Pansini Custom Design Associates, LLC v. City of Ocean City

Pansini Custom Design Associates, LLC (Pansini) (plaintiff) filed an action against the City of Ocean City (City) and Saving Our Station Coalition (SOS) (defendants) for declaratory judgment regarding the fair market value of historically designated property that Pansini owned and wished to demolish. Under the local zoning ordinance, an owner seeking to demolish historic property was required to obtain a demolition permit from the Historic Preservation Commission. Denial of a demolition permit from the Commission could be appealed to the zoning board, and if the board affirmed the denial, the owner could still demolish the building by placing the property on the market at fair market value for no less than six months. If after six months the building had not sold to an entity willing to preserve it, the owner could proceed with the intended demolition and development. Pansini purchased the property from a previous owner who had already been denied a demolition permit and proceeded unsuccessfully through the appellate process. Pansini listed the property for $1.1 million, but the City disputed the listing price as too high to be fair market value. Pansini filed for declaratory relief and retained an appraiser to provide testimony, a report, and comparable sales. The City and SOS also retained their own appraisers, who both used different sets of comparable sales to place the fair market value of the property much lower than Pansini’s appraiser had. To determine the fair market value, the trial judge averaged the 3 lowest comparable sales provided by Pansini’s appraiser with the 3 highest comparable sales by the City’s appraiser and declared the result to be the fair market value of the property. SOS appealed.