Opinion
No. 119904.
11-23-2015
CRYSTAL RUN ASSOCIATES, LLC, Claimant, v. The STATE of New York, Defendant.
Michael Rikon, Esq., Goldstein, Rikon, Rikon & Houghton, P.C., New York, Saul R. Fenchel, Esq., Berkman, Henoch, Peterson, Peddy & Fenchel, P.C., Garden City, for Claimant. NYS Office of the Attorney General by J. Gardner Ryan, AAG, Poughkeepsie, for Defendant.
Michael Rikon, Esq., Goldstein, Rikon, Rikon & Houghton, P.C., New York, Saul R. Fenchel, Esq., Berkman, Henoch, Peterson, Peddy & Fenchel, P.C., Garden City, for Claimant.
NYS Office of the Attorney General by J. Gardner Ryan, AAG, Poughkeepsie, for Defendant.
O. PETER SHERWOOD, J.
In this proceeding pursuant to section 30 of the Highway Law and Eminent Domain Procedure Law, Claimant and property owner, Crystal Run Associates, LLC, seeks “just compensation” arising from the taking of approximately 44 acres of wooded land by the State of New York on February 18, 2011, in connection with a capital project (PIN 8006, .72, Map No. 250, Parcel Nos. 282, 283, 284, 285, and entitled Goshen–Fair Oaks, Part 2 for S.H. No. 41–3) to improve the Exit 122 interchange of a controlled access highway known as New York State Route 17 (the “Project”). Exit 122 is in the Town of Wallkill, Orange County. As a consequence of the appropriation, the original tract was reduced from 86 to 42 acres and split into two unconnected sections of 41 and 1.1 acres. The taking maps and description of the appropriated land were filed in the Orange County Clerk's Office on February 18, 2011, and served on the property owner on March 3, 2011. This proceeding was commenced May 26, 2011, when the Claim was filed in the Court of Claims. The Claim (entitled Notice of Claim) was served on the Office of the Attorney General on May 25, 2011. The maps and descriptions describing the appropriated parcel set forth thereon are adopted by the court and incorporated herein by reference. This claim has not been assigned or submitted to any other court or tribunal for audit or determination.
BACKGROUND
In a decision dated February 27, 2013, the Court (Ruderman, J.) denied Claimant's motion for summary judgment. On that motion, Claimant argued that the remainders were valueless as a matter of law because the highway to which Claimant was granted access in an express easement on the taking maps was not in existence at the time of the taking. The Court rejected the claim as unpersuasive and unsupported by case law. It held that “there was an explicit reservation of a right to access made in the original appropriation” and that “the express easement granted at the time of the taking evinces an intention to provide both remainder parcels with frontage and access to a highway along the property”. The Court also held that “there are numerous issues surrounding the State's express easement of access to the highway along' the remainder ... and the physical location of this highway as it relates to the remainder”. These issues have been considered and are decided in this Decision.
Following a 4 day non-jury trial, the parties submitted lengthy post-trial briefs and the Court visited the site in the company of counsel for the parties. Having considered the evidence and arguments of the parties, the case is now ready for decision on the merits.
The background facts, which are largely undisputed, are drawn primarily from the State's post-trial brief. The principal disputed issues are whether the 41 acre remainder parcel is landlocked and valuation of the lands appropriated.
The interchange, locally known as the Crystal Run exit, was built in 1950. Its ramps provide ingress and egress for Route 17 to East Main Street/Crystal Run Road, a local public road that passes over the highway on a northeast/southwest skew using a two-lane overpass bridge. The name of the local road and the municipal jurisdiction over it changes at the overpass. On the east side of the overpass it is Crystal Run Road, a Town of Wallkill road. On the west side, it is East Main Street, an Orange County road.
Route 17 is designated as an East—West highway, but at this location is oriented more along a North—South compass alignment. Descriptive references approximate the compass alignment.
According to the State, the improvement project which makes use of the land acquired from Claimant will bring Exit 122 to current engineering standards, coordinate its ramps with nearby Exit 121, give access to Interstate Route 84, remedy severe traffic congestion and operational problems, and provide additional traffic capacity on local marginal/service roads needed to accommodate future growth.
The project includes removal of the existing overpass bridge and construction of a new, wider, overpass further to the south, one with a more perpendicular alignment in relation to Route 17, four travel lanes and shoulders. It will widen, relocate, and realign the East Main Street/Crystal Run Road approaches to Route 17 and build new interchange ramps on new alignments to meet the local roads at signalized intersections. The project will also create a Park and Ride facility and extend Crystal Run Crossing, another town roadway, to meet the new alignment of Crystal Run Road. Crystal Run Crossing, now a through road that meets the old northbound Route 17 ramps, will become a cul de sac access for the abutting properties.
In the first phase of the project, which is now nearing completion, the State is building the four-lane overpass bridge, the new approach sections of East Main Street and Crystal Run Road, a Park and Ride facility, signalized intersections, and an extension of Crystal Run Crossing. The State is also doing preliminary work for the construction of new ramps. In the second phase of the project, new interchange ramps will be built, signalized intersections will become fully operational, and the existing ramps, overpass bridge, and approaches to the bridge will be removed.
THE SUBJECT PROPERTY
Prior to the appropriation, the subject property enjoyed 1,000 feet of frontage to the north with access on Crystal Run Road and approximately 1,300 feet of frontage to the west with no direct access to Route 17. There are vacant lands owned by others to the east and the Wallkill River lies to the south. The 86 acre tract situated in the Southeast quadrant of the interchange was irregular in shape and terrain but had excellent visibility, as portions of the site along the two roads were at elevations equal to or higher than the roads themselves. The terrain of the tract varied, but generally sloped downward to the south from peaks of 470 feet, located near the Crystal Road Run frontage, to a flood plain of the Wallkill River at an elevation of 340 feet. It had ample area suitable for development in an allowed use regardless of any difficulties or constrictions due to terrain, the flood plain leading to the river, and wetlands.
According to Claimant, the 86 acre subject property was the last large developable site along the Crystal Run Road/East Main Street corridor and the prime property in Orange County. The property was zoned by the Town for “Office Research,” a classification that could accommodate business, research, public, religious, medical, and educational uses on lots of 40,000 sq. ft. and larger in landscaped, campus-like settings with incorporated natural features, open spaces and substantial buffering from surrounding uses. Additional uses available by special permit include day care facilities, hospitals, filling stations and repair shops, restaurants, hotels, assisted living/nursing home residential facilities, and retail use. There are office, medical office, hospital, hotel, and retail developments located in the vicinity.
Claimant states that it planned to develop the site as Phase II of the Crystal Run Corporate Park development. No such plan has been submitted to the town to initiate the SEQR process or for approval of a development plan (see Ex. B, p. 32). Phase I of the development, which consists of approximately 650,000 square feet of office and medical office space in six buildings, all located on Crystal Run Road, was completed between 1983 and 2010, with a development investment of over $100,000,000. The 86 acre property at issue here could have accommodated a total development of 360,000 square feet of general office space, 160,000 square feet of medical office space, and a 200–room, 180,000 square foot hotel, or a total of 700,000 square feet of building space for Crystal Run Corporate Park Phase II prior to the taking.
THE TAKING
On February 18, 2011 (“Taking Date”), the State acquired fee title to 43.68 acres of the subject property for the highway improvement project (see Ex. B, p. 11). The taking consisted of the entire westerly side of the property (Taking Parcels 282, 283, 284) with an extension across to the easterly property line (Taking Parcel 285), leaving a total remainder of approximately 42 acres in two pieces, a small, triangular, 1.1 acre parcel and a roughly quadrilateral 41 acre parcel.
The ten page taking map (Map 250, Parcels 282, 283, 284 and 285) appears at Exhibit 2 and is incorporated by reference in this decision. The date of the filing of the map with the Clerk of Orange County, as a matter of law, is the date of the State's acquisition of fee title to the property (see Eminent Domain Procedure Law § 402(A)(3) ), and the relevant date of valuation in the assessment of damages (see Gyrodyne Co. of Am., Inc. v. State of New York, 89 AD3d 988, 989 [2d Dept 2011] ).
Since the acquisition was made under Highway Law § 30 “for highway purposes,” the lands taken became part of the State's right-of-way and the properties abutting the right-of-way were imbued with the implicit right of access to the public way. Route 17, however, is a controlled access highway with entry and egress restricted to permitted motor vehicles at designated interchanges with other public roads and no broader right of access for abutting land owners absent an express grant (see Highway Law § 3[2] ). The taking, consequently, was “fee without access” to control or deny access for the abutting property across the right-of-way to a public road except “as such access may be reserved pursuant to the description and map of the property which has been ... acquired” (id. ).
The acquisition included all of the frontage along old Crystal Run Road, the only public road to which Claimant had an implied and legally enforceable right of access prior to the taking. As a result of the taking, the right of access on the entire property along its frontage on Crystal Run Road was extinguished. The taking allowed Crystal Run Road to be rerouted through the property acquired from the Claimant.
Simultaneous with extinguishment of the implied right of access along old Crystal Run Road, the Taking Maps created rights of access from the remainder parcels across the rights-of-way to the new public way. Specifically, the taking maps reserved “to the owner of the property and such owner's successors and assigns the right to access the highway along [specified courses and distances all located within Parcel 285] designated as PARCEL BOUNDARY WITH ACCESS” (Ex. 2, Sheet 10). The courses and distances identify precisely where on the common property line between the highway right-of-way and each remainder parcel the remainder property would have the right to access the public highway.
Claimant argues that Parcel 285 was not among the parcels originally designated for acquisition and was not included in the Final Environmental Impact Statement for the highway improvement project. It is undisputed that Parcel 285 is shown on the Taking Maps.
Before the taking, Claimant's tract abutted Crystal Run Road and had approximately 1,000 feet of at grade frontage on a straight or tangent section of that road. Access to and from the roadway was possible with the consent of the Town anywhere along the frontage.
After relocation, the rerouted Crystal Run Road crosses the right-of-way further down the slope leading to the Wallkill River and sweeps through the fee area on a berm of descending height which curves to the north to rejoin the undisturbed portion of Crystal Run Road. As a result of that new configuration, Claimant's 1.1 acre remainder abuts the right-of-way at grade with the elevation of a straight section of the new Crystal Run Road. The 41 acre remainder parcel is at the toe of a 40 foot high embankment atop which the rerouted Crystal Run Road curves to the north.
The specified courses and distances along which the 1.1 acre remainder property is granted the right of access to the highway runs across nearly the entire length of its frontage facing out to the rerouted Crystal Run Road. The specified courses and distances along which the 41 acre remainder property is granted the right of access to the highway is along its northerly 540 foot border abutting Parcel 285, the parcel on which the State has built the Park and Ride facility and an access road (“Access Road”) that leads to a signalized intersection with the new Crystal Run Road.
The public Access Road is the State's intended route of access from the 41 acre remainder to Crystal Run Road. The Access Road extends eastward from its intersection with Crystal Run Road descending to an elevation that is between 10 and 16 feet above the grade of the 41 acre remainder (See Exhibit 38 at 13). The signalized intersection will be a four-way intersection when the project is completed. The new highway ramps to and from northbound Route 17 will join the intersection directly opposite the mouth of the Access Road.
Sheet 8 of the Taking Maps shows a “proposed center line” in the approximate location where the access road has been constructed (see Ex. 2, Sheet 8).
PARTIES' PROOF
Claimant's view of the value of the property is set out in the appraisal report and testimony of Daniel Sciannameo, an expert appraiser of commercial real estate (Ex. 34). The report relies on and incorporates the reports of Wheldon Abt (Ex. 36), an architect, Geary Chumard (Ex. 38), a professional engineer, and John Sarna (Ex. 40), also a professional engineer. Each of these individuals testified as an expert in his respective field of endeavor.
Sciannameo testified that, before appropriation, the tract was the prime developable property in Orange County, able to support 700,000 sq. ft. of new building. He buttressed his opinion by reference to the opinions of Abt and Sarna on the subject. It is undisputed that the property had excellent exposure from Route 17 and Crystal Run Road, with areas at and above the elevation of the old Crystal Run Road. Its large area and rolling, irregular topography, sloping downward to the Wallkill River, gave a developer ample opportunity to grade substantial portions of the site for development regardless of any constraints of wetlands, steep slopes, and various area drainage courses passing through it to the floodplain of the river.
These opinions are grounded on a traffic study Sarna conducted which study revealed the maximum amount of new development that would be permitted given the volume of additional traffic old Crystal Run Road was able to handle (Tr. 2–133–34; 2–142).
Sciannameo testified that after the taking, the remainders are landlocked, or, at best, marginally developable with challenged access. The 41 acre remainder, while still visible from Route 17, is set back further from it and is located at an elevation that is substantially lower than the new Crystal Run Road. It has a less prominent exposure, and its smaller area and irregular topography is substantially less accommodating in dealing with potential site development issues. The 1.1 acre remainder, while it has adequate area, long at-grade frontage and at-highway grade, is set back 30 feet from the highway pavement and triangular in shape. Sciannameo opined that its future development may be hampered by a need for variances, restrictions posed by nearby wetlands, the need to accommodate storm water drainage from a higher neighboring property, and the cost of building out a 30 foot driveway to Crystal Run Road. His speculation is unsupported by credible proof (see Tr. 2–135–42) (Mr. Abt's trial testimony).
Using the appropriated land and fill, the State constructed the new Crystal Run Road at a higher elevation than the existing Crystal Run Road.
Claimant acknowledges that the Taking Maps include a reservation of rights pertaining to certain sections of the boundary in common with Parcel 285 and the 41 acre remainder. The Taking Maps allow Claimant to access a highway to be built along a proposed center line adjacent to that remainder. The reservation is adequate to allow for building a boulevard from the remainder to the Access Road (see Tr. 2–150–51). Claimant maintains that Parcel 285 was appropriated for the purpose of locating and constructing an Access Drive and Park and Ride facility and was not included in the Final Environmental Impact Statement (“FEIS”) prepared in connection with the Exit 122 project (see Claimant's Br. at 5). The Access Drive is claimed to refer to “paved travel lanes solely servicing the Park & Ride and not the 41 acre remainder” (id. at 14).
Claimant insists that after the taking neither remainder property has access to the highway (see id at 5–6). However, through Abt's testimony, Claimant conceded that if there was access, the 41 acre remainder property has sufficient area on its own to support development density of 700,000 sq. ft. of new mixed use building space, the same as the entire 86 acre tract before the taking (see Tr. 2–154). Claimant contends, however, that terrain and site conditions in the remainder, including the need to construct an appropriate entry and connection to the public highway, are substantially less beneficial, as a developer would face increased site preparation costs, including the likely expense of importing quantities of fill to build the entrance and interior roadways at the site. Thus, the taking made the remainder a less desirable building site than the original 86 acre parcel.
Abt agreed, however, that issues relating to the wetlands, slopes, and drainage pre-existed the taking, were not a consequence of it, and are only partly attributable to impacts from the Project. The extent and economic effects, if any, of these impacts on the remainder properties and the likely additional costs of development, either before the appropriation, or for the remainder parcels after the taking, are not quantified.
Abt testified further that the New York State Fire Code requires that apparatus have access to new buildings and that a code enforcement official could require that the 41 acre remainder have equipment access either from two roadways or from a boulevard type access to permit emergency vehicle entry despite roadway congestion. If that occurs, and if the public roadway shared with the Park and Ride (rather than the site's interior drives) is deemed the fire apparatus access road, it may become necessary to construct a raised median on the Access Road to separate opposing traffic flows if a development of Claimant's property is to exceed 50,000 sq. ft. of building space. Abt did not know if that could be achieved, but he agreed that the 88 foot wide public roadway is otherwise sufficient under the applicable Town and Fire Code standards for full development of the property. The Fire Code restriction did not render the remainder inaccessible.
Chumard testified that the State's taking permanently landlocks the remainder parcels, leaving no legal right of ingress and egress to a public road. Commenting on the provision in the Taking Maps that reserves a right to access to the highway for 540 feet along the boundary in common with parcel 285 and the 41 acre remainder, he theorized that because the taking, generally, was “without access,” the reservation merely means that “the Owner only has the right to construct its driveway within the boundaries of the remainder, but not beyond such boundaries ... to connect to a highway” (Chumard Report, attached as Exhibit 38, at 5). Accordingly, the owner had no right to build out from the identified courses and distances on the property line, across the right-of-way, to connect with the pavement of the highway.
The State responds that the right of access reserved here is no different from any implied right of access arising by virtue of private land abutting a public road. In both instances, the owner can build within the boundaries of its property without review or approval. However, to implement the right of access, enter the public right-of-way, and make the physical connection to the public road, it must secure a permit. According to the State, “the right of access, in both instances, is legally effective, enforceable and sufficient for marketability of title, but also subject to regulation” (State Br. at 15).
As a separate matter, Chumard testified that, if access is legally possible, any suitable access from the 41 acre remainder must cross the State's right-of-way for a distance of 30 feet or longer to meet the paved public roadway and that such a connection would require modification of the drainage for the Park and Ride facility and partial reconstruction of the Access Drive. The State replies that it is not incumbent on the State to build such connections or to make those accommodations for the benefit of the owner of a vacant parcel. Chumard conceded that it is usually the responsibility of the private property developer to design any highway entrances required for its project. Construction of the access is then done under a highway work permit obtained from the State or the responsible municipality. The extent of the work, its expense, and, ultimately, the suitability of the connection to the highway, depends on the nature of the property development, the conditions on the public highway when the development occurs, and the scope of work authorized by the permit. For its part, the State argues that it is not required to expend public funds to build a physical access for vacant property when none existed before, or to design and build a highway so that the pavement of the roadway meets the property line of an abutting parcel in a manner that minimizes the owner's cost of creating an access to the highway, if and when the land is developed.
Scott Geiger, a State Department of Transportation (“DOT”) engineer subpoenaed by Claimant to testify, and William FitzPatrick, a professional traffic engineer whom the State offered as its expert, testified that the State will design and provide a substitute access at public expense where an established driveway or private entrance road is disrupted by work done on a highway. However, where a property abuts the highway and has a right of access but no existing entrance or driveway, the State will not build a driveway or entrance road for the property. It will preserve and maintain the right of access so that the property owner has adequate frontage and reserved right of access to ensure that if and when the property is developed, suitable access to the highway can be engineered and constructed at the owner's expense. Any plan for an entrance to the highway, and any highway modifications required to accommodate the entrance, must be prepared by the developer, at its expense, and constructed by the developer under a permit obtained from the State or other governmental entity responsible for the highway to be accessed.
As to the development potential of the subject property, Claimant's traffic expert, John Sarna, described a traffic study he made to show the potential development capacity for the entire tract before the taking and the development potential for the 41 acre remainder after the appropriation. He concluded that the 86 acre tract could be developed, assuming appropriate modifications to the old Crystal Run Road, with 700,000 sq. ft. of medical, office and hotel space. He then testified that, assuming there is a legal right of access after the taking, the new roadway system could only accommodate traffic generated by a development of 161,000 sq. ft., one that is only 23 percent of the development possible before the taking.
The State argues that Sarna's analysis of the development potential of the 86 acre tract is logically fallacious. The State asserts that his analysis is unreliable since it is not an analysis of the road system to which traffic from any development on the property will be introduced, but merely a study of the ability of hypothetical intersections near it to accommodate traffic. The State maintains that his study ignores the bottleneck at the existing two lane highway bridge, assumes that traffic flows freely between the intersections and offers no analysis of the effect on intersection operation when drivers in the flow of traffic are confronted with multiple lane drops departing the intersections and must jockey for position in a single file to cross the bridge.
The State contends that Sarna's analysis should be rejected because it is “unreliable and false.” It is unreliable because it is not an analysis of a road system to which traffic from any development will be introduced, but merely a study of the ability of hypothetical intersections to accommodate traffic. It is simply the imposition of a hypothetical plan for an ideal access, conceived without regard to legitimate traffic engineering considerations relating to the roadway system. The State argues that it was offered merely to bolster Claimant's over-optimistic view of the utility of its property. The State emphasizes that Sarna agrees that neither his study, nor the offered plan of access, would meet the Town's requirements for review of a proposed development on the scale he proposes, or on any scale. The State maintains that Sarna's analysis cannot be relied on for purposes of assessing either the quality of access or the development potential of Claimant's property.
The State also asserts that Sarna's analysis in support of the claim that the traffic capacity of the highway has been diminished by the Project is “mummery.” It is fallacious, in that it purports to compare the capacity of different intersections operating under optimized conditions before and after completion of the Project, but the rules for optimizing those conditions and setting up the comparison are different and skewed. The State observes that in looking at the Crystal Run Crossing intersection, Sarna assumes that the two lane Crystal Run Road, with one through lane and one turning lane in each direction, will be expanded to six and seven traffic lanes at the intersection and that Crystal Run Crossing will also be expanded to six lanes. According to the State, Sarna also assumes the Town of Wallkill will approve and authorize Claimant's request to expand the intersection to accommodate the development, if the developer dedicates a portion of the frontage of the tract to the Town for that purpose.
Looking at the intersection on the relocated Crystal Run Road where traffic from the remainder parcel will have entry, Sarna adopted a different set of assumptions. For that intersection, no additional land would be dedicated to accommodate an expansion of the intersection. It assumes that the only optimization to be made available would be within the curblines of the intersection as it was built by the State. There can be no expansion of the intersection, only a repainting of its lanes and timing adjustments to its signal.
The State characterizes Sarna's opinion as one that is supported “only by the logical fallacy of apples and oranges.' “ It insists that any legitimate and acceptable effort to compare operations at the intersections must have the same predicates and pre-conditions. These are absent from Sarna's analysis. The analysis does not presume equal opportunity to expand the existing public roadways on the available public right-of-way. The State urges that his opinions and testimony should be given no weight.
Claimant seeks direct damages of $350,000 per acre, or a total of $15,400,000 for the 44 acres taken by the State. In addition, Claimant seeks compensation for damage to the remainder. It asserts that the partial taking rendered the remainder parcels landlocked, leaving them without legal and physical access to the public highway. Claimant argues that the 1.1 acre remainder parcel becomes worthless, and that the value of the 40.9 acre remainder parcel is only $4,500 per acre for an after-appropriation value of $184,050. Thus, Claimant seeks severance damages to the remainder of $14,515,950 ( [$350,000 x 42 acres] less $184,050). Claimant allows that if the Court were to adopt “the extraordinary assumption that ... access might be conceivably achieved,” for the larger remainder parcel, access would nevertheless be so impaired as to diminish its value. Claimant estimates that, in this scenario, the 1.1 acre parcel would still be worthless, and the value of the 40.9 acre remainder parcel would be $45,000 per acre with a resulting after-appropriation value of $1,840,500. Accordingly, Claimant calculated severance damages under the diminished access scenario at $12,859,500 ( [$350,000 x 42 acres] less $1,840,500).
The State, through its expert, appraiser Kenneth Golub, valued the entire property at $120,000 per acre or a total value of approximately $10,210,000. The State calculates direct damages of approximately $5,240,000 ($10,210,000 less [$120,000 x 41.42 acres] ). The State maintains that the reservations of access on the Taking Maps are “meaningful and effective.” For this reason, the State argues that access to the remainder is not impaired and that there should be no severance damages awarded.
DISCUSSION
Legal Standard
The legal standards governing this case are well settled. When private property is taken for public use, the condemning authority must “compensate the owner ‘so that he may be put in the same relative position, insofar as this is possible, as if the taking had not occurred’ “ (Matter of City of New York [Kaiser Woodcraft Corp.], 11 NY3d 353, 359 [2008], quoting City of Buffalo v. Clement Co., 28 N.Y.2d 241, 258 [1971] ; see 520 E. 81st St. Assoc. v. State of New York, 99 N.Y.2d 43, 47 [2002] ; Matter of City of New York [Glantz], 55 N.Y.2d 345, 351 [1982] ; Rose v. State of New York, 24 N.Y.2d 80, 87 [1969] ; Matter of West Bushwick Urban Renewal Area Phase 2, 69 AD3d 176, 181 [2d Dept 2009] ). Where there is a partial taking of property, the measure of all compensable damages is the difference between the value of the whole before the taking and the value of the remainder after the taking (see Diocese of Buffalo v. State of New York, 24 N.Y.2d 320, 323 [1969] ; Matter of Village of Dobbs Ferry v. Stanley Ave. Props., Inc., 95 AD3d 1027, 1029 [2d Dept 2012] ; Matter of Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead v. Kings Point Hgts., LLC, 74 AD3d 804, 805 [2d Dept 2010] ; Chester Indus. Park Assoc., LLP v. State of New York, 65 AD3d 513, 514–515 [2d Dept 2009] ; Coldiron Fuel Ctr., Ltd. v. State of New York, 8 AD3d 779, 780 [3d Dept 2004] ; Chemical Corp. v. Town of E. Hampton, 298 A.D.2d 419, 420 [2d Dept 2002] ; 627 Smith St. Corp. v. Bureau of Waste Disposal of Dept. of Sanitation of City of NY, 289 A.D.2d 472, 473 [2d Dept 2001] ) and the separate valuations required 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” (Board of Commr. of Great Neck Park Dist. of Town of N. Hempstead, 74 AD3d at 805 ; see Matter of Rochester Urban Renewal Agency [Patchen Post], 45 N.Y.2d 1, 8 [1978] ; Keator v. State of New York, 23 N.Y.2d 337, 339 [1968] ; Matter of Village of Dobbs Ferry, 95 AD3d at 1029 ; Chemical Corp., 298 A.D.2d at 420 ; 627 Smith St. Corp., 289 A.D.2d at 473 ; also Matter of Saratoga Water Servs. v. Saratoga County Water Auth., 83 N.Y.2d 205, 213 [1994] ; Arlen of Nanuet v. State of New York, 26 N.Y.2d 346, 354 [1970] ; Wolfe v. State of New York, 22 N.Y.2d 292, 295[1968] ). Fair market value is that price for which the property would sell if there were a willing buyer and a willing seller, neither of whom was under any compulsion to enter into the transaction (see Matter of Allied Corp. v. Town of Camillus, 80 N.Y.2d 351, 356 [1992] ).
A property owner is always entitled to receive direct damages for the property that has been acquired (see Chiesa v. State of New York, 43 A.D.2d 359 [3d Dept 1974], affd 36 N.Y.2d 21 [1974] [holding that an award of direct damages cannot be offset] ). A property owner may also be entitled to receive indirect damages resulting from impairment to the remaining property as a result of the appropriation. Such indirect impairment can be in the form of consequential damages that arise from the manner in which the State uses the property it has condemned. There can also be severance damages that occur when the development potential of the remainder land has been reduced because of the taking (see Coldiron Fuel Ctr ., Ltd. v. State of New York, 8 AD3d 779, 780 [3d Dept 2004] ; Madowitz v. State of New York, 288 A.D.2d 442 [2d Dept 2001] ). A partial taking does not itself cause a consequential loss. “Damages for such a loss must be based upon either the opinion of an experienced, knowledgeable expert ... or on actual market data showing a reduction in the value of the remainder as a result of the appropriation ” (Chemical Corp., 298 A.D.2d at 421 ) (emphasis in original and internal quotation marks deleted). Consequential damages may be awarded where claimants demonstrate that access to the remainder “is not only circuitous or inconvenient but unsuitable, i.e. inadequate to access needs inherent in the highest and best use of the property” (Lake George Assoc. v. State of New York, 23 AD3d 737, 738 [3d Dept 2005], affd 7 NY3d 475 [2006] [emphasis in original and internal quotation marks deleted] ). Severance damages are measured by the difference between the before and after values, less the value of the land and improvements appropriated (see Chemical Corp., 298 A.D.2d at 420 ). Any award should indicate the amount of damages attributable to the direct appropriation and those resulting from indirect damage to the remainder, as well as the basis for such award (see Howard v. State of New York, 35 A.D.2d 1032 [3d Dept 1970] ; Wineburgh v. State of New York, 20 A.D.2d 961, 962 [4th Dept 1964] ). A speculative or hypothetical use may not be accepted as the basis for an award. A proponent must show a reasonable possibility that an asserted highest and best use could or would have been made of the property within the reasonably near future (see Matter of City of New York [Franklin Record Ctr.], 59 N.Y.2d 57 [1983] ; Matter of City of New York [Broadway Cary Corp.], 34 N.Y.2d 535, 536, rearg. denied 34 N.Y.2d 916 [1974] ; Matter of City of New York [Rudnick], 25 N.Y.2d 146, 148–49 [1969] ; Heyert v. Orange & Rockland Util., 17 N.Y.2d 352, 362 [1966] ; Yaphank Dev. Co. v. County of Suffolk, 203 A.D.2d 280, 281 [2d Dept 1994] ; see also Matter of John Jay Coll. of Criminal Justice of the City Univ. of NY, 74 AD3d 460 [1st Dept 2010] ).
II. Valuation
It is undisputed that Claimant is entitled to receive direct damages, but the amount of such damages is hotly contested. Claimant maintains that it is also entitled to severance damages because the development potential of the two remainder parcels was rendered worthless as a result of the appropriation (Claimant's Br. at 19). Claimant asserts the remainders cannot be developed because there is no access to either parcel (id. ). Moreover, it is simply uneconomic to attempt to develop the 1.1 acre remainder. The Court will consider the latter claims before turning to the issue of valuation of the appropriated land.
A. Severance Damages: Is the Remainder Landlocked?
It is undisputed that the Taking Maps indicate that but for a 540 foot course along the boundary between Parcel 285 and the 41 acre remainder, the appropriated lands were acquired as “Fee Without Access.” This appropriation designation precludes abutting landowners from obtaining access to a public highway by going across the fee parcel acquired (see 815 Assoc., Inc. v. State of New York, 271 A.D.2d 398, 399 [2d Dept 2000] ). The taking eliminated 1,000 feet of access Claimant had along Crystal Run Road. However, by virtue of a reservation of rights provision in the Taking Maps, a right of access was created along a 540 n foot course adjacent to an access road to the Park and Ride facility (“Access Road”). The intended location of the road by which access would be provided is depicted on Sheet 8 of the Taking Maps as a “proposed center line” within Parcel 285 (see Ex. 2, Sheet 8).
Claimant acknowledges that the center line depicts the location of a “Connecting Roadway” that could serve as “a possible means of access” (Claimant's Br. at 21) but argues that the right was extinguished by the State's failure to construct the Connecting Roadway (see id. at 22, 26). Assuming, without deciding, that the State was required to show the specific means of access on the Taking Maps, the argument is nonetheless meritless. The record reveals and the Court's inspection of the site confirms that the State constructed an Access Road leading to the Park and Ride facility along the proposed center line.
Claimant seeks to discount this fact by contending, without proof, that the State constructed the Access Road “solely” to service the Park and Ride (see id. at 24). Claimant also argues that the reservation of the right of access on the Taking Maps does not allow access because the taking is generally without access and therefore the reservation means merely that the abutting owner only has the right to construct its driveway within the boundaries of the remainder and not across the appropriated land to connect to the public highway pavement.
Claimant has presented no evidence to show that entry to the Access Road is restricted in any material way. The Taking Maps do not purport to regulate development of roadways anywhere within the remainder, regardless of whether such roadways abut land appropriated in “FEE W.O.A.” or at a “parcel boundary with access” (Ex. 2, Sheet 8). The right of access reserved to Claimant on Taking Maps, Sheet 8, is no different than the implied right of access of any landowner to enter the public right-of-way and make a physical connection to the public road. “When respondent acquired the parcel in question solely for highway purposes, it became part of the right-of-way of the new highway, and thus remained burdened with the usual rights, including access, of the abutting owner” (Matter of Scoglio v. County of Suffolk, 85 N.Y.2d 709, 712 [1995], citing Regan v. Lanze, 40 N.Y.2d 475, 483 [1976] ; Griefer v. County of Sullivan, 246 AD 385, 386–387 [3d Dept 1936], affd 273 N.Y. 515, rearg. denied 274 N.Y. 587 [1937], also 815 Assoc., 271 A.D.2d at 400 ). The 41 acre remainder is vacant land. There are no paved roads within it, let alone roads abutting the public right-of-way. The landowner must secure all required permits and shoulder the costs associated with the design and construction of a connection road where none existed before.
This case is unlike Robinson v. State, 3 A.D.2d 326 (3d Dept 1957), where the appropriation did not leave the abutting land owner with an unlimited right of access to the highway but instead left him with an undefined, unlocated, and far more restrictive, implied way of necessity to the highway (see id. at 327 ).
Claimant asserts that access from the 41 acre remainder to the public highway would require modifications to the Access Road and that the State has not shown Claimant had the right or permission to make them. The simple response is that such showing cannot be made because Claimant never submitted a Crystal Run Corporate Park II design plan to the Town of Wallkill for approval (see Ex. B, p. 32) and has not submitted a highway work permit application to construct a connecting roadway to service the specific needs of an anticipated development. If an application were to be made, the landowner would be required to bear the cost of any indicated modifications to the Access Road.
In Wolfe v. State, 22 N.Y.2d 292, 296 (1968), on which Claimant relies in support of its argument, the State cut off all reasonable means of access while reserving in the appropriation the right of a State official (at the discretion of the official) to return to the owner a portion of that which was appropriated, which right the State official sought to exercise years later in an effort to avoid payment of just compensation due the landowner. There is no such reservation on the Taking Maps involved in this case.
Claimant also contends that, apart from the legal prohibitions to access, the Access Road, the construction plans, and planned utilization of the Access Road rendered the remainder landlocked as of the Taking Date for several reasons, including (a) the Access Road is perched approximately 15 feet above the 41 acre remainder with a horizontal separation of 30 feet, leaving that parcel in a remote pit without any visibility, (b) the Access Road is designed with a 90 degree curved sweep to allow continuous and unimpeded flow of vehicular traffic (cars and buses) to and from the Park and Ride; (c) the Access Road was not built to Town standards with respect to storm water runoff and emergency vehicle access; (d) the storm water management system was not designed to accommodate reconstructing and extending the Access Road to the 41 acre remainder; (e) the construction highway plans make no provisions for curb lines or easements, as they are prohibited pursuant to the State's August 18, 2010 Memo; (f) trees and shrubbery are planned to cover the steep cliff up to the Access Road instead of allowing vehicles; (g) guardrails installed along edge of the Access Road to prevent vehicles from accidentally dropping off the steep cliff will block access; (h) the sole purpose of the Access Road is to service the Park & Ride, a federally required and funded public service; (i) the FHWA and State have joint jurisdiction over the Access Road and Park & Ride; and (j) there is no reason for the FHWA or State to compromise the functioning of the Access Road by reconstructing and extending it (see Claimant Br. at 32). These are but a few examples of issues that a developer of any large scale project might encounter when it seeks to obtain permission to connect a proposed development site to an adjacent public highway. The fact that a developer's plans to access the highway are subject to regulation does not, itself, diminish the developer's legally effective and enforceable right to make a physical connection from the abutting property to the highway (see Regan, 40 N.Y.2d at 483 ).
Any development of the 41 acre remainder will require grading and filling of land, a circumstance that pre-existed the taking. Such grading and filling within the remainder will enable a developer to build a road capable of meeting the Access Road at grade level. The Engineering Report prepared by Chumard at the direction of Claimant describes one way of constructing a roadway to connect to the Access Road, which itself is a product of grading and filling, resulting in a sloping roadway and a level parking lot. The Access Road is designed to accommodate a connecting road from the remainder to the Access Road (see Tr. 1–148–9; Ex. B, pp 26–27). Having visited the site and reviewed the record presented at trial, the Court finds that neither the configuration of the Access Road, nor the current placement of the guardrails and shrubbery present any significant barrier to future planning and construction of a connecting roadway. One option would be construction of a boulevard type roadway, capable of accommodating emergency vehicles, from the subject property to the Access Road, along with any changes to the Access Road required by regulations existing at the time the design plans and application for a highway work permit are submitted for approval.
Regarding the claim that the 1.1 acre remainder is also landlocked “as it is separated from the relocated Crystal Run Road by 30 feet” (Claimant's Br. at 36), the claim is utterly meritless (see 815 Assoc., 271 A.D.2d at 399 [recognizing right of access to public highway where the claimant's property was separated from the paved portion of the highway by the State-owned highway right-of-way which extended as much as 200 feet in depth from the claimant's property line] ).
The remainder has access that is entirely suitable to any needs inherent in the highest and best use of the property. The access it will have following completion of the Project will be far superior to any that was available prior thereto (see Ex. B, p. 27–28). There is no requirement that the State construct a connecting road to the remainder as there is no existing road on Claimant's land to which such a road could be connected (see Tr. 1–137, 142). Claimant has not proved the existence of any legal, physical or functional barrier that has rendered either remainder parcel landlocked or (even “impaired”) and therefore of little or no value. Accordingly, the court rejects the claim for consequential damages premised on grounds that the appropriation rendered the remainders landlocked (see Lake George Assoc., 23 AD3d at 738 ).
B. Parties' Valuations: Direct Damages
Although varying in emphasis, the parties agree that the original 86 acre tract is favorably located at the intersection of two major highways and enjoys excellent visibility. It is zoned Office Research and is suitable for large-scale phased commercial development. Prime office, medical office, hospital, hotel and retail developments are located in the vicinity. The parties also agree that the 86 acre tract is the last large site available for development along Crystal Run Road in the vacinity of Route 17, but they disagree as to why it is so. Claimant suggests that its plans for development of the site were delayed and ultimately rendered obsolete by the State's plan to appropriate land for the Exit 122 construction project. The State argues that the site, which has an irregular topography, is last because of the ready availability of other, smaller, and less expensively developable parcels.
As noted above, Daniel Sciannameo, a commercial real estate appraiser, testified as to valuation on behalf of Claimant. His report and rebuttal report were admitted into evidence. Kenneth Golub, also a commercial real estate appraiser, prepared a report (see Ex. A) and testified on behalf of the State. Both experts used the comparable sales valuation methodology. The comparable sales approach—also called the “market data,” “direct sales” or “sales comparison” approach—generally involves locating parcels of land that are physically similar to the property being valued and which have been sold within a reasonable time of the valuation date. The sale prices of such parcels are then adjusted up or down to reflect differences between them and the subject property. Typically adjustments are made for location, size, terrain, topography and other physical attributes of the land, access to roads, market conditions, sale date and other factors (see Benderis, State Taxation, Chapter 24 Valuation of Property for Income, Property and Estate Taxes § 24.05[2] ). “In the case of vacant, unimproved property, the comparable sales approach is considered the most reliable method of valuation, the rationale being that the market place is the best indicator of value, based on the conflicting interests of many buyers and sellers” (id.; see also Allied Corp., 80 N.Y.2d at 356 ).
1. Sciannameo Valuation Analysis
Sciannameo identified six land sales which he states “comprise properties deemed to be reasonably similar and/or comparable to the subject property, before appropriation” (Ex. 34 at 25). The attributes of these properties, all located in the Town of Wallkill, are summarized in the following chart appearing at page 26 of his Report:
Comparable Land Sales–Before Appropriation
| No. | Address | Sale Date | Sale Price | ACAcres | $/Acre | Zone | Prop Clas s @ Sale | Comments |
|---|---|---|---|---|---|---|---|---|
| B1 | 14–33 Crystal Run Crossing | 02/02 | $1,207,538 | 7 | $172,505 | TC | 3 40 Vac Ind Land | Later developed with restaurants on Lots 80.3, 80.5 & 80.8. Lot 80.4 resold. |
| B2 | 24 Crystal Run Crossing | 06/02 | $1,375,000 | 7.3 | $188,356 | PID | 3 40 Vac Ind Land | Later developed with hotel. Visibility from CRR. Rear portion in flood zone. |
| B3 | 19 Crystal Run Crossing | 06/06 | $2,250,000 | 1.6 | $1,406,250 | O/R | 340 Vac Ind Land | Later developed with hotel. Last lot in commercial subdivision. |
| B4 | 95 Crystal Run Road | 03/08 | $3,400,000 | 11.9 | $285,714 | TC | 340 Vac Ind Land | Later developed with medical facility. Access from Ballard Road. |
| B5 | 601 East Main Street | 12/09 | $1,212,000 | 3 | $404,000 | HC | 330 Vac Com Land | Later developed with mini-mart. Wetlands on site. |
| B6 | East Main Street | 08/10 | $1,425,000 | 7.1 | $200,704 | O/R | 330 Vac Com Land | Adjacent to ORMC. Substantial wetlands onsite sewer from adjacent roads. |
| Mean | $442,922 | |||||||
| Median | $243,209 |
He then made a number of adjustments for time of sale, location, relative size/marketability of parcel, access to property, quality of exposure from public roads and site conditions. All of these adjustments were intended to reflect differences he found between the comparable land sales and the appropriated land to arrive at a final adjusted price per acre as summarized below. A positive adjustment indicates the relative inferiority of the comparable sale compared to the 86 acre parcel before appropriation. A negative adjustment indicates the relative superiority of the comparable sale compared to the subject property before appropriation. A net percentage is indicated for each comparable sale obtained by summing the percentage adjustments.
Comparable Land Sales Adjustment Grid–Before Appropriation
| # Date of Sale | Acre | Price/ Acre | Time Adj | Time Adj Price/Acre | Lo c Adj | Size Adj | Access Adj | Exp Adj | Site Adj | Net Adj | Final Adj $/Acre | |
| B1 | 02/02 | 7 | $172,505 | 71.62% | $296,054 | 0% | –15% | 0% | 15% | 0% | 0% | $296,054 |
| B2 | 06/02 | 7.3 | $188,356 | 70.18% | $320,550 | 0% | –15% | 0% | 15% | 0% | 0% | $320,550 |
| B3 | 06/06 | 1.6 | $1,406,250 | 65. 36% | $2,325,437 | 0% | –25% | 0% | 15% | –20% | –30% | $1,627,806 |
| B4 | 03/08 | 11.9 | $285,714 | 29.16% | $369,021 | 0% | –10% | 10% | 15% | 0% | 15% | $424,374 |
| B5 | 12/09 | 3 | $404,000 | 12.16% | $453,109 | 0% | –20% | 10% | 15% | 5% | 10% | $498,420 |
| B6 | 08/10 | 7.1 | $200,704 | 5.20% | $211,144 | 0% | –15% | 10% | 5% | 25% | 35% | $285,045 |
| Mean | $442,922 | $662,553 | $575,375 | |||||||||
| Median | $243,209 | $344,785 | $372,462 |
The comparable sales as adjusted exhibit a wide range of unit values from $285,000/acre to over $1.6 million/acre. Sciannameo considered comparable sale # B3, a re-sale of a 1.6 acre plot that sold for $1.4 million per acre, to be an outlier, and excluded it from his calculations (Tr. 2–39). With this exclusion, the range of sales narrows from a low of $285,000/acre to a high of $498,000/acre. He calculated mean and median unit values of $364,889/acre and $320,550/acre, respectively. In his opinion, the value of the 86 acre parcel prior to taking was $350,000/acre or $30,100,000.
In response, the State points out that the comparables used by Sciannameo are old sales of smaller plots. The State acknowledges that this is a consequence of a dearth of relevant sales. The sales Sciannameo selected closed between 2002 to 2010, and were 1.6 to 11 acres in size. According to the State, three of the sales relate to Crystal Run Crossing and were developed by affiliates of one developer. These transactions were by or among those affiliates. The State contends that these sales should not be used because they were not arms-length transactions. The State speculates that these transactions “may well reflect exchanges of compensation for other interests and purposes between affiliated entities, conveniently structured to minimize tax liability” (State Br. at 26–27). This is speculation and is unsupported by evidence.
The State also criticizes Sciannameo's adjustment of sale prices for time as being without meaningful support. Sciannameo assumed a steady 5% annual increase of land values at the Route 17 interchange beginning in 2002, accelerating to 7.5% when plans for construction of the Orange Regional Medical Center (“ORMC”) was announced in 2003 and further to 10% when ground was broken for the hospital campus in 2008. The State challenges Sciannameo's assertion that consolidation of hospital services and new construction nearby to house healthcare related offices made the area immune from the slump of the commercial real estate market in the wake of the financial crisis that began in September 2008. The State argues that Sciannameo cited no survey of sales and other relevant analysis to support an upward adjustment of earlier sale prices by over 70%. Finally, the State questions adjustments made for the claimed restriction of access to sites # B4, # B5 and # B6 and the superior visibility of the subject property.
Development of ORMC is the result of a merger of two local area hospitals.
Sciannameo also analyzed several properties which he deemed “not ... appropriate to use to value the subject property before appropriation because [they were] not remotely similar to the subject in terms of location or exposure before appropriation” (Ex. 41, p. 7).
Comparable Land Sales—After Appropriation
Scenario # 2—Impaired Access (41 Acre Remainder)
| Sale | # Address | Sale Date | Sale Price | Acres | $/Acre | Zone | Comments |
| A1 | W/S Sullivan Ln. | 1/25/05 | $1,613,500 | 46.1 | $35,000 | PID | Undeve loped. Challenged access off Sullivan Rd dead end. Hilly + portions in flood plain/wet. Need to run water/sewer from CRR. |
| A2 | E/S Sullivan Ln. | 10/14/ 05 | $1,250,000 | 40.5 | $30,864 | O/R | Undeveloped. Challenged access off Sullivan Rd dead end. Hilly + portions in flood plain/wet. Need to run water/sewer from CRR. |
| A3 | 4 Riverside Dr. | 5/13/08 | $210,000 | 3.8 | $55,263 | O/R | Developed w/ professional bldg. 2/3 of site situated in flood plain & wet-unusable. |
| A4 | 12 Riverside Dr. | 9/5/08 | $210,000 | 4 | $52,500 | O/R | Developed w/ educational bldg. 2/3 of site situated in flood plain & wet-unusable. |
| A5 | Cemetery Rd. | 2/24/09 | $485,000 | 6.8 | $71,324 | ENT | Undeveloped. Former gravel yard, generally level and dry. No water or sewer available. Level and dry. |
| A6 | 14 Industrial Dr. | 1/30/ 10 | $670,000 | 11.1 | $60,360 | ENT–L | Undeveloped land w/ good access, som e wetlands at rear. L-shape. Combined into 41–1–26.412 and improved as parking lot for Time Warner Cable. |
| A7 | 21 Riverside Dr. | 3/31/1 1 | $1,222,000 | 8.1 | $150,864 | O/R | Undeveloped, generally level and cleared and dry land with good access and substantial frontage on Riverside Dr and cul-de-sac. |
| Mean Median | $70,196 $57,812 |
He considered those properties relevant comparables for the 41 acre remainder after the taking. He included a similar chart to describe them and the adjustments he recommended to value the 41 acre parcel, assuming it were to have road access.
Comparable Land Sales Adjustment Grid—After Appropriation
Scenario # 2—Impaired Access (41 Acre Remainder)
| # Date of Sale | Acre | Price/Acre | Time Adj | Time Adj Price/Acre | Loc Adj | Size Adj | Access Adj | Exp Adj | Site Adj | Net Adj | Final Adj $/Acre | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| A1 | 01/05 | 46.1 | $35,000 | 52.84% | $53,493 | 0% | 0% | 0% | 10% | 0% | 10% | $58,842 |
| A2 | 10/05 | 40.5 | $30,864 | 47.47% | $45,516 | 0% | 0% | 0% | 10% | 0% | 10% | $50,068 |
| A3 | 05/08 | 3.8 | $55,263 | 27.68% | $70,559 | 0% | –20% | –25% | 5% | 10% | –30% | $49,392 |
| A4 | 09/08 | 4 | $52,500 | 24.53% | $65,378 | 0% | –20% | –25% | 5% | 10% | –30 % | $45,765 |
| A5 | 02/09 | 6.8 | $71,324 | 19.82% | $85,461 | 0% | –15% | –25% | –10% | –20% | –70% | $25,638 |
| A6 | 01/10 | 11.1 | $60,360 | 10.51% | $66,706 | 0% | –10% | –25% | 0% | –10% | –45% | $36,688 |
| A7 | 03/11 | 8.1 | $150,864 | –1.12% | $149,171 | 0% | –10% | –25% | 5% | –25% | –55% | $67,127 |
| Mean | $70,196 | $80,465 | $45,780 | |||||||||
| Median | $57,812 | $68,633 | $47,578 |
2. Golub Valuation Analysis
Golub found seven sales which he stated are comparable, as “most ... share one or more common attributes” with the subject land before the taking. Two of the sales are among those identified as comparable in Sciannameo's Report—Land Sale 8856 (Sale # B6 in Sciannameo Report), located on East Main Street according to Sciannameo and at Route 6 & Midway Pk. Drive in the Golub Report, and Land Sale 8912 (Sale # B4 in Sciannameo Report) located at 95 Crystal Run Road. Three of the sales also appear in Sciannameo's Report as comparable to the 41 acre remainder—Land Sale 8910 located at 14 Industrial Drive (Sale # A6 in Sciannameo Report), Land Sale 8911 on Cemetery Road (Sale # A5 in Sciannameo Report), and Land Sale 8909 at 21 Riverside Drive (Sale # A7 in Sciannameo Report).
The date of sale, sale price and size of the seven properties Golub reviewed are as follows:
| City | Sale # | Address | Sale Date | Sale Price | Acres |
| Middletown | 8404 | Route 17M & Dolsontown Rd. | 5/11/2009 | $2,800,000 | 26.3 |
| Wawayanda | 8855 | Route 6 & Apple Lane Drive | 10/12/2010 | $800,000 | 8 .14 |
| Middletown | 8856 | Route 6 & Midway Pk. Drive | 8/12/2010 | $1,425,000 | 7.1 |
| Wallkill | 8909 | Rykowski Lane | 3/31/2011 | $1,222,000 | 8.1 |
| Wallkill | 8910 | 14 Industrial Drive | 1/30/2010 | $670,000 | 11.1 |
| Wallkill | 8911 | Cemetery Road | 2/24/2009 | $485,000 | 6.8 |
| Wallkill | 8912 | 95 Crystal Run Road | 3/20/2008 | $3,400,000 | 11.5 |
Golub then made several adjustments, including adjustments for location, zoning, exposure, topography, frontage/shape and size. He noted that Land Sales 8404, 8855, 8856 and 8912 were affected by what he viewed as “abnormal circumstances,” specifically, a recessionary market following the Lehman Brothers collapse in September 2008 and sales involving “adjacent buyers with unusual motives” (Ex. A at 31). He added that Land Sales 8404 and 8909 involved contract conditions requiring receipt of development approvals prior to closing and options to terminate the contracts in the event that approvals were not obtained. He stated that the “prices might have been lower without those [contract] conditions” (id. ). Golub's land sale comparisons along with his adjustments are as follows:
LAND SALES COMPARISON GRID # 1—BEFORE TAKING
| Subject | Sale 8404 | Sale 8855 | Sale 8856 | Sale 8909 | Sale 8910 | Sal e 8911 | Sale 8912 | |
| Sale Price | $2,800,000 | $800,000 | $1,425,000 | $1,222,000 | $670,000 | $485,000 | $3,400,000 | |
| Price/Acre | $106,464 | $98,28 0 | $200,704 | $150,864 | $60,360 | $71,324 | $295,652 | |
| Date of Sale | 2/2011 | 5/2009 | 10/2010 | 8/2010 | 3/2011 | 1/2010 | 2/2009 | 3/2008 |
| Motivation | Normal | –10% | –10% | –10% | 0 | 0 | 0 | –20% |
| Financing | Typical | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Approvals | None | –20% | 0 | 0 | –20% | 0 | 0 | 0 |
| Adj. Price/AC. | $74,525 | $88,452 | $180,634 | $120,691 | $60,360 | $71,324 | $236,522 | |
| Location | Crystal Run | +5% | 0.05 | 0 | +10% | 0.05 | 0.05 | 0 |
| Exposure | Route 17 | 0.05 | 0.05 | 0 | 0.05 | 0.05 | 0.05 | 0 |
| Zoning | O/R | 0.15 | 0 | 0 | 0 | 0 | 0.05 | 0 |
| Topography | Rolling | 0 | 0 | 0 | –10% | 0 | –5% | –10% |
| Front/Shape | Ample/ Irreg. | –10% | 0 | –10% | –10% | 0.05 | 0 | –10% |
| Size (Acres) | 85.1 | 26.30 –10% | 8.14 –20% | 7.10 –20% | 8.10 –20% | 11.1 0 –20% | 6.80 –20% | 11.50 –20% |
| Net Adjustment | 0.05 | –10% | –30% | –25% | –5% | –10% | –40% | |
| Indicated Subj. Land Value/ AC. | $120,000 | $78,251 | $79,607 | $126,444 | $90,519 | $57,342 | $64,191 | $141,913 |
The comparable sales as adjusted by Golub reveal estimated unit values ranging from $57,000/acre to $142,000/acre. In his opinion, the value of the entire subject parcel, before taking, is $120,000/acre or $10,210,000, based largely on the unit values assigned Land Sales B6/8856 and B4/8912.
He describes the remainder property as a large, well situated tract of buildable land, the bulk of which can be subdivided into large sites for Class A offices, research and/or light industrial space. He asserts that the remainder property has many physical characteristics which are similar to the same land before the taking. In his view “[t]he only significant difference from the before taking appraisal is the subject's smaller overall size” (Ex. A at 45). However, he tacitly acknowledges that the taking resulted in diminished visibility to traffic on Route 17. He stated that the site will necessitate building new interior roads and an entry road. The entry road will benefit from its location adjacent to the Exit 122 ramps. He argues that because Orange County's growth pace is limited and there is a huge supply of competitive land and buildings, it will take years to win approvals, then develop a project in phases and then find occupants for new buildings. In his Report, he documented an office vacancy rate of 20% in the vicinity of the subject property versus a vacancy rate of 13% across Orange County. He opined that the optimal form of a subdivision layout for the remainder will emerge over time. In short, “this is a potential project that will evolve over a period of years” (id. ). He concluded that under the circumstances, the highest and best use of the remainder property is for it to be sold to a land investor as a long-term investment project taking many years to realize (id. ).
Given his view that size is the only significant change from the “before” appraisal, and observing that all of the comparison sales are of much smaller parcels than the subject, both before and after the taking, he opined that the unit value for the subject land is the same $120,000/acre for the 41.42 acres of remainder lands. He calculates total damages by direct taking to be $5,241,600 (43.68 acres x $120,000). Because the value per acre of the remainder land is the same before and after the taking, and assuming accessible road frontage for the remainder property, he concluded that there are no indirect damages arising from the appropriation. He found total appraised damages to be approximately $5,240,000.
In response, Claimant argues that “[t]here are a number of problems with the Golub report” (Claimant Br. at 52). First, there is access to the remainder. Second, with the exception of the two common sales, Golub's comparable sales are distinguishable. Third, certain of the adjustments Golub made are improper.
C. Court Analysis
The Court is mindful of the State's observation that “[a]lthough favorably located at a highway interchange with good exposure, the tract was burdened by an antiquated road system already stressed by traffic congestion due to area development that reasonably would limit the tract's exploitation to a fraction of its potential yield. Those limitations, the size of the capital investment needed to prepare the site, including improvements to the public highway, substantial grading, construction of an interior roadway system and infrastructure, the surfeit of available office space, and the extended period before a substantial return on investment could be expected from a project of its magnitude are all factors that explain why this large tract was undeveloped and the last large site available along the Crystal Run/East Main Street corridor” (State Br., p 21). These undisputed facts notwithstanding, Claimant remains entitled to just compensation for the property taken as measured by the fair market value in its highest and best use.
1. Consequential Damages: Impaired Access
The Court has already rejected the claim for consequential damages premised on the theory that the taking rendered the remainder landlocked. As to the alternative claim that, after the appropriation, Claimant was left with only limited access to the remainder resulting in a diminution of the remainder's value, the claim must be rejected on the law and the facts. It is undisputed that the 41 acre remainder parcel retained its essential characteristics undisturbed after the taking. It is still zoned for “Office Research” and can accommodate development of large office, research or medical facilities. Access onto Crystal Run Road is available through the Park and Ride Access Road, despite the filling required to align the interior roadway at grade with the Access Road. The nature of the access to the remainder from a spur off Crystal Run Road is no different from that of three comparable tracts fronting on a spur off Crystal Run Road known as Crystal Run Crossing (Land Sales # B1, # B2, and # B3). Sciannameo made no adjustments for access to these properties in his valuation analysis (see Ex. 34, p. 26). The Court finds that the remainder enjoys access to relocated Crystal Run Road that is far superior to the access it has to existing Crystal Run Road. The Access Road is an ideal entryway to the remainder, given its location at the controlled Exit 122 ramp. As discussed above, the 1.1 acre remainder was not rendered landlocked by the taking. Further, Claimant has not established that it would be uneconomic to attempt to develop this parcel. It sits at grade and has a long frontage directly on Crystal Run Road.
The remainder has not lost value from being close to Crystal Run Road since that benefit, if any, now attaches to the remainder (see Acme Theatres v. State of New York, 26 N.Y.2d 385, 389 [1970] ). In fact, the remainder will be significantly closer to relocated Crystal Run Road than it is to existing Crystal Run Road and will have better visibility from the new roadway as a result. The remainder is no farther away from Route 17 than it was prior to the Taking Date. Nor is it any lower than it was prior to that date. But for some post-appropriation filling that will raise the elevation of a portion of relocated Crystal Run Road, the remainder will retain the same visibility from Route 17 after the taking that it had before. In any event, even assuming that the remainder were to be rendered less visible from Route 17 as a result of the taking, courts have “consistently refused to award consequential damages because the owner's property is no longer visible to passing motorists” (id. at 390 ). The Court finds that development prospects of the remainder have not been made materially worse as a result of the taking. Accordingly, there were no consequential damages to the remainder (see Chemical Corp., 298 A.D.2d at 422 ). No severance damages are owed.
2. Direct Damages Comparables
Claimant has been damaged only to the extent that the vacant parcel is now half its previous size (see Diocese of Buffalo, 24 N.Y.2d at 325 ). Therefore, Claimant is only entitled to recover direct damages. To determine the value of the property which was taken, the Court must make adjustments to the sale prices of comparable properties for differences in characteristics affecting price, including location, visibility access and site conditions so as to approximate as nearly as reasonably possible the value of the property that was taken.Both appraisers agreed that there is a paucity of land sales analogous to the subject property, specifically sales involving large tracts of vacant land situated close to major interchanges in Orange County. Each expert addressed this problem in a different way and, unsurprisingly, reached a dramatically different direct damages estimate. Sciannameo selected sales of properties located in close proximity to Exit 122, including sales completed up to nine years prior to the Taking Date. His comparable sales involved small acreages varying in size from 3 to 12 acres. Golub selected sales that closed after the on-set of the 2008 financial crisis because in his opinion, the commercial real estate market after September 2008 was markedly different from what it was prior to that time. With one notable exception, Golub chose sales of somewhat larger acreages than those selected by Sciannameo. They are drawn from a wider geographic area than the immediate vicinity of Exit 122, the area to which Sciannameo restricted his study. Without adjustment, neither appraisal represents a proper measure of just compensation for the land appropriated by the State, but each offers helpful components for determining such compensation.
Sciannameo chose six sales against which he compared the value of the subject property. He excluded a sale with the smallest acreage and highest per acre price because he viewed it as an “outlier.” Two of the five remaining sales (B6/8856 and B4/8912) were also used in the Golub appraisal. The other five of the seven sales used by Golub are located outside the conveniently located Exit 122 vicinity. Sciannameo characterized these sales as “located off the beaten path” (Ex. 41 at 5). However, Sciannameo used three of those five (A7/8909, A6/8910, and A5/8911) in his valuation of the 41 acre remainder after appropriation.
The Court's analysis of the facts to ascertain the amount of just compensation due Claimant begins with the selection of the appropriate comparable sales. The five sales selected by Claimant's appraiser appear to be appropriate comparables, as these parcels are located close to the subject property and have good access. The Court has added Land Sales 8404 and 8909 to its analysis. Land Sale 8404 is the only sale involving a large tract of land and in this sense it is uniquely comparable to the subject property. It is a 26 acre parcel, has ample frontage, good site conditions and is within a reasonable distance of an I–84 interchange. Parcel 8909, identified as Land Sale # A7 in Sciannameo's after appropriation analysis, is an excellent comparable sale. The 8.1 acre property, zoned O/R, is located in a modern business park off Crystal Run Road. It has 422 feet of frontage on Rykowski Lane and 270 feet along Riverside Drive. It is readily buildable: at the time of sale, the land was cleared, dry and sloped gently up from road grades. The contract of sale was arranged in January 2009 and was subject to the buyer getting approvals (see Ex. A, p. 68; Ex. 34, p. 66).
The Court has not used Land Sales A6/8910 and A5/8911, even though these parcels were selected by both experts. Both parcels are zoned “ENT,” (Enterprise) and neither enjoys the exposure, access, or location of the properties included in the Court's review. The Court also declines to use Golub's Land Sale 8855 because it too appears to be less similar to the subject property before appropriation based on location, exposure, access, and size. It sits hidden from the road behind other parcels (see Ex. 41, p. 6).
3. Direct Damages Valuation
a. Time
Although he deemed it appropriate to use sales made as early as February 26, 2002, Sciannameo elected not to use sales of parcels assembled in connection with development of the commercially significant ORMC, including a 50 acre interchange parcel sold in 2003 for under $50,000/acre. He explained that those sales were not arm's length transactions (Tr. 2–71 to 72; 4–82). His broad assertion that his “investigations were that a lot of the sales that comprised that [the ORMC] property were not arm's length” (Tr. 2–71) lacks foundation and is unpersuasive. Similarly, the large upward “time adjustments” (ranging up to +71.62%) and the claim that land suitable for commercial uses in the immediate environs of ORMC escaped the collapse of the real estate market in the wake of the Lehman Brothers bankruptcy (see Ex. 34 at 68), are not supported by credible evidence. The two listed sales that closed after September 2008 are scant evidence of anything. Assuming they were probative, those sales reflect a precipitous decline in prices by fifty percent in just the nine months between December 2009 and August 2010 ($404/ acre vs $201/acre) (Ex. 34 at 26). Sciannameo's admittedly subjective adjustments for time are rejected.
b. Parcel Size
It is undisputed that sales of small acreages generally command higher prices per acre because there are more potential buyers at this end of the market (see Ex. 34 at 69). Sciannameo's percentage reductions for size were consistently smaller than those applied by Golub. Sciannameo applied –10% to –15% adjustments in all cases he compared to the subject property, except one where he applied a –20% adjustment to the sale of a small 3 acre parcel. Golub applied a –20% adjustment for the 6 to 12 acre parcels he selected and –10% in the case of a 26 acre parcel. Notably, Sciannameo assigned adjustments of –15% (B6/8856) (7.1 acres) and 10% (B4/8912) (11.5 acres) to the two parcels agreed upon by both experts. Golub assigned 20% adjustments for both. There is no evidence in the record tending to show that a 7 acre parcel is likely to command a significantly higher per acre price than an 11 acre site. Both are in a different class than an 86 acre parcel, thereby warranting significant price adjustments. The Court finds that Golub's adjustment for size better reflects the very large differences in size between the subject property and the two comparable sales. The Court will adopt his proposed adjustments for size.
c. Location
Sciannameo states that all of the properties he selected for comparison are situated in the same general area as the subject property. Accordingly, he made no adjustments for location. As to Land Sales B6/8856 and B4/8912, Golub, like Sciannameo, made no adjustments for location. Land Sale 8404 is located far away from the vicinity of Route 17 at Exit 122, but it is near an I–84 interchange. Land Sale A7/8909 is located on a side street, off of Crystal Run Road. Golub recommended a +10% adjustment for location. The Court will make no adjustments for location of the comparables used by Sciannameo, will apply a +20% adjustment based on the location of Land Sale 8404 and a +15% adjustment for Land Sales A7/8909.
d. Access
Sciannameo states that Land Sales B1 and B2 “have similar access from Route 17 at Exit 122 and are situated at Crystal Run Crossing. Accordingly, no adjustments for access are applied to these comparables” (Ex. 34 at 41). The Court agrees. Sciannameo contends that the 86 acre parcel had better access than parcels B4, B5, and B6. These parcels lack the same easy access to Exit 122 that the subject property enjoyed, but the differences are not substantial. Land Sale B4 is located at the intersection of Crystal Run Road and Ballard Road, is at the same grade as those roads, and has access to both public highways. The Court will allow a +5% adjustment for access for parcel B4. Regarding parcel B5, the +5% adjustment for access is appropriate. Parcel B6 sits adjacent to ORMC owned land. The 7 acre parcel with over 400 feet of frontage on East Main Street is close to parcel B5. A +5% adjustment will be made for access. Land Sale A7/8909 is a little further away from the highway interchange, and off a smaller street. The Court will allow a +15% access adjustment for Land Sale A7/8909.
Like the subject property before appropriation, Land Sale 8404 has a long frontage, but it is not as readily accessible to the two limited access highways (Route 17 and I–84), and Crystal Run Road. Golub assigned a –10% adjustment for “frontage/shape” (similar to “exposure” and “access” in Sciannameo's parlance). Sciannameo did not propose any adjustment for access. The Court will apply a +10% adjustment for Frontage/shape in recognition of the superior exposure and access the subject property had to limited access highways.
e. Zoning
Sciannameo argues that the zoning of Land Sale 8404 for residential use does not permit the same uses as the subject property, thereby rendering it inappropriate for comparison. In Golub's view, such zoning makes the 26 acre parcel “much more versatile and valuable” (Ex. A at 32). In any event, he made a +15% adjustment for the zoning difference in apparent recognition of the higher value of OR zoning. The Court will accept this adjustment. Golub suggests no zoning adjustment for Land Sale A7/8909. Sciannameo does not suggest a zoning adjustment. The Court will accept Golub's suggestion.
f. Exposure
Consistent with Claimant's view that the subject property had excellent visibility from Route 17 and Crystal Run Road, Sciannameo applied a uniform +15% adjustment to all of the comparison properties for exposure. In contrast, Golub allowed no adjustment for the two common comparables, B6/8856 and B4/8912. Although a portion of the 86 acre property had excellent visibility from Route 17 and Crystal Run Road, the five properties used as comparables also enjoyed good to excellent visibility. The appropriated portion of the property generally had higher elevations than the remainder and for this reason the Court will allow a larger adjustment than might be warranted otherwise. An adjustment of +10% will be applied to the comparables Sciannameo used.
Land Sale 8404 also has superior exposure for its location as it contains land that is high above the adjacent roadway. Nevertheless, appropriated property enjoyed better exposure. The Court accepts Golub's +5% adjustment for exposure. Land Sale A7/8909 lacks exposure to the highways, but it is near Crystal Run Road. The Court will apply a +10% adjustment for exposure to Land Sale A7/8909.
g. Site Conditions
Finally, Sciannameo considered adjustments for site conditions. He made no adjustments for Land Sales B1, B2, and B4. All are level tracts close to road grade (see Ex. 34 at 28–31 and 34). These lands appear more readily buildable than the subject property. A portion of B2 is in an undevelopable flood zone. Golub made no adjustment to B2 for site conditions but viewed B4 as superior to the subject property and applied a –10% adjustment. The Court accepts the assessment of the experts regarding parcel B2. A –5% adjustment will be applied to Land Sale B4. A –5% adjustment will be applied as well to B1 due to its superior site conditions compared to the subject property. Sciannameo made site condition adjustments to parcels B5 and B6. He states that parcel B5 “apparently contained some wetlands and required extensive retaining walls” (Ex. 34 at 36). It is unclear whether the “some wetlands” condition had any connection to the need for “extensive retaining walls” referred to in his Report. In any event, the subject property, including the appropriated portion thereof, had at least “some” wetlands and any development of the appropriated land would require grading and filling. Parcel B5 is at road grade and enjoyed readily buildable site conditions. Claimant has not shown that the subject property had superior site conditions. No adjustment will be allowed for Land Sale B5. Sciannameo stated that “Land Sale B6 contains extensive wetlands easily visible to the naked eye from the adjacent road” (Ex. 34 at 42) but the record also contains an aerial view of the entire parcel. It shows otherwise (see Ex. 34 at 39). Claimant has not established that a +25% adjustment is warranted for parcel B6. The Court will apply a +5% adjustment as a photograph providing a limited view of the tract from the road shows the existence of some wetlands (see Ex. 34 at 38).
The property at Land Sale 8404 is close to road grade, with readily buildable terrain, is cleared, and appears well drained. Site conditions are somewhat better at this parcel than at the subject property. However, the parcel is encumbered by several utility easements, including the Marcy South powerlines overhead. The Court will assign an adjustment of +5% to take into account all of these site conditions. The Land Sale A7/8909 property meets the roads at grade level, is vacant, level, and dry. Golub suggests a –10% adjustment for this property. The Court will apply a –5% adjustment as site conditions at this parcel are only somewhat better overall than at the subject property.
h. Motivation
Golub applied some additional adjustment factors to the properties he selected for comparison, including “motivation,” approvals, and zoning; all affected his analysis of the properties employed by the Court to determine Claimant's direct damages. The adjustment for “motivation” is based on Golub's admittedly subjective belief that Land Sales 8404, 8855, 8856 and “especially” 8912 “involve[d] adjacent buyers with unusual motives” (Ex. A at 31). In his view, where a property was bought by a neighbor, the seller had the upper hand, and therefore the buyer paid a premium price (see Tr. 4–125). At trial, Golub admitted that he made these adjustments based on no empirical evidence. They were based merely on his subjective judgment reached after conversing with (generally) the buyer (see Tr. 4–124 to 125). An adjustment for differences in the motivation of either a buyer or a seller may be appropriate when there is evidence to support it. The mere fact that a transaction was between neighbors (a common occurrence) is insufficient to justify any adjustment. Regarding Land Sale 8912, where Golub made a –20% adjustment on the ground that the buyer initiated the discussions thereby giving the seller the upper hand, Peter Albert, the managing CEO of Claimant, which was the seller of the property, testified that he approached the buyer about the sale. The fact that a transaction was between affiliates does not constitute grounds for an adjustment absent other evidence tending to show that the relationship influenced conditions of the sale. No such evidence was presented here. The Court rejects the adjustment for “motivation” as speculative. Golub did not suggest any “motivation” adjustment for Land Sale A7/8909, and the Court will not apply any.
i. Approvals
Golub applied a –20% adjustment to Land Sales 8404 and A7/8909 based on the fact that the contracts of sale required the seller to obtain all development approvals as a condition of closing. Claimant does not challenge these adjustments (see Ex. 41). Both parties recognize that the process of obtaining government approvals for large land development projects is often time consuming and costly. An adjustment to reflect a shifting of the risks and costs associated with obtaining governmental approvals from buyer to seller is appropriate. A –15% adjustment will be applied to these sales for “Approvals”.
In the chart, the adjustments to Land Sale 8404 for approvals and zoning have been combined, resulting in a net adjustment of 0%.
FINAL AWARD
The Court's comparable land sales adjustment grid is set forth below. As previously indicated there are no adjustments for either “time” or “motivation.”
| Sale | # Address | Sale Date | $/Acre | Approvals/Zoning | Loc. Adj. | Size Adj . | Access Adj. | Exp. Adj. | Site Adj. | Net Adj. | Final Adj. $/Acre |
|---|---|---|---|---|---|---|---|---|---|---|---|
| B1 | 14–33 CRC | 02/26/02 | $173K | 0% | 0% | –20% | 0% | 10% | –5% | –15% | $14 7.1K |
| B2 | 24 CRC | 06/11/02 | $188K | 0% | 0% | –20% | 0% | 10% | 0% | –10% | $169.2K |
| B4/ 8912 | 95 CRR | 06/30/06 | $2 96K11 | 0% | 0% | –20% | 5% | 10% | –5% | –10% | $266.4K |
The mean final adjusted value per acre is $208,043. Limiting comparable sales to the two parcels deemed applicable by both appraisers, the average final net adjusted value per acre is $233,700.
Taking these figures into account and considering all of the evidence addressed at trial, the Court concludes that the unit value applicable to the original 86 acre tract as of the Taking Date, February 18, 2011, is $210,000. Accordingly, direct damages to Claimant's land caused by the appropriation are $210,000/acre as of the Taking Date, or $9,240,000 for the 44 acres of land taken. Claimant is entitled to recover prejudgment interest at the statutory rate of 9% per annum running from the date of taking to the date of this decision and thereafter to the date of entry of judgment (see EDPL § 514 [B]; CPLR 5001, 5002, 5004 ; DeLaus v. State of New York, 19 Misc.3d 1133[A] [Ct Cl 2008] ).
Accordingly, Claimant is hereby awarded direct damages in the amount of $9,240,000.00 together with interest at a simple interest rate of 9% per annum commencing on February 18, 2011, through the date of this decision and thereafter to the date of entry of judgment. Further, pursuant to Court of Claims Act § 11–a(2), Claimant shall recover the initial filing fee.
The award to claimant 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.
All motions and cross-motions, if any, upon which the Court previously reserved decision are hereby denied. All objections, if any, upon which the Court reserved determination during trial are now overruled.
The Chief Clerk is directed to enter judgment accordingly.