sales for the units.

In fact, Reif found a way to have the witness do the arithmetic himself. He asked Michaud if he had a pocket calculator and Michaud whipped one out. When Michaud was finished with the numbers Reif gave him, it turned out that the sales price per unit should have been less than what they were.

Bergann sought to rehabilitate the witness on re-direct. Michaud said the comparables used for his analysis “were the best we had available.” Soon after the plaintiffs rested.

Now it was the town’s turn. Reif called Albert Franke, III, and the town’s appraiser, to the stand. It didn’t take long before Bergenn sought to remove him as an expert. Bergenn argued that his primary experience was in residential, not commercial appraisal, that he lacked the qualifications and that he did not have a college degree, even though Franke said he had the equivalent.

The attorneys engaged in debate. Judge Cremins said “I’m going to allow Mr. Franke to testify.”

Bergenn then launched his second attack, saying Franke had not considered the developer’s option to purchase the land because he didn’t know about it. If he had considered the developer’s option, then Franke’s original value for the land—$770,000 or $10,000 per acre would have been far higher, Bergenn argued. As it turned out, the town set aside $1.167 million at the time of the taking.

Franke said he had read the land records. Sources told the Eagle that the option was not cited on the land records, meaning that the developer did not put it on the record, which he was entitled to do.

Franke then explained he arrived at his figure based on his opinion that at the time the land was to remain vacant, undeveloped land, only a portion of which might be used for passive recreation.

As for the option agreement, which he read this year, Francke said it would not have had an impact on the price because it is an option only and it does not require purchase. The developer could have pulled out, he said.

“Second and importantly, the option could only be effectuated with town approvals and I can’t speculate that such approvals would be given. It would be derelict for me to do so,” Francke said.

Bergenn sought in his cross-examination to emphasize Franke’s failure to include the option . In the end, the judge finally had to intervene to put an end to a repetitious set of questions.

“The existence of the option would not change your report,” the judge said to Franke. “Yes,” he repled.” “The option doesn’t matter?” “Right,” said the witness.

“Right,” said the judge.

The town’s case resumed at 2 p.m. yesterday. Shirley Rasmussen, the town planner, gave a short bit of testimony. Other documents were admitted into evidence. The town then rested its case.

The lawyers will most likely spend July 4th writing briefs. They are due this Thursday when summations take place at 2 p.m. The judge, who likes to rule quickly, may do so from the bench. Or he might just weigh this one a bit.
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