New York State Court of Claims

New York State Court of Claims

BROADWAY v. THE STATE OF NEW YORK, #2003-010-032, Claim No. 103220


Synopsis


State appropriated property in City of Poughkeepsie and Court found claimant had not established highest and best use as residential development. Rather, Court adopted defendant's proof of highest and best use.

Case Information

UID:
2003-010-032
Claimant(s):
BROADWAY ASSOCIATES
Claimant short name:
BROADWAY
Footnote (claimant name) :

Defendant(s):
THE STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
103220
Motion number(s):

Cross-motion number(s):

Judge:
Terry Jane Ruderman
Claimant's attorney:
MC GOVERN, CONNELLY & DAVIDSONBy: John A. Vasile, Esq.
Defendant's attorney:
HON. ELIOT SPITZER
Attorney General for the State of New YorkBy: J. Gardner Ryan, Assistant Attorney General
Third-party defendant's attorney:

Signature date:
November 6, 2003
City:
White Plains
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision
Claimant seeks damages for the partial appropriation of their property pursuant to Highway Law § 30 and the Eminent Domain Law in a proceeding entitled, "City of Poughkeepsie North-South Arterial S.H. No. C63-21." The property is located in Dutchess County as reflected on Map No. 451, Parcel No. 481. The date of the taking was October 17, 1997. The Court adopts the appropriation maps and the description therein and incorporates them by reference. The claim arising from this taking was filed with the Clerk of the Court on October 16, 2000 and it has not been assigned to any other court or tribunal for audit or determination. The Court has viewed the subject property.
The subject property is an irregularly shaped, elongated parcel with frontage along the west side of Route 9. The property is at grade with Route 9, but generally slopes downward from east to west toward the Hudson River. Active railroad tracks run along the river front. The land area before the taking was 6.871 ± acres. The property taken was .
389 ± acres along Route 9 and described as a rhomboid. The property was within a district zoned for Research and Development and the permissible uses included: business and professional offices; medical laboratories; research, design and development laboratories; conference and meeting facilities; residential development subject to the requirements of High Density R-5 District Permitted Uses; and municipal parks and recreational facilities.
The property is essentially vacant with a dilapidated, light industrial building on the site which is of no contributing value and will have to be demolished to develop the property.
Claimant acquired the property in 1987 and has neither sought any permits nor filed any site plans with the City of Poughkeepsie.
The parties approach the valuation of the taking from vastly different viewpoints resulting in a significant discrepancy between the amounts of the alleged damages. In essence,
claimant contends that the highest and best use, both before and after the taking, is a high density residential development. Claimant offers a conceptual drawing of the property before the taking with a development consisting of 249 units in six, four story buildings. Claimant argues that, after the taking, due to open space requirements, only 185 units could be developed. Thus, claimant assesses damages by comparing the property to other parcels with residential units and calculates a per unit loss. Accordingly, claimant maintains that it suffered $105,000 in direct damages and $385,000 in consequential damages.
In contrast,
defendant contends that the property should be compared to other vacant parcels consistent with the zoning and the loss valued on a square foot basis with no allowance for any consequential damages. In support of this valuation, defendant notes that the industrial parcel has been vacant for years and claimant never filed any site plans with the city relative to development. Accordingly, defendant assesses only direct damages of $25,450.
James Balsley, a landscape architect and land planner, testified on behalf of
claimant. He explained that he evaluates what can be placed on property by considering the constraints, opportunities, topography and access. He was contracted by claimant to devise a site plan for the subject property as it existed prior to the taking. Despite the array of activities permitted by the zoning, he considered only residential uses of the property and determined that the optimum site plan was six residential buildings and one club house with the primary access over a bridge across Route 9 leading to Vassar Hospital (Ex. 5). A secondary access was proposed on an old roadbed that had been discontinued as a public road by the City of Poughkeepsie. He also assumed that a private right of access would be allowed from Route 9. Balsley conceded that he did not know if this secondary access was viable. Further, he did not address the impact on the total design if the secondary access was not obtained.
In determining the placement of the buildings he took into account the required open space. Based upon the footprint of the buildings, Balsley divided the number of square feet required for one bedroom and studio apartments. From this equation, he concluded that 249 units could be built with both underground and outdoor parking. He rejected the possibility of reducing the footprints of the buildings and increasing their height because that would reduce underground parking and create the need for more outdoor parking which would impinge upon the open space requirements.

Balsley's conceptual site plan was drafted in 2000 and included the property which had already been appropriated in 1997. The plan was not designed for submission to the planning board and ,while a conceptual site plan might be utilized in a preliminary meeting with a planning board, a formal submission would require more detail. Balsley's plan was drawn
to demonstrate the maximum number of units that could have been developed on the property prior to the taking. Balsley did not draft an alternative plan addressed at the property after the taking; rather he merely applied an overlay to show that, due to the appropriation, the conceptual plan was untenable.
Based upon the Balsley plan, Edward Weinstein, an architect and planner, prepared a zoning and development analysis for
claimant. Weinstein testified that the area taken had been part of Balsley's open space calculation. As a result of the reduction of open space, after the taking, only 185 units could be constructed resulting in a total loss of 64 units. Weinstein stated that he investigated the possibility of increasing the height of the buildings and narrowing their footprints. However, building above four stories would require more expensive elevators and a noncombustible form of construction. If the footprints were decreased, additional parking would have to be provided outdoors or in a parking structure, both of which would be excluded from open space. He did not do any cost analyses.
Weinstein did not consider any alternative plan or development possibilities. He reviewed Balsley's plans for compliance with zoning and not building codes. Weinstein calculated the number of allowable underground parking spots without accounting for handicap spaces, storage or utility areas, stairways and support beams. It was a "rough calculation"[1]
without any consideration given to developmental costs.
Weinstein further testified that the Balsley plan provided for an underground tunnel to the waterfront property owned by the City of Poughkeepsie. He assumed that the city, which intended to develop the waterfront as a park, would allow a private right of access to their land. Weinstein did not consider a traffic analysis or the means of access to the development. He conceded that planning boards considered access issues and that the number of allowable units was negotiable.

Eugene Albert, a certified real estate appraiser, testified on behalf of
claimant. His appraisal was offered in lieu of his direct testimony (Ex. 4). Albert maintained that the highest and best use of the property both before and after the taking was consistent with the plans prepared by Balsley. Albert adopted Weinstein's after the taking analysis that the potential of the site had been reduced by 64 units.
Albert used a sales comparison approach to estimate the value of the subject property based upon sales of properties targeted for multi-family development. He established a per unit value on each property. Using the comparable sales, he concluded that the before and after taking unit value for the subject property was $7,600. He then determined that the before taking market value of the subject property was $1,890,000 (rounded) by multiplying the number of units, 249, by $7,600. Albert took the market value price, divided it by the area of the property, to conclude that the value per acre before the taking
was $275,000. He used the same methodology for the after taking market value by multiplying 185 by $7,600 for a rounded amount of $1,400,000. This resulted in total damages of $490,000. By multiplying the area of the taking (.389 acres) by the value per acre before the taking ($275,000), he found the direct damages to be $105,000. This figure ($105,000) was subtracted from the total damages to arrive at a consequential damage value of $385,000.
In Albert's opinion, a residential development was the highest and best use because of the scenic view of the Hudson and ease of access to the property.
He maintained this position without performing any market analysis. Although there had not been any approvals for multi-family dwellings in Poughkeepsie in the preceding 10 years, some office buildings had been built. Despite the fact that the vacancy rate for apartments in Poughkeepsie was in double digits, Albert opined that the two largest and oldest developments in the city should not be counted in the calculation.
Albert conceded that the approval process before the planning board is not necessarily simple and that an environmental review would also be necessary because the use would be changing from a former industrial site. He assumed, however, that there would be no need for a detailed environmental study and remediation. Albert conceded that the improvement proposed for the access roads to Route 9 would need approval.
He described Route 9 as a limited access road through Poughkeepsie with no private rights of access. Albert also testified that he considered the topography of the property and that some site work was necessary.
In terms of Albert's comparables, all but one had municipal approvals at the time of their sale. He agreed that approvals have some value and adjusted each comparable by a uniform 15 percent, although each property may have had a different ratio of the number of units applied for versus those approved. He acknowledged that developers often seek approval for the maximum number of units, but the development is usually less than what is permitted by zoning (Ex. 4, p. 65).

On cross-examination, Albert was asked to compute the per acre value of his comparables and they ranged from $17,000 to $72,000, far less than the $275,000 he attributed to the subject property. Sale 3, the closest in size to the property, was valued at $33,500 per acre. Albert rejected this analysis and referred to it as an anomaly. He explained that land for multi-family dwellings is not bought by the acre.

Albert concurred with Balsley and Weinstein
that, based upon the area of the site before the taking (299,301 square feet), divided by the required land area per unit (1200 square feet per studio or one bedroom unit), the maximum potential for the site was 249 units. On cross-examination, Albert was asked to make the same calculation, i.e., divide the area of the site after the taking (282,356 square feet) by the area per unit (1200 square feet). After protesting that the same simple division was not possible after the taking, he finally did the arithmetic and testified that, by using the same formula that he used before the taking, the resulting number of units would be 235. This was only 14, rather than 64, units fewer than the before situation.
Paul Ritzcovan, a certified real estate appraiser, testified on behalf of
defendant. He reviewed the zoning and planning records and found that no plans had been filed in regard to the property. The land had lain fallow for ten years while it could have been developed for any of the uses consistent with the zoning. In Ritzcovan's opinion, the highest and best use would be along commercial lines. Since there had been no approvals, Ritzcovan contended that the property should be compared to other sales of vacant land along the Route 9 corridor. He considered four sales to arrive at a value of $1.50 per square foot. Using that measure, he calculated $25,450 in direct damages for the property taken. In contrast to Albert, Ritzcovan has never done an appraisal for vacant land using a per unit value unless full plans were in place. He explained that when there is a permissible range of uses, one particular use cannot be selected without analyzing all of the potential uses of the property.
Thomas Pease, an environmental engineer and scientist, who prepared a Phase I Environmental Site Assessment on the property in 2001 (Ex. B), testified on behalf of
defendant. His review of the history of the property revealed that it had been used for industrial purposes and he identified concerns of suspected contaminants, including solid waste debris around the dilapidated structure, fill brought into the property, and solvents and waste metals that had been used in the prior manufacturing activities. Pease also noted that the property adjoined the tracks of an active railroad which may have polluted the soil with heavy metals, herbicides, PCB's and polycyclic aromatics hydrocarbons. He also stated that a 10,000 gallon underground tank had been removed from the rhomboid. Pease testified that these concerns are significant to a potential purchaser who would be responsible for cleanup of the contaminants.
Pease reviewed a 1988 environmental audit conducted by Rudikoff and Rohde that described the industrial history of the site. This report, Pease maintained, was less detailed than the one he completed in 2001. The soil samples taken for the earlier study were not in the area of primary concern and the metals analyzed were not extensive. He explained that the soil samples should have been taken at more locations at a greater depth.

Paul Ciminello, the President of Ecosystems Strategies, Inc., prepared a report in rebuttal to Pease's environmental site assessment (Ex. 6). Ciminello, who had worked on the 1988 Rudikoff and Rohde audit, testified that the soil samples had been selected in what was perceived as the worst places on the property. The test results for volatile organics and metals were below identified levels of concern. In his opinion, no action was required.

On cross-examination, Ciminello conceded that the testing had been limited to seven heavy metals, which is below the current standard. He noted that the levels for lead and zinc were elevated and would trigger the need for a further evaluation. Nonetheless, in Ciminello's opinion, both the 1988 report and
defendant's environmental site assessment identified similar concerns. Ciminello acknowledged that, since the property was formerly used for industrial purposes, he would expect the planning board to require further testing.
Analysis
Claimant is entitled to just compensation for the partial taking of its property (New York State Constitution, Article I, §7). Just compensation is the difference between the value of the whole before the taking and the value of the remainder after the taking (see Diocese of Buffalo v State of New York, 24 NY2d 320, 323; Centereach Car Care Ctr. v State of New York, 271 AD2d 391). The measurement of damages must reflect the fair market value of the property at its highest and best use at the time of the taking (see Matter of the City of New York [Franklin Record Center]; 59 NY2d 57, 61). "However, it must be established as reasonably probable that the asserted highest and best use could or would have been made of the subject property in the near future [citation omitted]. A use which is no more than a speculative or hypothetical arrangement in the mind of the claimant may not be accepted as the basis for an award [citation omitted]" (Matter of City of New York [Shorefront High School - - Rudnick], 25 NY2d 146, 149).
Upon evaluation of all the evidence, including a viewing of the property, this Court concludes that
claimant has failed to meet its burden of establishing that the property's highest and best use should be evaluated as a multiple residential development (see J.W. Mays v State of New York, 300 AD2d 545, 547 [claimant failed to establish a basis from which a reasonable estimate of its purported consequential damages could be made]). Notably, the property, which had been an industrial site, was vacant for years and claimant had never filed any site plans with the city relative to development. Significantly, the vacancy rate for apartments in Poughkeepsie was in double digits and claimant's real estate appraiser admittedly did not perform a market analysis for the proposed multi-family development of the property. Also, there had not been any approvals given for such a development during the preceding 10 years. Balsley's conceptual plan did not contain the detail necessary for formal submission to the planning board and assumed a private right of access from Route 9, without the requisite municipal approvals. Weinstein did not do a traffic analysis and conceded that planning boards consider access issues along with their determination of the number of allowable units. Finally, all but one of the comparables presented by Albert had approvals at the time of sale. The Court also rejects the opinions of claimant's witnesses as speculative (see Split Rock Partnership v State of New York, 275AD2d 450 [award of consequential damages was improper where no evidence that State's appropriation reduced the potential development of the property]).
Considering all the evidence presented and
claimant's failure to establish the highest and best use as a multi-residential development, the Court finds defendant's methodology and analysis in determining the value of the property after the taking to be more acceptable (see Chemical Corp. v Town of E. Hampton, 298 AD2d 419 [Court reasonably rejected opinion of plaintiff's appraiser and credited the evidence presented by the Town's appraiser]; Vassar Coll. v State of New York, 294 AD2d 427 [Court properly credited State's expert evidence and methodology for calculating damages after the taking]). Notably, Weinstein did not consider other permissible development possibilities for the property and Balsley's overlay was a conclusory, oversimplification of the impact of the taking. By contrast, Ritzcovan's analysis and evaluation of the property was sound and reasonable as compared to other vacant land along the Route 9 corridor.
Accordingly, c
laimant is awarded damages in the sum of $25,450.00 with appropriate interest thereon from October 17, 1997, the date of the taking, to April 17, 1998, six months subsequent to the date of the taking, and from October 16, 2000, the date of the filing of the claim, to the date of this Decision and thereafter pursuant to CPLR 5001, 5002; EDPL §514; Court of Claims Act §19(1); subject to Court of Claims Act §19(4).
The award to
claimant herein is exclusive of the claims, if any , of persons, other than the owners of the appropriated property, tenants, mortgagees, and lienors having right or interest in any stream, lake, drainage, and irrigation ditch or channel, street, road, highway, or public or private right-of-way or the bed thereof within the limits of the appropriated property or contiguous thereto; and is exclusive also of claims, if any, for the value of or damage to easements and appurtenant facilities for the construction, operation, and maintenance of publicly owned or public service electric, telephone, telegraph, pipe, water, sewer, and railroad lines.
All motions not previously ruled upon are DENIED.

To the extent that
claimant has paid a filing fee, it may be recovered pursuant to Court of Claims Act §11-a(2).
LET JUDGMENT BE ENTERED ACCORDINGLY.


November 6, 2003
White Plains, New York

HON. TERRY JANE RUDERMAN
Judge of the Court of Claims




[1] All quotations are to the trial notes or audiotapes unless otherwise indicated.