Ken Acks, CEO testifies in New York State Supreme Court Regarding Property Diminution from MTBE spill

June 11th, 2008


Kenneth Acks, CEO of the Cost-Benefit Group, LLC testified before a New York State Supreme Court in Dutchess County on June 5, 2008 regarding property value diminution arising from MTBE contamination.

State Supreme Judge Christine Sproat ordered the owners of a Gulf station in Fishkill to pay a Hopewell Junction family about $150,000 in damages for a gasoline spill that contaminated the family's water supply with a suspected cancer-causing chemical, a gasoline additive called methyl tertiary butyl ether, or MTBE.

Judge Sproat ruled the MTBE contamination diminished the value of the 6.5 acre property] by one-fourth of its assessed value - or about $140,000. The judge also ordered the Gulf station owner to reimburse the family for all of the bottled water purchased since 2001 - about $11,000. The Gulf station owner was also ordered to pay the Conklin-Stewart family's attorneys' fees.

Attorneys for the plaintiff questioned Mr. Acks, who included a powerpoint presentation describing the situation at the subject property, valuation techniques, and estimated diminution. He then faced cross examination from attorneys for the defendant, and a redirect.

The subject property consisted of a 6.59 acre site with 340.5 feet of frontage on Route 52 zoned R-1. The site is improved with a two-story two-family wood-frame home constructed circa 1790 containing 3,872 square feet; two one-bedroom, one bath wood cottages - one constructed 1930 containing 568 square feet the other constructed in 1830 containing 454 square feet with a 102 square foot finished attic; two small wood storage buildings containing 144 and 247 square feet constructed circa 1930; and a 576 square foot swimming pool installed circa 1930.

On or about June 19, 2000 a gasoline spill (NYS DEC Spill # 0004155) occurred at a nearby Gulf gasoline station located at Route 52 and Lake Drive approximately 200 yards west of the subject. According to that report 150 tons of contaminated soil was removed from the gas station site.
According to an October 2001 fact sheet from the New York State Department of Environmental Conservation (NYS DEC) the agency was working with the owner of the Gulf Service Station to address contamination since November 1999. As of September 2001, 124 water samples were collected from 32 private wells. The primary contaminant of concern was Methyl Tertiary Butyl Ether, or MTBE, a gasoline additive. Through October 2001 the migration of MTBE in groundwater was generally to the north of the station. Sample results showed eight wells with MTBE levels above 10 parts per billion (ppb) and 6 wells with MTBE less that 10 ppb. Beginning in October 2000, whole-house activated charcoal filter systems were installed in 8 homes and businesses with levels of MTBE at 10 ppb or higher and a tanker truck provided drinking water for businesses in the Archway Plaza on Route 52. On May 22, 2007 Conklin Services & Construction Inc. obtained water samples from the subject (19 Locust Lane)_which detected MTBE in the samples collected at the influent and middle of the treatment system at 18 and 24 μg/l. MTBE was not detected in the effluent. Prior samples reportedly registered MTBE readings of 77 parts per million with spiking occurring periodically. Conklin Services & Construction planned to change the carbon in the treatment system. This has not occurred and strong gasoline smells have been observed.

The defendant hired a local appraiser. The decision regarding diminution was within 5% of Mr. Acks' estimate, 20% higher than that of the defendant's expert.