New York State Court of Claims

New York State Court of Claims

J.L.D. REALTY, INC. v. THE STATE OF NEW YORK, #2004-033-531, Claim No. 102447


Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

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

Cross-motion number(s):

Claimant's attorney:
Flower, Medalie & MarkowitzBy: Alan Wasser, Esq.
Defendant's attorney:
Eliot Spitzer, New York State Attorney GeneralBy: J. Gardner Ryan, Assistant Attorney General
Third-party defendant's attorney:

Signature date:
December 23, 2004

Official citation:

Appellate results:

See also (multicaptioned case)

This is a timely filed claim for the partial taking of property owned by J.L.D. Realty, Inc. (hereinafter "claimant") pursuant to the Eminent Domain Procedure Law and §30 of the Highway Law in a proceeding entitled "
Bayshore - Brookhaven Town Line", SH 5301, as reflected on Map No. 151, Parcel No. 171 (permanent appropriation), and Map No. 269, Parcel No. 269 (temporary easement). Vesting occurred on June 18, 1999. The claim was filed on May 10, 2000. The appropriation maps and descriptions contained therein are adopted by the Court and incorporated by reference. The Court has made the required viewing of the property which is the subject of this claim.
The appraisers of both parties conclude that the claimant is the owner of the subject property (Exhibits A and 4). Therefore, the Court finds that the claimant has established title to the property, which is located on the northwesterly corner of Montauk Highway (NYS Route 27A) and North Ocean Avenue, in the Town of Islip, Suffolk County, New York.

The subject property is almost square in shape and has approximately 131.94 linear feet of frontage on the northerly side of Route 27A and 125.90 linear feet of frontage on North Ocean Avenue. Its total plot area prior to acquisition by the State was 16,325 square feet.[1]
It is improved with a two story masonry block commercial building of approximately 6,484 square feet of gross area. The property is further improved with: 9,000 square feet of asphalt; 350 liner feet of curbing; 6 catch basins; 3 cesspools; 135 linear feet of chain link fencing; a 5' x 8' illuminated sign mounted on a 18' metal pole; 25' flagpole; 25 evergreen shrubs; and 3,000 square feet of lawn.
Prior to trial, the parties placed a number of other stipulations on the record. They agreed that the land value of the property prior to the taking was $12.00 a square foot for a total value of $195,900.00.[2]
They also agree that the vesting date is June 18, 1999.
In discussing the highest and best use of the property, each of the appraisers state that its current use as a bank/office building is the highest and best use.

The permanent taking consisted of a triangular shaped piece of land running 13.95 feet along the subject's frontage on Route 27A and 17.36 feet on North Ocean Avenue. The total taking area is 146 square feet. In addition, the defendant also acquired a temporary easement. The easement is 5.33 feet deep on its westerly end and 1.87 feet deep on its easterly end and runs 118.01 feet along a portion of the property's southerly property line on Route 27A. The easement has a total area of 332 square feet. The easement ran across a portion of two parking spaces and was terminated on August 10, 2001.

The primary question for the Court to determine is what effect the taking had on the remainder. The Court recognizes that the parties have stipulated to a before taking value of $12.00 per square foot for the land value, and therefore, the Court finds a value of $12.00 per square foot for the subject property for direct damages of $1,750.00(R) (146 square feet x $12.00 per square foot).

In addition to the land taken by defendant, defendant also took improvements which were situated within the taking area. Items taken by defendant include approximately 50 linear feet of concrete curbing, 25 square feet of sidewalk and 121 square feet of lawn area.

Each of the appraisers deal summarily with the cost of these improvements in their reports. Defendant assigns a post-depreciation value of $6.40 per linear foot for the concrete curbing; $4.00 per square foot for the sidewalk; and a non-depreciated value of $1.50 per square foot for the lawn area. Defendant's total value of the improvements taken is $600.00(R). Claimant assigns a value of $1,200.00 to the improvements taken, but with no delineations as to how the total was determined. The Court, based on the values presented will adopt the values for the improvements as set forth by defendant. Therefore, the Court finds the value of the improvements taken to be $600.00.

The Court awards the following damages for improvements taken: 50 linear feet of concrete curbing ($6.40 per linear foot x 50 linear feet) - $320.00; 25 square feet of sidewalk ($4.00 per square foot x 25 square feet) - $100.00; and 121 square feet of lawn ($1.50 per square foot x 121 square feet) - $181.50. The total award for improvements taken is $600.00(R). The total direct damages for the subject property is $2,350.00(R) ($1,750.00(R) + $600.00(R)).

The Court must next determine if there was any severance damage to the remainder as a result of the taking. Where the State takes a portion of claimant's property, claimant is entitled not only to direct damages for the taking, but also consequential or indirect damages for the diminution in the value of the remaining property as a result of the taking (
Fason Properties Inc. v State of New York, Claim No 81102, Blinder, J., filed August 29, 1994). As a general rule, the measure of damages in a partial taking case is the difference between the fair market value of the whole property before the taking and the fair market value of the remainder after the taking (Acme Theatres, Inc. v State of New York, 26 NY2d 385).
In determining the before value of the subject property, inclusive of improvements, the appraisers used the sales comparison of improved properties and the income approach to valuation. Claimant indicates that it relied on each of these valuation methods equally because the building was small enough to be owner occupied. However, defendant relied more heavily on the income approach to valuation because this value more closely reflects the market reaction to this type of property. Understanding that defendant relied more heavily on the income approach to valuation, the Court will concentrate its analysis on this method. However, the Court is mindful of the other methods used by the parties and the conclusions reached.

In doing the income approach analysis, the parties took a two step approach to the evaluation. The building on the subject property is a two story building. The bottom portion of the building is a bank, while the second floor is used as office space. As to the bank area, claimant analyzed three leases, while defendant analyzed four leases. The Court notes that none of the comparables used by the appraisers are in common. The Court accepts the adjustments of the appraisers. Claimant's comparables have values of $32.10 (lease 3), $16.88 (lease 4), and $24.40 (lease 5). Defendant's range of values for its comparables is $17.55 (lease H), $17.00 (lease I), $17.38 (lease J), and $17.82 (lease K).

As to the office area, claimant and defendant each evaluated three leases. None of the comparables chosen by the parties is in common. In examining the adjustments made by the appraisers, the Court accepts each of the adjustments. Claimant's comparables have values of $13.11 (lease 6), $15.39 (lease 7), and $16.25 (lease 8). The range of values for the defendant's comparables is $14.31 (lease E), $14.36 (lease F), and $13.39 (lease G).

The Court adopts a value of $20.00 per square foot for the bank area. Therefore, the potential gross income for the bank area is $64,580.00 (3,229 square feet[3]
x $20 per square foot). The Court adopts a value of $14.50 per square foot for the office area. The potential gross income for the office area is $46,820.00(R) (3,229[4] square feet x $14.50 per square foot). The potential gross income for the entire building is $111,400.00 ($64,580.00 + $46,820.00).
To arrive at the value of the property, the potential income of the property must be adjusted. In addition to the rent, claimant has also paid one half of the bank's portion of the real estate taxes. This is income to claimant in the sum of $14,500.00.[5]
Therefore, the total potential gross income figure is $126,000.00(R).[6] The Court will adopt the expenses as delineated by claimant in reaching the net income for the subject property, but will deduct a vacancy rate of 3% from the potential gross income to arrive at the effective gross rent of $122,220.00. As stated, the Court adopts claimant's expenses of $42,000.00 (Real estate taxes - $29,000.00; insurance - $3,000.00; management - $4,000.00; structural repairs - $4,000.00; and miscellaneous fees - $2,000.00). The net income for the subject property is $80,220.00.
The Court adopts claimant's capitalization rate of 10% and finds the value of the subject property before the taking to be $800,000.00(R) ($80,220.00 divided by 10%).

In determining the after value of the land, as vacant, of the subject property, defendant found no severance damage. Claimant finds no severance to the land. However, claimant does find severance damage to the improvements. Claimant argues that prior to the taking, the subject property was a legal non-conforming use. The property was conforming as built in 1973. However, the property was re-zoned in 1990 and at that point the property was no longer in conformity with the zoning laws. According to claimant, the taking has now reduced the set back area along Route 27A (if measured from the corner taken). This new non-conformity, therefore, means that the property is in need of a variance. Claimant estimates the cost of obtaining the variance to be $10,000.00 and adds this figure to its damages. In addition, claimant in analyzing the value of the property in the after situation reduces each of its comparables by 10%. This negative adjustment is reflective of the effect the non-conformity would have on the marketability of the subject property to a potential buyer.

In opposition, defendant argues that 165 square feet of the building was located in the setback area from North Ocean Avenue prior to the taking. The effect of the taking was that now 190 square feet of the building are located in the setback area. Zoning requirements were for 20% of the property to be landscaped. Prior to the taking 17.9% of the property was landscaped, while after the taking 17.23% of the property was landscaped.

In analyzing the after value of the subject property the Court will again rely most heavily on the income capitalization method to value the subject property. After reviewing the sales and the adjustments in the after situation, the Court will take the adjustments made in the before situation. However, the Court will make a downward adjustment of one percent to reflect the effect on marketability as the result of the property's taking contributing to the nonconformity to the zoning requirements. Following this reduction of 1% through the analysis of the income capitalization method (and using the 10% capitalization rate), the Court finds a value of the subject property of $795,000.00(R) in the after situation.

The total damages found by the Court are $5,000.00. This is found by subtracting the value of the subject in the after situation ($800,000.00) from the value of the subject in the before situation ($795,000.00). The Court finds the following direct damages: land taken approximately 146 square feet at $12.00 per square foot, totals $1,750.00(R); improvements taken, $600.00(R); total direct damages are $2,350.00(R). Indirect or severance damage to the land and improvements are $2,650.00 Adding the total direct damages and total consequential damages, make the total damages by fee taking to be $5,000.00.
In addition to the fee acquisition, the State also acquired a temporary easement for a 332 square foot strip of the subject property across the Route 27A portion. Claimant is entitled to the fair rental value for the area of the temporary easement. The Court concludes that the value of the temporary easement is $478.08
per annum or $40.00(R) per month. The value of the 332 square feet at $12.00 per foot is $3,984.00. The Court accepts the appraisers' rate of return of 12% and finds the annual rental to be $478.08. Dividing this amount by twelve months, the Court finds a monthly rent of $40.00(R). The Court will not award the severance damage for the temporary easement as requested by claimant. The appraisers' opinions of the use of the temporary easement is completely opposite. Claimant has the burden of proving the interference of the temporary easement. Claimant has failed to meet that burden.
Accordingly, it is the finding of the Court that claimant is entitled to an award of
$5,000.00, with statutory interest thereon from the vesting date of June 18, 1999, to the date of decision herein and thereafter, to the date of entry of judgment for the permanent appropriation[7]; and $1,040.00 for the temporary easement ($40 per month x 26 months).
The award to claimant herein is exclusive of the claim, if any, of persons other than the owners of the appropriated property, their tenants, mortgages and lienors having any 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 other motions on which the Court may have previously reserved or which were not previously determined, are hereby denied.

December 23, 2004
Hauppauge, New York

Judge of the Court of Claims

[1]Prior to trial, the parties stipulated to the land area.
[2]This value is reached by taking the before taking land area of 16,325 square feet and multiplying it by the value per square foot of $12.00.
[3]The Court accepts the floor space as designated by claimant.
[4]See footnote 3.
[5]The Court accepts the tax figure put forth by claimant.
[6]Defendant also includes care and maintenance payments by the tenants in the potential income. This same amount is then deducted as an expense paid by claimant. Therefore, the Court has chosen to omit this figure from both sides of the equation.
[7]The Court chooses not to suspend interest from the six months following the vesting to the date of filing approximately five months later.