## Facts

- Pansini Custom Design Associates, LLC and a co-owner owned property at 801 Fourth Street in Ocean City, New Jersey, containing a former U.S. Life Saving Service/U.S. Coast Guard station that had been converted to residential use and designated as historic under a local preservation ordinance.
- Under Ocean City’s historic-preservation demolition controls, an owner seeking to demolish a designated historic structure had to apply for a demolition permit from the Historic Preservation Commission.
- If the Commission denied the permit, the owner could appeal to the zoning board; if the zoning board affirmed the denial, the owner still could proceed with demolition only after offering the property for sale for at least six months at “fair market value” to allow a buyer interested in preservation to purchase it.
- A prior owner had already been denied a demolition permit and had pursued the local appeal process before selling the property to Pansini.
- Pansini wished to demolish and redevelop the property and listed it for $1.1 million; the City of Ocean City and Saving Our Station Coalition (SOS), a preservation group, disputed that listing price as exceeding fair market value.
- Pansini filed a Law Division action seeking a declaratory judgment fixing the property’s fair market value for purposes of the ordinance’s six-month marketing requirement.
- Each side presented appraisal evidence using different comparable sales and different indicated values; SOS participated in the case and supported a lower valuation.
- The trial judge set fair market value by selecting and averaging subsets of each side’s comparable sales (including taking low-end figures from one side and high-end figures from the other), without a qualitative explanation of why specific comparable sales and adjustments were accepted or rejected.
- SOS appealed, challenging the valuation method and the adequacy of the trial court’s findings.

## Issues

1. Whether a trial judge may determine fair market value by averaging comparable-sale figures drawn from competing appraisals rather than making an explained, evidence-based valuation finding.
2. Whether the trial court’s averaging approach satisfied the judge’s obligation to make reasoned findings that permit appellate review.

## Decision

- The Appellate Division disapproved the practice of averaging comparable sales as a shortcut to determining fair market value.
- The court held that valuation is a fact-finding function requiring a reasoned, factually supported conclusion based on the appraisal proofs, not a mechanical arithmetic result.
- The judgment fixing fair market value was reversed and the matter was remanded for further proceedings consistent with an explained valuation analysis.

## Legal Principles

- A court fixing real-property fair market value must weigh the competing appraisal proofs and reach a reasoned, factually supported conclusion; it cannot substitute a simple average of expert numbers for fact-finding.
- Comparable-sales analysis requires qualitative evaluation of comparability and adjustments (such as time of sale, location, physical characteristics, and other property differences), with an explanation of why particular sales and adjustments are credited or rejected.
- Findings on value must be stated with enough reasoning to allow meaningful appellate review; unexplained arithmetic methods do not satisfy that obligation.

## Conclusion

Pansini Custom Design Associates, LLC v. City of Ocean City holds that when a court determines “fair market value” in a declaratory-judgment action tied to a historic-preservation demolition ordinance, it must do so through reasoned findings based on the appraisal record; simply averaging selected comparable-sale figures is an improper method and requires reversal and remand for a properly explained valuation determination.


Pansini Custom Design Associates, LLC v. City of Ocean City, 969 A.2d 1163 (2009)