Opinion
# 2017-045-501 Claim No. 122519
05-04-2017
BDG 115 LAND, LLC v. THE STATE OF NEW YORK
Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. By: Saul R. Fenchel and Eugene Ferencik, Esqs. Hon. Eric T. Schneiderman, Attorney General By: Charles E. Gary and Christopher M. Gatto, Assistant Attorneys General
Synopsis
Appropriation trial decision. Mixed use property, restaurant, bank, office building. Lost future parking spaces, vehicle turning radius analysis.
Case information
| UID: | 2017-045-501 |
| Claimant(s): | BDG 115 LAND, LLC |
| Claimant short name: | BDG |
| Footnote (claimant name) : | |
| Defendant(s): | THE STATE OF NEW YORK |
| Footnote (defendant name) : | |
| Third-party claimant(s): | |
| Third-party defendant(s): | |
| Claim number(s): | 122519 |
| Motion number(s): | |
| Cross-motion number(s): | |
| Judge: | Gina M. Lopez-Summa |
| Claimant's attorney: | Berkman, Henoch, Peterson, Peddy & Fenchel, P.C. By: Saul R. Fenchel and Eugene Ferencik, Esqs. |
| Defendant's attorney: | Hon. Eric T. Schneiderman, Attorney General By: Charles E. Gary and Christopher M. Gatto, Assistant Attorneys General |
| Third-party defendant's attorney: | |
| Signature date: | May 4, 2017 |
| City: | Hauppauge |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
This is a timely filed claim for the partial appropriation (taking) of property owned by claimant, BDG 115 Land, LLC (BDG), brought against defendant, the State of New York, pursuant to the Eminent Domain Procedure Law and § 30 of the Highway Law.
The subject property, consists of three contiguous parcels of land improved with two multi-tenanted office buildings and a free standing restaurant. The parcels are located at the intersection of Route 110 and Pinelawn Road with frontage on Route 110. Access to the property is through two driveways, one on Pinelawn Road and the other on the northbound side of Route 110. The property is located in the Hamlet of Melville in the Town of Huntington, County of Suffolk.
Prior to the taking the property was 14.82 acres or 645,673 square feet. The State appropriated 8,976 square feet of the property across the entire Route 110 frontage varying in depth from 7 feet to 20 feet. The remainder property is 14.61 acres or 636,697 square feet. The size of the buildings on the property did not change after the taking.
In the post-trial brief, Claimant set forth that it "will accept the State's land area of 645,673 square feet in the Before and 636,697 square feet in the After (remainder)."
During the trial of this matter, the parties agreed that the title vesting date was September 10, 2012 and title to the subject property on the vesting date was in the name of claimant under common ownership and a single site plan.
The Notice of Claim was filed with the Court on March 18, 2013. The appropriation maps and descriptions contained therein are adopted by the Court and incorporated herein by reference. The aforesaid maps and descriptions were filed in the Office of the County Clerk of Suffolk County. Pursuant to the requirements of Court of Claims Act § 12 (4) and EDPL § 510 (A), the Court has made the required viewing of the property which is the subject of this claim. The claim has not been assigned or submitted to any other Court or tribunal for audit or determination.
The subject property is identified on the Suffolk County Tax Map as District 400, Section 257, Block 3, Lots 9.3, 9.4 and 9.5. The taking was associated with a construction project to expand New York State Route 110.
Pursuant to CPLR 3025, the Court deems that the pleadings are conformed to the proof presented at trial.
The appropriate 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 (Chester Indus. Park Assoc., L.P. v State of New York, 103 AD3d 827 [2d Dept 2013]). 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, whether or not the property is being put to such use at that time (Gyrodyne Co. of Am., Inc. v State of New York, 89 AD3d 988 [2d Dept 2011]).
Both parties appraisers, Elinor Brunswick for the claimant and Lawrence Indimine for the defendant, agree that both prior to and after the taking the highest and best use of the subject property was as commercial property, consistent with C-6 zoning.
Consequently, the Court finds that the highest and best use of the subject property is its current use as a commercial property.
Thomas C. Dixon, an engineer and land surveyor, submitted a report and testified on behalf of claimant. In his report Mr. Dixon stated that the property is comprised of three separate tax lots with common ownership and unity. The property operates as one unified development for engineering, zoning, and sanitary/septic purposes. He explained that the 5 acre residential portion acts as a buffer between the commercial uses and the residential area and provides the necessary sanitary density area to accommodate the health care facility and the restaurant. Mr. Dixon set forth that although the C-6 zoning does not have any setback requirements, the Town of Huntington imposed the following covenants and restrictions on the property. 10 Pinelawn Rd, Lot 9.3 requires a 50 foot setback and the use of the property is limited to banking, general office and day care and not more than one restaurant, not to exceed 8,500 square feet and no more than 1,700 square feet in outdoor dining. 115 Broadhollow Rd, Lot 9.5 requires a 75 foot setback from Route 110; the use of property is limited to banking, general office and day care; a 25 foot landscape buffer and the 5 acre portion zoned R-40 shall not be developed in any way and shall remain as a landscaped buffer except for limited use parking during Schmitt's Farm Fall Festival. 121 Broadhollow Rd, Lot 9.4 requires a 75 foot setback from Route 110 and 20 foot setback from Pinelawn Road and the use of property is limited to banking, general office, day care and a fitness center.
Mr. Dixon also testified that the most recently approved site plan in 2011 was for the addition of outdoor seating at the restaurant in which a parking variance was required and granted. Thus, there is a total of 584 parking spaces provided out of 607 required parking spaces. The 584 number includes 29 spaces in front of 115 Broadhollow Road which had not yet been built. Mr. Dixon also testified that before the taking, the property was fully conforming to the Town of Huntington's covenants and restrictions and that the property also conformed to the Suffolk County Department of Health Services wastewater disposal requirements. He explained that additional sanitary credits were purchased and transferred to the property in 2012 to allow for the health facility conversion and the outdoor dining addition at the restaurant.
Mr. Dixon testified that the taking of 8,976 square feet along the frontage of Route 110 reduced the property to 14.61 acres. He explained that the taking reduced the setbacks of both 115 and 121 Broadhollow Road on Route 110 to approximately 55 feet, placing both 115 and 121 Broadhollow Road into non-conformity with the Town of Huntington's covenants and restrictions. A minor setback non-conformity exists with respect to the Pinelawn Road frontage. An additional non-conformance is also created as the remaining available land is insufficient to provide the 25 foot landscape buffer between the parking area and the new right of way line. After the taking the buffer is reduced from 25 feet to a variable distance of 15 feet to less than 2 feet.
The taking also created a sanitary density non-conformity. The property was at maximum capacity prior to the taking and the loss of 8,976 square feet resulted in a deficiency which requires the purchase of .40 sanitary credits. Credits cost approximately $125,000.00 - $150,000.00 per credit thus cost to cure damages result in the amount of $50,000.00 to $60,000.00.
Mr. Dixon testified that the most important impact of the taking was the negative impact on the 29 future parking spaces across the front of 115 Broadhollow Road. These spaces are reached through the driveway/curb cut on Route 110. Cars driving northbound would make a right turn into the curb cut to utilize the parking. He explained in 2011 these spaces were included as part of the computation and granting of the parking variance. The property has a 23 space deficiency which is 4% of the total spaces. He opined that after the taking, the 29 parking spaces are impaired to the point that the spaces are effectively non-functional. As a result of the taking and the loss of parking, the existing parking non-compliance is almost 10% of the total parking, which increases the difficulty of obtaining a variance. Mr. Dixon also opined that the loss of the parking space impairs the future development of the property because the lost parking spaces cannot be included in parking calculations for any future site plans. The Town of Huntington's Zoning Ordinance § 198.47 requires 200-250 square feet of building area to be supported by 1 parking space. He explained that the parking supports the use of the building and their potential expansion and/or change of tenant mix. Mr. Dixon concluded that the taking and loss of parking resulted in approximately 7,000 square feet of lost building expansion.
Mr. Dixon testified that the State's taking reduced the turning radius and maneuverability of vehicles entering the site and future parking area in front of 115 Broadhollow Road, impairing those parking spaces and making them dysfunctional and no longer usable. Using AASHTO, a nationally recognized reference for highway design and adopted by New York State Department of Transportation (DOT), for design purposes, as well as Autoturn, a nationally recognized and utilized software to generate turning radii, Mr. Dixon calculated turning radii for an AASHTO standard passenger car under pre-construction, post construction, and potential right of way expansion scenarios. The calculations included a turn at 12 mph which Mr. Dixon testified that in actual field conditions would be expected. He testified that based upon his experience turning speeds would be anywhere from 10-15 mph so he chose 12 mph.
AASHTO refers to the American Association of State Highway and Transportation Officials.
Mr. Dixon set forth that the vehicles are turning into a 24-foot wide driveway entrance that is a two-way roadway. He also explained that it is a right-in right-only driveway. He testified that he calculated the turning radii of cars, turning not from the travel lane but from the shoulder because it is his experience that when a shoulder is available cars will merge into the shoulder lane to decelerate. He explained that AASHTO and DOT Manuals both recognize shoulder areas as places to make entry and departure from sites easier.
Using 10 mph as the turning speed, pre-taking vehicles turning from shoulder had a 28.2 foot turning radius. He testified that a vehicle can make the turn but that it was a tight turn and there was a small potential for vehicle contact with a vehicle exiting onto the street. However, he pointed out that the Town of Huntington approved the site plan with this small potential for a conflict. Post construction, vehicles turning from the shoulder had a 25.2 foot turning radius which places the vehicle halfway over the pavement marking separating the lanes of traffic. These vehicles would not have enough room to complete the turn into the parking lot. If the State chooses at some time to expand to the right of way line, vehicles turning from the shoulder would have a 21 foot turning radius which again places the vehicle halfway over the pavement marking separating the lanes of traffic thereby not having enough room to complete the turn into the parking lot.
At 12 mph as the turning speed, pre-taking vehicles had a 27 foot turning radius. He testified that a vehicle can make the turn but that it was a tight turn and there was a small potential for vehicle contact with a vehicle exiting onto the street. However, he pointed out that the Town of Huntington approved the site plan with this small potential for a conflict. Post construction, vehicles would have a 27 foot turning radius and would not be able to turn into the parking area without a significant encroachment of more than half the turning vehicle into the exiting lane creating a conflict. This vehicle would also have a conflict with vehicles attempting to exit from the parking spaces. If the State chooses at some time to expand to the right of way line, vehicles turning from the shoulder would have a 27 foot turning radius which again places the vehicle more than halfway over the pavement marking separating the lanes of traffic and preventing it from entering the parking area.
Mr. Dixon opined that by reason of the taking, the usability and functionality of the 29 future spaces is impaired and rendered non conforming. He explained that a lesser number of spaces could not remain usable as any car navigating the turn is confronted with a conflict entering the parking area but must also have to straighten out and further navigate into the parking area to utilize the remaining line of spaces. Usability is also impacted because vehicles now have to back out of spaces inside a more space restricted area. Mr. Dixon opined that it is quite possible that the Town of Huntington and DOT would object to a site plan application for the improvement and striping of the 29 spaces as there is a clear conflict between vehicles exiting the site with vehicles entering the site and parking area.
Elinor Brunswick, a real estate appraiser, prepared claimant's appraisal in this matter and testified on claimant's behalf at trial. She described the subject property prior to the taking as containing 14.82 acres of which 9.82 acres were commercially developed and 5 acres residentially zoned. The residential acres act as a buffer and provide septic capacity to the commercial portion of the site. The site has 475.56 feet of frontage along Route 110 and 413.46 feet of frontage along Pinelawn Road. There is an additional 58 feet of frontage at the corner. The subject property is a level, irregularly shaped parcel.
Prior to the taking, as depicted on the 2011 approved site plans for the property, the property is improved with three separate commercial buildings which are shown as Lot 9.3, 10 Pinelawn Road which houses Blackstone Steakhouse, Lot 9.4, 121 Broadhollow Road which houses an office building and fitness center and Lot 9.5, 115 Broadhollow Road which houses Chase Manhattan Bank. Lot 9.3 has a land area of 101,453 square feet and a building area of 13,200 square feet. Lot 9.4 has a land area of 126,106 square feet and a building area of 30,150 square feet and Lot 9.5 has a land area of 418,114 square feet and a building area of 83,921 square feet. The subject property requires 607 parking spaces and included in this 607 figure are 29 future parking spaces, located in front of 115 Broadhollow Road. The site plan provides for 584 parking spaces and a variance for the parking deficit which was granted (Cl Exhs 11, 11A, 31 and 34). Ms. Brunswick described the property as the premier office location in the entire Suffolk County if not all of Long Island. It is a Class A property at the apex of the entire commercial corridor on Route 110 and is strategically located between the Northern State Parkway and the Long Island Expressway.
In analyzing the site valuation of the subject property as if vacant prior to the taking, Ms. Brunswick utilized the sales comparison or market data approach which reflects an estimate of value as indicated by the actual sales market. She explained that the sales comparison or market data approach is the most preferred and most commonly used method of valuation. As such, she selected four different sales of vacant commercial land within Suffolk County in valuing the subject property as vacant. After making certain adjustments to the sales which she determined were appropriate she found a before taking land value of the subject property of $27.54 per square foot or $1,200,000.00 per acre. She then multiplied $1,200,000.00 by 9.82 acres and found a before taking land value of the property of $11,800,000.00.
Unless otherwise noted all calculations are rounded off.
Ms. Brunswick set forth that the fee taking resulted in the loss of 8,976 square feet. She used the same sales and rentals in her after taking analysis. After applying certain adjustments to the properties she found an after taking land value of $27.55 per square foot or $1,200,000.00 per acre. She then subtracted the R-40 zoned 5 acres to arrive at 9.62 acres which was multiplied by $1,200,000.00 for a total of $11,540,000.00 for the after taking land value.
Ms. Brunswick then used the sales comparison approach to determine the market value of the property as improved before the taking. She conducted an analysis for the office building spaces and a separate analysis for the restaurant space.
In her analysis of the those parcels of the subject property as improved with office buildings she selected four different sales of properties improved with office buildings within the Town of Huntington. After making certain adjustments to the sales which she determined were appropriate she found a before taking value of the parcels of the subject property as improved with office buildings of $155.00 per square foot. She then multiplied $155.00 by 93,074 square feet, the size of the office buildings on those parcels of the subject property, and found a before taking value of the parcels of the subject property as improved with office buildings of $14,426,470.00. Ms. Brunswick explained that in order to calculate an estimate of the value of the entire property with improvements she needed to conduct a separate analysis of the restaurant parcel which she then added to the above office land and improvements evaluation.
In performing her analysis of the parcel of the subject property improved with the restaurant, Ms. Brunswick selected three different sales of properties improved with restaurants. After making certain adjustments to the sales which she determined were appropriate she found a before taking per square foot value of the restaurant parcel of $440.00. She then multiplied $440.00 by 10,200 square feet, the size of the restaurant building, and found a before taking value of the restaurant parcel of the subject property of $4,488,000.00. She combined the two findings and reached a final value total estimate of the subject property as improved prior to the taking of $18,900,000.00.
Ms. Brunswick did not include the cellar prep areas nor the storage areas in her square footage calculations.
Ms. Brunswick performed the same analysis using the sales comparison approach to value the property as improved after the taking. She again conducted an analysis for the office building spaces and a separate analysis for the restaurant space.
Ms. Brunswick adopted Mr. Thomas C. Dixon's engineering opinion that there was a loss of 29 future parking spaces. She explained that the loss of parking in front of 115 Broadhollow Road impacted the potential future building expansion, change in tenant mix and/or additional convenience. She reflected the loss with a 5% downward adjustment under the marketability category. She also included a 5% downward adjustment in the utility category to reflect the non-conformity with the covenants and restrictions and the non-conformity with the parking variance granted in 2011. She explained that this property is unique in that it is one large parcel with three distinct buildings with three different uses. She opined that the adjustment was reasonable because the subject property allows for flexibility of use and a variety of tenants. The properties interplay with each other economically and have an advantage over stand alone buildings. On cross-examination she opined that considering parking in both the marketability and utility adjustments was correct as a loss of parking impacts the flexibility of use as well as what a buyer is willing to pay for the property. After applying the adjustments she found an after taking value of $140.00 per square foot for the improved office spaces. She then multiplied 93,074 square feet by $140.00 for a total of $13,030,360.00.
Ms. Brunswick, utilizing the sales comparison approach for the restaurant space, applied the marketability but not the utility adjustments and found an after taking value of $420.00 per square foot for the restaurant space. She then multiplied 10,200 square feet by $420.00 for a total of $4,284.000.00. She then combined the two findings and reached a final value total estimate of the subject property as improved after the taking of $17,300,000.00.
Ms. Brunswick also utilized the income capitalization approach to value the subject property prior to the taking. Ms. Brunswick explained that the income capitalization approach is used to derive market value in the appraisal of income producing properties. She compared 6 office rentals; 3 bank rentals; 4 fitness center rentals and 4 restaurant rentals. After making certain adjustments to the rentals which she determined were appropriate she found a lower level office space rental rate of $20.00 per square foot; a regular office space rental rate of $25.00 per square foot; a bank space rental rate of $37.00 per square foot; a fitness center space rental rate of $24.00 per square foot and a restaurant rental rate of $45.00 per square foot. She also determined there was 104,366 square feet of leasable space on the subject property. After doing the calculations for the various spaces, she determined a net income of $1,465,705.00 and a capitalization rate of 8%. She concluded that under the income capitalization approach the before value of the subject property was $18,300,000.00.
Ms. Brunswick then performed the same analysis using the income capitalization approach to value the property as improved after the taking.
As she did in the sales comparison approach Ms. Brunswick applied certain adjustments to her calculations based on the loss of 29 future parking spaces. She again explained that the loss of parking in front of 115 Broadhollow Road impacted the potential future building expansion, change in tenant mix and/or additional convenience. She reflected the loss as a capitalization rate adjustment in the income capitalization approach. She also applied a capitalization rate adjustment for the non-conformity with the covenants and restrictions and the non-conformity with the parking variance granted in 2011. Ms. Brunswick testified that due to these adjustments the after taking capitalization rate increased from 8 to 8.75%. Calculating the rental minus the expenses, she arrived at a net income of $1,465,705.00. Dividing the net income by 8.75 she arrived at an after taking valuation of the subject property using the income capitalization approach of $16,750,000.00.
Ms. Brunswick opined that strong weight could be attributed to both the sales comparison approach and the income capitalization approach and thus concluded the estimated market value of the subject property prior to the taking was $18,500,000.00 and the estimated market value of the subject property after the taking was $17,000,000.00.
Ms. Brunswick subtracted $17,000,000.00 from $18,500,000.00 to find total direct and indirect damages of $1,500,000.00. She then subtracted direct damages of $250,000.00 from $1,500,000.00 to find severance damages of $1,250,000.00. Ms. Brunswick also found $50,000.00 in cost to cure damages as a result of a loss in the sanitary credit requirement due to the reduction in land area. Ms. Brunswick stated that sanitary credits have been trading at $125,000.00 per credit. She calculated the loss by multiplying $125,000.00 per credit by .40 to arrive at $50,000.00, the amount that was lost. She testified that she spoke with Mr. Dixon and other attorneys who represent buyers and sellers in the transfer of sanitary credits to arrive at the $125,000.00 figure.
Ms. Brunswick failed to use her own rounded off figures when calculating direct and severance damages. As a result the Court calculated the figures using the rounded off numbers contained within the Brunswick appraisal report.
Thus, Ms. Brunswick concluded that the total damages from the taking was $1,550,000.00 which was the aggregate of direct damages for the fee taking, $250,000.00, with severance damages, $1,250,000.00 and cost to cure damages, $50,000.00.
Christopher Tartaglia, an engineer, submitted a report and testified on behalf of defendant. In his report Mr. Tartaglia stated that the property is comprised of three separate tax lots on 14.82 acres developed with a restaurant on Lot 9.3; a fitness center and offices on Lot 9.4 and a bank and office on Lot 9.5. He explained that the subject property is accessible by two 25 foot wide driveways, one on Route 110 and one on Pinelawn Road. He also set forth that the property is zoned C-6 General Business except for the residential portion of 5 acres in the R-40 Residential Zone.
Mr. Tartaglia testified that the taking impacted 115 Broadhollow Road, which pursuant to the covenants and restrictions was to have a 75 foot setback, by reducing the setback from 81.4 feet to 61.4 feet. He further testified that 121 Broadhollow Road, which pursuant to the covenants and restrictions was to have a 75 foot setback on Route 110 and a 20 foot setback on Pinelawn Road, was impacted after the taking by having the Route 110 setback reduced from 75.1 feet to 55.1 feet and the Pinelawn Road setback reduced from 21.6 to 19.6. He also found that if the property owners were to construct the future parking spaces and access aisle, that the 25 foot landscape buffer depth would be reduced from the required 25 feet to approximately 15 feet at its widest to 1 foot at its narrowest.
With regard to sanitary flow, Mr. Tartaglia opined that the taking resulted in an approximately 124 gallon reduction in the allowable sanitary flow for the property. He concluded that this reduction would result in reduction of either 2,060 square feet of non-medical office space; 3,090 square foot reduction of mechanical/storage space, 12,360 square foot reduction of the fitness center or 13 restaurant seats or any combination of the above scenarios. Mr. Tartaglia noted in his report that costs associated with the septic system were excluded from his report at the direction of the Office of the New York State Attorney General.
Mr. Tartaglia opined that the taking had no impact on parking. He took exception to claimant's engineer's use of the shoulder lane for deceleration purposes and set forth that it should not be used in the turning analysis. He opined that his analysis, to wit, vehicles turning from the right travel lane of traffic, is more accurate because in real world driving situations drivers do not drive in the shoulder because it is impermissible pursuant to New York State Vehicle and Traffic Law (VTL) §1131.
Mr. Tartaglia, used the same software program, Autoturn, as Mr. Dixon and applied it to the AASHTO standard passenger vehicle to determine turning radii. Mr. Tartaglia testified that vehicles turning from left of center in the right lane of Broadhollow Road into the parking area of the subject property at 12 mph had no conflict with other vehicles entering the parking area. On cross-examination, he conceded that there is nothing in the VTL which permits a vehicle to move to the left in order to make a right turn. In addition, he also conceded on cross-examination that if a vehicle turning at 12 mph turned from the center part or the right side of the travel lane of Broadhollow Road there would be a conflict with a vehicle leaving a parking stall from the subject property.
Mr. Tartaglia opined that the impact on the fee taking was a reduction in the front yard setback and/or landscape buffer depth to the 115 Broadhollow Road building, the 10 Pinelawn Road building and 121 Broadhollow Road. The fee taking reduced the overall site area thereby reducing the allowable sanitary flow for the existing uses. Additionally, certain site features such as asphalt pavement, a concrete entry walk and grass areas were removed. He found that $5,969.66 was the cost to cure and attributed no money for the septic costs to cure per direction of the New York State Attorney General's office.
Lawrence Indimine a real estate appraiser, prepared defendant's appraisal in this matter and testified on defendant's behalf at trial. He described the subject property as containing 14.82 acres on three contiguous lots. He and claimant's appraiser agreed on the area of the three separate lots, the overall size of the subject property as well as the amount of frontage alongside Broadhollow and Pinelawn Roads. Mr. Indimine described Lot 9.3 as having a 8,500 square feet restaurant with a 1,700 square foot outdoor dining area, the office building on Lot 9.4 as having an area of 30,150 square feet and the office building on Lot 9.5 as having an area of 65,395 square feet and an auto teller structure of 228 square feet. He excluded all of the basement area from the calculations which accounts for the differences in claimant's and defendant's calculations.
In analyzing the value of the subject property prior to the taking, Mr. Indimine first utilized the vacant land valuation. He selected four different sales of vacant commercial land within Suffolk County in valuing the subject property. After making certain adjustments to the sales which he determined were appropriate he found a before taking value of the land of $1,300,000.00 per acre. He then multiplied $1,300,000.00 by 9.82 acres and found a before taking value of the land of $12,770,000.00. He broke down the estimate per lot as follows; Lot 9.3 - $3,030,000.00; Lot 9.4 - $3,765,000.00 and Lot 9.5 - $5,975,00.00. He also found $6,438,00.00 to be the value of the improvements on the land.
Mr. Indimine next utilized the income capitalization approach. He compared 5 restaurant rentals for Lot 9.3 which houses Blackstone Restaurant and after making certain adjustments to the rentals which he determined were appropriate he found $40.00 per square foot to be appropriate for 8,500 square feet of space. He unlike, Ms. Brunswick did not calculate the 1,700 square feet of outdoor dining. He determined a net income of $289,935.00 and a capitalization rate of .088 to reach a valuation of $3,260,000.00.
He compared 4 office rentals for Lot 9.4 and after making certain adjustments to the rentals which he determined were appropriate he found $25.00 per square foot to be appropriate and 30,150 square feet of leasable space. He determined a net income of $408,765.00 and a capitalization rate of .088 to reach a valuation of $4,600,000.00.
He compared 4 office rentals for Lot 9.5 and after making certain adjustments to the rentals which he determined were appropriate he found $26.00 per square foot to be appropriate as well as 65,395 square feet of leasable space. He also included the basement rental of 8,000 square feet to be at 75% of the $26.00 rate or $19.50 per square foot. He determined a net income of $938,822.00 and a capitalization rate of .088 to reach a valuation of $10,570,000.00. The calculations in the aggregate for the income approach as performed by the Court are $18,430,000.00.
Mr. Indimine and Ms. Brunswick differed on the amount of leasable space. Mr. Indimine calculated 112,045 square feet of leasable space while Ms. Brunswick calculated 104,366 square feet of leasable space.
Mr. Indimine also utilized the sales comparison approach to determine the market value of the subject property as improved with a restaurant and office buildings. He selected four different sales of restaurants in valuing Lot 9.3 of the subject property. After making certain adjustments to the sales which he determined were appropriate he found a before taking per square foot value of the restaurant property of $525.00, which the Court notes is $85.00 more than claimant's valuation. He then multiplied $525.00 by 8,500 square feet and found a before taking value of Lot 9.3, the restaurant property, of $4,460,000.00 (Mr. Indimine did not include the 1,700 square feet of outdoor dining space in his calculations).
The sales comparison approach for Lot 9.4 included the selection of five different sales of improved office buildings within the Town of Huntington. After making certain adjustments to the sales which he determined were appropriate he found a before taking per square foot value of the office building on Lot 9.4 of $155.00. He then multiplied $155.00 by 30,150 square feet and found a before taking value of Lot 9.4 as improved with the office building of $4,670,000.00.
The sales comparison approach for Lot 9.5 included the selection of five different sales of improved office buildings within the Town of Huntington. Mr. Indimine utilized the same properties he used in analyzing Lot 9.4. After making certain adjustments to the sales which he determined were appropriate he found a before taking per square foot value of the office building on Lot 9.5 of $160.00. He then multiplied $160.00 by 65,395 square feet and found a before taking value of Lot 9.5 as improved with the office building of $10,460,000.00.
The calculations in the aggregate for the Sales Approach, as performed by the Court, are $19,590,000.00. This amount is $690,000.00 more than claimant's value, partly attributable to Mr. Indimine's addition of 2,471 more square feet.
Mr. Indimine concluded that the sales comparison approach was most reliable for Lots 9.3 and 9.4 since he did not have to make any excessive adjustments to the comparable sales. As a result he adopted the numbers from the sales comparison approach for those parcels. However, with respect to Lot 9.5, he adopted a number of $10,500,00.00 which was between the sales comparison approach and the income approach. Based on those calculations, Mr. Indimine reached an estimated market value of the subject property as improved before the taking of $19,630,000.00.
Mr. Indimine set forth that the fee taking resulted in the loss of 8,976 square feet. He opined that the reduction in the setback was not considered to have an adverse impact on the value of the three lots. He determined that the two non-conformities with the covenants and restrictions, one for the setback and the other for the landscaper buffer, would be easily addressed in a future application to the Town of Huntington. He based his opinion that the parking, including the 29 future spaces, was not impacted by the taking on an engineering report prepared by High Point Engineering. He opined that the taking by the State did not impact the functionality, utility and/or marketability of the property and therefore he found that there are no severance damages as a result of the taking.
However, on cross-examination, Mr. Indimine stated that he did believe parking could affect the price of property and that if he did consider the loss of the 29 parking spaces, his after value would have decreased. He further testified that parking variances do get turned down and that for this particular property, which already has a 23 space variance, expansion based on the existing parking is unlikely at this time. He opined that a buyer would consider the likelihood of getting a variance in their consideration of purchasing a property and that if you increase the parking deficiency there is less of a chance of getting a parking variance approved.
Mr. Indimine used the same sales and rentals in his after taking analysis. He explained that since the taking had no impact on Lot 9.3, he conducted no further analysis in regard to that parcel. After applying certain adjustments to the properties he found an after taking land value of $1,300,000.00 per acre for a total of $12,500,000.00 for the after taking land value. He also concluded there were direct damages in the amount of $270,000.00.
Mr. Indimine ascribed $6,432,000.00 to the improvements which he described as the asphalt, concrete curbing, concrete walk and grass area.
Mr. Indimine utilized the sales comparison approach to value the subject property as improved after the taking. He made the same adjustments in calculating the after taking value as improved and found an after taking value of $151.50 per square foot for Lot 9.4. He then multiplied 30,150 square feet by $151.50 for a total of $4,565,000.00. With regard to Lot 9.5, he found an after taking value as improved of $157.00 per square foot. He then multiplied 65,395 square feet by $157.00 for a total of $10,268,000.00. The value for Lot 9.3 remained the same after the taking and was valued at $4,460,000.00. The aggregate for all three lots as improved was valued at $19,293,000.00.
Mr. Indimine also used the income analysis approach in the after taking scenarios for Lots 9.4 and 9.5. He made the same adjustments as in the before taking, made no changes to the rental process and used the same income capitalization rate. Consequently, the after values using the income approach are identical to the values before the taking, $18,430,000.00.
Mr. Indimine opined that after the taking the estimated market value of the property was $19,354,000.00 based more heavily upon the sales comparison approach. Mr. Indimine testified on cross-examination that the taking of land and improvements in front of 115 and 121 Broadhollow Road had a direct impact on the value of Lots 9.4 and 9.5 overall and it affected the value of the entire property. However, he found no severance damages, opining that the market would not reflect the acquisition by the State because a buyer would not realize there was a difference in value overall.
Mr. Indimine concluded that the damages from the taking included $270,000.00 in direct damages based upon .206 acre x $1,300,000.00/acre; $6,000 for the depreciated costs of the improvements for a total of $276,000.00. He awarded no severance damages. He also did not award any cost to cure damages even though both claimant's and defendant's engineering reports confirm that the taking resulted in a loss of allowable sanitary flow for the subject property.
Thus, based upon the totality of the reports in evidence and after evaluating the credibility of the witnesses, the Court accepts claimant's calculations as being the accurate measurements for the amount of leasable space in both the before and after taking scenarios. The parties agreed on the measurement for the taking area.
As previously stated the appropriate 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 (Chester Indus. Park Assoc., L.P. v State of New York, 103 AD3d 827 [2d Dept 2013]). 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, whether or not the property is being put to such use at that time (Gyrodyne Co. of Am., Inc. v State of New York, 89 AD3d 988 [2d Dept 2011]). Consequential or severance damages may also occur if there is a diminution in value of the remaining property as a result of the taking (Murphy v State of New York, 14 AD3d 127 [2d Dept 2004]).
The Court adopts claimants's methodology and calculations in awarding $250,000.00 as the accurate valuation of direct damages to the subject property as a result of the taking.
There was a dispute between the expert engineers as to whether the 29 future spaces were lost as a result of the acquisition by the State. The credible evidence established that while in certain circumstances it may be appropriate to utilize the shoulder to decelerate and make a turn, it is always appropriate to turn from the center or the right most portion of the right travel lane of Broadhollow Road. There was no dispute that 12 mph is an acceptable speed by which to calculate a turn. Thus, the evidence established that after the taking, a turn into the subject property from the right hand lane of Broadhollow Road at 12 mph would create a conflict with another vehicle leaving the parking area and/or a vehicle exiting a parking stall. Based upon the foregoing and the credible testimony from Mr. Dixon the courts finds that the parking spaces would be impaired and that the entire parking area would be dysfunctional.
When parking spaces are deemed lost or impaired as a result of an appropriation consequential or severance damages are warranted, where after the taking there is a calculable deficiency in parking as well as repercussions on the economic value of the subject property (Martabano v State of New York, 120 AD2d 712 [2d Dept 1986]). Moreover, damages have also been awarded where the taking's impact rendered the parking spaces less functional which "could perhaps make the property less desirable and therefore reduce the value" (Berg Investors, LLC v State of New York, UID No. 2009-031-504 [Ct Cl, Minarik, J., 2010]).
With regard to the possibility of obtaining a parking variance in the future to support either further development or change in tenant mix, the evidence did not establish that a parking variance would be granted. Both experts testified that the likelihood a variance would be granted decreased as the size of the variance needed increased. In this case, the subject property which had a 23 space variance or 4% of the parking, is now as a result of the appropriation, deficient 52 spaces or 10% of the parking.
There was a further dispute between the experts as to whether severance damages were appropriate in this matter. Defendant's expert did concede that the taking had a direct impact on the value of Lots 9.4 and 9.5 overall and it affected the value of the entire property. He also conceded that if the 29 future parking spaces were lost, his after value would have decreased.
After reviewing the evidence and weighing the credibility of the experts, the Court finds it appropriate to award severance damages in this matter.
The evidence established that claimant's appraiser took both a utility adjustment and a marketability adjustment for the loss of parking in the sales comparison analysis for the office buildings only. The credible evidence established that this loss of parking is adequately addressed as a marketability adjustment. The credible evidence also established that the flexibility of use and variety of tenancy that was present in the before taking scenario does not change as a result of the taking. Moreover, the evidence established that the non-compliance with the covenants and restrictions after the taking is minor, the covenants and restrictions have been amended many times in the past and there is no evidence before this court for it to conclude that future amendments to the covenants and restrictions would be prohibited thus necessitating a utility adjustment. Thus, the Court finds it appropriate to add back in to the claimant's calculations after the taking the 5% adjustment for utility.
The effect of this adjustment results in an after taking market value for the office space of $147.50 per square foot which was the number between the mean and median, consistent with Ms. Brunswick's approach. Multiplying $147.50 by 93,074 square feet the Court calculated $13,728,000.00 rounded off as the after taking market value of the office space. Adding this figure to the after value of the restaurant space of $4,284,000.00, the Court finds an after value of the subject property as improved using the sales comparison approach of $18,012,000.00.
An adjustment to the income capitalization approach is necessary as well, as Ms. Brunswick increased the capitalization rate by .75; .50 attributable to marketability and .25 attributable to the zoning/utility of the property. As such the Court concludes a capitalization rate of 8.5% is appropriate. Using the same net income of $1,465,705.00, and dividing it by 8.5% , the Court arrives at $17,243,588.00 as the value using the income capitalization approach. The Court will utilize both approaches but place a heavier weight on the sales comparison approach to reach a final after value for the property. The Court concludes the after value of the subject property as improved is $17,600,000.00. Using claimant's methodology, the Court subtracted $17,600,000.00 from the before value of $18,500,000.00, to find $900,000.00 in total damages. Subtracting the direct damages of $250,000.00 from $900,000.00, the Court finds $650,000.00 in severance damages.
With respect to cost to cure damages for the reduction in sanitary and septic flow, the Court accepts claimant's calculations. Defendant's engineer also found a reduction in the sanitary flow as a result of the taking but excluded the cost to cure at the direction of the Office of the New York State Attorney General. Thus, the Court awards $50,000.00 in cost to cure damages.
Therefore, claimant is awarded a total of $950,000.00 in damages. This amount was calculated by adding the direct damages of $250,000.00, the severance damages of $650,000.00 and the cost to cure damages of $50,000.00.
Accordingly, claimant is entitled to an award of $950,000.00 with statutory interest from the vesting date of September 10, 2012 to the date of decision and thereafter to date of entry of judgment (see CPLR §§ 5001 and 5002). Suspension of interest is not warranted since the notice of acquisition was served by certified mail, return receipt requested and not by personal service (Sokol v State of New York, 272 AD2d 604 [2d Dept 2000]; see also EDPL 514 [B]).
The award to claimant herein is exclusive of the claims, if any, of persons other than the owners of the appropriated properties, their tenants, mortgagees or lienors having any right or interest in any stream, lake, drainage, irrigation ditch or channel, street, road, highway or public or private right-of-way or the bed thereof within the limits of the appropriated properties or contiguous thereto; and is exclusive also of claims, if any, for the value of or damage to easements or appurtenant facilities for the construction, operation or maintenance of publicly owned or public service electric, telephone, telegraph, pipe, water, sewer or railroad lines. To the extent the claimant has paid a filing fee, it may be recovered pursuant to Court of Claims Act section 11-a (2).
All other motions on which the Court may have previously reserved or which were not previously determined, are hereby denied.
The Chief Clerk of the Court is hereby directed to enter said Judgment accordingly.
May 4, 2017
Hauppauge, New York
Gina M. Lopez-Summa
Judge of the Court of Claims