New York State Court of Claims

New York State Court of Claims

REEVES/TESCHNER v. THE STATE OF NEW YORK, #2009-037-506, Claim No. 113420


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:
Gross, Shuman, Brizdle & Gilfillan, P.C.By: John K. Rottaris, Esq.
Defendant’s attorney:
Hon. Andrew M. Cuomo
New York State Attorney General
By: Paul VolcyAssistant Attorney General
Third-party defendant’s attorney:

Signature date:
July 24, 2009

Official citation:

Appellate results:

See also (multicaptioned case)


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 taking.[1] 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 appropriation.

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 [1980]). 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 [1992]; Gold-Mark 35 Assoc. v State of New York, 210 AD2d 377 [1994]). 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 approaches.

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 [1964], affd 26 NY2d 869 [1970]; Kurnick v State of New York, 54 AD2d 1098 [1976]; City of Niagara Falls v Zak, 40 AD2d 755 [1972]). 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 diner.

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 [1963]; Glenn Houle Co. v State of New York, 73 AD2d 794 [1979]).

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 [1969], affd 26 NY2d 692 [1970]; Kommit v State of New York, 60 AD2d 945 [1978]). 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.[2]

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 hereby denied.

To the extent that Claimants have paid a filing fee, it may be recovered pursuant to Court of Claims Act § 11-a(2).


July 24, 2009
Buffalo, New York

Judge of the Court of Claims

[1].Claimants incorrectly assert that January 24, 2006, the date the appropriation map was filed in the office of the Department of Transportation, is the date of taking.
[2].Because there is no evidence on the record establishing the date of personal service of the notice of acquisition, prejudgment interest shall not be suspended pursuant to EDPL 514(B) (see Sokol v State of New York, 272 AD2d 604 [2000]).