Claimant awarded indirect damages for parking spaces lost over and above the number of spaces granted by variance sought by Claimant despite awareness of impending appropriation. The amount of indirect damages granted reflected Claimant's failure to mitigate damages.
|Claimant(s):||BERG INVESTORS, LLC|
|Claimant short name:||BERG INVESTORS|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||RENÉE FORGENSI MINARIK|
|Claimant's attorney:||GILBERTI, STINZIANO, HEINTZ & SMITH, P.C.
BY: KEVIN G. ROE, ESQ. and SIDNEY DEVORSETZ, ESQ., of counsel
|Defendant's attorney:||HON. ANDREW M. CUOMO
New York State Attorney General
BY: REYNOLDS E. HAHN, ESQ.
|Third-party defendant's attorney:|
|Signature date:||March 4, 2010|
|See also (multicaptioned case)|
Claimant, Berg Investors, LLC, filed claim No. 111092 on July 1, 2005, claiming the State's appropriation of its land, pursuant to section 30 of the New York State Highway Law and the Eminent Domain Procedure Law, damaged it both directly and indirectly. I held a trial on this matter on January 26, and 27, 2009.
The subject parcel appears on appropriation maps filed in the Monroe County Clerk's Office on August 3, 2004, and is identified as Map No. 133, Parcel No. 168, Town of Greece, County of Monroe. The appropriation maps and description contained therein are adopted by the Court and incorporated by reference. The Defendant has complied with necessary procedures under New York State Eminent Domain Procedure Law with regard to service. I have made the required viewing of the premises. This claim has not been assigned or submitted to any other court or tribunal for audit or determination.
The subject parcel is owned by Claimant(1) and commonly known as 2780 West Ridge Road, Greece, New York. At the time of the taking, the 1.89 ± acre parcel was improved with a single-tenant retail building. The one-story building, with basement, which was constructed in 1969 and renovated in 2003-2004, contains 50,245 ± square feet of space. The amount of land taken by Defendant is not in dispute. The parties have stipulated that the taking was 6,390 square feet in the nature of a strip of land along the parcel's entire West Ridge Road frontage. The strip varies in width from 9 feet on the southwest corner of the building to 23 feet on the southeast corner (Exhibit A, p. 54). The taking left approximately 76,076 square feet remaining, meaning the strip of land taken represented approximately 8% of the parcel. The parties agree that the highest and best use for the property, both before and after the taking, is for single-tenant retail use.
The New York State Department of Transportation used the appropriated land as part of a general expansion project on West Ridge Road.
Scott Milnamow testified on behalf of Claimant. Mr. Milnamow is the Vice President of Real Estate Development for Raymours Furniture Company, Inc. ("Raymour") (which is owned by Claimant). He stated that he is responsible for site selection, leasing space, development of new stores and asset management for Raymour. Mr. Milnamow described Claimant's acquisition of and alterations to the subject property. He testified that Raymour acquired the subject property in 1993. Prior to that time it had been, for many years, a Flanigan Furniture store. The name was changed shortly after Raymour's acquisition to "Raymour and Flanigan."
The property was originally purchased for approximately $2,000,000.00. In 2003, aware of the impending appropriation, Claimant modernized the building. Renovations were performed both inside and out at a cost of approximately $2.4 million. Mr. Milnamow stated that, in deciding to modernize, Claimant considered the history and good will built up over the years on that site. Claimant determined that, even with the pending appropriation, the best use of the subject property was to renovate and continue operations of the Raymour and Flanigan Furniture store. The site plan approved by the Town of Greece for the renovations (Exhibit 2) indicated that a parking variance for 86 parking spaces was approved. This variance was a reduction of 65 spaces because 151 spaces were required by the town code. The appropriation eventually eliminated between 6 - 26 more parking spaces.
Mr. Milnamow also discussed Claimant's Exhibit 3. Exhibit 3 is Claimant's proposed layout of the parking lot after the appropriation and an attempt to reach the Town's approved 86 parking spaces for the parcel. The witness indicated that it was important to Claimant to maintain as many spots as possible by the front door of the store. He felt that this is important for any retail operation. The maximum number of spots that could fit on the subject property, according to Exhibit 3, was 80. In order to accomplish this, Claimant had to angle the parking and reduce the traffic flow from two-way to one-way east to west through the parking lot. Accordingly, if a customer were traveling west to east and entering the property from Harvest Drive where a traffic light was located, that customer would have to turn around to correctly enter the angled parking. This configuration also tended to hinder the ingress and egress of trucks that would deliver furniture to the store. Some potential parking spots at the southwest corner had to be eliminated to afford the trucks enough space to make a turn. Mr. Milnamow believed that the parking situation as depicted in Exhibit 3 was less than desirable because it confused customers and made stopping at the store less convenient. Further, according to Mr. Milnamow, the proposed configuration in Exhibit 3 severely limited Claimant's ability to lease or share the space with any other tenant.
Mr. Milnamow stated that Exhibit 3 was never submitted to the Town for approval, even though it does substantially reflect the current parking situation. He conceded that the renovation was planned in 2003 and Claimant was, at that time, aware of the impending appropriation. Claimant moved forward, given the "locational good will" the subject parcel had garnered since becoming a furniture store in the early 1990s, that is, its propensity to attract former customers who tend to make repeat purchases every three to four years. In addition, Claimant owns other stores in Henrietta, Victor and Canandaigua, as well as a furniture warehouse in Rochester, and the store operating at the site of the subject property contributed positively to Claimant's overall business plan in the area.
As a condemnee, Claimant is entitled to "just compensation" when the State exercises its power of eminent domain. Just compensation is generally determined by reference to the fair market value of the property according to its highest and best use (Matter of Town of Islip [Mascioli], 49 NY2d 354 ). In determining fair market value, "the condemnee is entitled to have the appraisal based on the highest and best available use of the property irrespective of whether he is so using it" (Keator v State of New York, 23 NY2d 337, 339 ). In situations such as this, where only a portion of the condemnee's property is taken, just compensation includes both direct damages for the portion taken, and also any indirect damages resulting from impairment to the remainder of the property resulting from the appropriation. Such indirect impairment can be in the form of consequential damages (damage resulting from the use to which the appropriated portion is put; see e.g. Matter of City of New York [Metro Inv. & Credit Corp.], 288 NY 75 ; Dennison v State of New York, 48 Misc 2d 778 , affd 28 AD2d 28 , affd 22 NY2d 409 ) or severance damages (damage resulting from the effects of the loss of the taken portion; see e.g. Coldiron Fuel Ctr., Ltd. v State of New York, 8 AD3d 779 ). Damages are calculated by taking the difference between the fair market value of the property before the appropriation and its fair market value after the taking (McDonald v State of New York, 42 NY2d 900 ; Acme Theatres v State of New York, 26 NY2d 385 ; Diocese of Buffalo v State of New York, 24 NY2d 320 ).
Of course, the best evidence of value is a recent sale of the subject property in an arms-length transaction. When such evidence is not available, however, three approaches have been generally accepted by courts as reliable methods of valuing real estate: (1) the cost approach; (2) the income capitalization approach; and (3) the sales comparison approach, with the third method being the generally preferred option (Matter of Allied Corp. v Town of Camillus, 80 NY2d 351, 356 ).
Both appraisers relied primarily on the sales comparison approach in reaching their damage figures. Claimant's appraiser also used the cost approach as a check on his sales comparison values and Defendant's appraiser used the income capitalization approach for the same purpose. Although the Court has examined the cost approach and income capitalization approach to valuation proffered by the experts, it has relied primarily on the sales comparison approach to value the land as vacant, and as improved, as the best indication of value in both the "before" and "after" situations.
In determining the value of Claimant's property as vacant land before the taking, Claimant's appraiser, Mr. Kenneth V. Gardner II, used six comparable sales and Defendant's appraiser, Mr. Todd P. Thurston, MAI, used four. The methodology used by each appraiser, as well as the adjustments that they each made in determining the "before" land value, appear to be reasonable and logical. Mr. Gardner placed a value of $1,484,000.00 upon the entire parcel based on a vacant land value of $18.00 per square foot (82,466 square feet x $18.00 per square foot) (Exhibit 1, p. 21). Mr. Thurston valued the subject parcel as vacant land at $1,237,000.00, based upon $15.00 per square foot (Exhibit A, p. 32). Based upon a preponderance of the evidence and the Court's consideration of the comparable sales offered by each party, the Court elects to adopt a value of $16.00 per square foot for the vacant land value before the taking, resulting in a total value of $1,319,456.00 (82,466 square feet x $16.00 per square foot).
For the analysis of the improved land sales in the "before" situation, Claimant's appraiser determined that the value of the subject property before the taking was $4,271,000.00 (Exhibit 1, p. 31). Using the cost approach to value as a check on the sales comparison method, Claimant's appraiser estimated the value to be $4,361,000.00 (Exhibit 1, p. 22) and, reconciling the two, found the final before-market value to be $4,270,000.00 (Exhibit 1, p. 39). Defendant's appraiser, using the sales comparison approach, determined the subject had a "before" appropriation value of $3,158,000.00 (Exhibit A, p. 42). He used the income capitalization approach as a check on the sales comparison method, which resulted in a "before" value of $3,565,000.00 (Exhibit A, p. 50). Mr. Thurston then opined that the "before" market value of the subject property was $3,500,000.00 (Exhibit A, p. 52).
The Court has reviewed and considered each appraisal, including the comparable sales offered by each appraiser, the adjustments made by each appraiser, the rationale behind each adjustment and the testimony and evidence presented at trial. Based upon a preponderance of the evidence, I find and adopt a value of $4,000,000.00 for the subject property, as improved, in the "before" situation.
In the "after" situation, both appraisers used the same comparable sales that were used for the before-taking analysis. Each appraiser made further adjustments to those sales to reflect changed circumstances to the subject parcel after the taking. In determining the "after" value for the subject land as vacant, Mr. Gardner found a value of $18.00 per square foot. As the remaining land area was 76,076 square feet, he determined the "after" value for the vacant land was $1,369,000.00 (Exhibit 1, p. 48). Defendant's expert, Mr. Thurston determined that, as there were no indirect damages to the land or land improvements, the "before" taking value of $15.00 per square foot was appropriate for use in the "after" situation. Accordingly, he determined that the "after" value for the land as vacant was $1,141,000.00 (76,076 square feet x $15.00) (Exhibit 1, p. 59). The Court elects to adopt a value of $16 per square foot for the vacant land value after the taking, resulting in a total value (rounded) of $1,217,000.00 (76,076 square feet x $16).
Claimant's expert concluded that the subject property had a fair market value, after the taking, of $3,765,000.00 (Exhibit 1, p. 60), of which $1,369,000.00 was attributable to the land itself (Exhibit 1, p. 48) and $2,475,000.00 was attributable to structural and land improvements (Exhibit 1, p. 50). Defendant's appraiser, by contrast, concluded that the subject property had a value after the taking of $3,394,000.00, of which $1,141,000.00 was attributable to the land itself and $2,253,000.00 was attributable to building and land improvements (Exhibit A, p. 64). I note that the major point of contention between the Claimant's "after" valuation and Defendant's is the value each appraiser has assigned to the indirect damages Claimant sustained for the loss of parking and the less desirable building-to-land ratio in the after aspect.
Defendant called Gary Tajkowski, Director of Development Services for the Town of Greece, who explained the parking predicament and the Town of Greece's position. Mr. Tajkowski testified that he has held that position since 1991 and has been with the Town since 1980. Mr. Tajkowski recalled the site plan approval for the 2003 renovations on the subject (Exhibit 2). He indicated that the variance granted in 2003 reduced the required parking on the subject property from 151 to 86 parking spaces. He also confirmed that, at the time Claimant submitted this site plan, Claimant was already aware that the proposed appropriation would have an impact on the parking plan. Mr. Tajkowski recounted how the Town had addressed similar loss of parking issues on other West Ridge Road properties affected by the expansion project and he indicated that the Town had already approved curative parking plans on other West Ridge Road properties.
The Town of Greece Zoning Board of Appeals heard Claimant's application for a parking variance on May 20, 2003. The minutes note, at page 15 (Exhibit 4), that a "lengthy discussion" was had regarding the West Ridge Road reconstruction, specifically the fact that the reconstruction was likely to have a negative impact on the number of parking spaces on the subject property. However, the Zoning Board of Appeals was in no position to act on any proposed future plan and was required to decide on a variance based on the information it had in front of it. The Zoning Board of Appeals acknowledged that, at some point in the future, Claimant could be "in non-compliance with any zoning codes or existing variances that have been granted" but that the Town would notify them of such non-compliance and give them a choice of options (Exhibit 4, p. 16).
Defendant then called Mr. Bryce A. Walker, who testified that he had 21 years of experience as a professional engineer, and was currently employed by Stantec Consulting Services. He described how he had been involved in overseeing the design of the redevelopment project on West Ridge Road. He had been asked by Defendant to prepare a parking plan for Claimant's property in the "after" situation. This parking plan was received in evidence as Exhibit M. Mr. Walker, using specifications that called for reduced lane width and parking space sizes, was able to "reconstitute" 81 parking spaces, despite the appropriation.
This point was a major area of contention between the parties. How many parking spaces did the appropriation eliminate, and what value was lost in trying to squeeze more, but smaller spaces out of what was left? Defendant offered the testimonies of Mr. Tajkowski and Mr. Walker to demonstrate that the Claimant had really suffered no indirect damages due to lost parking. Mr. Tajkowski testified that the Town was consistently willing to work with condemnees who had lost parking as a result of the West Ridge Road project. He also indicated that Claimant was well aware of the impending appropriation but had decided to proceed with the renovations anyway.(2)
Claimant's position is that the property, prior to the appropriation, already had minimal parking. They had sought and received a variance from the required 151 spaces to 86. The appropriation took 6,390 square feet (8% of the pre-appropriation land area). After the appropriation, to continue the parking pattern in the same desirable fashion (with two way traffic and parallel spaces that complied with zoning standards) meant a loss of 17 spaces or 20% of the available parking. Claimant's expert, therefore, concludes that Claimant has suffered indirect damages in the amount of $374,000.00 (Exhibit 1, p. 61).
Defendant's position, based upon the testimonies of Mr. Tajkowski and Mr. Walker, is that Claimant's indirect damages are limited to the cost of re-striping Claimant's parking lot. According to Defendant's Exhibit M (the parking lot plan developed by Mr. Walker), the parking could be reconfigured using smaller lanes and smaller parking space depths and widths. Using these reductions (which were typically approved by the Town Planning Board), Mr. Walker was able to recover substantially all the spaces that were allegedly lost by the appropriation.
While it may be true that Claimant could have approached the Town and that Exhibit M demonstrates that the same number of parking spaces, albeit smaller, could have been plotted, Defendant refused to concede that these smaller and less functional parking spaces could perhaps make the property less desirable and therefore reduce the value. I find that these newly defined, smaller spaces, as well as the reduced land-to-building ratio, do make the property less desirable. The Court awards Claimant $240,000.00 in indirect damages for the losses.
The Court having reviewed and considered each appraisal, the testimony and evidence presented at trial, the adjustments made by each appraiser and the rationale behind each adjustment, finds the "after" value attributable to the land itself to be $1,217,000.00. The Court values the building and site improvements in the "after" aspect at $2,441,000.00. Therefore, the total value of the property after the appropriation is $3,658,000.00.CONCLUSION
Based upon a preponderance of the evidence, the Court finds that Claimant is entitled to direct damages in the amount of $102,000.00 and indirect damages in the amount of $240,000.00 for a total award of $342,000.00 with appropriate interest thereon from the date of taking, August 3, 2004 until January 5, 2007 (the date that interest was suspended, pursuant to a Stipulation and Order filed June 4, 2007) and from June 21, 2007 (the date Claimant's appraisal was filed) until the date of this decision and thereafter to the date of entry of judgment herein, pursuant to CPLR 5001 and CPLR 5002; EDPL § 514; Court of Claims Act § 19(1); subject to Court of Claims Act § 19(4).
The award herein is exclusive of the claims, if any, of persons other than the owners of the appropriated property, its tenants, mortgagees and lienors having any right or interest in any stream, lake, drainage, 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 the 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.
It is ordered that, to the extent Claimant has paid a filing fee, it is recoverable pursuant to Court of Claims Act § 11-a(2).
LET JUDGMENT BE ENTERED ACCORDINGLY.
March 4, 2010
Rochester, New York
RENÉE FORGENSI MINARIK
Judge of the Court of Claims
1. Berg Investors is a limited liability corporation that owns and manages real estate. Claimant leases property to Raymour Furniture Company.
2. I note this was a business decision on Claimant's part, as Mr. Milnamow indicated on Claimant's direct case.