The Court finds Claimant is entitled to $698,870 for the fee taking and $13,480 for the temporary easement with appropriate interest thereon from August 10, 2001, the date of the taking until February 10, 2002, and then from March 19, 2003 until entry of judgment.
|Claimant(s):||PARTNERS TRUST BANK, f/k/a SBU BANK, f/k/a SAVINGS BANK OF UTICA|
|Claimant short name:||SBU|
|Footnote (claimant name) :|
|Defendant(s):||STATE OF NEW YORK|
|Footnote (defendant name) :|
|Judge:||DIANE L. FITZPATRICK|
|Claimant's attorney:||SIDNEY DEVORSETZ PLLC
By: Sidney Devorsetz, Esquire
GILBERTI STINZIANO HEINTZ & SMITH, P.C.
By: Kevin G. Roe, Esquire
|Defendant's attorney:||ANDREW M. CUOMO
Attorney General of the State of New York
By: Roger B. Williams, Esquire
Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||April 1, 2010|
|See also (multicaptioned case)|
Claimant seeks compensation from the State for a partial, permanent appropriation and a temporary easement pursuant to Eminent Domain Procedure Law (EDPL) and Highway Law § 30. The claim was timely filed on March 19, 2003. An amended claim was filed on March 6, 2006, by permission of the Court.(1) The land appropriated is described in Map No. 42, parcels 50 and 180, and filed in the Oneida County Clerk's Office. A temporary easement was also taken as described in Map No. 115, parcel number 181, also filed in the Oneida County Clerk's Office. The Court adopts the descriptions of the appropriated property as shown by the filed maps and descriptions, copies of which are attached to the claim and incorporated herein by reference. This claim has not been assigned or submitted to any other Court or tribunal for audit and determination.
The parties agreed that the date of the State's appropriation was August 10, 2001. The Court has viewed the property. As a result of the taking, the property was left with no legal access to Commercial Drive (New York State Route 5A) in the Town of New Hartford.
The subject property is owned in fee by Partners Trust formerly Savings Bank of Utica (hereinafter SBU). The property consists of a 5.5 acre parcel in the Town of New Hartford at the intersections of Ellinwood Drive, Commercial Drive, and Clinton Street. The appraisers each had different measurements for the amount of road frontage on each roadway. Using the deed descriptions, the Court finds the property has 365 feet of frontage on Ellinwood Drive, 270 feet on Commercial Drive, and 418 feet on Clinton Street.
The property consists of three tax parcels. The SBU purchased two of the parcels in 1992. It then began a major renovation and expansion project on the existing professional office facility for additional office space and building the branch bank facility. Access to the building at this time was only from Ellinwood Drive. Thereafter, in July 1996, SBU purchased another tax parcel of 1.717 acres, referred to during the trial as the Sadallah property, to accommodate ingress and egress on Commercial Drive.
The subject property is a level parcel at grade with Ellinwood Drive, but 10 to 15 feet above grade on Commercial Drive. There are two buildings on the property. A professional office building, commonly known as the Ellinwood Office Complex with 37,450 square feet(2) on two levels. It is a masonry building on a concrete foundation originally constructed in 1973, with additions made in 1977. The building was substantially expanded and renovated in 1993. The upper level of the building has four sections with two primary entrances. The lower level has three sections. The two levels are accessible by both stairs and an elevator. The interior is finished with painted or wallpapered drywall with oak trim and new electrical service. Heat pumps and a cooling tower supplies the boiler for heating and air conditioning both for this office building and the branch bank.
The branch bank was constructed in 1993 and is a single-story masonry building on a concrete foundation. The building design complements the Ellinwood Office Building architecture. The branch bank has 2,394 square feet,(3) designed to function as a bank with a customer service area, several offices, a vault, and restrooms. The bank building and the office complex share a common boiler and cooling tower located in the office building. The building also has electrical feed from the office building.
The 1.717 acres, adjoining the "Sadallah" parcel acquired in July 1996, was improved with an access road to Commercial Drive and expanded parking at a cost of $660,000.
At the time of the appropriation, the Metropolitan Property and Casualty Insurance Company leased a major portion of the Ellinwood Office complex. The balance of the office building and the branch bank were occupied by SBU.
The property falls within two zoning districts. A portion of the property is zoned RB1-Retail Business, which permits a variety of commercial uses such as offices, retail, restaurants, and banking facilities. The balance of the property at the time of the appropriation was zoned RB3 (now Planned Development Mixed Uses - PDMU) which permits even more commercial uses. The existing use of the property complies with the zoning laws.
The property is located in an area of continuing development despite declining population in the county. At the time of this appropriation, along the Commercial Drive corridor, particularly south of the subject property and in the vicinity of Sangertown Square Mall, there were several development projects existing. Several additional development projects were also planned closer to the subject. The neighborhood has a stable occupancy rate of approximately 85%. The area has seen significant growth and remains primed for further development.
Both parties utilized the expertise of professional, certified appraisers in presenting this case. Claimant used Kenneth V. Gardner, II, of North East Appraisals and Management Co., Inc. Defendant used Todd P. Thurston of Thurston, Casale and Ryan, LLC. Claimant, in rebuttal, used Brian D. Snow, Managing Director of Pyramid Brokerage Company, Inc.
In valuing the property, Claimant's appraiser used all three valuation methods, the Sales Comparison, Income Capitalization and the Cost Approach. While Defendant's appraiser used only the Sales Comparison Approach and the Income Capitalization Approach. These two approaches were considered by the Court as most appropriate and useful although the most weight was given to the Sales Comparison Approach by both the Court and the experts.
The Sales Comparison Approach values the subject property by utilizing the sales of comparable properties with adjustments made for uncomparable elements. With this approach, both appraisers valued the land, first as vacant and then as improved. The Income Capitalization Approach derives a value for an income producing property by using comparable lease data to determine net operating income. A capitalization rate is then applied to the net operating income to assess value.
BEFORE THE TAKING
Critical to the determination of adequate compensation for the taking of Claimant's property is the finding of highest and best use. Both Mr. Gardner and Mr. Thurston found that the highest and best use for this property was commercial development. For Claimant, Mr. Gardner felt that the subject property's current use as a professional office building, branch banking facility and commercial development site - as three economic units - was its highest and best use. Defendant's appraiser opined that the highest and best use vacant was for retail/restaurant development and as improved, the continued use as office and banking facility, as a single unit property.
SALES COMPARISON APPROACH
Both experts began by valuing the land as vacant and then as improved. Claimant's expert, in valuing the improved property, valued each economic unit individually and then used these values to arrive at a value for the property as a whole. Defendant's expert valued the property primarily as an office building determining that the branch bank facility did not contribute to the value as a whole. He also did not find the unused land and parking area a potential commercial development site.
Mr. Gardner reviewed nine sale properties in the vicinity of the subject property and selected four of these properties (Sales #1, #2, #4, and #5) as being most comparable to the subject. Each of these comparables were sold between two- to- seven years before the appropriation of the subject. Mr. Gardner opined that during this period property values increased due to market activity and demand requiring a market trend adjustment of 3% per year be made to each comparable sale.
Sale #1 is a portion (1.71 acres) of the subject property purchased in July 1996, or referred to as the Sadallah parcel. The Court notes that the acreage is actually 1.717 acres pursuant to the deed. Defendant utilized this sale in its valuation of the property as well. The Court has given significant weight to this sale as an arms-length sale of the subject property at fair market value. Typically, the best evidence of a property's value is a recent sale between a seller under no compulsion to sell and a buyer under no compulsion to buy (Allied Corp v Town of Camillus, 80 NY2d 351, 356; Gold-Mark 35 Associates v State of New York, 210 AD2d 377, 378).
For Sale #1, the Court first has recalculated Mr. Gardner's square footage (74,488 square feet) to comport with the square footage of 1.717 acres (1.717 x 43,560(4) = 74,793 [R]). In addition to a 15% market trend adjustment, Claimant's expert made a -5% adjustment for the smaller size of the sale parcel. Both appraisers accepted the theory that smaller parcels sell for higher unit prices. Defendant also made an adjustment for the difference in size of -10%. Defendant adjusted the sale property 5% for the subject's better access on two roadways. Both appraisers had the same net adjustments. However, Defendant's expert also adjusted the cost per acre(5) of the property to include the cost that would be incurred to demolish an existing building.
Certainly, an adjustment must be made for the difference in size as the subject, as a whole, is more than three times the size of Sale #1 which the Court finds would impact the price. The Defendant's -10% adjustment is most appropriate given the size disparity. An adjustment for the better access of the entire subject parcel is also appropriate. Mr. Gardner's market trend
is also accepted given the significant time frame between Sale #1 and the date of the appropriation. Additionally, since at the time of purchase demolition of the existing building was planned, it is appropriate to factor this ($15,000) into the cost. Accordingly, the adjusted value per square foot is $5.67.
At trial, Defendant moved to strike Claimant's Comparable #2 because of its remoteness in time. The Court agrees and has not considered this sale.
For Claimant's remaining two comparables, Sale #4 and Sale #5, after Mr. Gardner's analysis, he made deductions of -5% for size and -10% for frontage. The frontage deduction reflects that the subject's frontage slopes above road grade. Although the existing structures on both properties were demolished, no inclusions were made for the cost of demolition of the existing structures. Sale #5 was also part of an assemblage, and Mr. Gardner made a -10% reduction to reflect an assemblage premium. Mr. Gardner's range of values is $9.03 and $8.39 for Sales #4 and #5 respectively. Some adjustments must be made to Mr. Gardner's valuation. A -15% adjustment should be made to both Sales #4 and #5 for size as the subject property is four times larger. The access frontage deduction should be reduced to -5%. Accordingly, the adjusted square foot prices to Claimant's comparables, based upon the information provided, is $8.50 for Sale #4 and $7.90 for Sale #5. The Court takes note that these values are exclusive of demolition costs incurred by both purchasers.
Defendant's appraiser, Mr. Thurston, in addition to the Site Sale #1, the Sadallah parcel, used three other comparable sales on Commercial Drive. These three sales were all beyond Henderson Road and that area has a different character of retail development (i.e., car dealerships) than the subject.
Site Sale #2 was a 1.700 acre parcel (74,052 square feet) much smaller than the subject and an appropriate -10% adjustment was made to reflect the subject's larger size. In the appraisal report, Mr. Thurston made a 5% adjustment for the better access of the subject; however, at trial Mr. Thurston corrected this 0% adjustment as he learned this parcel had not one but two access points. For his site Sale #3, Mr. Thurston made a -20% adjustment for site size - this is too much. The adjustment should be -15%. All of his other adjustments are appropriate. With these adjustments, the Court finds the square foot value of the Site Sale #2 is $4.30, for Site Sale #3 is $4.95, and Site Sale #4 is $3.87.
Based on their comparable sales, Claimant's expert, Mr. Gardner valued the subject property as vacant at $7.00 per square foot or $1,677.060 (239,580 square feet x $7.00). Defendant's expert, Mr. Thurston, found the square foot value of the subject property to be $4.59 per square foot for a full site value of $1,100,000(R).
The Court finds after considering all of the comparables that the value per square foot is $5.70 or $1,377,585 for the subject parcel as vacant.
To arrive at the value of the subject property as improved, Claimant's expert used four sales of property improved with office buildings to obtain a value for the Ellinwood Office Complex. He then used three sales of branch banking facilities to arrive at a value for the branch bank building.
Two of Mr. Gardner's professional office space comparable sales (Sale #11 and Sale #13) were also used by Defendant (Improved Sale #3 and Improved Sale #1, respectively). The Court has primarily considered these two sales. Both appraisers made very similar adjustments to Sale #11 or Improved Sale #3 for the same characteristics, and the Court finds the 10% location adjustment for the better location of the subject and -10% adjustment for the smaller building size of the sale property appropriate. Mr. Gardner also made a -4% market trend because it sold approximately eighteen months after the appropriation.
For Sale #13, (Improved Sale #1) Mr. Gardner made an appropriate 10% adjustment as a condition of sale to reflect the premium paid by lessee to purchase. He made no other adjustments. Mr. Thurston made a 3% adjustment for the smaller building size of the subject which the Court finds necessary. Accordingly, the adjusted square foot values are $71.05 for Sale #11 and Improved Sale #3, and $73.84 for Sale #13 and Improved Sale #1.
Mr. Gardner also used Sale #10, a timely sale, finding an $82.08 value per square foot after adjusting for the smaller building size of the sale property, and Sale #12, a professional office building across Ellinwood Drive from the subject. This second sale occurred seven years before the appropriation and involved a significantly smaller building with a selling price per square foot significantly higher than the other comparables - particularly after factoring in the market trend. As a result, the Court has not considered Sale #12, despite its appealing location compatibility.
Mr. Thurston used one other improved property comparable, Improved Sale #2, a smaller professional office building on a lot roughly one-half of the size of the subject which sold two years before the appropriation. He made a -5% adjustment for the smaller size of the building which is appropriate resulting in an adjusted square foot value of $75.07.
In his appraisal, Mr. Gardner also separately valued the branch bank building on the subject property by analyzing the sales of comparable branch banks. Mr. Gardner's comparable sales all involved independent parcels improved by only a branch bank. Mr. Thurston contrarily opined that the branch bank building added no independent value to the property and merely valued the building as additional office space square footage.
Mr. Gardner analyzed three sales of branch bank facilities, two (Sales #14 and #15) in 1995 and one after the date of the appropriation in 2002 (Sale #16). To both sales, #14 and #15, Mr. Gardner made market trend adjustments and a -10% adjustment for the superior location of the subject. He also adjusted both +10% because the larger square footage of the bank results in a lower square foot value compared to the smaller subject. To Sale #15, Mr. Gardner also made a +10% adjustment because this property was part of a three-branch bank acquisition and was quickly sold again for roughly the same sale price. Mr. Gardner opined this resulted in a lower square foot value requiring an adjustment. This seems counterintuitive to the often premium price paid for a multi-purchase acquisition, however, Mr. Gardner's testimony on this point and conviction was persuasive and the Court accepts his adjustments. The last sale, Sale #16, was sold with the restriction that it could not be used as a branch bank, which the Court finds limits its usefulness as a comparable before the appropriation and, therefore, the Court has given this sale little consideration. Mr. Gardner's values per square foot for the branch bank buildings for Sales #14 and #15 were $198.06 and $178.75 respectively.
Based upon their respective analyses, using the Sales Comparison Approach, Mr. Gardner valued the property for the Ellinwood Office Complex at $2,860,000, the branch bank at $455,000 and the Sadallah parcel as a developable commercial lot at $523,551 ($7 x 74,793). Mr. Thurston valued the improved property using the Sales Comparison analysis for both the office building and the branch bank at $3,000,000(R) (40,112 x $75).
THE INCOME CAPITALIZATION APPROACH
For his analysis using this approach, Mr. Gardner considered four leases involving professional office space (Leases #1, #2, #3, and #4) and three branch banking facilities (Leases #5, #6, and #7).
Mr. Thurston used three leases of professional office space for this approach (Rental #1, Rental #2 and Rental #3). He did not utilize any comparable rental income for branch bank facilities. Instead, he relied upon the rental income for professional office space to determine the market rent for the office space and the branch bank.
The first lease both appraisers used (Lease #1 and Rental #1) was the subject's lease to Metropolitan Property & Casualty. Both appraisers had different lease dates and square footage. Mr. Gardner had gross rent of $18.50 per square foot and Mr. Thurston had $18.46 for gross rent per square foot for this lease. Mr. Gardner made no adjustments. All occupancy costs were paid by the owner except for janitorial service. At trial, Mr. Thurston made a + $.50 adjustment for the fact that increases in real estate taxes over the term of the lease are passed through to the landlord. He also made a -$.50 adjustment for the cost of janitorial services borne by the lessee. These were not reflected in his appraisal report but were corrections he made at trial. He made a -5% adjustment also to reflect the larger square total footage of the subject - as smaller rentals command a higher per footage rent. Mr. Thurston backed away from this adjustment during the trial because the office building could have multiple tenants. These adjustments brought the rental square footage in Mr. Thurston's report to $17.54.
The second lease (Lease #2 and Rental #2) was also the same for both appraisers. This lease also had an $18.50 per square foot gross rent. Mr. Thurston made a -$.05 adjustment for insurance, -$.30 adjustment for repairs and maintenance and a -$.70 adjustment for janitorial services based upon the terms in the lease. He also deducted $.71 for the cost of build out. He also made a +5% adjustment because this rental had more than double the square footage of the subject. Mr. Thurston's adjusted square foot rent for this lease was $17.58. Mr. Gardner made no adjustments to this lease.
The square foot rental price of the subject property is certainly most persuasive for determining the overall rental value of the subject. Mr. Thurston's adjustment to Lease #1/Rental #1 are not accepted as the subject was a multi-rental building and not a single tenant occupancy, so the total square footage of the entire building should not reduce the square footage rent. No other adjustments are accepted as this is a lease of the subject property.
The adjustments to Mr. Thurston's Rental #2 for insurance, repairs, and janitorial were not supported. The adjustment for size of this lease is appropriate as the lessee leased the entire 84,840 square feet compared to the smaller available rental square footage of the subject. As adjusted, the square foot rental value for this lease is $18.68 (17.79 + 5% = 18.68).
Based upon the adjusted comparable rents, Mr. Gardner had a range of rents for professional office space of $18.50, $18.50, $11.00 and $17.50 for leases #1 through #4 respectively. He arrived at a rental value for the subject office building of $18.50 per square foot. Mr. Thurston, based on his analysis, found a range of comparable rents of $17.54, $17.58 and $16.15(6) for (Rentals #1-3) professional office space and he valued the subject (both the office building and branch bank building) at $17.25 per square foot.
To these gross rents, Mr. Gardner deducted an 8% vacancy rate. Mr. Thurston used a 15% vacancy rate. Neither appraiser substantiated how they arrived at these rates, so the Court has utilized a median vacancy rate of 11.5%. To the adjusted gross rent (after deducting for vacancies) Mr. Thurston deducted $7.78 per square foot for expenses (management, taxes, insurance, maintenance, miscellaneous and leasing commissions). Mr. Gardner deducted $9.30 per square foot for the same expenses. Mr. Gardner found net operating income of $286,535 solely for the office building, while Mr. Thurston calculated $276,139 for both the office building and branch bank.
Mr. Gardner separately considered the square foot rent for three comparable branch bank leases (Lease #5, #6, #7). The Court finds Lease #7 as most comparable to the subject in terms of size and location. The Court does not agree with Mr. Gardner's $3.00 per square foot adjustment to this lease because the bank is part of a strip plaza - it has a drive-thru and is at least as accessible and visible as the subject. With that modification, Mr. Gardner's range of rental values per square foot for the subject branch bank property are $17.12 for Lease #5, $19.82 for Lease #6, and $14.00 for Lease #7. These square foot rents are net leases, which means the tenant pays for most operating expenses. Based on these leases, Mr. Gardner opined that the branch bank had potential net income of $17.50 per square foot (2,435 square feet x 17.50 = 42,613). From this income, he deducted a 3% vacancy loss, as he found the rental of branch banks more stable than for office buildings. He also deducted 5% of gross income for management costs and almost 3% of net income for a reserve fund leaving annual net operating income of $37,548 for the branch bank.
This approach then requires that future net income be discounted to present value - the process of capitalization. Both appraisers used a 10% capitalization rate which the Court adopts.
Applying the capitalization rate to the net operating income, Mr. Gardner found, based upon this approach that the value of the Ellinwood Office Complex is $2,865,000 and the branch bank is $375,000. Mr. Thurston found, based upon this approach, that the subject had a market value of $2,760,000 for both the office complex and the branch bank.
Based upon his analysis, using the three approaches, Mr. Gardner concluded that the value of the subject property before the taking was $3,910,000 comprised of $2,860,000 for the Ellinwood Office Building, $450,000 Ellinwood Branch Bank, and $600,000 for the development lot. Mr. Thurston's determination of the subject's value after his analysis using the Sales Comparison and Income Capitalization approaches was $2,900,000.
HIGHEST AND BEST USE
The Court takes exception with both appraisers' opinion of the highest and best use of the property. Claimant's appraiser valued each component of the property as divisible, independent, economic units. Yet, the office building and the branch bank are substantially interdependent in that they share HVAC system, electrical supply, and parking facilities. Mr. Gardner's use of independent comparable properties of office buildings and branch banks ignores the ancillary design of the branch bank. Nonetheless, Mr. Thurston's treatment of the subject as one unit ignores the feasibility of developing the Sadallah parcel. Mr. Thurston's valuation of the branch bank solely as additional office space at $75 per square foot, undervalues the special characteristics of the branch bank which could be used as office space or could be leased at a higher square footage lease as a branch bank - which is the highest and best use. Mr. Thurston's valuation of the improved property at the square foot office space rent is inconsistent with his determination of highest and best use.
Accordingly, the Court finds the highest and best use of the property is as two parcels with independent economic value to each building as office space and a branch bank, and the Sadallah parcel as vacant commercial land.
After considering both appraisers valuations supporting data and exhibits, and relying most heavily upon the experts' Sales Comparison Approach, I find the value of the subject property before the taking:
Sadallah Parcel: (1.717 acres) 74,793(R) square feet
x $5.70 = $426,320.10 or $ 426,320(R)
Ellinwood Office Complex: 37,450 x $75 = $2,832,000}
Branch Bank: 2,352 x $125= $ 294,000}
Total Before Taking Value: $3,552,320
AFTER THE TAKING
On August 10, 2001, the State appropriated in fee 6,394(7) square feet (Map #42 Parcel #50) of the subject parcel along Commercial Drive. Also taken was a large lawn sign, a paved access road, lawn area and landscaping. At the corner of Ellinwood Drive and Clinton Street, 2,853 square feet of the subject was also taken in fee (Map #42, Parcel #180).
A temporary easement of 18,919 square feet was also taken on a portion of the property adjacent to Parcel #50 and extending to the corner of Clinton Street and Commercial Drive.
The fee taking eliminated all access to Commercial Drive from the property. The sole means of access is now from Ellinwood Drive. As part of the project, a median was constructed in the middle of Commercial Drive beyond the intersection of Clinton Street and, as a result, Commercial Drive is only accessible from Clinton Street as a right hand turn or westerly procession. Eastbound traffic can only access the property by making a U-turn.
Both appraisers agree that the significance of the taking is the loss of access to Commercial Drive. It is Claimant's position that this loss of access has substantially affected the value and usefulness of the whole property. Defendant maintains that this loss of access has had little impact on the highest and best use of this property as it is a destination use and the Ellinwood Drive entrance provides adequate access. Defendant further maintains that the increased traffic and exposure to the property as a result of the Judd Road project has substantially increased market values in the area. It is Defendant's position that visibility from the Judd Road connector has increased the subject's value as vacant. As improved, Defendant opines the taking had no effect on the property's value.
Following the appropriation, the lessee, Metropolitan Property & Casualty Insurance Company, on the short-term amended the lease and occupied an additional 1,450 square feet of space in the Ellinwood Office Complex. However, by June of 2002, Metropolitan chose not to renew its five-year lease option and vacated the Ellinwood Office Complex. In December 2002, Claimant closed its branch banking facility, and moved into a building it owned through its acquisition of Herkimer Trust Bank. The bank, thereafter, again relocated to a new building closer to Consumer Square.
The property was also listed for sale with a professional brokerage firm in December 2000 for $4.5 million. The property remained on the market until mid-2004 at the gradually reduced price of $3.4 million. One offer of $2.3 million was made. A second oral offer may have been made but was apparently never communicated to the broker. The $2.3 million offer was not accepted and, ultimately, Claimant reoccupied the office complex in 2005. The branch bank remains empty.
After the appropriation, it is Claimant's position that the taking has significantly changed the highest and best use of this property - to only professional office space. The Sadallah parcel, without independent access, Claimant argues, is relegated to surplus land not appropriate for development.
Defendant's highest and best use after appropriation is unchanged from before the taking.(8)
HIGHEST AND BEST USE
After consideration of the parties' respective positions and evidence, the Court finds the highest and best use of the subject property is as professional office space. The Court agrees with Claimant that without any independent means of ingress and egress, and without any direct access to Commercial Drive, the Sadallah parcel has lost its value as a separate commercial building lot.
The appraisers used significantly different approaches to value the property. Claimant, again, used all three valuation approaches. Defendant opined that the loss of access to Commercial Drive had no impact on the property as improved, only as vacant. As a result, Mr. Thurston did not engage in any post-taking analysis of his prior improved comparable sales or income capitalization valuations. The Court disagrees with Mr. Thurston's position.
To assess the post-taking value of the vacant land, Mr. Thurston used three different comparable sales with specified adjustments to arrive at a land value of $5.74 per square foot or $1,328,300. Mr. Thurston made no adjustment for loss of access. To support this, he based his determination on three matched pairs. Only one of these pairs was similarly located to the subject. The pair that Mr. Thurston found most comparable to the subject were in the Town of Greece (near Rochester), a significant distance from the subject (Matched Pair #3). Using this pair, Mr. Thurston found a 35% enhancement for indirect access with a fronting location and expressway visibility. On cross-examination, however, Mr. Thurston's underlying assumption that the property referred to at trial as the Krispy Kreme property, had expressway visibility was called into question impacting the reliability of his conclusions. Also called into question is the visibility of the subject property from the newly constructed Judd Road Connector. Mr. Thurston's second matched pair located in the neighborhood of the subject property reflected a
-24% detriment for indirect access, a rear location, and poor visibility. The -16 to -24% range of detrimental effect for indirect access shown by Mr. Thurston's first and second matched pairs is in line with Mr. Gardner's determination that the loss of access had a -22% detrimental effect on the value of the subject property. The Court cannot accept the proposition that the loss of direct access to the major thoroughfare, without increased visibility, has had no impact on the value of the property as vacant or improved. This was further corroborated by Mr. Snow's rebuttal report (Claimant's Exhibit 2).
Nonetheless, despite such disparity in perspectives on the impact of this appropriation on the value of the subject property, both appraisers arrived at almost the same after value. Claimant valued the property at $2,940,000 and Defendant valued the property at $2,900,000.
After reviewing both appraisers respective analysis, and given the Court's rejection of Defendant's position that the appropriation had no effect on the improved value of this property, the Court finds Mr. Gardner's post-valuation analysis more persuasive. The Court has reviewed both the sales comparison and income capitalization approaches and has relied mostly upon the Sales Comparison Approach. The Cost Approach has not been relied upon by the Court.
For Mr. Gardner's vacant land valuation, the Court has not considered Sale #2, for the same reason it was not considered before the appropriation - too remote in time. Other than this modification, Mr. Gardner's valuation of the property at $4.75 per square foot or $1,095,000 is accepted.
For the Sales Comparison Approach as improved property, Mr. Gardner used the same four comparables for professional office space after the appropriation as before with a range of values from $56.84 per square foot to $63.84 per square foot. The Court has not used Sale #12 because it was seven years before the appropriation. Mr. Gardner determined that the value of the Ellinwood Office Complex was $62 per square foot or $2,303,000, and the Court adopts this square footage value and adjusts the total value for the square footage determined by the Court ($62 x 37,450) $2,321,900.
To value the branch bank facility, Mr. Gardner used three sales (Sales #14, #15, and #16) which he used in his before analysis, and Sale #17 which involved a branch bank sale with restrictions on future use as a banking facility. Mr. Gardner's Sale #16 also involved the sale of a branch bank facility sold for conversion to office use. The Court accepts Mrs. Gardner's square foot values: $118.84 for Sale #14, $107.25 for Sale #15, $133.05 for Sale #16, and $112.88 for Sale #17.
Mr. Gardner valued the branch bank facility as independent professional office space, finding the specialized improvements for banking are unnecessary improvements. Although the building can be used for independent professional office space, the dependency of this building on the Ellinwood Office Complex for HVAC and electrical service as in the "before" situation must be factored into the value, although not to the extent that Mr. Thurston determined, by merely adding the square footage of the banking facility to that of the office complex at $75 per square foot. As a result, the Court gives more weight to Mr. Gardner's valuation and finds that the value of the branch bank is $107 per square foot ($107 x 2,394) or $256,158.
The Court accordingly finds the value of the property after the appropriation at $2,938,058.
Ellinwood Office Complex - $2,321,900
Ellinwood Branch Bank - $ 256,158
Sadallah Parcel - $ 360,000
Total Valuation: $2,938,058
The State also took a temporary easement of 18,919 square feet. There was no evidence presented at trial regarding the easement. The only assessment is in the respective appraisals. Claimant makes reference(9) to the easement for one year while Defendant reflects a two-year easement. Without any means to determine the correct duration of the easement, the Court has used 18 months. There is also no indication how Mr. Gardner arrived at his $6.75 rental value per square foot. Both appraisers agreed that the rental value for the easement would be 10% of the property value per year. The Court has used 10% of its post-appropriation square foot valuation of the vacant site to obtain a value for the temporary easement for one year.
ALLOCATION OF DAMAGES:
9,247 square feet x $5.70 = $52,707.90 $ 52,708 (R)
Site Improvements = $ 32,000(10)
$4.75 x 18,919 = $89,865.25
$89,865 x .10 = $8,986.53
18 mos. occupancy = 13,479.79 $ 13,480(R)
Total Direct Damages $ 98,188
Ellinwood Office Complex $ 510,000
2,832,000 - 2,321,900
Ellinwood Branch Bank $ 37,842
294,000 - 256,158
426,320 - 360,000 $ 66,320
Total Damages: $ 712,350
The Court finds Claimant is entitled to $698,870 for the fee taking and $13,480 for the temporary easement with appropriate interest thereon from August 10, 2001, the date of the taking until February 10, 2002, and then from March 19, 2003 until entry of judgment herein, pursuant to Court of Claims Act § 19(1), CPLR 5001 and 5002, it is further
ORDERED, that to the extent that Claimant has paid a filing fee, it may be recovered pursuant to Court of claims Act § 11-a(2).
The award to Claimant herein is exclusive of the claims, of any persons, other than the owners of the appropriated property, their tenants, mortgagees, and lienors having any right or interest in any stream, lake, drainage or 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 the damage, with easements, and appurtenant facilities for the construction, operation and maintenance of publicly owned or public service, electric, telephone, telegraph, pipe, water, sewer, or railroad lines.
All motions not previously ruled upon are DENIED.
LET JUDGMENT BE ENTERED ACCORDINGLY.
April 1, 2010
SYRACUSE, New York
DIANE L. FITZPATRICK
Judge of the Court of Claims
1. Savings Bank of Utica v State of New York, Decision and Order dated January 23, 2006, Motion No. M-70973.
2. The appraisers each had different square footage values for this building. Defendant's expert provided the specific perimeter measurements of the building. Claimant's expert did not, and without any means to check the measurements, the Court has calculated the median square footage ("the approach of Solomon," see Overseas American Bay Shore Assoc., L.P. v State of New York, Ct Cl, Sise, J., June 21, 2004, Cl. No. 101771[UID #2004-028-0005]).
3. See note 1.
4. There are 43,560 square feet in one acre. (Merriam-Webster Collegiate Dictionary [10th ed.] p. 10).
5. Claimant's appraiser used square foot calculations, and the Court modified Defendant's calculations to square footage for comparability.
6. This was the adjusted rent from his testimony at trial (Transcript p. 116, lines 18-24).
7. Mr. Gardner had a different square footage for the taking. The Court adopts the square footage for the taking as described in Map #42 and Mr. Thurston's appraisal report.
8. Mr. Thurston's appraisal reflects that the highest and best use has not changed but states only "office use." At trial, Mr. Thurston noted this was an error and it should have stated, "office and bank use." (TT: January 24, 2007, p. 87, lines 12-25; TT: January 23, 2007, p. 127, lines 19-21).
9. Exhibit 1, page 98.
10. Neither appraiser provided adequate information to support his site improvement damage valuation, so the Court has been left to use the median between each appraiser's position.