This is a timely filed claim for damages caused by the total appropriation of
Claimants’ property pursuant to Section 30 of the Highway Law and the
Eminent Domain Procedure Law (EDPL) in a proceeding entitled “Harlem Road,
S.H. 9381, PIN 5268.32, Erie County, Town of Amherst, Map No. 602, Parcel No.
613,” filed in the Erie County Clerk’s Office on February 27, 2006,
which the Court finds to be the date of
Said map and the property description
set forth therein are adopted by the Court and incorporated herein by reference.
This Claim was originally filed with the Clerk of the Court on March 7, 2007 and
an Amended Claim was filed on June 12, 2007 and it has not been assigned or
submitted to any other court, tribunal or officer for audit or determination.
The Court has viewed the property pursuant to Section 12 (4) of the Court of
Claims Act and EDPL § 510.
The subject property is located at the intersection of Harlem Road and
Kensington Avenue in the Town of Amherst, Erie County, New York, and is more
particularly described in a deed from Helen R. Evanson to Richard K. Teschner
and Donald J. Reeves, recorded October 15, 1992 in the Erie County Clerk’s
Office in Liber 10532 of Deeds at page 100. Ownership was not contested and both
appraisers valued the property on the basis of Claimants’ ownership of a
fee interest in the subject premises. Thus, the Court concludes that Claimants
have established title to and were the owners of the property at the time of the
At the time of taking the subject property was triangular in shape with 84.607
feet of frontage on Lexington Terrace, 101.055 feet of frontage on Kensington
Avenue and 55.26 feet of frontage on Harlem Road, containing approximately 0.05
acre of land improved with a one-story brick building containing approximately
675 square feet operated as a fast food restaurant/diner known as Jimmy’s.
In the area of the appropriation, Harlem Road (New York State Route 240) is a
heavily traveled north-south highway located along the Amherst-Cheektowaga town
line. The intersections of Harlem Road with Kensington Avenue and nearby Wehrle
Drive contain significant commercial development and the parties agree that the
property was zoned GB-General Business under the Town of Amherst zoning law
which permitted commercial uses for providing goods and services. Since the
property did not comport with the zoning requirements in effect on the date of
taking it represented a legal non-conforming use under the zoning law. At the
time of taking, the property was assessed at $107,600, with $9,000 apportioned
to land and $98,600 to improvements. The equalization rate for the Town of
Amherst in 2006 was 100%. Claimant Richard K. Teschner testified that he and his
partner, Claimant Donald J. Reeves, purchased the property in 1992 for $107,000
and that it had been leased to tenants since that time. At the time of taking,
the current tenants were in the fourth year of a ten-year lease paying $18,600
per year in rent.
Claimants are entitled to “just compensation” when the State
exercises its power of eminent domain and the amount 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 ). The
fair market value is the price for which the property would sell if there was a
willing buyer and a willing seller under no compulsion to either buy or sell
(Matter of Allied Corp. v Town of Camillus, 80 NY2d 351 ;
Gold-Mark 35 Assoc. v State of New York, 210 AD2d 377 ). There are
three generally accepted approaches to determine the value of real estate: the
cost approach; the income capitalization approach; and the sales comparison
approach. Both appraisers relied primarily upon the income and sales comparison
When a property is income producing, as in the case of the subject property,
the preferred method of valuation is the income approach (City of Buffalo v
Joseph Davis, Inc., 32 AD2d 604 , affd 26 NY2d 869 ;
Kurnick v State of New York, 54 AD2d 1098 ; City of Niagara
Falls v Zak, 40 AD2d 755 ). Considering the income producing nature of
the subject property and the absence of owner occupancy, the Court finds that
the income approach is the better indicator of value and it will be given
greater weight than the sales comparison approach.
Both appraisers agree, in substance, and the Court concludes that the highest
and best use of the subject property, both in a vacant and improved condition,
was for continued use as a commercial building, fast food restaurant or
Claimants’ appraiser, Michael Gluc, concluded the property had a value of
$170,000 as of the date of taking. He found a value of $140,000 using the sales
comparison approach and a value of $185,000 using the income capitalization
approach. Claimants’ appraiser relied most heavily on the income
capitalization analysis in reaching the retrospective market value of the fee
simple interest of $170,000.
Defendant’s appraiser, Gregory C. Klauk, concluded the subject property
had a value of $86,000 as of the date of taking. He found a value of $86,500
using the sales comparison approach; a value of $85,200 using the income
capitalization approach; and a value of $82,000 using the cost approach.
Defendant’s appraiser relied on the sales comparison and income
capitalization analyses to develop the retrospective market value of the fee
simple interest of $86,000. Thus the difference between Claimants’ value
of $170,000 and Defendant’s value of $86,000 is $84,000.
Claimants’ appraiser utilized four comparable sales to determine market
value, and the adjusted sales indicated a range of $162.41 per square foot to
$242.38 per square foot with a median value of $210.00 per square foot of
building, including land. Utilizing the area of the subject as 675 square feet,
this valuation equates to $141,750 for the entire parcel.
Defendant’s appraiser used seven comparable sales, three of which were
common to both appraisals (Sales No. 1, 3 & 4, Exhibit 1 and Sales No. 1, 2,
& 3, Exhibit A), to determine market value and the adjusted sales indicate a
value range from $68,535 to $129,550, resulting in a mean value of $86,041,
which he rounded to $86,500 for the entire parcel. Utilizing the area of the
subject property as 675 square feet, this valuation equates to $128.00 per
square foot of building, including land.
Given the relatively minor difference between the square foot valuations
arrived at by the two appraisers, the Court finds it unnecessary to engage in an
exhaustive discussion of the comparable sales offered by the appraisers.
Overall, based upon a preponderance of the evidence and the Court’s
consideration of the comparable sales submitted by each party, the Court elects
to adopt a value of $170.00 per square foot for the land and building resulting
in a total value of $114,750 based upon the sales comparison approach.
Turning to an analysis of value based upon the income capitalization approach,
the Court notes that Claimants’ appraiser used three and Defendant’s
appraiser used five rentals of what they deemed to be comparable commercial
properties. The suitability of comparables is a matter resting in the sound
discretion of the trial court (Levin v State of New York, 13 NY2d 87
; Glenn Houle Co. v State of New York, 73 AD2d 794 ).
Claimants’ appraiser determined that based upon the range of the
comparable rentals and on the lease in place for the subject property, the
rental of $1,550 per month ($27.56 per square foot) in effect for the subject at
the time of taking was a reasonable rental compared to the three comparables.
Mr. Gluc calculated the potential gross income of the subject property at the
time of taking to be $18,603. He then deducted 5% as the estimated vacancy rate
and credit loss to arrive at an adjusted gross income of $17,673, from which he
deducted estimated annual expenses of $1,146 to conclude that the annual net
operating income was $16,527. Mr. Gluc calculated the overall capitalization
rate to be 9% and, using the income approach, divided the net operating income
by the overall capitalization rate to determine that the value of the subject
property was $183,633 which he rounded to $185,000.
Defendant’s appraiser determined the rent per square foot for each of the
five comparable rentals and then adjusted the rent for location and physical
condition to arrive at an indicated rental per square foot. Based upon this
analysis, Mr. Klauk concluded that the market rent of Claimants’ property
was $20.00 per square foot at the time of the taking, for a potential gross
income of $13,260 ($20.00 x 663 square feet) per year. Since this figure is less
than the actual rent for the subject property, he disregards the contract rent
for the purposes of his appraisal. He utilized a vacancy rate and collection
loss of 5% to arrive at an effective gross income of $12,597. He then estimated
the total operating expenses to be $4,078, resulting in a net operating income
of $8,519. Mr. Klauk concluded that the overall capitalization rate was 10% and
that the indicated value of Claimants’ property was $85,192, which he
rounded to $85,200.
Actual rent is generally considered to be the best indicator of value but
another figure may be adopted if the actual rent is shown to be too high or too
low (Motsiff v State of New York, 32 AD2d 729 , affd 26 NY2d
692 ; Kommit v State of New York, 60 AD2d 945 ). Here, the
Court finds that the actual rent of $18,603 paid under the lease for the subject
property is the best indicator of rental value. Both appraisers estimated the
vacancy and credit loss rate at 5%, resulting in adjusted gross income of
$17,673. Claimants’ appraiser estimated total expenses at 6.48% while
Defendant’s appraiser estimated them at approximately 32%. The Court
concludes, based upon the evidence, that total expenses are 17% of adjusted
gross income or $3004, resulting in net operating income of $14,669.
Claimants’ appraiser testified that the appropriate capitalization rate
is 9% and Defendant’s appraiser stated it is 10%. The Court finds the
appropriate capitalization rate to be 9.5%, which results in an indicated value
based on the income capitalization approach (rounded) of $154,400.
Accordingly, based upon a preponderance of the evidence, the Court’s
careful consideration of the approaches to value submitted by the parties and
placing greater weight on the income capitalization approach, the Court finds
that Claimants sustained damages for the total appropriation of their property
in the amount of $137,000. Therefore, Claimants are awarded the sum of $137,000
for all damages, with statutory interest thereon from the vesting date of
February 27, 2006 to the date of this decision and thereafter to the date of the
entry of judgment herein.
The award to Claimants herein is exclusive of the claims, if any, of persons
other than the owners of the appropriated property, their tenants, mortgagees or
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 or appurtenant facilities for the
construction, operation or maintenance of publicly owned or public service
electric, telephone, telegraph, pipe, water, sewer or railroad lines.
All motions not previously ruled upon or upon which decision was reserved are
To the extent that Claimants have paid a filing fee, it may be recovered
pursuant to Court of Claims Act § 11-a(2).
LET JUDGMENT BE ENTERED ACCORDINGLY.