Source: http://vertumnus.courts.state.ny.us/claims/html/2004-015-594.html
Timestamp: 2018-11-19 07:18:52
Document Index: 242386520

Matched Legal Cases: ['§ 10', '§ 10', '§ 10', '§ 514', '§ 19', '§ 19', '§ 11', '§ 19', '§ 514']

LAKE GEORGE ASSOCIATES v. THE STATE OF NEW YORK, 104481
LAKE GEORGE ASSOCIATES v. THE STATE OF NEW YORK, #2004-015-594, Claim No. 104481
Affirmed 23 AD3d 737, affirmed 7 NY3d 475 [10/19/06].
2004-015-594
LAKE GEORGE ASSOCIATES
Bond Schoeneck & King, PLLCBy: Carl Rosenbloom, Esquire
Honorable Eliot Spitzer, Attorney GeneralBy: Michael A. Simms, Esquire, Assistant Attorney General
Affirmed 23 AD3d 737, affirmed 7 NY3d 475 [10/19/06]
This timely filed claim seeks damages for the partial appropriation of claimant's property and two permanent easements thereon pursuant to the Eminent Domain Procedure Law and Highway Law § § 10 and 30 in a proceeding entitled "Glens Falls-Lake George S.H. # 417" as reflected in map number 212. The aforesaid map and attached description were filed in the Office of the Warren County Clerk on July 13, 1998. The claim was filed with the Clerk of the Court of Claims and served upon the Attorney General on June 27, 2001. The Court adopts the description of the appropriated property as shown on the map and description filed in the Warren County Clerk's Office, a copy of which is attached to the claim and incorporated herein by reference. This claim has not been assigned or submitted to any other Court, tribunal or officer for audit or determination. The Court has made the required viewing of the property.
On the date of taking the property was owned by the claimant, Lake George Associates, which acquired title to the property by deed dated March 16, 1990 from Dunham Brothers Company, Inc. for a purchase price of $1,250,000.00. Although defense counsel noted the failure of claimant's representative to appear and testify at trial there does not appear to be a genuine dispute as to the ownership of the property.
The subject property is a slightly irregular rectangular parcel of land with improvements. It is situated at the southeast corner of the intersection of State Routes 9 and 149 in the Town of Queensbury, Warren County in an area known as the Million Dollar Half-Mile and contained 1.82 acres of land prior to the taking. The parcel had 364 feet of frontage on the easterly side of Route 9 and 168 feet of frontage on the southerly side of Route 149 (Court Exhibit 3, page 7) with a fifty foot wide curb cut on each highway allowing ingress and egress. The site was improved with a one story wood frame structure with wood siding, an asphalt shingle roof and a concrete foundation. The improvement was constructed in 1987 and contains approximately 14,600 square feet of space including common areas. Although initially designed for occupancy by four retail tenants the building is constructed in such a manner that its retail occupancy can vary. The property has been continuously occupied for commercial/retail purposes since its construction in 1987.
As indicated on map 212 the subject appropriation involved parcel numbers 268, 269 and 270. Parcel number 268 was taken in fee and includes a strip of land along claimant's entire frontage on both Route 9 and Route 149 consisting of a total area of approximately 6,081 square feet. Parcels 269 and 270 were made subject to permanent easements and contain 683 square feet and 1,461 square feet, respectively. Parcel number 269 abuts the State's easterly highway boundary on Route 9 while parcel 270 abuts the State's southerly highway boundary on Route 149. Both permanent easements were taken by the State for the purpose of constructing driveways and appurtenances, specifically reserving to the claimant as fee owner the right to use the easements for access to and from the public roads (Court Exhibit 1, pages 100-101). As part of this highway improvement project the State also acquired, by appropriation, fee title and a permanent easement in parcels reputedly owned by David R. White located immediately south of and contiguous to the subject parcel (Court Exhibit 1, page 102) hereinafter referred to as the White property; and a permanent easement in a parcel immediately east of and contiguous to the subject property reputedly owned by Michael J. Tatko (Court Exhibit 1, page 103) hereinafter referred to as the Tatko property. These additional appropriations are mentioned since they played a major part in the State's reconstruction of driveways which permitted shared ingress to and egress from the subject parcel as well as the two adjoining parcels.
The claim was tried in Albany, New York on September 10 - 11, 2003.
At trial claimant presented the testimony of Kenneth V. Gardner, a real estate appraiser licensed by the State of New York. Mr. Gardner explained that in preparing his appraisal he reviewed survey maps, tax maps, the appropriation maps, and conducted interviews with the property owner as well as tenants of the subject property. He described the property before taking as a site with frontage on both Route 9 and Route 149 which was improved with a single story retail building and which was well maintained, of good quality and appropriate for both the site and the surrounding neighborhood. Gardner testified that a key characteristic of the subject property prior to its appropriation was its corner location stating that the exposure afforded by its frontage on two roads made it a preferred retail location. He described the subject property before the taking as a "freestanding corner unit" separated from the White property to the south by fencing, lawn and vegetation. He stressed that the subject property was an independent entity prior to the appropriation with more than adequate parking and the ability to expand parking if needed.
Mr. Gardner further described the property prior to taking as having two 50 foot wide curb cuts which were located entirely within the confines of the subject property, provided more than adequate access to and from the subject property and permitted direct ingress and egress from the subject property to both Route 9 and Route 149. The witness opined that the property's highest and best use prior to taking was as a retail strip shopping center and that he valued the subject property before appropriation based upon that highest and best use. In his appraisal Gardner considered and employed the replacement cost, comparable sales and income approaches to valuation. He admitted, however, that the cost methodology was advanced primarily for informational purposes and that he relied most on the sales comparison and income approaches in valuing the property.
Gardner testified that the first step in his appraisal process was to value the subject land as if the land were vacant. This was accomplished by identifying and selecting sales with similar location characteristics including proximity to Interstate I-87 and frontage on two or more streets. Gardner testified that he identified seven comparable sales of vacant land, utilized four of the sales for direct comparison to the subject site (Court Exhibit 3, pages 17-21) and adjusted the sales for differences between each vacant parcel and the subject property. He testified that he relied primarily upon sale #3 because it was a corner parcel located in the same market area as the subject property and was purchased for purposes of constructing a strip retail center. Mr. Gardner's appraisal report establishes an indicated value for sale #3 before the taking of $12.27 per square foot after adjustments (Court Exhibit 3, page 18). Based upon his analysis of the various comparable sales of vacant property he concluded that using the comparable sale method of valuation the subject land had a value prior to the appropriation of $12.00 per square foot or $862,000.00
(71,874 sq. ft. x $12.00 = $862,488.00 rounded).
The witness also valued the subject property as improved prior to the appropriation using the sales comparison approach. He reportedly canvassed the subject area for sales of improved properties and selected four as being most similar to the subject property. These were identified in his appraisal as sales numbered 9, 11, 12 and 14. The four improved sales were compared to the subject property and adjusted by the witness for alleged differences (Court Exhibit 3, pages 24-30). Based upon the comparable improved sales Mr. Gardner arrived at an opinion of value of $147.00 per square foot for the subject property as improved prior to appropriation and concluded that the subject had a fair market value as of that time of $2,100,000.00 [14,307 sq. ft x $147.00 = $2,103,129.00 rounded] (Court Exhibit 3, page 30).
The witness further testified that he valued the subject property before appropriation using an income approach which he found to be particularly applicable to the subject property as leased property. In performing this valuation the witness utilized the subject property's historical income and expense records as well as information regarding leases in the immediate area which he alleged defined the rental market and enabled him to make reliable projections. He established an economic rent for the subject property from which he deducted projected operating expenses to arrive at a net operating income. He then derived a capitalization rate which he applied to the net operating income to reflect a value for the subject property prior to appropriation
. Based upon the witness's analysis of the actual leases of the subject property and the comparable leases identified in the appraisal Mr. Gardner arrived at an economic rent of $17.50 per square foot (Court Exhibit 3, page 33) for the subject property prior to appropriation. To this he added tenant reimbursements which he estimated at $4.00 per square foot. He therefore concluded that the subject property had a gross rental value of $21.50 per square foot. The witness then estimated a vacancy and collection loss of 7% of gross income and deducted that amount to arrive at an effective gross income of $281,332.00 (Court Exhibit 3, page 35). He further estimated operating expenses for the subject property which included charges for management, professional fees and reserves for repair and/or replacement of the structure. The witness deducted total operating expenses of $72,492.00 from the effective gross income and arrived at a net operating income for the subject property of $208,840.00. In order to arrive at a before value for the subject property using the income approach the witness testified that he capitalized the net operating income figure of $208,840.00 at 10% and concluded that the subject property had a pre-appropriation fair market value of $2,088,000.00 (Trial Transcript, pages 48-49; Court Exhibit 3, page 41). Gardner then purportedly reconciled his conclusions derived from the various valuation methodologies and opined that the subject property had a value of $2,090,000.00 prior to appropriation (Court Exhibit 3, page 42).
The witness testified that prior to determining the after taking value he considered the effects of the appropriation on the subject property. Specifically, he identified three distinct categories of consequential damages to the subject. Those included loss of parking, restricted and unsuitable ingress and egress and traffic flow and parking encroachments (Court Exhibit 3, pages 43-45). Mr. Gardner testified that the subject property lost six parking spaces as a result of the appropriation and that the appropriation effectively blended the subject's parking with the adjacent property to the south thus permitting the subject's parking lot to be utilized by patrons shopping at neighboring retail outlets and resulting in the effective loss of seven additional parking spaces. He further testified that prior to the appropriation the subject property had two fifty foot curb cuts entirely within the confines of its own boundaries providing a means of ingress from and egress to both Route 9 and Route 149. After the appropriation the primary means of access to the subject property from Route 9 was over the abutting White property to the south. He further noted that after the appropriation the subject property shared ingress from Route 149. Egress from the subject to Route 149 was available only over the Tatko property. The witness alleged that there was no language in the State's appropriation maps relative to either the White or Tatko appropriations which specifically permitted access to the subject over those adjoining properties. From that Gardner concluded that access to the subject property, which was wholly within its boundaries and determined to be very suitable prior to the appropriation, became restricted and unsuitable subsequent to the appropriation.
After having made the above observations the witness testified that he used the same procedures to value the subject property subsequent to the appropriation as he had used in the before situation. The witness maintained that in the after situation the adjustments reflected the reduced marketability and increased risk of ownership of the subject property which in his opinion resulted from the shared ingress and egress to Routes 9 and 149 as well as from parking and traffic flow considerations. While the highest and best use of the subject property after appropriation continued to be as a retail shopping plaza the witness asserted that the subject property lost its identity as an independent corner parcel since it became blended with the property to its south, lost control over its parking and traffic flow and that access to and from the abutting highways became unsuitable.
While Mr. Gardner used comparable sales #1, #2 and #3 to value the property as vacant land after the taking as he had done in the before valuation, he adjusted the sales to account for the alterations to ingress and egress, traffic flow, parking and the loss of the subject property's corner identity allegedly affected by the appropriation. The witness stated his opinion that the value of the land as vacant was reduced from $862,000.00 before the taking (valued at $12.00 per square foot) to $668,000.00 after the taking (valued at $10.50 per square foot).
With respect to the income approach to valuation the witness testified that he re-analyzed rental data and in doing so discovered that tenant sales volumes had declined from their pre-taking levels and that a new lease signed for rental space at the subject property reflected a rent of $15.00 per square foot net which was a reduction from the previously determined before economic rent of $17.50 per square foot. Based upon these factors the witness testified that he eliminated a before adjustment which had been made to reflect the property's superior corner location and changes in other commercial aspects of the property. He testified further that he changed the vacancy and collection loss percentages to account for an increased risk to the owner alleging that the property was now less desirable for retail use than it was prior to the appropriation. He further adjusted the capitalization rate after the taking from 10% to 11% based upon the alleged increased risk in ownership.
Gardner opined that the property's fair market value decreased as a result of the appropriation by the amount of $488,000.00 from a before value of $2,090,000.00 to a value of $1,602,000.00 after appropriation. He attributed $99,000.00 of the $488,000.00 decrease in value to direct damages and $389,000.00 to consequential damages (Trial Transcript, page 98; Court Exhibit 3, page 69).
On cross-examination the witness admitted that he used a figure of 1.65 acres in calculating the before appropriation land value per square foot and used the same figure in calculating the subject property's overall value. He testified that although he looked at all deeds for the comparable sale properties he could not recall whether he had looked at the deed transferring title to the subject to the claimant. Upon being shown the deed at trial, the witness acknowledged that the deed purportedly conveyed 1.821 acres more or less into Lake George Associates and that the difference between that figure and the acreage figure which he used in his calculations would produce a different result in valuing the land as vacant. Gardner admitted the calculations used in valuing the land as vacant contained in Court Exhibit 3 are incorrect if the actual size of the subject property was greater than he assumed.
With respect to the income approach to valuation Gardner alleged that he considered actual income and expense information from Lake George Associates but that he did not incorporate those actual figures into his appraisal. The witness was questioned regarding the applicable zoning in the area of the subject property and acknowledged that the current zoning ordinance adopted in 2001 zoned the area as "HC-INT" (Highway Commercial - Intensive). He further admitted that the most recently adopted zoning ordinance established parking requirements for commercial properties and required that for every 1,000 square feet of retail space the owner provide five parking spaces. Based upon an alleged leasable space of 14,300 square feet the witness calculated that the subject property would require 72 parking spaces in order to conform with current zoning requirements. Under examination by defense counsel the witness corrected his prior testimony to indicate that on the date of taking only 11,916 square feet of the total leasable area of 14,016
square feet was in fact occupied. He testified that the 2,100 square feet which was not rented at the time of taking remained unrented for approximately one year. The witness further explained that in using the income approach to valuation he had not used the actual rental history from Lake George Associates' tenants because several of the leases were long-term leases entered into several years prior to the taking and were therefore not considered representative of market conditions existing at the time of taking.
With regard to the witness's comparable sales table, Mr. Gardner testified that his calculation of the sale price per square foot for sale #3 was based on an acreage figure of 2.57 acres. Upon being shown a certified copy of a deed for sale #3 (Defendant's Exhibit A) the witness acknowledged that the deed description indicated that the size of the property was 3.12 acres. He admitted that the difference between the figure he had used and the figure set forth in the deed for comparable sale #3 was .64 acres. The witness explained that he obtained his description of the acreage of sale #3 from a tax map but then admitted that the tax map for that property shows 2.37 acres, not the 2.57 acre figure used in Mr. Gardner's analysis (Court Exhibit 3 pages 18 and 55).
Mr. Gardner testified that his calculation of value for sale #3 would be lower if calculated using a total acreage of 3.12 acres based upon the increased size of the comparable sale property resulting in a reduction in value from $12.27 per square foot as adjusted to $10.11 per square foot. Despite this change the witness reiterated his earlier opinion that sale #3 was the sale property most comparable to the subject.
The witness further admitted that his comparable sale #12 involved a parcel located in the Village of Lake George and that he adjusted the value of that parcel to reflect the fact that it was not a corner lot. After the witness was directed to page 116 of his report (Court Exhibit 3) he acknowledged that comparable sale #12 indeed had frontage on both Canada Street and Ottawa Street and additional limited frontage on Iroquois Street (Court Exhibit 3, pages 115-116).
The witness stated his opinion that the cost method of valuation was the least appropriate means for determining the value of the subject parcel. The witness also acknowledged that he was not familiar with Highway Law § 10 (24-d).
Although the witness had earlier testified that he used sales #4 and #5 to assist in determining the impact of the corner influence for purposes of valuing the subject property, he was forced to admit that he used the wrong tax map number for sale #5 and upon revisiting the information contained on page 103 of his appraisal report (Court Exhibit 3) he corrected his testimony to indicate that sale #5 was indeed not a corner property.
The witness related that he was familiar with the subject property having visited the property six to eight times. He admitted that he had not seen any document showing the layout of parking spaces prior to the 1998 taking and further admitted that he had not seen a survey showing actual parking spaces remaining subsequent to the taking. He allegedly used the photocopy of the survey which is reprinted at page 8 of his appraisal report to determine the area that was available for parking both before and after taking.
With respect to the effective gross income reported on pages 35 and 62 of his report, the witness testified that he looked at an actual income statement from the claimant for the year 2000 and that the figure contained on page 35 should be corrected to indicate that the potential gross income was approximately $300,000.00
. Gardner testified that he was unaware of any barrier on the subject property before the appropriation which prevented vehicles from entering the subject property and traveling around the building to exit onto Route 149. There was, however, a physical barrier which existed between the subject property and the southern adjoining (White) property.
On re-direct examination the witness testified that the actual income statements from Lake George Associates included in the defendant's appraisal report (Court Exhibit 1) at pages 91 - 97 contained the same information which he summarized in claimant's report. He further testified with respect to the year 2000 that while gross revenues were reported in the amount of $296,224.00 on page 95 of Court Exhibit 1 the total actual rent received was $226,047.00 with the remaining revenue being attributable to tenant reimbursement for maintenance, taxes, insurance and other operating costs.
With regard to comparable sale #5 the witness testified that the comparable sale property had frontage on two streets. With reference to the diagrams contained on pages 145 and 146 of Court Exhibit 3 he testified that the changes to the subject depicted on page 145 were only partially implemented following the appropriation. He stated that the features which were actually implemented included curb cuts which are shared by the adjoining property owners as well as access across both the southerly boundary of the subject property and the easterly boundary of the subject property which requires vehicles to travel onto those adjoining properties for full ingress and egress. The witness indicated that he reviewed the language contained within the subject easements which reserved rights to the adjoining owners to use the property as driveways but that each of those easements was silent regarding use of the area by anyone other than the fee owner. The witness affirmatively answered questions from counsel inquiring whether the reservation of rights was to the fee owner of the property to the south and to the fee owner of the property to the east of the subject property. The witness's re-direct testimony concluded with an explanation of the difference between gross building area which he testified was 14,307 square feet versus gross leasable area which according to the witness was measured at 14, 016 square feet. He explained that the gross leasable area of 14, 016 square feet included the actual leased area as described in the lease documents and excluded a small common area which was used as a shared means of access by the tenants. The witness further clarified that approximately 2,100 square feet of leasable space was not rented at the time of the taking. He further explained that the income and expense statements for 1999, 2000 and 2001 reflect additional income from the subsequent lease of the 2,100 square foot space.
The witness was next questioned regarding the difference in land area of the subject property as brought out during cross-examination. He testified that the difference between the 1.82 acres described in the deed and the 1.65 acres which he used in his analysis is .l7 acre. He stated that although this difference would not be significant when considering all three approaches to value it would result in some difference in the calculations used in the comparable sales approach. In response to counsel's inquiry the witness indicated that converting the .17 acre figure to square feet and multiplying by $12.00 per square foot results in an increase of $88,862.00 in the value of the subject property.
On re-cross examination the witness stated that although he had read the reservations contained within the State's acquisition documents involving the White and Tatko properties neither of those documents were appended to his appraisal report. The witness acknowledged that the drawings contained on pages 145 and 146 of Court Exhibit 3 do not contain the 24 foot wide additional curb cut on Route 9 constructed as part of the road construction project. The witness was excused following the conclusion of re-cross examination.
Claimant's second witness was Thomas Andress, a civil engineer licensed in New York State, Massachusetts and New Jersey. The witness testified that he obtained documents regarding the taking, visited the site, took measurements and observed traffic patterns. He also reviewed an undated site plan and read the Buckhurst Report which was included in the claimant's appraisal report (Court Exhibit 3, pages 120-141)
. Mr. Andress testified that prior to the taking the subject property was a stand alone property with 50 feet of access to and from Route 9, and 50 feet of access to and from Route 149. The witness also noted the existence of a barrier between the subject property and the adjoining parcel to the south which included a grassy area, fencing and landscaping. He testified that vehicles could not travel between the subject and the White property to the south without first exiting onto Route 9 and then proceeding a short distance north on Route 9 to the subject property. Alternatively, one could travel across the rear of the White property then across the Tatko property to the rear of the subject property and around the building to the front. He stated that after the taking the subject property was still a corner lot but was not a stand alone property. The barrier between the subject property and the White property was removed allowing two-way traffic between the subject property and the southern adjoining property. He further testified that after the taking the subject property contained a 24 foot wide curb cut providing a means of ingress from Route 9 as opposed to a 50 foot curb cut which existed prior to the taking. The witness further described a new access point providing ingress from and egress to Route 9 which resulted from the reconstruction. The reconstructed access to and from Route 9 was located partly on the subject property and partly on the White property to the south and provided two lanes in from Route 9 and two lanes out. He explained that while the two outgoing lanes of the new Route 9 exit appear to be located upon the subject property the inbound lanes are actually located on the White property. According to the witness vehicles exiting the subject property by means of this exit and intending to travel north on Route 9 could do so entirely within the boundaries of the subject property while those vehicles intending to travel south on Route 9 would be required to traverse a portion of the White property to reach the left turn lane of the newly constructed exit.
The witness testified that after the taking the subject property no longer had exclusive use of its own parking area since its lot was now available to anyone entering the White property to the south. Moving the primary entrance to the southern boundary line of the subject property and removing the pre-existing physical barrier to create an open paved area between the subject and the parking area of the White property established a cross connection between the subject property and the White property allowing use of the subject property's parking lot by non-patrons. Relying upon his experience in commercial site and parking lot design as well as what he described as existing mapping to determine the maximum available spaces for the subject property the witness determined that the subject property had 70 available parking spaces prior to the taking. He testified that the parking areas considered included the front of the building and the southern end of the building. He did not consider parking areas to the rear of the building since the rear area is used by the subject's retail tenants for loading/unloading and the storage of trash dumpsters as well as snow during the winter months. The witness concluded that after the taking there were four fewer parking spaces than existed prior to the taking. In addition to the four spaces that were directly lost the witness testified that there was an effective loss of a total of 13 parking spaces which had previously been available for customers visiting the subject property and were now unavailable because they were able to be used by persons patronizing the retail establishments on the White property. Andress testified that parking spaces are one of the most important parts of site development and that all of his clients are very concerned about not having sufficient parking. Some clients request parking in excess of that which is required by municipal zoning and demand that parking be in close proximity to the specific project location. In some instances retail tenants have specific parking spaces designated for their exclusive use in their leases. The witness testified that he had not been provided with copies of any agreements between the subject property owner and the adjoining property owners for shared parking and/or maintenance of the parking areas on and adjacent to the subject. On cross-examination the witness identified the maps which he reviewed with respect to parking as those contained on pages 145 and 146 of Court Exhibit 3 which he asserted were originally part of the Buckhurst Report. The witness admitted that the plans do not show acreage, dimensions or square footage of the subject parking area. The witness asserted that he also reviewed the site plan which appears on page 8 of the claimant's appraisal (Court Exhibit 3) but admitted that the site map is undated, does not indicate the scale upon which it was drawn or the dimensions of the macadam (blacktop) area, does not show actual lined parking spaces and does not indicate by whom it was prepared. The witness testified as to what he categorized as primary parking versus secondary parking and explained that the primary parking area for the subject property is that which is located along the front of the building on Route 9. He described the area along the southern boundary of the subject property as secondary parking. The witness indicated that in the before situation all parking was primary since the lot was purportedly used exclusively by the property's tenants and patrons. He alleged further, however, that the interconnection of the subject's lot and the White property implemented as a result of the taking converted primary parking located along the subject's southern boundary into secondary parking. The witness testified that customers generally want to park as close as possible to their destination when traveling to a retail strip mall. He admitted uncertainty concerning the number of parking spaces available in front of the Log Jam Restaurant located on the White property to the south as well as the number of parking spaces available on the White property as a whole. The witness testified that on a March visit to the site he was able to find a parking space convenient to the subject property, but explained that the busy time of year for this retail area is in the summer months.
The witness acknowledged that in preparing his report he did not review any actual parking plan in effect prior to the taking. He further testified that while there is currently a sidewalk along Route 9 there was no sidewalk in that area before the taking or, if a sidewalk was present, it was inadequate. Andress acknowledged that while visiting the subject premises he failed to observe any signs on the subject restricting available parking to patrons only.
With regard to the witness's estimate of 70 parking spaces in the before situation he testified that he had prepared a layout sketch for his own records but that the sketch is not included in his report. He further testified that he prepared a second sketch to show the parking lot layout after the taking and to demonstrate the impact of the taking on parking but that sketch is likewise not included in his report. In determining the actual loss of four spaces he explained that two of those spaces were located in the northwest corner of the parking area and the other two were located near the southern boundary of the property. In response to defense counsel's question as to whether there was parking available on the subject property on each occasion that the witness visited the property he responded that there was available parking, even during what he described as the area's "peak season." He testified further that at no time during any of his visits to the site did he observe any person who parked on the subject property and walked to the White property or parked on the White property and walked to the subject.
The witness testified on redirect examination that he observed cars driving from Route 149 through the subject property to the White property and observed cars driving through the subject property from the south to access Route 149. At the conclusion of this witness's redirect examination the claimant rested its case.
Defense counsel then moved to dismiss the claim for failure to establish a prima facie case with respect to damages based upon the testimony of claimant's appraiser acknowledging that he made errors with respect to the size of the subject property and additional errors relative to several of the comparable sale properties used in his report. The Court denied the motion to dismiss.
The State called as its first witness Cheryl Duprey, who identified herself as a Real Estate Specialist II with the Department of Transportation. The witness expressed a general familiarity with the subject property and indicated that she had visited it several times between January and June of 1998 while working for the Department of Transportation as an Assistant Right-of-Way Agent. While there she took photographs, counted the number of parking spaces available on the subject property and took measurements. She testified that in early 1998 she counted 60 striped parking spaces and that three spaces located in the front of the building were identified for handicap use. She further testified that she took measurements in an area described as the northwest corner of the property which the Court understands to refer to the paved roadway area which proceeds in a generally east-west direction around the northwest corner of the building improvement. Those measurements were said to be 23 feet 6 inches at its widest and 19 feet 7 inches at it's narrowest point. She also identified photographs which were admitted into evidence including a photo taken on February 17, 1998 showing the northwest (sic)
entry to the subject property. This photograph was marked and received as Exhibit B. The witness identified Exhibit C as containing two photos taken on May 11, 1998 depicting the southwest corner of the property prior to the taking. She next described the sidewalk, including handicap ramps, located at the driveway entrances to the property. With regard to Exhibit D, a photograph depicting the northwest corner of the property allegedly taken on September 8, 2003, Ms. Duprey testified that on that occasion she and another employee of the Department of Transportation traveling in separate vehicles passed one another at the northwest corner of the property several times to ensure that two vehicles could pass while proceeding in opposite directions at that location.
She further reported that on September 8, 2003 she counted the number of striped parking spaces on the subject property and determined that there were 60 such spaces. In addition she observed that there was a tent in place near the northwest corner of the property which covered a portion of the parking area. She further observed that there was a driveway in front of the building leading directly into the property from Route 9 but stated that she did not measure the width of the opening. She described the driveway as generally perpendicular to Route 9 and stated that she utilized the driveway both to enter and exit the property. The Court received in evidence defendant's Exhibit E, an affidavit of service of the notice of appropriation filed in the Warren County Clerk's Office on June 1, 1999.
On cross-examination the witness testified that Exhibit C depicted a grassy area at or near the southern boundary of the subject property with no means of access between the subject and the adjoining White property. She also testified regarding Exhibit 6 which is a letter written by the witness on June 15, 1998 and including as an attachment the State's revised proposed construction plan for the project including the 24 foot curb cut from Route 9 onto the subject. When questioned regarding the parking spaces, the witness testified that she counted only striped parking spaces and was unsure if all parts of the subject's paved area was striped. She did, however, recall observing that there was an area in the southwest corner of the property in which parking was not allowed. Ms. Duprey did not know whether the curbing in the northwest corner of the subject property was constructed in the manner appearing on the project drawing.
The witness's redirect examination was unremarkable.
The State's second and final witness was Leonard Berdan who identified himself as a self-employed licensed general real estate appraiser and member of the Appraisal Institute. He testified that the subject parcel included 1.82 acres of land which was sold to the claimant on March 16, 1990 for the sum of $1,250,000.00. Mr. Berdan related that the property is situated in an area known as the Million Dollar Half-Mile which he described as a regional shopping destination located near Exit 20 of Interstate 87. It also adjoins Route 149, which he described as a primary route of travel between New York and central Vermont. According to Mr. Berdan the real estate market in the Route 9 corridor was generally stable through the late 1990s, including 1998. He described the improvement on the subject property as consisting of a one-story 14,600 square foot retail building built in 1987 and in average to good condition. Further site improvements such as paved parking, outside lighting, landscaping and signs were also described. The subject property was said to be located in an area zoned as Highway Commercial-1 acre (HC-1A) in 1998 and its assessed value at that time was $1,057,700.00. Like the claimant's appraiser, the defendant's appraiser indicated that the highest and best use of the subject property before taking was for commercial development/retail use.
The witness testified that he did not employ the cost method in valuing the subject alleging that it was highly speculative with respect to this particular property. Instead he used the sales comparison and income approaches to valuation. With regard to the income approach the witness testified that leases in effect for the subject property were at or near market rent for the area and, therefore, were calculated on a net basis. Based upon his analysis the witness concluded that an appropriate market rent for the subject property was $18.00 per square foot which included $3.00 to $4.00 per square foot in tenant reimbursement.
With regard to the sales comparison approach in the before situation the witness testified that he found five comparable sales of vacant land within the Town of Queensbury and analyzed those sales on a dollar per square foot basis. Those figures were then adjusted as indicated on pages 11 through13 of the defendant's appraisal report. Based upon this analysis the witness concluded that the land value of the subject property before the taking using the sales comparison approach was $675,000.00 (79,280 sq. ft. x $8.50 sq. ft. = $673,880.00 rounded). The witness next discussed the portion of his appraisal report which included a sales comparison grid and supporting information for improved properties in the before situation and determined that the three comparable sale properties selected had values ranging from $115.27 per square foot to $132.50 per square foot from which the witness concluded that a value of $125.00 per square foot was reasonable. Applying that figure to the property's 14,600 square feet of retail space the witness determined that the before taking value of the improved property based upon a sales comparison approach was $1,825,000.00 (14,600 sq. ft. x $125.00 = $1,825,000.00) as set forth on page 21 of Court Exhibit 1. The witness testified that in arriving at the aforementioned value he took into account the value of site improvements which he used to make adjustments to the various comparable sales. He estimated that site improvements before appropriation had an enhancement value or depreciated value of roughly $76,525.00 (Court Exhibit 1, page 19).
With respect to the income approach to valuation of the subject property before appropriation the witness testified that he utilized the three comparable rentals set forth on page 27 of defendant's appraisal report as well as the actual leases in effect in July, 1998. Based upon his review the estimated market rent for the subject property was $18.00 per square foot inclusive of tenant reimbursements of $3.00 - $4.00 per square foot. The witness then explained the reconstructed operating statement on page 28 of the appraisal report in which he estimated a potential gross income from the subject property of $259,000.00. He deducted from that amount a vacancy and credit loss of 5% and operating expenses of roughly $76,500.00 for taxes, leasing commissions, professional fees, snow plowing, etc. Based upon his analysis the witness estimated a net operating income of $169,620.00 to which he applied a capitalization rate of 10% to arrive at an indicated value for the subject property using the income approach of approximately $1,700,000.00. The witness was asked whether he was able to reconcile the figures he had arrived at through the various methods of valuation and he indicated that by weighing both the income and sales comparison approaches he arrived at a final estimated value before the appropriation of $1,750,000.00.
The witness described the subject appropriation as having taken roughly 0.14 acres in fee which included a strip along Routes 9 and 149 as well as two easements; one at the northeast corner of the property and the other on the southwest corner. The taking also encompassed some small site improvements on the subject property. He further related that subsequent to the appropriation the subject site was reduced in size to 1.68 acres and that traffic circulation around the northwest corner of the site's improvement was narrowed by approximately two feet leaving still adequate room for cars to pass. The witness further related that as part of the highway reconstruction project a 24 foot wide curb cut was created on Route 9 in front of the building's entrance.
The witness described the parking situation following the taking as adequate for 60 cars with more parking available behind the building. According to defendant's expert the appropriation resulted in slightly less area at the subject site than in the before situation and vehicular access which was slightly more confined but still adequate for the building. Mr. Berdan alleged that the State's permanent driveway easement on the adjoining property of David White provides the subject property with full access to the newly created curb cuts which were created at the southwest boundary of the subject property. He further testified that there is an additional curb cut on Route 149 which was combined with 22.6 feet of highway access created by the permanent driveway easement over the adjoining lands of Michael Tatko to the east. The witness averred that both driveway easements provide adequate ingress and egress to and from each highway.
Berdan further testified that the project added turning lanes at the intersection of Routes 9 and 149 easing traffic congestion and decreasing a vehicle stacking problem previously existing along the subject property's entire frontage. He alleges that these improvements were a benefit to the subject in that they improved and made ingress and egress to the subject property easier. He opined that the highest and best use of the subject property in the after situation was the same as in the before situation, i.e., continued commercial/retail usage.
In valuing the property subsequent to the appropriation using the sales comparison approach the witness used the same five comparable sales used to establish the before value as improved. After adjustments for various differences in value the witness arrived at a land value after taking of $622,000.00 (73,180 sq. ft. x $8.50 per sq. ft. = $622,030.00 rounded). Using the replacement cost approach the witness estimated the value of site improvements to be approximately $72,000.00
.	The witness used the sales comparison approach to value the property as improved after the appropriation and determined that after making adjustments the value of the improved property was $1,765,000.00
(14,600 sq. ft. x $121.00 = $1,766,600.00 rounded).
The witness testified that he also utilized the income approach to determine a value for the subject subsequent to the taking. His analysis considered the income generating potential of the property and the probable expenses required to generate that income. He stated that he used a slightly higher capitalization rate of 10.25% and arrived at an after-valuation of $1,650,000.00
($169,620.00 ÷ 0.1025 = $1,654,829.00 rounded). Mr. Berdan explained his use of a different capitalization rate in the post-taking analysis by stating that an astute investor would probably weigh the fact that at the end of a holding period, in this case a ten year holding period, the property's reversion value would be slightly less because there is slightly less land than in the before situation.
Reconciling the income and sales comparison approaches the witness testified that using the sales comparison approach figure of $1,765,000.00 and the income approach figure of $1,650,000.00 he arrived at a final value of $1,690,000.00 in the after situation (Court Exhibit 1 page 40). Comparing before and after values of the property the witness testified that he determined total damages arising from the appropriation to be $60,000.00 to which he added an additional $6,000.00 for the relocation of two business signs on the property (Court Exhibit 1, page 41). Of the $60,000.00 damage figure the witness stated that $55,000.00 was attributable to direct damages to the land and $5,000.00 damage to the property's improvements.
On cross-examination the witness recalled that he was retained by the defendant in the Spring of 2002. When questioned as to whether or not he had discussed his appraisal with the DOT representative (Ms. Duprey) who testified earlier at the trial he indicated that he had but that he was not made privy to the appraisal which she allegedly prepared for the department. In response to questions by claimant's counsel the witness testified that he did not make any assumptions from his review of the appropriation map of the David White property. Instead he claimed that the wording of the David White easement was very clear, and that it is an easement to the People of the State of New York.
Mr. Berdan next identified claimant's Exhibit 7 as containing an appropriation map (#211) relating to parcels #266 and #267 as well as a description of the permanent easement taken by the State in the 0.65 acre parcel identified as parcel #267. Both parcels are designated on Exhibit 7 as reputedly owned by David R. White. The easement contained a reservation clause reserving to the fee owner of the property, his successors or assigns the right of using the said property for the purpose of access to a public road and to construct, reconstruct and maintain a driveway and appurtenances thereon. The easement did not contain any specific language reserving rights over parcel #267 to Lake George Associates.
The witness was then shown Exhibit 8 which purported to be an appropriation map to which was appended a description of a permanent easement which the witness identified as relating to the appropriation of a permanent easement over the lands of Michael J. Tatko for the purpose of constructing a driveway and appurtenances. Within the exhibit the witness identified language similar to that discussed above regarding the White property which reserved to the fee owner, his successors or assigns the right of using said property for the purpose of access to a public road and to construct, reconstruct and maintain a driveway and appurtenances thereon. The witness denied having made any assumption based upon that language that similar rights over the easements taken on either the Tatko or the White properties were reserved to Lake George Associates. The witness was then questioned regarding language contained on page 32 of the defendant's appraisal report (Court Exhibit 1) indicating that the permanent driveway easement on the adjoining White property provided the subject property full access to a new curb cut. He acknowledged that the only reservation of rights explicitly stated in the two easements under discussion were to the two fee owners White and Tatko.
The cross-examination then proceeded to consideration of the physical characteristics of the subject property's southern boundary and the White property's northern boundary prior to the taking including the physical separation of the two parcels by a two rail wood fence. This observation was corroborated through the use of aerial photographs which appeared in the defendant's report at pages 65 and 66. The witness testified that in the before situation there was no driveway between the subject property and the White property and that prior to the appropriation there were two routes which could be used to travel from the White property to the subject property. The first was to exit the White property onto Route 9 north and enter the subject property through an existing driveway; the other was "to go around the back way" across the Tatko property and onto the subject property. The witness admitted that neither approach was as direct as the access between the White property and the subject following the appropriation. The witness further discussed the curb cuts which existed prior to and subsequent to the taking. Mr. Berdan disagreed with the conclusion of claimant's appraiser that shared access to the subject property is less desirable than direct access and he opined that no difference in marketability would flow from the resulting change in access between the White property and the subject.
With regard to the defendant's comparable sale #7 the witness testified that the property's driveway opening was only suitable for ingress and was signed accordingly. The witness was then shown Exhibits 9 and 10 which he identified as photographs of defendant's comparable sale #7 and an adjoining property immediately to the west. The witness agreed that the property to the west was a Friendly's Restaurant which was included within comparable sale #7. Specifically, he testified that the sale consisted of three buildings housing a retail factory outlet center on 2.46 acres as well as a pad site rented and occupied by Friendly's. The ensuing colloquy focused on whether the witness had mistakenly characterized sale #7 as having a driveway providing ingress only.
The witness's attention was next directed to comparable sale # 5 which he described as land purchased for the purpose of constructing a strip shopping center. It was agreed that improved comparable sale #5 was the same property as claimant's improved comparable sale #3. The witness avoided counsel's attempt to characterize the witness's remaining comparable sales as being unrelated to the same highest and best use as that which he ascribed to the subject property. He explained that while sale #5 was the only comparable property purchased to construct a strip shopping center his remaining comparables were all properties improved with commercial buildings. The witness acknowledged that after adjustments sale #5 had an indicated value of $9.99 per square foot.
The witness explained that he used comparable improved properties located in Manchester, Vermont in his appraisal since there were no other factory outlet centers in Warren County. He stated that portions of Manchester, Vermont are somewhat superior to the location of the subject property while other parts of the Village of Manchester were inferior. He characterized defendant's comparable improved sale #7 located on Depot Street in Manchester as being on a side street which has more vacancies and lower rent than properties located in the main section of the Village which he described as a superior location with greater traffic and higher end factory outlet stores. With regard to the defendant's comparable sales #7 and #9 which are both located in Manchester, Vermont, the witness acknowledged that sale #7 had shared egress with an adjoining property and sold for $95.52 per square foot. He further acknowledged that sale #9 which had its own curb cut and parking sold for $226.72 per square foot. With regard to the defendant's comparable sale # 8, the witness testified that the property was located on two street corners in the City of Saratoga Springs with frontage on Route 9, Todd Street and Race Street. Neither of the latter two streets, however, was a through street.
Mr. Berdan was further questioned regarding the income approach to valuation and his analysis of comparable rentals to arrive at a market rent of $16.00 per square foot for the subject property. The witness stated that as part of his analysis he considered comparable rentals at 395 Broadway in Saratoga Springs, Village Plaza in Clifton Park and Mt. Royal Plaza located on Route 9 in Queensbury and alleged that those rental amounts supported his estimated market rent for the subject property. He acknowledged that although he compared the aforementioned properties' rents to the subject he did not adjust those properties in the appraisal report.
In response to counsel's question the witness acknowledged that one of the calculations or analyses he performed was an averaging of total revenue collected from the subject property between 1996 and 2001. Claimant's counsel moved to strike the averaging analysis on the basis of Latham Holding Co. v State of New York, 16 NY2d 41. The Court reserved decision on the motion and directed the parties to submit post-trial briefs on the issue.
The witness acknowledged that his analysis and comparisons were made on the basis that the subject property had shared access with the White property to the south and the Tatko property to the east as well as its own exclusive highway access which he characterized as a 24 foot wide curb cut constructed as part of the road reconstruction project and providing both ingress and egress between the subject and Route 9. He testified that the two ingress lanes of the driveway created on the subject's border with the White property were approximately 15 meters or 50 feet wide.
On re-direct examination the witness testified that the highway access available to the subject in the before situation could be construed as suitable or adequate for the size of the building and the size of the site. He further testified that the access existing after the taking was also suitable for the highest and best use of the subject at that time.
On re-cross examination the witness reiterated his testimony on re-direct examination asserting that access to and from the subject property in the after situation was adequate.
The trial concluded with a motion by claimant's counsel to strike from Court Exhibit 1 the report of Smith and Mahoney prepared by Mr. William J. Bamford, Jr., who was not present as a witness, on the basis that the document lacked foundation. The motion was not opposed by defense counsel and the Court struck that portion of the defendant's appraisal report (pages 104-108) from the record.
The standard for determining just compensation for property taken by way of condemnation is "market value at the time of appropriation, that is the price a willing buyer would have paid a willing seller for the property" (Matter of Town of Islip [Mascioli], 49 NY2d 354, 360). The measure of damages in a partial taking such as this is "the difference between the fair market value of the whole before the taking and the fair market value of the remainder after the taking" (Acme Theatres v State of New York, 26 NY2d 385, 388).
In the recent case of Chemical Corp. v Town of E. Hampton, 298 AD2d 419 at 420-421 the Appellate Division, Second Department offered the following explanation of damages in an appropriation case involving a partial taking:
It is well settled that the measure of damages for a partial taking of real property is the difference between the value of the whole property before the taking and the value of the remainder after the taking (see, Diocese of Buffalo v State of New York, 24 NY2d 320, 323; Matter of County of Nassau v 408 Realty Corp., 283 AD2d 644; Matter of Nassau County, 278 AD2d 236). Consequential damages are measured by the difference between the before and after values, less the value of the land and improvements appropriated (see, Matter of Estate of Haynes v County of Monroe, 278 AD2d 823, 825; Mil-Pine Plaza v State of New York, 72 AD2d 460, 462). The measure of damages must reflect the fair market value of the property in its highest and best use on the date of the taking, regardless of whether the property is being put to such use at the time (see, Matter of City of New York, 59 NY2d 57, 61; 627 Smith Street Corp. v Bureau of Waste Disposal of Dept. of Sanitation of City of N.Y., 289 AD2d 472, 473).
Claimant's expert opined that the subject's highest and best use before the taking both as vacant and improved was "commercial - retail plaza." He asserted that its highest and best use after the appropriation was as "commercial-retail plaza with restricted access & limited parking." Defendant's expert similarly opined that the subject's highest and best use as vacant land before taking was "for development with highway commercial uses including the current retail commercial use" and as improved before taking for the "current retail commercial use." Following the appropriation the defendant's expert opined that the subject's highest and best use both as vacant and as improved remained the same as it was before taking.
Applying the four well-established criteria for highest and best use, i.e., legal permissibility, physical possibility, financial feasibility and maximum profitability; and cognizant of the subject's location, physical characteristics and zoning
the Court concludes that the highest and best use of the subject in the before situation was for commercial development in conformity with local zoning.
Valuation Before Taking
As noted above it is established that the standard for determining proper compensation in condemnation cases is "market value at the time of appropriation, that is, the price a willing buyer would have paid a willing seller for the property" (Matter of Town of Islip [Mascioli], 49 NY2d 354, supra at 360). "The valuation is to be based upon the highest and best use of the property, regardless of whether the condemnee is so using the property at the time (Matter of County of Suffolk [Firester], 37 NY2d 649, 652)" (Matter of Breitenstein v State of New York, 245 AD2d 837, 839). The Appellate Division, Third Department cautioned in Breitenstein, (id. 839) that:
[W]here the property is not being put to its highest and best use at the time of taking, the proper rule to be employed in ascertaining value is to treat the property neither as raw acreage nor as having attained its highest and best use, but rather to add to the value of the acreage an increment for its potential use (id.).
The increment would presumably reflect, or at least be reviewable as to, the application of "proper discounts *** for the cost that would be incurred if the land were developed for a particular use as its highest and best use" (Matter of County of Clinton [Gagnon], 204 AD2d 898, 899; see, Matter of Iroquois Gas Transmission Sys. [Kudlack], 226 AD2d 808, 809).
Of course, where values are ascertained with reference to truly comparable sites, i.e., those with similar highest and best uses but not yet so developed, there is no need for the use of an increment (see, e.g., Marks v State of New York, 152 AD2d 930; United Artists Theatre Circuit v State of New York, 53 AD2d 784).
In this case each party's appraiser used both a comparable sales approach and an income approach to valuation. In addition, claimant's appraiser also used the cost approach while the defendant's appraiser eschewed the cost method of valuation alleging that it was of limited reliability in relation to the subject due to the presence of physical deterioration and the difficulty of estimating reproduction costs which he asserted would be hypothetical and speculative.
Using the cost approach (Court Exhibit 3, page 23) claimant's expert estimated that the base cost of replacing the subject's improvement was $1,334,843.00 subject to depreciation over a projected 40 year life of $200,226.00 for a depreciated replacement cost of $1,134,617.00. To this figure claimant added site improvement replacement costs of $90,000.00 less depreciation over a projected 20 year life of $27,000.00. To the resulting figures claimant's appraiser added a calculated land value of $862,000.00 for an indicated value of $2,059,617.00 rounded to $2,060,000.00.
Applying the comparable sales approach to valuation the parties offered widely divergent appraisals of the improved subject's before taking value. Claimant alleged the improved value to be $2,100,000.00 (14,307 sq. ft. x $147.00/sq. ft. = $2,103,129.00 rounded) of which $862,000.00 was allocated to land value and $1,238,00.00 was attributed to the building and site improvements (see, Court Exhibit 3, page 30).
On the other hand, the defendant's appraiser using the comparable sales approach found the value of the subject property as if vacant before taking to be $675,000.00 (79,280 sq. ft. x $8.50
= $673,880.00 rounded) and the subject's improved value before taking to be $1,825,000.00 [14,600 sq. ft. x $125.00
/sq. ft.]) (Court Exhibit 1, page 21).
Two of the three comparable improved sales used by the defendant's appraiser in his analysis of the value of the property both before and after the taking were properties located in Manchester, Vermont in what he characterized as a similar although superior outlet mall shopping destination. The defendant's remaining improved comparable sale was located in the City of Saratoga Springs, New York.
Claimant's appraiser relied in part upon two improved sales of retail plazas located in the Village of Lake George, New York within three miles of the subject property (see, claimant's sales #11 and #12 in Court Exhibit 3, pages 113, 115) which occurred in January 1998 and May 1996 respectively. He also relied upon the same improved Saratoga Springs property which the defendant relied upon.
Of the varying comparable sales of vacant land presented by the parties the Court finds the one sale common to both parties (i.e., claimant's sale #3 and defendant's sale #5) to be the most analogous to the subject and that property will be used as the foundation of the Court's analysis of the value of the subject property as vacant land in the before and after situation (see, Matter of CNG Transmission Corp. [Green], 273 AD2d 726). There is, however, a problem with the claimant's acreage figure for comparable sale #3. In its report at page 18 and page 20 claimant's appraiser indicated the size of sale #3 as 2.57 acres or 111,949 square feet. On cross-examination claimant's appraiser identified defendant's Exhibit A as the deed to this comparable sale which recites that the conveyance includes "all those premises described in Schedule 'A' annexed thereto and made a part thereof ". Schedule 'A' is a metes and bounds description of the property which states that the sale property contains "3.12 acres of land . . . more or less" which is the figure used by the defendant in its report (Court Exhibit 1, pages 12 and 18). Since it is known and accepted that larger properties bring less per acre or per square foot a larger adjustment for size than claimant allowed at page18 of its report would initially appear to be appropriate. However, since claimant's appraiser also mistakenly assumed the subject parcel to be 1.65 acres before the taking rather than 1.82 acres the difference between the correct subject acreage and the correct comparable sale acreage is insignificant and no additional adjustment need be made for size. Defendant, using the correct acreage for both the subject and itscomparable sale #5, made a +.50 adjustment which is equivalent to a percentage adjustment of 6.67%
As the following grid #1 indicates the Court has determined that this common comparable sale should be adjusted for size by +15%. Moreover, as claimant's appraiser recognized at trial the analyzed price per square foot of claimant's comparable sale #3 must be corrected from $9.09 to $7.49 per sq. ft. (see, Trial Transcript pages 119-123). This corrected figure will be used in both grid #1 and grid #2 below.
Based upon the evidence the Court determines that the indicated value of the subject property per square foot as vacant land before taking is $10.11 per sq. ft.
Each party also determined a before taking value of the subject property as improved using the sales comparison approach. Claimant's appraiser selected comparable sales #9, #11, #12 and #14 as being most similar for purposes of comparison to the subject. These sales were then adjusted in comparison to the subject for location, site, building size, and condition/quality. No adjustments were made for utility/access. The adjusted values of claimant's improved sales before taking ranged from a low of $141.99/sq. ft. to a high of $152.38/sq. ft. As previously noted, from his analysis of the collected data claimant's appraiser opined the subject property had an indicated value before taking of $2,103,129.00 rounded to $2,100,000.00 of which $862,000.00 was allocated to the land and $1,238,000.00 to the building and site improvements.
The defendant's appraiser reached his estimate of before taking value based upon an analysis of improved comparable sales #7, #8 and #9, the prices of which after adjustment for location, land/building ratio, land improvements, building size, condition and quality ranged from $115.27/sq. ft. to $132.50/sq. ft. Utilizing what he described as a reasonable value in the middle of the adjusted range the appraiser determined a before taking value of $125.00 per square foot as improved and concluded that the subject property's before value as improved was $1,825,000.00 (14,600 sq. ft. x $125.00). He did not specifically allocate this figure between land value and the value of the subject's improvements.
In valuing the subject as vacant land after the appropriation the claimant used the same comparable sales except for the elimination of sale #4 and the substitution of sale #5. Claimant's appraiser explains in the report at page 54 that sale #5 was used to demonstrate the value differential between properties with and without a separate corner influence.
Defendant's appraiser likewise used the same comparable sales in valuing the land as vacant after the taking as he used in determining a before taking value. As noted above the Court finds claimant's sale #3 and defendant's sale #5, shared in common by both, an appropriate foundation for the Court's determination of land value before and after taking. Claimant's figures in grid #2 below have been altered to reflect the corrected sale price for claimant's sale #3 based upon a corrected figure for size (i.e., 3.12 acres or 135,900 sq. ft.). The Court also made adjustments for claimant's errors in determining the subject's total area before taking (1.82 acres or 79,279 sq. ft.) and the area remaining after the appropriation of 6,081 sq. ft. in fee and the taking of permanent easements of 683 sq. ft. and 1,461 sq. ft.
Determining Value of Subject Property Before Taking Using Comparable Sales Approach
The Court has calculated the value of the subject property as vacant land prior to the appropriation based upon the information set forth in each party's grid for the shared comparable vacant parcel and then adjusted the analyzed price per square foot as shown in the grid below. It must be noted that in doing so the Court recognized that the fee taking and the two permanent easements resulted in the loss of 6,081 sq. ft. in fee and the effective loss of 683 sq. ft. and 1,461 sq. ft. as a result of the permanent easements thus reducing the subject property's overall square footage from 79,279 to 71,054 sq. ft.
For reasons explained elsewhere in this decision the Court rejects the claimant's utility/access adjustment for its comparable sale #3 as unsupported by the proof. The Court finds that the +5% adjustment made for utility/access of comparable sale #3 applies in both the before and after situations and has provided such an adjustment in Grid #1 and Grid #2 below.
VALUE OF VACANT LAND (BEFORE)
Claimant's Comparable Sale # 3
Defendant's Comparable Sale #5
Court Adjustment
Rts. 9 & 149 Queensbury
Quaker & Bay Roads, Queensbury
3.12 acres*
NC-1A
Analyzed Price per sq. ft.
($9.09)*
(+.50)
Utility/Access
(+) 6.67%
Indicated Value per sq. ft.
($12.27)*
* Figures corrected by claimant's appraiser's testimony at trial to conform to the area designated in the deed description (Defendant's Exhibit A) for this comparable sale property (Trial Transcript, pages 119-123). Figures in parentheses are the respective party's original grid figures.
Court's Determination of Before Value (Vacant)
Based upon the Court's adjustments to the common comparable sale the indicated value per square foot of the subject property as vacant land before the taking is $801,510.69 (79,279 sq. ft. x $10.11/sf).
VALUE OF VACANT LAND (AFTER)
Claimant's Comparable Sale #3
71,054 sq. ft.
(111,949 sq. ft)
71,054 sq. ft. **
(-.05)
-.667%
(+)15%
* Figures corrected by claimant's appraiser's testimony at trial to conform to the area designated in the deed description (Defendant's Exhibit A) for this comparable sale property (Trial Transcript, pages119-123). Figures in parentheses are the respective party's original grid figures.
**This figure arrived at by subtracting area of fee taking and easements from pre-taking square footage (79,279 - 6,081 - 683 - 1461 = 71,054).
Court's Determination of After Value (Vacant)
Based upon the Court's adjustments to the common comparable sale the indicated value per square foot of the subject property as vacant land after the taking is $702,724.06 (71,054 sq. ft. x $9.89).
Valuing The Improved Property
The parties also shared one comparable sale of improved property; namely claimant's sale #14 and defendant's sale #8. That property is located on Broadway in Saratoga Springs and consists of a site which is slightly more than one-third the size of the subject parcel before the taking and contains an improvement the square footage of which is approximately one-half the size of the subject's improvement. This shared comparable sale property is described by the defendant as being in average condition and of below average quality while claimant describes it as being in good condition and of good quality.
Both appraisers adjusted the $132.50 per square foot sale price of the shared comparable sale in the before situation as improved. Claimant's appraiser made a +15% adjustment for location, a +10% "site" adjustment and a -10% adjustment for size in reaching an indicated value for the improved property before the taking of $152.38 per square foot. The defendant's appraiser adjusted the comparable sale for building size (-7.54%), condition (+3.77%) and quality (+3.77%) in determining a net adjustment of 0% for an indicated value per square foot of $132.50 before the taking.
In valuing the improved property after the appropriation the defendant adjusted its comparable sale #8 by -2.64% for a category labeled "land/ratio", -7.54% for building size and +3.77% for both condition and quality. Defendant's appraiser applied a -2.64% net adjustment and concluded that an indicated value of $129.00 per square foot was appropriate.
Claimant applied the same +15% adjustment for location to the improved property after appropriation as was used in adjusting the improved property before the taking. Likewise, a -10% size adjustment was used in adjusting the value of comparable sale #14 vis-à-vis the subject after the taking as it was in the before situation. In fact, the only difference in the adjustments made to the improved property after the taking relative to adjustments made to the same property as improved prior to the taking was the elimination of a +10% site adjustment and the inclusion in the after appropriation analysis of a -20% adjustment for "utility." This circumstance was confirmed and explained by claimant's appraiser who testified (at pages 86 - 88) as follows:
If you refer back to the sales comparison table on page 27 in the before - before the appropriation and compare the table after the appropriation on Page 59, you'll see that the only adjustment - there's two adjustments that vary. One is for site and one is for utility and again these adjustments were reconsidered to reflect the effects of the appropriation on the marketability and value of the subject property.
For the site adjustment, it is clear that the value of the subject site is - has been reduced as a result of the appropriation, as a result of the same reasons we discussed, traffic flow, ingress and egress issues, parking encroachments, the loss of the property's corner identity and now being blended into the adjoining properties as if it were part of a plaza.
The utility adjustment as set forth on Page 59 and described on Page 58 reflects the impact on the marketability of the building, how tenants would view a situation that exists at the subject property after the appropriation compared to before the appropriation. You know, the tenant, anybody renting property at the subject property ... now to get customers to their door has to deal with the issues of parking congestion, shared access, encroachments for cars that may be using the property next door, the utility of that space and the desirability of that space for retail use is clearly not as desirable when you compare it to a free-standing, completely separate property that had all the attributes that it needed to successfully operate as a retail plaza.
Before the appropriation, it had it's own independent, clearly suitable access from Route 9 and Route 149. It had a division between it's boundaries and the adjoining property. It didn't allow parking encroachments and there were no clouds on the marketability of the title as a result of the shared ingress and egress.
All of those factors result in the utilization of that property at a reduced level after the appropriation.
In the instant matter the claimant seeks to recover both direct and consequential damages. The defendant contends that there can be no recovery for consequential damages arising from the reconfiguration of the subject property's direct means of ingress and egress onto Routes 9 and 149, traffic flow, parking encroachments or loss of the parcel's corner identity. Claimant on the other hand argues that the appropriation not only reduced the subject's pre- taking means of access but also diminished the utility and marketability of the remainder by transforming it from a distinct corner parcel with exclusive parking and traffic flow to a parcel sharing access with the adjoining properties resulting in reduced parking, traffic congestion and parking encroachments. Claimant argues that consequential damages are, therefore, recoverable.
In Rider v State of New York, 192 AD2d 983 the Appellate Division, Third Department made it clear that while consequential damages are not recoverable where the taking results in merely making access to the condemnee's property more inconvenient or circuitous (citing Bopp v State of New York, 19 NY2d 368; Selig v State of New York, 10 NY2d 34; Red Apple Rest. v State of New York, 27 AD2d 417) it may be compensable where access after the appropriation is found to be unsuitable (see, Rider, supra at 985). Unsuitability was defined by that Court as " 'inadequate to the access needs inherent in the highest and best use of the property involved' (Priestly v State of New York, 23 NY2d 152, 156)" (Rider, at 985). The issue of suitability is a factual question directly related to the property's highest and best use. The Court of Appeals in Priestly supra, at 155 defined suitable access as " 'any access by which entrance may be had to a property without difficulty' ".
The Third Department has further held that "[t]he owner of a commercial property abutting a highway does not have the right of direct access from every point along the highway. Right of access means reasonable ingress to and egress from abutting land to a system of public highways .... Where ample access is provided, such access cannot be deemed unsuitable merely because it is more difficult or inconvenient to enter or leave the premises" [citations omitted] (Tucci v State of New York, 28 AD2d 774, 774-775; see also, Sun Oil Co. of Penn. v State of New York, 50 AD2d 983; Pennigroth v State of New York, 35 AD2d 1024).
The claimant herein argues that consequential damages are appropriate in that prior to the taking the subject property had direct access to Routes 9 and 149 via two 50 foot wide driveways both of which were located entirely within the property's boundaries. After the taking, access to the subject is through a 24 foot curb cut on Route 9 and points of ingress and egress which are shared with the White property to the south and the Tatko property to the east. Claimant contends that the 24 foot curb cut was designed as a means of ingress only and that the shared access with the adjoining properties to the south and east lie partly outside the boundaries of the subject property and require persons seeking to enter or exit the subject to travel over the adjoining property thereby rendering access restricted and unsuitable. In this regard the Court is unpersuaded.
The claimant argues that the permanent driveway easements taken over the White and Tatko properties do not specifically reserve any rights to Lake George Associates and that the claimant's use of the adjoining properties as a means of ingress and egress is merely permissive and without legal right.
In a matter substantially analogous to the instant claim, the Appellate Division, Third Department in Van Valkenburgh v State of New York, 131 AD2d 903, considered and rejected the theory relied upon by the claimants herein. In Van Valkenburgh the State appropriated portions of the claimants' property and thereby eliminated claimants' access to Front Street in the Town of Chenango, Broome County. The State restored claimants' access to and from Front Street by building an access route across adjoining lands it had previously appropriated. Claimants sued arguing that the access route provided by the State was unsuitable because no title to the lands underlying the new access route had been conveyed to the claimants resulting in uncertainty regarding their right to use the access route and rendering their property unmarketable. The claimant herein makes a similar claim regarding marketability of the subject property.
The Court in Van Valkenburgh noted the potential that the adjoining lands over which the access route had been constructed might someday return to private ownership but nevertheless found that the State had provided the claimants therein legal access to Front Street. Quoting Raj v State of New York, (124 AD2d 426, 427) the Court affirmed that "[a]ccess . . . and not convenience is the dispositive damage yardstick" and determined that no actual conveyance to the claimants was required by Highway Law § 10 (24-d) which permits the Commissioner of Transportation to acquire additional property for the purpose of reestablishing a property owner's access to a public road. Because substitute access was provided by the State over the adjoining parcel the claimants were not entitled to consequential damages.
This Court can discern no basis upon which to distinguish the instant case in which the access provided claimant is over lands upon which the State has taken a permanent easement from the circumstances at issue in Van Valkenburgh (supra). As a result, the Court concludes that the claimant continues to have suitable access to its property on both Route 9 and Roue 149 which is consistent with the subject property's highest and best use.
Moreover, the evidence presented clearly shows that subsequent to the appropriation claimant had available a direct means of access from and to Route 9, albeit half the size of the curb cut that previously existed. Claimant's appraiser testified that the reconstructed 24 foot wide curb cut was designed for ingress only while the defendant's appraiser testified that the curb cut permits both ingress from and egress onto Route 9. The photographic evidence offered by both sides reveals neither signage nor pavement markings limiting traffic flow through this curb cut to only vehicles seeking to enter the subject property. Nor were any such signs or markings observed by the Court during its viewing of the property. Claimant has offered no proof such as industry standards or other relevant evidence to support is contention that the 24 foot curb cut was designed only for purposes of ingress other than its appraiser's conclusory statements. Without such proof and in the absence of signage prohibiting use of the 24 foot curb cut by those seeking to exit the property it appears equally likely to the Court that the driveway permits traffic to flow in both directions without restriction.
Even if claimant's expert was correct in his assertion regarding the curb cut's use for ingress only, the exit constructed near the subject's southern border appears to permit egress from the subject in both northerly and southerly directions. Although claimant has argued that the use of the exit's southernmost lane requires vehicles to traverse the adjoining White property to reach the left turn lane claimant's own Exhibit 6 suggests otherwise. Access from Route 9 via the 24 foot curb cut and to Route 9 via the two lane exit at the property's southern boundary constitutes reasonable ingress to and egress from the subject to a public highway and negates the claim for consequential damages related to the issue of access.
The claimant has failed to establish its entitlement to consequential damages for interference with its right of access to the subject property.
With regard to the loss of the property's corner identity and its having been blended into the adjoining property, the Court finds from the testimony, photographic evidence and the Court's on site visit that the property remains a corner property with access to and from each of the highways which border it. In the first instance, claimant's comparable sale #5, one of two properties utilized by claimant's appraiser to gauge the effect of corner influence in valuing the subject property, was in fact not a corner property as conceded by Mr. Gardner on cross-examination. Moreover, despite the shared ingress and egress created at its southwestern and northeastern boundaries the Court cannot determine that the property has lost its distinct identity as a corner parcel and become in effect a part of the retail plaza to the south as urged by the claimant. While the area of the subject nearest the southeastern corner was opened to permit traffic flow to and from the subject and the adjoining property to the south (and the shared point of ingress and egress) there remains a grassy strip along the subject's southern boundary with the White property which acts as a partial physical barrier between the subject and the White property and militates against finding that the two parcels have been effectively blended as urged by the claimant (see, Andress' cross-examination, Transcript pages 55-56).
Furthermore, claimant's appraiser appears to premise the alleged existence of traffic flow and parking encroachments related at page 45 of his report at least partly upon the Buckhurst Report and the traffic design and circulation plans contained therein. The Buckhurst plan was never adopted as part of the reconstruction of Routes 9 and 149 and merely proposes traffic configurations and various physical changes to the subject and adjoining properties for consideration in future development of the "Million Dollar Half Mile." Those proposals, prepared by a stranger to the instant litigation, have no direct relationship to the issues of traffic flow and parking encroachments in the reconstructed configuration of the subject property or neighboring parcels.
Claimant's engineer, Thomas Andress, testified that during his several visits to the site he was always able to find an available parking space on the subject property and at no time did he observe any pedestrian traffic moving either from vehicles parked on the subject to the White property or in the opposite direction from vehicles parked on the White parcel to the subject property. Mr. Andress testified that he did not observe any signs restricting parking to only those persons intending to patronize businesses at the subject property during any of his visits to the site subsequent to July 13, 1998. The Court likewise noted during its site visit the absence of such signs as well as any signs limiting access through the opening at the property's southwest corner to patrons of the subject's tenant businesses only. The witness did not refute the testimony of Ms. Duprey regarding the ability of two vehicles to safely move in opposite directions around the northwest corner of the building and otherwise failed to establish that traffic flow in and around the subject was impeded or restricted in any way after the taking that it had not been before. The Court finds upon the proof submitted that the claimant failed to establish its entitlement to consequential damages for either restricted traffic flow or parking encroachments.
Claimant's proof with respect to the actual loss of parking spaces is both confusing and speculative while the defendant offered the testimony of Ms. Duprey who testified that she counted 60 striped parking spaces on the subject property before the appropriation and 60 striped spaces after the appropriation. Claimant's appraisal report states that the subject's parking area before the taking was "sufficient in size to accommodate 75 vehicles" (Court Exhibit 3, page 7) but the appraiser was unable to justify that figure by reference to any map, drawing or photograph of the property before taking. In describing the appropriation itself claimant's appraiser alleged at page 43 that the appropriation eliminated 6 parking spaces or approximately 9% of the parking available before taking. His description of the subject after appropriation set forth on page 53 of the report indicates that "[t]he reduction in the size of the subject property and alterations to traffic patterns has eliminated between nine and ten parking spaces, which represent approximately 9% of the available parking before the appropriation."
Claimant's engineer on the other hand opined on direct examination that the subject before taking had 70 parking spaces (Transcript page17) and suffered the loss of four spaces as a result of the taking (Transcript page 18). Similarly, he testified on cross-examination that four parking spaces were lost in the direct taking; two in the property's northwest corner where the current business sign is situated and two in the area of access opened between the subject and the White property (see, Transcript pages 60-62).
Even if the Court were able to determine from the proof provided by the claimant the actual number of parking spaces, if any, that were lost as a result of the appropriation claimant utterly failed to assign a dollar value or square footage measurement to the alleged loss. Instead, the Court accepts the unrefuted testimony of Ms. Duprey and finds that the subject property suffered no loss of parking spaces, direct or indirect, as a result of the appropriation.
Therefore, claimant's recovery on this claim is limited to the direct taking of the land itself based upon the following Court determined values with no recovery for alleged consequential damages. Those values as stated above were $801,510.69 before and $702,724.06 after taking and the damages payable as a result of this appropriation are $98,786.63.
Claimant is awarded $98,786.63 with appropriate interest from July 13, 1998 (date of taking) until January 13, 1999 (six months subsequent to the date of taking
) and from June 27, 2001 (the date of filing of the claim) to the date of this decision and thereafter to the date of entry of judgment hereon pursuant to CPLR 5001 and CPLR 5002; EDPL § 514; Court of Claims Act § 19 (1) and subject to Court of Claims Act § 19 (4).
The Clerk of the Court is directed to enter judgment in favor of claimant as provided for herein and the filing fee paid by claimant shall be recovered pursuant to Court of Claims Act § 11-a (2).
All motions made during the trial and not specifically addressed in this decision are denied.
[1]This figure was based upon Gardner's assumption that the subject before taking was comprised of 1.65 acres or 71,874 square feet. This figure was later shown to be inaccurate.
[2]Gardner's capitalization rate of 10% before appropriation was the same rate used by the State's appraiser (compare Court Exhibit 3, page 41 and Court Exhibit 1, page 30).
[3]The square footage of the subject's improvement is referred to by both parties using figures varying from 14,016 to 14,600.
[4]The actual figure is $302,508.00.
[5]That report is entitled Corridor Management & Traffic Circulation Plan for the Million Dollar Half-Mile, (Route 9/149), Queensbury, New York and was prepared for the Adirondack-Glens Falls Transportation Council. The report appears to have been prepared by Buckhurst Fish & Jacquemart, Inc. in July 1997.
[6]The Court presumes the witness meant northeast entry.
[7]The actual figure in Court Exhibit 1, page 37 is $72,200.
[8]This figure should have been rounded up to $1,767,000.
[9]This figure should have been rounded up to $1,655,000.
1[0]Claimant alleged the subject area is zoned HC-INT (Highway Commercial - Intensive) as demonstrated by the addenda attached to its appraisal. However, the zoning map included on page 90 of Court Exhibit 3 indicates "Town of Queensbury Proposed Zoning". Defendant alleges that the subject is zoned HC1A (Highway Commercial 1 Acre) as described in the addenda to the defendant's appraisal report (Court Exhibit 1, pp 69-73).
[1]1This figure derived by rough averaging of adjusted per square foot sales figures ranging from $6.33 to $11.01.
1[2]This figure derived by rough averaging of defendant's adjusted comparable sales figures for improved properties ranging in value from $115.27 / sq. ft. to $132.50/ sq. ft.
1[3]For ease of comparison the Court finds it necessary to convert the defendant's dollars and cents adjustment to percentages of the comparable sale's "refined price per square foot." For example a $.50 adjustment was equal to 6.67% of a refined price per square foot of $7.49 (.50 ÷ 7.49 = 6.67%).
1[4]Neither party arrived at this figure (79,279 - 6,081 - 683 - 1,461 = 71,054) since claimant started from an erroneous area figure of 1.65 acres (i.e., 71,874 sq. ft.) prior to reducing that amount to account for the appropriation and the defendant reduced the correct figure only by the fee taking (6,081 sq. ft.) ignoring the effective loss of land due to the permanent easements imposed upon the subject.
1[5]See, Court of Claims Act § 19(1); EDPL § 514 (B).