Much of the first rail-condemnation case to go to trial hinged on the testimony of two experienced, local dueling appraisers: Jon Yamaguchi and Steven Chee.
Yamaguchi, of the firm Yamaguchi & Yamaguchi Inc., said he’s appraised 85 properties along the rail line for the city.
Chee, of the firm Lesher Chee Stadlbauer Inc., was hired by Honolulu Hardwoods owner Bryan Hoernig and his defense team to conduct their own appraisal.
The two appraisers used similar methods but also had key differences that ultimately left their October 2015 appraisals about $1 million apart.
Yamaguchi and Chee each considered the land value of Hoernig’s 10,000-square-foot property plus the value of the more than 70-year-old, 8,800-square-foot warehouse that sits on top of it. Yamaguchi put the land value at $2.2 million, while Chee put it at $2.5 million.
Then, for the warehouse’s value, Yamaguchi found that a “reasonable” cost estimate to replace the building would be nearly $1.6 million and that it would serve a “useful economic life” of 65 years.
Yamaguchi also figured that the existing warehouse, despite its age, could serve another 20 years or so. Thus, if it was worth $1.6 million brand-new, he estimated it had roughly $500,000 in value left.
Combining that with his $2.2 million value for the land, he appraised the property’s total value at $2.7 million.
However, Chee said that Yamaguchi’s approach to appraising the building “just didn’t make sense.” It wasn’t reliable in Hoernig’s case because whoever owns the property would not be able to rebuild the same structure under the Hawaii Community Development Association’s latest regulations, he said. Also, it’s tough to estimate the remaining life on a building that’s already 70 years old, Chee added.
Instead, Chee used the comparable sales of several similar, nearby Kakaako properties to get the value of the warehouse. He deducted the land values from those comparable properties, leaving the value of the buildings on top. Using an average from those building values, he appraised Hoernig’s warehouse at nearly $1.2 million.
Combined with a land value of $2.5 million, that gave Chee a total appraisal for Hoernig’s property of $3.7 million.
After the parties reached a settlement, at least three jurors said they were convinced Chee’s approach made more sense — and that Hoernig’s property was worth at least $1 million more than the city had offered.